Coffee Service

Keurig Dr Pepper reports strong Q3 results, raises 2021 guidance

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October 28, 2021

Keurig Dr Pepper Inc. reported strong and balanced financial results for the third quarter, which ended Sept. 30, 2021 and raised its guidance for net sales growth, which is now expected in the range of 7% to 8% for 2021, according to a press release.

The company also reaffirmed its guidance for adjusted diluted earnings per share growth in the range of 13% to 15% for the year.

Net sales for the third quarter of 2021 increased 7.6% to $3.25 billion, compared to $3.02 billion in the year-ago period, driven by growth in each business segment, with beverage concentrates and Latin America beverages posting double-digit growth.

Adjusted net income advanced 13.3% to $631 million in the third quarter of 2021, compared to $557 million in the year-ago period, largely reflecting the adjusted operating income growth and the significant decline in interest expense.

Adjusted diluted EPS advanced 12.8% to 44 cents compared to 39 cents in the comparative period. On a two-year basis, year-to-date adjusted diluted EPS grew 32.2% versus the first nine months of 2019.

"In the quarter, we continued to effectively manage through macro challenges to deliver strong and balanced results," Bob Gamgort, chairman and CEO, said in the press release. "We are now entering the final quarter of our three-year, post-merger period with excellent top-line momentum and are on track to deliver or exceed our original merger commitments. Our outlook for the business remains strong, as we look forward to our next chapter of transformation and growth."

The $3.25 billion in quarterly revenue beat analyst expectations by $90 million while the GAAP EPS of 44 cents beat expectations by 2 cents, according to Seeking Alpha.

Shares traded at $35.10 today against a 52-week range of $26.67-$37.11.

KDP in-market performance in the liquid refreshment beverages category remained strong in the quarter, with retail dollar consumption advancing 6.8% across the company's cold beverage retail base, reflecting strength in CSDs, premium unflavored water, enhanced flavored water, coconut water, apple juice and apple sauce. This performance was driven by Dr Pepper, Sunkist, Canada Dry, A&W and Squirt CSDs, Evian, Bai, Vita Coco, Polar and Mott's apple juice and apple sauce.

In coffee, retail consumption of single-serve pods manufactured by KDP in IRi tracked channels increased 4.3% and dollar market share remained strong, advancing to 83% in the quarter. Performance in the away-from-home business improved versus the year-ago shelter-in-place environment, although the increase in overall consumer mobility has not yet fully translated into a broad return to offices. On a two-year stacked basis, retail consumption of single-serve pods manufactured by KDP increased 16% in IRi tracked channels.

Net sales for coffee systems in the third quarter of 2021 advanced 5.3% to $1.16 billion, compared to $1.10 billion in the year-ago period.

Net sales for packaged beverages increased 6.9% to $1.55 billion, compared to $1.45 billion in the year-ago period. Leading the strong net sales performance were CSDs, particularly Dr Pepper, Canada Dry, Sunkist, A&W, 7UP and Squirt, as well as growth in Polar and Mott's, partially offset by a decline in Snapple related to recent supply chain challenges and softness in Hawaiian Punch.

Net sales for beverage concentrates increased 11.4% to $392 million, compared to $352 million in the year-ago period. The volume/mix performance reflected lower concentrate shipments in the quarter, largely offset by improving trends versus year-ago in the fountain foodservice business, driven by increased consumer mobility in the restaurant and hospitality channels.

The company raised its guidance for constant currency net sales growth to the range of 7% to 8%, from the previous range of 6% to 7%, and reaffirmed its outlook for adjusted diluted EPS growth in the range of 13% to 15%.