Core Viewpoint - Keurig Dr Pepper (KDP) is undergoing a significant change in its board composition following a public offering of shares by JAB Holding Company, which will reduce JAB's ownership stake in KDP to approximately 10.7% [1][2][3] Group 1: Offering Details - JAB Holding Company will sell a total of 73,000,000 shares of KDP common stock, with an additional 10,950,000 shares available for purchase by the underwriter within 30 days [1] - Following the offering, JAB will be subject to a 90-day lock-up agreement regarding the remaining shares it holds [2] Group 2: Board Changes - Three board members affiliated with JAB, Joachim Creus, Frank Engelen, and Olivier Goudet, will resign from KDP's Board of Directors upon completion of the offering [3] - The resignation reflects JAB's reduced ownership stake and marks a transition in KDP's governance structure [3] Group 3: Company Outlook - JAB's CEO, Joachim Creus, expressed gratitude for KDP's performance over the past decade, highlighting the investment as one of JAB's most successful [4] - KDP's Executive Chairman, Bob Gamgort, emphasized the company's strong foundation and positive future outlook, noting the importance of this transaction in KDP's evolution as a public company [4] Group 4: Company Profile - KDP is a leading beverage company in North America with over 125 brands and annual revenue exceeding $15 billion [7] - The company holds leadership positions in various beverage categories, including carbonated soft drinks, coffee, tea, and water, and is known for its innovative partnership model [7]

Keurig Dr Pepper Inc. (NASDAQ:KDP) Q4 2024 Earnings Conference Call February 25, 2025 8:00 AM ET Company Participants Jane Gelfand - Senior Vice President, Finance Tim Cofer - Chief Executive Officer Sudhanshu Priyadarshi - Chief Financial Officer and President, International Conference Call Participants Chris Carey - Wells Fargo Peter Grom - UBS Steve Powers - Deutsche Bank Andrea Teixiera - JPMorgan Kaumil Gajrawala - Jefferies Filippo Falorni - Citi Operator Good morning, ladies and gentlemen and thank y ...

Core Insights - Keurig Dr Pepper exceeded market expectations in Q4 2024, reporting adjusted EPS of $0.58 and total revenue of $4.07 billion, surpassing estimates of $0.57 and $4.02 billion respectively [2][3] - The company faced challenges in its U.S. coffee segment, which saw a 2.4% decline in net sales, while the U.S. refreshment beverages segment experienced a 10.3% increase in net sales [6][8] Financial Performance - Adjusted EPS increased by 5.5% year-over-year from $0.55 in Q4 2023 to $0.58 in Q4 2024 [3] - Total net sales rose by 5.2% year-over-year from $3.87 billion in Q4 2023 to $4.07 billion in Q4 2024 [3] - Adjusted operating income was reported at $1.129 billion, a 2.5% increase from the previous year [3] - Free cash flow reached $687 million, marking a significant 380% increase year-over-year from $143 million [3][8] Business Overview and Strategy - Keurig Dr Pepper operates in a competitive beverage market, focusing on product innovation, strategic partnerships, and distribution network reinforcement to maintain its competitive edge [4] - Recent acquisitions, such as the energy drink brand Ghost, and partnerships have strengthened the company's position in high-growth categories [5][9] Segment Analysis - The U.S. refreshment beverages segment showed strong growth with a 10.3% increase in net sales, driven by positive volume/mix growth and favorable pricing [6] - The U.S. coffee segment faced a decline in net sales and a 5.7% drop in adjusted operating income due to pricing challenges and competitive pressures [6] - The international segment experienced a slight 0.8% increase in net sales, with an 8.5% growth when adjusted for currency effects, although adjusted operating income decreased by 8.6% due to inflationary pressures [7] Future Outlook - Management anticipates mid-single-digit net sales growth and high-single-digit adjusted EPS growth in constant currency for 2025, with a focus on the energy drink sector and other high-growth segments [11] - The company plans to continue investing in product innovation and market penetration, particularly in international markets, while adjusting pricing strategies in the U.S. coffee segment to address margin pressures [12]

Core Insights - Keurig Dr Pepper, Inc (KDP) reported revenue of $4.07 billion for the quarter ended December 2024, reflecting a 5.3% increase year-over-year [1] - The earnings per share (EPS) for the quarter was $0.58, up from $0.55 in the same quarter last year, with an EPS surprise of +1.75% compared to the consensus estimate of $0.57 [1] Financial Performance - The reported revenue exceeded the Zacks Consensus Estimate of $4.03 billion by +0.96% [1] - Net Sales in U.S. Refreshment Beverages reached $2.44 billion, surpassing the three-analyst average estimate of $2.37 billion, with a year-over-year increase of +10.3% [4] - Net Sales in International markets were $499 million, slightly below the three-analyst average estimate of $515.04 million, showing a year-over-year change of +0.8% [4] - U.S. Coffee Net Sales were reported at $1.13 billion, which was below the three-analyst average estimate of $1.14 billion, reflecting a year-over-year decline of -2.4% [4] Stock Performance - Over the past month, shares of Keurig Dr Pepper have returned +7.2%, contrasting with the Zacks S&P 500 composite's -1.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Retail and Sales Performance - KDP's largest retailer, Walmart, accounted for approximately 16% of consolidated net sales in 2024[37]. - Net sales increased by $537 million, or 3.6%, to $15,351 million for the year ended December 31, 2024, compared to $14,814 million in the prior year[172]. - Total net sales increased by 3.6% to $15,351 million for the year ended December 31, 2024, compared to $14,814 million in the prior year[182]. - U.S. Refreshment Beverages segment net sales rose by 5.8% to $9,331 million, while income from operations decreased by 24.4% to $1,878 million[183]. - U.S. Coffee segment net sales decreased by 2.6% to $3,967 million, with income from operations down by 6.8% to $1,079 million[186]. - International segment net sales increased by 6.8% to $2,053 million, with income from operations rising by 14.7% to $545 million[189]. Acquisitions and Investments - KDP acquired a controlling interest in GHOST, initially purchasing a 60% stake, with an agreement to buy the remaining 40% by 2028[32]. - The company entered into a definitive agreement to acquire a controlling interest in GHOST for approximately $1 billion, purchasing a 60% stake[165][166]. - The company actively evaluates investments in companies to fill whitespace in its beverage portfolio[19]. - The company is focused on future mergers and acquisitions to extend geographic coverage and enhance its product portfolio[211]. Product Innovation and Development - The company launched the Keurig K-Brew+Chill brewer featuring Quick Chill Technology, allowing iced beverages below 60 degrees[33]. - KDP's innovation pipeline includes new brewers and K-Cup pods to enhance household penetration and meet consumer preferences[31]. - The company is committed to innovation and product development to differentiate its offerings and maintain competitive positioning in the market[82]. Financial Performance - Gross profit rose by $449 million, or 5.6%, to $8,529 million for the year ended December 31, 2024[172]. - Net income decreased by $740 million, or 33.9%, to $1,441 million for the year ended December 31, 2024[172]. - Earnings per diluted share fell by $0.50, or 32.3%, to $1.05 for the year ended December 31, 2024[172]. - The effective tax rate increased to 24.7% for the year ended December 31, 2024, compared to 20.9% in the prior year[172]. - The company reported a gross margin of 55.6% and an operating margin of 16.9% for the year ended December 31, 2024[172]. - Income from operations decreased by $601 million, or 18.8%, to $2,591 million for the year ended December 31, 2024, primarily due to non-cash impairment charges[178]. Operational Challenges - The company faces risks related to supply chain disruptions, including increased commodity and transportation costs, which may adversely affect financial results[74]. - Labor market challenges, including shortages and increased turnover, could significantly impact the company's ability to attract and retain a skilled workforce[100]. - Rising employee benefit costs, particularly in healthcare and retirement programs, are expected to pressure profitability[102]. - The company is exposed to risks related to acquisitions and investments, which could affect expected revenue increases and operational results if not managed effectively[90]. - The company must successfully manage its information systems to avoid disruptions that could negatively affect business operations and financial performance[96]. Market and Consumer Trends - Consumer preferences are evolving, and failure to respond to these changes could adversely affect sales and growth[81]. - The beverage market experiences seasonal variations, with cold beverage sales peaking in warmer months and hot beverage sales in cooler months[58]. - The company faces intense competition in the beverage industry, which may negatively impact sales if unable to maintain or increase prices or effectively promote products[80]. Sustainability and Governance - The company is committed to transparency in its environmental, social, and governance initiatives, focusing on areas such as climate action and consumer health[66]. - The company is focusing on sustainability, particularly in packaging, to meet consumer demands and avoid potential sales declines[83]. - Concerns regarding plastic use and disposal may lead to increased costs and regulatory compliance, impacting product demand and overall business performance[127]. Risk Management - The company’s risk management system includes oversight from executive leadership and the Audit and Finance Committee regarding cybersecurity risks[142]. - The company is subject to ongoing cybersecurity risk assessments and training to mitigate potential threats and vulnerabilities[141]. - Cybersecurity risks from third-party service providers could disrupt business operations and adversely affect financial reporting and reputation[129]. - The company faces potential significant liabilities from ongoing litigation and legal proceedings, which could adversely affect its reputation and financial performance[125]. Employee and Workforce Management - The company has approximately 29,400 employees, with 22,400 in the U.S., 5,300 in Mexico, and 1,400 in Canada[59]. - The company’s employee benefits programs are designed to support the physical, mental, and financial health of employees, including access to medical and retirement benefits[62]. Capital Expenditures and Financial Commitments - Capital expenditures for property, plant, and equipment were $563 million in 2024, up from $425 million in 2023, indicating a 32.5% increase[205]. - The company authorized a share repurchase program of up to $4 billion over a four-year period starting January 1, 2022, aimed at returning value to shareholders[104]. - As of December 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program of up to $4 billion[155].

Core Viewpoint - Keurig Dr Pepper, Inc (KDP) reported quarterly earnings of $0.58 per share, exceeding the Zacks Consensus Estimate of $0.57 per share, and showing an increase from $0.55 per share a year ago, indicating a positive earnings surprise of 1.75% [1][2] Financial Performance - The company achieved revenues of $4.07 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.96%, and up from $3.87 billion in the same quarter last year [2] - Over the last four quarters, KDP has exceeded consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - KDP shares have increased approximately 6.2% since the beginning of the year, outperforming the S&P 500, which gained 1.7% [3] Future Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $0.40 on revenues of $3.67 billion, and for the current fiscal year, it is $2.03 on revenues of $16.21 billion [7] Industry Context - The Beverages - Soft drinks industry, to which KDP belongs, is currently ranked in the bottom 47% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - Net sales for full year 2024 increased 3.6% to $15.35 billion, with constant currency growth of 3.9% driven by volume/mix growth of 2.7% and favorable net price realization of 1.2%[3]. - Adjusted diluted EPS for full year 2024 increased 7.8% to $1.92, supported by adjusted operating income growth of 9.0% to $4.0 billion, which accounted for 25.9% of net sales[5]. - For Q4 2024, net sales increased 5.2% to $4.07 billion, with constant currency growth of 6.2% driven by volume/mix growth of 5.3%[14]. - The company expects mid-single-digit net sales growth and high-single-digit adjusted EPS growth for 2025 on a constant currency basis, including contributions from the GHOST acquisition[24]. - The total change in net sales for 2024 was 3.9%, with U.S. Refreshment Beverages growing by 5.8% and International sales increasing by 9.2%[74]. Cash Flow and Capital Allocation - Operating cash flow for full year 2024 increased 67% to $2.2 billion, while free cash flow grew 82% to $1.7 billion, enabling balanced capital allocation[4]. - Free cash flow for the year ended December 31, 2024, was $2,219 million, an increase from $1,329 million in 2023[46]. - The net cash provided by operating activities for 2024 was $2,219 million, compared to $1,329 million in 2023[78]. Segment Performance - U.S. Refreshment Beverages segment net sales for full year 2024 increased 5.8% to $9.3 billion, driven by volume/mix growth of 2.7% and favorable net price realization of 3.1%[7]. - International segment net sales for full year 2024 increased 6.8% to $2.1 billion, with constant currency growth of 9.2% driven by volume/mix growth of 6.2% and favorable net price realization of 3.0%[11]. - For Q4 2024, total net sales increased by 5.2%, with U.S. Refreshment Beverages up 10.3% and U.S. Coffee down 2.4%[63]. - The U.S. Coffee segment experienced a decline in sales of 2.6% for the year ended December 31, 2024[74]. Profitability and Margins - Adjusted operating income for Q4 2024 increased 3.4% to $1.13 billion, totaling 27.7% of net sales, reflecting net sales growth and productivity savings[15]. - For Q4 2024, reported gross profit was $2,277 million with a gross margin of 55.9%[58]. - For the year ended December 31, 2024, reported gross profit was $8,529 million, with a gross margin of 55.6%[65]. - The company reported a total operating margin of 1.5% for Q4 2024, with an adjusted margin of 27.7%[63]. - The operating margin for U.S. Refreshment Beverages in 2024 was 30.7%, while the total operating margin was 25.9%[74]. Impairments and Restructuring - The company recognized an impairment of goodwill and other intangible assets amounting to $718 million in Q4 2024[60]. - The company incurred restructuring expenses related to the 2023 CEO succession totaling $24 million in Q4 2024[60]. - The company incurred restructuring costs of $51 million related to the 2024 Network Optimization[75]. - Adjusted EBITDA for the year ended December 31, 2024, was significantly impacted by impairments totaling $718 million, including $306 million for goodwill and $412 million for other intangible assets[41][46]. Assets and Liabilities - Total assets increased to $53,430 million as of December 31, 2024, up from $52,130 million in 2023[44]. - Total liabilities rose to $29,187 million in 2024, compared to $26,454 million in 2023[44]. - The company’s cash and cash equivalents increased to $510 million in 2024, compared to $267 million in 2023[44]. Tax and Income - The effective tax rate for the year ended December 31, 2024, was 24.7%[68]. - Adjusted net income for the year ended December 31, 2024, was $2,632 million, with diluted earnings per share of $1.92[68]. - For the year ended December 31, 2023, adjusted net income was $2,518 million, reflecting a 7.3% increase year-over-year[71]. - The company reported a net loss of $144 million for Q4 2024, compared to a net income of $693 million in Q4 2023[41].

Core Insights - The upcoming earnings report for Keurig Dr Pepper, Inc (KDP) is projected to show quarterly earnings of $0.57 per share, reflecting a 3.6% increase year-over-year [1] - Analysts anticipate revenues of $4.03 billion, which represents a 4.2% increase compared to the same quarter last year [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 1.8% in the last 30 days, indicating a reassessment by covering analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions to the stock [3] Key Metrics Forecast - Analysts estimate 'Net Sales- U.S. Coffee' to reach $1.14 billion, a decrease of 1.4% from the prior-year quarter [5] - 'Net Sales- International' is expected to be $515.04 million, showing an increase of 4.1% year-over-year [5] - 'Net Sales- U.S. Refreshment Beverages' is forecasted to reach $2.37 billion, indicating a 7.1% increase from the previous year [5] Stock Performance - KDP shares have increased by 4.1% over the past month, outperforming the Zacks S&P 500 composite, which rose by 2.6% [6] - KDP holds a Zacks Rank of 3 (Hold), suggesting it is expected to closely follow overall market performance in the near term [6]

Core Viewpoint - Keurig Dr Pepper Inc. (KDP) is expected to report a solid performance in its fourth-quarter 2024 results, with anticipated year-over-year increases in both revenues and earnings per share [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for fourth-quarter revenues is $4.03 billion, reflecting a 4.2% increase from the same quarter last year [2]. - The consensus estimate for quarterly earnings is 57 cents per share, indicating a 3.6% increase year-over-year, although this figure has decreased by one cent in the past 30 days [2]. - KDP has a trailing four-quarter earnings surprise average of 3.4% [2]. Key Growth Drivers - KDP's consumer-focused innovation model is expected to drive market share gains, supported by metrics tracking awareness, household penetration, and loyalty [3]. - The company's strategic focus on innovation, brand activity, and strong commercial execution, along with disciplined capital management, positions it for sustained growth in key categories such as liquid refreshment beverages, K-Cup pods, and brewers [3]. Operational Expansion - Recent asset integration in Arizona and an extended distribution footprint in Tennessee are expected to enhance KDP's operational reach [4]. - The Direct Store Delivery network in Mexico provides a competitive advantage in a market reliant on traditional trade, with ongoing investments showing strong growth trends [4]. Full-Year Guidance - Management has reaffirmed its full-year guidance, expecting mid-single-digit constant-currency net sales growth and high-single-digit adjusted earnings per share growth for 2024 [5]. Segment Performance - The Refreshment Beverages segment is projected to generate $2.4 billion in revenues, marking a 4.7% year-over-year increase, driven by strong sales and a favorable product mix [6]. - Growth in carbonated soft drinks (CSDs) is attributed to affordable pricing and strategic marketing efforts [6]. Brand Strength and Marketing - KDP's strong market share momentum is expected to continue, bolstered by successful innovation and brand strength [7]. - Popular products like Dr Pepper's creamy coconut flavor and expanding zero-sugar options are anticipated to gain traction, supported by marketing campaigns [7]. Valuation Perspective - KDP stock is trading at a forward 12-month price-to-earnings ratio of 15.98x, below its five-year high of 23.33x and the industry average of 18.41x, indicating compelling value for investors [9]. - Over the past three months, KDP shares have increased by 1.7%, compared to the industry's growth of 2.3% [10].

Core Insights - Albert Anthony is a Croatian-American media personality active on investor platforms, focusing on markets and stocks, with a growing follower base of over 1,000 since 2023 [1] - He is set to launch a new book titled "Financial Markets: Growing A Dividend Income Portfolio" in 2025, coinciding with an ongoing article series on the same topic [1] - Albert Anthony has a background in management and information systems, having worked in a top-10 financial firm's IT department [1] Company Profile - Albert Anthony & Co. is a sole proprietorship registered in Austin, Texas, and is wholly owned by Albert Anthony [1] - The company does not provide personalized financial advisory services but offers general market commentary based on publicly available data [1] Investment Focus - Albert Anthony has launched the Future Investor Fund, which aims to build a dividend portfolio [1] - The company emphasizes the importance of due diligence for investors, indicating that all investments carry risk [1]