Keurig Dr Pepper(KDP) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for the first quarter of 2025 were $3,635 million, an increase of 4.8% compared to $3,468 million in the first quarter of 2024[11] - Gross profit for the first quarter of 2025 was $1,985 million, up from $1,940 million in the same period last year, reflecting a gross margin of approximately 54.6%[11] - Net income for the first quarter of 2025 was $517 million, representing a 14% increase from $454 million in the first quarter of 2024[11] - Earnings per share (EPS) for the first quarter of 2025 were $0.38, compared to $0.33 in the first quarter of 2024, indicating a 15.2% year-over-year growth[11] - Income from operations for the first quarter of 2025 was $801 million, compared to $765 million in the same period of 2024, reflecting a 4.7% increase[71] - The U.S. Refreshment Beverages segment generated net sales of $2,323 million in Q1 2025, up from $2,093 million in Q1 2024, representing an increase of 11%[72] - The U.S. Coffee segment reported net sales of $877 million in Q1 2025, a decrease of 3.7% from $911 million in Q1 2024[72] - The International segment's net sales were $435 million in Q1 2025, compared to $464 million in Q1 2024, indicating a decline of 6.3%[72] Assets and Liabilities - Total assets as of March 31, 2025, were $53,699 million, a slight increase from $53,430 million as of December 31, 2024[16] - The company’s total liabilities were $29,252 million as of March 31, 2025, compared to $29,187 million at the end of 2024[16] - Long-term obligations decreased to $11,927 million as of March 31, 2025, from $12,912 million at the end of 2024, showing a reduction of approximately 7.6%[28] - The current portion of long-term obligations was $1,027 million as of March 31, 2025, slightly up from $1,026 million at the end of 2024[28] - Outstanding obligations under supplier financing arrangements were $1,759 million as of March 31, 2025, compared to $1,740 million as of December 31, 2024[86] Cash Flow and Dividends - Cash and cash equivalents increased to $653 million as of March 31, 2025, up from $510 million at the end of 2024[16] - The company reported a net cash provided by operating activities of $209 million for the first quarter of 2025, compared to $85 million in the first quarter of 2024[17] - Net cash provided by financing activities was $(7) million in Q1 2025, compared to $158 million in Q1 2024, indicating a significant decrease[19] - Cash dividends paid increased to $312 million in Q1 2025 from $299 million in Q1 2024, reflecting a rise of approximately 4.3%[19] - The company declared cash dividends of $312 million in the first quarter of 2025, slightly up from $299 million in the same period last year[19] Investments and Acquisitions - The company entered into a definitive agreement to acquire a controlling interest in GHOST for $999 million, with an initial purchase of a 60% stake completed on December 31, 2024[40] - As of March 31, 2025, investments in unconsolidated affiliates totaled $1,568 million, up from $1,543 million as of December 31, 2024, with Nutrabolt being the largest investment at $1,120 million[79] Tax and Compliance - The effective tax rate for the first quarter of 2025 was 21.7%, a decrease from 23.6% in the same quarter of 2024, primarily due to a non-cash revaluation of state deferred tax liabilities[80] - The company maintained compliance with its minimum interest coverage ratio of 3.25 to 1.00 under the 2025 Revolving Credit Agreement as of March 31, 2025[35] Restructuring and Litigation - The restructuring program initiated in March 2024 is expected to incur pre-tax charges between $125 million and $145 million through the second half of 2025[93] - The company plans to continue its restructuring efforts, including the closure of the Windsor, Virginia manufacturing facility, expected to be completed in the second quarter of 2025[92] - Litigation reserves remained at $2 million as of both March 31, 2025, and December 31, 2024, with ongoing antitrust litigation claims exceeding $5 billion[87][90] - Keurig reached a settlement agreement for $31 million in the Multidistrict Antitrust Litigation, resolving claims from indirect purchasers[89] Stock and Compensation - Stock-based compensation expense for Q1 2025 was $22 million, down from $28 million in Q1 2024[74] - As of March 31, 2025, the company had 12,522,161 outstanding Restricted Share Units (RSUs) with an intrinsic value of $429 million[75] - The company recognized $205 million of unrecognized compensation cost related to unvested RSUs, expected to be recognized over a weighted average period of 3.3 years[76] - The company granted 443,933 Performance Share Units (PSUs) with a fair value of $30.71, resulting in a balance of 442,619 PSUs as of March 31, 2025[78]