Keurig Dr Pepper(KDP) - 2025 Q3 - Quarterly Results

Financial Performance - Q3 2025 net sales increased by 10.7% to $4.31 billion, with constant currency growth of 10.6% driven by volume/mix growth of 6.4% and favorable net price realization of 4.2%[3] - GAAP operating income for Q3 increased by 10.3% to $995 million, while adjusted operating income rose by 3.8% to $1,091 million, representing 25.3% of net sales[4] - Adjusted diluted EPS for Q3 increased by 5.9% to $0.54, driven by adjusted operating income growth and benefits from minority investments[5] - GAAP net income for Q3 increased by 7.5% to $662 million, or $0.49 per diluted share[5] - Net income for the first nine months of 2025 was $1,726 million, compared to $1,585 million in 2024, representing an 8.9% increase[36] - The company reported a net income of $2,230 million for the first nine months of 2025, with an effective tax rate of 22.6%[61] - Adjusted diluted earnings per share for the first nine months of 2025 was $1.45, compared to $1.34 in the same period of 2024, representing a 8.2% increase[61] - The company reported a net income of $1,582 million for the last twelve months, with interest expenses totaling $763 million[70] Sales Growth - U.S. Refreshment Beverages segment net sales rose 14.4% to $2.7 billion, with volume/mix growth of 11.2% and a contribution of 7.2 percentage points from the acquisition of GHOST[7] - U.S. Coffee segment net sales increased by 1.5% to $991 million, with favorable net price realization of 5.5% offset by a volume/mix decline of 4.0%[9] - International segment net sales increased by 10.5% to $580 million, driven by favorable net price realization of 6.1% and volume/mix growth of 4.0%[11] - U.S. Refreshment Beverages segment net sales increased to $2,735 million in Q3 2025 from $2,390 million in Q3 2024, a growth of 14.4%[40] - Total change in net sales for Q3 2025 was 10.7%, with U.S. Refreshment Beverages growing by 14.4%[56] - In the first nine months of 2025, total net sales increased by 7.3%, with a constant currency change of 8.1%[68] - U.S. Refreshment Beverages segment reported a 12.0% increase in net sales, while U.S. Coffee experienced a decline of 0.7%[68] Cash Flow and Assets - Operating cash flow for Q3 was $639 million, and free cash flow totaled $528 million[5] - Total current assets rose to $4,701 million as of September 30, 2025, compared to $3,997 million at the end of 2024, marking a 17.6% increase[34] - Cash dividends paid in the first nine months of 2025 totaled $937 million, compared to $883 million in 2024, indicating a 6.1% increase[38] - The company reported a net cash provided by operating activities of $1,279 million for the first nine months of 2025, down from $1,370 million in 2024[36] - Free cash flow for the first nine months of 2025 was $955 million, slightly down from $973 million in 2024[75] Operational Efficiency - Reported gross profit for the first nine months of 2025 was $6,580 million, with a gross margin of 54.4%[58] - Adjusted income from operations for Q3 2025 was $1,091 million, reflecting an operating margin of 25.3%[50] - The total operating margin for the first nine months of 2025 was 22.3%, with an adjusted margin of 24.5%[68] - U.S. Coffee operating margin for Q3 2025 was 32.0%, up from 31.7% in Q3 2024[56] - The U.S. Coffee operating margin improved to 30.9% after adjustments, compared to 25.7% in the previous year[68] Strategic Initiatives - The company is focused on integrating JDE Peet's and preparing for a future separation into two pure-play companies[2] - The company executed €10 billion FX forward contracts during Q3 2025 to mitigate foreign exchange risks related to the anticipated acquisition of JDE Peet's[45] - The company incurred $13 million in acquisition, integration, and financing costs related to the acquisition of JDE Peet's[55] - Restructuring costs related to Network Optimization amounted to $26 million in Q3 2025[55] - The company incurred $38 million in restructuring costs related to network optimization during the first nine months of 2025[67] - The company incurred an impairment of goodwill and other intangible assets amounting to $718 million during the last twelve months[70] Market Outlook - The company raised its 2025 constant currency net sales growth outlook to a high-single-digit range, revised from a mid-single-digit growth outlook[14] - The weighted average diluted shares outstanding for Q3 2025 was 1,362.9 million, slightly down from 1,361.9 million in Q3 2024[32] - The effective tax rate for Q3 2025 was 22.3%, with net income reported at $662 million[53] - The company reported a 10.9% increase in adjusted income from operations compared to Q3 2024[55] - International segment net sales increased by 1.0%, with a constant currency impact of 7.1%[68] - The impact of foreign currency on adjusted income was a decrease of 0.2% for the first nine months of 2025[61]