Keurig Dr Pepper(US:KDP)2025-10-27 21:39Financial Performance - Net sales for Q3 2025 reached $4,306 million, a 10.7% increase from $3,891 million in Q3 2024[12] - Gross profit for the first nine months of 2025 was $6,580 million, up from $6,252 million in the same period of 2024, reflecting a 5.2% growth[12] - Net income for Q3 2025 was $662 million, compared to $616 million in Q3 2024, representing an 7.5% increase[12] - Earnings per share (EPS) for Q3 2025 was $0.49, up from $0.45 in Q3 2024, indicating an 8.9% increase[12] - Net income for the first nine months of 2025 was $1,726 million, an increase of 8.9% compared to $1,585 million in 2024[18] - Comprehensive income for the first nine months of 2025 reached $1,978 million, up from $1,284 million in 2024, reflecting a significant increase of 54%[14] - The company reported an income from operations of $995 million for Q3 2025, compared to $902 million in Q3 2024, indicating a year-over-year increase of 10.3%[87] Assets and Liabilities - Total assets as of September 30, 2025, were $54,605 million, an increase from $53,430 million at the end of 2024[17] - Current liabilities decreased to $7,527 million as of September 30, 2025, from $8,087 million at the end of 2024[17] - The company’s long-term obligations rose to $13,531 million as of September 30, 2025, compared to $12,912 million at the end of 2024[17] - Total liabilities as of September 30, 2025, were $29,281 million, a marginal increase from $29,187 million at the end of 2024[16] - Total stockholders' equity increased to $25,324 million as of September 30, 2025, from $24,985 million at the end of June 2025[21] Cash Flow and Investments - Net cash provided by operating activities decreased to $1,279 million in 2025 from $1,370 million in 2024, reflecting a decline of 6.6%[18] - The company reported cash dividends paid of $937 million in the first nine months of 2025, compared to $883 million in the same period of 2024, indicating a 6.1% increase[19] - The company issued $2,000 million in notes during the first nine months of 2025, down from $3,000 million in 2024[19] - Net cash used in investing activities was $390 million in 2025, a decrease of 27.5% from $538 million in 2024[19] - The company repurchased common stock totaling $9 million in 2025, significantly lower than $1,105 million in 2024[19] Acquisitions and Strategic Investments - KDP entered into an acquisition agreement for JDE Peet's at a cash offer price of €31.85 per share, expected to close in the first half of 2026, pending regulatory approvals[31] - KDP completed the acquisition of Dyla for $98 million, with $69 million paid in cash and $3 million held in escrow, finalized in Q3 2025[33][34] - A strategic minority investment of $4 billion will be made into the Pod Manufacturing JV, with the investors acquiring a 49% interest[121] Debt and Financing - The Bridge Credit Agreement for the JDE Peet's acquisition provides a 364-day senior unsecured bridge loan facility of up to €16.2 billion, with €36 million in additional fees due if undrawn by December 22, 2025[42][43] - The 2025 Revolving Credit Agreement was amended to increase capacity to $4.3 billion, with no amounts outstanding as of September 30, 2025[46] - KDP maintained compliance with its minimum interest coverage ratio of 3.25 to 1.00 under the 2025 Revolving Credit Agreement as of September 30, 2025[49] Inventory and Operating Costs - Inventories increased to $1,840 million as of September 30, 2025, from $1,299 million at the end of 2024, reflecting a 42% rise[17] - Operating lease costs for Q3 2025 amounted to $46 million, up from $42 million in Q3 2024, reflecting an increase of 9.5%[79] - The total future minimum lease payments for operating leases as of September 30, 2025, are projected to be $1,091 million, while finance leases total $1,037 million[82] Tax and Compensation - The effective tax rate for the third quarter of 2025 was 22.3%, a decrease from 23.2% in the same quarter of 2024[100] - Stock-based compensation expense for the third quarter of 2025 was $25 million, slightly up from $24 million in Q3 2024[93] - As of September 30, 2025, there was $178 million of unrecognized compensation cost related to unvested RSUs expected to be recognized over a weighted average period of 3.0 years[95] Derivative Instruments and Risk Management - The company entered into FX forward contracts to manage anticipated Euro-denominated cash outflows related to the JDE Peet's Acquisition[65] - As of September 30, 2025, the notional amounts of outstanding derivative instruments include $2,300 million in interest rate contracts and $12,418 million in FX contracts, with a significant increase in FX forward contracts due to a planned acquisition[69] - The company expects to reclassify approximately $13 million of pre-tax net gains and $3 million of pre-tax net losses from AOCI into net income over the next twelve months related to interest rate and FX contracts, respectively[78]