Keurig Q3 Earnings In Line With Estimates, Stock Down on Sales Miss

Core Insights - Keurig Dr Pepper Inc. (KDP) reported third-quarter 2024 results with earnings per share of 51 cents, in line with estimates, while sales of $3.89 billion missed expectations [1][2] - The company experienced year-over-year growth in both adjusted earnings and sales, driven by strong performance in the International and U.S. Refreshment Beverages segments [1][2] Financial Performance - Adjusted earnings per share grew 6.3% year over year, supported by increased adjusted operating income and a reduced share count, despite higher interest expenses [1] - Net sales increased 2.3% year over year but fell short of the Zacks Consensus Estimate, with a constant-currency improvement of 3.1% [2] - Adjusted gross profit rose 2.5% to $2.18 billion, with an adjusted gross margin expansion of 20 basis points to 56% [3] - Adjusted operating income increased 7.5% to $1.05 billion, with an adjusted operating margin expanding 110 basis points to 27% [3] Segment Performance - U.S. Refreshment Beverages segment sales reached $2.39 billion, up 5.3% year over year, driven by a 4% growth in volume/mix [4] - U.S. Coffee segment sales declined 3.6% to $976 million, with a volume/mix improvement of 2.7% offset by a 6.3% unfavorable net price realization [5] - International segment sales increased 0.4% to $525 million, with a constant-currency growth of 6.5% [5] Financial Health - As of September 30, 2024, KDP had cash and cash equivalents of $552 million, long-term obligations of $12.4 billion, and total stockholders' equity of $25 billion [6] - Net cash provided by operating activities for the first nine months of 2024 was $1.4 billion, with free cash flow amounting to $973 million [6] Forward Outlook - KDP reaffirmed its fiscal 2024 guidance, expecting mid-single digits constant-currency net sales growth and high single digits adjusted earnings per share growth [7]