Core Insights - Keurig Dr Pepper Inc. (KDP) is experiencing growth driven by brand strength, pricing strategies, and product innovation [1][9] - The company is focusing on expanding its portfolio to achieve growth, particularly in the International and U.S. Refreshment Beverages segments [1][3] Growth and Performance - KDP's growth is attributed to a strategic combination of innovation, brand activity, and effective commercial execution, alongside a commitment to cost efficiency and disciplined capital management [2] - The Refreshment Beverages segment has shown continued strength, supported by robust sales, a favorable product mix, and contributions from Electrolit [3][9] - KDP's consumer-focused innovation model and strong household penetration are enhancing its market share in key categories such as liquid refreshment beverages and K-Cup pods [3] Portfolio and Market Position - The company is enhancing its portfolio by focusing on faster-growing categories like energy, sports hydration, and functional beverages [4] - KDP's multi-brand energy platform, including GHOST, C4, and Bloom, has outperformed the broader energy category, with market share increasing by nearly 1.5 points [4] - The integration of GHOST into KDP's distribution network has improved distribution and shelf presence, while Bloom is attracting new consumers, particularly in health-conscious segments [4] Financial Performance and Estimates - KDP's stock has increased by 2.4% over the past six months, compared to the industry's growth of 10.8% [7] - The company trades at a forward price-to-earnings ratio of 11.29X, significantly lower than the industry average of 18.21X [8] - The Zacks Consensus Estimate for KDP's earnings per share (EPS) indicates a year-over-year increase of 10.7% for 2026 and 10.4% for 2027, with estimates having risen in the past 30 days [10]

Core Insights - Keurig Dr Pepper Inc. (KDP) shows that its U.S. Refreshment Beverages segment is the main driver of its growth narrative, with strong performance in carbonated soft drinks, energy, and sports hydration [1][3] Financial Performance - In Q4 2025, U.S. Refreshment Beverages sales increased by 11.5% year over year to $2.7 billion, supported by a 4.5% rise in net price realization and a 7% growth in volume/mix [2][8] - Segment operating income rose by 8.7%, driven by strong performance in core CSD brands, energy brands GHOST and C4, and significant gains in sports hydration led by Electrolit [2][8] Future Outlook - The refreshment unit is well-positioned to maintain momentum through continued innovation, expanded cold-vault presence, and distribution gains, particularly in convenience channels [3] - Consumer demand remains strong across key categories, and pricing elasticity is manageable, supporting both current earnings stability and long-term growth [3] Strategic Model - KDP's flexible build, buy, and partner model enhances the segment's long-term outlook, allowing for rapid scaling of emerging brands and faster commercialization through its direct store delivery network [4] - The focus on energy and hydration aligns with KDP's strategy to diversify revenue streams and improve margin resilience over time [4] Competitive Landscape - PepsiCo (PEP) maintains a balanced beverage and convenient foods portfolio, enhancing margin durability through global distribution and disciplined cost management [5] - Monster Beverage Corporation (MNST) focuses on the energy category, benefiting from strong brand equity and expanding distribution partnerships, despite input cost volatility [6] - The Coca-Cola Company (KO) leverages its global scale and brand strength, driving growth through zero-sugar innovation and premiumization, while facing macroeconomic volatility [7]

Core Insights - Keurig Dr Pepper Inc. (KDP) reported strong fourth-quarter 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year improvement [1][2] Financial Performance - KDP's net sales reached $4.5 billion, a 10.5% increase year over year, surpassing the Zacks Consensus Estimate of $4.36 billion. On a constant currency basis, net sales increased by 9.9%, driven by a 3.9% gain in volume/mix and a 6% benefit from favorable net pricing [4] - Adjusted earnings per share (EPS) were 60 cents, reflecting a 1.7% year-over-year growth and exceeding consensus estimates by a penny. This improvement was attributed to higher adjusted operating income, despite a slightly higher tax rate and increased interest expense [5] - Adjusted gross profit rose 7.7% year over year to $2.47 billion, while the adjusted gross margin decreased by 140 basis points to 54.9% [5] Segment Performance - In the U.S. Refreshment Beverages segment, net sales increased 11.5% year over year to $2.7 billion, supported by a 7% rise in volume/mix and a 4.5% benefit from favorable net pricing. The acquisition of GHOST contributed 6.2 percentage points to this growth [7] - Adjusted operating income for the U.S. Refreshment Beverages segment rose 8.7% year over year to $841 million, representing 30.9% of net sales [8] - The U.S. Coffee segment saw net sales increase by 3.9% year over year to $1.2 billion, primarily driven by K-Cup sales, despite a 4.1% decline in volume/mix [9] - Adjusted operating income in the U.S. Coffee segment fell 8.8% year over year to $364 million, or 31% of net sales, due to inflationary pressures and decreased volume/mix [10] - The International segment's net sales increased 21% year over year to $604 million, with a 9.2% benefit from favorable net pricing and a 6.8% increase in volume/mix [12] - Adjusted operating income for the International segment increased 20% to $163 million, representing 27% of net sales [13] Financial Health - As of December 31, 2025, KDP had cash and cash equivalents of $1,026 million, long-term obligations of $13.03 billion, and total stockholders' equity of $25.5 billion. Net cash provided by operating activities totaled $1.99 billion, with free cash flow amounting to $1.52 billion [14] 2026 Outlook - For 2026, KDP expects constant currency net sales in the range of $25.9 billion to $26.4 billion, with low-double-digit EPS growth anticipated. This outlook assumes 4-6% growth in both net sales and adjusted earnings, along with contributions from the JDE Peet's acquisition [15][16]

Financial Data and Key Metrics Changes - In 2025, net sales increased by almost 9%, driven by approximately 5 percentage points of growth from the base business and nearly 4 points from GHOST contributions [8][9] - EPS grew by 7% for the year, with Q4 EPS growth at 2% [9][28] - Gross margin contracted by 150 basis points due to elevated inflationary pressures, partially offset by net price realization and productivity savings [28] Business Line Data and Key Metrics Changes - U.S. Refreshment Beverages was the standout performer, delivering double-digit net sales growth and high single-digit operating income growth [9][29] - U.S. Coffee segment revenue increased by 4%, but operating income declined at a high-single-digit rate due to cost pressures [16][31] - International segment saw mid-teens constant currency net sales growth and 20% operating income growth, driven by strong performance in Mexico and Canada [20][22] Market Data and Key Metrics Changes - The carbonated soft drink category remains strong, with Dr. Pepper gaining market share for the ninth consecutive year [9][12] - The multi-branded energy platform, including C4 and GHOST, outperformed the category, with market share increasing nearly 1.5 points [14] - The coffee category trends remain resilient, with the Keurig compatible pod category growing retail dollars at a mid-single-digit rate [16] Company Strategy and Development Direction - The company is focused on three objectives for 2026: delivering low double-digit full-year EPS growth, closing and integrating JDE Peet's, and establishing two standalone businesses [6][25] - The acquisition of JDE Peet's is expected to close in early April, with significant progress made on integration planning [7][8] - The company plans to deploy a flexible build-by-partner model to expand into additional white space areas over time [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit EPS growth in 2026, despite anticipated cost pressures in the first half of the year [20][37] - The company is navigating a dynamic operating environment while laying the groundwork for long-term success [5][6] - Management acknowledged that the coffee segment will face year-over-year cost headwinds, particularly in Q1, but expects improvement in the second half of 2026 [31][66] Other Important Information - The company reported free cash flow of $1,519 million in 2025, with expectations to increase to approximately $2 billion in 2026 [34] - The financing structure for the JDE Peet's acquisition has been refined, with an increase in the convertible preferred equity raise to $4.5 billion [35] - The board is evolving with new independent directors being added to support the company's transformation [41][43] Q&A Session Summary Question: Top line performance for standalone KDP - Management expects low double-digit EPS growth on a combined basis, with KDP standalone guidance of 4%-6% top line growth [47] Question: Existing KDP debt allocation - Existing KDP debt will stay with Beverage Company, while Coffee Co. will assume $5 billion of existing JDVP debt [54] Question: Energy category growth - Management believes the energy category has multiple structural growth drivers and expects to gain shelf space relative to other LRBs [56][57] Question: Coffee business commodity headwinds - Year-over-year cost headwinds are expected to be most impactful in Q1, with relief anticipated in the latter part of the year [63][66] Question: Free cash flow thoughts for 2026 - Free cash flow is expected to increase significantly post-acquisition, with a focus on generating cash flow for deleveraging [34]

Financial Data and Key Metrics Changes - In 2025, net sales increased by almost 9%, with approximately 5 percentage points of growth from the base business and nearly 4 points from GHOST contributions [6][25] - EPS grew by 7%, while Q4 EPS increased by 2% [6][25] - For the full year, net sales grew 8.6%, operating income increased by 4.9%, and EPS rose by 7.3% on a constant currency basis [25] Business Line Data and Key Metrics Changes - U.S. Refreshment Beverages saw double-digit net sales growth and high single-digit operating income growth [6][26] - U.S. Coffee segment revenue increased by 4%, but operating income declined at a high single-digit rate due to cost pressures [13][29] - International segment delivered mid-teens constant currency net sales growth and 20% operating income growth, driven by strong performance in Mexico and Canada [18][30] Market Data and Key Metrics Changes - The U.S. retail sales growth among top food and beverage manufacturers was the fastest for KDP, with market share gains across its portfolio [3] - The carbonated soft drink category remains strong, with KDP gaining market share in Dr Pepper for the ninth consecutive year [6][9] - The energy drink category is expected to continue growing, with KDP's multi-branded energy platform increasing market share by nearly 1.5 points [11][54] Company Strategy and Development Direction - KDP is focused on three objectives for 2026: delivering low double-digit EPS growth, integrating JDE Peet's, and establishing two standalone businesses [4][22] - The company is advancing its operational readiness for separation by the end of 2026 and capturing initial deal-related synergies [5][22] - KDP plans to enhance its portfolio through innovation, including new product launches in refreshment beverages and coffee [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit EPS growth despite cost pressures and inflation [4][34] - The company anticipates that cost headwinds will peak in Q1 2026 before easing, allowing for improved performance in the latter half of the year [30][60] - Management highlighted the importance of innovation and marketing investments to support long-term growth [16][70] Other Important Information - The company reported free cash flow of $1.519 billion in 2025, with expectations to increase to approximately $2 billion in 2026 [32] - KDP is refining its financing structure for the JDE Peet's acquisition, increasing the size of its convertible preferred equity raise to $4.5 billion [32][33] - The board is evolving with new independent directors and a focus on establishing strong governance for the future standalone companies [38][39] Q&A Session Summary Question: Top line performance for standalone KDP and contribution from U.S. Refreshment business - Management expects low double-digit EPS growth on a combined basis, with KDP standalone guidance of 4%-6% top line growth driven by U.S. Refreshment Beverages [45][46] Question: Existing KDP debt allocation across Future Bev versus Coffee Co - Existing KDP debt will remain with Beverage Company, while Global Coffee Co. will assume new debt related to the JDE Peet's acquisition [51][52] Question: Commodity headwinds in the coffee business - Year-over-year cost headwinds are expected to be most impactful in Q1, with relief anticipated in the latter part of the year [59][60] Question: Organic sales growth in the first quarter - Management anticipates some pressure in Q1 due to retail inventory adjustments, but expects good visibility for EPS growth in Q2 and acceleration in the back half [66][68] Question: Strategy on partner brands and willingness to add more brands - KDP aims for a balanced approach between core brand growth and partnerships, with flexibility to capture white space opportunities through buy, build, or partner strategies [70]

Financial Data and Key Metrics Changes - In 2025, net sales increased by almost 9%, driven by approximately 5 percentage points of growth from the base business and nearly 4 points from GHOST contributions [8] - EPS grew by 7% for the year, with Q4 EPS growth at 2% [9][28] - Gross margin contracted by 150 basis points due to elevated inflationary pressures, partially offset by net price realization and productivity savings [28] Business Line Data and Key Metrics Changes - U.S. Refreshment Beverages was the standout performer, delivering double-digit net sales growth and high single-digit operating income growth [9] - U.S. Coffee segment revenue increased by 4%, but operating income declined at a high-single-digit rate due to cost pressures [16][31] - International segment saw mid-teens constant currency net sales growth and 20% operating income growth, driven by strong performance in Mexico and Canada [20][32] Market Data and Key Metrics Changes - The carbonated soft drink category remains strong, with KDP gaining market share in Dr Pepper for the ninth consecutive year [9] - The multi-branded energy platform, including C4, GHOST, Bloom, and Black Rifle, outperformed the category, with market share increasing nearly 1.5 points [14] - The coffee category trends remain resilient, with the Keurig compatible pod category growing retail dollars at a mid-single-digit rate in Q4 [16] Company Strategy and Development Direction - KDP is focused on three objectives for 2026: delivering low double-digit full-year EPS growth, closing and integrating JDE Peet's, and establishing two standalone businesses [6][25] - The company is advancing work streams to capture initial deal-related synergies and appoint independent leadership teams for the two new companies [8] - KDP plans to leverage its flexible build-by-partner model to expand into additional white space areas over time [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit EPS growth in 2026, despite anticipated cost pressures in the first half of the year [20][37] - The company is navigating a dynamic operating environment while laying the groundwork for long-term success through strategic investments [5][19] - Management acknowledged that while Q4 was softer for U.S. Coffee, they are investing to position the business for long-term success [16][66] Other Important Information - The company reported free cash flow of $1,519 million in 2025, with expectations to increase to approximately $2 billion in 2026 [34] - KDP is refining its financing structure for the JDE Peet's acquisition, increasing the size of its convertible preferred equity raise to $4.5 billion [35] - The board is evolving with new independent directors and a restructuring of committees to align with best practices [41][43] Q&A Session Summary Question: Top line performance for standalone KDP - Management expects low double-digit EPS growth on a combined basis, with KDP standalone guidance of 4%-6% top line growth [47] Question: Existing KDP debt allocation - Existing KDP debt will stay with Beverage Company, while Coffee Co. will assume $5 billion of existing JDE Peet's debt [54] Question: Energy category growth - Management believes the energy category has multiple structural growth drivers and expects to gain shelf space relative to other LRBs [56] Question: Coffee business commodity headwinds - Cost headwinds are expected to be most impactful in Q1, with relief anticipated in the latter part of the year [63] Question: Free cash flow thoughts for 2026 - Management expects standalone KDP free cash flow to increase in 2026 to approximately $2 billion [34]

Financial Data and Key Metrics Changes - In 2025, net sales increased by almost 9%, with approximately 5 percentage points of growth from the base business and nearly 4 points from GHOST contributions [5] - EPS grew by 7%, while Q4 EPS increased by 2% despite cost pressures and higher reinvestment spending [5][25] - For the full year, net sales grew by 8.6%, operating income by 4.9%, and EPS by 7.3% on a constant currency basis [25] Business Line Data and Key Metrics Changes - U.S. Refreshment Beverages saw double-digit net sales growth and high single-digit operating income growth, with net sales growing 11.5% in Q4 [5][26] - U.S. Coffee segment revenue increased by 4%, but operating income declined at a high single-digit rate due to cost pressures [12][28] - International segment delivered mid-teens constant currency net sales growth and 20% operating income growth, driven by strong performance in Mexico and Canada [17][30] Market Data and Key Metrics Changes - The U.S. Refreshment Beverages market showed strong performance, with market share gains in key brands like Dr Pepper [5][11] - The energy drinks category grew significantly, with KDP's multi-branded energy platform gaining nearly 1.5 points in market share [11] - The coffee category remained resilient, with the Keurig compatible pod category growing retail dollars at a mid-single-digit rate [12] Company Strategy and Development Direction - KDP is focused on three objectives for 2026: delivering low double-digit EPS growth, integrating JDE Peet's, and establishing two standalone businesses [2][3] - The company is advancing its operational readiness for separation into Beverage Co. and Global Coffee Co. by the end of 2026 [4] - Significant investments are planned in marketing and innovation to support long-term growth, particularly in the coffee segment [30][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit EPS growth despite anticipated cost pressures in the first half of 2026 [34][36] - The company expects to navigate through inflationary pressures and retailer inventory adjustments, with a positive outlook for the second half of 2026 [36][66] - Management highlighted the importance of innovation and marketing investments to sustain growth across all segments [22][68] Other Important Information - The company reported free cash flow of $1.519 billion in 2025, with expectations to increase to approximately $2 billion in 2026 [32] - KDP is refining its financing structure for the JDE Peet's acquisition, including an increase in convertible preferred equity and a finalized Pod Manufacturing JV [32][33] - The board is evolving with new independent directors and a new governance structure to support the company's transformation [38][39] Q&A Session Summary Question: Can you provide context on the top line performance for standalone KDP, specifically regarding U.S. Refreshment? - Management expects low double-digit EPS growth on a combined basis, with U.S. Refreshment being a significant driver of growth [45] Question: What are the assumptions for the JDE Peet's business within the EPS contribution for 2026? - The guidance includes $8.5 billion-$8.7 billion of incremental revenue from JDE Peet's, contributing 6-7 percentage points to EPS [47] Question: How will existing KDP debt be allocated across Future Beverage and Coffee Co.? - Existing KDP debt will remain with Beverage Company, while Global Coffee Co. will assume new debt related to the acquisition [51] Question: What are the pricing plans in the coffee segment given commodity headwinds? - Management anticipates cost headwinds to peak in Q1, with pricing strategies focused on sustainable volume and mix-led growth [60] Question: How do you see organic sales growth in Q1 in the context of full year guidance? - There will be some pressure in Q1 due to retail inventory adjustments, but visibility for EPS growth in Q2 is strong [66]

Financial Data and Key Metrics Changes - In 2025, net sales increased by almost 9%, driven by approximately 5 points of growth from the base business and nearly 4 points from GHOST contributions [7] - EPS grew by 7% for the year, with Q4 EPS growth at 2% [8][10] - Gross margin contracted by 150 basis points due to elevated inflationary pressures, partially offset by net price realization and productivity savings [27] Business Line Data and Key Metrics Changes - U.S. Refreshment Beverages was the standout performer, delivering double-digit net sales growth and high single-digit operating income growth [8] - U.S. Coffee segment revenue increased by 4%, but operating income declined at a high-single-digit rate due to cost pressures [14][31] - International segment saw mid-teens constant currency net sales growth and 20% operating income growth, driven by strong performance in Mexico and Canada [19][32] Market Data and Key Metrics Changes - The carbonated soft drink category remains strong, with KDP gaining market share in Dr. Pepper for the ninth consecutive year [8] - The multi-branded energy platform, including C4 and GHOST, outperformed the category, with market share increasing nearly 1.5 points [12] - The coffee category trends remain resilient, with the Keurig compatible pod category growing retail dollars at a mid-single-digit rate [15] Company Strategy and Development Direction - KDP is focused on three objectives for 2026: delivering low double-digit full-year EPS growth, closing and integrating JDE Peet's, and establishing two standalone businesses [5][24] - The company is advancing work streams to capture initial deal-related synergies and appoint independent leadership teams for the two new companies [6] - KDP plans to leverage its flexible build-by partner model to expand into additional white space areas over time [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low double-digit EPS growth in 2026, despite anticipated cost pressures in the first half of the year [19][36] - The company expects to navigate through inflationary pressures while investing in long-term growth initiatives [16][61] - Management acknowledged that Q1 EPS may be under pressure due to cost headwinds and retailer inventory adjustments, but expects improvement in the second half of the year [38][66] Other Important Information - The company announced a refined financing structure for the JDE Peet's acquisition, increasing the size of the convertible preferred equity raise to $4.5 billion [34] - KDP's free cash flow for 2025 was $1,519 million, with expectations to increase to approximately $2 billion in 2026 [33] - The board is evolving with new independent directors and a new chair to support the company's transformation [40][41] Q&A Session Summary Question: Can you provide context on the top line performance for standalone KDP? - Management expects low double-digit EPS growth, with KDP standalone guidance of 4%-6% top line growth driven by U.S. Refreshment Beverages [45][46] Question: What are the assumptions for the JDE Peet's business in 2026? - The guidance includes $8.5 billion-$8.7 billion of incremental revenue from JDE Peet's, contributing to a 6-7 percentage point EPS benefit [46][47] Question: How will existing KDP debt be allocated across the future Beverage Co. and Coffee Co.? - Existing KDP debt will remain with Beverage Co., while Coffee Co. will assume new debt related to the acquisition [50][51] Question: What is the outlook for the energy category? - Management is optimistic about the energy category's growth, expecting continued distribution expansion and household penetration gains [52][54] Question: When should we expect relief from commodity headwinds in the coffee business? - Cost headwinds are expected to peak in Q1, with improvements anticipated in the second half of 2026 [58][61] Question: What is the strategy regarding partner brands during the transition? - KDP aims to maintain a balance between core brand growth and partnerships, leveraging a flexible buy-build partner model to capture growth opportunities [67]

Q4 and FY 2025 Results February 24, 2026 1 Forward looking statements Certain statements in this Presentation (this "Presentation") of Keurig Dr Pepper Inc. (the "Company" or "KDP"), including statements relating to the Company's contemplated acquisition (the "Acquisition") of JDE Peet's, N.V. ("JDE Peet's"), the structured manufacturing JV with Apollo Management Holdings, L.P. (together with its affiliates, "Apollo") as the lead investor, in partnership with Kohlberg Kravis Roberts & Co., L.P. (together wi ...

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