Keurig Dr Pepper Inc. · NASDAQ:KDP
Keurig Dr Pepper — Q1 2024 Earnings Presentation
30 slides from Keurig Dr Pepper's earnings presentation, Apr 25, 2024
Slide 1: Q1 '24 Quarterly Results
Q1 ‘24 QUARTERLY RESULTS APRIL 25, 2024
Slide 2: Forward-looking statements
Forward-looking statements Certain statements contained herein are “forward-looking statements” within the meaning of applicable securities laws and regulations. These forward-looking statements include, but are not limited to, words such as “outlook,” “guidance,” “anticipate,” “expect,” “believe,”
Slide 3: Agenda
Agenda 1. Introduction 2. Business Update & Strategy Review 3. Financial Results & Outlook 3 Drink in the possibilities
Slide 4: Conference call participants
Conference call participants Bob Gamgort Tim Cofer Sudhanshu Jane Gelfand Chairman & Incoming CEO & Priyadarshi VP, Investor Relations & Chief Executive Officer Chief Operating Officer Strategic Initiatives Chief Financial Officer & President, International 4 Drink in the possibilities
Slide 5: Introduction
INTRODUCTION Bob Gamgort Chairman & Chief Executive Officer 5
Slide 6: In Q1, multiple initiatives to extend KDP's track record of success
In Q1, multiple initiatives to extend KDP’s track record of success STRONG START MULTI-YEAR $1B+ STRONG TO 2024 SINGLE SERVE VISION BUYBACK FOUNDATION FOR NEXT CHAPTER Q1 net sales at top end Unveiled reimagined Repurchased 38M Evolved strategy, and EPS above outlook, single serve system shares in Q
Slide 7: Successful CEO transition
Successful CEO transition Smooth and deliberate transition period began in Fall 2023 Tim Cofer appointed CEO and to join the Board of Directors effective April 26 Bob Gamgort to serve as KDP’s Executive Chairman 7 Drink in the possibilities
Slide 8: Business Update & Strategy Review
BUSINESS UPDATE & STRATEGY REVIEW Tim Cofer Incoming CEO & Chief Operating Officer 8
Slide 9: Evolved strategy to guide the next chapter of KDP
Evolved strategy to guide the next chapter of KDP OUR PURPOSE OUR VISION A beverage for every need, Drink Well. Do Good. anytime, anywhere OUR STRATEGIES Champion Shape our now and next Amplify our route to Dynamically allocate consumer-obsessed Generate fuel for growth beverage portfolio market adv
Slide 10: Q1 2024 highlights
Q1 2024 highlights Q1 constant-currency net sales growth accelerated sequentially to ~3% year-over-year Continued strong momentum in U.S. Refreshment Beverages and International Meaningful progress in U.S. Coffee, with improving volume and continued margin recovery Significant gross margin expansion
Slide 11: Q1 activity across each strategic pillar
Q1 activity across each strategic pillar Champion Consumer-Obsessed Brand Building • Early success in Canada Dry Fruit Splash launch, with strong incrementality • Developing Mexico non-alcohol category Shape our Now and Next Beverage Portfolio through Schweppes ready-to-drink mocktails • Distributio
Slide 12: U.S. Refreshment Beverages
Segment highlights U.S. Refreshment Healthy mid-single-digit net sales growth Beverages led by pricing, with innovation to ramp in Q2 Performance led by resilient CSD trends and expansion in energy and sports hydration Strong innovation slate to fully benefit 2H’24 • Canada Dry Fruit Splash • Dr Pep
Slide 13: U.S. Coffee
Segment highlights Meaningful sequential improvement in net sales, U.S. Coffee down low-single-digits with roughly flat volume/mix Pod shipment declines moderated to (1%), with modest improvement in at-home coffee category and building Keurig-specific momentum Market share trends accelerated for own
Slide 14: Keurig ecosystem continues to attract new partners
Keurig ecosystem continues to attract new partners Veteran-founded, mission-driven New York’s best-loved local “Shark Tank”-funded, Black and premium coffee company roasting company woman-owned premium coffee brand Leader in Canadian organic coffee Vertically integrated, super premium Global brand r
Slide 15: International
Segment highlights International Continued strong net sales momentum, with high-single-digit constant currency growth Broad-based momentum across categories & markets, led by cold beverages in Latin America and owned & licensed brands in Canada Multi-year partnership with the Toronto Blue Jays, for
Slide 16: Drink in the possibilities
Drink in the 16 possibilities
Slide 17: Financial Results & Outlook
FINANCIAL RESULTS & OUTLOOK Sudhanshu Priyadarshi Chief Financial Officer & President, International 17
Slide 18: Consolidated results
Consolidated results Net Sales ($ Billions) Adj. Operating Income ($ Millions) Adjusted EPS ($ per share) $825 $3.5 2.8% $0.38 YoY 17.5% 11.8% YoY YoY $3.4 $0.34 $699 Q1'23 Q1'24 Q1'23 Q1'24 Q1'23 Q1'24 20.8% 23.8% Adjusted OI Margin Financial metrics presented on an adjusted basis, with growth rate
Slide 19: U.S. Refreshment Beverages
U.S. Refreshment Beverages Q1 2024 Change Net Sales $2.1B 4.3% Adjusted Operating Income $622M 22.4% Adjusted Operating Margin 29.7% 4.4pts • Net sales grew 4.3%, led by 5.6% net price realization, partly offset by (1.3%) volume/mix • Q1 reflected later innovation timing in 2024 vs. 2023 • Operating
Slide 20: U.S. Coffee
U.S. Coffee Q1 2024 Change Net Sales $911M (2.1%) Adjusted Operating Income $289M 1.4% Adjusted Operating Margin 31.7% 1.1pts • Net sales declined (2.1%), driven by lower net pricing of (1.8%) and volume/mix of (0.3%) • Steady recovery in owned & licensed trends throughout Q1, with strong growth in
Slide 21: International
International Q1 2024 Change Net Sales $464M 7.0% Adjusted Operating Income $109M 25.0% Adjusted Operating Margin 23.5% 3.4pts • Net sales grew 7.0%, driven by strong volume/mix of 4.8% and net price realization of 2.2% • Healthy momentum across markets and categories • Operating income growth and m
Slide 22: Capital allocation priorities and year-to-date activity
Capital allocation priorities and year-to-date activity Invest for Growth Direct Shareholder Returns Direct shareholder returns of ~$1.4 billion • Regular quarterly dividend of $0.215 per share, up 7.5% year-over-year • Opportunistic repurchase of Internal Accretive Grow the Opportunistic ~38 millio
Slide 23: Fiscal 2024 Outlook
Fiscal 2024 Outlook Net Sales growth Mid-single-digit EPS growth High-single-digit Other Items Interest Expense $625-$645M Tax Rate 22-23% Share Count ~1.37B 23 Guidance is presented on an Adjusted basis. Drink in the possibilities
Slide 24: Drink in the possibilities
Drink in the 24 possibilities
Slide 25: Thank You
© ZlXeuri “¢€ DrPepper THANK YOU
Slide 26: Appendix
APPENDIX 26
Slide 27: Reconciliation of certain Non-GAAP information
Reconciliation of certain Non-GAAP information Income from Operating Gross profit Gross margin operations margin For the First Quarter of 2024 Reported $ 1,940 55.9 % $ 765 22.1 % Items Affecting Comparability: Mark to market (3) (19) Amortization of intangibles — 33 Stock compensation — 4 Restructu
Slide 28: Interest expense, net and income before provision for income taxes
Income before Diluted Interest Provision for Effective tax provision for Net income earnings per expense, net income taxes rate income taxes share For the First Quarter of 2024 Reported $ 178 $ 594 $ 140 23.6 % $ 454 $ 0.33 Items Affecting Comparability: Mark to market (35) 18 2 16 0.01 Amortization
Slide 29: Income from operations by segment reconciliation
U.S. Refreshment Unallocated U.S. Coffee International Total Beverages corporate costs For the First Quarter of 2024 Reported - Income from Operations $ 615 $ 248 $ 112 $ (210) $ 765 Items Affecting Comparability: Mark to market — — (6) (13) (19) Amortization of intangibles 5 25 3 — 33 Stock compens
Slide 30: Reported, foreign currency impact and constant currency
Reported Impact of Foreign Currency Constant Currency For the first quarter of 2024: Net sales U.S. Refreshment Beverages 4.3 % — % 4.3 % U.S. Coffee (2.1) — (2.1) International 11.8 (4.8) 7.0 Total net sales 3.4 (0.6) 2.8 Items Affecting Impact of Foreign Constant Currency Reported Adjusted Compara