In This Article:
Keurig Dr Pepper Inc. KDP has reported third-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year. Results gained from continued brand strength and significant pricing.
Shares of KDP have declined 13.8% in the past three months against the industry’s 9.2% rise.
Q3 in Detail
Adjusted earnings of 48 cents per share grew 4.3% year over year and came above the Zacks Consensus Estimate of adjusted earnings of 47 cents per share.
Keurig Dr Pepper, Inc Price, Consensus and EPS Surprise
Keurig Dr Pepper, Inc price-consensus-eps-surprise-chart | Keurig Dr Pepper, Inc Quote
Net sales of $3,805 million beat the consensus estimate of $3,776 million. Also, the reported figure jumped 5.1% from the year-ago quarter on a reported basis and increased 4.1% on a constant-currency (cc) basis. Net price realization grew 5.5%, with a lower volume/mix of 1.4%. Continued strength in the company's brand portfolio and in-market execution, along with elasticity across most categories, aided revenues.
In the reported quarter, Keurig Dr Pepper’s in-market performance in the Liquid Refreshment Beverages category remained sturdy, with retail dollar consumption growing 7% and market share expanding roughly 82% of KDP's cold beverage portfolio. This mainly reflected strength in Dr Pepper and Squirt in CSDs3, Polar in unsweetened sparkling water, Vita Coco, C4 Energy and Mott's apple juice.
U.S. retail dollar consumption of manufactured pods dipped 7% in Iri-tracked channels during the reported quarter, while KDP Manufactured shares were healthy at about 79%.
Adjusted gross profit rose 0037% year over year to $2,123 million. The adjusted gross margin advanced 100 basis points year over year to 55.8% on a reported basis. We had expected an adjusted gross margin of 54.3% for the quarter under discussion.
Adjusted operating income rose 3.9% to $984 million in the quarter. Meanwhile, the adjusted operating margin contracted 20 basis points to 25.9%.
Segmental Details
Sales in the U.S. Coffee segment declined 3.2% year over year to $1,012 million, reflecting net price realization of 3.1% and lower volume/mix of 6.3%. Further, pod revenues fell 4.8%, including a shipment drop of 8.1%. Our estimate for sales from this segment was $1,052.6 million in the quarter. Brewer shipments totaled 10.2 million in the 12 months ending Sep 30, 2023, representing a 4.5% decline year over year.
Sales in the U.S. Refreshment Beverages segment totaled $2,270 million, up 5.9% year over year, reflecting higher net price realization of 7.1% and a modest drop in volume/mix of 1.2%. The results were driven by resilient category trends, market share gains, and the contribution from KDP's sales and distribution partnership with Nutrabolt for C4 Energy. In the quarter, we had expected sales to be $2,245.6 million from the segment.
Sales in the International segment rose 20.8% year over year to $523 million, gaining from a favorable net price realization of 3.9% and a volume/mix rise of 9%. At cc, the segment’s net sales increased 12.9%. Also, solid momentum in Mexico and Canada aided the results. Our estimate for sales from this segment was $460.9 million in the quarter.