Keurig Dr Pepper reports Q1 2026
Commenting on the results, Keurig Dr Pepper Inc.'s CEO Tim Cofer stated, "The year is off to a good start. We delivered a solid first quarter, with strong momentum in our cold beverage portfolio and coffee results that tracked with our expectations, even as we navigated elevated costs. Earlier this month, we also completed our acquisition of JDE Peet's, achieving a significant milestone in our transformation agenda and uniting our complementary organizations under a shared vision for global coffee leadership. With well-constructed plans in place, high-quality execution, and improving cost visibility as the year unfolds, we remain confident in our ability to deliver on our commitments while standing up two pure-play companies positioned for success."
First Quarter Consolidated Results
Net sales for the first quarter increased 9.4% to $4.0 billion. On a constant currency basis, net sales advanced 8.1%, driven by favourable net price realization of 5.5% and volume/mix growth of 2.6%.
GAAP operating income decreased 5.6% to $756 million, including an unfavourable year-over-year impact of items affecting comparability. Adjusted operating income decreased 1.9% to $838 million and totalled 21.1% of net sales. The adjusted operating income decline was primarily due to the impact of inflationary pressures and higher SG&A expenses, including increased marketing, partially offset by net sales growth and productivity savings.
GAAP net income decreased 47.8% to $270 million, or $0.20 per diluted share, including an unfavourable year-over-year impact of items affecting comparability, primarily due to transaction and acquisition-related costs. Adjusted net income decreased 6.9% to $534 million and Adjusted diluted EPS decreased 7.1% to $0.39, driven by the Adjusted operating income decline and the impact of lapping an investment gain in the prior year.
Operating cash flow for the first quarter was $281 million and free cash flow totalled $184 million.
Adjusted financial metrics presented in this release are non-GAAP, excluding items affecting comparability. Adjusted growth rates are non-GAAP, excluding items affecting comparability and presented on a constant currency basis. See reconciliations of GAAP results to Adjusted results on a constant currency basis in the accompanying tables. |
First Quarter Segment Results
U.S. Refreshment Beverages
Net sales for the first quarter increased 11.9% to $2.6 billion, driven by volume/mix growth of 7.2% and favourable net price realization of 4.7%.
GAAP operating income increased 10.2% to $721 million. Adjusted operating income increased 9.8% to $742 million and totalled 28.5% of net sales. GAAP and Adjusted operating income growth were driven by net sales growth and productivity savings, partially offset by the impact of inflationary pressures and higher SG&A expenses, including increased marketing.
U.S. Coffee
Net sales for the first quarter decreased 2.3% to $857 million. Volume/mix declined 8.2%, which more than offset favourable net price realization of 5.9%.
GAAP operating income decreased 20.8% to $160 million. Adjusted operating income decreased 21.3% to $199 million and totalled 23.2% of net sales. The Adjusted operating income decline was primarily due to the impact of cost pressures, the volume/mix decline, and increased marketing. These factors were partially offset by net price realization and productivity savings.
International
Net sales for the first quarter increased 19.5% to $520 million. On a constant currency basis, net sales increased 8.5%, driven by favourable net price realization of 9.2%, partially offset by a volume/mix decline of 0.7%.
GAAP operating income decreased 5.6% to $85 million, including a favorable year-over-year impact from currency translation. Adjusted operating income decreased 15.1% to $87 million and totalled 16.7% of net sales. The Adjusted operating income decline was primarily due to the impact of cost pressures, the volume/mix decline, and increased marketing. These factors were partially offset by net price realization and productivity savings.
2026 Guidance
The 2026 guidance provided below is presented on a constant currency, non-GAAP basis. The company does not provide reconciliations of such forward-looking non-GAAP measures to GAAP measures, due to the inability to predict the amount and timing of impacts outside of the company's control on certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of derivative instruments, among others, which could be material. Reconciling such items would require unreasonable efforts.
For 2026, KDP expects net sales of $25.9-$26.4 billion and constant currency Adjusted diluted EPS growth in a low-double-digit range. This guidance is comprised of 4-6% constant currency net sales growth and 4-6% constant currency Adjusted diluted EPS growth for KDP's legacy business, as well as an incremental contribution from the JDE Peet's acquisition. At current exchange rates, foreign currency translation is forecasted to approximate a one percentage point tailwind to 2026 full year net sales and EPS growth.