Keurig Dr Pepper — Q3 2026 Earnings Summary

Financial Performance:

• Net sales increased 70.6% year-over-year to $7.34 billion for the third quarter, and 53.9% to $18.63 billion year-to-date; on a constant currency basis, Q3 sales grew 70.1% and YTD sales grew 53.0%.
• Excluding the JDE Peet's acquisition, legacy KDP net sales increased 8.6% in Q3, driven by volume/mix growth of 6.5% and favorable net price realization of 2.1%.
• GAAP diluted EPS was $0.59 for Q3, up 20.4% year-over-year; Adjusted diluted EPS was $0.66, up 22.2% year-over-year.
• Year-to-date GAAP diluted EPS was $0.85, down 33.1% year-over-year; Adjusted diluted EPS was $1.65, up 13.1% year-over-year.
• GAAP operating income increased 34.0% to $1.3 billion in Q3; Adjusted operating income increased 52.5% to $1.7 billion, representing 22.7% of net sales.
• GAAP net income attributable to common shareholders increased 22.4% to $810 million in Q3; Adjusted net income increased 22.1% to $905 million.
• Operating cash flow for the quarter was $1.04 billion, and free cash flow totaled $1.01 billion.
• GAAP and Adjusted results included a $99 million benefit from tariff refunds.
• Interest expense, net, increased to $474 million in Q3 compared to $188 million in the prior year period.

Guidance and Future Outlook:

• The company reaffirmed its full-year 2026 guidance for net sales of $25.9–$26.4 billion.
• 2026 guidance includes approximately $8.3–$8.4 billion in net sales and a 7 to 8 percentage point EPS growth contribution from the JDE Peet's acquisition.
• The company expects 3–5% constant currency EPS growth for its legacy business, revised due to expectations for U.S. Coffee.
• Constant currency Adjusted diluted EPS growth for 2026 is expected to be in a low-double-digit range.
• Foreign currency translation is forecasted to provide approximately a 0.5 percentage point tailwind to 2026 full-year net sales and EPS growth.

Business Segments and Product Lines:

• U.S. Refreshment Beverages: Net sales increased 10.9% to $3.0 billion, driven by volume/mix growth of 7.2% and favorable net price realization of 3.7%. Adjusted operating income increased 8.3% to $884 million (29.1% margin).
• U.S. Coffee: Net sales increased 2.7% to $1.0 billion. Volume/mix growth of 6.9% was partially offset by unfavorable net price realization of 4.2%. Adjusted operating income increased 11.4% to $353 million (34.7% margin), driven by tariff refunds, volume/mix, productivity savings, and cost synergies.
• JDE Peet's: Net sales were $2.6 billion in Q3. GAAP operating income was $289 million; Adjusted operating income was $480 million (18.1% margin). The acquisition closed on April 1, making the segment contribution wholly incremental year-over-year.
• KDP International: Net sales increased 11.0% to $644 million (7.6% on a constant currency basis), driven by favorable net price realization of 5.7% and volume/mix growth of 1.9%. Adjusted operating income declined 0.6% to $160 million (24.8% margin) due to cost pressures, including the Mexico beverage tax, and increased marketing.

Market and Competitive Landscape:

• The refreshment beverages portfolio maintained double-digit sales growth momentum.
• The coffee business delivered solid results, led by strong JDE Peet's profitability.
• The company noted inflationary pressures impacting costs, partially offset by productivity savings and price realization.

Risks and Challenges:

• Risks include global economic uncertainty, tariffs, trade wars, geopolitical disturbances, and sanctions.
• Risks related to the completion of the separation of beverage and coffee portfolios in the anticipated timeframe.
• Risks associated with the acquisition of JDE Peet's, including integration difficulties, debt incurrence, and potential credit rating downgrades.
• Risks include negative impacts on business relationships, litigation, regulatory actions, and the potential for significant separation costs.
• The company noted unfavorable year-over-year impacts from items affecting comparability, primarily acquisition and integration-related costs.

Management Commentary and Tone:

• CEO Tim Cofer stated the company is pleased with third-quarter results featuring meaningful net sales and EPS growth alongside healthy free cash flow.
• Management noted they are on track to deliver 2026 financial commitments and remain focused on achieving milestones to enable the planned separation.
• The tone was confident regarding the portfolio's momentum and the integration of JDE Peet's.

Other Key Points:

• The JDE Peet's acquisition closed on April 1, 2026.
• The company issued convertible preferred stock and non-controlling interest proceeds as part of financing arrangements for the JDE Peet's acquisition.
• Cash dividends paid to common shareholders were $938 million for the first nine months of 2026.
• Cash dividends paid to Preferred Investors were $107 million for the first nine months of 2026.
• The company reported a $400 million gain on the sale of an equity method investment in the third quarter.
• The balance sheet shows total assets of $86.872 billion as of September 30, 2026, compared to $55.459 billion as of December 31, 2025.
• Long-term obligations increased to $21.595 billion as of September 30, 2026, from $13.036 billion as of December 31, 2025.