Keurig Dr Pepper (KDP) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales rose 3.5% year-over-year to $3.92 billion, with double-digit international growth and solid U.S. Refreshment Beverages performance; net income up 2.4% to $515 million and diluted EPS up 5.6% to $0.38 per share.

• Adjusted operating income increased 11.0% to $970 million; adjusted EPS up 7.1% to $0.45.

• Company reaffirmed its fiscal 2024 guidance for mid-single-digit net sales growth and high-single-digit adjusted EPS growth, advancing strategic initiatives and innovation.

• Recent product innovations and partner growth contributed to market share gains.

• Key events included the agreement to acquire Kalil Bottling Company, CEO succession, and network optimization initiatives.

Financial highlights

• Q2 net sales grew 3.5% year-over-year to $3.92 billion; consolidated volume mix up 1.8%.

• Adjusted operating income rose 11.0% to $970 million; adjusted EPS increased 7.1% to $0.45.

• Gross margin improved to 55.4% (up 150 bps); adjusted gross margin at 56.1%.

• Free cash flow for Q2 was $543 million, with first-half free cash flow up 50% year-over-year.

• SG&A expenses rose 1.8% to $1,295 million, mainly due to higher personnel costs.

Outlook and guidance

• Fiscal 2024 guidance reaffirmed: mid-single-digit net sales growth and high-single-digit adjusted EPS growth on a constant currency basis.

• Expects net sales acceleration in the back half, driven by partnerships and innovation, not reliant on macro improvement.

• Back half EPS growth expected to moderate sequentially due to inflation and ongoing investments.

• Interest expense projected at $625–$645 million, tax rate at 22–23%, and 1.37 billion diluted shares.

• Management expects to remain on track with its long-term strategic agenda and cost efficiency initiatives.