Keurig Dr Pepper (KDP) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 2.3% to $3.89B, with constant currency growth of 3.1% year-over-year, led by U.S. Refreshment Beverages and international gains.

• Adjusted diluted EPS grew 6.3% to $0.51, and GAAP diluted EPS increased 21.6% to $0.45 compared to Q3 2023.

• Announced acquisition of a 60% stake in GHOST for $990 million, enhancing presence in the energy drink category, with full ownership planned by 2028.

• Increased annualized dividend rate by 7% to $0.92 per share, marking the fourth consecutive annual raise.

• Progressed on strategic pillars: brand building, portfolio evolution, and route-to-market expansion.

Financial highlights

• Q3 2024 net sales: $3.9B, up 3.1% year-over-year on a constant currency basis; volume/mix up 3.5%.

• Adjusted operating income rose 7.5% to $1.05B; adjusted operating margin expanded to 27.0% from 25.9% in Q3 2023.

• Free cash flow exceeded $500M in Q3, with improved conversion and operating cash flow of $628M.

• Gross margin for Q3 was 55.0% (GAAP) and 56.0% (adjusted); operating margin up 110 basis points.

• Interest expense fell 55.3% year-over-year to $106M, supporting net income growth.

Outlook and guidance

• Reaffirmed 2024 guidance: mid-single-digit constant currency net sales growth and high-single-digit adjusted EPS growth.

• Q4 focus on top-line growth, improved pricing, and partnership contributions; margin progress to pause due to inflation.

• Interest expense expected at $615–$625M; tax rate at 22–23%; share count ~1.37B.

• Management expects continued growth through innovation, productivity, and strategic acquisitions, with sufficient liquidity.

• 2025 outlook balanced; official guidance to be provided next cycle.