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 majority stake in GHOST, a fast-growing energy brand with ~$500M annual sales, for $990 million, with full ownership planned by 2028.

• Increased annualized dividend rate by 7% to $0.92 per share, effective with the September 2024 dividend.

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

Financial highlights

• Q3 2024 net sales: $3.9B, up 3.1% year-over-year on a constant currency basis; gross margin 55.0% (GAAP), 56.0% (adjusted).

• Adjusted operating income rose 7.5% to $1.05B, representing 27.0% of net sales; adjusted EPS up 6.3%.

• Free cash flow exceeded $500M in Q3, supporting capital allocation priorities.

• U.S. Refreshment Beverages net sales up 5.3%; U.S. Coffee net sales down 3.6%; International net sales up 6.5% (constant currency).

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

Outlook and guidance

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

• Q4 expected to see improved net price realization and continued partnership contributions, though margin progress may pause due to inflation.

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

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

• 2025 outlook balanced; strategic progress in 2024 expected to provide long-term benefits.