Keurig Dr Pepper Inc. (KDP) Earnings

Keurig Dr Pepper Inc.

KDP · Nasdaq

Symbol: KDP
Type: Stock
Sector: Consumer Staples
Industry: Beverages
Exchange: Nasdaq

Keurig Dr Pepper (Nasdaq: KDP) is a leading beverage company with more than 150 owned, licensed and partner brands that meet a wide range of needs and occasions. Our North American refreshment beverage business holds leadership positions across carbonated soft drinks, water, juice and mixers with a portfolio of iconic brands such as Dr Pepper, Canada Dry, Mott's, A&W, Penafiel, GHOST, 7UP, Snapple, Clamato and Core Hydration. Our global coffee business spans more than 100 markets and includes the leading Keurig single serve brewing system in the U.S. and Canada, along with powerhouse brands such as Peet's, L'OR and Jacobs, and other regional coffee leaders. Our more than 50,000 employees aim to enhance the experience of every beverage and coffee occasion while making a positive impact for people, communities, and the planet. Learn more at www.keurigdrpepper.com and follow us @KeurigDrPepper on LinkedIn and Instagram.

Key Issues

Bullish view

Pricing is expected to support second-quarter performance, while margin discipline could help protect profitability despite a difficult cost environment.

Bearish view

Inflation and tariff pressures could absorb pricing benefits, limiting margin expansion and weakening earnings quality.

Analyst Consensus

See all

Buy

17 analysts

$32

Current

—

Low

$38

Average

—

High

Average target implies +18.75% versus the current price.

Earnings History

BeatMissNo estimate

Sep 2026upcoming

Next quarter

Reports Oct 26, 2026.

Consensus is $0.64 EPS for Sep 2026 across 6 estimates, ranging $0.61 to $0.72.

KDP Jun 2026

Reported Aug 6, 2026 · before the open

: 3.64%

: $0.55
: $0.57
: —
: $7.31B

Reported results

: $7.31B; from $4.16B
: 41.95%; from 54.17%
: $628.00M; from $898.00M
: 8.59%; from 21.57%
: $142.00M; from $547.00M
: $0.04; from $0.40

Highlights

EPS beat: Adjusted diluted EPS was $0.57, up 16.3% year over year and ahead of the $0.55 consensus estimate by 3.64%; GAAP diluted EPS was $0.04 versus $0.40 a year ago and $0.20 in Q1.
Acquisition-led sales: Net sales rose 75.6% to $7.31 billion, including $2.80 billion from JDE Peet’s, which was acquired on April 1; legacy KDP sales increased 7.3%, led by 4.2% price realization and 3.1% volume/mix growth.
Adjusted profitability: Adjusted operating income increased 42.9% to $1.48 billion, or 20.2% of sales, despite inflation and higher SG&A; GAAP operating income fell 30.1% to $628 million because of acquisition-related costs and other comparability items.
Refreshment strength: U.S. Refreshment Beverages sales increased 10.0% to $2.93 billion, with 6.5% volume/mix growth and 3.5% pricing; adjusted operating income rose 11.9% to $874 million, with a 29.9% margin.
Coffee divergence: JDE Peet’s contributed $2.80 billion of sales and $414 million of adjusted operating income, while U.S. Coffee sales fell 3.2% to $918 million and adjusted operating income declined 24.7% to $225 million.
International improvement: KDP International sales grew 12.4% on a constant-currency basis to $664 million, driven by 6.5% volume/mix and 5.9% pricing; adjusted operating income was $155 million, flat year over year.
Cash generation: Second-quarter operating cash flow was $895 million and free cash flow was $714 million; first-half free cash flow reached $898 million versus $427 million a year earlier.
Guidance maintained: KDP reaffirmed 2026 sales guidance of $25.9-$26.4 billion and constant-currency adjusted EPS growth in a low-double-digit range, while targeting a year-end pro forma management leverage ratio of approximately 4.1x.
Balance-sheet burden: June 30 principal debt was $30.39 billion less $1.52 billion of cash, implying net principal debt of $28.87 billion and a pro forma management leverage ratio of 4.4x at quarter-end.

Analysis

KDP’s second quarter was an acquisition-heavy beat with a sharp split between strong U.S. refreshment execution and pressure in legacy U.S. Coffee. Adjusted diluted EPS of $0.57 exceeded the $0.55 consensus and rose 16.3% from $0.49 a year ago, while reported revenue of $7.31 billion increased 75.6% from $4.16 billion in Q2 2025 and was up from $3.98 billion in Q1. The comparison is distorted by the April 1 acquisition of JDE Peet’s, which supplied $2.80 billion of incremental sales and $414 million of adjusted operating income.

Underlying legacy sales were healthier than the consolidated headline suggests: sales excluding JDE Peet’s grew 7.3%, supported by pricing and volume/mix. U.S. Refreshment Beverages delivered 10.0% sales growth and 11.9% adjusted operating-income growth, whereas U.S. Coffee sales declined 3.2% and adjusted operating income fell 24.7%. Adjusted operating income rose 42.9% to $1.48 billion, but GAAP operating income dropped to $628 million from $898 million because of acquisition, integration and inventory-step-up charges. The quarter also established the financial constraints of the transaction: interest expense increased to $336 million from $180 million, while free cash flow of $714 million supported deleveraging. Management reaffirmed full-year guidance and continued to target separation of the beverage and coffee businesses in early 2027.

JDE Peet’s contribution

JDE Peet’s was fully incremental to the year-ago comparison after closing on April 1 and accounted for most of the reported sales increase. The segment generated $2.80 billion of revenue and $414 million of adjusted operating income, a 14.8% adjusted margin. GAAP operating income was a $62 million loss, reflecting acquisition and integration-related costs. The purchase also created a $314 million inventory step-up charge in cost of sales during the quarter, making reported earnings materially lower than the adjusted result.

Acquisition scale: KDP paid approximately $17.43 billion in net cash consideration, with total consideration of $17.93 billion including untendered-shareholder liabilities and other items.
Accounting burden: The preliminary purchase allocation included $9.66 billion of goodwill and $14.76 billion of acquired intangible assets, contributing to $124 million of quarterly intangible amortization.
Strategic rationale: Management expects synergies from complementary coffee portfolios, supply-chain and manufacturing optimization, and lower operating and general and administrative costs.

U.S. refreshment beverages

U.S. Refreshment Beverages was the strongest operating engine in the quarter. Sales increased 10.0% to $2.93 billion, with volume/mix growth of 6.5% and net price realization of 3.5%. Adjusted operating income grew 11.9% to $874 million, and the adjusted operating margin was 29.9% versus 29.4% a year earlier. Growth from sales and productivity savings more than offset inflation and higher SG&A, including increased marketing.

Underlying momentum: The segment combined positive volume/mix with pricing, unlike U.S. Coffee, where volume/mix declined.
Legacy business support: Excluding JDE Peet’s, KDP’s consolidated sales increased 7.3%, with 4.2% pricing and 3.1% volume/mix growth.

Coffee platform split

The combined coffee platform was mixed: JDE Peet’s delivered solid initial results, but U.S. Coffee remained a drag. U.S. Coffee revenue fell 3.2% to $918 million as volume/mix declined 8.2%, partly because Peet’s K-Cup pod sales moved into the JDE Peet’s segment after the acquisition. Favorable 5.0% pricing did not offset the volume decline. Adjusted operating income fell 24.7% to $225 million, with inflation, lower volume/mix and higher marketing more than offsetting pricing and productivity savings.

Margin contrast: U.S. Coffee’s adjusted margin was 24.5%, down from 31.5% a year earlier, while JDE Peet’s reported a 14.8% adjusted margin in its first quarter inside KDP.
Separation preparation: KDP said it advanced organizational readiness and integration work ahead of the planned separation of the beverage and coffee portfolios in early 2027.

International recovery

KDP International improved sequentially as planned. Reported sales increased 19.6% to $664 million, or 12.4% on a constant-currency basis, driven by 6.5% volume/mix growth and 5.9% pricing. Adjusted operating income was $155 million, flat year over year, producing a 23.3% adjusted margin. Sales growth and productivity savings were offset by cost pressures, including Mexico’s beverage tax, and higher marketing.

Sequential direction: Management characterized the segment as improving from the prior quarter, although currency reduced reported growth by 7.2 percentage points.
Six-month context: First-half constant-currency sales growth was 10.7%, with adjusted operating income of $242 million versus $238 million a year earlier.

Cash flow and leverage

Cash generation was a key support for the highly levered post-acquisition structure. Second-quarter operating cash flow was $895 million and free cash flow was $714 million. For the first six months, operating cash flow rose to $1.18 billion from $640 million, while free cash flow increased to $898 million from $427 million. Even so, interest expense climbed to $336 million from $180 million a year earlier as KDP funded the JDE Peet’s acquisition.

Debt position: Principal debt totaled $30.39 billion at June 30, including $25.22 billion of notes and $3.19 billion drawn under the delayed-draw term loan; cash was $1.52 billion.
Leverage path: The quarter-end pro forma management leverage ratio was 4.4x, above the approximately 4.1x target for year-end 2026.
Funding structure: KDP also issued $4.5 billion of convertible preferred stock and sold a 49% interest in the Pod Manufacturing JV for approximately $4.0 billion of proceeds.

2026 outlook

KDP reaffirmed its full-year constant-currency guidance rather than raising it after the second-quarter beat. The outlook calls for net sales of $25.9-$26.4 billion and adjusted diluted EPS growth in a low-double-digit range. The legacy business is expected to deliver 4%-6% constant-currency sales growth and 4%-6% constant-currency adjusted EPS growth, supplemented by JDE Peet’s. At current exchange rates, foreign currency is expected to provide an approximately one-percentage-point tailwind to full-year sales and EPS growth.

Execution priorities: Management highlighted initial cost synergies, organizational readiness and integration progress as the main transformation milestones at midyear.
Key constraint: The guidance embeds continued investment in marketing and integration while KDP works to reduce leverage and complete the planned separation.