Keurig Dr Pepper announced third quarter earnings and revenue that topped Wall Street estimates as it debuted a partnership in the sports hydration category.
The company posted net income of $518 million, or 37 cents per diluted share, versus $180 million, or 13 cents per diluted share, in the year-past period. The performance primarily reflected a favorable year-over-year impact of items affecting comparability partially offset by a higher GAAP tax rate, the company noted. Adjusted for one-time events, net income was $673 million, or 48 cents per diluted share, versus $656 million, or 46 cents per diluted share, in the year-previous, Keurig Dr Pepper reported.
A Yahoo Finance-published analyst consensus estimate called for earnings per adjusted diluted share of 47 cents and revenue of $3.77 billion.
Net sales for the third quarter of 2023 increased 5.1% to $3.81 billion in the year-before period, Keurig Dr Pepper noted. On a constant currency basis, net sales gained 4.1%, driven by net price realization of 5.5%, only partially offset by lower volume/mix of 1.4%. Revenue momentum reflected the ongoing strength of the company’s brand portfolio and in-market execution, as well as manageable elasticity across most categories.
Operating income was $896 million versus $394 million in the year-prior quarter, while adjusted operating income was $984 million versus $947 million.
Among company divisions, U.S. Refreshment Beverages net sales for the third quarter advanced 5.9% to $2.27 billion as adjusted operating income increased 6.1% to $695 million, while U.S. Coffee net sales, including brewers, slipped 3.2% to $1.01 billion as adjusted operating income increased 5.7% to $333 million year over year. International net sales gained 20.8% to $523 million versus the period a year earlier as adjusted operating income increased 31.7% to $145 million.
Pod revenue decreased in the third quarter by 4.8%, driven by a shipment decline of 8.1%. Brewer shipments totaled 10.2 million for the twelve months ending September 30, 2023, declining 4.5% year-over-year. In the quarter, brewer shipments grew year-over-year as KDP prepared for the upcoming holiday season, according to Keurig Dr. Pepper.
Meanwhile, Keurig Dr Pepper Inc. announced an agreement with and Grupo PiSA for Keurig Dr. Pepper to sell, distribute and merchandise Electrolit, a premium hydration beverage, across the United States. The partnership extends the Keurig Dr. Pepper beverage portfolio into sports hydration.
“In the third quarter, we maintained healthy revenue momentum and delivered a significant gross margin inflection, helping to fund reinvestment in our brands and capabilities,” said chairman and CEO Bob Gamgort in announcing the financial results. “In addition to continued strong results across our U.S. Refreshment Beverages and International segments, we also began to rebuild our margins in U.S. Coffee. We are reaffirming our full-year outlook and remain committed to delivering a strong Q4 with an improved composition of earnings. KDP continues to pair strong execution and financial delivery with building the foundation for the company’s next phase of growth. Today, we announced our expansion into sports hydration through a new and exciting partnership with Grupo PiSA for Electrolit. Over the past 12 months, we have established new growth platforms in sports hydration, energy and RTD coffee by partnering with compelling brands and leveraging our unique distribution assets across both cold and hot beverages to attract strong partnerships.”
