Keurig Dr Pepper Inc (KDP) Q1 2026 Earnings Call Transcript
Bullish Other 40.57B USA
Next Earnings
2026-04-22
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Keurig Dr Pepper delivered solid 2025 results, advanced the JDE Peet's acquisition and separation plan, and provided 2026 guidance for low double-digit EPS growth with significant accretion from JDE Peet's, supported by a revised financing plan and strong momentum in core brands.
⭐ Key Highlights
2025 performance and strategic milestones
Keurig Dr Pepper reported strong 2025 results in line with guidance, highlighted by market share gains, innovative product launches, and groundwork for a transformational split into two stand-alone companies.
Transformation plan and close timing
Update on the JDE Peet's acquisition: regulatory approvals secured, tender offer launched, and close anticipated in early April 2026, with ongoing integration workstreams and readiness for a separate Beverage Co and Global Coffee Co by 2026 year-end.
2026 guidance and accretion
Full-year 2026 guidance includes low double-digit EPS growth on a combined basis, with 6-7 percentage points of accretion from JDE Peet's beginning in Q2, and stand-alone KD guidance of 4-6% top-line and 4-6% EPS growth.
Financing plan and capital structure
Updated financing plan increases beverage-convertible preferred to $4.5B, finalizes a $4B coffee pod JV, and adds $9B of debt plus $5B rollover from JDE Peet's debt, with debt allocations specified between Beverage Co and the future Global Coffee Co.
Near-term headwinds in US Coffee and Q1 emphasis
US Coffee faces near-term cost pressures from inflation and retailer inventory adjustments; management expects EPS to ramp in Q2 and accelerate in H2 as headwinds ease and JDE Peet's benefits accrue.
✔Positive Signals
- Strong 2025 results and market share gains driven by core brands (e.g., Dr Pepper) and emerging growth areas.
- Progress on JDE Peet's integration with a clear plan and anticipated early Q2 accretion to EPS.
- Robust 2026 guidance with low double-digit combined EPS growth and 6-7 percentage points of JDE Peet's contribution.
- Updated financing plan enabling a timely separation and strong balance sheet for both stand-alone companies.
- Energy portfolio momentum (Ghost, C4, Bloom) and expectations for continued distribution gains and new formats.
✖Negative Signals
- Near-term margin pressure in US Coffee due to cost inflation and timing of cost mitigations.
- Q1 2026 expected EPS weakness due to lapping a cocoa gain in 2025 and retailer inventory adjustments.
- Higher headwinds from green coffee prices and tariffs in early 2026 before easing later in the year.
- Integration and separation execution risk surrounding two large pure-play entities.
- Foreign exchange and macro volatility could influence full-year net sales and EPS.
📊Financial Results
- 2025 net sales grew 8.6% on a constant currency basis; operating income +4.9%; EPS +7.3%.
- Q4 net sales grew 9.9% driven by US Refreshment beverages, with price realisation contributing ~6 percentage points.
- Free cash flow in 2025 was $1.519B, with 2026 target of approximately $2.0B for standalone KD, excluding JDE Peet's cash flows.
- US Refreshment beverages net sales grew 11.5% in 2025; international net sales grew mid-teens CC with 20% segment operating income growth in Q4.
- Q4 2025 earnings benefited from productivity savings and overhead discipline, partially offset by cost inflation.
🔮Future Guidance
- 2026 stand-alone Keurig Dr Pepper: 4-6% net sales growth and 4-6% EPS growth on a constant currency basis.
- Combined 2026 net sales guidance of $25.9B to $26.4B, including $8.5B to $8.7B incremental revenue from JDE Peet's from Q2 onward and ~6-7 point EPS accretion for the year.
- Q1 2026 expected EPS of $0.36 to $0.37 vs. $0.42 prior year due to cocoa gain lapping, cost headwinds, and retailer inventory adjustments, with improvement expected in H2.
- Debt and financing plan to support close of JDE Peet's, including $9B incremental debt, with existing KD debt staying with Beverage Co and JDE Peet's debt remaining with the combined entities until separation.
- Free cash flow target for KD standalone increases to about $2.0B in 2026, with further deleveraging expected post-separation.
💡Interesting Insights
- The company plans to avoid a partial IPO for Beverage Co, signaling a full standalone separation post-close with two independent boards and governance structures.
Detailed Analysis
AI-generated summary of Keurig Dr Pepper Inc earnings call transcript.
Keurig Dr Pepper reported a strong 2025 performance aligned with guidance, driven by double-digit momentum in US refreshment beverages, international resilience, and ongoing growth from emerging brands and energy platforms. The company advanced its transformational agenda, securing regulatory clearances for the JDE Peet's acquisition and launching a tender offer with a planned close in early April 2026, setting the stage for the separation into two stand-alone companies—Beverage Co and Global Coffee Co.—by late 2026. Management outlined a milestone-based integration and separation plan, including initial synergy capture and governance changes, as well as a capital structure optimized to fund the deal (larger beverage-convertible preferred, a $4B coffee pod JV, and blended debt). For 2026, the guidance calls for what could be low double-digit EPS growth on a combined basis, with JDE Peet's contributing roughly 6-7 percentage points of EPS accretion in the year and stand-alone KD delivering 4-6% top-line and EPS growth; near-term challenges in coffee—primarily cost inflation and retailer-inventory dynamics—are expected to ease through the year, supported by higher marketing investment and next-generation product launches including Keurig Alta and K Supreme refreshes. Free cash flow is targeted to improve meaningfully, supporting deleveraging after close.
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