Keurig Dr Pepper's US Coffee Sales Hits A Snag, Beats On Q3 With Solid Gross Margin Expansion

Keurig Dr Pepper Inc KDP reported third-quarter FY23 sales growth of 5.1% year-on-year to $3.81 billion, beating the analyst consensus estimate of $3.768 billion.

U.S. Coffee sales decreased 3.2% to $1.01 billion, U.S. Refreshment Beverages rose 5.9% to $2.27 billion, and International climbed 20.8% to $523 million.

Gross profit increased 11% to 2.1 billion, with the margin expanding from 52.5% to 55.5%.

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Selling, general and administrative expenses grew 1.8% to $1.22 billion.

Operating margin was 23.5%, and operating income for the quarter increased 127.4% to $896 million.

The company held $260 million in cash and equivalents as of September 30, 2023. Operating cash flow for nine months totaled $1.03 billion. Inventories as of September 30, 2023, totaled $1.35 billion.

Adjusted EPS of $0.48 beat the analyst consensus estimate of $0.47.

Outlook: Keurig reaffirmed FY23 constant currency sales growth of 5% to 6% and adjusted EPS growth of 6% - 7%. 

Price Action: KDP shares are trading higher by 1.08% at $29.42 on the last check Thursday.