Keurig Dr Pepper Q3: Earnings Hit The Mark, Sales Fall Short & Boosts Portfolio With Energy Drink Business GHOST

Keurig Dr Pepper Inc. KDP shares are trading lower on Thursday.

The company reported third-quarter adjusted earnings per share of 51 cents, which aligned with the street view. Quarterly sales of $3.89 billion (+2.3%) missed the analyst consensus of $3.93 billion.

“Three quarters into the year, we remain on track to achieve our full year outlook, while notching significant progress against our multi-year strategic agenda,” said CEO Tim Cofer.

Also Read: Tesla Q3 Earnings Highlights: EPS Beat, Revenue Miss, Shares Climb On 2025 Timeline For Lower-Cost EVs

Adjusted operating income increased 7.5% to $1.050 billion and totaled 27% as a percent of net sales. Adjusted operating income growth primarily reflected net productivity savings and disciplined overhead expense management, partially offset by the impact of inflation.

In the third quarter, U.S. Refreshment Beverages saw net sales rise by 5.3% to $2.4 billion, fueled by a 4.0% increase in volume/mix and a 1.3% rise in net price realization.

Conversely, U.S. Coffee experienced a decline, with net sales falling 3.6% to $1 billion. While volume/mix growth of 2.7% was positive, it was more than offset by a 6.3% decrease in net price realization.

Internationally, net sales increased slightly by 0.4% to $0.5 billion.

Keurig Dr Pepper has also announced its acquisition of GHOST Lifestyle LLC and GHOST Beverages LLC, starting with a 60% stake, followed by the acquisition of the remaining 40% stake in 2028.

GHOST, known for its rapidly growing GHOST Energy brand, has seen net sales quadruple in three years. The deal aims to enhance Keurig Dr Pepper’s presence in the energy drink category and is expected to be accretive to adjusted EPS starting in 2025.

Keurig Dr Pepper plans to invest approximately $990 million initially, with an additional $250 million for distribution transitions. The full consolidation of GHOST’s financials is expected upon closing, anticipated in late 2024 or early 2025.

Outlook: Keurig Dr Pepper has reaffirmed its FY24 guidance, expecting constant currency net sales growth in the mid-single-digit range and adjusted EPS growth in the high-single-digit range.

Price Action: KDP shares are trading lower by 4.06% to $35.21 at last check Thursday.

Read Next:

• Tractor Supply Net Sales Miss Estimates In Q3, Confirms Allivet Acquisition