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Beverage company Keurig Dr Pepper (NASDAQ:KDP) reported results in line with analysts' expectations in Q2 CY2024, with revenue up 3.5% year on year to $3.92 billion. It made a non-GAAP profit of $0.45 per share, improving from its profit of $0.42 per share in the same quarter last year.
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Keurig Dr Pepper (KDP) Q2 CY2024 Highlights:
- Revenue: $3.92 billion vs analyst estimates of $3.92 billion (small beat)
- EPS (non-GAAP): $0.45 vs analyst expectations of $0.45 (in line)
- KDP reaffirmed its fiscal 2024 guidance for constant currency net sales growth in a mid-single-digit range and Adjusted diluted EPS growth in a high-single-digit range
- Gross Margin (GAAP): 55.4%, up from 53.9% in the same quarter last year
- Free Cash Flow of $742 million is up from -$73 million in the previous quarter
- Sales Volumes were flat year on year (2.1% in the same quarter last year)
- Market Capitalization: $44.42 billion
Born out of a 2018 merger between coffee company Keurig Green Mountain and beverage company Dr Pepper Snapple , Keurig Dr Pepper (NASDAQ:KDP) boasts a powerhouse portfolio of beverages.
Beverages and AlcoholThese companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales GrowthKeurig Dr Pepper is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 7.3% over the last three years was decent for a consumer staples business.
This quarter, Keurig Dr Pepper grew its revenue by 3.5% year on year, and its $3.92 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 3.9% over the next 12 months, an acceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Keurig Dr Pepper's quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn't see much volatility.
In Keurig Dr Pepper's Q2 2024, year on year sales volumes were flat. By the company's standards, this result was a meaningful deceleration from the 2.1% year-on-year increase it posted 12 months ago. We'll be watching Keurig Dr Pepper closely to see if it can reaccelerate demand for its products.
Key Takeaways from Keurig Dr Pepper's Q2 Results That this quarter lacked surprises was a good thing (the market tends to reward steady performance). Revenue was in line, EPS beat by a bit, and the company maintained its full year guidance for sales and EPS. This shows that things are squarely on track for Keurig Dr Pepper. The stock traded up 3.7% to $33.99 immediately following the results.
