BURLINGTON, Mass. and FRISCO, Texas, US – Keurig Dr Pepper Inc. yesterday today reported financial results for the first quarter ended March 31, 2021 and increased its outlook for 2021 net sales growth to 4% to 6%, from the Company’s prior net sales guidance of 3% to 4%. KDP also reaffirmed its guidance for full-year Adjusted diluted EPS growth of 13% to 15%.
Net sales in the first quarter of 2021 advanced approximately 11% on both a GAAP and constant currency basis, with each of the Company‘s business segments reporting strong growth. GAAP diluted earnings per share more than doubled to $0.23 and Adjusted1 diluted EPS grew to $0.33, a double-digit increase versus year-ago.
Commenting on the announcement, Chairman and CEO Bob Gamgort stated, “We delivered an exceptional first quarter, driving double-digit net sales and earnings growth, behind outstanding in-market execution.
Looking forward, we see an improving, but volatile, macro environment marked by increasing consumer mobility and rising inflationary headwinds. We remain focused on delivering our business plan, with increased net sales growth expectations and growing confidence in achieving our Adjusted diluted EPS growth target of 13% to 15% for the year, and we plan to reinvest any earnings upside in the business to drive future growth.”
Keurig Dr Pepper: Coffee Systems
Net sales for the first quarter of 2021 advanced 17.4% to $1.14 billion, compared to $0.97 billion in the year-ago period. On a constant currency basis, net sales advanced 16.9%, reflecting higher volume/mix of 19.5%, partially offset by lower net price realization of 2.6%.
The volume/mix increase of 19.5% in the quarter reflected pod volume growth of 13.7% and brewer volume growth of 61%. The pod volume growth was driven by strong at-home consumption, partially offset by continued softness in the away-from-home business, as return to offices and hospitality has been slow.
The brewer volume growth largely reflected strong retail consumption, primarily driven by the Company’s successful brewer innovation program, as well as a benefit from shipment timing.
GAAP operating income increased 23.5% in the first quarter of 2021 to $336 million, compared to $272 million in the year-ago period, reflecting the strong growth in net sales, continued productivity and merger synergies and the favorable year-over-year impact of items affecting comparability.
Partially offsetting these positive drivers was the unfavorable comparison to the sale-leaseback gain in the year-ago period that impacted the segment by $16 million, as well as inflation in logistics and input costs and slightly higher marketing spending.
Adjusted operating income in the first quarter of 2021 totaled $389 million, an increase of 12.1%, compared to $347 million in the year-ago period, which included the benefit of sale-leaseback gain – this gain negatively impacted the year-over-year Adjusted operating income growth rate by more than five percentage points.
On a percent of net sales basis, Adjusted operating margin was 34.1% in the first quarter of 2021, compared to Adjusted operating margin of 35.7% in the year-ago period, a decline of 160 basis points, including negative margin mix related to the exceptionally strong brewer sales and the 170 basis point headwind from a year-ago sale-leaseback gain.