BURLINGTON, Mass. and FRISCO, Texas, USA – Keurig Dr Pepper Inc. on February 23, 2023, reported results for the fourth quarter and full year ended December 31, 2022. The Company also provided guidance for constant currency net sales growth of 5% and Adjusted diluted EPS growth of 6% to 7% in 2023.
Keurig Dr Pepper: Full-year 2022 highlights:
- Drove double-digit net sales growth of 11%, significantly ahead of the Company’s initial guidance of mid-single-digit growth and in line with its guidance update in the second quarter. Net sales for the full year of 2022 increased 10.8% to $14.06 billion, compared to $12.68 billion in the year-ago period and, on a constant currency basis, net sales advanced 11.1%
- Delivered Adjusted diluted EPS growth of 5% to $1.68, in line with the Company’s mid-single-digit guidance.
- Grew market share in Cold Beverages in categories representing 92% of the Company’s U.S. retail sales base.
- Expanded the Keurig brewing system to 38 million U.S. households, a 10 million household increase since 2018.
- Expanded the Company’s presence in the strategically compelling energy and non-alcohol beer and cocktail categories through unique partnerships and disciplined investments, such as the strategic partnership with Nutrabolt announced in the fourth quarter, which included a long-term sales and distribution agreement for C4 Energy drinks.
- Returned $1.5 billion to shareholders through dividends, including a 6.7% increase in KDP’s quarterly dividend, and the opportunistic repurchase of 10.6 million shares.
- Ended the year with a strong balance sheet and reduced management leverage ratio of 2.8x.
Commenting on the announcement, Bob Gamgort – Chairman and CEO of Keurig Dr Pepper – stated, “We accelerated our revenue growth for the fifth consecutive year, delivering 12% growth in the fourth quarter and 11% growth for the full year. Continued brand strength across our portfolio enabled modest elasticities in an environment marked by significant pricing. As we look to 2023, we expect mid-single-digit revenue growth, as the rate of pricing moderates, and enhanced gross margins, as the relationship between inflation and pricing improves.”
Gamgort continued, “In 2022 we made multiple strategic investments in new platforms and categories through innovation, partnerships and equity investments that support our vision of a “Modern Beverage Company” and provide fuel for future growth. Further, we continued to enhance our positive impact on all stakeholders through continued achievement of our ambitious ‘Drink Well. Do Good.’ corporate responsibility commitments.”
Net sales for the year increased 5.6% to $4.98 billion, compared to $4.72 billion in the year-ago period and, on a constant currency basis, net sales advanced 6.2%. The constant currency net sales growth was driven by a 7.0% increase in net price realization, partially offset by a 0.8% decrease in volume/mix driven by brewers.
The higher net price realization of 7.0% for the year primarily reflected pricing actions taken in late 2021 and the second quarter of 2022, while the volume/mix decrease of 0.8% was due to pod shipment growth of 1.4%, more than offset by an expected brewer shipment decline of 5.2%, due to lapping a COVID-related brewer sales acceleration in the prior year.
The Company added approximately two million net new U.S. households to the Keurig system in 2022, in line with its long-term annual target, reflecting successful innovation including new connected brewer models.
GAAP operating income for the year decreased 9.0% to $1.32 billion, compared to $1.45 billion in the year-ago period. The performance largely reflected broad-based inflationary pressure that was only partially offset by the growth in net sales, productivity, a $44 million benefit from the Company’s strategic asset investment program and a $23 million benefit related to the aforementioned insurance recovery.
Adjusted operating income decreased 7.5% to $1.51 billion and, on a percent of net sales basis, totaled 30.4%.