Keurig Dr Pepper Inc. Q1 FY2025 earnings call

• Strong Q1 results with net sales up over 6% and EPS up over 10%. - U.S. Refreshment Beverages was standout with 11% net sales growth. - Integration of GHOST kicked off well. - Vita Coco partnership extended. - U.S. Coffee focused on mitigating green coffee inflation and advancing long-term growth initiatives. - International saw mid-single-digit sales growth.

U.S. Refreshment Beverages: Net sales grew 11% in Q1, driven by core CSD portfolio and GHOST acquisition. CSDs outperformed, Dr Pepper had market share gains including from Dr Pepper Blackberry launch, Canada Dry and 7UP had healthy growth. Energy portfolio was strong with C4, GHOST, Bloom, and Black Rifle. U.S. Coffee: Net sales declined 3.7% due to commodity-driven inflation, but net price realization contributed. Focus on premium cold and next-gen opportunities. International: Net sales grew mid-single-digits, strong in liquid refreshment beverages, inflation-related pricing supported top line.

• Reaffirmed 2025 guidance with mid-single-digit net sales growth and high single-digit EPS growth. - Considering tariff impacts and trade policy, expecting improvement in U.S. Coffee in the second half. - Anticipates FX to be a ~1 percentage point headwind, but has steps to offset tariff impacts like cost savings, pricing, and mix management.

• Tariff impacts on business. - Consumer response to pricing changes. - Uncertainty from trade policy changes. - Economic uncertainties affecting consumer spending.

Q: Clarification on fiscal '25 guidance, tariff exposure, and sustainability of U.S. Refreshment Beverages growth A: Sudhanshu discussed EPS guidance, identified steps to offset tariff impacts, and Tim spoke about U.S. Refreshment Beverages' growth drivers and pricing sustainability Q: Thoughts on coffee elasticity and affordability in constrained consumer environment A: Tim discussed coffee inflation mitigation, pricing dynamics, and affordability efforts like price pack options and premium proposition value Q: Perspective on Hispanic consumer activity and Snap initiatives A: Tim spoke about Hispanic consumer trends and industry stance on Snap initiatives advocating consumer choice Q: Free cash flow development and capital allocation A: Tim discussed free cash flow acceleration, path to return to long-term conversion level, and capital allocation priorities Q: GHOST performance and energy category growth A: Tim talked about GHOST's progress, energy category growth, and momentum of KDP's energy portfolio Q: EPS upside, phasing of coffee improvement, and tariff impact on coffee A: Sudhanshu discussed Q1 EPS upside, phasing of coffee improvement, and tariff impacts on coffee P&L Q: Dr Pepper Blackberry market share contribution A: Tim discussed Dr Pepper's market share growth and Dr Pepper Blackberry's performance and future potential Q: Coffee cadence and tariff impact mitigation in coffee A: Sudhanshu discussed coffee cadence expectations and tariff impact mitigation efforts in coffee