Keurig Dr Pepper tops Q3 profit estimates, trims legacy outlook

Keurig Dr Pepper (KDP) said on Nov. 3 that third-quarter adjusted diluted earnings per share rose 22.2% to $0.66, topping the $0.62 consensus estimate compiled by Finnhub. Net sales rose 70.6% to $7.34 billion.

Here's how the company did:

• Adjusted EPS: $0.66 vs. $0.54 a year earlier, $0.62 expected, according to Finnhub
• GAAP diluted EPS: $0.59 vs. $0.49 a year earlier
• Net sales: $7.34 billion vs. $4.31 billion a year earlier, in line with the $7.4 billion consensus estimate compiled by Finnhub

Excluding the JDE Peet's acquisition, legacy KDP net sales rose 8.6%, driven by volume and mix growth of 6.5% and net price realization of 2.1%.

The JDE Peet's acquisition closed on April 1, so its segment contribution was wholly incremental on a year-over-year basis.

Adjusted operating income rose 52.5% to $1.67 billion, or 22.7% of net sales. The company said the increase was driven by net sales growth and productivity savings, partly offset by inflationary pressures and higher SG&A expenses, including increased marketing.

GAAP operating income rose 34.0% to $1.33 billion. The company said GAAP and adjusted operating income both included a $99 million benefit from tariff refunds in the quarter.

CEO Tim Cofer said, "We are pleased with our third quarter results, which featured meaningful net sales and EPS growth." He added that the company remains focused on the remaining milestones to enable its planned separation.

2026 guidance

The company expects 2026 net sales of $25.9 billion to $26.4 billion. That forecast includes about $8.3 billion to $8.4 billion in net sales from JDE Peet's.

The company now expects constant currency adjusted EPS growth of 3% to 5% for its legacy business, down from the 4% to 6% range it gave in its previous results release on Aug. 6. It attributed the change to revised expectations for U.S. Coffee.

The company expects JDE Peet's to add 7 to 8 percentage points to 2026 EPS growth. It forecasts foreign currency translation to add about half a percentage point to full-year net sales and EPS growth.

Segment results

U.S. Refreshment Beverages net sales rose 10.9% to $3.0 billion, on volume and mix growth of 7.2% and net price realization of 3.7%. Adjusted operating income rose 8.3% to $884 million.

U.S. Coffee net sales rose 2.7% to $1.0 billion. Adjusted operating income rose 11.4% to $353 million, which the company said was primarily driven by the benefit from tariff refunds.

JDE Peet's net sales were $2.6 billion, with adjusted operating income of $480 million, or 18.1% of net sales.

KDP International net sales rose 11.0% to $644 million. Adjusted operating income declined 0.6% to $160 million, as cost pressures, including the Mexico beverage tax, and increased marketing offset sales growth.

Costs and cash flow

GAAP operating income was held down by acquisition and integration-related costs, which the company excludes from its adjusted results.

Operating cash flow was $1.04 billion in the quarter, and free cash flow totaled $1.01 billion.

Net income has fallen in each of the last three quarters, from $662.0 million in the third quarter of 2025 to $142.0 million in the second quarter of 2026, according to its SEC filings.