Keurig Dr Pepper, Inc (KDP) Earnings & Analysis

Latest quarter

Keurig Dr Pepper reported Q2 FY2026 revenue of $7.3 billion, up 75.6% from Q2 FY2025, while diluted EPS was $0.04, down 90.0% from a year earlier. The company reported adjusted EPS of $0.57 against the consensus of $0.55 and revenue of $7.3 billion against the consensus of $7.2 billion.

The filing said JDE Peet’s acquisition contributed to revenue growth, while legacy KDP net sales also grew; management said U.S. refreshment beverages and KDP International posted double-digit net-sales growth, partly offset by a low-single-digit decline in U.S. coffee. The filing reported gross margin of 41.9%, versus 54.2% a year earlier, and operating margin of 8.59%, versus 21.6%. The filing attributed lower operating income to higher SG&A and other operating expenses, while higher interest expense and the effective tax rate reduced net income. Keurig Dr Pepper reported free cash flow of $712.0 million, compared with $323.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Tim Cofer said total net sales grew 75% including the JDE Peet’s acquisition, while legacy KDP sales increased at a high-single-digit rate through both pricing and volume/mix. Cofer said U.S. refreshment beverages recorded double-digit net-sales and operating-income growth, led by carbonated soft drinks, energy, water and sports hydration. In response to an analyst question, Cofer said the same drivers should support the segment in the second half, although its growth rate should moderate against tougher comparisons.

Cofer said U.S. coffee faced higher green-coffee costs and tariffs, as well as single-serve volume declines and unfavorable portfolio mix. He said brewer shipments returned to growth, and he expects lower-cost inventory and improving tariff effects to reach the profit and loss statement over the balance of the year. Anthony DiSilvestro said Peet’s K-Cup reporting shifted from U.S. Coffee to JDE Peet’s during the quarter, with the full sales and profit recognition set to return to U.S. Coffee in the second half; he said the change is neutral at the enterprise level.

When analysts asked about coffee costs and pricing, DiSilvestro said Keurig Dr Pepper generally forward hedges commodity purchases and that changes in green-coffee prices reach results with a lag. Cofer said enterprise pricing is expected to contribute less to second-half sales than in the first half, primarily because of coffee dynamics. He also said the company would look for opportunities to invest in consumer value.

Cofer said the JDE Peet’s integration had moved Keurig and Peet’s to a single invoice and integrated sales force in the U.S., with initial cost synergies beginning in the quarter. DiSilvestro said JDE Peet’s second-quarter profitability benefited from pricing net of cost inflation, productivity savings, derivative gains and marketing phasing, and that the quarter would likely be its highest quarterly earnings contribution in 2026. He said free cash flow supported a pro forma management leverage ratio of 4.4 times at quarter-end, and that capital priorities remain business investment, the current dividend and debt repayment.

Guidance

Anthony DiSilvestro said the company now assumes interest expense of approximately $1.12 to $1.14 billion and an effective tax rate of approximately 22% to 23% for FY2026. He said the outlook now includes an incremental 2% noncash EPS headwind from higher acquired-entity depreciation and an anticipated one-time cash benefit from tariff refunds, which the company expects to largely offset on a net basis.