filings.toolsItem 1. Financial Statements (Unaudited)
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Item 1. Financial Statements (Unaudited)
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net sales | $ | 4,163 | $ | 3,922 | $ | 7,798 | $ | 7,390 | |||||||||||||||
| Cost of sales | 1,908 | 1,750 | 3,558 | 3,278 | |||||||||||||||||||
| Gross profit | 2,255 | 2,172 | 4,240 | 4,112 | |||||||||||||||||||
| Selling, general, and administrative expenses | 1,356 | 1,295 | 2,548 | 2,471 | |||||||||||||||||||
| Other operating expense (income), net | 1 | 16 | (7) | 15 | |||||||||||||||||||
| Income from operations | 898 | 861 | 1,699 | 1,626 | |||||||||||||||||||
| Interest expense, net | 180 | 204 | 328 | 382 | |||||||||||||||||||
| Other income, net | — | (15) | (7) | (22) | |||||||||||||||||||
| Income before provision for income taxes | 718 | 672 | 1,378 | 1,266 | |||||||||||||||||||
| Provision for income taxes | 171 | 157 | 314 | 297 | |||||||||||||||||||
| Net income | $ | 547 | $ | 515 | $ | 1,064 | $ | 969 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | 0.40 | $ | 0.38 | $ | 0.78 | $ | 0.71 | |||||||||||||||
| Diluted | 0.40 | 0.38 | 0.78 | 0.70 | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | 1,358.3 | 1,355.6 | 1,357.7 | 1,368.2 | |||||||||||||||||||
| Diluted | 1,362.8 | 1,361.2 | 1,362.6 | 1,374.4 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 547 | $ | 515 | $ | 1,064 | $ | 969 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustments | 319 | (201) | 332 | (257) | |||||||||||||||||||
| Net change in cash flow hedges, net of tax of $5, $1, $6, and $1, respectively | (34) | 21 | (46) | 19 | |||||||||||||||||||
| Total other comprehensive income (loss) | 285 | (180) | 286 | (238) | |||||||||||||||||||
| Comprehensive income | $ | 832 | $ | 335 | $ | 1,350 | $ | 731 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| (in millions, except share and per share data) | June 30, 2025 | December 31, 2024 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 509 | $ | 510 | |||||||
| Restricted cash and restricted cash equivalents | 56 | 80 | |||||||||
| Trade accounts receivable, net | 1,498 | 1,502 | |||||||||
| Inventories | 1,741 | 1,299 | |||||||||
| Prepaid expenses and other current assets | 802 | 606 | |||||||||
| Total current assets | 4,606 | 3,997 | |||||||||
| Property, plant, and equipment, net | 2,996 | 2,964 | |||||||||
| Investments in unconsolidated affiliates | 1,566 | 1,543 | |||||||||
| Goodwill | 20,228 | 20,053 | |||||||||
| Other intangible assets, net | 23,841 | 23,634 | |||||||||
| Other non-current assets | 1,095 | 1,200 | |||||||||
| Deferred tax assets | 36 | 39 | |||||||||
| Total assets | $ | 54,368 | $ | 53,430 | |||||||
| Liabilities and stockholders' equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 3,113 | $ | 2,985 | |||||||
| Accrued expenses | 1,324 | 1,584 | |||||||||
| Structured payables | 31 | 41 | |||||||||
| Short-term borrowings and current portion of long-term obligations | 1,976 | 2,642 | |||||||||
| Other current liabilities | 777 | 835 | |||||||||
| Total current liabilities | 7,221 | 8,087 | |||||||||
| Long-term obligations | 13,920 | 12,912 | |||||||||
| Deferred tax liabilities | 5,487 | 5,435 | |||||||||
| Other non-current liabilities | 2,755 | 2,753 | |||||||||
| Total liabilities | 29,383 | 29,187 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued | — | — | |||||||||
| Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,358,413,413 and 1,356,664,609 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | 14 | 14 | |||||||||
| Additional paid-in capital | 19,729 | 19,712 | |||||||||
| Retained earnings | 5,232 | 4,793 | |||||||||
| Accumulated other comprehensive income (loss) | 10 | (276) | |||||||||
| Total stockholders' equity | 24,985 | 24,243 | |||||||||
| Total liabilities and stockholders’ equity | $ | 54,368 | $ | 53,430 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| First Six Months | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Operating activities: | |||||||||||
| Net income | $ | 1,064 | $ | 969 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation expense | 217 | 207 | |||||||||
| Amortization of intangibles | 68 | 67 | |||||||||
| Other amortization expense | 63 | 101 | |||||||||
| Provision for sales returns | 24 | 29 | |||||||||
| Deferred income taxes | 4 | 17 | |||||||||
| Employee stock-based compensation expense | 45 | 52 | |||||||||
| (Gain) loss on disposal of property, plant, and equipment | (6) | 18 | |||||||||
| Unrealized (gain) loss on foreign currency | (6) | 16 | |||||||||
| Unrealized (gain) loss on derivatives | (56) | 36 | |||||||||
| Equity in earnings of unconsolidated affiliates | (27) | (17) | |||||||||
| Earned equity from distribution arrangements | (10) | (45) | |||||||||
| Other, net | (5) | 5 | |||||||||
| Changes in assets and liabilities, excluding the effects of business acquisitions: | |||||||||||
| Trade accounts receivable | 3 | (67) | |||||||||
| Inventories | (416) | (119) | |||||||||
| Income taxes receivable and payables, net | (86) | (34) | |||||||||
| Other current and non-current assets | (136) | (180) | |||||||||
| Accounts payable and accrued expenses | (93) | (314) | |||||||||
| Other current and non-current liabilities | (7) | 1 | |||||||||
| Net change in operating assets and liabilities | (735) | (713) | |||||||||
| Net cash provided by operating activities | 640 | 742 | |||||||||
| Investing activities: | |||||||||||
| Acquisitions of businesses, net of cash acquired | (111) | — | |||||||||
| Purchases of property, plant, and equipment | (226) | (273) | |||||||||
| Proceeds from sales of property, plant, and equipment | 13 | 1 | |||||||||
| Purchases of intangibles | (16) | (49) | |||||||||
| Investments in unconsolidated affiliates | (1) | (7) | |||||||||
| Other, net | 63 | (1) | |||||||||
| Net cash used in investing activities | $ | (278) | $ | (329) | |||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, CONTINUED)
| First Six Months | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Financing activities: | |||||||||||
| Proceeds from issuance of Notes | $ | 2,000 | $ | 3,000 | |||||||
| Repayments of Notes | (529) | (1,150) | |||||||||
| Net repayment of commercial paper | (139) | (226) | |||||||||
| Repayment of term loan | (990) | — | |||||||||
| Proceeds from structured payables | 16 | 31 | |||||||||
| Repayments of structured payables | (26) | (60) | |||||||||
| Cash dividends paid | (625) | (591) | |||||||||
| Repurchases of common stock, inclusive of excise tax obligation | (9) | (1,105) | |||||||||
| Tax withholdings related to net share settlements | (28) | (43) | |||||||||
| Payments on finance leases | (63) | (56) | |||||||||
| Other, net | (16) | (22) | |||||||||
| Net cash used in financing activities | (409) | (222) | |||||||||
| Cash, cash equivalents, restricted cash, and restricted cash equivalents: | |||||||||||
| Net change from operating, investing, and financing activities | (47) | 191 | |||||||||
| Effect of exchange rate changes | 4 | (20) | |||||||||
| Beginning balance | 608 | 267 | |||||||||
| Ending balance | $ | 565 | $ | 438 | |||||||
| Supplemental cash flow disclosures of non-cash investing and financing activities: | |||||||||||
| Capital expenditures included in accounts payable and accrued expenses | $ | 155 | $ | 173 | |||||||
| Earned equity from distribution arrangements | 10 | 45 | |||||||||
| Equity received in exchange for modification of related party contract | — | 19 | |||||||||
| Dividends declared but not yet paid | 312 | 292 | |||||||||
| Accrued excise tax on net share repurchases | — | 14 | |||||||||
| Supplemental cash flow disclosures: | |||||||||||
| Cash paid for interest | 277 | 211 | |||||||||
| Cash paid for income taxes | 276 | 205 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
| Common Stock Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders' Equity | |||||||||||||||||||||||||||||||
| (in millions, except per share data) | Shares | Amount | |||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | 1,356.7 | $ | 14 | $ | 19,712 | $ | 4,793 | $ | (276) | $ | 24,243 | ||||||||||||||||||||||||
| Net income | — | — | — | 517 | — | 517 | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 1 | 1 | |||||||||||||||||||||||||||||
| Dividends declared, $0.23 per share | — | — | — | (313) | — | (313) | |||||||||||||||||||||||||||||
| Shares issued under employee stock-based compensation plans and other | 1.5 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Tax withholdings related to net share settlements | — | — | (23) | — | — | (23) | |||||||||||||||||||||||||||||
| Stock-based compensation and stock options exercised | — | — | 22 | — | — | 22 | |||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | 1,358.2 | $ | 14 | $ | 19,711 | $ | 4,997 | $ | (275) | $ | 24,447 | ||||||||||||||||||||||||
| Net income | — | — | — | 547 | — | 547 | |||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | 285 | 285 | |||||||||||||||||||||||||||||
| Dividends declared, $0.23 per share | — | — | — | (312) | — | (312) | |||||||||||||||||||||||||||||
| Shares issued under employee stock-based compensation plans and other | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||
| Tax withholdings related to net share settlements | — | — | (5) | — | — | (5) | |||||||||||||||||||||||||||||
| Stock-based compensation and stock options exercised | — | — | 23 | — | — | 23 | |||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | 1,358.4 | $ | 14 | $ | 19,729 | $ | 5,232 | $ | 10 | $ | 24,985 | ||||||||||||||||||||||||
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED, CONTINUED)
| Common Stock Issued | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Total Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||||
| (in millions, except per share data) | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | 1,390.4 | $ | 14 | $ | 20,788 | $ | 4,559 | $ | 315 | $ | 25,676 | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 454 | — | 454 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (58) | (58) | |||||||||||||||||||||||||||||||||||||||||
| Dividends declared, $0.215 per share | — | — | — | (292) | — | (292) | |||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, inclusive of excise tax obligation | (38.0) | — | (1,114) | — | — | (1,114) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued under employee stock-based compensation plans and other | 3.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholdings related to net share settlements | — | — | (41) | — | — | (41) | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation and stock options exercised | — | — | 28 | — | — | 28 | |||||||||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | 1,355.6 | $ | 14 | $ | 19,661 | $ | 4,721 | $ | 257 | $ | 24,653 | ||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | 515 | — | 515 | |||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | (180) | (180) | |||||||||||||||||||||||||||||||||||||||||
| Dividends declared, $0.215 per share | — | — | — | (292) | — | (292) | |||||||||||||||||||||||||||||||||||||||||
| Shares issued under employee stock-based compensation plans and other | 0.2 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Tax withholdings related to net share settlements | — | — | (2) | — | — | (2) | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation and stock options exercised | — | — | 24 | — | — | 24 | |||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | 1,355.8 | $ | 14 | $ | 19,683 | $ | 4,944 | $ | 77 | $ | 24,718 | ||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. General
ORGANIZATION
References in this Quarterly Report on Form 10-Q to "KDP", "we", “us”, and "our", refer to Keurig Dr Pepper Inc. and all wholly-owned subsidiaries included in the unaudited condensed consolidated financial statements. Definitions of terms used in this Quarterly Report on Form 10-Q are included within the Master Glossary.
This Quarterly Report on Form 10-Q refers to some of our owned or licensed trademarks, trade names, and service marks, which are referred to as our brands. All of the product names included herein are either KDP registered trademarks or those of our licensors.
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting principally of normal recurring adjustments, considered necessary for a fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report.
References to the "second quarter" indicate the quarterly periods ended June 30, 2025 and 2024.
USE OF ESTIMATES
The process of preparing our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect reported amounts. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions we believe to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
2. Long-term Obligations and Borrowing Arrangements
The following table summarizes our long-term obligations:
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Notes | $ | 14,419 | $ | 12,948 | |||||||
| Term loan | — | 990 | |||||||||
| Less: current portion of long-term obligations | (499) | (1,026) | |||||||||
| Long-term obligations | $ | 13,920 | $ | 12,912 |
The following table summarizes our short-term borrowings and current portion of long-term obligations:
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Commercial paper notes | $ | 1,477 | $ | 1,616 | |||||||
| Current portion of long-term obligations: | |||||||||||
| Notes | 499 | 1,026 | |||||||||
| Short-term borrowings and current portion of long-term obligations | $ | 1,976 | $ | 2,642 |
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
SENIOR UNSECURED NOTES
| (in millions, except %) | Maturity Date | Rate | June 30, 2025 | December 31, 2024 | |||||||||||||||||||
| 2025 Merger Notes | May 25, 2025 | 4.417% | $ | — | $ | 529 | |||||||||||||||||
| 2025 Notes | November 15, 2025 | 3.400% | 500 | 500 | |||||||||||||||||||
| 2026 Notes | September 15, 2026 | 2.550% | 400 | 400 | |||||||||||||||||||
| 2026-B Notes | November 15, 2026 | Floating(2) | 500 | — | |||||||||||||||||||
| 2027-B Notes | March 15, 2027 | Floating(2) | 350 | 350 | |||||||||||||||||||
| 2027-C Notes | March 15, 2027 | 5.100% | 750 | 750 | |||||||||||||||||||
| 2027 Notes | June 15, 2027 | 3.430% | 500 | 500 | |||||||||||||||||||
| 2028 Notes | May 15, 2028 | 4.350% | 500 | — | |||||||||||||||||||
| 2028 Merger Notes | May 25, 2028 | 4.597% | 1,112 | 1,112 | |||||||||||||||||||
| 2029-B Notes | March 15, 2029 | 5.050% | 750 | 750 | |||||||||||||||||||
| 2029 Notes | April 15, 2029 | 3.950% | 1,000 | 1,000 | |||||||||||||||||||
| 2030 Notes | May 1, 2030 | 3.200% | 750 | 750 | |||||||||||||||||||
| 2030-B Notes | May 15, 2030 | 4.600% | 500 | — | |||||||||||||||||||
| 2031 Notes | March 15, 2031 | 2.250% | 500 | 500 | |||||||||||||||||||
| 2031-B Notes | March 15, 2031 | 5.200% | 500 | 500 | |||||||||||||||||||
| 2032 Notes | April 15, 2032 | 4.050% | 850 | 850 | |||||||||||||||||||
| 2034 Notes | March 15, 2034 | 5.300% | 650 | 650 | |||||||||||||||||||
| 2035 Notes | May 15, 2035 | 5.150% | 500 | — | |||||||||||||||||||
| 2038 Merger Notes | May 25, 2038 | 4.985% | 211 | 211 | |||||||||||||||||||
| 2045 Notes | November 15, 2045 | 4.500% | 550 | 550 | |||||||||||||||||||
| 2046 Notes | December 15, 2046 | 4.420% | 400 | 400 | |||||||||||||||||||
| 2048 Merger Notes | May 25, 2048 | 5.085% | 391 | 391 | |||||||||||||||||||
| 2050 Notes | May 1, 2050 | 3.800% | 750 | 750 | |||||||||||||||||||
| 2051 Notes | March 15, 2051 | 3.350% | 500 | 500 | |||||||||||||||||||
| 2052 Notes | April 15, 2052 | 4.500% | 1,150 | 1,150 | |||||||||||||||||||
| Principal amount | 14,564 | 13,093 | |||||||||||||||||||||
| Adjustment from principal amount to carrying amount(1) | (145) | (145) | |||||||||||||||||||||
| Carrying amount | $ | 14,419 | $ | 12,948 |
(1)The carrying amount includes unamortized discounts, debt issuance costs, and fair value adjustments related to the DPS Merger.
(2)Our floating rate notes bear interest at a rate equal to Compounded SOFR (as defined in the respective supplemental indenture) plus a spread of 0.580% and 0.880% for the 2026-B Notes and the 2027-B Notes, respectively.
On May 5, 2025, we completed the issuance of the 2026-B Notes, 2028 Notes, 2030-B Notes, and 2035 Notes, with an aggregate principal amount of $2 billion. The discount associated with these notes was approximately $4 million, and we incurred $10 million in debt issuance costs. The proceeds from the issuance were used for the repayment of outstanding commercial paper borrowings.
The 2025 Merger Notes were repaid at maturity using proceeds from commercial paper.
VARIABLE-RATE BORROWING ARRANGEMENTS
Term Loan Agreement
On January 31, 2025, we repaid the amount outstanding under the Term Loan Agreement using proceeds from commercial paper. On May 7, 2025, we terminated our Term Loan Agreement. We had no outstanding loan balances as of the termination date.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
Revolving Credit Agreement
On March 31, 2025, we entered into the 2025 Revolving Credit Agreement among KDP, as borrower, the lenders and issuing banks party thereto, and JPMorgan Chase, Bank, N.A., as administrative agent. We incurred approximately $4 million in deferred financing fees related to the issuance.
The following table summarizes information about the 2025 Revolving Credit Agreement:
| Amounts Outstanding | |||||||||||||||||||||||
| (in millions) | Maturity Date | Capacity | June 30, 2025 | December 31, 2024 | |||||||||||||||||||
| 2025 Revolving Credit Agreement(1) | March 31, 2030 | $ | 4,000 | $ | — | $ | — |
(1)The 2025 Revolving Credit Agreement has a $200 million letter of credit limit, with none utilized as of June 30, 2025.
The 2025 Revolving Credit Agreement replaced our previous revolving credit agreement.
Borrowings under the 2025 Revolving Credit Agreement will bear interest at a rate per annum equal to, at our option, the term SOFR rate plus a margin of 0.750% to 1.250% or the alternative base rate plus a margin of zero to 0.250%, in each case, depending on the rating of certain of our index debt. The 2025 Revolving Credit Agreement contains customary representations and warranties for investment grade financings. The 2025 Revolving Credit Agreement also contains (i) certain customary affirmative covenants, including those that impose certain reporting and/or performance obligations on us and our subsidiaries, (ii) certain customary negative covenants that generally limit, subject to various exceptions, us and our subsidiaries from taking certain actions, including, without limitation, incurring liens and consummating certain fundamental changes, (iii) a financial covenant in the form of a minimum interest coverage ratio of 3.25 to 1.00, and (iv) customary events of default (including a change of control) for financings of this type.
As of June 30, 2025, we were in compliance with our minimum interest coverage ratio with respect to the 2025 Revolving Credit Agreement.
Commercial Paper Program
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions, except %) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Weighted average commercial paper borrowings | $ | 2,317 | $ | 2,305 | $ | 2,498 | $ | 2,381 | |||||||||||||||
| Weighted average borrowing rates | 4.67 | % | 5.59 | % | 4.65 | % | 5.61 | % |
Letter of Credit Facility
In addition to the portion of the 2025 Revolving Credit Agreement reserved for issuance of letters of credit, we have an incremental letter of credit facility. Under this facility, $150 million is available for the issuance of letters of credit, $72 million of which was utilized as of June 30, 2025 and $78 million of which remains available for use.
FAIR VALUE DISCLOSURES
The fair value of our commercial paper approximates the carrying value and is considered Level 2 within the fair value hierarchy.
The fair values of our Notes are based on current market rates available to us and are considered Level 2 within the fair value hierarchy. The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all the Notes and related unamortized costs to be incurred at such date. The fair value of our Notes was $13,714 million and $12,036 million as of June 30, 2025 and December 31, 2024, respectively.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
3. Acquisitions
DYLA ACQUISITION
On June 2, 2025, we completed the acquisition of Dyla for aggregate consideration of $98 million. Dyla is a leading player in powdered drink mixes and liquid water enhancers. Prior to the acquisition, we held direct and indirect ownership interests in Dyla and accounted for the investment as an equity method investment. In order to complete the acquisition of Dyla, net of our previous ownership interest, we paid $69 million in cash, and approximately $3 million of cash was held back and placed in escrow.
Our preliminary allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed is based on estimated fair values as of June 2, 2025, and the consideration was primarily allocated to intangible assets and goodwill.
GHOST TRANSACTIONS
On October 23, 2024, we entered into a definitive agreement with GHOST, and certain other parties named therein, to acquire a controlling interest in GHOST. Under the terms of the agreement, we initially purchased a 60% stake in GHOST for aggregate consideration of $999 million, which included customary adjustments, and closed on December 31, 2024. We also entered into an agreement which requires us to purchase the remaining equity interests in GHOST in 2028.
In the first quarter of 2025, we finalized our allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the GHOST Transactions based on estimated fair values as of December 31, 2024, with no significant measurement period adjustments recorded.
4. Goodwill and Other Intangible Assets
GOODWILL
Changes in the carrying amount of goodwill by reportable segment are as follows:
| (in millions) | U.S. Refreshment Beverages | U.S. Coffee | International | Total | |||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | 8,855 | $ | 8,622 | $ | 2,576 | $ | 20,053 | |||||||||||||||||||||
| Acquisitions(1) | 16 | — | — | 16 | |||||||||||||||||||||||||
| Foreign currency translation | — | — | 159 | 159 | |||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | 8,871 | $ | 8,622 | $ | 2,735 | $ | 20,228 |
(1)Acquisition activity during the first six months of 2025 represents the goodwill recorded as a result of the Dyla Acquisition. Refer to Note 3 for additional information.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
INTANGIBLE ASSETS OTHER THAN GOODWILL
The net carrying amounts of intangible assets other than goodwill are as follows:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (in millions) | Gross Amount | Accumulated Amortization | Net Amount | Gross Amount | Accumulated Amortization | Net Amount | |||||||||||||||||||||||||||||
| Intangible assets with definite lives: | |||||||||||||||||||||||||||||||||||
| Acquired technology | $ | 1,146 | $ | (658) | $ | 488 | $ | 1,146 | $ | (621) | $ | 525 | |||||||||||||||||||||||
| Customer relationships | 683 | (285) | 398 | 666 | (270) | 396 | |||||||||||||||||||||||||||||
| Contractual arrangements | 145 | (26) | 119 | 144 | (21) | 123 | |||||||||||||||||||||||||||||
| Trade names | 126 | (126) | — | 126 | (124) | 2 | |||||||||||||||||||||||||||||
| Brands | 77 | (36) | 41 | 51 | (32) | 19 | |||||||||||||||||||||||||||||
| Distribution rights | 68 | (29) | 39 | 66 | (23) | 43 | |||||||||||||||||||||||||||||
| Other | 25 | — | 25 | — | — | — | |||||||||||||||||||||||||||||
| Total | $ | 2,270 | $ | (1,160) | $ | 1,110 | $ | 2,199 | $ | (1,091) | $ | 1,108 | |||||||||||||||||||||||
| Intangible assets with indefinite lives: | |||||||||||||||||||||||||||||||||||
| Brands | $ | 20,041 | $ | 19,848 | |||||||||||||||||||||||||||||||
| Trade names | 2,478 | 2,478 | |||||||||||||||||||||||||||||||||
| Distribution rights | 212 | 200 | |||||||||||||||||||||||||||||||||
| Total intangible assets with indefinite lives | 22,731 | 22,526 | |||||||||||||||||||||||||||||||||
| Other intangible assets, net | $ | 23,841 | $ | 23,634 |
Amortization expense for intangible assets with definite lives was as follows:
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Amortization expense | $ | 34 | $ | 34 | $ | 68 | $ | 67 |
5. Derivatives
We are exposed to market risks arising from adverse changes in interest rates, FX rates, and commodity prices. We manage these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward, future, swap, and option contracts, and supplier pricing agreements. We do not hold or issue derivative financial instruments for trading or speculative purposes.
All derivative instruments are recorded on a gross basis, including those subject to master netting arrangements.
We formally designate and account for certain interest rate contracts and FX forward contracts that meet established accounting criteria under U.S. GAAP as cash flow hedges. For such contracts, the effective portion of the gain or loss on the derivative instruments is recorded, net of applicable taxes, in AOCI. When net income is affected by the variability of the underlying transaction, the applicable offsetting amount of the gain or loss from the derivative instrument deferred in AOCI is reclassified to net income. Cash flows from derivative instruments designated in a qualifying hedging relationship are classified in the same category as the cash flows from the hedged items. If a cash flow hedge were to cease to qualify for hedge accounting, or were terminated, the derivatives would continue to be carried on the balance sheet at fair value until settled, and hedge accounting would be discontinued prospectively. If the underlying hedged transaction ceases to exist, any associated amounts reported in AOCI would be reclassified to earnings at that time.
For derivatives that are not designated or for which the designated hedging relationship is discontinued, the gain or loss on the instrument is recognized in earnings in the period of change.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
We have exposure to credit losses from derivative instruments in an asset position in the event of nonperformance by the counterparties to the agreements. Historically, we have not experienced material credit losses as a result of counterparty nonperformance. We select and periodically review counterparties based on credit ratings, limit our exposure to a single counterparty under defined guidelines, and monitor the market position of the programs upon execution of a hedging transaction and at least on a quarterly basis.
INTEREST RATES
Economic Hedges
We are exposed to interest rate risk related to our borrowing arrangements and obligations. We enter into interest rate contracts to provide predictability in our overall cost structure and to manage the balance of fixed-rate and variable-rate debt. We primarily enter into receive-fixed, pay-variable and receive-variable, pay-fixed swaps, and swaption contracts. A natural hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in Interest expense, net in the unaudited Condensed Consolidated Statements of Income. As of June 30, 2025, economic interest rate derivative instruments have maturities ranging from March 2027 to November 2046.
Cash Flow Hedges
From time to time, we designate certain interest rate contracts as cash flow hedges in order to manage the exposures resulting from changes in interest rates as described above. We had no such contracts outstanding as of June 30, 2025.
FOREIGN EXCHANGE
We are exposed to FX risk in our foreign subsidiaries and with certain counterparties in foreign jurisdictions, which may transact in currencies that are different from the functional currencies of our legal entities. Additionally, the balance sheets of these subsidiaries are subject to exposure from movements in exchange rates.
Economic Hedges
We hold FX forward contracts to economically manage the balance sheet exposures resulting from changes in the FX rates described above. The intent of these FX contracts is to minimize the impact of FX risk associated with balance sheet positions not in local currency. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same caption of the unaudited Condensed Consolidated Statements of Income as the associated risk. As of June 30, 2025, these FX contracts have maturities ranging from July 2025 to September 2026.
Cash Flow Hedges
We designate certain FX forward contracts as cash flow hedges in order to manage the exposures resulting from changes in the FX rates described above. These designated FX forward contracts relate to forecasted inventory purchases of our foreign subsidiaries in U.S. dollars. The intent of these FX contracts is to provide predictability in our overall cost structure. As of June 30, 2025, these FX contracts have maturities ranging from July 2025 to May 2027.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
COMMODITIES
Economic Hedges
We centrally manage the exposure to volatility in the prices of certain commodities used in our production process and transportation through various derivative contracts. We generally hold some combination of future, swap, and option contracts that economically hedge certain of our risks. In these cases, a hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items or as an offset to certain costs of production. Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same line item of the unaudited Condensed Consolidated Statements of Income as the hedged transaction. Unrealized gains and losses are recognized as a component of unallocated corporate costs until our reportable segments are affected by the completion of the underlying transaction, at which time the gain or loss is reflected as a component of the respective segment's income from operations. As of June 30, 2025, these commodity contracts have maturities ranging from July 2025 to July 2027.
NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS
The following table presents the notional amounts of our outstanding derivative instruments by type:
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Interest rate contracts | |||||||||||
| Forward starting swaps, not designated as hedging instruments | $ | 2,300 | $ | 1,700 | |||||||
| FX contracts | |||||||||||
| Forward contracts, not designated as hedging instruments | 593 | 490 | |||||||||
| Forward contracts, designated as cash flow hedges | 579 | 486 | |||||||||
| Commodity contracts, not designated as hedging instruments(1) | 578 | 515 |
(1)Notional value for commodity contracts is calculated as the expected volume times strike price per unit on a gross basis.
FAIR VALUE OF DERIVATIVE INSTRUMENTS
The fair values of commodity contracts, interest rate contracts, and FX forward contracts are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The fair value of commodity contracts are valued using the market approach based on observable market transactions, primarily underlying commodities futures or physical index prices, at the reporting date. Interest rate contracts are valued using models based primarily on readily observable market parameters, such as SOFR forward rates, for all substantial terms of our contracts and credit risk of the counterparties. FX forward contracts are valued using quoted forward FX prices at the reporting date. Therefore, we have categorized these contracts as Level 2.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
Not Designated as Hedging Instruments
The following table summarizes the location of the fair value of our derivative instruments which are not designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.
| (in millions) | Balance Sheet Location | June 30, 2025 | December 31, 2024 | ||||||||||||||
| Assets: | |||||||||||||||||
| Interest rate contracts | Prepaid expenses and other current assets | $ | 1 | $ | — | ||||||||||||
| FX contracts | Prepaid expenses and other current assets | 4 | 7 | ||||||||||||||
| Commodity contracts | Prepaid expenses and other current assets | 42 | 32 | ||||||||||||||
| FX contracts | Other non-current assets | — | 4 | ||||||||||||||
| Commodity contracts | Other non-current assets | 1 | 2 | ||||||||||||||
| Liabilities: | |||||||||||||||||
| Interest rate contracts | Other current liabilities | 5 | 22 | ||||||||||||||
| FX contracts | Other current liabilities | 3 | 4 | ||||||||||||||
| Commodity contracts | Other current liabilities | 41 | 82 | ||||||||||||||
| Interest rate contracts | Other non-current liabilities | 342 | 345 | ||||||||||||||
| FX contracts | Other non-current liabilities | 8 | — | ||||||||||||||
| Commodity contracts | Other non-current liabilities | 4 | 3 |
Designated as Hedging Instruments
The following table summarizes the location of the fair value of our derivative instruments which are designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets. All such instruments are considered Level 2 within the fair value hierarchy.
| (in millions) | Balance Sheet Location | June 30, 2025 | December 31, 2024 | ||||||||||||||
| Assets: | |||||||||||||||||
| FX contracts | Prepaid expenses and other current assets | $ | 4 | $ | 41 | ||||||||||||
| Liabilities: | |||||||||||||||||
| FX contracts | Other current liabilities | 7 | — | ||||||||||||||
IMPACT OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS
The following table presents the amount of (gains) losses, net, recognized in the unaudited Condensed Consolidated Statements of Income related to derivative instruments not designated as hedging instruments under U.S. GAAP during the periods presented. Amounts include both realized and unrealized gains and losses.
| Income Statement Location | Second Quarter | First Six Months | |||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Interest rate contracts | Interest expense, net | $ | (2) | $ | 26 | $ | (34) | $ | 52 | ||||||||||||||||||||
| FX contracts | Cost of sales | (2) | (1) | (3) | (2) | ||||||||||||||||||||||||
| FX contracts | Other income, net | 11 | (2) | 14 | (8) | ||||||||||||||||||||||||
| Commodity contracts | Cost of sales | (10) | 7 | (27) | 22 | ||||||||||||||||||||||||
| Commodity contracts | SG&A expenses | 2 | 3 | — | (9) | ||||||||||||||||||||||||
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
IMPACT OF CASH FLOW HEDGES
The following table presents the amount of gains, net, reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income related to derivative instruments designated as cash flow hedging instruments:
| Income Statement Location | Second Quarter | First Six Months | |||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Interest rate contracts | Interest expense, net | $ | (4) | $ | (4) | $ | (7) | $ | (6) | ||||||||||||||||||||
| FX contracts | Cost of sales | (8) | 2 | (13) | 2 |
We expect to reclassify approximately $13 million and $2 million of pre-tax net gains from AOCI into net income during the next twelve months related to interest rate contracts and FX contracts, respectively.
6. Leases
The following table presents the components of lease cost:
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Operating lease cost | $ | 46 | $ | 43 | $ | 90 | $ | 85 | |||||||||||||||
| Finance lease cost | |||||||||||||||||||||||
| Amortization of right-of-use assets | 28 | 30 | 56 | 60 | |||||||||||||||||||
| Interest on lease liabilities | 9 | 7 | 18 | 14 | |||||||||||||||||||
| Variable lease cost(1) | 9 | 10 | 18 | 20 | |||||||||||||||||||
| Short-term lease cost | — | — | — | 1 | |||||||||||||||||||
| Total lease cost | $ | 92 | $ | 90 | $ | 182 | $ | 180 |
(1)Variable lease cost primarily consists of common area maintenance costs, property taxes, and adjustments for inflation.
The following table presents supplemental cash flow and other information about our leases:
| First Six Months | |||||||||||
| (in millions) | 2025 | 2024 | |||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | 85 | $ | 80 | |||||||
| Operating cash flows from finance leases | 18 | 14 | |||||||||
| Financing cash flows from finance leases | 63 | 56 | |||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||
| Operating leases | 21 | 44 | |||||||||
| Finance leases | 92 | 53 |
The following table presents information about our weighted average discount rate and remaining lease term:
| June 30, 2025 | December 31, 2024 | ||||||||||
| Weighted average discount rate | |||||||||||
| Operating leases | 5.3 | % | 5.3 | % | |||||||
| Finance leases | 4.6 | % | 4.5 | % | |||||||
| Weighted average remaining lease term | |||||||||||
| Operating leases | 9 years | 9 years | |||||||||
| Finance leases | 9 years | 9 years |
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of June 30, 2025 were as follows:
| (in millions) | Operating Leases | Finance Leases | |||||||||
| Remainder of 2025 | $ | 75 | $ | 85 | |||||||
| 2026 | 166 | 208 | |||||||||
| 2027 | 143 | 116 | |||||||||
| 2028 | 112 | 103 | |||||||||
| 2029 | 103 | 96 | |||||||||
| 2030 | 83 | 85 | |||||||||
| Thereafter | 417 | 304 | |||||||||
| Total future minimum lease payments | 1,099 | 997 | |||||||||
| Less: imputed interest | (217) | (166) | |||||||||
| Present value of minimum lease payments | $ | 882 | $ | 831 |
SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED
As of June 30, 2025, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $176 million. These leases are expected to commence between the third quarter of 2025 through 2027, with initial lease terms ranging from 3 years to 10 years.
7. Segments
Our operating and reportable segments consist of the following:
-
The U.S. Refreshment Beverages segment reflects sales in the U.S. from the manufacture and distribution of branded concentrates, syrups, and finished beverages, including the sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
-
The U.S. Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single-serve brewers, and accessories, and other coffee products to partners, retailers, and directly to consumers through the Keurig.com website.
-
The International segment reflects sales in international markets, including the following:
◦Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrups, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
◦Sales in Canada from the manufacture and distribution of finished goods relating to our K-Cup pods, single-serve brewers, and other coffee products.
Segment results are based on management reports provided to the CODM, which is Tim Cofer, our CEO. Net sales and income from operations are the significant financial measures used to assess the operating performance of our operating segments. The CODM periodically monitors our actual results and remaining forecast versus our annual budget for these financial measures, and this information is used to assess performance of the reportable segments, determine the payout of short-term incentive plan compensation, and to establish management’s base salaries.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
Intersegment sales are recorded at cost and are eliminated in the unaudited Condensed Consolidated Statements of Income. We have not provided disclosures of intersegment sales or total assets for each reportable segment, as our CODM does not review and is not provided with this information. “Other segment (income) expense” includes Other operating expense (income), net, as well as other financial statement captions for infrequent charges, such as impairment of goodwill or intangible assets, used to arrive at “Income from operations - reportable segments”. “Unallocated corporate costs” are excluded from our measurement of segment performance and include unrealized commodity derivative gains and losses and certain general corporate expenses.
Information about our operations and significant expenses by reportable segment is as follows:
| (in millions) | U.S. Refreshment Beverages | U.S. Coffee | International | Total | |||||||||||||||||||
| Second Quarter of 2025 | |||||||||||||||||||||||
| Net sales | $ | 2,660 | $ | 948 | $ | 555 | $ | 4,163 | |||||||||||||||
| Cost of sales | 1,099 | 551 | 260 | ||||||||||||||||||||
| SG&A expenses | 815 | 163 | 152 | ||||||||||||||||||||
| Other segment (income) expense | — | 1 | — | ||||||||||||||||||||
| Income from operations - reportable segments | $ | 746 | $ | 233 | $ | 143 | $ | 1,122 | |||||||||||||||
| Unallocated corporate costs | (224) | ||||||||||||||||||||||
| Income from operations | 898 | ||||||||||||||||||||||
| Interest expense, net | 180 | ||||||||||||||||||||||
| Income before provision for income taxes | $ | 718 | |||||||||||||||||||||
| Second Quarter of 2024 | |||||||||||||||||||||||
| Net sales | $ | 2,407 | $ | 950 | $ | 565 | $ | 3,922 | |||||||||||||||
| Cost of sales | 950 | 526 | 267 | ||||||||||||||||||||
| SG&A expenses | 740 | 179 | 149 | ||||||||||||||||||||
| Other segment (income) expense | — | 17 | (1) | ||||||||||||||||||||
| Income from operations - reportable segments | $ | 717 | $ | 228 | $ | 150 | $ | 1,095 | |||||||||||||||
| Unallocated corporate costs | (234) | ||||||||||||||||||||||
| Income from operations | 861 | ||||||||||||||||||||||
| Interest expense, net | 204 | ||||||||||||||||||||||
| Other income, net | (15) | ||||||||||||||||||||||
| Income before provision for income taxes | $ | 672 |
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
| (in millions) | U.S. Refreshment Beverages | U.S. Coffee | International | Total | |||||||||||||||||||
| First Six Months of 2025 | |||||||||||||||||||||||
| Net sales | $ | 4,983 | $ | 1,825 | $ | 990 | $ | 7,798 | |||||||||||||||
| Cost of sales | 2,036 | 1,074 | 488 | ||||||||||||||||||||
| SG&A expenses | 1,548 | 314 | 271 | ||||||||||||||||||||
| Other segment (income) expense | (1) | 2 | (2) | ||||||||||||||||||||
| Income from operations - reportable segments | $ | 1,400 | $ | 435 | $ | 233 | $ | 2,068 | |||||||||||||||
| Unallocated corporate costs | (369) | ||||||||||||||||||||||
| Income from operations | 1,699 | ||||||||||||||||||||||
| Interest expense, net | 328 | ||||||||||||||||||||||
| Other income, net | (7) | ||||||||||||||||||||||
| Income before provision for income taxes | $ | 1,378 | |||||||||||||||||||||
| First Six Months of 2024 | |||||||||||||||||||||||
| Net sales | $ | 4,500 | $ | 1,861 | $ | 1,029 | $ | 7,390 | |||||||||||||||
| Cost of sales | 1,750 | 1,023 | 495 | ||||||||||||||||||||
| SG&A expenses | 1,419 | 345 | 272 | ||||||||||||||||||||
| Other segment (income) expense | (1) | 17 | — | ||||||||||||||||||||
| Income from operations - reportable segments | $ | 1,332 | $ | 476 | $ | 262 | $ | 2,070 | |||||||||||||||
| Unallocated corporate costs | (444) | ||||||||||||||||||||||
| Income from operations | 1,626 | ||||||||||||||||||||||
| Interest expense, net | 382 | ||||||||||||||||||||||
| Other income, net | (22) | ||||||||||||||||||||||
| Income before provision for income taxes | $ | 1,266 |
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
8. Revenue
The following table disaggregates our revenue by product portfolio and by reportable segment:
| (in millions) | U.S. Refreshment Beverages | U.S. Coffee | International | Total | |||||||||||||||||||
| Second Quarter of 2025 | |||||||||||||||||||||||
| LRB | $ | 2,589 | $ | 15 | $ | 374 | $ | 2,978 | |||||||||||||||
| K-Cup pods | — | 773 | 132 | 905 | |||||||||||||||||||
| Appliances | — | 122 | 12 | 134 | |||||||||||||||||||
| Other | 71 | 38 | 37 | 146 | |||||||||||||||||||
| Net sales | $ | 2,660 | $ | 948 | $ | 555 | $ | 4,163 | |||||||||||||||
| Second Quarter of 2024 | |||||||||||||||||||||||
| LRB | $ | 2,372 | $ | 10 | $ | 394 | $ | 2,776 | |||||||||||||||
| K-Cup pods | — | 745 | 118 | 863 | |||||||||||||||||||
| Appliances | — | 165 | 17 | 182 | |||||||||||||||||||
| Other | 35 | 30 | 36 | 101 | |||||||||||||||||||
| Net sales | $ | 2,407 | $ | 950 | $ | 565 | $ | 3,922 | |||||||||||||||
| First Six Months of 2025 | |||||||||||||||||||||||
| LRB | $ | 4,852 | $ | 28 | $ | 651 | $ | 5,531 | |||||||||||||||
| K-Cup pods | — | 1,490 | 248 | 1,738 | |||||||||||||||||||
| Appliances | — | 238 | 20 | 258 | |||||||||||||||||||
| Other | 131 | 69 | 71 | 271 | |||||||||||||||||||
| Net sales | $ | 4,983 | $ | 1,825 | $ | 990 | $ | 7,798 | |||||||||||||||
| First Six Months of 2024 | |||||||||||||||||||||||
| LRB | $ | 4,434 | $ | 14 | $ | 693 | $ | 5,141 | |||||||||||||||
| K-Cup pods | — | 1,492 | 233 | 1,725 | |||||||||||||||||||
| Appliances | — | 293 | 30 | 323 | |||||||||||||||||||
| Other | 66 | 62 | 73 | 201 | |||||||||||||||||||
| Net sales | $ | 4,500 | $ | 1,861 | $ | 1,029 | $ | 7,390 |
LRB represents net sales of owned and partner brands within our portfolio and includes branded concentrates, syrups, and finished beverages, including contract manufacturing of KDP branded products for our bottlers and distributors. K-Cup pods represents net sales from owned brands, partner brands, and private label owners. Net sales for partner brands and private label owners are contractual and long-term in nature.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
9. Earnings Per Share
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net income | $ | 547 | $ | 515 | $ | 1,064 | $ | 969 | |||||||||||||||
| Weighted average common shares outstanding | 1,358.3 | 1,355.6 | 1,357.7 | 1,368.2 | |||||||||||||||||||
| Dilutive effect of stock-based awards | 4.5 | 5.6 | 4.9 | 6.2 | |||||||||||||||||||
| Weighted average common shares outstanding and common stock equivalents | 1,362.8 | 1,361.2 | 1,362.6 | 1,374.4 | |||||||||||||||||||
| Basic EPS | $ | 0.40 | $ | 0.38 | $ | 0.78 | $ | 0.71 | |||||||||||||||
| Diluted EPS | 0.40 | 0.38 | 0.78 | 0.70 | |||||||||||||||||||
| Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation | 0.4 | 0.9 | 0.4 | 0.9 |
10. Stock-Based Compensation
The components of stock-based compensation expense are presented below:
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 23 | $ | 24 | $ | 45 | $ | 52 | |||||||||||||||
| Income tax benefit | (3) | (4) | (8) | (8) | |||||||||||||||||||
| Stock-based compensation expense, net of tax | $ | 20 | $ | 20 | $ | 37 | $ | 44 |
RESTRICTED SHARE UNITS
The table below summarizes RSU activity:
| RSUs | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
| Outstanding as of December 31, 2024 | 12,488,799 | $ | 29.70 | 2.0 | $ | 401 | |||||||||||||||||
| Granted(1) | 3,416,195 | 30.78 | |||||||||||||||||||||
| Vested and released | (2,557,226) | 30.57 | 86 | ||||||||||||||||||||
| Forfeited | (1,040,196) | 29.87 | |||||||||||||||||||||
| Outstanding as of June 30, 2025 | 12,307,572 | $ | 29.81 | 2.2 | $ | 407 |
(1)Beginning in 2025, new RSUs granted vest ratably over 4 years.
As of June 30, 2025, there was $193 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.2 years.
PERFORMANCE SHARE UNITS
In March 2025, the Remuneration & Nomination Committee of the Board approved PSU grants. Each PSU represents the right to receive one share of our common stock. The PSUs vest 3 years from the grant date, to the extent that the performance metrics are achieved during a predetermined performance period. The performance metrics include net sales growth and adjusted diluted EPS growth, as defined in the respective grant agreement, and are measured on a constant currency basis. The payout percentage for all PSUs granted ranges from 0% to 200%. Beginning in 2025, the fair value of PSUs is determined based on the number of units granted and the grant date price of common stock.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
The table below summarizes PSU activity:
| PSUs | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
| Balance as of December 31, 2024 | — | $ | — | 0.0 | $ | — | |||||||||||||||||
| Granted | 452,192 | 30.71 | |||||||||||||||||||||
| Forfeited or expired | (1,314) | 30.71 | |||||||||||||||||||||
| Balance as of June 30, 2025 | 450,878 | $ | 30.71 | 2.7 | $ | 15 |
As of June 30, 2025, there was $9 million of unrecognized compensation cost related to unvested PSUs that is expected to be recognized over a weighted average period of 2.7 years.
11. Investments
The following table summarizes our investments in unconsolidated affiliates:
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Nutrabolt(1) | $ | 1,132 | $ | 1,097 | |||||||
| Chobani | 316 | 313 | |||||||||
| Tractor | 53 | 56 | |||||||||
| Athletic Brewing(2) | 53 | 47 | |||||||||
| Other | 12 | 30 | |||||||||
| Investments in unconsolidated affiliates | $ | 1,566 | $ | 1,543 |
(1)We hold a 36.0% interest on an as-converted basis in Nutrabolt, consisting of 30.9% in Class A preferred shares acquired through our December 2022 investment, which are treated as in-substance common stock, and 5.1% in Class B common shares earned through the achievement of certain milestones included in our distribution agreement with Nutrabolt.
(2)During the first quarter of 2025, we received additional equity interests in Athletic Brewing in accordance with our investment agreement, raising our total interest to 12.2%. This earned equity is recorded in Other income, net in the unaudited Condensed Consolidated Statements of Income.
12. Income Taxes
Our effective tax rates were as follows:
| Second Quarter | First Six Months | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Effective tax rate | 23.8 | % | 23.4 | % | 22.8 | % | 23.5 | % |
For the second quarter of 2025, the change in our effective tax rate was driven by an increase in uncertain tax positions and an unfavorable comparison to a non-cash revaluation of state deferred tax liabilities in the second quarter of 2024, which was largely offset by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions.
For the first six months of 2025, the change in our effective tax rate was primarily driven by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions, partially offset by an increase in uncertain tax positions.
On July 4, 2025, the OBBB was signed into law in the U.S., which includes a broad range of tax reform provisions. We are currently evaluating the impact of the OBBB.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
13. Accumulated Other Comprehensive Income (Loss)
The following table provides a summary of changes in AOCI, net of taxes:
| (in millions) | Foreign Currency Translation Adjustments | Pension and Post-Retirement Benefit Liabilities | Cash Flow Hedges | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||
| Second Quarter of 2025 | |||||||||||||||||||||||
| Beginning balance | $ | (397) | $ | (14) | $ | 136 | $ | (275) | |||||||||||||||
| Other comprehensive income (loss) | 319 | — | (25) | 294 | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | (9) | (9) | |||||||||||||||||||
| Total other comprehensive income (loss) | 319 | — | (34) | 285 | |||||||||||||||||||
| Balance as of June 30, 2025 | $ | (78) | $ | (14) | $ | 102 | $ | 10 | |||||||||||||||
| Second Quarter of 2024 | |||||||||||||||||||||||
| Beginning balance | $ | 146 | $ | (14) | $ | 125 | $ | 257 | |||||||||||||||
| Other comprehensive (loss) income | (201) | — | 22 | (179) | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | (1) | (1) | |||||||||||||||||||
| Total other comprehensive (loss) income | (201) | — | 21 | (180) | |||||||||||||||||||
| Balance as of June 30, 2024 | $ | (55) | $ | (14) | $ | 146 | $ | 77 | |||||||||||||||
| First Six Months of 2025 | |||||||||||||||||||||||
| Beginning balance | $ | (410) | $ | (14) | $ | 148 | $ | (276) | |||||||||||||||
| Other comprehensive income (loss) | 332 | — | (32) | 300 | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | (14) | (14) | |||||||||||||||||||
| Total other comprehensive income (loss) | 332 | — | (46) | 286 | |||||||||||||||||||
| Balance as of June 30, 2025 | $ | (78) | $ | (14) | $ | 102 | $ | 10 | |||||||||||||||
| First Six Months of 2024 | |||||||||||||||||||||||
| Beginning balance | $ | 202 | $ | (14) | $ | 127 | $ | 315 | |||||||||||||||
| Other comprehensive (loss) income | (257) | — | 22 | (235) | |||||||||||||||||||
| Amounts reclassified from AOCI | — | — | (3) | (3) | |||||||||||||||||||
| Total other comprehensive (loss) income | (257) | — | 19 | (238) | |||||||||||||||||||
| Balance as of June 30, 2024 | $ | (55) | $ | (14) | $ | 146 | $ | 77 |
The following table presents the amount of (gains) losses reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income:
| Income Statement Caption | Second Quarter | First Six Months | |||||||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Cash Flow Hedges | |||||||||||||||||||||||||||||
| Interest rate contracts | Interest expense, net | $ | (4) | $ | (4) | $ | (7) | $ | (6) | ||||||||||||||||||||
| FX contracts | Cost of sales | (8) | 2 | (13) | 2 | ||||||||||||||||||||||||
| Total | (12) | (2) | (20) | (4) | |||||||||||||||||||||||||
| Income tax expense | 3 | 1 | 6 | 1 | |||||||||||||||||||||||||
| Total, net of tax | $ | (9) | $ | (1) | $ | (14) | $ | (3) |
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
14. Other Financial Information
CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS
The carrying value of cash, cash equivalents, restricted cash, and restricted cash equivalents is valued as of the balance sheet date equating fair value and is classified as Level 1. The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows:
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Cash and cash equivalents | $ | 509 | $ | 510 | |||||||
| Restricted cash and restricted cash equivalents | 56 | 80 | |||||||||
| Non-current restricted cash and restricted cash equivalents | — | 18 | |||||||||
| Total cash, cash equivalents, restricted cash, and restricted cash equivalents | $ | 565 | $ | 608 |
SELECTED BALANCE SHEET INFORMATION
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Inventories: | |||||||||||
| Raw materials | $ | 691 | $ | 524 | |||||||
| Work-in-progress | 12 | 9 | |||||||||
| Finished goods | 1,064 | 798 | |||||||||
| Total | 1,767 | 1,331 | |||||||||
| Allowance for excess and obsolete inventories | (26) | (32) | |||||||||
| Total inventories | $ | 1,741 | $ | 1,299 | |||||||
| Prepaid expenses and other current assets: | |||||||||||
| Other receivables | $ | 162 | $ | 146 | |||||||
| Prepaid income taxes | 132 | 33 | |||||||||
| Customer incentive programs | 67 | 18 | |||||||||
| Derivative instruments | 51 | 80 | |||||||||
| Prepaid marketing | 26 | 29 | |||||||||
| Spare parts | 130 | 126 | |||||||||
| Income tax receivable | 71 | 75 | |||||||||
| Other | 163 | 99 | |||||||||
| Total prepaid expenses and other current assets | $ | 802 | $ | 606 | |||||||
| Other non-current assets: | |||||||||||
| Operating lease right-of-use assets | $ | 839 | $ | 880 | |||||||
| Customer incentive programs | 42 | 45 | |||||||||
| Derivative instruments | 1 | 6 | |||||||||
| Equity securities(1) | 33 | 89 | |||||||||
| Non-current restricted cash and restricted cash equivalents | — | 18 | |||||||||
| Other | 180 | 162 | |||||||||
| Total other non-current assets | $ | 1,095 | $ | 1,200 |
(1)We sold our investment in Vita Coco and recorded a realized gain of $34 million in the first quarter of 2025.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Accrued expenses: | |||||||||||
| Accrued customer trade | $ | 484 | $ | 439 | |||||||
| Accrued compensation | 157 | 235 | |||||||||
| Insurance reserve | 61 | 57 | |||||||||
| Accrued interest | 119 | 107 | |||||||||
| Accrued termination fees(1) | — | 225 | |||||||||
| Accrued transferable tax credits | 99 | 130 | |||||||||
| Other accrued expenses | 404 | 391 | |||||||||
| Total accrued expenses | $ | 1,324 | $ | 1,584 | |||||||
| Other current liabilities: | |||||||||||
| Dividends payable | $ | 312 | $ | 312 | |||||||
| Income taxes payable | 56 | 67 | |||||||||
| Operating lease liability | 133 | 128 | |||||||||
| Finance lease liability | 146 | 125 | |||||||||
| Derivative instruments | 56 | 108 | |||||||||
| Holdback liability | 53 | 80 | |||||||||
| Other | 21 | 15 | |||||||||
| Total other current liabilities | $ | 777 | $ | 835 | |||||||
| Other non-current liabilities: | |||||||||||
| Operating lease liability | $ | 749 | $ | 790 | |||||||
| Finance lease liability | 685 | 677 | |||||||||
| Mandatory redemption liability | 719 | 689 | |||||||||
| Pension and post-retirement liability | 30 | 31 | |||||||||
| Insurance reserves | 103 | 95 | |||||||||
| Derivative instruments | 354 | 348 | |||||||||
| Deferred compensation liability | 33 | 33 | |||||||||
| Holdback liability | — | 18 | |||||||||
| Other | 82 | 72 | |||||||||
| Total other non-current liabilities | $ | 2,755 | $ | 2,753 |
(1)We paid the termination fee related to the GHOST Transactions in full in the first quarter of 2025.
Supplier Financing Arrangements
Outstanding obligations under supplier financing arrangements, which are confirmed as valid and included in accounts payable as of June 30, 2025 and December 31, 2024, were $1,668 million and $1,740 million, respectively.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
15. Commitments and Contingencies
We are occasionally subject to litigation or other legal proceedings. Reserves are recorded for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. We had litigation reserves of $3 million and $2 million as of June 30, 2025 and December 31, 2024, respectively. We have also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. We do not believe that the outcome of these, or any other, pending legal matters, individually or collectively, will have a material adverse effect on our results of operations, financial condition, or liquidity.
ANTITRUST LITIGATION
In February 2014, TreeHouse Foods, Inc. and certain affiliated entities filed suit against KDP’s wholly-owned subsidiary, Keurig (formerly known as Green Mountain Coffee Roasters, Inc.), in the U.S. District Court for the Southern District of New York (“SDNY”) (TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al.). The TreeHouse complaint asserted claims under the federal antitrust laws and various state laws, contending that Keurig had monopolized alleged markets for single serve coffee brewers and single serve coffee pods. The TreeHouse complaint sought treble monetary damages, declaratory relief, injunctive relief and attorneys’ fees. In the months that followed, a number of additional actions, including claims from another coffee manufacturer (JBR, Inc.), as well as putative class actions on behalf of direct and indirect purchasers of Keurig’s products, were filed in various federal district courts, asserting claims and seeking relief substantially similar to the claims asserted and relief sought in the TreeHouse complaint. Additional similar actions were filed by individual direct purchasers (including McLane Company, Inc., BJ’s Wholesale Club, Inc., Winn-Dixie Stores Inc., and Bi-Lo Holding LLC) in 2019 and in 2021. All of these actions were transferred to the SDNY for coordinated pre-trial proceedings (In re: Keurig Green Mountain Single-Serve Coffee Antitrust Litigation) (the “Multidistrict Antitrust Litigation”).
In July 2020, Keurig reached an agreement with one of the plaintiff groups in the Multidistrict Antitrust Litigation, the putative indirect purchaser class, to settle the claims asserted for $31 million. The settlement class consisted of individuals and entities in the United States that purchased, from persons other than Keurig and not for purposes of resale, Keurig manufactured or licensed single serve beverage portion packs during the applicable class period (beginning in September 2010 for most states). The settlement was approved and paid, and the indirect purchasers’ claims have been dismissed.
Discovery in all remaining matters pending in the Multidistrict Antitrust Litigation is concluded, with the plaintiffs collectively claiming more than $5 billion of monetary damages. Keurig strongly disputes the merits of the claims and the calculation of damages. Keurig has fully briefed summary judgment motions that, if successful, would end the cases entirely. Keurig is also pursuing its opposition to direct purchaser plaintiffs’ motion for class certification.
Keurig intends to continue vigorously defending the remaining lawsuits. At this time, we are unable to predict the outcome of these lawsuits, the potential loss or range of loss, if any, associated with the resolution of these lawsuits or any potential effect they may have on us or our results of operations. Accordingly, we have not accrued for a loss contingency. Additionally, as the timelines in these cases may be beyond our control, we can provide no assurance as to whether or when there will be material developments in these matters.
16. Restructuring
RESTRUCTURING PROGRAMS
Network Optimization
In March 2024, we announced a restructuring program designed to more effectively and efficiently meet the needs of consumers and customers. Our restructuring program includes the closure of certain facilities and other costs intended to optimize our manufacturing and distribution footprint throughout our operations.
The restructuring program is expected to incur pre-tax restructuring charges in an estimated range of $150 million to $170 million through 2026, primarily comprised of asset related costs.
KEURIG DR PEPPER INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, CONTINUED)
2023 CEO Succession and Associated Realignment
In 2023, we began to implement succession planning for our CEO, including a realignment of our executive and operating leadership team, in order to reinforce enterprise capabilities to support growth and to control costs. The program is expected to incur charges of approximately $85 million, primarily driven by severance costs, which were substantially completed as of December 31, 2024, and the sign-on bonus for our CEO.
RESTRUCTURING EXPENSES
Restructuring expenses for the defined programs were as follows:
| Second Quarter | First Six Months | ||||||||||||||||||||||
| (in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Network Optimization | $ | 10 | $ | 19 | $ | 12 | $ | 21 | |||||||||||||||
| 2023 CEO Succession and Associated Realignment | 1 | 11 | — | 13 |
RESTRUCTURING LIABILITIES
Restructuring liabilities that qualify as exit and disposal costs under U.S. GAAP are included in accounts payable and accrued expenses on the unaudited condensed consolidated financial statements. Restructuring liabilities, primarily consisting of workforce reduction costs, were as follows:
| (in millions) | Restructuring Liabilities | ||||
| Balance as of December 31, 2024 | $ | 44 | |||
| Charges to expense and other adjustments | (4) | ||||
| Cash payments | (17) | ||||
| Balance as of June 30, 2025 | $ | 23 |
17. Related Parties
In February 2025, JAB BevCo B.V., a subsidiary of JAB, sold approximately 87 million shares of our common stock through an underwritten secondary offering. Upon completion of the offering on February 28, 2025, JAB beneficially owned less than 10% of our outstanding common stock, and the three members of our Board affiliated with JAB resigned. Prior to these transactions, JAB and its affiliates were included in our disclosures of related party transactions. Effective February 28, 2025, these disclosures are no longer applicable to JAB and its affiliates.
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