filings.toolsItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited consolidated financial statements and notes thereto in our Annual Report.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including, in particular, statements about the impact of future events, future financial performance, plans, strategies, business combinations, expectations, prospects, competitive environment, regulation, labor matters, supply chain issues, tariffs or trade wars and related uncertainty, inflation, and availability of raw materials. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as “outlook,” “guidance,” “anticipate,” “expect,” “believe,” “could,” “estimate,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar words, phrases, or expressions and variations or negatives of these words in this Quarterly Report on Form 10-Q. We have based these forward-looking statements on our current views with respect to future events and financial performance. Our actual financial performance could differ materially from those projected in the forward-looking statements due to a variety of factors, including the inherent uncertainty of estimates, forecasts, and projections, global economic uncertainty or economic downturns, tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, or threats of such actions and related uncertainty, as well as the possibility that we are unable to successfully integrate GHOST into our business, and our financial performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking statements. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under "Risk Factors" in Part I, Item 1A of our Annual Report, as well as our subsequent filings with the SEC. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, after the date of this Quarterly Report on Form 10-Q, except to the extent required by applicable securities laws.
This Quarterly Report on Form 10-Q contains the names of some of our owned or licensed trademarks, trade names, and service marks, which we refer to as our brands. All of the product names included in this Quarterly Report on Form 10-Q are either our registered trademarks or those of our licensors.
OVERVIEW
KDP is a leading beverage company in North America that manufactures, markets, distributes, and sells hot and cold beverages and single serve brewing systems. We have a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, and The Original Donut Shop, as well as the Keurig brewing system. Our beverage brands are some of the most recognized in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, as well as powerful distribution capabilities.
Our three operating and reportable segments are U.S. Refreshment Beverages, U.S. Coffee, and International.
COMPARABLE RESULTS OF OPERATIONS
We eliminate from our financial results all applicable intercompany transactions between entities included in our consolidated financial statements and the intercompany transactions with our equity method investees. References in tables below to percentage changes that are not meaningful are denoted by "NM".
EXECUTIVE SUMMARY
RESULTS OF OPERATIONS
Second Quarter of 2025 as compared to Second Quarter of 2024
(in millions, except Diluted EPS)
Key Events During the Second Quarter of 2025
Debt Issuance
On May 5, 2025, we completed the issuance of an aggregate principal amount of $2 billion of senior unsecured notes. The proceeds from the issuance were used for the repayment of outstanding commercial paper borrowings. Refer to Note 2 of the Notes to our Unaudited Consolidated Financial Statements for further information.
Second Quarter of 2025 Compared to Second Quarter of 2024
Consolidated Operations
| Second Quarter | Percentage Change | ||||||||||||||||
| ($ in millions, except per share amounts) | 2025 | 2024 | |||||||||||||||
| Net sales | $ | 4,163 | $ | 3,922 | 6.1 | % | |||||||||||
| Cost of sales | 1,908 | 1,750 | 9.0 | ||||||||||||||
| Gross profit | 2,255 | 2,172 | 3.8 | ||||||||||||||
| Selling, general, and administrative expenses | 1,356 | 1,295 | 4.7 | ||||||||||||||
| Other operating expense, net | 1 | 16 | NM | ||||||||||||||
| Income from operations | 898 | 861 | 4.3 | ||||||||||||||
| Interest expense, net | 180 | 204 | (11.8) | ||||||||||||||
| Other income, net | — | (15) | NM | ||||||||||||||
| Income before provision for income taxes | 718 | 672 | 6.8 | ||||||||||||||
| Provision for income taxes | 171 | 157 | NM | ||||||||||||||
| Net income | $ | 547 | $ | 515 | 6.2 | ||||||||||||
| Earnings per common share: | |||||||||||||||||
| Basic | $ | 0.40 | $ | 0.38 | 5.3 | % | |||||||||||
| Diluted | 0.40 | 0.38 | 5.3 | ||||||||||||||
| Gross margin | 54.2 | % | 55.4 | % | (120) bps | ||||||||||||
| Operating margin | 21.6 | 22.0 | (40) bps | ||||||||||||||
| Effective tax rate | 23.8 | 23.4 | 40 bps |
Sales Volume
| Percentage Change | |||||
| LRB | 1.2 | % | |||
| K-Cup pods | (2.6) | ||||
| Appliances | (20.1) |
Net Sales Drivers
| Percentage Change | |||||
| Volume / mix(1) | 5.0 | % | |||
| Net price realization | 2.2 | ||||
| FX | (1.1) | ||||
| Total | 6.1 | % |
(1)The acquisition of GHOST contributed 4.0 percentage points to our consolidated volume / mix growth in the quarter.
Gross profit increased 3.8% to $2,255 million for the second quarter of 2025. This performance primarily reflected the gross profit impact of net sales growth (6 percentage points), partially offset by the net impact from changes in ingredients, materials, and productivity (3 percentage points).
SG&A expenses increased 4.7% to $1,356 million for the second quarter of 2025, primarily driven by increased transportation and warehousing expenses (4 percentage points) and integration expenses associated with acquisitions (2 percentage points), partially offset by lower marketing expense (2 percentage points).
Other operating expense, net decreased in the second quarter of 2025, primarily reflecting a favorable comparison to losses incurred in 2024 on the disposal of assets related to our Network Optimization program.
Income from operations increased 4.3% to $898 million for the second quarter of 2025, driven by increased gross profit, partially offset by higher SG&A expenses.
Interest expense, net decreased 11.8% to $180 million for the second quarter of 2025, primarily driven by a favorable year-over-year change in unrealized mark-to-market activity (15 percentage points), which was partially offset by increased debt and higher financing costs (4 percentage points).
Other income, net decreased in the second quarter of 2025, primarily reflecting an increase of approximately $29 million in our mandatory redemption liability for GHOST during the quarter, partially offset by net gains on our investments in unconsolidated affiliates.
The effective tax rate increased 40 bps to 23.8% for the second quarter of 2025, compared to 23.4% for the second quarter of 2024, primarily driven by an increase in uncertain tax positions (170 bps) and an unfavorable comparison to a non-cash revaluation of state deferred tax liabilities in the second quarter of 2024 (110 bps), which was fully offset by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions (280 bps).
Net income increased 6.2%, to $547 million for the second quarter of 2025, primarily driven by increased income from operations and reduced interest expense.
Diluted EPS increased 5.3% to $0.40 per diluted share for the second quarter of 2025 as compared to $0.38 in the second quarter of 2024.
Results of Operations by Segment
The following tables provide certain results of operations for our reportable segments for the second quarter of 2025 and 2024.
| Second Quarter | Percentage Change | ||||||||||||||||
| (in millions) | 2025 | 2024 | |||||||||||||||
| Net sales | |||||||||||||||||
| U.S. Refreshment Beverages | $ | 2,660 | $ | 2,407 | 10.5 | % | |||||||||||
| U.S. Coffee | 948 | 950 | (0.2) | ||||||||||||||
| International | 555 | 565 | (1.8) | ||||||||||||||
| Total net sales | $ | 4,163 | $ | 3,922 | 6.1 | ||||||||||||
| Income from operations | |||||||||||||||||
| U.S. Refreshment Beverages | $ | 746 | $ | 717 | 4.0 | % | |||||||||||
| U.S. Coffee | 233 | 228 | 2.2 | ||||||||||||||
| International | 143 | 150 | (4.7) | ||||||||||||||
| Unallocated corporate costs | (224) | (234) | (4.3) | ||||||||||||||
| Income from operations | $ | 898 | $ | 861 | 4.3 | ||||||||||||
| Operating margin | |||||||||||||||||
| U.S. Refreshment Beverages | 28.0 | % | 29.8 | % | (180) bps | ||||||||||||
| U.S. Coffee | 24.6 | 24.0 | 60 bps | ||||||||||||||
| International | 25.8 | 26.5 | (70) bps |
Sales Volumes
| LRB | K-Cup Pods | Appliances | ||||||||||||||||||
| U.S. Refreshment Beverages | 2.0 | % | — | % | — | % | ||||||||||||||
| U.S. Coffee | NM | (3.7) | (22.6) | |||||||||||||||||
| International | (2.2) | 4.5 | 4.8 |
Net Sales
| Volume / Mix**(1)** | Net Price Realization | FX | Total | |||||||||||||||||||||||
| U.S. Refreshment Beverages | 9.5 | % | 1.0 | % | — | % | 10.5 | % | ||||||||||||||||||
| U.S. Coffee | (3.8) | 3.6 | — | (0.2) | ||||||||||||||||||||||
| International | 0.4 | 5.3 | (7.5) | (1.8) |
(1)The acquisition of GHOST contributed 6.6 percentage points to our volume / mix growth in U.S. Refreshment Beverages in the quarter.
U.S. Refreshment Beverages
Sales volume increased 2.0% in the second quarter of 2025, driven by growth in our energy portfolio, including the acquisition of GHOST, as well as in carbonated soft drinks. These benefits were partially offset by softness in our still beverages portfolio.
Net sales increased 10.5% to $2,660 million for the second quarter of 2025, led by volume / mix growth, including a benefit from the acquisition of GHOST, as well as higher net price realization.
Income from operations increased 4.0% to $746 million for the second quarter of 2025. This performance was led by the gross profit impact of net sales growth (17 percentage points), partially offset by increased transportation and warehousing expenses (6 percentage points), a net unfavorable change in ingredients, materials, and productivity (3 percentage points), and integration expenses associated with acquisitions (3 percentage points).
U.S. Coffee
Appliance volume decreased 22.6%, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases.
Net sales decreased 0.2% to $948 million for the second quarter of 2025, as favorable net price realization was fully offset by unfavorable volume / mix.
Income from operations increased 2.2% to $233 million for the second quarter of 2025, reflecting the impacts of favorable net price realization (15 percentage points) and lower marketing expense (7 percentage points), partially offset by a net unfavorable change in ingredients, materials, and productivity (14 percentage points), unfavorable volume / mix (4 percentage points) and increases in other manufacturing costs.
International
LRB sales volume decreased 2.2%, driven by carbonated soft drinks. Appliance volumes increased 4.8% and K-Cup pod volumes increased 4.5%, reflecting category growth and market share gains in key brands.
Net sales decreased 1.8% to $555 million in the second quarter of 2025, reflecting unfavorable FX translation, partially offset by higher net price realization and volume / mix growth.
Income from operations decreased 4.7%, to $143 million for the second quarter of 2025, as the benefit from the gross profit impact of the higher net price realization and volume / mix growth (17 percentage points) was more than offset by increased transportation and warehousing expenses (8 percentage points), unfavorable FX impacts (7 percentage points), a net unfavorable impact from changes in ingredients, materials, and productivity (1 percentage point), and increases in other manufacturing costs.
First Six Months of 2025 Compared to First Six Months of 2024
Consolidated Operations
| First Six Months | Percentage Change | ||||||||||||||||||||||
| ($ in millions, except per share amounts) | 2025 | 2024 | |||||||||||||||||||||
| Net sales | $ | 7,798 | $ | 7,390 | 5.5 | % | |||||||||||||||||
| Cost of sales | 3,558 | 3,278 | 8.5 | ||||||||||||||||||||
| Gross profit | 4,240 | 4,112 | 3.1 | ||||||||||||||||||||
| Selling, general, and administrative expenses | 2,548 | 2,471 | 3.1 | ||||||||||||||||||||
| Other operating (income) expense, net | (7) | 15 | NM | ||||||||||||||||||||
| Income from operations | 1,699 | 1,626 | 4.5 | ||||||||||||||||||||
| Interest expense, net | 328 | 382 | (14.1) | ||||||||||||||||||||
| Other income, net | (7) | (22) | NM | ||||||||||||||||||||
| Income before provision for income taxes | 1,378 | 1,266 | 8.8 | ||||||||||||||||||||
| Provision for income taxes | 314 | 297 | NM | ||||||||||||||||||||
| Net income | $ | 1,064 | $ | 969 | 9.8 | ||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | 0.78 | $ | 0.71 | 9.9 | % | |||||||||||||||||
| Diluted | 0.78 | 0.70 | 11.4 | ||||||||||||||||||||
| Gross margin | 54.4 | % | 55.6 | % | (120) bps | ||||||||||||||||||
| Operating margin | 21.8 | 22.0 | (20) bps | ||||||||||||||||||||
| Effective tax rate | 22.8 | 23.5 | (70) bps |
Sales Volume
| Percentage Change | |||||
| LRB | 1.7 | % | |||
| K-Cup pods | (4.3) | ||||
| Appliances | (15.0) |
Net Sales Drivers
| Percentage Change | |||||
| Volume / mix(1) | 4.3 | % | |||
| Net price realization | 2.5 | ||||
| FX | (1.3) | ||||
| Total | 5.5 | % |
(1)The acquisition of GHOST contributed 3.5 percentage points to our consolidated volume / mix growth in the first six months of 2025.
Gross profit increased 3.1% to $4,240 million for the first six months of 2025. This performance primarily reflected the gross profit impact of net sales growth (5 percentage points), partially offset by a net unfavorable impact from changes in ingredients, materials, and productivity (2 percentage points).
SG&A expenses increased 3.1% to $2,548 million for the first six months of 2025, primarily driven by increased transportation and warehousing expenses (4 percentage points), partially offset by lower marketing expense (1 percentage point).
Income from operations increased 4.5% to $1,699 million for the first six months of 2025, primarily driven by increased gross profit, partially offset by higher SG&A expenses.
Interest expense, net decreased 14.1% to $328 million for the first six months of 2025, primarily driven by a favorable change in unrealized mark-to-market activity (22 percentage points), which was partially offset by increased debt and higher financing costs (8 percentage points).
Other income, net decreased in the first six months of 2025, primarily reflecting an increase of approximately $40 million in our mandatory redemption liability for GHOST, partially offset by net gains on our investments in unconsolidated affiliates.
The effective tax rate decreased 70 bps to 22.8% for the first six months of 2025, compared to 23.5% in the first six months of 2024, primarily driven by a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions (170 bps), which was partially offset by an increase in uncertain tax positions (100 bps).
Net income increased 9.8% to $1,064 million for the first six months of 2025, driven primarily by increased income from operations and lower interest expense.
Diluted EPS increased 11.4% to $0.78 per diluted share for the first six months of 2025 as compared to $0.70 in the first six months of 2024.
Results of Operations by Segment
The following tables provide certain results of operations for our reportable segments for the first six months of 2025 and 2024.
| First Six Months | Percentage Change | ||||||||||||||||
| (in millions) | 2025 | 2024 | |||||||||||||||
| Net sales | |||||||||||||||||
| U.S. Refreshment Beverages | $ | 4,983 | $ | 4,500 | 10.7 | % | |||||||||||
| U.S. Coffee | 1,825 | 1,861 | (1.9) | ||||||||||||||
| International | 990 | 1,029 | (3.8) | ||||||||||||||
| Total net sales | $ | 7,798 | $ | 7,390 | 5.5 | ||||||||||||
| Income from operations | |||||||||||||||||
| U.S. Refreshment Beverages | $ | 1,400 | $ | 1,332 | 5.1 | % | |||||||||||
| U.S. Coffee | 435 | 476 | (8.6) | ||||||||||||||
| International | 233 | 262 | (11.1) | ||||||||||||||
| Unallocated corporate costs | (369) | (444) | (16.9) | ||||||||||||||
| Total income from operations | $ | 1,699 | $ | 1,626 | 4.5 | ||||||||||||
| Operating margin | |||||||||||||||||
| U.S. Refreshment Beverages | 28.1 | % | 29.6 | % | (150) bps | ||||||||||||
| U.S. Coffee | 23.8 | 25.6 | (180) bps | ||||||||||||||
| International | 23.5 | 25.5 | (200) bps |
Sales Volumes
| LRB | K-Cup Pods | Appliances | ||||||||||||||||||
| U.S. Refreshment Beverages | 2.0 | % | — | % | — | % | ||||||||||||||
| U.S. Coffee | NM | (5.1) | (16.6) | |||||||||||||||||
| International | 0.5 | 1.5 | (0.4) |
Net Sales
| Volume / Mix**(1)** | Net Price Realization | FX | Total | |||||||||||||||||||||||
| U.S. Refreshment Beverages | 8.8 | % | 1.9 | % | — | % | 10.7 | % | ||||||||||||||||||
| U.S. Coffee | (4.5) | 2.6 | — | (1.9) | ||||||||||||||||||||||
| International | 0.7 | 4.8 | (9.3) | (3.8) |
(1)The acquisition of GHOST contributed 5.7 percentage points to our volume / mix growth in U.S. Refreshment Beverages in the quarter.
U.S. Refreshment Beverages
Sales volume increased 2.0% for the first six months of 2025, driven by growth in our energy portfolio, including the acquisition of GHOST, and in carbonated soft drinks. These benefits were partially offset by softness in our still beverages portfolio.
Net sales increased 10.7% to $4,983 million for the first six months of 2025, led by volume / mix growth, including a benefit from the acquisition of GHOST, as well as higher net price realization.
Income from operations increased 5.1% to $1,400 million for the first six months of 2025. This performance was led by the gross profit impact of net sales growth (17 percentage points), partially offset by increased transportation and warehousing expenses (6 percentage points), higher labor costs driven by acquisitions (3 percentage points), and the impact of a smaller earned equity achievement in 2025 compared to 2024 (3 percentage points).
U.S. Coffee
Appliance volume decreased 16.6%, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 5.1%, reflecting category elasticity in response to price increases.
Net sales decreased 1.9% to $1,825 million for the first six months of 2025, as higher net price realization was more than offset by unfavorable volume / mix.
Income from operations decreased 8.6% to $435 million for the first six months of 2025, driven by a net unfavorable impact from changes in ingredients, materials, and productivity (13 percentage points), partially offset by lower marketing expense (5 percentage points).
International
LRB sales volume increased 0.5%, primarily driven by growth in carbonated soft drinks. Appliance volumes decreased 0.4% and K-Cup pod volumes increased 1.5%.
Net sales decreased 3.8% to $990 million in the first six months of 2025, reflecting unfavorable FX translation, partially offset by higher net price realization and volume / mix growth.
Income from operations decreased 11.1% to $233 million for the first six months of 2025, as the benefit from the gross profit impact of the higher net price realization and volume/mix growth (20 percentage points) was more than offset by increased transportation and warehousing expenses (10 percentage points), unfavorable FX impacts (8 percentage points), a net unfavorable impact from changes in ingredients, materials, and productivity (4 percentage points), and increases in other manufacturing costs.
CRITICAL ACCOUNTING ESTIMATES
The process of preparing our consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are both fundamental to the portrayal of a company’s financial condition and results and require difficult, subjective, or complex estimates and assessments. These estimates and judgments are based on historical experience, future expectations, and other factors and assumptions we believe to be reasonable under the circumstances. The most significant estimates and judgments are reviewed on an ongoing basis and revised when necessary. These critical accounting estimates are discussed in greater detail in Part II, Item 7 of our Annual Report.
LIQUIDITY AND CAPITAL RESOURCES
Overview
We believe our financial condition and liquidity remain strong. We continue to manage all aspects of our business, including, but not limited to, monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing gross margin enhancement strategies through our productivity initiatives, and developing new opportunities for growth, such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
Cash generated by our foreign operations is generally repatriated to the U.S. periodically as working capital funding requirements, where allowed. We do not expect restrictions or taxes on repatriation of cash held outside the U.S. to have a material effect on our overall business, liquidity, financial condition, or results of operations for the foreseeable future.
Principal Sources of Capital Resources
Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from our operations, and borrowing capacity available under our 2025 Revolving Credit Agreement. Additionally, we have an uncommitted commercial paper program where we can issue unsecured commercial paper notes on a private placement basis. Based on our current and anticipated level of operations, we believe that our operating cash flows will be sufficient to meet our anticipated obligations for the next twelve months and thereafter for the foreseeable future. To the extent that our operating cash flows are not sufficient to meet our liquidity needs, we may utilize cash on hand or amounts available under our financing arrangements. From time to time, we may seek additional deleveraging, refinancing, or liquidity enhancing transactions, including entering into transactions to repurchase or redeem outstanding indebtedness or otherwise seek transactions to reduce interest expense, extend debt maturities, and improve our capital and liquidity structure.
Sources of Liquidity - Operations
Net cash provided by operating activities decreased $102 million for the first six months of 2025, as compared to the first six months of 2024, driven by the unfavorable comparison in working capital versus the prior year period and lower net income adjusted for non-cash items.
Sources of Liquidity - Financing
Refer to Note 2 of the Notes to our Unaudited Consolidated Financial Statements for management's discussion of our financing arrangements.
As of June 30, 2025, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.
We also have an active shelf registration statement, filed with the SEC on August 19, 2022, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board.
Principal Uses of Capital Resources
Our capital allocation priorities are investing to grow our business both organically and inorganically, continuing to strengthen our balance sheet, and returning cash to shareholders through regular quarterly dividends and opportunistic share repurchases. We dynamically adjust our cash deployment plans based on the specific opportunities available in a given period, but over time we allocate capital to balance each of these priorities.
Regular Quarterly Dividends
We have declared total dividends of $0.46 per share and $0.43 per share for the first six months of 2025 and 2024, respectively.
Repurchases of Common Stock
Our Board authorized a four-year share repurchase program, ending December 31, 2025, of up to $4 billion of our outstanding common stock. We did not repurchase any common stock during the first six months of 2025. As of June 30, 2025, $1,810 million remained available for repurchase under the authorized share repurchase program.
Capital Expenditures
Purchases of property, plant, and equipment were $226 million and $273 million for the first six months of 2025 and 2024, respectively.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, primarily related to investments in manufacturing capabilities, both in the U.S. and internationally, for the first six months of 2025 and 2024. Capital expenditures included in accounts payable and accrued expenses were $155 million and $173 million for the first six months of 2025 and 2024, respectively, which primarily related to these investments.
Investments in Unconsolidated Affiliates
From time to time, we expect to invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio. Our investments may involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.
Acquisitions of Businesses and Purchases of Intangible Assets
We have invested in the expansion of our distribution network through transactions with strategic independent bottlers or third-party brand ownership companies to ensure competitive distribution scale. Additionally, from time to time, we acquire brand ownership companies to expand our portfolio. These transactions could be accounted for either as an acquisition of a business or as an asset acquisition, if the majority of the transaction price represents the acquisition of a single intangible asset. In the second quarter of 2025, we completed the Dyla acquisition. Refer to Note 3 of the Notes to our Unaudited Consolidated Financial Statements for additional information. Purchases of intangible assets were $16 million and $49 million for the first six months of 2025 and 2024, respectively.
Uncertainties and Trends Affecting Liquidity
Disruptions in financial and credit markets, including those caused by inflation, global economic uncertainty or economic downturns, fluctuations in interest rates, or the imposition of new tariffs or changes to existing tariffs, trade wars, barriers or restrictions, or threats of such actions, and related uncertainty, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors, and may also impact our ability to access liquidity through financial markets in a timely and cost-effective manner. These disruptions could have a negative impact on the ability of our customers to timely pay their obligations to us, thus reducing our cash flow, or the ability of our vendors to timely supply materials.
Customer and consumer demand for our products may also be impacted by the risk factors discussed under "Risk Factors" in Part 1, Item 1A of our Annual Report, as well as subsequent filings with the SEC, that could have a material effect on production, delivery, and consumption of our products, which could result in a reduction in our sales volume.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
The Notes are fully and unconditionally guaranteed by certain of our direct and indirect subsidiaries (the "Guarantors"), as defined in the indentures governing the Notes. The Guarantors are 100% owned either directly or indirectly by us and jointly and severally guarantee, subject to the release provisions described below, our obligations under the Notes. None of our subsidiaries organized outside of the U.S., any of the subsidiaries held by Maple Parent Holdings Corp. prior to the DPS Merger, or any of the subsidiaries acquired after the DPS Merger (collectively, the "Non-Guarantors") guarantee the Notes. The subsidiary guarantees with respect to the Notes are subject to release upon the occurrence of certain events, including the sale of all or substantially all of a subsidiary's assets, the release of the subsidiary's guarantee of our other indebtedness, our exercise of the legal defeasance option with respect to the Notes, and the discharge of our obligations under the applicable indenture.
The following schedules present the summarized financial information for Keurig Dr Pepper Inc. (the “Parent”) and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from and amounts due to Non-Guarantors are disclosed separately. The consolidating schedules are provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries.
Summarized financial information for the Parent and Guarantors follows:
| (in millions) | First Six Months of 2025 | ||||
| Net sales | $ | 5,041 | |||
| Gross profit | 2,666 | ||||
| Income from operations | 1,765 | ||||
| Net income | 1,084 |
| (in millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Current assets | $ | 2,843 | $ | 2,373 | |||||||
| Non-current assets | 50,520 | 49,827 | |||||||||
| Total assets(1) | $ | 53,363 | $ | 52,200 | |||||||
| Current liabilities | $ | 5,117 | $ | 6,101 | |||||||
| Non-current liabilities | 22,368 | 20,984 | |||||||||
| Total liabilities(2) | $ | 27,485 | $ | 27,085 |
(1)Includes $196 million and $115 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of June 30, 2025 and December 31, 2024, respectively.
(2)Includes $2,330 million and $1,997 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of June 30, 2025 and December 31, 2024, respectively.
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