Keurig Dr Pepper Q3 Adjusted EPS Rises 22% as Sales Jump 70%

Keurig Dr Pepper Inc. (NASDAQ: KDP) reported a 70.1% increase in third-quarter adjusted net sales on a constant-currency basis, reflecting the addition of JDE Peet’s and 8.6% growth from legacy KDP. Adjusted diluted earnings per share rose 22.2% to $0.66, supported by acquisition accretion, pricing discipline, cost savings and tariff refunds.

Adjusted net sales reached $7.3 billion in the quarter ended in 2026, up from $4.3 billion a year earlier. Adjusted operating income increased 52.5% to $1.7 billion from $1.1 billion. Including currency movements, net sales grew 70.6%, adjusted operating income rose 53.1% and adjusted EPS increased 22.2%.

Refreshment beverages lead legacy growth

The U.S. Refreshment Beverages segment generated $3.0 billion in adjusted net sales, an increase of 10.9% in constant currency. Volume and mix contributed 7.2 percentage points, while net price realization added 3.7 points. Growth was led by energy drinks, carbonated soft drinks, sports hydration products and waters, with Dr Pepper and Canada Dry supporting carbonated soft-drink trends.

KDP said its energy portfolio reached a 10% market share during the quarter, while GHOST exceeded $1 billion in retail sales. Segment adjusted operating income rose 8.3% to $884 million as sales growth and productivity offset inflation and higher selling, general and administrative expenses, including increased marketing. Adjusted operating margin narrowed 0.7 percentage point to 29.1%.

U.S. Coffee returned to sales growth, with adjusted net sales rising 2.7% to $1.0 billion. A 6.9% contribution from volume and mix, driven by higher brewer and pod shipments and the mix benefit from Peet’s K-Cup pods, more than offset a 4.2% decline in net price realization. Brewer sales grew at a double-digit rate.

Adjusted operating income in U.S. Coffee increased 11.4% to $353 million, helped by tariff refunds, favorable volume and mix, and cost savings. Lower net pricing, inflation and higher marketing partly offset those gains. Adjusted operating margin expanded 2.7 percentage points to 34.7%. KDP said underlying profitability improved from the first half, though by less than planned.

JDE Peet’s adds scale

JDE Peet’s contributed $2.6 billion in adjusted net sales and $480 million in adjusted operating income, with an adjusted operating margin of 18.1%. KDP attributed profitability to pricing net of inflation, productivity and cost synergies.

The company said marketplace trends improved following the resolution of retailer negotiations and solid execution. Sales performance reflected comparisons with prior-year pricing actions and the current-year pass-through of lower costs.

KDP International posted adjusted net sales of $644 million, up 7.6% in constant currency. Net pricing added 5.7 percentage points and volume and mix contributed 1.9 points, with refreshment beverages—particularly Peñafiel in Mexico—leading growth. Canada benefited from energy drinks and ready-to-drink teas.

International adjusted operating income declined 0.6% to $160 million, while adjusted operating margin contracted 2 percentage points to 24.8%. Cost pressures and the timing of investments offset sales gains and productivity. Including currency effects, the segment’s sales rose 11%, operating income increased 3.2% and margin declined 1.9 points.

2026 outlook and balance sheet priorities

KDP expects 2026 net sales of $25.9 billion to $26.4 billion, including $8.3 billion to $8.4 billion from JDE Peet’s based on an April 1 closing date and current exchange rates. The outlook incorporates legacy KDP growth of 3% to 5% and a contribution of 7 to 8 percentage points from JDE Peet’s. Management expects low-double-digit adjusted EPS growth in constant currency and an approximately 0.5-percentage-point currency tailwind, based on its current exchange-rate outlook.

Other assumptions include interest expense of $1.09 billion to $1.11 billion, a tax rate of about 22% to 23%, roughly 1.37 billion diluted shares and approximately $190 million of pre-tax coffee joint-venture costs.

The company generated $1.0 billion in free cash flow during the quarter and ended the period with a pro forma trailing-12-month management leverage ratio of 4.1 times. Its capital-allocation priorities are business investment, maintaining the current dividend and reducing leverage rapidly while seeking to preserve investment-grade ratings for KDP and the planned Beverage Co. and Global Coffee Co.

KDP said it advanced milestones related to the planned separation of its beverage and coffee portfolios and named Russ Torres as CEO of the Coffee Operating Unit and future CEO of Global Coffee Co.

The acquisition and separation plans remain subject to material uncertainty. Risks identified by KDP include integration delays or higher costs, significant acquisition-related debt, possible credit-rating pressure, additional separation expenses, management distraction, regulatory or litigation exposure, and the possibility that the separation may not occur on the expected timetable or deliver its anticipated benefits. Tariffs, geopolitical disruption and broader economic uncertainty could also cause results to differ from management’s current expectations.