Keurig Dr Pepper (KDP) Q1 2026 earnings summary

Executive summary

• Q1 2026 net sales rose 9.4% to $4.0 billion, led by strong U.S. Refreshment Beverages momentum, while net income fell 47.8% to $270 million due to higher interest and non-operating expenses.

• The JDE Peet's acquisition closed on April 1, 2026, integrating over 20,000 employees and incurring significant financing and integration costs.

• Transformation initiatives and separation into two pure-play public companies are underway, with leadership roles defined for both entities.

• Q1 results slightly exceeded expectations, and the company reaffirmed its 2026 constant currency net sales and adjusted EPS outlook.

Financial highlights

• Net sales grew 9.4% year-over-year to $3.98–$4.0 billion, with U.S. Refreshment Beverages up 11.9% and International up 19.5% (8.5% constant currency).

• Adjusted EPS declined 7.1% to $0.39, while GAAP EPS dropped 47.4% to $0.20, reflecting acquisition and financing costs.

• Gross margin contracted 180–220 basis points to 52.8% due to elevated cost pressures.

• Free cash flow was $184 million in Q1; operating cash flow reached $281 million.

• Adjusted EBITDA for the last twelve months totaled $4.85 billion.

Outlook and guidance

• 2026 guidance: net sales of $25.9–$26.4 billion, with 4–6% constant currency growth for legacy business and $8.5–$8.7 billion from JDE Peet's.

• Low double-digit adjusted EPS growth expected, with acceleration in the second half as cost pressures ease and synergies build.

• FX expected to be a 1 percentage point tailwind for net sales and EPS.

• Free cash flow expected to reach ~$2.5 billion in 2026.

• Interest expense projected at $1.13–$1.16 billion; effective tax rate ~22%.