Keurig Dr Pepper (KDP) Q2 2026 earnings summary

Executive summary

• Q2 2026 results exceeded expectations, with net sales surging up to 75.6% year-over-year to $7.31 billion, driven by the JDE Peet's acquisition and strong U.S. Refreshment Beverages performance.

• Adjusted diluted EPS rose 16.3% to $0.57, while GAAP diluted EPS dropped 90% to $0.04 due to acquisition and integration costs.

• Integration and deleveraging are progressing ahead of plan, with cost synergies being realized and the interim operating model functioning well.

• The company remains on track to achieve low double-digit EPS growth for 2026 and key milestones for the planned separation into two standalone companies in early 2027.

• Maintained disciplined execution amid a dynamic external environment, reinforcing confidence in full-year guidance.

Financial highlights

• Consolidated net sales grew up to 75.6% year-over-year to $7.31 billion, driven by the JDE Peet's acquisition; legacy KDP net sales rose up to 7.3%.

• Adjusted operating income increased 42.9% to $1,478 million, and adjusted net income attributable to common shareholders grew 15.2% to $783 million.

• Gross margin was 46.5%, down 860 bps due to portfolio mix; excluding JDE Peet's, gross margin contracted 210 bps.

• Free cash flow reached $714 million in Q2, with a full-year target of $2.5 billion.

• GAAP operating income fell 30.1% to $628 million due to items affecting comparability.

Outlook and guidance

• Reaffirmed full-year net sales guidance of $25.9–$26.4 billion, including $8.5–$8.7 billion from JDE Peet's.

• Legacy KDP expected to grow 4–6% in constant currency, likely at the high end of the range.

• Low double-digit constant currency adjusted EPS growth expected, with 6–7 percentage points from JDE Peet's.

• FX expected to provide a 1% tailwind to net sales and EPS.

• Pro-forma management leverage ratio targeted at 4.1x by year-end 2026.