Keurig Dr Pepper Reports Q3 Results and Reaffirms Guidance for 2026
Delivered Q3 Diluted EPS Increase of More Than 20% FRISCO, TX and BURLINGTON, MA ( November 3, 2026 ) – Keurig Dr Pepper Inc. (NASDAQ: KDP) today reported results for the third quarter of 2026 and reaffirmed its full year guidance.
Commenting on the performance, CEO Tim Cofer stated, "We are pleased with our third quarter results, which featured meaningful net sales and EPS growth, along with healthy free cash flow. Our refreshment beverages portfolio maintained its double-digit sales growth momentum and we drove solid results in coffee, led by strong JDE Peet’s profitability. Notably, we achieved these results while stepping up investment behind our brands and capabilities to position our two future companies for success. As we enter the final stretch of the year, we are on track to deliver our 2026 financial commitments and we remain focused on achieving the remaining milestones to enable our planned separation.”
Net sales for the third quarter increased 70.6% to $7.3 billion and, on a constant currency basis, net sales advanced 70.1%. Excluding the contribution from the JDE Peet’s acquisition, legacy KDP net sales increased 8.6%, driven by volume/mix growth of 6.5% and favorable net price realization of 2.1%.
GAAP operating income increased 34.0% to $1.3 billion, including an unfavorable year-over-year impact of items affecting comparability, primarily due to acquisition and integration-related costs. Adjusted operating income increased 52.5% to $1.7 billion and totaled 22.7% of net sales. The Adjusted operating income growth was driven by net sales growth and productivity savings, partially offset by the impact of inflationary pressures and higher SG&A expenses, including increased marketing. GAAP and Adjusted operating income also included a $99 million benefit from tariff refunds in the quarter.
GAAP net income attributable to common shareholders increased 22.4% to $810 million, or $0.59 per diluted share, including an unfavorable year-over-year impact of items affecting comparability. Adjusted net income attributable to common shareholders increased 22.1% to $905 million and Adjusted diluted EPS increased 22.2% to $0.66. GAAP and Adjusted EPS growth were driven by the operating income increase, partly offset by higher non-operating expense, interest expense, non-controlling interest, and earnings allocated to preferred investors.
Operating cash flow for the third quarter was $1.04 billion and free cash flow totaled $1.01 billion.
1 Adjusted financial metrics presented in this release are non-GAAP, excluding items affecting comparability. Adjusted growth rates are non-GAAP, excluding items affecting comparability and presented on a constant currency basis. See reconciliations of GAAP results to Adjusted results on a constant currency basis in the accompanying tables. The Company does not provide reconciliations of forward-looking non-GAAP measures to GAAP measures, due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of derivative instruments, among others, which could be material. Reconciling such items would require unreasonable efforts.
Net sales for the third quarter increased 10.9% to $3.0 billion, driven by volume/mix growth of 7.2% and favorable net price realization of 3.7%.
GAAP operating income increased 2.2% to $820 million, including an unfavorable year-over-year impact of items affecting comparability. Adjusted operating income increased 8.3% to $884 million and totaled 29.1% of net sales. Adjusted operating income growth was driven by net sales growth and productivity savings, partially offset by the impact of inflationary pressures and higher SG&A expenses, including increased marketing.
Net sales for the third quarter increased 2.7% to $1.0 billion. Volume/mix growth of 6.9% was partially offset by unfavorable net price realization of 4.2%.
GAAP operating income increased 34.6% to $319 million, including a favorable year-over-year impact of items affecting comparability. Adjusted operating income increased 11.4% to $353 million and totaled 34.7% of net sales. The Adjusted operating income growth was primarily driven by the benefit from tariff refunds, as well as volume/mix growth, productivity savings, and cost synergies. These factors more than offset unfavorable net price realization, the impact of inflationary pressures, and increased marketing.
Net sales for the third quarter were $2.6 billion. GAAP operating income was $289 million, including an unfavorable impact of items affecting comparability, primarily due to acquisition and integration-related costs. Adjusted operating income was $480 million and totaled 18.1% of net sales.
The JDE Peet’s acquisition closed on April 1, and therefore the segment contribution was wholly incremental to the Company on a year-over-year basis.
Net sales for the third quarter increased 11.0% to $644 million. On a constant currency basis, net sales increased 7.6%, driven by favorable net price realization of 5.7% and volume/mix growth of 1.9%.
GAAP operating income increased 3.3% to $158 million, including a favorable year-over-year impact from currency translation. Adjusted operating income declined 0.6% to $160 million and totaled 24.8% of net sales. The Adjusted operating income decline was driven by cost pressures, including the Mexico beverage tax, and increased marketing, which offset net sales growth and productivity savings.
The 2026 guidance provided below is presented on a constant currency, non-GAAP basis. The Company does not provide reconciliations of such forward-looking non- GAAP measures to GAAP measures, due to the inability to predict the amount and timing of impacts outside of the Company's control on certain items, such as non-cash gains or losses resulting from mark-to-market adjustments of derivative instruments, among others, which could be material. Reconciling such items would require unreasonable efforts. For 2026, KDP expects net sales of $25.9-$26.4 billion and constant currency Adjusted diluted EPS growth in a low-double-digit range. This guidance now includes approximately $8.3-$8.4 billion in net sales and a 7 to 8 percentage point EPS growth contribution from the JDE Peet’s acquisition, as well as 3-5% constant currency EPS growth for KDP's legacy business, due to revised expectations for U.S. Coffee. At current exchange rates, foreign currency translation is forecasted to approximate a one half of one percentage point tailwind to 2026 full year net sales and EPS growth.
Keurig Dr Pepper (Nasdaq: KDP) is a leading beverage company with more than 150 owned, licensed and partner brands that meet a wide range of needs and occasions. Our North American refreshment beverage business holds leadership positions across carbonated soft drinks, water, juice and mixers with a portfolio of iconic brands such as Dr Pepper®, Canada Dry®, Mott’s®, A&W®, Peñafiel®, GHOST®, 7UP®, Snapple®, Clamato® and Core Hydration®. Our global coffee business spans more than 100 markets and includes the leading Keurig® single‑serve brewing system in the U.S. and Canada, along with powerhouse brands such as Peet’s, L’OR and Jacobs, and other regional coffee leaders. Our more than 50,000 employees aim to enhance the experience of every beverage and coffee occasion while making a positive impact for people, communities and the planet. Learn more at www.keurigdrpepper.com and follow us @KeurigDrPepper on LinkedIn and Instagram.
Certain statements contained herein are "forward-looking statements" within the meaning of applicable securities laws and regulations. These forward-looking statements include those preceded by, followed by or that include the words such as "outlook," "guidance," "anticipate," "enable," "expect," "believe," "could," "confident," "estimate," "feel," "continue," "ongoing," "forecast," "intend," "may," "on track," "plan," "positioned," "potential," "project," "should," "target," "will," "would" and similar words, phrases, or expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. These statements are based on the current expectations of our management, are not predictions of actual performance, and actual results may differ materially.
Forward-looking statements are subject to a number of risks and uncertainties, including the factors disclosed in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission (the “SEC”). Our actual financial performance could differ materially from the projections in the forward-looking statements due to a variety of factors, including, but not limited to, (i) the inherent uncertainty of estimates, forecasts and projections, (ii) global economic uncertainty or economic downturns, (iii) tariffs or the imposition of new tariffs, trade wars, barriers or restrictions, sanctions, geopolitical disturbances and conflicts, or threats of such actions and related uncertainty, (iv) the risk that our financial performance may be better or worse than anticipated, (v) risks related to the completion of the separation of our beverage and coffee portfolios in the anticipated timeframe or at all, (vi) our incurrence of significant debt or our entry into other funding alternatives, in each case, in connection with the acquisition of JDE Peet’s, which may result in dilution to our stockholders or introduce complexity to our capital structure, (vii) additional risks associated with the acquisition of JDE Peet's and those geographies, countries and associated governments where JDE Peet's currently operates, (viii) our ability to successfully integrate JDE Peet's into our business, or that such integration may be more difficult, time- consuming or costly than expected, (ix) constraints on management’s attention to operating and growing our business during the execution of the integration of JDE Peet's and the separation, (x) the potential downgrade of our credit ratings as a result of debt incurred and/or assumed in connection with the acquisition of JDE Peet’s and the separation, (xi) the possibility of negative impacts on business relationships in connection with the acquisition of JDE Peet’s and the separation, (xii) the risk that the separation incurs significant additional costs, (xiii) the risk of potential litigation and regulatory actions, (xiv) risks related to negative effects of the acquisition of JDE Peet’s and the pendency of the separation on our share price and (xv) the ability to achieve the anticipated strategic and financial benefits from the separation. We are under no obligation to update, modify or withdraw any forward-looking statements, except as required by applicable law .
This release includes certain non-GAAP financial measures, which differ from results using U.S. Generally Accepted Accounting Principles (“GAAP”). These non- GAAP financial measures should be considered as supplements to and should not be considered replacements for, or superior to, the GAAP measures. These measures may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define the non-GAAP financial measure in the same way. Non-GAAP financial measures typically exclude certain charges, including one-time costs that are not expected to occur routinely in future periods, described by the Company as "items affecting comparability". Refer to page A- 6for the Company's description of items affecting comparability for each period presented. The Company uses non-GAAP financial measures to evaluate our operating and financial performance and to compare such performance to that of prior periods and to the performance of our competitors. Additionally, we use non-GAAP financial measures in making operational and financial decisions and in our budgeting and planning process. We believe that providing non-GAAP financial measures to investors helps investors evaluate our operating performance, profitability and business trends in a way that is consistent with how management evaluates such performance.
Adjusted gross profit. Adjusted gross profit is defined as Net sales less Cost of sales, as adjusted for items affecting comparability as described on page A- 6. Management believes that Adjusted gross profit is useful for investors in evaluating the Company’s operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.
Adjusted operating income. Adjusted operating income is defined as Income from operations, as adjusted for items affecting comparability as described on page A- 6. Management believes that Adjusted operating income is useful for investors in evaluating the Company’s operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.
Adjusted net income. Adjusted net income is defined as Net income, as adjusted for items affecting comparability as described on page A- 6. Management believes that Adjusted net income is useful for investors in evaluating the Company’s operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.
Adjusted diluted EPS. Adjusted diluted EPS is defined as Diluted EPS, as adjusted for items affecting comparability as described on page A- 6. Management believes that Adjusted diluted EPS is useful for investors in providing period- to-period comparisons of the results of our operations since it adjusts for certain items affecting overall comparability.
Adjusted gross margin. Adjusted gross margin is defined as Adjusted gross profit divided by Net sales. Management believes that Adjusted gross margin is useful for investors as supplemental measures to evaluate our operating performance and ability to manage ongoing costs.
Adjusted operating margin. Adjusted operating margin is defined as Adjusted Income from operations divided by Net sales. Management believes that Adjusted operating margin is useful for investors as supplemental measures to evaluate our operating performance and ability to manage ongoing costs.
Adjusted interest expense . Adjusted interest expense is defined as Interest expense, net, as adjusted for items affecting comparability as described on page A-6. Management believes that Adjusted interest expense is useful for investors in evaluating our performance and establishing expectations for the impacts of interest expenses.
Adjusted EBITDA . Adjusted EBITDA is defined as EBITDA, as adjusted for items affecting comparability as described on page A- 6 . EBITDA is defined as Net income as adjusted for interest expense, net; provision for income taxes; depreciation expense; amortization of intangibles; and other amortization. Management believes that Adjusted EBITDA is useful for investors in evaluating the Company's operating results and understanding the Company's operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.
Management leverage ratio. Management leverage ratio is defined as KDP's total principal amounts of debt less cash and cash equivalents, divided by Adjusted EBITDA. Management believes that the Management leverage ratio is useful for investors in evaluating the Company’s liquidity and assessing the Company's ability to meet its financial obligations.
Free cash flow. Free cash flow is defined as net cash provided by operating activities adjusted for purchases of property, plant and equipment, proceeds from sales of property, plant and equipment, and certain items excluded for comparison to prior year periods. Management uses this measure to evaluate the company’s performance and make resource allocation decisions.
Financial measures presented on a constant currency basis. Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability, calculated on a constant currency basis by converting our current period local currency financial results using the prior period foreign currency exchange rates. Because our reporting currency is the U.S. Dollar, the value of financial measures presented in U.S. Dollar will be affected by changes in currency exchange rates. Therefore, we present certain financial measures on a constant currency basis for greater comparability.
(in millions, except share and per share data) Assets September 30, December 31, Current assets: 2026 2025 ────────────────────────────────────────────────────────────────────────────── Cash and cash equivalents $ 1,290 $ 1,026 Restricted cash and restricted cash 16 18 equivalents Trade accounts receivable, 2,523 1,671 net Inventories 3,767 1,733 Prepaid expenses and other current 2,018 818 assets Total current assets 9,614 5,266 Property, plant, and 6,094 3,230 equipment, net Equity method investments 1,358 1,660 Goodwill 29,780 20,247 Intangible assets, net 37,888 23,725 Deferred tax assets 214 36 Other non-current assets 1,924 1,295 Total assets $ 86,872 $ 55,459 Liabilities, convertible preferred stock, and equity Current liabilities: Accounts payable $ 6,223 $ 2,996 Accrued expenses 2,636 1,379 Structured payables 982 25 Short-term borrowings and current 7,270 3,105 portion of long-term obligations Other current liabilities 1,440 785 Total current liabilities 18,551 8,290 Long-term obligations 21,595 13,036 Deferred tax liabilities 8,798 5,526 Other non-current 3,879 3,091 liabilities Total liabilities 52,823 29,943 Convertible preferred stock, $0.01 par value, 4,500,000 shares authorized, 4,500,000 and 0 shares issued and outstanding as of September 4,418 — 30, 2026 and December 31, 2025, respectively. Liquidation preference of $4,500 million as of September 30, 2026 Stockholders' equity: Preferred stock, $0.01 par value, 10,500,000 shares authorized, no shares — — issued as of September 30, 2026 and December 31, 2025 Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,360,940,119 and 1,358,663,795 shares 14 14 issued and outstanding as of September 30, 2026 and December 31, 2025, respectively Additional paid-in capital 19,839 19,778 Retained earnings 5,842 5,622 Accumulated other comprehensive (loss) -269 102 income Total stockholders' equity 25,426 25,516 Non-controlling interests 4,205 — Total equity 29,631 25,516 Total liabilities, convertible preferred $ 86,872 $ 55,459 stock, and equity
(in millions) First Nine Months Operating activities: 2026 2025 ────────────────────────────────────────────────────────────────────────────── Net income $ 1,432 $ 1,726 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 527 336 Amortization of intangibles 286 101 Amortization of inventory 361 15 step-up Other amortization expense 125 117 Provision for sales returns 132 42 Deferred income taxes -177 -39 Employee stock-based compensation 95 70 expense Amortization of deferred 115 15 financing costs Gain on sale of equity method -400 — investment Loss (gain) on disposal of property, 69 -3 plant, and equipment Unrealized (gain) loss on foreign -9 7 currency Unrealized gain on derivatives -165 -127 Settlements of interest rate 70 — contracts Earnings of equity method -58 -62 investments Earned equity from distribution -16 -21 arrangements Other, net 63 -12 Changes in assets and liabilities, excluding the effects of business acquisitions:
Trade accounts receivable -131 -16 Inventories 160 -533 Income taxes receivable and 119 -27 payable, net Other current and non-current -138 -183 assets Accounts payable and accrued -41 -140 expenses Other current and non-current -199 13 liabilities Net change in operating assets and -230 -886 liabilities Net cash provided by operating 2,220 1,279 activities Investing activities: Acquisitions of businesses, net of cash -16,633 -114 acquired Proceeds from sale of equity method 400 — investment Purchases of property, plant, and -457 -338 equipment Proceeds from sales of property, plant, 145 14 and equipment Purchases of intangibles -4 -16 Other, net -2 64 Net cash used in investing $ -16,551 $ -390 activities
(in millions) First Nine Months Financing activities: 2026 2025 ────────────────────────────────────────────────────────────────────────────── Proceeds from issuance of Notes $ 6,108 $ 2,000 Repayments of Notes -400 -529 Net repayment of commercial -968 -225 paper Proceeds from Delayed Draw Term 3,626 — Loan Repayment of term loans -405 -990 Net proceeds from issuance of 4,395 — convertible preferred stock Net proceeds from sale of 3,899 — non-controlling interest Proceeds from structured 650 23 payables Repayments of structured -696 -34 payables Cash dividends paid to common -938 -937 shareholders Cash dividends paid to Preferred -107 — Investors Distributions paid to non-controlling -64 — interest holders Repurchases of common stock, inclusive — -9 of excise tax obligation Tax withholdings related to net share -34 -29 settlements Payments on finance leases -146 -96 Deferred financing charges paid -44 -103 Other, net -5 -5 Net cash provided by (used in) financing 14,871 -934 activities Cash, cash equivalents, restricted cash, and restricted cash equivalents:
Net change from operating, investing, 540 -45 and financing activities Effect of exchange rate changes -278 6 Beginning balance 1,044 608 Ending balance $ 1,306 $ 569
(UNAUDITED) The Company reports its financial results in accordance with U.S. GAAP. However, management believes that certain non-GAAP financial measures that reflect the way management evaluates the business may provide investors with additional information regarding the Company's results, trends and ongoing performance on a comparable basis.
Specifically, investors should consider the following with respect to our financial results:
Adjusted: Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability.
Items affecting comparability: Defined as certain items that are excluded for comparison to prior year periods, adjusted for the tax impact as applicable. Tax impact is determined based upon an approximate rate for each item. For each period, management adjusts for (i) the unrealized mark-to-market impact of derivative instruments not designated as hedges in accordance with U.S. GAAP that do not have an offsetting risk reflected within the financial results, as well as the unrealized mark-to-market impact of our Vita Coco investment prior to its sale in the first quarter of 2025; (ii) the amortization associated with definite-lived intangible assets; (iii) the amortization of the deferred financing costs associated with the DPS Merger and JDE Peet's Acquisition; (iv) the amortization of the fair value adjustment of the senior unsecured notes obtained as a result of the DPS Merger and JDE Peet's Acquisition; (v) stock compensation expense and the associated windfall tax benefit attributable to the matching awards made to employees who made an initial investment in KDP; (vi) transaction costs for significant business combinations (completed or abandoned), excluding costs related to the JDE Peet's Acquisition; (vii) non- cash changes in deferred tax liabilities related to goodwill and intangible assets as a result of tax rate or apportionment changes; and (viii) other certain items that are excluded for comparison purposes to prior year periods.
For the first nine months of 2026, the other certain items excluded for comparison purposes include (i) productivity expenses; (ii) restructuring adjustments associated with the 2023 CEO Succession and Associated Realignment; (iii) costs related to significant non-routine legal matters, including the antitrust litigation; (iv) restructuring expenses associated with the Network Optimization program; (v) integration expenses associated with the Dyla acquisition; (vi) the change in our mandatory redemption liability for GHOST; (vii) the impacts of various transactions with Chobani; (viii) acquisition, integration, and financing costs associated with the acquisition of JDE Peet's and subsequent spin of Global Coffee Co.; (ix) the impact of the step-up of acquired inventory associated with acquisitions; (x) Legacy JDE Peet’s transformation activities and corporate actions; (xi) Legacy JDE Peet’s ERP system implementation and upgrade expenses; (xii) Legacy JDE Peet’s losses and costs associated with divestitures; and (xiii) the reassessment of the allocation of convertible preferred dividends for items affecting comparability.
The acquisition, integration, and financing costs associated with the acquisition of JDE Peet's and subsequent spin of Global Coffee Co. category includes (i) transaction costs; (ii) integration costs; (iii) costs to obtain proceeds to close the JDE Peet's Acquisition; (iv) costs to manage the FX risk associated with the purchase price, and (v) Day 1 post-combination share-based compensation expense associated with Legacy JDE Peet’s share awards. In connection with the acquisition of JDE Peet's, we entered into financing arrangements and incurred deferred financing costs associated with these agreements. Further, we executed certain FX forward contracts to protect against negative foreign exchange movement against the Euro-denominated purchase price prior to the close of the JDE Peet's Acquisition. A-6
(UNAUDITED) For the preferred dividends, the Preferred Investors are entitled to participate in dividends declared or paid on the common shares on an as-converted basis. Beginning in the second quarter of 2026, net income attributable to common shareholders is computed under the two-class method in periods when the Preferred Investors’ participation on an as-converted basis exceeds the preferred dividends related to the Convertible Preferred Stock. The reassessment of the allocation of convertible preferred dividends for items affecting comparability caption reflects any adjustment required if the adjusted net income attributable to KDP is used if the Preferred Investors’ participation on an as-converted basis exceeds the preferred dividends related to the Convertible Preferred Stock.
For the first nine months of 2025, the other certain items excluded for comparison purposes include (i) productivity expenses; (ii) restructuring expenses associated with the 2023 CEO Succession and Associated Realignment; (iii) costs related to significant non-routine legal matters, including the antitrust litigation; (iv) restructuring expenses associated with the Network Optimization program; (v) the impact of the step-up of acquired inventory associated with acquisitions; (vi) integration expenses associated with the GHOST and Dyla acquisitions; (vii) the change in our mandatory redemption liability for GHOST; and (viii) non-cash changes in deferred tax liabilities related to goodwill and other intangible assets as a result of tax rate or apportionment changes.
Constant currency adjusted: Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability, calculated on a constant currency basis by converting our current period local currency financial results using the prior period foreign currency exchange rates.
For the third quarter and first nine months of 2026 and 2025, the supplemental financial data set forth below includes reconciliations of adjusted and constant currency adjusted financial measures to the applicable financial measure presented in the unaudited condensed consolidated financial statements for the same period. A-7
Refer to pages A- 11and A- 12for reconciliations of reported net sales to constant currency net sales and adjusted income from operations to constant currency adjusted income from operations.
Impact Reported of Constant Foreign Currency Currency Third Quarter of 2026 Change in net sales U.S. Refres… 10.9 % — % 10.9 % Bevera… U.S. 2.7 — 2.7 Coffee KDP 11.0 -3.4 7.6 Intern… JDE N/A N/A N/A Peet's Total change 70.6 -0.5 70.1 in net sales
Items Reported Affecti… Adjusted Compara… Third Quarter of 2025 Operati… margin U.S. Refresh… 29.3 % 0.5 % 29.8 % Beverag… U.S. 23.9 8.1 32.0 Coffee KDP 26.4 0.3 26.7 Interna… JDE N/A N/A N/A Peet's Total operati… 23.1 2.2 25.3 margin
Refer to p ages A- 16through A- 18for reconciliations of reported net sales to constant currency net sales and adjusted income from operations to constant currency adjusted income from operations.
Impact Reported of Constant Foreign Currency Currency First Nine Months of 2026 Change in net sales U.S. Refres… 10.9 % — % 10.9 % Bevera… U.S. -0.8 — -0.8 Coffee KDP 16.4 -6.8 9.6 Intern… JDE N/A N/A N/A Peet's Total change 53.9 -0.9 53.0 in net sales
Items Reported Affecti… Adjusted Compara… First Nine Months of 2025 Operati… margin U.S. Refresh… 28.5 % 1.0 % 29.5 % Beverag… U.S. 23.9 7.0 30.9 Coffee KDP 24.6 0.4 25.0 Interna… JDE N/A N/A N/A Peet's Total operati… 22.3 2.2 24.5 margin
(UNAUDITED) Free cash flow is defined as net cash provided by operating activities adjusted for purchases of property, plant, and equipment, proceeds from sales of property, plant, and equipment, and certain items excluded for comparison to prior year periods. For the third quarter of 2026 and 2025, there were no certain items excluded for comparison to prior year periods.
(UNAUDITED) The Company reports its financial results in accordance with U.S. GAAP. In this section, management has included pro forma EBITDA, pro forma adjusted EBITDA, and pro forma management leverage ratio, each of which is a non-GAAP financial measure. Management believes that these pro forma non-GAAP financial measures provide useful information about the Company’s pro forma operating results.
These pro forma non-GAAP financial measures are not an alternative to the unaudited pro forma statements of income prepared in accordance with U.S. GAAP and should be considered in addition to, and not as a substitute or superior to, such pro forma financial information. Using only the pro forma non-GAAP financial measures to analyze its performance would have material limitations because their calculation is based on our subjective determination regarding the nature and classification of events and circumstances that investors may find significant. For each of these pro forma non-GAAP financial measures, a reconciliation of the differences between the pro forma non-GAAP measure and the most directly comparable pro forma U.S. GAAP measure has been provided. As a result, the method used to calculate the Company's pro forma non-GAAP financial measures may differ from the methods used by other companies to calculate their non-GAAP measures.
Specifically, investors should consider the following with respect to our unaudited pro forma financial results:
Adjusted: Defined as certain financial statement captions and metrics adjusted for certain items affecting comparability.
Items affecting comparability: Defined as certain items that are excluded for comparison to prior year periods, adjusted for the tax impact as applicable. Tax impact is determined based upon an approximate rate for each item. For each period, management adjusts for (i) the unrealized mark-to-market impact of derivative instruments not designated as hedges in accordance with U.S. GAAP that do not have an offsetting risk reflected within the financial results; (ii) the amortization associated with definite-lived intangible assets; (iii) the amortization of the deferred financing costs associated with the DPS Merger and JDE Peet’s Acquisition; (iv) the amortization of the fair value adjustment of the senior unsecured notes obtained as a result of the DPS Merger and JDE Peet’s Acquisition; (v) stock compensation expense and the associated windfall tax benefit attributable to the matching awards made to employees who made an initial investment in KDP or JDE Peet’s prior to the Acquisition; (vi) transaction costs for significant business combinations (completed or abandoned), excluding costs related to the JDE Peet’s Acquisition; (vii) non- cash changes in deferred tax liabilities related to goodwill and intangible assets as a result of tax rate or apportionment changes; and (viii) other certain items that are excluded for comparison purposes to prior year periods.
For the trailing twelve months ended September 30, 2026, the other certain items excluded for comparison purposes include (i) productivity expenses; (ii) costs related to significant non-routine legal matters, including the antitrust litigation; (iii) restructuring expenses associated with the Network Optimization program; (iv) restructuring adjustments associated with the 2023 CEO Succession and Associated Realignment; (v) impairment of intangible assets; (vi) legacy JDE Peet’s transformation activities and corporate actions; (vii) legacy JDE Peet’s ERP system implementation and upgrade expenses; (viii) activity related to JDE Peet’s total return equity swaps, which were not representative of the Company’s go-forward activities; (ix) the impact of the step-up of acquired inventory associated with acquisitions; (x) integration expenses associated with the GHOST and Dyla acquisitions; (xi) the change in our mandatory redemption liability for GHOST; (xii) the impacts of various transactions with Chobani; (xiii) acquisition, integration, and financing costs associated with the anticipated acquisition of JDE Peet's and subsequent spin of Global Coffee Co; (xiv) legacy JDE Peet’s impacts from prior acquisitions; and (xv) legacy JDE Peet's losses and costs associated with divestitures.
Pro Forma Adjusted EBITDA is defined as Pro Forma EBITDA, as adjusted for items affecting comparability as described above. Pro Forma EBITDA is defined as Net income as adjusted for interest expense, net; provision for income taxes; depreciation expense; amortization of intangibles; and other amortization. Management believes that Pro Forma Adjusted EBITDA is useful for investors in evaluating the Company’s operating results and understanding the Company’s operating trends by adjusting certain items that can vary significantly depending on specific underlying transactions or events, thereby affecting comparability.
Pro Forma Management leverage ratio is defined as the Company’s total unaudited pro forma principal amounts of Long-term obligations less cash and cash equivalents, divided by Pro Forma Adjusted EBITDA. Management believes that the Pro Forma Management leverage ratio is useful for investors in evaluating the Company’s liquidity and assessing the Company’s ability to meet its financial obligations. A-20
(in millions, except for ratio) PRO FORMA ADJUSTED EBITDA RECONCILIATION - LAST TWELVE MONTHS Last Twelve Months ────────────────────────────────────────────────────────────────────────────── Pro forma net income $ 1,796 Pro forma interest expense, net 1,609 Pro forma provision for income taxes 329 Pro forma depreciation expense 755 Pro forma other amortization 168 Pro forma amortization of intangibles 496 Pro forma EBITDA 5,153 Items affecting comparability: Productivity $ 85 Mark-to-market -100 Stock compensation 23 Non-routine legal matters 16 Restructuring - 2023 CEO Succession and Associated 2 Realignment Restructuring - Network Optimization 47 Impairment of intangible assets 79 Chobani transactions -330 Acquisition, integration, and financing costs - 855 Acquisition of JDE Peet's and Spin of Global Coffee Co. Change in mandatory redemption liability for 224 GHOST Integration of acquisitions, excluding JDE 10 Peet’s Inventory step-up 361 Transaction costs, excluding JDE Peet's 9 Legacy JDE Peet's transformation activities and 207 corporate actions Legacy JDE Peet's ERP system implementation and 37 upgrade expenses Legacy JDE Peet's total return equity swaps -15 Legacy JDE Peet's prior acquisition impacts 151 Legacy JDE Peet's losses and costs associated with 8 divestitures Pro forma Adjusted EBITDA $ 6,822 September 30, 2026 Principal amounts of: Commercial paper notes $ 1,242 Senior unsecured notes 24,805 Delayed draw term loan 3,188 Total principal amounts 29,235 Less: Cash and cash equivalents 1,290 Total principal amounts less cash and cash $ 27,945 equivalents September 30, 2026 Pro forma Management Leverage 4.1 Ratio
(UNAUDITED) The following adjustments have been made to prepare the unaudited pro forma financial information to give the effect to the following:
• Application of the acquisition method of accounting under the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 805, Business Combinations (“ASC 805”), where assets and liabilities of JDE Peet’s will be recorded by KDP at their respective fair values at the date of completion of the JDE Peet's Acquisition;
• Adjustments to reflect the following debt and equity transactions used to raise proceeds for the JDE Peet's Acquisition;
• Adjustments to reflect transactions costs in connection with the JDE Peet's Acquisition; and
• Adjustments to reflect the related tax effects for the preliminary pro forma adjustments.
(a) Elimination of Net sales between KDP and JDE Peet’s as part of the JDE Peet’s Acquisition. The transactions are assumed to be at-market.
(b) Reflects the adjustments to Cost of sales related to (i) preliminary fair value step-up adjustment to inventory, which is reflected in Cost of sales during the year as the related inventory is expected to be sold within twelve months following the closing of the JDE Peet’s Acquisition, (ii) the removal of JDE Peet’s historical amortization and depreciation expense recorded within Cost of sales during the period, (iii) the addition of depreciation expense recorded within Cost of sales from acquired Property, plant, and equipment and (iv) elimination of Cost of sales between KDP and JDE Peet’s that are eliminated as part of the JDE Peet’s Acquisition (the transactions are assumed to be at- market).
(c) Reflects the adjustments to Selling, general, and administrative expenses (“SG&A”), (i) including the removal of JDE Peet’s portion of historical amortization and depreciation expense recorded in SG&A, (ii) the addition of amortization expense related to definite-lived brands, customer and distributor relationships, and acquired technology recorded within SG&A, (iii) the addition of depreciation expense related to Property, plant, and equipment, (iv) recognition of expenses for estimated transaction costs and (v) recognition of post combination stock-based compensation expense. KDP is still in the process of evaluating the fair value of the definite-lived intangible assets. Any resulting change in the fair value would have a direct impact on amortization expense. The amortization of definite-lived intangible assets is calculated on a straight-line basis. The amortization is based on the periods over which the economic benefits of the intangible assets are expected to be realized, which are subject to adjustment as additional information becomes available.
(d) Reflects the adjustment to Interest expense, net related to the preliminary fair value adjustment to JDE Peet’s historical debt.
(e) Reflects the Interest expense and amortization of issuance costs related to the Debt Financing Transactions in connection with the JDE Peet’s Acquisition: A-33
(UNAUDITED) (f) To record the income tax impact of the pro forma transaction accounting adjustments, excluding non-deductible transaction costs and non-deductible stock compensation, utilizing the blended statutory income tax rates, based on regional pre-tax data provided, of approximately 25% for the three months ended March 31, 2026, December 31, 2025 and September 30, 2025. Deductibility of estimated transaction costs was analyzed under US income tax law. Transaction costs deemed facilitative are non-deductible for US federal income tax purposes. Stock compensation is non-deductible under Netherlands local tax law and therefore, no tax benefit has been recorded as a pro forma income tax adjustment. Because the tax rates used for the unaudited pro forma condensed combined financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the JDE Peet’s Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.
(g) Represents the estimated tax impact of income allocated from a taxable entity to a non-taxable entity related to non-controlling interest within the Pod Manufacturing JV, which is not subject to federal income tax.
(h) Represents certain nonrecurring tax expenses related to implementing the Pod Manufacturing JV investment structure, including withholding taxes and the recognition of a valuation allowance on specific deferred tax assets. A-34
(UNAUDITED) The historical financial statements of JDE Peet’s have been converted from IFRS to U.S. GAAP. As IFRS differs in certain respects from U.S. GAAP, the following adjustments have been made to align JDE Peet’s historical accounting policies under IFRS to KDP’s accounting policies under U.S. GAAP for purposes of this pro forma presentation:
(i) Record the difference in pension accounting treatment from IFRS Accounting Standards to U.S. GAAP, and corresponding deferred tax adjustment.
(ii) Reflect the tax effects of adjustments made to conform with U.S. GAAP, including items related to intra-entity transfers of inventory, recognition of deferred taxes on non-qualifying assets, the reversal of backward tracing, outside basis differences, and uncertain tax positions.
(iii) Reflect the impact of business combination foreign exchange and fair value interest rate hedges not eligible for hedge accounting under U.S. GAAP, reclassifying amounts from other comprehensive income to the statement of income.
(iv) Reflect difference in hyperinflationary accounting from IFRS Accounting Standards to U.S. GAAP for operations in Turkey. Under U.S. GAAP, the financial statements of a foreign operation in a highly inflationary economy are remeasured as if the parent’s reporting currency were its functional currency.
(v) Reclassify the operating lease amortization expense and finance charges to operating lease cost. Under U.S. GAAP, lessees distinguish between finance leases and operating leases for reporting purposes. For operating leases, the right-of-use asset and corresponding lease liability are recognized on the balance sheet, and the related lease expense is presented on a straight-line basis.
(vi) Record the impact of accounting for leases embedded in revenue arrangements under U.S. GAAP. U.S. GAAP uses a rule-based classification model to categorize lessor leases as either operating, direct financing, or sales-type leases. The adjustment reclassifies certain leases from operating leases under IFRS Accounting Standards to sales-type leases under U.S. GAAP.
(vii) Reflect the reclassifications of historical JDE Peet’s financial statement line items to conform to the expected financial statement line items of the combined company following the JDE Peet’s Acquisition.
(viii) Reflect the reclassification of certain trade payables as structured payables in order to conform to KDP’s accounting policy along with the corresponding reclassification of related expenses in the statement of income. A-35
Full text with the tables
EXHIBIT 99.1
Keurig Dr Pepper Reports Q3 Results and Reaffirms Guidance for 2026
Drove Healthy Q3 Net Sales Momentum, with Growth Across all Legacy KDP Segments
Delivered Q3 Diluted EPS Increase of More Than 20%
FRISCO, TX and BURLINGTON, MA ( November 3, 2026 ) – Keurig Dr Pepper Inc.
(NASDAQ: KDP) today reported results for the third quarter of 2026 and
reaffirmed its full year guidance.
Reported GAAP Adjusted
Basis Basis1
Q3 YTD Q3 YTD
Net Sales $7.34 bn $18.63 bn $7.34 bn $18.63 bn
% vs prior 70.6% 53.9% 70.1% 53.0%
year
Diluted EPS $0.59 $0.85 $0.66 $1.65
% vs prior 20.4% (33.1)% 22.2% 13.1%
year
Commenting on the performance, CEO Tim Cofer stated, "We are pleased with our
third quarter results, which featured meaningful net sales and EPS growth, along
with healthy free cash flow. Our refreshment beverages portfolio maintained its
double-digit sales growth momentum and we drove solid results in coffee, led by
strong JDE Peet’s profitability. Notably, we achieved these results while
stepping up investment behind our brands and capabilities to position our two
future companies for success. As we enter the final stretch of the year, we are
on track to deliver our 2026 financial commitments and we remain focused on
achieving the remaining milestones to enable our planned separation.”
Third Quarter Consolidated Results
Net sales for the third quarter increased 70.6% to $7.3 billion and, on a
constant currency basis, net sales advanced 70.1%. Excluding the contribution
from the JDE Peet’s acquisition, legacy KDP net sales increased 8.6%, driven by
volume/mix growth of 6.5% and favorable net price realization of 2.1%.
GAAP operating income increased 34.0% to $1.3 billion, including an unfavorable
year-over-year impact of items affecting comparability, primarily due to
acquisition and integration-related costs. Adjusted operating income increased
52.5% to $1.7 billion and totaled 22.7% of net sales. The Adjusted operating
income growth was driven by net sales growth and productivity savings, partially
offset by the impact of inflationary pressures and higher SG&A expenses,
including increased marketing. GAAP and Adjusted operating income also included
a $99 million benefit from tariff refunds in the quarter.
GAAP net income attributable to common shareholders increased 22.4% to $810
million, or $0.59 per diluted share, including an unfavorable year-over-year
impact of items affecting comparability. Adjusted net income attributable to
common shareholders increased 22.1% to $905 million and Adjusted diluted EPS
increased 22.2% to $0.66. GAAP and Adjusted EPS growth were driven by the
operating income increase, partly offset by higher non-operating expense,
interest expense, non-controlling interest, and earnings allocated to preferred
investors.
Operating cash flow for the third quarter was $1.04 billion and free cash flow
totaled $1.01 billion.
1 Adjusted financial metrics presented in this release are non-GAAP, excluding
items affecting comparability. Adjusted growth rates are non-GAAP, excluding
items affecting comparability and presented on a constant currency basis. See
reconciliations of GAAP results to Adjusted results on a constant currency basis
in the accompanying tables. The Company does not provide reconciliations of
forward-looking non-GAAP measures to GAAP measures, due to the inability to
predict the amount and timing of impacts outside of the Company's control on
certain items, such as non-cash gains or losses resulting from mark-to-market
adjustments of derivative instruments, among others, which could be material.
Reconciling such items would require unreasonable efforts.
Third Quarter
Segment Results
U.S. Refreshment Beverages
Net sales for the third quarter increased 10.9% to $3.0 billion, driven by
volume/mix growth of 7.2% and favorable net price realization of 3.7%.
GAAP operating income increased 2.2% to $820 million, including an unfavorable
year-over-year impact of items affecting comparability. Adjusted operating
income increased 8.3% to $884 million and totaled 29.1% of net sales. Adjusted
operating income growth was driven by net sales growth and productivity savings,
partially offset by the impact of inflationary pressures and higher SG&A
expenses, including increased marketing.
U.S. Coffee
Net sales for the third quarter increased 2.7% to $1.0 billion. Volume/mix
growth of 6.9% was partially offset by unfavorable net price realization of
4.2%.
GAAP operating income increased 34.6% to $319 million, including a favorable
year-over-year impact of items affecting comparability. Adjusted operating
income increased 11.4% to $353 million and totaled 34.7% of net sales. The
Adjusted operating income growth was primarily driven by the benefit from tariff
refunds, as well as volume/mix growth, productivity savings, and cost synergies.
These factors more than offset unfavorable net price realization, the impact of
inflationary pressures, and increased marketing.
JDE Peet’s
Net sales for the third quarter were $2.6 billion. GAAP operating income was
$289 million, including an unfavorable impact of items affecting comparability,
primarily due to acquisition and integration-related costs. Adjusted operating
income was $480 million and totaled 18.1% of net sales.
The JDE Peet’s acquisition closed on April 1, and therefore the segment
contribution was wholly incremental to the Company on a year-over-year basis.
KDP International
Net sales for the third quarter increased 11.0% to $644 million. On a constant
currency basis, net sales increased 7.6%, driven by favorable net price
realization of 5.7% and volume/mix growth of 1.9%.
GAAP operating income increased 3.3% to $158 million, including a favorable
year-over-year impact from currency translation. Adjusted operating income
declined 0.6% to $160 million and totaled 24.8% of net sales. The Adjusted
operating income decline was driven by cost pressures, including the Mexico
beverage tax, and increased marketing, which offset net sales growth and
productivity savings.
2026 Guidance
The 2026 guidance provided below is presented on a constant currency, non-GAAP
basis. The Company does not provide reconciliations of such forward-looking non-
GAAP measures to GAAP measures, due to the inability to predict the amount and
timing of impacts outside of the Company's control on certain items, such as
non-cash gains or losses resulting from mark-to-market adjustments of derivative
instruments, among others, which could be material. Reconciling such items would
require unreasonable efforts.
For 2026, KDP expects net sales of $25.9-$26.4 billion and constant currency
Adjusted diluted EPS growth in a low-double-digit range. This guidance now
includes approximately $8.3-$8.4 billion in net sales and a 7 to 8 percentage
point EPS growth contribution from the JDE Peet’s acquisition, as well as 3-5%
constant currency EPS growth for KDP's legacy business, due to revised
expectations for U.S. Coffee. At current exchange rates, foreign currency
translation is forecasted to approximate a one half of one percentage point
tailwind to 2026 full year net sales and EPS growth.
Investor Contact:
Investor Relations
T: 888-340-5287 / IR@kdrp.com
Media Contact:
Katie Gilroy
T: 781-418-3345 / katie.gilroy@kdrp.com
ABOUT KEURIG DR PEPPER
Keurig Dr Pepper (Nasdaq: KDP) is a leading beverage company with more than 150
owned, licensed and partner brands that meet a wide range of needs and
occasions. Our North American refreshment beverage business holds leadership
positions across carbonated soft drinks, water, juice and mixers with a
portfolio of iconic brands such as Dr Pepper®, Canada Dry®, Mott’s®, A&W®,
Peñafiel®, GHOST®, 7UP®, Snapple®, Clamato® and Core Hydration®. Our global
coffee business spans more than 100 markets and includes the leading Keurig®
single‑serve brewing system in the U.S. and Canada, along with powerhouse brands
such as Peet’s, L’OR and Jacobs, and other regional coffee leaders. Our more
than 50,000 employees aim to enhance the experience of every beverage and coffee
occasion while making a positive impact for people, communities and the planet.
Learn more at www.keurigdrpepper.com and follow us @KeurigDrPepper on LinkedIn
and Instagram.
FORWARD LOOKING STATEMENTS
Certain statements contained herein are "forward-looking statements" within the
meaning of applicable securities laws and regulations. These forward-looking
statements include those preceded by, followed by or that include the words such
as "outlook," "guidance," "anticipate," "enable," "expect," "believe," "could,"
"confident," "estimate," "feel," "continue," "ongoing," "forecast," "intend,"
"may," "on track," "plan," "positioned," "potential," "project," "should,"
"target," "will," "would" and similar words, phrases, or expressions and
variations or negatives of these words. Forward-looking statements by their
nature address matters that are, to different degrees, uncertain. These
statements are based on the current expectations of our management, are not
predictions of actual performance, and actual results may differ materially.
Forward-looking statements are subject to a number of risks and uncertainties,
including the factors disclosed in our Annual Report on Form 10-K and subsequent
filings with the Securities and Exchange Commission (the “SEC”). Our actual
financial performance could differ materially from the projections in the
forward-looking statements due to a variety of factors, including, but not
limited to, (i) the inherent uncertainty of estimates, forecasts and
projections, (ii) global economic uncertainty or economic downturns, (iii)
tariffs or the imposition of new tariffs, trade wars, barriers or restrictions,
sanctions, geopolitical disturbances and conflicts, or threats of such actions
and related uncertainty, (iv) the risk that our financial performance may be
better or worse than anticipated, (v) risks related to the completion of the
separation of our beverage and coffee portfolios in the anticipated timeframe or
at all, (vi) our incurrence of significant debt or our entry into other funding
alternatives, in each case, in connection with the acquisition of JDE Peet’s,
which may result in dilution to our stockholders or introduce complexity to our
capital structure, (vii) additional risks associated with the acquisition of JDE
Peet's and those geographies, countries and associated governments where JDE
Peet's currently operates, (viii) our ability to successfully integrate JDE
Peet's into our business, or that such integration may be more difficult, time-
consuming or costly than expected, (ix) constraints on management’s attention to
operating and growing our business during the execution of the integration of
JDE Peet's and the separation, (x) the potential downgrade of our credit ratings
as a result of debt incurred and/or assumed in connection with the acquisition
of JDE Peet’s and the separation, (xi) the possibility of negative impacts on
business relationships in connection with the acquisition of JDE Peet’s and the
separation, (xii) the risk that the separation incurs significant additional
costs, (xiii) the risk of potential litigation and regulatory actions, (xiv)
risks related to negative effects of the acquisition of JDE Peet’s and the
pendency of the separation on our share price and (xv) the ability to achieve
the anticipated strategic and financial benefits from the separation. We are
under no obligation to update, modify or withdraw any forward-looking
statements, except as required by applicable law .
NON-GAAP FINANCIAL MEASURES
This release includes certain non-GAAP financial measures, which differ from
results using U.S. Generally Accepted Accounting Principles (“GAAP”). These non-
GAAP financial measures should be considered as supplements to and should not be
considered replacements for, or superior to, the GAAP measures. These measures
may differ from similarly titled non-GAAP financial measures presented by other
companies, and other companies may not define the non-GAAP financial measure in
the same way. Non-GAAP financial measures typically exclude certain charges,
including one-time costs that are not expected to occur routinely in future
periods, described by the Company as "items affecting comparability". Refer to
page A- 6for the Company's description of items affecting comparability for each
period presented. The Company uses non-GAAP financial measures to evaluate our
operating and financial performance and to compare such performance to that of
prior periods and to the performance of our competitors. Additionally, we use
non-GAAP financial measures in making operational and financial decisions and in
our budgeting and planning process. We believe that providing non-GAAP financial
measures to investors helps investors evaluate our operating performance,
profitability and business trends in a way that is consistent with how
management evaluates such performance.
Adjusted gross profit. Adjusted gross profit is defined as Net sales less Cost
of sales, as adjusted for items affecting comparability as described on page A-
6. Management believes that Adjusted gross profit is useful for investors in
evaluating the Company’s operating results and understanding the Company's
operating trends by adjusting certain items that can vary significantly
depending on specific underlying transactions or events, thereby affecting
comparability.
Adjusted operating income. Adjusted operating income is defined as Income from
operations, as adjusted for items affecting comparability as described on page
A- 6. Management believes that Adjusted operating income is useful for investors
in evaluating the Company’s operating results and understanding the Company's
operating trends by adjusting certain items that can vary significantly
depending on specific underlying transactions or events, thereby affecting
comparability.
Adjusted net income. Adjusted net income is defined as Net income, as adjusted
for items affecting comparability as described on page A- 6. Management believes
that Adjusted net income is useful for investors in evaluating the Company’s
operating results and understanding the Company's operating trends by adjusting
certain items that can vary significantly depending on specific underlying
transactions or events, thereby affecting comparability.
Adjusted diluted EPS. Adjusted diluted EPS is defined as Diluted EPS, as
adjusted for items affecting comparability as described on page A- 6. Management
believes that Adjusted diluted EPS is useful for investors in providing period-
to-period comparisons of the results of our operations since it adjusts for
certain items affecting overall comparability.
Adjusted gross margin. Adjusted gross margin is defined as Adjusted gross profit
divided by Net sales. Management believes that Adjusted gross margin is useful
for investors as supplemental measures to evaluate our operating performance and
ability to manage ongoing costs.
Adjusted operating margin. Adjusted operating margin is defined as Adjusted
Income from operations divided by Net sales. Management believes that Adjusted
operating margin is useful for investors as supplemental measures to evaluate
our operating performance and ability to manage ongoing costs.
Adjusted interest expense . Adjusted interest expense is defined as Interest
expense, net, as adjusted for items affecting comparability as described on page
A-6. Management believes that Adjusted interest expense is useful for investors
in evaluating our performance and establishing expectations for the impacts of
interest expenses.
Adjusted EBITDA . Adjusted EBITDA is defined as EBITDA, as adjusted for items
affecting comparability as described on page A- 6 . EBITDA is defined as Net
income as adjusted for interest expense, net; provision for income taxes;
depreciation expense; amortization of intangibles; and other amortization.
Management believes that Adjusted EBITDA is useful for investors in evaluating
the Company's operating results and understanding the Company's operating trends
by adjusting certain items that can vary significantly depending on specific
underlying transactions or events, thereby affecting comparability.
Management leverage ratio. Management leverage ratio is defined as KDP's total
principal amounts of debt less cash and cash equivalents, divided by Adjusted
EBITDA. Management believes that the Management leverage ratio is useful for
investors in evaluating the Company’s liquidity and assessing the Company's
ability to meet its financial obligations.
Free cash flow. Free cash flow is defined as net cash provided by operating
activities adjusted for purchases of property, plant and equipment, proceeds
from sales of property, plant and equipment, and certain items excluded for
comparison to prior year periods. Management uses this measure to evaluate the
company’s performance and make resource allocation decisions.
Financial measures presented on a constant currency basis. Defined as certain
financial statement captions and metrics adjusted for certain items affecting
comparability, calculated on a constant currency basis by converting our current
period local currency financial results using the prior period foreign currency
exchange rates. Because our reporting currency is the U.S. Dollar, the value of
financial measures presented in U.S. Dollar will be affected by changes in
currency exchange rates. Therefore, we present certain financial measures on a
constant currency basis for greater comparability.
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in
milli…
except
per First
share Third Nine
data) Quarter 2026 2025 Months 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net $ 7,344 $ 4,306 $ 18,629 $ 12,104
sales
Cost
of 3,819 1,966 9,940 5,524
sales
Gross 3,525 2,340 8,689 6,580
prof…
Sell…
gene…
and 2,137 1,344 5,876 3,892
admi…
expe…
Other
oper…
expe… 55 1 96 -6
(inc…
net
Inco…
from 1,333 995 2,717 2,694
oper…
Inte…
expe… 474 188 1,091 516
net
Gain
on
sale
of -400 — -400 —
equi…
meth…
inve…
Other
expe… 47 -45 152 -52
(inc…
net
Inco…
befo…
prov… 1,212 852 1,874 2,230
for
inco…
taxes
Prov…
for 260 190 442 504
inco…
taxes
Net 952 $ 662 1,432 $ 1,726
inco…
Less:
Net
inco…
attr… 70 — 138 —
to
non-…
inte…
Net
inco…
attr… 882 662 1,294 1,726
to
KDP
Less:
Net
inco…
allo… 72 — 135 —
to
Pref…
Inve…
Net
inco…
attr… $ 810 $ 662 $ 1,159 $ 1,726
to
comm…
shar…
Earn…
per
comm…
shar…
Basic $ 0.60 $ 0.49 $ 0.85 $ 1.27
Dilu… 0.59 0.49 0.85 1.27
Weig…
aver…
comm…
shar…
outs…
Basic 1,360… 1,358.5 1,360.2 1,358…
Dilu… 1,366… 1,362.9 1,364.9 1,362…
A-1
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share
and per share data)
Assets September 30, December 31,
Current assets: 2026 2025
──────────────────────────────────────────────────────────────────────────────
Cash and cash equivalents $ 1,290 $ 1,026
Restricted cash and
restricted cash 16 18
equivalents
Trade accounts receivable, 2,523 1,671
net
Inventories 3,767 1,733
Prepaid expenses and other
current 2,018 818
assets
Total current assets 9,614 5,266
Property, plant, and 6,094 3,230
equipment, net
Equity method investments 1,358 1,660
Goodwill 29,780 20,247
Intangible assets, net 37,888 23,725
Deferred tax assets 214 36
Other non-current assets 1,924 1,295
Total assets $ 86,872 $ 55,459
Liabilities, convertible
preferred
stock, and equity
Current liabilities:
Accounts payable $ 6,223 $ 2,996
Accrued expenses 2,636 1,379
Structured payables 982 25
Short-term borrowings and
current 7,270 3,105
portion of long-term
obligations
Other current liabilities 1,440 785
Total current liabilities 18,551 8,290
Long-term obligations 21,595 13,036
Deferred tax liabilities 8,798 5,526
Other non-current 3,879 3,091
liabilities
Total liabilities 52,823 29,943
Convertible preferred
stock, $0.01 par
value, 4,500,000 shares
authorized,
4,500,000 and 0 shares
issued and
outstanding as of September 4,418 —
30, 2026 and
December 31, 2025,
respectively.
Liquidation preference of
$4,500 million
as of September 30, 2026
Stockholders' equity:
Preferred stock, $0.01 par
value,
10,500,000 shares
authorized, no shares — —
issued as of September 30,
2026 and
December 31, 2025
Common stock, $0.01 par
value,
2,000,000,000 shares
authorized,
1,360,940,119 and
1,358,663,795 shares 14 14
issued and outstanding as
of September
30, 2026 and December 31,
2025,
respectively
Additional paid-in capital 19,839 19,778
Retained earnings 5,842 5,622
Accumulated other
comprehensive (loss) -269 102
income
Total stockholders' equity 25,426 25,516
Non-controlling interests 4,205 —
Total equity 29,631 25,516
Total liabilities,
convertible preferred $ 86,872 $ 55,459
stock, and equity
A-2
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions) First Nine Months
Operating activities: 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net income $ 1,432 $ 1,726
Adjustments to reconcile net
income to
net cash provided by operating
activities:
Depreciation expense 527 336
Amortization of intangibles 286 101
Amortization of inventory 361 15
step-up
Other amortization expense 125 117
Provision for sales returns 132 42
Deferred income taxes -177 -39
Employee stock-based
compensation 95 70
expense
Amortization of deferred 115 15
financing costs
Gain on sale of equity method -400 —
investment
Loss (gain) on disposal of
property, 69 -3
plant, and equipment
Unrealized (gain) loss on
foreign -9 7
currency
Unrealized gain on derivatives -165 -127
Settlements of interest rate 70 —
contracts
Earnings of equity method -58 -62
investments
Earned equity from distribution -16 -21
arrangements
Other, net 63 -12
Changes in assets and
liabilities,
excluding the effects of
business
acquisitions:
Trade accounts receivable -131 -16
Inventories 160 -533
Income taxes receivable and 119 -27
payable, net
Other current and non-current -138 -183
assets
Accounts payable and accrued -41 -140
expenses
Other current and non-current -199 13
liabilities
Net change in operating assets
and -230 -886
liabilities
Net cash provided by operating 2,220 1,279
activities
Investing activities:
Acquisitions of businesses, net
of cash -16,633 -114
acquired
Proceeds from sale of equity
method 400 —
investment
Purchases of property, plant,
and -457 -338
equipment
Proceeds from sales of
property, plant, 145 14
and equipment
Purchases of intangibles -4 -16
Other, net -2 64
Net cash used in investing $ -16,551 $ -390
activities
A-3
KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions) First Nine Months
Financing activities: 2026 2025
──────────────────────────────────────────────────────────────────────────────
Proceeds from issuance of Notes $ 6,108 $ 2,000
Repayments of Notes -400 -529
Net repayment of commercial -968 -225
paper
Proceeds from Delayed Draw Term 3,626 —
Loan
Repayment of term loans -405 -990
Net proceeds from issuance of 4,395 —
convertible preferred stock
Net proceeds from sale of 3,899 —
non-controlling interest
Proceeds from structured 650 23
payables
Repayments of structured -696 -34
payables
Cash dividends paid to common -938 -937
shareholders
Cash dividends paid to Preferred -107 —
Investors
Distributions paid to
non-controlling -64 —
interest holders
Repurchases of common stock,
inclusive — -9
of excise tax obligation
Tax withholdings related to net
share -34 -29
settlements
Payments on finance leases -146 -96
Deferred financing charges paid -44 -103
Other, net -5 -5
Net cash provided by (used in)
financing 14,871 -934
activities
Cash, cash equivalents,
restricted cash,
and restricted cash equivalents:
Net change from operating,
investing, 540 -45
and financing activities
Effect of exchange rate changes -278 6
Beginning balance 1,044 608
Ending balance $ 1,306 $ 569
A-4
KEURIG DR PEPPER INC.
RECONCILIATION OF SEGMENT INFORMATION
(UNAUDITED)
(in First
millio… Third Nine
Net Quarter Months
sales 2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
U.S.
Refres… $ 3,033 $ 2,735 $ 8,557 $ 7,718
Bevera…
U.S. 1,018 991 2,793 2,816
Coffee
KDP 644 580 1,828 1,570
Intern…
JDE 2,649 — 5,451 —
Peet's
Total
net $ 7,344 $ 4,306 $ 18,629 $ 12,104
sales
Income
from
operat…
U.S.
Refres… $ 820 $ 802 $ 2,398 $ 2,202
Bevera…
U.S. 319 237 628 672
Coffee
KDP 158 153 395 386
Intern…
JDE 289 — 227 —
Peet's
Unallo…
corpor… -253 -197 -931 -566
costs
Total
income $ 1,333 $ 995 $ 2,717 $ 2,694
from
operat…
A-5
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
The Company reports its financial results in accordance with U.S. GAAP. However,
management believes that certain non-GAAP financial measures that reflect the
way management evaluates the business may provide investors with additional
information regarding the Company's results, trends and ongoing performance on a
comparable basis.
Specifically, investors should consider the following with respect to our
financial results:
Adjusted: Defined as certain financial statement captions and metrics adjusted
for certain items affecting comparability.
Items affecting comparability: Defined as certain items that are excluded for
comparison to prior year periods, adjusted for the tax impact as applicable. Tax
impact is determined based upon an approximate rate for each item. For each
period, management adjusts for (i) the unrealized mark-to-market impact of
derivative instruments not designated as hedges in accordance with U.S. GAAP
that do not have an offsetting risk reflected within the financial results, as
well as the unrealized mark-to-market impact of our Vita Coco investment prior
to its sale in the first quarter of 2025; (ii) the amortization associated with
definite-lived intangible assets; (iii) the amortization of the deferred
financing costs associated with the DPS Merger and JDE Peet's Acquisition; (iv)
the amortization of the fair value adjustment of the senior unsecured notes
obtained as a result of the DPS Merger and JDE Peet's Acquisition; (v) stock
compensation expense and the associated windfall tax benefit attributable to the
matching awards made to employees who made an initial investment in KDP; (vi)
transaction costs for significant business combinations (completed or
abandoned), excluding costs related to the JDE Peet's Acquisition; (vii) non-
cash changes in deferred tax liabilities related to goodwill and intangible
assets as a result of tax rate or apportionment changes; and (viii) other
certain items that are excluded for comparison purposes to prior year periods.
For the first nine months of 2026, the other certain items excluded for
comparison purposes include (i) productivity expenses; (ii) restructuring
adjustments associated with the 2023 CEO Succession and Associated Realignment;
(iii) costs related to significant non-routine legal matters, including the
antitrust litigation; (iv) restructuring expenses associated with the Network
Optimization program; (v) integration expenses associated with the Dyla
acquisition; (vi) the change in our mandatory redemption liability for GHOST;
(vii) the impacts of various transactions with Chobani; (viii) acquisition,
integration, and financing costs associated with the acquisition of JDE Peet's
and subsequent spin of Global Coffee Co.; (ix) the impact of the step-up of
acquired inventory associated with acquisitions; (x) Legacy JDE Peet’s
transformation activities and corporate actions; (xi) Legacy JDE Peet’s ERP
system implementation and upgrade expenses; (xii) Legacy JDE Peet’s losses and
costs associated with divestitures; and (xiii) the reassessment of the
allocation of convertible preferred dividends for items affecting comparability.
The acquisition, integration, and financing costs associated with the
acquisition of JDE Peet's and subsequent spin of Global Coffee Co. category
includes (i) transaction costs; (ii) integration costs; (iii) costs to obtain
proceeds to close the JDE Peet's Acquisition; (iv) costs to manage the FX risk
associated with the purchase price, and (v) Day 1 post-combination share-based
compensation expense associated with Legacy JDE Peet’s share awards. In
connection with the acquisition of JDE Peet's, we entered into financing
arrangements and incurred deferred financing costs associated with these
agreements. Further, we executed certain FX forward contracts to protect against
negative foreign exchange movement against the Euro-denominated purchase price
prior to the close of the JDE Peet's Acquisition.
A-6
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
For the preferred dividends, the Preferred Investors are entitled to participate
in dividends declared or paid on the common shares on an as-converted basis.
Beginning in the second quarter of 2026, net income attributable to common
shareholders is computed under the two-class method in periods when the
Preferred Investors’ participation on an as-converted basis exceeds the
preferred dividends related to the Convertible Preferred Stock. The reassessment
of the allocation of convertible preferred dividends for items affecting
comparability caption reflects any adjustment required if the adjusted net
income attributable to KDP is used if the Preferred Investors’ participation on
an as-converted basis exceeds the preferred dividends related to the Convertible
Preferred Stock.
For the first nine months of 2025, the other certain items excluded for
comparison purposes include (i) productivity expenses; (ii) restructuring
expenses associated with the 2023 CEO Succession and Associated Realignment;
(iii) costs related to significant non-routine legal matters, including the
antitrust litigation; (iv) restructuring expenses associated with the Network
Optimization program; (v) the impact of the step-up of acquired inventory
associated with acquisitions; (vi) integration expenses associated with the
GHOST and Dyla acquisitions; (vii) the change in our mandatory redemption
liability for GHOST; and (viii) non-cash changes in deferred tax liabilities
related to goodwill and other intangible assets as a result of tax rate or
apportionment changes.
Constant currency adjusted: Defined as certain financial statement captions and
metrics adjusted for certain items affecting comparability, calculated on a
constant currency basis by converting our current period local currency
financial results using the prior period foreign currency exchange rates.
For the third quarter and first nine months of 2026 and 2025, the supplemental
financial data set forth below includes reconciliations of adjusted and constant
currency adjusted financial measures to the applicable financial measure
presented in the unaudited condensed consolidated financial statements for the
same period.
A-7
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
(in
mill…
exce…
%)
Third
Quar… Income
of Gross Gross from Oper…
2026 profit margin opera… marg…
──────────────────────────────────────────────────────────────────────────────
Repo… $ 3,525 48.0 % $ 1,333 18.2 %
Items
Affe…
Comp…
Prod… — 6
Mark… 2 -56
Amor…
of — 125
inta…
Stock — 2
comp…
Non-…
legal — 6
matt…
Rest…
- — 2
Netw…
Opti…
Chob… — 51
tran…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of 2 124
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 1
excl…
JDE
Peet…
Inve… 47 47
step…
Tran…
cost…
excl… — 1
JDE
Peet…
Lega…
JDE
Peet…
tran… — 19
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… — 9
impl…
and
upgr…
expe…
Adju… $ 3,576 48.7 % $ 1,670 22.7 %
Impa…
of — % — %
fore…
curr…
Cons…
curr… 48.7 % 22.7 %
adju…
Third
Quar…
of
2025
Repo… $ 2,340 54.3 % $ 995 23.1 %
Items
Affe…
Comp…
Prod… 35 47
Mark… -27 -40
Amor…
of — 33
inta…
Stock — 4
comp…
Non-…
legal — 9
matt…
Rest…
- 1 26
Netw…
Opti…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of — 13
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 4
excl…
JDE
Peet…
Adju… $ 2,349 54.6 % $ 1,091 25.3 %
Refer to pages A- 11and A- 12for reconciliations of reported net sales to
constant currency net sales and adjusted income from operations to constant
currency adjusted income from operations.
A-8
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
…
… … …
… … … …
… … … … … … …
… … … … … … … … …
… … … … … … … … …
… … … … … … … … …
──────────────────────────────────────────────────────────────────────────────
$ … $ … $ … $ … $ … … % $ … $ … $ 0…
— — — 6 … 8 0…
… — — … … … 0…
— — — … … … 0…
— — — 2 — 2 —
… — — … 6 … 0…
… — — 2 — 2 —
— — — 6 2 4 —
— — — — … 2 —
— — 2 2 — —
— … … … … … -…
… — — … … … 0…
— — … … 7 … 0…
— — — 1 1 — —
— — … … … 0…
— — — 1 … 6 —
— — — … 9 … 0…
— — — 9 2 7 0…
… — 4 … … …
… -…
$ … $ — $ 4 $ … $ … … % $ … $ … $ 0…
— %
… %
Diluted earnings per common share may not foot due to rounding.
A-9
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
…
…
… …
… … …
… … … …
… … … …
… … … …
──────────────────────────────────────────────────────────────────────────────
$ … $ — $ … … … … $ — …
— — — … … …
… — — … … …
— — — … … …
— — — 4 1 —
… — — 3 1 —
— — — 9 2 —
— — — … 7 …
… — … … … …
— — … … 5 …
— — — 4 … …
— — — — … —
$ … $ — $ … … … … $ — …
… % % …
— % % —
… % % …
Diluted earnings per common share may not foot due to rounding.
A-10
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
INCOME FROM OPERATIONS - CONSOLIDATED AND SEGMENTS
(UNAUDITED)
…
…
…
…
…
… U… …
… R… U… K… J… …
… B… C… I… P… … …
──────────────────────────────────────────────────────────────────────────────
…
-
… $ 8… $ 3… $ … $ … $ -… $ 1…
…
…
…
…
…
… — — 1 — 5 6
… — — — 2 -… -…
…
… 12 23 1 … — 1…
…
… — — — — 2 2
…
…
… — — — — 6 6
…
…
- — 1 — — 1 2
…
…
… 51 — — — — 51
…
…
…
…
…
…
-
…
… — 10 — … 87 1…
…
…
…
…
…
…
…
…
…
…
… 1 — — — — 1
…
…
…
… — — — … — 47
…
…
…
… — — — — 1 1
…
…
…
…
…
… — — — … 2 19
…
…
…
…
…
…
…
…
… — — — 9 — 9
…
…
…
…
…
-
… $ 8… $ 3… $ … $ … $ -… $ 1…
…
…
…
…
…
…
…
-
… $ 8… $ 2… $ … $ — $ -… $ 9…
…
…
…
…
…
… — 35 — — 12 47
… — — — — -… -…
…
… 9 22 2 — — 33
…
… — — — — 4 4
…
…
… — 1 — — 8 9
…
…
- 3 22 — — 1 26
…
…
…
…
… 2 — — — 2 4
…
…
…
…
…
…
…
…
-
…
… — — — — 13 13
…
…
…
…
…
…
…
…
…
-
… $ 8… $ 3… $ … $ — $ -… $ 1…
…
…
…
- 8… % 1… % … % N… 5… % 5… %
…
…
… — % — % … % N… — % -… %
…
…
…
-
… 8… % 1… % … % N… 5… % 5… %
…
…
A-11
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CHANGE IN NET SALES AND OPERATING MARGIN - CONSOLIDATED AND SEGMENTS
(UNAUDITED)
Impact
Reported of Constant
Foreign Currency
Currency
Third
Quarter
of 2026
Change
in net
sales
U.S.
Refres… 10.9 % — % 10.9 %
Bevera…
U.S. 2.7 — 2.7
Coffee
KDP 11.0 -3.4 7.6
Intern…
JDE N/A N/A N/A
Peet's
Total
change 70.6 -0.5 70.1
in net
sales
It… Im… C…
Re… Af… Ad… of C…
Co… Fo… A…
Cu…
T…
Q…
of
2…
O…
m…
U…
R… 27… % 2… % 2… % — % 29… %
B…
U… 31… 3… 3… — 34…
C…
K… 24… 0… 2… -… 24…
I…
J… 10… 7… 1… N/A N…
P…
T…
o… 18… 4… 2… — 22…
m…
Items
Reported Affecti… Adjusted
Compara…
Third
Quarter
of 2025
Operati…
margin
U.S.
Refresh… 29.3 % 0.5 % 29.8 %
Beverag…
U.S. 23.9 8.1 32.0
Coffee
KDP 26.4 0.3 26.7
Interna…
JDE N/A N/A N/A
Peet's
Total
operati… 23.1 2.2 25.3
margin
A-12
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
(in
mill…
exce…
%)
First
Nine
Mont… Income
of Gross Gross from Oper…
2026 profit margin opera… marg…
──────────────────────────────────────────────────────────────────────────────
Repo… $ 8,689 46.6 % $ 2,717 14.6 %
Items
Affe…
Comp…
Prod… 1 30
Mark… -14 -109
Amor…
of — 286
inta…
Stock — 11
comp…
Non-…
legal — 12
matt…
Rest…
-
2023
CEO — 1
Succ…
and
Asso…
Real…
Rest…
- 7 32
Netw…
Opti…
Chob… — 51
tran…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of 11 530
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 5
excl…
JDE
Peet…
Inve… 361 361
step…
Tran…
cost…
excl… — 1
JDE
Peet…
Lega…
JDE
Peet…
tran… 3 38
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… — 19
impl…
and
upgr…
expe…
Lega…
JDE
Peet…
loss…
and — 1
costs
asso…
with
dive…
Adju… $ 9,058 48.6 % $ 3,986 21.4 %
Impa…
of — % — %
fore…
curr…
Cons…
curr… 48.6 % 21.4 %
adju…
First
Nine
Mont…
of
2025
Repo… $ 6,580 54.4 % $ 2,694 22.3 %
Items
Affe…
Comp…
Prod… 95 126
Mark… -70 -89
Amor…
of — 101
inta…
Stock — 10
comp…
Non-…
legal — 17
matt…
Rest…
- 2 38
Netw…
Opti…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of — 13
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… 1 35
excl…
JDE
Peet…
Inve… 17 17
step…
Tran…
cost…
excl… — 4
JDE
Peet…
Adju… $ 6,625 54.7 % $ 2,966 24.5 %
Refer to p ages A- 16through A- 18for reconciliations of reported net sales to
constant currency net sales and adjusted income from operations to constant
currency adjusted income from operations.
A-13
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
… …
… …
… … …
… … … …
… … … …
… … … …
──────────────────────────────────────────────────────────────────────────────
… $ … % … $ $
— 8 …
— … …
— … …
— 3 8
— … …
— 1 3
— 3 9
— — 1
— 9 …
… … …
… … …
… … …
— 2 3
… …
— 1 —
— 9 …
— 4 …
— — 1
— … …
$ … % $ $
%
%
Diluted earnings per common share may not foot due to rounding.
A-14
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
…
…
…
…
…
──────────────────────────────────────────────────────────────────────────────
… … … $ — …
… … …
… … …
… … …
… 3 —
… 3 …
1 — —
… 4 …
… … …
… … …
… … …
… 4 …
… 1 …
4 1 —
— … —
… … … $ — …
% …
% …
% …
Diluted earnings per common share may not foot due to rounding.
A-15
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
INCOME FROM OPERATIONS - CONSOLIDATED AND SEGMENTS
(UNAUDITED)
(…
m…
e…
%)
F…
N…
M… U.… Una…
of Re… U.… KDP JDE cor…
2… Be… Co… In… Pe… cos… Tot…
──────────────────────────────────────────────────────────────────────────────
R…
-
I… $ 2,… $ 628 $ 395 $ 227 $ -9… $ 2,…
f…
O…
I…
A…
C…
P… — 1 1 — 28 30
M… — — — -25 -84 -1…
A…
of 37 67 6 176 — 286
i…
S… — — — — 11 11
c…
N…
l… — — — — 12 12
m…
R…
-
2…
C… — — — — 1 1
S…
a…
A…
R…
R…
- 10 20 — — 2 32
N…
O…
C… 51 — — — — 51
t…
A…
i…
a…
f…
c…
-
A…
of — 61 — 99 370 530
J…
P…
a…
S…
of
G…
C…
C…
I…
of
a… 4 — — — 1 5
e…
J…
P…
I… — — — 361 — 361
s…
T…
c…
e… — — — — 1 1
J…
P…
L…
J…
P…
t… — — — 36 2 38
a…
a…
c…
a…
L…
J…
P…
E…
s… — — — 19 — 19
i…
a…
u…
e…
L…
J…
P…
l…
a… — — — 1 — 1
c…
a…
w…
d…
A…
-
I… $ 2,… $ 777 $ 402 $ 894 $ -5… $ 3,…
f…
O…
A-16
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
INCOME FROM OPERATIONS - CONSOLIDATED AND SEGMENTS
(UNAUDITED)
…
…
…
…
…
…
… U… …
… R… U… K… … …
… B… C… I… … … …
──────────────────────────────────────────────────────────────────────────────
…
-
… $ 2… $ 6… $ 3… $ — $ -… $ 2…
…
…
…
…
…
… — 95 — — 31 1…
… — — — — -… -…
…
… 25 69 7 — — 1…
…
… — — — — 10 10
…
…
… — 1 — — 16 17
…
…
- 4 32 — — 2 38
…
…
…
…
… 25 — — — 10 35
…
…
…
… 17 — — — — 17
…
…
…
…
…
…
-
…
… — — — 13 13
…
…
…
…
…
…
…
…
…
…
… — — — — 4 4
…
…
…
-
… $ 2… $ 8… $ 3… $ — $ -… $ 2…
…
…
…
- 1… % -… % 2… % N… 3… % 3… %
…
…
… — % — % -… % N… -… % -… %
…
…
…
-
… 1… % -… % -… % N… 2… % 3… %
…
…
A-17
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CHANGE IN NET SALES AND OPERATING MARGIN - CONSOLIDATED AND SEGMENTS
(UNAUDITED)
Impact
Reported of Constant
Foreign Currency
Currency
First
Nine
Months
of 2026
Change
in net
sales
U.S.
Refres… 10.9 % — % 10.9 %
Bevera…
U.S. -0.8 — -0.8
Coffee
KDP 16.4 -6.8 9.6
Intern…
JDE N/A N/A N/A
Peet's
Total
change 53.9 -0.9 53.0
in net
sales
It… I… C…
Re… Af… Ad… of C…
Co… F… A…
C…
F…
N…
M…
of
2…
O…
m…
U…
R… 28… % 1.2 % 29… % — % 29… %
B…
U… 22… 5.3 27… — 27…
C…
K… 21… 0.4 22… — 22…
I…
J… 4.2 12… 16… N/A N…
P…
T…
o… 14… 6.8 21… — 21…
m…
Items
Reported Affecti… Adjusted
Compara…
First
Nine
Months
of 2025
Operati…
margin
U.S.
Refresh… 28.5 % 1.0 % 29.5 %
Beverag…
U.S. 23.9 7.0 30.9
Coffee
KDP 24.6 0.4 25.0
Interna…
JDE N/A N/A N/A
Peet's
Total
operati… 22.3 2.2 24.5
margin
A-18
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
FREE CASH FLOW
(UNAUDITED)
Free cash flow is defined as net cash provided by operating activities adjusted
for purchases of property, plant, and equipment, proceeds from sales of
property, plant, and equipment, and certain items excluded for comparison to
prior year periods. For the third quarter of 2026 and 2025, there were no
certain items excluded for comparison to prior year periods.
(in millions) First Nine Months 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net cash provided by
operating $ 2,220 $ 1,279
activities
Purchases of property,
plant, and -457 -338
equipment
Proceeds from sales of
property, plant, 145 14
and equipment
Free Cash Flow $ 1,908 $ 955
A-19
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - PRO FORMA COMBINED
(UNAUDITED)
The Company reports its financial results in accordance with U.S. GAAP. In this
section, management has included pro forma EBITDA, pro forma adjusted EBITDA,
and pro forma management leverage ratio, each of which is a non-GAAP financial
measure. Management believes that these pro forma non-GAAP financial measures
provide useful information about the Company’s pro forma operating results.
These pro forma non-GAAP financial measures are not an alternative to the
unaudited pro forma statements of income prepared in accordance with U.S. GAAP
and should be considered in addition to, and not as a substitute or superior to,
such pro forma financial information. Using only the pro forma non-GAAP
financial measures to analyze its performance would have material limitations
because their calculation is based on our subjective determination regarding the
nature and classification of events and circumstances that investors may find
significant. For each of these pro forma non-GAAP financial measures, a
reconciliation of the differences between the pro forma non-GAAP measure and the
most directly comparable pro forma U.S. GAAP measure has been provided. As a
result, the method used to calculate the Company's pro forma non-GAAP financial
measures may differ from the methods used by other companies to calculate their
non-GAAP measures.
Specifically, investors should consider the following with respect to our
unaudited pro forma financial results:
Adjusted: Defined as certain financial statement captions and metrics adjusted
for certain items affecting comparability.
Items affecting comparability: Defined as certain items that are excluded for
comparison to prior year periods, adjusted for the tax impact as applicable. Tax
impact is determined based upon an approximate rate for each item. For each
period, management adjusts for (i) the unrealized mark-to-market impact of
derivative instruments not designated as hedges in accordance with U.S. GAAP
that do not have an offsetting risk reflected within the financial results; (ii)
the amortization associated with definite-lived intangible assets; (iii) the
amortization of the deferred financing costs associated with the DPS Merger and
JDE Peet’s Acquisition; (iv) the amortization of the fair value adjustment of
the senior unsecured notes obtained as a result of the DPS Merger and JDE Peet’s
Acquisition; (v) stock compensation expense and the associated windfall tax
benefit attributable to the matching awards made to employees who made an
initial investment in KDP or JDE Peet’s prior to the Acquisition; (vi)
transaction costs for significant business combinations (completed or
abandoned), excluding costs related to the JDE Peet’s Acquisition; (vii) non-
cash changes in deferred tax liabilities related to goodwill and intangible
assets as a result of tax rate or apportionment changes; and (viii) other
certain items that are excluded for comparison purposes to prior year periods.
For the trailing twelve months ended September 30, 2026, the other certain items
excluded for comparison purposes include (i) productivity expenses; (ii) costs
related to significant non-routine legal matters, including the antitrust
litigation; (iii) restructuring expenses associated with the Network
Optimization program; (iv) restructuring adjustments associated with the 2023
CEO Succession and Associated Realignment; (v) impairment of intangible assets;
(vi) legacy JDE Peet’s transformation activities and corporate actions; (vii)
legacy JDE Peet’s ERP system implementation and upgrade expenses; (viii)
activity related to JDE Peet’s total return equity swaps, which were not
representative of the Company’s go-forward activities; (ix) the impact of the
step-up of acquired inventory associated with acquisitions; (x) integration
expenses associated with the GHOST and Dyla acquisitions; (xi) the change in our
mandatory redemption liability for GHOST; (xii) the impacts of various
transactions with Chobani; (xiii) acquisition, integration, and financing costs
associated with the anticipated acquisition of JDE Peet's and subsequent spin of
Global Coffee Co; (xiv) legacy JDE Peet’s impacts from prior acquisitions; and
(xv) legacy JDE Peet's losses and costs associated with divestitures.
Pro Forma Adjusted EBITDA.
Pro Forma Adjusted EBITDA is defined as Pro Forma EBITDA, as adjusted for items
affecting comparability as described above. Pro Forma EBITDA is defined as Net
income as adjusted for interest expense, net; provision for income taxes;
depreciation expense; amortization of intangibles; and other amortization.
Management believes that Pro Forma Adjusted EBITDA is useful for investors in
evaluating the Company’s operating results and understanding the Company’s
operating trends by adjusting certain items that can vary significantly
depending on specific underlying transactions or events, thereby affecting
comparability.
Pro Forma Management Leverage Ratio.
Pro Forma Management leverage ratio is defined as the Company’s total unaudited
pro forma principal amounts of Long-term obligations less cash and cash
equivalents, divided by Pro Forma Adjusted EBITDA. Management believes that the
Pro Forma Management leverage ratio is useful for investors in evaluating the
Company’s liquidity and assessing the Company’s ability to meet its financial
obligations.
A-20
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
PRO FORMA ADJUSTED EBITDA AND MANAGEMENT LEVERAGE RATIO
(UNAUDITED)
(in millions, except for ratio)
PRO FORMA ADJUSTED EBITDA RECONCILIATION -
LAST TWELVE MONTHS Last Twelve Months
──────────────────────────────────────────────────────────────────────────────
Pro forma net income $ 1,796
Pro forma interest expense, net 1,609
Pro forma provision for income taxes 329
Pro forma depreciation expense 755
Pro forma other amortization 168
Pro forma amortization of intangibles 496
Pro forma EBITDA 5,153
Items affecting comparability:
Productivity $ 85
Mark-to-market -100
Stock compensation 23
Non-routine legal matters 16
Restructuring - 2023 CEO Succession and
Associated 2
Realignment
Restructuring - Network Optimization 47
Impairment of intangible assets 79
Chobani transactions -330
Acquisition, integration, and financing costs
- 855
Acquisition of JDE Peet's and Spin of Global
Coffee Co.
Change in mandatory redemption liability for 224
GHOST
Integration of acquisitions, excluding JDE 10
Peet’s
Inventory step-up 361
Transaction costs, excluding JDE Peet's 9
Legacy JDE Peet's transformation activities
and 207
corporate actions
Legacy JDE Peet's ERP system implementation
and 37
upgrade expenses
Legacy JDE Peet's total return equity swaps -15
Legacy JDE Peet's prior acquisition impacts 151
Legacy JDE Peet's losses and costs associated
with 8
divestitures
Pro forma Adjusted EBITDA $ 6,822
September 30,
2026
Principal amounts of:
Commercial paper notes $ 1,242
Senior unsecured notes 24,805
Delayed draw term loan 3,188
Total principal amounts 29,235
Less: Cash and cash equivalents 1,290
Total principal amounts less cash and cash $ 27,945
equivalents
September 30, 2026 Pro forma Management
Leverage 4.1
Ratio
A-21
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
PRO FORMA ADJUSTED EBITDA - LAST TWELVE MONTHS
(UNAUDITED)
Fourth First Second Third
Quart… Quart… Quart… Quart… Last
(in of of of of Twelve
milli… 2025 2026 2026 2026 Months
──────────────────────────────────────────────────────────────────────────────
Pro
forma $ 355 $ 279 $ 210 $ 952 $ 1,796
net
inco…
Pro
forma
inte… 383 416 336 474 1,609
expe…
net
Pro
forma
prov… 48 -74 95 260 329
for
inco…
taxes
Pro
forma 175 167 208 205 755
depr…
expe…
Pro
forma 43 34 48 43 168
other
amor…
Pro
forma
amor… 123 124 124 125 496
of
inta…
Pro
forma $ 1,127 $ 946 $ 1,021 $ 2,059 $ 5,153
EBIT…
Items
affe…
comp…
Prod… $ 56 $ 13 $ 10 $ 6 $ 85
Mark… 26 -109 39 -56 -100
Stock 8 9 4 2 23
comp…
Non-…
legal 4 4 2 6 16
matt…
Rest…
-
2023
CEO 1 1 — — 2
Succ…
and
Asso…
Real…
Rest…
- 15 23 7 2 47
Netw…
Opti…
Impa…
of 79 — — — 79
inta…
asse…
Chob… — — — -330 -330
tran…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of 188 220 323 124 855
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Chan…
in
mand…
rede… 154 24 22 24 224
liab…
for
GHOST
Inte…
of
acqu… 5 2 2 1 10
excl…
JDE
Peet…
Inve… — — 314 47 361
step…
Tran…
cost…
excl… 8 — — 1 9
JDE
Peet…
Lega…
JDE
Peet…
tran… 112 57 19 19 207
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… 8 10 10 9 37
impl…
and
upgr…
expe…
Lega…
JDE
Peet…
total -15 — — — -15
retu…
equi…
swaps
Lega…
JDE
Peet… — 151 — — 151
prior
acqu…
impa…
Lega…
JDE
Peet…
loss…
and 2 5 1 — 8
costs
asso…
with
dive…
Pro
forma $ 1,778 $ 1,356 $ 1,774 $ 1,914 $ 6,822
Adju…
EBIT…
A-22
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CONDENSED COMBINED STATEMENT OF INCOME - PRO FORMA
(UNAUDITED)
Hist…
Fou… KDP JDE
Qua… Hist… Peet… Tran… Pro
of (As as Acco… Forma
2025 Repo… Conv… Adju… Note Comb…
──────────────────────────────────────────────────────────────────────────────
Net $ 4,499 $ 3,081 $ -46 -a $ 7,534
sal…
Cost
of 2,080 2,109 -23 -b 4,166
sal…
Gro… 2,419 972 -23 3,368
pro…
Sel…
gen…
and 1,459 734 106 -c 2,299
adm…
exp…
Imp…
of 78 1 — 79
int…
ass…
Oth…
ope… 1 29 — 30
exp…
net
Inc…
from 881 208 -129 960
ope…
Int… -d),
exp… 238 31 114 (e 383
net
Oth…
exp… 186 -12 — 174
(in…
net
Inc…
bef…
pro… 457 189 -243 403
for
inc…
tax…
Pro… -f),
for 104 15 -71 (g), 48
inc… (h
tax…
Net $ 353 $ 174 $ -172 $ 355
inc…
A-23
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
HISTORICAL JDE PEET'S STATEMENT OF INCOME
(UNAUDITED)
H… A… Hi…
… H… H… R… P… Re… Hi…
… J… J… R… J… a… N… and JDE
… P… P… (… P… C… Co… Pe…
… P… (… (… A… To… (U…
(… (E…
…
…
…
…
… 2… -2 i… 2… 3…
… v…
R… 2… —
… i…
… 1… -42 v, 1… 2…
… vi
C…
of 1… —
s…
… G… 7… — 7… 40 8… 9…
… p…
… i…
… i…
… 6… -6 v, 6… 7…
… v…
…
S…
g…
a… 6… -…
a…
e…
…
… 1 — 1 1
…
…
S…
g…
a… — 1
a…
e…
…
… v,
… 33 -8 v… 25 29
… v…
…
S…
g…
a… — 33
a…
e…
… O…
… p… 1… 3 1… 54 1… 2…
…
i…
… i…
… 57 -30 v, 27 31
… v…
v…
v…
F… -… 6
i…
F… 3… 56
e…
… i,
… -… 44 i… -… -…
… i…
… v…
S…
g…
a… — 2
a…
e…
F… — -…
e…
S…
of
n…
p… 5 -5
(…
of
a…
…
… P…
… b… 1… — 1… 40 1… 1…
… i…
… t…
…
i,
… i…
… i…
… 24 -11 i… 13 15
… v,
v…
v…
I…
t… 24 —
e…
… P…
… f…
… t… 97 — 97 51 1… 1…
… p…
…
A-24
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - PRO FORMA
(UNAUDITED)
(in
mill…
exce…
%)
Four…
Quar… Income
of Gross Gross from Oper…
2025 profit margin opera… marg…
──────────────────────────────────────────────────────────────────────────────
Pro $ 3,368 44.7 % $ 960 12.7 %
forma
Items
Affe…
Comp…
Prod… 41 55
Mark… 14 26
Amor…
of — 15
inta…
Stock — 8
comp…
Non-…
legal — 4
matt…
Rest…
-
2023
CEO — 1
Succ…
and
Asso…
Real…
Rest…
- 2 24
Netw…
Opti…
Impa…
of — 79
inta…
asse…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of — 45
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 5
excl…
JDE
Peet…
Tran…
cost…
excl… — 8
JDE
Peet…
Lega…
JDE
Peet…
tran… — 112
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… — 8
impl…
and
upgr…
expe…
Pro
forma $ 3,425 45.5 % $ 1,350 17.9 %
Adju…
A-25
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - PRO FORMA
(UNAUDITED)
(…
m…
e…
%
a…
p…
s… In…
d… be…
F… Ot… pr… Pr…
Q… In… ex… for for Ef…
of ex… (i… in… in… tax Net
2… net net ta… ta… ra… in…
──────────────────────────────────────────────────────────────────────────────
P… $ 383 $ 174 $ 403 $ 48 11… % $ 3…
f…
I…
A…
C…
P… — — 55 12 43
M… -44 — 70 9 61
A…
of — — 15 2 13
i…
S… — — 8 1 7
c…
A…
of
f…
v… -4 — 4 1 3
of
d…
a…
N…
l… — — 4 1 3
m…
R…
-
2…
C… — — 1 — 1
S…
a…
A…
R…
R…
- — — 24 5 19
N…
O…
I…
of — — 79 19 60
i…
a…
A…
i…
a…
f…
c…
-
A…
of -18 -51 114 12 1…
J…
P…
a…
S…
of
G…
C…
C…
C…
in
m…
r… — -1… 154 37 1…
l…
f…
G…
I…
of
a… — — 5 5 —
e…
J…
P…
I… — — — 1 -1
s…
T…
c…
e… — — 8 23 -…
J…
P…
L…
J…
P…
t… — — 112 31 81
a…
a…
c…
a…
L…
J…
P…
E…
s… — — 8 2 6
i…
a…
u…
e…
L…
J…
P…
t… — 15 -15 — -…
r…
e…
s…
L…
J…
P…
l…
a… — -2 2 1 1
c…
a…
w…
d…
P…
f… $ 317 $ -18 $ 1,… $ 210 20… % $ 8…
A…
A-26
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CONDENSED COMBINED STATEMENT OF INCOME - PRO FORMA
(UNAUDITED)
Hist…
Fir… KDP JDE
Qua… Hist… Peet… Tran… Pro
of (As as Acco… Forma
2026 Repo… Conv… Adju… Note Comb…
──────────────────────────────────────────────────────────────────────────────
Net $ 3,976 $ 2,864 $ -21 -a $ 6,819
sal…
Cost
of 1,878 2,011 -24 -b 3,865
sal…
Gro… 2,098 853 3 2,954
pro…
Sel…
gen…
and 1,342 816 69 -c 2,227
adm…
exp…
Inc…
from 756 37 -66 727
ope…
Int… -d),
exp… 281 32 103 (e 416
net
Oth…
exp… 118 -12 — 106
(in…
net
Inc…
bef…
pro… 357 17 -169 205
for
inc…
tax…
Pro… -f),
for 87 -115 -46 (g), -74
inc… (h
tax…
Net $ 270 $ 132 $ -123 $ 279
inc…
A-27
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
HISTORICAL JDE PEET'S STATEMENT OF INCOME
(UNAUDITED)
H… A… Hi…
… H… H… R… P… Re… Hi…
… J… J… R… J… a… N… and JDE
… P… P… (… P… C… Co… Pe…
… P… (… (… A… To… (U…
(… (E…
…
…
…
…
… 2… -2 vi 2… 2…
…
R… 2… —
…
… 1… -32 vi 1… 2…
…
C…
of 1… —
s…
… G… 6… — 6… 34 7… 8…
… p…
…
… i…
… 7… -14 v, 6… 8…
… v…
…
S…
g…
a… 7… -9
a…
e…
…
… v…
… 9 -9 v… — —
…
…
S…
g…
a… — 9
a…
e…
… O…
… p… -… — -… 57 35 40
…
i…
… v,
… 20 7 v… 27 32
… v…
v…
F… -… 5
i…
F… 37 5
e…
… i,
… -… — i… -… -…
… v…
…
F… — -5
i…
F… — -5
e…
…
… P…
… b… -… — -… 47 15 17
… i…
… t…
…
… i,
… i…
… -… -2 i… -… -…
… v…
v…
I…
t… -… —
e…
P…
… f… -… — 64 49 1… 1…
… t…
p…
A-28
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - PRO FORMA
(UNAUDITED)
(in
mill…
exce…
%)
First
Quar… Income
of Gross Gross from Opera…
2026 profit margin opera… margin
──────────────────────────────────────────────────────────────────────────────
Pro
forma $ 2,954 43.3 % $ 727 10.7 %
Cons…
Items
Affe…
Comp…
Prod… 1 14
Mark… -40 -109
Amor…
of — 14
inta…
Stock — 9
comp…
Non-…
legal — 4
matt…
Rest…
-
2023
CEO — 1
Succ…
and
Asso…
Real…
Rest…
- 4 23
Netw…
Opti…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of 6 89
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 2
excl…
JDE
Peet…
Lega…
JDE
Peet…
tran… — 57
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… — 10
impl…
and
upgr…
expe…
Lega…
JDE
Peet… — 151
prior
acqu…
impa…
Pro
forma $ 2,925 42.9 % $ 992 14.5 %
Adju…
A-29
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - PRO FORMA
(UNAUDITED)
(…
m…
e…
%
a…
p…
s… In…
d… be…
F… Ot… pr… Pr…
Q… In… ex… for for Ef…
of ex… (i… in… in… tax Net
2… net net ta… ta… ra… in…
──────────────────────────────────────────────────────────────────────────────
P…
f… $ 416 $ 106 $ 205 $ -74 -3… % $ 2…
C…
I…
A…
C…
P… — — 14 3 11
M… -1 — -1… -7 -…
A…
of — — 14 2 12
i…
S… — — 9 6 3
c…
A…
of
f…
v… -3 — 3 1 2
of
d…
a…
N…
l… — — 4 1 3
m…
R…
-
2…
C… — — 1 — 1
S…
a…
A…
R…
R…
- — — 23 4 19
N…
O…
A…
i…
a…
f…
c…
-
A…
of -99 -1… 299 39 2…
J…
P…
a…
S…
of
G…
C…
C…
C…
in
m…
r… — -24 24 5 19
l…
f…
G…
I…
of
a… — — 2 — 2
e…
J…
P…
L…
J…
P…
t… — — 57 11 46
a…
a…
c…
a…
L…
J…
P…
E…
s… — — 10 2 8
i…
a…
u…
e…
L…
J…
P… — — 151 155 -4
p…
a…
i…
L…
J…
P…
l…
a… — -5 5 1 4
c…
a…
w…
d…
P…
f… $ 313 $ -34 $ 713 $ 149 20… % $ 5…
A…
A-30
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
(in
mill…
exce…
%)
Seco…
Quar… Income
of Gross Gross from Oper…
2026 profit margin opera… marg…
──────────────────────────────────────────────────────────────────────────────
Repo… $ 3,066 41.9 % $ 628 8.6 %
Items
Affe…
Comp…
Prod… — 10
Mark… 7 39
Amor…
of — 124
inta…
Stock — 4
comp…
Non-…
legal — 2
matt…
Rest…
- 3 7
Netw…
Opti…
Acqu…
inte…
and
fina…
costs
-
Acqu…
of 3 318
JDE
Peet…
and
Spin
of
Glob…
Coff…
Co.
Inte…
of
acqu… — 2
excl…
JDE
Peet…
Inve… 314 314
step…
Lega…
JDE
Peet…
tran… 3 19
acti…
and
corp…
acti…
Lega…
JDE
Peet…
ERP
syst… — 10
impl…
and
upgr…
expe…
Lega…
JDE
Peet…
loss…
and — 1
costs
asso…
with
dive…
Adju… $ 3,396 46.5 % $ 1,478 20.2 %
A-31
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
CERTAIN LINE ITEMS - CONSOLIDATED
(UNAUDITED)
…
…
…
%
…
…
… … …
… … … …
… … … … … … …
… … … … … … … … …
… … … … … … … … …
… … … … … … … … …
──────────────────────────────────────────────────────────────────────────────
… $ 3… $ -… $ 3… $ 95 3… % $ 1… $ -… $ 0…
…
…
…
… — — 10 7 3 —
… -2 — 41 — 41 0…
…
… — — 1… 28 96 0…
…
… — — 4 2 2 —
…
…
…
…
… -… — 24 6 18 0…
…
…
…
…
…
… -2 — 2 1 1 —
…
…
…
… — — 2 — 2 —
…
…
-
…
… — — — 2 -2 —
…
…
…
…
…
- — — 7 3 4 —
…
…
…
…
…
…
…
-
…
… -3 -5 3… 64 2… 0…
…
…
…
…
…
…
…
…
…
…
…
… — -… 22 7 15 0…
…
…
…
…
…
… — — 2 1 1 —
…
…
…
… — — 3… 83 2… 0…
…
…
…
… — — — 6 -6 —
…
…
…
…
…
… — — 19 — 19 0…
…
…
…
…
…
…
…
…
… — — 10 2 8 0…
…
…
…
…
…
…
…
…
… — — 1 — 1 —
…
…
…
…
…
…
…
…
…
… — — — -… 27 0…
…
…
…
…
…
… $ 3… $ -… $ 1… $ 2… 2… % $ 8… $ -… $ 0…
A-32
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
TRANSACTION ACCOUNTING ADJUSTMENTS - PRO FORMA
(UNAUDITED)
The following adjustments have been made to prepare the unaudited pro forma
financial information to give the effect to the following:
• Application of the acquisition method of accounting under the provisions of
the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification 805, Business Combinations (“ASC 805”), where assets and
liabilities of JDE Peet’s will be recorded by KDP at their respective fair
values at the date of completion of the JDE Peet's Acquisition;
• Adjustments to reflect the following debt and equity transactions used to
raise proceeds for the JDE Peet's Acquisition;
▪ Delayed Draw Term Loan of $3.6 billion.
▪ Senior Unsecured Notes of approximately $6 billion.
▪ JV Investment of $4 billion.
▪ Issuance of Convertible Preferred Stock of $4.5 billion.
• Adjustments to reflect transactions costs in connection with the JDE Peet's
Acquisition; and
• Adjustments to reflect the related tax effects for the preliminary pro forma
adjustments.
Acquisition Adjustments:
(a) Elimination of Net sales between KDP and JDE Peet’s as part of the JDE
Peet’s Acquisition. The transactions are assumed to be at-market.
(b) Reflects the adjustments to Cost of sales related to (i) preliminary fair
value step-up adjustment to inventory, which is reflected in Cost of sales
during the year as the related inventory is expected to be sold within twelve
months following the closing of the JDE Peet’s Acquisition, (ii) the removal of
JDE Peet’s historical amortization and depreciation expense recorded within Cost
of sales during the period, (iii) the addition of depreciation expense recorded
within Cost of sales from acquired Property, plant, and equipment and (iv)
elimination of Cost of sales between KDP and JDE Peet’s that are eliminated as
part of the JDE Peet’s Acquisition (the transactions are assumed to be at-
market).
(c) Reflects the adjustments to Selling, general, and administrative expenses
(“SG&A”), (i) including the removal of JDE Peet’s portion of historical
amortization and depreciation expense recorded in SG&A, (ii) the addition of
amortization expense related to definite-lived brands, customer and distributor
relationships, and acquired technology recorded within SG&A, (iii) the addition
of depreciation expense related to Property, plant, and equipment, (iv)
recognition of expenses for estimated transaction costs and (v) recognition of
post combination stock-based compensation expense. KDP is still in the process
of evaluating the fair value of the definite-lived intangible assets. Any
resulting change in the fair value would have a direct impact on amortization
expense. The amortization of definite-lived intangible assets is calculated on a
straight-line basis. The amortization is based on the periods over which the
economic benefits of the intangible assets are expected to be realized, which
are subject to adjustment as additional information becomes available.
(d) Reflects the adjustment to Interest expense, net related to the preliminary
fair value adjustment to JDE Peet’s historical debt.
(e) Reflects the Interest expense and amortization of issuance costs related to
the Debt Financing Transactions in connection with the JDE Peet’s Acquisition:
A-33
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
TRANSACTION ACCOUNTING ADJUSTMENTS - PRO FORMA
(UNAUDITED)
(f) To record the income tax impact of the pro forma transaction accounting
adjustments, excluding non-deductible transaction costs and non-deductible stock
compensation, utilizing the blended statutory income tax rates, based on
regional pre-tax data provided, of approximately 25% for the three months ended
March 31, 2026, December 31, 2025 and September 30, 2025. Deductibility of
estimated transaction costs was analyzed under US income tax law. Transaction
costs deemed facilitative are non-deductible for US federal income tax purposes.
Stock compensation is non-deductible under Netherlands local tax law and
therefore, no tax benefit has been recorded as a pro forma income tax
adjustment. Because the tax rates used for the unaudited pro forma condensed
combined financial information are estimated, the blended rate will likely vary
from the actual effective rate in periods subsequent to completion of the JDE
Peet’s Acquisition. This determination is preliminary and subject to change
based upon the final determination of the fair value of the acquired assets and
assumed liabilities.
(g) Represents the estimated tax impact of income allocated from a taxable
entity to a non-taxable entity related to non-controlling interest within the
Pod Manufacturing JV, which is not subject to federal income tax.
(h) Represents certain nonrecurring tax expenses related to implementing the Pod
Manufacturing JV investment structure, including withholding taxes and the
recognition of a valuation allowance on specific deferred tax assets.
A-34
KEURIG DR PEPPER INC.
RECONCILIATION OF GAAP TO NON-GAAP INFORMATION
ACCOUNTING POLICY AND CONVERSION ADJUSTMENTS - PRO FORMA
(UNAUDITED)
The historical financial statements of JDE Peet’s have been converted from IFRS
to U.S. GAAP. As IFRS differs in certain respects from U.S. GAAP, the following
adjustments have been made to align JDE Peet’s historical accounting policies
under IFRS to KDP’s accounting policies under U.S. GAAP for purposes of this pro
forma presentation:
(i) Record the difference in pension accounting treatment from IFRS Accounting
Standards to U.S. GAAP, and corresponding deferred tax adjustment.
(ii) Reflect the tax effects of adjustments made to conform with U.S. GAAP,
including items related to intra-entity transfers of inventory, recognition of
deferred taxes on non-qualifying assets, the reversal of backward tracing,
outside basis differences, and uncertain tax positions.
(iii) Reflect the impact of business combination foreign exchange and fair value
interest rate hedges not eligible for hedge accounting under U.S. GAAP,
reclassifying amounts from other comprehensive income to the statement of
income.
(iv) Reflect difference in hyperinflationary accounting from IFRS Accounting
Standards to U.S. GAAP for operations in Turkey. Under U.S. GAAP, the financial
statements of a foreign operation in a highly inflationary economy are
remeasured as if the parent’s reporting currency were its functional currency.
(v) Reclassify the operating lease amortization expense and finance charges to
operating lease cost. Under U.S. GAAP, lessees distinguish between finance
leases and operating leases for reporting purposes. For operating leases, the
right-of-use asset and corresponding lease liability are recognized on the
balance sheet, and the related lease expense is presented on a straight-line
basis.
(vi) Record the impact of accounting for leases embedded in revenue arrangements
under U.S. GAAP. U.S. GAAP uses a rule-based classification model to categorize
lessor leases as either operating, direct financing, or sales-type leases. The
adjustment reclassifies certain leases from operating leases under IFRS
Accounting Standards to sales-type leases under U.S. GAAP.
(vii) Reflect the reclassifications of historical JDE Peet’s financial statement
line items to conform to the expected financial statement line items of the
combined company following the JDE Peet’s Acquisition.
(viii) Reflect the reclassification of certain trade payables as structured
payables in order to conform to KDP’s accounting policy along with the
corresponding reclassification of related expenses in the statement of income.
A-35