Keurig Dr Pepper Inc

Strong start to 2026; modest EPS but underlying trajectory improving - Q1 net sales +8.1% (reported): driven primarily by net price realization (+5.5 pts) and volume/mix (+2.6 pts). - Q1 EPS $0.39 (-7.1% YoY): decline attributed to cost/tariff phasing, plus a prior-year below-the-line gain lapping ($0.02). - Management tone: results “slightly ahead” of expectations, with expectations for healthier EPS growth beginning in Q2 and acceleration in the back half.

U.S. Refreshment Beverages: robust growth and profit momentum (best-performing segment) - Net sales +11.9% YoY; operating income +9.8% YoY (both double-digit). - Drivers: healthy CSD category (retail mid-single digit retail dollar growth, accelerating vs Q4), Dr Pepper share gains across regular/diet/zero, and continued DSD + distribution execution. - Innovation and growth opportunities: - Canada Dry Fruit Splash launched nationally in Feb; contributed to share gains and is expected to provide tailwinds. - Dr Pepper Creamy Coconut relaunched (dirty-sodas appeal); positioned as a major contributor through the year. - Energy/sports hydration + prebiotic/value/wellness (e.g., Bloom Pop rapid off small base; zero sugar CSDs + double-digits). - SNAP impacts: seen as manageable and consistent with expectations so far; management will monitor state-by-state waivers and adjust RGM.

U.S. Coffee: weaker near-term profit expected; headwinds easing later in year - Q1 net sales -2.3%; operating income -21.3% YoY: largely as expected. - Key negatives: - Green coffee cost pressures + tariffs (timing/flow-through to P&L), and - Trade inventory adjustments (pod shipments down ~7%, lagging POS), plus higher marketing spend. - Forecast/phasing: - Full-year U.S. Coffee expected to decline modestly in profit, with largest Q1 decline. - Improvement expected in Q2 and more meaningfully in the back half as cost inflation eases and inventory dynamics normalize. - Lower green coffee prices could be a tailwind into 2027 (manager noted “could be” supportive). - Pricing stance: 2026 pricing primarily reflects carryover from 2025 inflation offsets; management avoids committing to future price rollbacks, emphasizing consumer value and monitoring elasticity.