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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM                     TO             

Commission file number 001-33829
kdp-20220930_g1.jpg
Keurig Dr Pepper Inc.
(Exact name of registrant as specified in its charter)
Delaware98-0517725
(State or other jurisdiction of incorporation or organization)(I.R.S. employer identification number)
53 South Avenue
Burlington, Massachusetts
01803
(Address of principal executive offices)
(781) 418-7000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stockKDPThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
Large Accelerated Filer Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes      No    
As of October 25, 2022, there were 1,416,251,307 shares of the registrant's common stock, par value $0.01 per share, outstanding.





KEURIG DR PEPPER INC.
FORM 10-Q
TABLE OF CONTENTS
   Page
 
  
  
  
  
  
 
 
 
 
 
 
s-i

KEURIG DR PEPPER INC.
MASTER GLOSSARY
TermDefinition
2019 KDP Term Loan$2 billion aggregate principal amount, with the ability to make voluntary and mandatory prepayments, which was originally due on February 8, 2023 and was fully repaid in 2021
2021 364-Day Credit AgreementThe Company's $1,500 million credit agreement, which was entered into on March 26, 2021 and was terminated on February 23, 2022
2022 Revolving Credit AgreementKDP’s $4 billion revolving credit agreement, which was executed in February 2022 and replaced the 2021 364-Day Credit Agreement and the KDP Revolver
2022 Strategic RefinancingA series of transactions in April 2022, whereby KDP issued the 2029 Notes, the 2032 Notes, and the 2052 Notes, and voluntarily prepaid and retired the remaining 2023 Merger Notes and tendered portions of the 2025 Merger Notes, the 2028 Merger Notes, the 2038 Merger Notes and the 2048 Merger Notes
A ShocA Shoc Beverage LLC, an equity method investment of KDP, or Adrenaline Shoc energy drinks
ABCThe American Bottling Company, a wholly-owned subsidiary of KDP
ABIAnheuser-Busch InBev SA/NV, the majority owner of Bedford with a 70% interest
Annual Report
Annual Report on Form 10-K for the year ended December 31, 2021
AOCIAccumulated other comprehensive income or loss
BedfordBedford Systems, LLC, an equity method investment of KDP and the maker of Drinkworks
BoardThe Board of Directors of KDP
BodyArmorBA Sports Nutrition, LLC, a former equity method investment of KDP
bpsbasis points
CARES Act
U.S. Coronavirus Aid, Relief and Economic Security Act
CSDCarbonated soft drink
DIODays inventory outstanding
DPODays of payables outstanding
DPSDr Pepper Snapple Group, Inc.
DPS MergerThe combination of the business operations of Keurig and DPS that was consummated on July 9, 2018 through a reverse merger transaction, whereby a wholly-owned special purpose merger subsidiary of DPS merged with and into the direct parent of Keurig
DSDDirect Store Delivery, the operating segment whereby finished beverages are delivered directly to retailers
DSODays sales outstanding
EPSEarnings per share
Exchange ActSecurities Exchange Act of 1934, as amended
FFSFountain Foodservice, an operating segment of KDP which serves the fountain channel, such as restaurants
FASBFinancial Accounting Standards Board
FXForeign exchange
IRiInformation Resources, Inc.
KDPKeurig Dr Pepper Inc.
KDP RevolverThe Company's $2,400 million revolving credit facility, which was entered into on February 28, 2018 and terminated on February 23, 2022.
KeurigKeurig Green Mountain, Inc., a wholly-owned subsidiary of KDP, and the brand of our brewers
LIBORLondon Interbank Offered Rate
NCBNon-carbonated beverage
NotesCollectively, the Company's senior unsecured notes
PETPolyethylene terephthalate, which is used to make the Company's plastic bottles
Proposition 65The State of California's Safe Drinking Water and Toxic Enforcement Act of 1986
RSURestricted share unit
RVGResidual value guarantee
TractorTractor Beverages, Inc., an equity method investment of KDP
SECSecurities and Exchange Commission
SG&ASelling, general and administrative
SOFRSecured Overnight Financing Rate
U.S. GAAPAccounting principles generally accepted in the U.S.
Veyron SPEsSpecial purpose entities with the same sponsor, Veyron Global
VIEVariable interest entity
Vita CocoThe Vita Coco Company, Inc.
WDWarehouse Direct, the operating segment whereby finished beverages are shipped to retailer warehouses, and then delivered by the retailer through its own delivery system to its stores
s-ii

PART I - FINANCIAL INFORMATION
ITEM 1.Financial Statements (Unaudited)

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Third QuarterFirst Nine Months
(in millions, except per share data)2022202120222021
Net sales$3,622 $3,250 $10,254 $9,292 
Cost of sales1,721 1,415 4,927 4,087 
Gross profit1,901 1,835 5,327 5,205 
Selling, general and administrative expenses1,196 1,040 3,418 3,040 
Impairment of intangible assets311  311  
Gain on litigation settlement  (299) 
Other operating income, net  (35)(4)
Income from operations394 795 1,932 2,169 
Interest expense207 116 570 381 
Loss on early extinguishment of debt  217 105 
Gain on sale of equity method investment  (50) 
Impairment of investments and note receivable  12  
Other expense (income), net4 1 22 (6)
Income before provision for income taxes183 678 1,161 1,689 
Provision for income taxes4 149 179 387 
Net income including non-controlling interest179 529 982 1,302 
Less: Net loss attributable to non-controlling interest(1)(1)(1)(1)
Net income attributable to KDP$180 $530 $983 $1,303 
Earnings per common share:    
Basic$0.13 $0.37 $0.69 $0.92 
Diluted0.13 0.37 0.69 0.91 
Weighted average common shares outstanding:  
Basic1,416.1 1,417.6 1,417.3 1,414.9 
Diluted1,427.2 1,428.5 1,428.8 1,427.5 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


1

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
 Third QuarterFirst Nine Months
(in millions)2022202120222021
Net income including non-controlling interest$179 $529 $982 $1,302 
Other comprehensive (loss) income
Foreign currency translation adjustments(249)(137)(283)(9)
Net change in pension and post-retirement liability, net of tax of $, $, $ and $, respectively
  (3) 
Net change in cash flow hedges, net of tax of $12, $4, $98 and $(22), respectively
35 15 303 (62)
Total other comprehensive (loss) income(214)(122)17 (71)
Comprehensive income including non-controlling interest(35)407 999 1,231 
Less: Comprehensive income attributable to non-controlling interest    
Comprehensive (loss) income attributable to KDP$(35)$407 $999 $1,231 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


2

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 September 30,December 31,
(in millions, except share and per share data)20222021
Assets
Current assets:  
Cash and cash equivalents$925 $567 
Restricted cash and cash equivalents3 1 
Trade accounts receivable, net1,472 1,148 
Inventories1,438 894 
Prepaid expenses and other current assets487 447 
Total current assets4,325 3,057 
Property, plant and equipment, net2,483 2,494 
Investments in unconsolidated affiliates76 30 
Goodwill20,024 20,182 
Other intangible assets, net23,299 23,856 
Other non-current assets1,196 937 
Deferred tax assets37 42 
Total assets$51,440 $50,598 
Liabilities and Stockholders' Equity
Current liabilities:  
Accounts payable$5,284 $4,316 
Accrued expenses1,129 1,110 
Structured payables145 142 
Short-term borrowings and current portion of long-term obligations 304 
Other current liabilities675 613 
Total current liabilities7,233 6,485 
Long-term obligations11,561 11,578 
Deferred tax liabilities5,745 5,986 
Other non-current liabilities1,800 1,577 
Total liabilities26,339 25,626 
Commitments and contingencies
Stockholders' equity:  
Preferred stock, $0.01 par value, 15,000,000 shares authorized, no shares issued
  
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 1,416,251,307 and 1,418,119,197 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
14 14 
Additional paid-in capital21,730 21,785 
Retained earnings3,367 3,199 
Accumulated other comprehensive loss(9)(26)
Total stockholders' equity25,102 24,972 
Non-controlling interest(1) 
Total equity25,101 24,972 
Total liabilities and equity$51,440 $50,598 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 First Nine Months
(in millions)20222021
Operating activities:  
Net income attributable to KDP$983 $1,303 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation expense301 304 
Amortization of intangibles100 101 
Other amortization expense129 118 
Provision for sales returns38 48 
Deferred income taxes(281)(21)
Employee stock-based compensation expense43 68 
Loss on early extinguishment of debt217 105 
Gain on sale of equity method investment(50) 
Gain on disposal of property, plant and equipment(38)(5)
Unrealized loss on foreign currency22 1 
Unrealized loss (gain) on derivatives387 (94)
Settlements of interest rate contracts125  
Equity in loss of unconsolidated affiliates6 2 
Impairment of intangible assets311  
Impairment on investments and note receivable of unconsolidated affiliate12  
Other, net22 10 
Changes in assets and liabilities:  
Trade accounts receivable(372)(126)
Inventories(552)(210)
Income taxes receivable and payables, net(106)(11)
Other current and non-current assets(380)(181)
Accounts payable and accrued expenses1,014 536 
Other current and non-current liabilities167 (15)
Net change in operating assets and liabilities(229)(7)
Net cash provided by operating activities2,098 1,933 
Investing activities:  
Proceeds from sale of investment in unconsolidated affiliates50  
Purchases of property, plant and equipment(260)(325)
Proceeds from sales of property, plant and equipment79 18 
Purchases of intangibles(19)(31)
Issuance of related party note receivable(18)(17)
Investments in unconsolidated affiliates(48) 
Other, net3 5 
Net cash used in investing activities$(213)$(350)
    

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, CONTINUED)
 First Nine Months
(in millions)20222021
Financing activities:  
Proceeds from issuance of Notes
$3,000 $2,150 
Repayments of Notes
(3,365)(3,595)
Proceeds from issuance of commercial paper500 4,756 
Repayments of commercial paper(649)(3,758)
Repayments of 2019 KDP Term Loan
 (425)
Proceeds from structured payables114 112 
Repayments of structured payables(111)(123)
Cash dividends paid(796)(687)
Repurchases of common stock(88) 
Proceeds from issuance of common stock 140 
Tax withholdings related to net share settlements(10)(125)
Payments on finance leases(65)(40)
Other, net(45)(35)
Net cash used in financing activities(1,515)(1,630)
Cash, cash equivalents, and restricted cash and cash equivalents:  
Net change from operating, investing and financing activities370 (47)
Effect of exchange rate changes(10)(5)
Beginning balance568 255 
Ending balance$928 $203 
Supplemental cash flow disclosures of non-cash investing activities:
Capital expenditures included in accounts payable and accrued expenses$179 $180 
Non-cash conversion of note receivable to investment in unconsolidated affiliate6  
Purchases of intangibles22 — 
Supplemental cash flow disclosures of non-cash financing activities:
Dividends declared but not yet paid284 268 
Supplemental cash flow disclosures:
Cash paid for interest236 284 
Cash paid for income taxes566 408 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

 Common Stock IssuedAdditional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNon-controlling InterestTotal
Equity
(in millions, except per share data)SharesAmount
Balance as of January 1, 20221,418.1 $14 $21,785 $3,199 $(26)$24,972 $ $24,972 
Net income   585  585  585 
Other comprehensive income    241 241  241 
Dividends declared, $0.1875 per share
   (266) (266) (266)
Shares issued under employee stock-based compensation plans and other0.4        
Tax withholdings related to net share settlements  (5)  (5) (5)
Stock-based compensation and stock options exercised  (16)  (16) (16)
Balance as of March 31, 2022
1,418.5 14 21,764 3,518 215 25,511  25,511 
Net income   218  218  218 
Other comprehensive loss    (10)(10) (10)
Dividends declared, $0.1875 per share
   (265) (265) (265)
Repurchases of common stock(2.5) (88)  (88) (88)
Shares issued under employee stock-based compensation plans and other0.1        
Tax withholdings related to net share settlements  (3)  (3) (3)
Stock-based compensation and stock options exercised  28   28  28 
Balance as of June 30, 2022
1,416.1 14 21,701 3,471 205 25,391  25,391 
Net income   180  180 (1)179 
Other comprehensive loss    (214)(214) (214)
Dividends declared, $0.20 per share
   (284) (284) (284)
Shares issued under employee stock-based compensation plans and other0.2        
Tax withholdings related to net share settlements  (2)  (2) (2)
Stock-based compensation and stock options exercised  31   31  31 
Balance as of September 30, 2022
1,416.3 $14 $21,730 $3,367 $(9)$25,102 $(1)$25,101 








6

KEURIG DR PEPPER INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED, CONTINUED)

 Common Stock IssuedAdditional
Paid-In Capital
Retained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNon-controlling InterestTotal Equity
(in millions, except per share data)SharesAmount
Balance as of January 1, 2021
1,407.3 $14 $21,677 $2,061 $77 $23,829 $1 $23,830 
Net income— — — 325 — 325  325 
Other comprehensive loss— — — — 87 87 — 87 
Dividends declared, $0.15 per share
— — — (212)— (212)— (212)
Issuance of common stock4.3 — 140 — — 140 — 140 
Shares issued under employee stock-based compensation plans and other5.7 — — — — — — — 
Tax withholdings related to net share settlements— — (125)— — (125)— (125)
Stock-based compensation and stock options exercised— — 26 — — 26 — 26 
Balance as of March 31, 2021
1,417.3 14 21,718 2,174 164 24,070 1 24,071 
Net income— — — 448 — 448  448 
Other comprehensive income— — — — (36)(36)— (36)
Dividends declared, $0.1875 per share
— — — (265)— (265)— (265)
Shares issued under employee stock-based compensation plans and other0.1 — — — — — — — 
Stock-based compensation and stock options exercised— —