Keurig Dr Pepper’s Second-Quarter Earnings Beat Expectations

Keurig Dr Pepper (KDP) on Thursday reported second-quarter earnings that beat expectations, led higher by a higher gross margin rate that also beat views.

The company said adjusted diluted per-share earnings in the quarter ended June 30 rose to $0.30 from adjusted pro forma diluted EPS of $0.26 in the prior-year period. Capital IQ’s consensus was for $0.29.

Net sales edged down to $2.81 billion from $2.82 billion last year on an adjusted pro forma basis, also below the Street’s view of $2.86 billion. Adjusted gross margin was 57.5%, ahead of expectations of 56.5%.

Shares were up 1.5% in morning trading.

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“Our strong quarterly results cap an outstanding first year for Keurig Dr Pepper,” said Chief Executive Bob Gamgort. “Our team has executed well across the board, integrated two companies into one seamless total beverage organization, gaining or maintaining market share across the majority of our portfolio and delivering the bold financial commitments communicated at the time of the merger announcement.”

The company was formed last year by the $18.7 billion combination of Burlington, Mass.-based Keurig Green Mountain and the Plano, Texas-based Dr Pepper Snapple Group.

Adjusted operating income rose to $702 million from adjusted pro forma operating income of $640 million last year, driven by “strong productivity and merger synergies,” the company said. Adjusted net income rose to $423 million from $356 million.