Keurig Dr Pepper Q4 2019 Earnings Report
Key Takeaways
Keurig Dr Pepper reported strong Q4 and full year results. The company's net sales increased by 4.3% in the fourth quarter, driven by higher volume/mix. Diluted EPS grew by 53% to $0.29. The company provided 2020 guidance, including its outlook for accelerated top-line growth.
Delivered strong performance for 2019, with underlying net sales growth in all four segments and EPS growth above our merger target range.
In-market performance was healthy across our portfolio, as innovation, marketing and in-store execution drove share growth in key segments.
Free cash flow continued to be robust, enabling us to rapidly delever.
Increasing investment behind growth drivers, leading to expectation that revenue will accelerate above merger targets, while still delivering double-digit EPS growth.
Keurig Dr Pepper
Keurig Dr Pepper
Forward Guidance
KDP expects net sales growth in 2020 to accelerate to 3.0% to 4.0%, versus the Company’s merger target of 2.0% to 3.0%. Adjusted diluted EPS growth in 2020 is expected to be in the range of 13% to 15%, or $1.38 to $1.40 per diluted share.
Positive Outlook
- Momentum is expected to be fueled by investments KDP is planning across the business, including in the areas of innovation, new partnerships, in-store execution, marketing and research and development.
- Merger synergies of $200 million in 2020, consistent with the Company's long-term merger target for $200 million per year over the 2019-2021 period.
- Adjusted interest expense is expected to be in the range of $530 million to $545 million, reflecting ongoing deleveraging and some benefit from unwinding interest rate swap contracts.
- The Adjusted effective tax rate is expected to be in the range of 24.5% to 25.0%.
- Management leverage ratio is expected to be in the range of 3.5x to 3.8x at year end 2020.