Operating Cash Flow in FY 2023 was significantly lower due to a combination of factors. **A major reduction in accounts payable** led to less cash generated from operations. Additionally, FY 2022 benefited from a **$349 million gain from the BodyArmor transaction**, which did not recur in FY 2023, resulting in an unfavorable year-over-year comparison. These factors, despite being partially offset by a **$745 million increase in net income**, collectively contributed to the lower Operating Cash Flow in FY 2023.  **[0001418135-24-000007_kdp-20231231.htm:76]** **[0001418135-24-000006_ex991-keurigdrpepperreport.htm:9]** **[0001418135-24-000007_kdp-20231231.htm:58]** 

Why was Operating Cash Flow so low in FY 2023?

KDP’s drastic drop in operating cash flow—from **$663 million in Q1 2022** to **$71 million in Q1 2023**—was mainly driven by several factors. First, there was a significant **decrease in net income adjusted for non-cash items**, largely because the **$349 million gain from the BodyArmor litigation settlement** that boosted Q1 2022 was not repeated in Q1 2023.  **[0001418135-23-000009_kdp-20230331.htm:39]**  Additionally, there were **unfavorable changes in operating assets and liabilities**, with a **$506 million net change** compared to a much smaller change in the prior year. This was primarily due to a **$391 million decrease in accounts payable and accrued expenses**, a **$151 million increase in other current and non-current assets**, and a **$74 million increase in inventories**.  **[0001418135-23-000009_kdp-20230331.htm:5]** **[0001418135-23-000008_ex991-keurigdrpepperreport.htm:6]**  Finally, the **cash conversion cycle worsened,** increasing by **24 days** from **(70) days** in Q1 2022 to **(46) days** in Q1 2023, which further contributed to the decline in cash flow.  **[0001418135-23-000009_kdp-20230331.htm:39]** 

What drove the dramatic drop in Operating Cash Flow in Q1 2023?

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The significant decline in **cash and cash equivalents** to **$267 million** in FY 2023 is primarily attributable to a marked drop in net cash provided by operating activities—a decrease of **$1,508 million**—which was partly driven by a reduction in accounts payable and the impact of a **$349 million gain from BodyArmor** in the previous year. Additionally, changes in investing activities, including **$425 million** spent on property, plant, and equipment and **$316 million** for investments in unconsolidated affiliates, alongside a reduction in financing activities—evidenced by lower amounts spent on common stock repurchases and dividends—further contributed to the lower cash position. The accelerated cash outflow was also influenced by a significant reduction in Days Payable Outstanding, from **167 days** in FY 2022 to **113 days** in FY 2023, accelerating payments to suppliers.  **[0001418135-24-000007_kdp-20231231.htm:76]** **[0001418135-24-000007_kdp-20231231.htm:77]** **[0001418135-24-000006_ex991-keurigdrpepperreport.htm:9]** **[0001418135-24-000007_kdp-20231231.htm:58]** 

Why is cash and cash equivalents so low in FY 2023?

The sharp decline in KDP's short-term borrowings in Q1 2024 is primarily attributed to the **repayment of the current portion of long‑term obligations**, which dropped from **$1,150 million to $0**, and a **reduction in commercial paper notes** from **$2,096 million to $1,908 million**, reflecting a net repayment of **$188 million** in that category.  **[0001418135-24-000054_kdp-20240331.htm:5]** **[0001418135-24-000052_ex991-keurigdrpepperreport.htm:5]** 

What caused the sharp decline in short-term borrowings in Q1 2024?

The **restricted cash** increased from **$0 million** as of December 31, 2023, to **$8 million** as of September 30, 2024, but the documents do not provide specific reasons for this jump.  **[0001418135-24-000090_kdp-20240930.htm:3]** **[20241024DA37596:4]** 

Why did restricted cash jump to 8 in Q3 2024?

The significant increase in long-term obligations in Q1 2024 was driven by **Keurig Dr Pepper’s issuance of $3,000 million in Notes**, which was partially offset by the **repayment of $1,150 million in Notes**. This financing activity resulted in an overall increase of **$2,984 million** in long-term obligations during the quarter.  **[0001418135-24-000054_kdp-20240331.htm:5]** **[20240425DA95768:5]** 

What drove the significant increase in long-term obligations in Q1 2024?

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Keurig Dr Pepper's impairment of intangible assets dropped to **zero in Q4 2023** because the company did not record any impairment charges during that quarter. This is in contrast to **Q4 2022**, when it recorded **$166 million** in impairments primarily related to underperforming intangible assets like the **Bai brand**, which faced specific performance and margin challenges. The absence of triggering events requiring impairment testing in Q4 2023 reflects an improvement in the performance of the company's intangible assets.  **[0001418135-24-000006_ex991-keurigdrpepperreport.htm:13]** **[0001418135-24-000007_kdp-20231231.htm:94]** **[0001418135-24-000007_kdp-20231231.htm:53]** 

Why did Impairment of Intangible Assets drop to zero in Q4 2023?

The sharp decline in **Interest Expense, Net** in Q4 2023 was driven by a **favorable comparison of activity associated with interest rate contracts** and a **decrease in the use of debt** during the quarter, which is reflected in a drop from **$123 million** in Q4 2022 to **$64 million** in Q4 2023.  **[0001418135-24-000007_kdp-20231231.htm:50]** **[0001418135-24-000007_kdp-20231231.htm:98]** 

What drove the sharp decline in Interest Expense in Q4 2023?

KDP’s high operating margin in Q1 2024 was driven by several factors. **Gross profit growth** played a key role, with an increase of **11.2%** to **$1,940 million** fueled by **net sales growth of 3.4%** along with productivity initiatives and favorable changes in ingredients and materials, which together added nearly **390 basis points** to the margin.  **[0001418135-24-000054_kdp-20240331.htm:21]**  Additionally, efficient **cost management and productivity savings** helped offset inflationary pressures, while **segment-level improvements**—including a **500 basis point** rise in U.S. Refreshment Beverages, a **230 basis point** boost in U.S. Coffee, and a **480 basis point** improvement in International segments—further supported the strong margin performance.  **[0001418135-24-000054_kdp-20240331.htm:21]** **[0001418135-24-000054_kdp-20240331.htm:22]** **[0001418135-24-000054_kdp-20240331.htm:23]**  Finally, a **C4 performance incentive** and well-controlled SG&A expenses contributed to the overall rise in operating margin, reaching **22.1%** in Q1 2024.  **[0001418135-24-000054_kdp-20240331.htm:21]** **[0001418135-24-000054_kdp-20240331.htm:23]** 

Why was Operating Margin so high in Q1 2024?

506a8836e0554f6cfa04b9ac7c6a884659619f148039212b30d3e09fe3c7ed7c

d66d92cb3ec8d381f5222181261e72501aee99b22a749d80e18109b94e899b08

fc55361e51f8a0af92142ee9bab709b816409bd9839c13d165180023d2f729e0

Net Sales (USD, millions)

Cost of Sales (USD, millions)

Gross Profit (USD, millions)

Selling, General and Administrative Expenses (USD, millions)

Other Operating (Income) Expense, Net (USD, millions)

Income from Operations (USD, millions)

Interest Expense, Net (USD, millions)

Other Income, Net (USD, millions)

Income Before Provision for Income Taxes (USD, millions)

Provision for Income Taxes (USD, millions)

Net Income (USD, millions)

Basic Earnings per Common Share (USD)

Diluted Earnings per Common Share (USD)

fd15e7c776f4ddf3b94e0183341e638e9b3aeb7d5c32fdb3116a91ace887dfee

ccefeb6df3b281d48d7cac61b3c305baf63143470f8892480a2970ca122ce0e9

bc8efc8753f6aab5ed5c41e5d8950329085aa185b3f10368bc337180563e28ac

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

315aea120bf5e4ddb7a7cf6ee268e62b2bac9132f13675cc970abc7041a2ecb9

Sales Volume for U.S. Refreshment Beverages (percentage)

K-Cup Pod Volume in U.S. Coffee (percentage)

Appliance Volume in U.S. Coffee (percentage)

LRB Sales Volume in International Segment (percentage)

K-Cup Pods Sales Volume in International Segment (percentage)

Appliances Sales Volume in International Segment (percentage)

Volume/Mix Growth for U.S. Refreshment Beverages (percentage)

Volume/Mix Growth for U.S. Coffee (percentage)

Volume/Mix Growth for International (percentage)

Volume/Mix Growth for Entire KDP (percentage)

Net Price Realization for U.S. Refreshment Beverages (percentage)

Net Price Realization for U.S. Coffee (percentage)

Net Price Realization for International (percentage)

Net Price Realization for Entire KDP (percentage)

Days Inventory Outstanding (days)

Days Sales Outstanding (days)

Days Payables Outstanding (days)

Cash Conversion Cycle (days)

4985c1ad905f55ef5b974d61b8692d586b75f25c28322edb05a8f202d0eebca1

1474632fb74fbb134de56efb58dd394bfdaf1f3b89cae2b7fa81645638934106

U.S. Refreshment Beverages

U.S. Coffee

International

United States

- Canada

- Latin America and Other

Total Revenue

25761d92d172f5c1e8a8c185137785230c13d3363e01cbe5e5c6fd76f7a18053

Keurig Dr Pepper (KDP)

Financials