Dr Pepper's (DPS) Q1 Earnings Miss, Revenues Beat Estimates

Dr Pepper Snapple Group Inc.’s (NYSE:DPS) first-quarter 2018 earnings missed the Zacks Consensus Estimate while revenues beat the same. Revenues benefited from a growth in sales volumes, favorable product and package mix, segment mix as well as foreign currency translation.

Recently, the company announced its acquisition agreement with the well-known coffee maker Keurig Green Mountain, Inc. Per the transaction, Dr Pepper will be acquired by Keurig and the company’s shareholders will receive a special cash dividend of $130.75 per share, making the deal worth $18.7 billion.

Dr Pepper’s shareholders will retain 13% ownership of the combined entity, while Keurig’s shareholders will own the remaining 87%. The transaction is scheduled to close in the second quarter of 2018.

Quarterly Highlights

In the first quarter, adjusted earnings per share of 98 cents declined 3% year over year and missed the consensus estimate by 4.9%. Net sales of $1.59 billion surpassed the consensus estimate of $1.57 million by 1.3% but rose 5.6% from the year-ago quarter.

Gross profit of $913 million was up 1.1% from the prior-year quarter.

Volume Details

Dr Pepper’s sales volume is measured in two methods — sales volume and bottler case sales (“BCS”) volume. Sales volume represents concentrates and finished beverages sold to bottlers, retailers and distributors. BCS includes the sale of finished packaged beverages by the company and its bottlers to retailers and independent distributors.

In the quarter, BCS volumes rose 2% year over year. In the United States and Canada, volumes were 3% higher and in Mexico and Caribbean, volumes were flat. Branded CSD volume was up 2%, while NCB volume increased 6% from the prior-year quarter.

Segment Detail

Beverage Concentrates segment revenues were up 3% year over year due to higher pricing, favorable product mix and a 1% increase in concentrate case sales.

Packaged Beverage segment sales increased 5% from the prior-year quarter on higher sales volumes, favorable product and package mix and an increase in contract manufacturing.

Latin America Beverage segment revenues grew 15% year over year owing to favorable foreign currency translation of $7 million, higher pricing and favorable product and package mix.

Dr Pepper Snapple Group, Inc Price, Consensus and EPS Surprise

Financials

Cash and cash equivalents were $13 million as of Mar 31, compared with $61 million at 2017-end. Long-term obligations totaled $4.1 billion as of Mar 31 and were slightly lower than $4.4 billion in 2017.

Capital Expenditures were $41 million for the three months ended Mar 31, compared with $16 million in 2017.

Net cash provided by operating activities totaled nearly $103 million in Mar 31, 2018, up 6.2% year over year.

Zacks Rank & Peer Release

Dr Pepper carries a Zacks Rank #4 (Sell).

The Coca-Cola Company’s (NYSE:KO) first-quarter 2018 comparable earnings of the company were 47 cents per share, which surpassed the Zacks Consensus Estimate of 46 cents. Earnings improved 8% from the year-ago quarter’s profit of 43 cents, courtesy of ongoing productivity efforts. However, net revenues declined 16% year over year due to the negative impact of structural items.

Upcoming Peer Releases

Monster Beverage (NASDAQ:MNST) is expected to report first-quarter 2018 results on May 3.

Cott Corporation (NYSE:COT) is scheduled to report quarterly results on May 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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