First quarter sales in the U.S. Coffee Segment at Keurig Dr Pepper declined slightly year over year as consumer coffee consumption has returned to what the company said are more normal levels after at-home gains during the COVID-19 pandemic.
Keurig Dr Pepper (KDP) as a whole narrowly beat a Yahoo Finance-published analyst consensus estimate for adjusted earnings of 33 cents per share and revenues of $3.3 billion.
Company net income was $467 million, or $33 cents per diluted share, versus $585 million, or 41 cents per diluted share, in the year-before quarter. Adjusted for one-time events, net income was $479 million, or 34 cents per diluted share, compared to $474 million, or 33 cents per diluted share, in the year-previous period, the company stated.
Net sales were $3.35 billion versus $3.08 billion in the year-prior quarter. Operating income was $584 million versus $966 million in the year-earlier period while adjusted operating income was $699 million versus $732 million.
In the U.S. Coffee segment, net sales for the first quarter decreased 1.3% to $931 million year over year. The performance reflected higher net price realization of 5.3%, more than offset by a 6.6% decrease in volume/mix, KDP noted.
At-home coffee consumption in the quarter continued to normalize post pandemic, according to KDP. Pod revenue gained 2.9%, including a shipment decrease of 1.9% due primarily to greater mobility versus the prior year. On a trailing twelve-month basis versus the pre-pandemic first quarter of 2019 period, at-home pod shipments grew 22.8%, representing a mid-single digit compound annual growth rate.
Brewer shipments totaled 10.2 million for the 12 months ending March 31, representing a 9.8% decline year-over-year. Versus pre-pandemic levels represented by the twelve months ending March 31, 2019, brewer shipments advanced 25.6%, representing a mid-single digit CAGR.
GAAP operating income in the U.S Coffee segment decreased 9% to $232 million in the year-past period, largely reflecting the decline in volume/mix, broad-based inflationary pressure and an unfavorable year-over-year impact of items affecting comparability, partially offset by higher net price realization and productivity. With those items affecting comparability excluded, adjusted operating income declined 5.3% to $285 million and, on a percent of net sales basis, totaled 30.6%.
According to the company, greater consumer mobility continued to affect total at-home coffee category trends in the quarter, with the single-serve pod segment gaining volume share of the category. U.S. retail dollar consumption of KDP Manufactured pods decreased 0.5% in IRi tracked channels in the quarter, while KDP Manufactured share remained healthy at approximately 81%.
In comments on the financial results, KDP chairman and CEO Bob Gamgort stated, “Our overall performance in the quarter demonstrated the resilience of KDP as we delivered on our commitments in a dynamic macro environment. Our results were led by strong revenue growth, supported by successful innovation, increased marketing and modest brand elasticities. The U.S. Refreshment Beverages and International segments exhibited standout performance and, as expected, U.S. Coffee had a slower start to the year. Though the at-home coffee category is still cycling through mobility-related changes relative to last year, single serve continues to gain volume share of the U.S. category. On a consolidated basis and against the backdrop of persistent inflation, we are driving healthy bottom-line growth while reinvesting in our business, and we remain confident in our 2023 outlook.”
