Keurig Dr Pepper Net Income Drops 48% to $270M in Q1 2026 Amid Higher Interest Costs

Keurig Dr Pepper Inc. (NASDAQ: KDP), a U.S.-based beverage and coffee company, reported net income of $270 million for the first quarter ended March 31, 2026, down 48% from $517 million in the same period last year. The sharp decline came as interest expense nearly doubled to $281 million from $148 million, reflecting the company's expanded debt load following major transactions. Read more earnings reports.

Net sales for the quarter rose 9% to $3.98 billion from $3.64 billion a year earlier. Cost of sales climbed to $1.88 billion from $1.65 billion, while selling, general, and administrative expenses increased to $1.34 billion from $1.19 billion. Gross profit advanced to $2.10 billion from $1.99 billion.

Income from operations fell to $756 million from $801 million in the prior-year quarter. The provision for income taxes dropped to $87 million from $143 million.

Diluted earnings per share came in at $0.20, down from $0.38 a year earlier. The weighted average diluted share count edged up to 1.36 billion shares from 1.36 billion shares.

Balance Sheet and Capital Structure

Total assets as of March 31, 2026 stood at $73.14 billion, up sharply from $55.46 billion at December 31, 2025. The increase reflected a surge in current assets to $23.13 billion from $5.27 billion, driven primarily by restricted cash and restricted cash equivalents of $17.82 billion.

Long-term obligations rose to $20.89 billion from $13.04 billion at year-end. Short-term borrowings and current portion of long-term obligations totaled $4.82 billion, up from $3.11 billion.

The company issued $4.50 billion of Series A Convertible Perpetual Preferred Stock during the quarter, recorded at $4.42 billion on the balance sheet after issuance costs. KDP also sold a non-controlling interest in its coffee production assets, generating $3.95 billion in proceeds net of transaction costs and tax effects. The non-controlling interest appeared on the balance sheet at $3.92 billion as of March 31, 2026.

Total stockholders' equity stood at $25.26 billion as of March 31, 2026, compared with $25.52 billion at December 31, 2025. Total equity including the non-controlling interest was $29.18 billion.

Cash Flow

Net cash provided by operating activities totaled $281 million for the quarter, up from $209 million in the first quarter of 2025. The improvement came despite a net change in operating assets and liabilities that consumed $275 million, compared with $408 million a year earlier.

Inventories increased by $101 million during the quarter, while trade accounts receivable fell by $118 million. Accounts payable and accrued expenses declined by $129 million.

Net cash used in investing activities totaled $98 million, compared with $57 million in the prior-year quarter. Capital expenditures for property, plant, and equipment were $116 million, down slightly from $120 million a year earlier.

Financing activities generated net cash of $17.64 billion, driven by $6.00 billion in proceeds from the issuance of Maple Notes, $4.49 billion in net proceeds from convertible preferred stock, $3.95 billion from the sale of the non-controlling interest, and $3.63 billion from a delayed draw term loan. The company repaid $990 million on a term loan and paid $312 million in dividends.

Cash, cash equivalents, restricted cash, and restricted cash equivalents totaled $18.72 billion as of March 31, 2026, up from $1.04 billion at December 31, 2025.

Quarterly Financial Summary

The company declared a quarterly dividend of $0.23 per share, unchanged from the prior year. Stock-based compensation expense for the quarter was $30 million, up from $22 million.

Goodwill stood at $20.21 billion as of March 31, 2026, compared with $20.25 billion at year-end. Net intangible assets totaled $23.65 billion, down from $23.73 billion.