Q1 2026 Keurig Dr Pepper Inc Earnings Call

April 23, 2026

Operator 2: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Keurig Dr Pepper's earnings call for Q1 2026. This conference call is being recorded, and there will be a question and answer session at the end of the call. I would now like to introduce Chethan Mallela, Vice President of Investor Relations at Keurig Dr Pepper. Please go ahead.

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Keurig Dr Pepper's earnings call for Q1 2026. This conference call is being recorded, and there will be a question and answer session at the end of the call. I would now like to introduce Chethan Mallela, Vice President of Investor Relations at Keurig Dr Pepper. Please go ahead.

Speaker #2: This conference call is being recorded, and there will be a question-and-answer session at the end of the call. I would now like to introduce Chathan Malella, Vice President of Investor Relations at Keurig Dr Pepper.

Speaker #2: Please go ahead. Thank you, and hello everyone. Earlier this morning, we issued a press release detailing our first quarter 2026 results, which we will discuss on today's call.

Chethan Mallela: Thank you, and hello, everyone. Earlier this morning, we issued a press release detailing our Q1 2026 results, which we will discuss on today's call. An accompanying slide presentation is available and can be viewed in real time on the webcast. Before we get started, I'd like to remind you that our remarks will include forward-looking statements, which reflect KDP's judgment, assumptions, and analysis only as of today. Our actual results may differ materially from current expectations based on a number of factors affecting KDP's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today. For more information, please refer to our earnings release and the risk factors discussed in our most recent Form 10-K and our latest 10-Q, which will be filed with the SEC later today.

Speaker #2: And accompanying slide presentation is available and can be viewed in real time on the webcast. Before we get started, I'd like to remind you that our remarks will include forward-looking statements, which reflect KDP's judgment, assumptions, and analysis only as of today.

Speaker #2: Our actual results may differ materially from current expectations, based on a number of factors affecting KDP's business. Except as required by law, we do not undertake any obligation to update any forward-looking statements discussed today.

Speaker #2: For more information, please refer to our earnings release and the risk factors discussed in our most recent Form 10-K and our latest 10-Q, which will be filed with the SEC later today.

Speaker #2: Consistent with previous quarters, we will be discussing our Q1 performance on a non-GAAP adjusted basis, which reflects constant currency growth rates and excludes items affecting comparability.

Chethan Mallela: Consistent with previous quarters, we will be discussing our Q1 performance on a non-GAAP adjusted basis, which reflects constant currency growth rates and excludes items affecting comparability. Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings materials. Here with us today to discuss our results are Keurig Dr Pepper's Chief Executive Officer, Tim Cofer, and Chief Financial Officer, Anthony DiSilvestro. I'll now turn it over to Tim.

Speaker #2: Definitions and reconciliations to the most directly comparable GAAP metrics are included in our earnings materials. Here with us today to discuss our results are Keurig Dr Pepper's Chief Executive Officer, Tim Kofer; and Chief Financial Officer, Anthony DeSilvestro.

Speaker #2: I'll now turn it over to Tim.

Speaker #3: Thanks, Chathan, and good morning everyone. We're pleased with our start to the year. We closed the JDP's acquisition and made steady progress on our transformation initiatives, while continuing to drive our base business with first quarter results that tracked slightly ahead of our expectations.

Tim Cofer: Thanks, Chethan, and good morning, everyone. We're pleased with our start to the year. We closed the JDE Peet's acquisition and made steady progress on our transformation initiatives while continuing to drive our base business with Q1 results that tracked slightly ahead of our expectations. In a dynamic operating environment, our teams remain focused on balancing longer term foundational work with near term execution. Looking ahead, our top priorities for 2026 remain unchanged, delivering our low double-digit EPS growth guidance in a high-quality way, seamlessly integrating JDE Peet's and beginning to unlock combination benefits, and achieving key milestones to set up a successful separation. While there's plenty of work ahead, our well-constructed plans and year-to-date progress reinforce our confidence in delivering on these commitments. Before discussing our quarterly results, let me briefly touch on our transformation work.

Speaker #3: In a dynamic operating environment, our teams remain focused on balancing longer-term foundational work with near-term execution. Looking ahead, our top priorities for 2026 remain unchanged, delivering our low double-digit EPS growth guidance and a high-quality way seamlessly integrating JDEP's and beginning to unlock combination benefits and achieving key milestones to set up a successful separation.

Speaker #3: While there's plenty of work ahead, our well-constructed plans and year-to-date progress reinforce our confidence in delivering on these commitments. Before discussing our quarterly results, let me briefly touch on our transformation work.

Speaker #3: On April 1st, we closed the acquisition of JDEP's. Welcoming over 20,000 new colleagues to KDP and bringing our complementary portfolios and capabilities together united by a shared passion for great brands and exceptional coffee experiences.

Tim Cofer: On 1 April, we closed the acquisition of JDE Peet's, welcoming over 20,000 new colleagues to KDP and bringing our complementary portfolios and capabilities together, united by a shared passion for great brands and exceptional coffee experiences. With the transaction now closed, we have begun to operationalize our integration plans, led by a dedicated transformation management office and guided by clear work streams and accountability. At the same time, we're also advancing our work to separate into two advantaged pure-play public companies, which will be well-positioned to create value through increased focus and organizational clarity, with fit-for-purpose strategies and capital allocation policies. BeverageCo will be a growth-oriented challenger in the large and attractive $300 billion North American refreshment beverages market.

Speaker #3: With the transaction now closed, we have begun to operationalize our integration plans, led by a dedicated transformation management office and guided by clear work streams and accountability.

Speaker #3: At the same time, we're also advancing our work to separate into two advantaged pure-play public companies which will be well-positioned to create value through increased focus and organizational clarity, with fit-for-purpose strategies and capital allocation policies.

Speaker #3: BeverageCo will be a growth-oriented challenger in the large and attractive $300 billion North American refreshment beverages market. With iconic brands, differentiated go-to-market capabilities, and a proven track record of whitespace expansion the standalone beverage business should deliver compelling financial results while also possessing strategic optionality over time.

Tim Cofer: With iconic brands, differentiated go-to-market capabilities, and a proven track record of white space expansion, the standalone beverage business should deliver compelling financial results while also possessing strategic optionality over time. Global Coffee Co. will be a scaled leader in the $400 billion global coffee market with an enhanced set of capabilities to meet consumer needs across formats, channels, and geographies. Supported by a portfolio of leading global and regional brands, deep expertise in sourcing, blending, and appliances, and strong synergy potential, the coffee business will also have a compelling value creation model. As we balance near-term performance with our transformation agenda, we have put in place an operating model designed to maintain enterprise focus while preparing each business unit to operate independently at separation. Under this structure, the centralized KDP leadership team is responsible for strategic oversight, total company commitments, and transaction execution.

Speaker #3: Global coffee co will be a scaled leader in the $400 billion global coffee market with an enhanced set of capabilities to meet consumer needs across formats, channels, and geographies.

Speaker #3: Supported by a portfolio of leading global and regional brands, deep expertise in sourcing, blending, and appliances, and strong synergy potential, the coffee business will also have a compelling value creation model.

Speaker #3: As we balance near-term performance with our transformation agenda, we have put in place an operating model designed to maintain enterprise focus while preparing each business unit to operate independently at separation.

Speaker #3: Under this structure, the centralized KDP leadership team is responsible for strategic oversight, total company commitments, and transaction execution, while our dedicated beverage and coffee operating units are accountable for delivering their 2026 business plans and shaping the strategic direction for each business.

Tim Cofer: While our dedicated beverage and coffee operating units are accountable for delivering their 2026 business plans and shaping the strategic direction for each business. As CEO of KDP and the future CEO of Beverage Co., I am overseeing both the KDP leadership team and the beverage operating unit. As we recently announced, JDE Peet's CEO, Rafa Oliveira, has been selected by the board to lead the coffee operating unit and become the future CEO of Global Coffee Co. upon separation. Rafa has meaningful CPG experience, a track record of navigating complex global markets, and is the architect of JDE Peet's brand-led strategy. He's the natural choice to lead our coffee business today and in the future, and I look forward to advancing our partnership as we prepare to stand up two winning companies.

Speaker #3: As CEO of KDP and the future CEO of BeverageCo, I am overseeing both the KDP leadership team and the beverage operating unit. As we recently announced, JDEP's CEO, Rafa Oliveira, has been selected by the board to lead the coffee operating unit and become the future CEO of Global CoffeeCo upon separation.

Speaker #3: Rafa has meaningful CPG experience, a track record of navigating complex global markets, and is the architect of JDEP's brand-led strategy. He's the natural choice to lead our coffee business today and in the future, and I look forward to advancing our partnership as we prepare to stand up to winning companies.

Speaker #3: Overall, our transformation work has progressed well, and we continue to target operational readiness to separate by the end of 2026, with the official separation likely to occur in early 2027, subject to market conditions.

Tim Cofer: Overall, our transformation work is progressing well, and we continue to target operational readiness to separate by the end of 2026, with the official separation likely to occur in early 2027, subject to market conditions. Turning now to our Q1 results. Net sales grew 8% with positive contributions from both net price realization and volume mix. Top-line performance was led by continued strong momentum in U.S. Refreshment Beverages and International, partly offset by previously discussed temporary pressures in U.S. Coffee. Our EPS of $0.39 declined from last year, reflecting the phasing of cost and tariff impacts and lapping a below-the-line gain in the year-ago period. Importantly, as Anthony will discuss, we have visibility to healthy EPS growth beginning in Q2 with further acceleration in the back half. Let me now discuss our Q1 segment performance.

Speaker #3: Turning now to our first quarter results. Net sales grew 8%, with positive contributions from both net price realization and volume mix. Top-line performance was led by continued strong momentum in U.S.

Speaker #3: refreshment beverages and international, partly offset by previously discussed temporary pressures in U.S. coffee. Our EPS of $39 declined from last year, reflecting the phasing of cost and tariff impacts and lapping a below-the-line gain in the year-ago period.

Speaker #3: Importantly, as Anthony will discuss, we have visibility to healthy EPS growth beginning in the second quarter with further acceleration in the back half. Let me now discuss our Q1 segment performance.

Speaker #3: I'll start with U.S. refreshment beverages. Which delivered another robust growth quarter. Net sales and operating income each grew at a double-digit rate, driven by favorable trends in our core carbonated soft drink business and continued momentum in our portfolio's emerging growth areas.

Tim Cofer: I'll start with U.S. Refreshment Beverages, which delivered another robust growth quarter. Net sales and operating income each grew at a double-digit rate, driven by favorable trends in our core carbonated soft drink business and continued momentum in our portfolio's emerging growth areas. Within CSDs, the category remained healthy, with Q1 retail sales dollars growing at a mid-single-digit rate and accelerating from Q4. While Dr Pepper faced a difficult innovation comparison versus the Blackberry launch last year, our underlying trends were strong, with the brand's three primary lines, regular, diet, and zero sugar, collectively gaining share during the quarter, supported by demand generation activity and point-of-sale execution. CSD innovation will play an important role in our plans for the rest of the year. Canada Dry Fruit Splash Strawberry launched nationally in February and has driven healthy consumer trial, strong on-shelf velocities, and incrementality to the franchise.

Speaker #3: Within CSDs, the category remained healthy. With Q1 retail sales dollars growing at a mid-single-digit rate, an accelerating from Q4. While Dr. Pepper faced a difficult innovation comparison, versus the BlackBerry launch last year, our underlying trends were strong.

Speaker #3: With the brand's three primary lines—regular, diet, and zero sugar—collectively gaining share during the quarter, supported by demand generation activity and point-of-sale execution.

Speaker #3: CSD innovation will play an important role in our plans for the rest of the year. Canada Dry Fruit Splash Strawberry launched nationally in February, and has driven healthy consumer trial, strong on-shelf velocities, and incrementality to the franchise, the launch contributed to Canada Dry's Q1 share gains and should provide a further tailwind in coming quarters.

Tim Cofer: The launch contributed to Canada Dry's Q1 share gains and should provide a further tailwind in coming quarters. In addition, the fan favorite Dr Pepper Creamy Coconut limited-time offering relaunched earlier this month, and we're confident it will build on its successful initial run during 2024 as it taps into ongoing consumer interest in dirty sodas. Our performance in 2026 will also benefit from our continued focus on aligning our CSD portfolio with consumer needs around both value and wellness. With consumers seeking affordability in the current environment, we have refined our promotional strategies to offer compelling price points in key channels while maintaining discipline to ensure net price realization continues to offset inflationary pressures. We're also leaning into the better-for-you areas of our portfolio with Bloom Pop prebiotic CSDs expanding rapidly off a small base and our zero sugar CSD offerings growing at a double-digit rate in Q1.

Speaker #3: In addition, the fan-favorite Dr. Pepper Creamy Coconut Limited Time Offering relaunched earlier this month, and we're confident it will build on its successful initial run during 2024 as it taps into ongoing consumer interest in dirty sodas.

Speaker #3: Our performance in 2026 will also benefit from our continued focus on aligning our CSD portfolio with consumer needs around both value and wellness. With consumers seeking affordability in the current environment, we have refined our promotional strategies to offer compelling price points in key channels while maintaining discipline to ensure net price realization continues to offset inflationary pressures.

Speaker #3: We're also leaning into the better few areas of our portfolio, with Bloom Pop, Rebiotic CSDs expanding rapidly off a small base and our zero sugar CSD offerings growing at a double-digit rate in Q1.

Speaker #3: Beyond CSDs, we continue to build our presence in emerging growth areas, in energy, we once again expanded market share during the first quarter, led by Bloom and Ghost, which were two of the top three fastest-growing major trademarks in the category.

Tim Cofer: Beyond CSDs, we continue to build our presence in emerging growth areas. In energy, we once again expanded market share during Q1, led by Bloom and Ghost, which were two of the top three fastest-growing major trademarks in the category. Our performance reflected strong innovation, incremental distribution wins, and high-quality DSD execution. We believe our portfolio approach to the category remains a clear advantage and continue to see meaningful growth potential across C4, Ghost, Bloom, and Black Rifle. Our sports hydration partnership with Electrolit is also delivering healthy results, with the brand gaining significant share in Q1 through distribution expansion and strong velocities. Overall, U.S. Refreshment Beverages continues to represent an outsized growth driver for KDP, and we expect this segment to remain a key contributor in 2026. Turning now to U.S. Coffee.

Speaker #3: Our performance reflected strong innovation, incremental distribution wins, and high-quality DSD execution. We believe our portfolio approach to the category remains a clear advantage and continue to see meaningful growth potential across C4, Ghost, Bloom, and Black Rifle.

Speaker #3: Our sports hydration partnership with Electrolite is also delivering healthy results, with the brand gaining significant share in Q1 through distribution expansion and strong velocities.

Speaker #3: Overall, U.S. refreshment beverages continues to represent an outsized growth driver for KDP and we expect this segment to remain a key contributor in 2026.

Speaker #3: Turning now to U.S. coffee. While both net sales and operating income declined, the quarter largely played out as we expected. And we have conviction in both the category and our business.

Tim Cofer: While both net sales and operating income declined, the quarter largely played out as we expected, and we have conviction in both the category and our business. I'd highlight a few key points. First, the coffee category is healthy with continued growth and manageable elasticities. The Keurig compatible sub-segment grew retail sales at a nearly 4% rate, with our owned and licensed brands keeping pace. Our licensed Lavazza brand was a standout performer, growing K-Cup sales more than 50% in the quarter through brand strength, successful innovation, and increased distribution breadth and quality. Second, as expected, our reported results were impacted by some meaningful but temporary headwinds. Peak year-over-year cost pressures constrained Q1 segment profitability, reflecting the timing of higher cost green coffee hedges and tariffs. As previewed last quarter, trade inventory adjustments pressured pod shipments, which declined 7% and lagged point of sale trends weighing on operating income.

Speaker #3: I'd highlight a few key points. First, the coffee category is healthy, with continued growth and manageable elasticities. The Keurig compatible subsegment grew retail sales at a nearly 4% rate, with our owned and licensed brands keeping pace.

Speaker #3: Our licensed Lavazza brand was a standout performer, growing K-cup sales more than 50% in the quarter through brand strength, successful innovation, and increased distribution breadth and quality.

Speaker #3: Second, as expected, our reported results were impacted by some meaningful but temporary headwinds. Peak year-over-year cost pressures constrained Q1 segment profitability, reflecting the timing of higher-cost green coffee hedges and tariffs.

Speaker #3: And as previewed last quarter, trade inventory adjustments pressured pod shipments, which declined 7% and lagged point-of-sale trends weighing on operating income. Importantly, these headwinds should ease slightly in Q2 and moderate more meaningfully in the back half, providing visibility to improved top and bottom line trends over the balance of the year.

Tim Cofer: Importantly, these headwinds should ease slightly in Q2 and moderate more meaningfully in H2, providing visibility to improved top and bottom-line trends over the balance of the year. Third, despite the near-term profit pressure, we're thoughtfully investing in long-term growth initiatives. Let me provide a few examples. We're enhancing our premium owned and licensed segment through the well-supported Keurig Coffee Collective innovation launch, which is off to an encouraging start with strong retailer enthusiasm and early consumer trial. We are continuing to execute our coffee partnership strategy, as evidenced by the recent renewal and expansion of our K-Cup agreement with Nestlé USA. This agreement deepens and extends a highly successful relationship and will enable us to expand distribution and innovation for the Starbucks brand in the Keurig ecosystem. We continue to prepare the Keurig Alta system for its initial targeted direct-to-consumer launch planned for later this year.

Speaker #3: Third, despite the near-term profit pressure, we're thoughtfully investing in long-term growth initiatives. Let me provide a few examples. We're enhancing our premium owned and licensed segment through the well-supported Keurig Coffee Collective innovation launch, which is off to an encouraging start with strong retailer enthusiasm and early consumer trial.

Speaker #3: We are continuing to execute our coffee partnership strategy, as evidenced by the recent renewal and expansion of our K-Cup agreement with Nestlé USA.

Speaker #3: This agreement deepens and extends a highly successful relationship and will enable us to expand distribution and innovation for the Starbucks brand in the ecosystem. And we continue to prepare the Keurig Alta system for its initial targeted direct-to-consumer launch planned for later this year. This disruptive next-generation coffee system will feature our Keurig brand, the newly acquired premium Peet's Coffee brand, and over time the likely participation of partner brands as well.

Tim Cofer: This disruptive next-generation coffee system will feature our Keurig brand, the newly acquired premium Peet's Coffee brand, and over time, the likely participation of partner brands as well. Putting it all together, combining constructive category trends with our investments to support long-term growth initiatives, we remain confident in the prospects for our coffee business. In international, Q1 net sales grew at a high single-digit rate, driven by net price realization. While volume mix declined modestly due to some short-term impacts related to the Mexico beverage tax, we're encouraged by the resilience of underlying consumer demand and our share trends across key categories. Despite the top-line strength, operating income declined, reflecting cost pressures and higher investment spending in a seasonally smaller profit quarter.

Speaker #3: Putting it all together, combining constructive category support long-term growth initiatives, we remain confident in the prospects for our coffee business. In the international, Q1 net sales grew at a high single-digit rate, driven by net price realization.

Speaker #3: While volume mix declined modestly, due to some short-term impacts related to the Mexico beverage tax, we're encouraged by the resilience of underlying consumer demand and our share trends across key categories.

Speaker #3: Despite the top line strength, operating income declined, reflecting cost pressures and higher investment spending in a seasonally smaller profit quarter. Looking ahead, we expect profitability trends to improve as inflationary pressures ease, volume mix strengthens, and we execute our commercial plans for the year including summertime activations to drive engagement and celebrate soccer fandom.

Tim Cofer: Looking ahead, we expect profitability trends to improve as inflationary pressures ease, volume mix strengthens, and we execute our commercial plans for the year, including summertime activations to drive engagement and celebrate soccer fandom. Overall, we continue to expect our international segment will remain a meaningful growth contributor over time. Given our strong local share positions in attractive categories, as well as portfolio and distribution expansion opportunities in both Canada and Mexico. We will also be disciplined and opportunistic in targeting other geographies. For example, we recently evolved our Suntory partnership in Europe to a more collaborative concentrate supply model that will provide access to incremental consumers through a capital-light, low-risk model. To close, we're starting the year on solid footing. We completed the JDE Peet's acquisition. We're making steady progress advancing our transformation agenda, and we remain on track to achieve our full year outlook.

Speaker #3: Overall, we continue to expect our International segment will remain a meaningful growth contributor over time, given our strong local share positions in attractive categories, as well as portfolio and distribution expansion opportunities in both Canada and Mexico.

Speaker #3: We will also be disciplined and opportunistic in targeting other geographies. For example, we recently evolved our Suntory partnership in Europe to a more collaborative concentrate supply model that will provide access to incremental consumers through a capital light low-risk model.

Speaker #3: To close, we're starting the year on solid footing. We completed the JDE Peet's acquisition. We're making steady progress advancing our transformation agenda. And we remain on track to achieve our full year outlook.

Speaker #3: As we look ahead to the rest of the year, we're focused on sustaining base business momentum integrating JDE Peet's with excellence and laying the groundwork for two strong standalone companies.

Tim Cofer: As we look ahead to the rest of the year, we're focused on sustaining base business momentum, integrating JDE Peet's with excellence, and laying the groundwork for two strong standalone companies. With that, I'll turn the call over to Anthony to discuss the financials in more detail.

Speaker #3: With that, I'll turn the call over to Anthony to discuss the financials in more detail.

Speaker #2: Thanks, Tim. And good morning, everyone. We delivered solid first-quarter results that were modestly ahead of our expectations reflecting strong momentum particularly in cold beverages.

Anthony DiSilvestro: Thanks, Tim, and good morning, everyone. We delivered solid Q1 results that were modestly ahead of our expectations, reflecting strong momentum, particularly in cold beverages. Net sales increased 8.1% in the quarter, led by strong gains in U.S. Refreshment Beverages and International, partly offset by a decline in U.S. Coffee as expected. Net price realization was the primary top-line driver, contributing 5.5 percentage points to growth, while volume mix added 2.6 points. Gross margin contracted 220 basis points as elevated cost pressures were only partly offset by net price realization and productivity savings. We expect Q1 to represent the most significant year-over-year gross margin decline for our legacy KDP business, with trends improving as inflation and tariff impacts ease, particularly in the back half.

Speaker #2: Net sales increased 8.1% in the quarter, led by strong gains in U.S. refreshment beverages and International, probably offset by a decline in U.S. coffee as expected.

Speaker #2: Net price realization was the primary top-line driver, contributing 5.5 percentage points to growth, while volume mix added 2.6 points. Gross margin contracted 220 basis points, as elevated cost pressures were only partly offset by net price realization and productivity savings.

Speaker #2: We expect Q1 to represent the most significant year-over-year gross margin decline for our legacy KDP business with trends improving as inflation and tariff impacts ease particularly in the back half.

Speaker #2: SG&A was flat as a percent of sales with transportation and warehousing efficiencies offsetting increased marketing spending across all three segments to support our key brand equities and compelling innovation slate.

Anthony DiSilvestro: SG&A was flat as a percent of sales, with transportation and warehousing efficiencies offsetting increased marketing spending across all three segments to support our key brand equities and compelling innovation slate. All in, Q1 operating income declined 1.9%. Including the below the line impact of lapping last year's $0.02 gain on the sale of our Vita Coco stake, EPS decreased 7.1% to $0.39. Moving on to our segments. U.S. Refreshment Beverages net sales grew 11.9%, with volume mix contributing 7.2 points. Net price realization added another 4.7 points, reflecting inflation-driven price increases taken early in the year. On the bottom line, segment operating income was strong, increasing 9.8%, with net sales growth and productivity savings more than offsetting inflation and higher marketing spending. Overall, U.S. Refreshment Beverages has strong momentum led by healthy trends in carbonated soft drinks, energy, and sports hydration.

Speaker #2: All in, Q1 operating income declined 1.9%. Including the below-the-line impact of lapping last year's 2-cent gain on the sale of our Vita Coco steak EPS decreased 7.1% to 39 cents.

Speaker #2: Moving on to our segments, US refreshment beverages net sales grew 11.9% with volume mix contributing 7.2 points. Net price realization added another 4.7 points reflecting inflation-driven price increases taken early in the year.

Speaker #2: On the bottom line, segment operating income was strong increasing 9.8% with net sales growth and productivity inflation and a higher marketing spending. Overall, US refreshment beverages has strong momentum led by healthy trends in carbonated soft drinks energy and sports hydration.

Speaker #2: We have robust innovation and commercial plans in place for the balance of 2026 and expect another strong year for the segment. In US coffee, our Q1 performance was largely as anticipated.

Anthony DiSilvestro: We have robust innovation and commercial plans in place for the balance of 2026 and expect another strong year for the segment. In U.S. Coffee, our Q1 performance was largely as anticipated. Net sales declined 2.3%, with volume mix driving an 8.2 percentage point decline. Pod shipments declined 7%, reflecting trade inventory adjustments along with manageable price elasticities. Brewer shipments also declined at a high single-digit rate, primarily driven by elasticity. Net price realization added 5.9 points to net sales, driven primarily by carryover pricing in both pods and brewers. Turning to profit, segment operating income declined 21.3%. This was primarily driven by meaningful cost pressures as higher green coffee costs and tariffs flowed through our results in the quarter. Profitability was also impacted by the pod shipment decline and increased marketing spending. Collectively, these factors more than offset benefits from net price realization and productivity savings.

Speaker #2: Net sales declined 2.3% with volume mix driving an 8.2 percentage point decline. Pod shipments declined 7% reflecting trade inventory adjustments along with manageable price elasticities.

Speaker #2: Brewer shipments also declined at a high single-digit rate primarily driven by elasticity. Net price realization added 5.9 points to net sales driven primarily by carryover pricing in both pods and brewers.

Speaker #2: Turning to profit, segment operating income declined 21.3%. This was primarily driven by meaningful cost pressures, as higher green coffee costs and tariffs flowed through our results in the quarter.

Speaker #2: Profitability was also impacted by the pod shipment decline and increased marketing spending. Collectively, these factors more than offset benefits from net price realization and productivity savings.

Speaker #2: Ultimately, our US coffee segment is tracking with our plans. While we continue to expect subdued profit for the full year, we have visibility to progressive improvement particularly in the second half when our costs improve in short-term trade inventory dynamics normalize.

Anthony DiSilvestro: Ultimately, our U.S. Coffee segment is tracking with our plans. While we continue to expect subdued profit for the full year, we have visibility to progressive improvement, particularly in H2, when our costs improve and short-term trade inventory dynamics normalize. In our International segment, constant currency net sales increased 8.5%. Net price realization contributed 9.2 percentage points, driven by pricing actions taken in response to cost pressures in both Mexico and Canada. Volume mix provided a partial offset, declining 0.7 percentage points. International segment operating income declined 15.1% on a constant currency basis, primarily due to cost pressures, including the Mexico beverage tax and increased marketing spending. As we previewed last quarter, we plan for a softer start to the year in this segment, and we continue to expect profit trends to improve as 2026 progresses. Turning to the balance sheet and cash flow.

Speaker #2: In our international segment, constant currency net sales increased 8.5%. Net price realization contributed 9.2 percentage points driven by pricing actions taken in response to cost pressures in both Mexico and Canada.

Speaker #2: Volume mix provided a partial offset declining 0.7 percentage points. International segment operating income declined 15.1% on a constant currency basis primarily due to cost pressures including the Mexico beverage tax and increased marketing spending.

Speaker #2: As we previewed last quarter, we plan for a softer start to the year in this segment and we continue to expect profit trends to improve as 2026 progresses.

Speaker #2: Turning to the balance sheet and cash flow, during the first quarter, we closed the financing for the JDEP acquisition with an optimized structure comprised of a $4.5 billion beverage company convertible preferred equity investment, a $4 billion coffee company pod manufacturing JV minority investment, approximately $6 billion in newly issued long-term senior debt, and additional term loan borrowings.

Anthony DiSilvestro: During Q1, we closed the financing for the JDE Peet's acquisition with an optimized structure comprised of a $4.5 billion beverage company convertible preferred equity investment, a $4 billion coffee company pod manufacturing JV minority investment, approximately $6 billion in newly issued long-term senior debt, and an additional term loan borrowings. Based on this financing mix, we continue to expect net leverage of approximately 4.5x at mid-year. We remain committed to investment-grade ratings for KDP and our two future companies and will prioritize debt paydown in the near term. Our plan is for free cash flow generation to serve as the primary deleveraging source, though we will also continue to assess non-core asset divestitures. We generated $184 million of free cash flow in Q1 and continue to expect legacy KDP will generate approximately $2 billion for the full year.

Speaker #2: Based on this financing mix, we continue to expect net leverage of approximately 4.5 times at mid-year. We remain committed to investment-grade ratings for KDP and our two future companies, and will prioritize debt paydown in the near term.

Speaker #2: Our plan is for free cash flow generation to serve as the primary deleveraging source, though we will also continue to assess non-core asset divestitures.

Speaker #2: We generated $184 million of free cash flow in the first quarter and continue to expect legacy KDP will generate approximately $2 billion for the full year.

Speaker #2: Incorporating the net cash flow contribution from JDEP this year, including the impact of incremental financing costs and one-time deal and transformation-related expenses, we expect approximately $2.5 billion of aggregate company free cash flow in 2026.

Anthony DiSilvestro: Incorporating the net cash flow contribution from JDE Peet's this year, including the impact of incremental financing costs and one-time deal- and transformation-related expenses, we expect approximately $2.5 billion of aggregate company free cash flow in 2026. Cash generation should increase beyond this year, enabling us to further optimize Beverage Co. and Global Coffee Co.'s capital structures, and over time, providing optionality for value-enhancing capital allocation. Let me now turn to guidance. We are reaffirming our 2026 outlook, which uses current FX rates and includes the anticipated contribution from JDE Peet's as of the 1 April deal close date. We plan to report JDE Peet's as a separate segment until separation. For the total company, we expect net sales in a range of $25.9 to 26.4 billion, reflecting 4% to 6% constant currency growth for legacy KDP, and an $8.5 to 8.7 billion contribution from JDE Peet's.

Speaker #2: Cash generation should increase beyond this year, enabling us to further optimize Beverage Co and Global Coffee Co's capital structures and, over time, providing optionality for value-enhancing capital allocation.

Speaker #2: Let me now turn to guidance. We are reaffirming our 2026 outlook, which uses current FX rates and includes the anticipated contribution from JDEP as of the April 1st deal close date.

Speaker #2: We plan to report JDEP as a separate segment until separation. For the total company, we expect net sales in a range of $25.9 to $26.4 billion reflecting 4 to 6 percent constant currency growth for legacy KDP and an 8.5 to 8.7 billion contribution from JDEP.

Speaker #2: On the bottom line, we expect low double-digit EPS growth in constant currency which includes an anticipated 6 to 7 percentage points contribution from the JDEP acquisition and 4 to 6 percent growth for legacy KDP.

Anthony DiSilvestro: On the bottom line, we expect low double-digit EPS growth in constant currency, which includes an anticipated 6 to 7 percentage points contribution from the JDE Peet's acquisition and 4% to 6% growth for legacy KDP. Based on current rates, we anticipate that FX will represent an approximately 1 percentage point tailwind to total company net sales and EPS growth for the full year. Below the line, we are assuming the following. Interest expense of approximately $1.13 to $1.16 billion, an effective tax rate of approximately 22%, and approximately 1.37 billion diluted weighted average shares outstanding. As a reminder, beginning with Q2, our P&L will also have two new impacts to reflect the pod manufacturing JV and the convertible preferred security.

Speaker #2: Based on current rates, we anticipate that FX will represent an approximately 1 percentage point tailwind to total company net sales and EPS growth for the full year.

Speaker #2: Below the line, we are assuming the following: interest expense of approximately $1.13 to $1.16 billion and effective tax rate of approximately 22% and approximately $1.37 billion diluted weighted average shares outstanding.

Speaker #2: As a reminder, beginning with the second quarter, our P&L will also have two new impacts to reflect the pod manufacturing JV and the convertible preferred security.

Speaker #2: For the balance of 2026, we expect the following: approximately $190 million in pre-tax coffee JV costs, which will flow through the non-controlling interest line, and convertible preferred costs that will flow through below net income to KDP and will be calculated each quarter as the greater of the roughly $53 million quarterly preferred dividend or the security's approximately 8% proportionate share of earnings.

Anthony DiSilvestro: For the balance of 2026, we expect the following. Approximately $190 million in pre-tax coffee JV costs, which will flow through the non-controlling interest line, and convertible preferred costs that will flow through below net income to KDP and will be calculated each quarter as the greater of the roughly $53 million quarterly preferred dividend or the security's approximately 8% proportionate share of earnings. For 2026, we expect the calculation to default to the proportionate share of earnings. From a phasing perspective, we expect high single-digit EPS growth in Q2 with further acceleration in the back half as costs improve and synergies build. In closing, we delivered solid Q1 results. Our teams executed well in a highly dynamic environment and made important progress preparing the company for its next chapter.

Speaker #2: For 2026, we expect the calculation to default to the proportionate share of earnings. From a phasing perspective, we expect high single-digit EPS growth in Q2, with further acceleration in the back half as costs improve and synergies build.

Speaker #2: In closing, we delivered solid Q1 results. Our teams executed well in a highly dynamic environment and made important progress preparing the company for its next chapter.

Speaker #2: We remain on track to deliver our full-year commitments while also building the foundation for our two future standalone public companies. With that, I will turn the call back to Tim for closing remarks.

Anthony DiSilvestro: We remain on track to deliver our full year commitments while also building the foundation for our two future standalone public companies.

Tim Cofer: With that, I will turn the call back to Tim for closing remarks. Thanks, Anthony. Overall, we're pleased with our start to the year. With clear priorities and well-crafted plans, we're striking a healthy balance between near-term fundamental delivery and our longer-term transformation initiatives. We will remain focused on disciplined execution to achieve our 2026 commitments and capitalize on the value creation opportunity we see ahead. With that, we're now happy to take your questions.

Anthony DiSilvestro: With that, I will turn the call back to Tim for closing remarks.

Speaker #2: Thanks, Anthony. Overall, we're pleased with our start to the year. With clear priorities and well-crafted plans, we're striking a healthy balance between near-term fundamental delivery and our longer-term transformation initiatives.

Tim Cofer: Thanks, Anthony. Overall, we're pleased with our start to the year. With clear priorities and well-crafted plans, we're striking a healthy balance between near-term fundamental delivery and our longer-term transformation initiatives. We will remain focused on disciplined execution to achieve our 2026 commitments and capitalize on the value creation opportunity we see ahead. With that, we're now happy to take your questions.

Speaker #2: We will remain focused on disciplined execution to achieve our 2026 commitments and capitalize on the value creation opportunity we see ahead. With that, we're now happy to take your questions.

Operator 2: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question today comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We ask that you please limit yourself to one question. At this time, we will pause momentarily to assemble our roster. The first question today comes from Dara Mohsenian with Morgan Stanley. Please go ahead.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you please limit yourself to one question.

Speaker #1: At this time, we will pause momentarily to assemble our roster. The first question today comes from Dara Mossinian with Morgan Stanley. Please go ahead.

Dara Mohsenian: Hey, good morning.

Speaker #2: Hey, good morning. So first, on US refreshment, clearly strong sales growth on an underlying basis, even adjusting for incremental ghost distribution, etc. Can you just give us a bit more detail under the hood on what's driving the momentum at a segment and brand level and how sustainable you think those growth drivers are going forward?

Tim Cofer: Good morning, Dara.

Dara Mohsenian: First on U.S. Refreshment, clearly strong sales growth on an underlying basis, even adjusting for incremental Ghost distribution, et cetera. Can you just give us a bit more detail under the hood on what's driving the momentum at a segment and brand level, and how sustainable you think those growth drivers are going forward? Any thoughts on the impact from SNAP changes so far? If I can just slip one in on coffee, there's obviously a lot of dynamic factors impacting profitability at this point. You have the higher commodity pressure, particularly with the hedgings and the inventory timing. But at the same time, obviously, green coffee prices have come off, the tariff situation's improved. Just can you give us an update on a quarterly basis going forward, how you see profitability in that segment playing out given those factors?

Speaker #2: And any thoughts on the impact from snap changes so far? And then if I can just slip one in on coffee, there's obviously a lot of dynamic factors impacting profitability at this point.

Speaker #2: You have the higher commodity pressure, particularly with the hedging and the inventory timing. But at the same time, obviously green coffee prices have come off, the tariff situation's improved, so just can you give us an update on a quarterly basis going forward how you see profitability in that segment playing out given those factors and also how pricing ties into the cost dynamics both in terms of what you're seeing in the marketplace and your own potential actions?

Dara Mohsenian: Also, how pricing ties into the cost dynamics, both in terms of what you're seeing in the marketplace and your own potential actions. Thanks.

Speaker #2: Thanks.

Speaker #3: Good morning, Dara. Yeah, I'll tackle the first two and I'll kick it over to Anthony to talk about coffee, profitability. Look, on US refreshment beverage, we're very pleased with our start to the year.

Tim Cofer: Good morning, Dara. Yeah. I'll tackle the first two and I'll kick it over to Anthony to talk about coffee profitability. Look, on U.S. Refreshment Beverages, we're very pleased with our start to the year. You saw the print double-digit growth both on the top line and the bottom line. In terms of your question on sustainability, we expect this segment will continue to deliver strong results in the balance of the year, both top and bottom. As you think about the top line, we've got a great innovation slate lined up. You've already seen the impact on our second-largest CSD brand, Canada Dry, with the Fruit Splash innovation and news there that drove share gains. Literally in the last days, a week, we've launched Dr Pepper Creamy Coconut. We expect that to be a big hit this year, capitalizing on dirty sodas.

Speaker #3: You saw the print double-digit growth both on the top line and the bottom line. And in terms of your question on sustainability, we expect this segment will continue to deliver strong results in the balance of the year, both top and bottom.

Speaker #3: As you think about the top line, we've got a great innovation slate lined up. You've already seen the impact on our second largest CSD brand, Canada Dry, with the fruit splash innovation and news there.

Speaker #3: That drove share gains. Literally in the last days, a week, we've launched Dr. Pepper Creamy Coconut, we expect that to be a big hit this year, capitalizing on dirty sodas.

Speaker #3: Feel very good about our DSD route-to-market execution and the ability to continue to drive distribution gains for key brands both owned brands that are showing strong growth, continued momentum like our Zero Sugar lineup, and a lot of partner brands think energy rapid hydration, prebiotic CSDs.

Tim Cofer: feel very good about our DSD route-to-market execution and the ability to continue to drive distribution gains for key brands, both own brands that are showing strong growth, continued momentum like our zero sugar lineup, and a lot of partner brands, think energy, rapid hydration, prebiotic CSDs. Last thing I'd say on the top-line driver is stepped up brand support. We are planning to increase marketing this year. We did it in the first quarter. You'll see it on a full-year basis. We're really dialing up our precision marketing capabilities, and our digital agenda. Having said that, I will say net sales will likely moderate relative to the Q1 elevated levels. The quarter, as you mentioned, Dara, did benefit from some incremental Ghost distribution year over year on a comparison basis and some outsized growth and some partner brands.

Speaker #3: Last thing I'd say on the top-line driver is stepped-up brand support. We are planning to increase marketing this year. We did it in the first quarter.

Speaker #3: You'll see it on a full-year basis. And we're really dialing up our precision marketing capabilities in our digital agenda. Having said that, I will say net sales will likely moderate relative to the Q1 elevated levels.

Speaker #3: The quarter, as you mentioned, Dara, did benefit from some incremental ghost distribution year over year on a comparison basis and some outside growth and some partner brands.

Speaker #3: Having said that, top line growth will remain strong for the remainder of the year, healthy volume trends, positive net price realization, and US ref dev will be an outsized contributor relative to our MSD net sales growth.

Tim Cofer: Having said that, top-line growth will remain strong for the remainder of the year. Healthy volume trends, positive net price realization, and U.S. Ref Bev will be an outsized contributor relative to our MSD net sales growth guide for legacy KDP, and I expect this top-line growth momentum will also translate into continued operating income as well. You then referenced SNAP. I would tell you this, we're seeing healthy trends across our categories. Even with the pricing actions to offset inflation, the volume we're seeing in CSDs at a category level and broader LRB have been positive this year. I think this underscores the value that our categories provide to our consumers and what we're doing around affordable pack sizes and some of the work on price pack architecture and RGM. The innovation is still ringing true to consumers and providing continued appeal.

Speaker #3: Guide for legacy KDP, and I expect this top line growth momentum will also translate into continued operating income as well. You then referenced snap.

Speaker #3: I would tell you this. We're seeing healthy trends across our categories. Even with the pricing actions to offset inflation, the volume we're seeing in CSDs at a category level and broader LRB have been positive this year.

Speaker #3: And I think this underscores the value that our categories provide to our consumers and what we're doing around affordable pack sizes and some of the work on price pack architecture and RGM.

Speaker #3: The innovation is still ringing true to consumers and providing continued appeal. So the snap impacts to date have been manageable and largely consistent with our expectations and our plans.

Tim Cofer: The SNAP impacts to date have been manageable and largely consistent with our expectations, and our plans. We know and we monitor closely state by state how these waivers roll out, and you'll expect us to continue to monitor that and adjust in our RGM capabilities to ensure that we deliver on our guide. On the coffee phasing question, let me start by saying on a full-year basis for 2026, we do expect a modest year-over-year profit decline for US coffee with the cost pressures continuing to exceed pricing and productivity. Particularly, in H1, and you saw it in our Q1. Our results will also reflect our decision to prioritize investment spending as we set up the business for separation despite the inflationary backdrop.

Speaker #3: We know and we monitor closely state-by-state how these waivers roll out, and you'll expect us to continue to monitor that and adjust in our RGM capabilities to ensure that we deliver on our guide.

Speaker #2: On the coffee phasing question, let me start by saying on a full-year basis for 2026, we do expect a modest year-over-year profit decline for US coffee, with the cost pressures continuing to exceed pricing and productivity.

Speaker #2: Particularly, in the first half, and you saw it in our first quarter, our to prioritize investment spending as we set up the business for separation, despite the inflationary backdrop.

Speaker #2: From a phasing perspective, we would expect the Q1 decline will be the most significant for the year, as the inflation cost pressures peak on a year-over-year basis.

Tim Cofer: From a phasing perspective, we would expect the Q1 decline will be the most significant for the year, as the inflation cost pressures peak on a year-over-year basis. You're seeing the green coffee cost inflation come through the P&L. As we've talked about in the past, it does lag market prices by about 6 to 9 months, given our hedging programs and our inventory cycle. I would also say in Q1, a little bit of extra drag on top and bottom line from some adjustments and reductions in trade inventory levels, particularly in pods. Also, as I said, our higher marketing spend behind initiatives like Keurig Coffee Collective and the Keurig Anthem campaign. This pressure should begin to moderate a bit in Q2, but the larger improvement will be in the back half.

Speaker #2: And you're seeing the green coffee cost inflation come through the P&L. And as we've talked about in the past, it does lag market prices by about 6 to 9 months.

Speaker #2: Giving our hedging programs and our inventory cycle. I would also say in the first quarter, a little bit of extra drag top and bottom line from some adjustments and reductions in trade inventory levels, particularly in pods.

Speaker #2: And also as I said, our higher marketing spend behind initiatives like Keurig Coffee Collective and the Keurig Anthem campaign. This pressure should begin to moderate a bit in Q2, but the larger improvement will be in the back half.

Speaker #2: Cost inflation will meaningfully ease in the second half. And our innovation and commercial program will begin to kick in, and we should see some top-line improvement.

Tim Cofer: Cost inflation will meaningfully ease in H2, and our innovation and commercial program will begin to kick in, and we should see some top line improvement. I would end by saying, look, based on current coffee prices, this could be a tailwind for us going into 2027.

Speaker #2: And I would end by saying, look, based on current coffee prices, this could be a tailwind for us going into 2027.

Operator 2: The next question comes from Chris Carey with Wells Fargo. Please go ahead.

Operator: The next question comes from Chris Carey with Wells Fargo. Please go ahead.

Speaker #1: The next question comes from Chris Carey with Wells Fargo. Please go ahead.

Chris Carey: Hi, good morning, everyone. I wanted to follow up on this line of thinking just to, number one, stress test confidence a bit more. I look at consensus estimates for coffee margins specifically and see roughly 1,000 basis points of margin improvement into the H2 of the year. Certainly, you're not talking about guiding the segment margins, but there's clearly some nice improvement in margins if you're going to see modest profit declines on the full year. There's also roughly high teens or 20% earnings growth in the H2 if you're delivering high single digits in Q2. I just wanted to maybe dig in a bit deeper on the cost front. How much visibility do you have in your coffee costs at this point of the year? I assume high.

Speaker #4: Hi, good morning, everyone. So I wanted to follow up on this line of thinking. Just to, number one, stress test confidence a bit more.

Speaker #4: I look at consensus estimates for coffee margins. Specifically, I see roughly 1,000 basis points of margin improvement into the back half of the year.

Speaker #4: Certainly, you're not talking about guiding the segment margins, but there's clearly some nice improvement in margins if you're going to see modest profit declines on the full year.

Speaker #4: There's also roughly high teens or 20% earnings growth in the back half if you're delivering high single digits. In Q2. So I just wanted to maybe dig in a bit deeper on the cost front.

Speaker #4: How much visibility do you have in your coffee costs at this point of the year? I assume high. And secondly, how much visibility do you have that you're stronger consumption trends in coffee will be reflected in stronger shipment trends so as to avoid some of the volume mixed deleverage into the back half of the year?

Chris Carey: Secondly, how much visibility do you have that your stronger consumption trends in coffee will be reflected in stronger shipment trends so as to avoid some of the volume mix deleverage into the back half of the year? Just one quick follow-up as well on U.S. Refreshment. From the creamy coconut launch, are you expecting any uplifts into Q2? Because I would imagine that would offset some of the drop-off in Ghost. Thank you.

Speaker #4: And just one quick follow-up as well on US refreshment. From the creamy coconut launch, are you expecting any uplift into Q2? Because I would imagine that would offset some of the drop-off in ghost.

Speaker #4: Thank you.

Speaker #3: Okay. Let me start broadly with talking about US coffee and how we're seeing the various puts and takes on the year. And then Anthony, maybe you can talk more specifically on green coffee costs and how we're seeing that flow through the P&L.

Tim Cofer: Okay. Let me start broadly with talking about U.S. Coffee and how we're seeing the various puts and takes on the year. Anthony, maybe you can talk more specifically on green coffee costs and how we're seeing that flow through the P&L on a quarterly basis. I think our focus in 2026 in U.S. Coffee is to navigate these near-term headwinds while really positioning our business for long-term success. As we anticipated, and as we shared at the guide at the beginning of the year, H1 features headwinds from real peaking cost pressures and some trade inventory adjustments. You've seen that flow through impacting both our top and our bottom-line performance in Q1, but this is tracking right on to our expectations.

Speaker #3: On a quarterly basis, I think our focus in 2026 in U.S. coffee is to navigate these near-term headwinds while really positioning our business for long-term success.

Speaker #3: So as we anticipated and as we shared at the guide at the beginning of the year, the first half of the year features headwinds.

Speaker #3: From real peaking cost pressures and some trade inventory adjustments. And so you've seen that flow through impacting both our top and our bottom line performance in the first quarter.

Speaker #3: But this is tracking right onto our expectations. Anthony mentioned this a minute ago. We're also deliberately stepping up our investment behind long-term growth initiatives even as we manage through these higher cost peak inflationary environment in Q1 from a P&L standpoint.

Tim Cofer: Anthony mentioned this a minute ago. We're also deliberately stepping up our investment behind long-term growth initiatives, even as we manage through these higher cost peak inflationary environment in Q1 from a P&L standpoint. We've meaningfully increased our Q1 marketing. Anthony said it earlier, on both pods and brewers, and against our fairly robust active innovation slate on both the pod and the brewer side, Keurig Coffee Collective, new brewers, and then preparing for Alta. All of this gives us good line of sight to an improving top and bottom-line trend as the year progresses. Net sales will improve as our innovation, our marketing, our commercial investment will build through the quarters, and operating income will also benefit from the improving coffee cost envelope, particularly starting in H2. Anthony, you want to talk a little more on coffee cost, green?

Speaker #3: So we meaningfully increased our Q1 marketing—Anthony said it earlier—on both pods and brewers. And against our fairly robust, active innovation slate, on both the pod and the brewer side: Keurig Coffee Collective new brewers, and then preparing for Alta.

Speaker #3: All of this gives us good line of sight to an improving top- and bottom-line trend as the year progresses, and that sales will improve as our innovation, our marketing, and our commercial investment will build through the quarters.

Speaker #3: And operating income will also benefit from the improving coffee cost envelope particularly starting in the second half. Anthony, you want to talk a little more on coffee costs, green?

Anthony DiSilvestro: Sure. Let me step back a bit. We are guiding, and we have a high degree of confidence to our low double-digit EPS guide. As Tim mentioned, that's going to accelerate as we go through the year here for a number of reasons. The most significant one would be green coffee costs. We have very good visibility to how this will flow through the balance of the year, given our current hedging program as well as our inventory cycle. I would add to that, we are mostly hedged on other commodities, including those that have been impacted by the recent conflicts in the Middle East. We are also bringing on board, obviously, JDE Peet's. JDE Peet's profile will follow one that's similar to our U.S. Coffee segment.

Speaker #2: Sure. Sure. Let me step back a bit. We are guiding and we have a high degree of confidence to our low double-digit EPS guide.

Speaker #2: And as Tim mentioned, that's going to accelerate as we go through the year here for a number of reasons. The most significant one would be green coffee costs.

Speaker #2: And we have very good visibility to how this will flow through balance of year giving our current hedging program as well as our inventory cycle.

Speaker #2: I would add to that, we are mostly hedged on other commodities, including those that have been impacted by the recent conflicts in the Middle East.

Speaker #2: We are also bringing on board obviously JDE Peats. And JDE Peats profile will follow a one that's similar to our US coffee segment, right?

Tim Cofer: Right. As coffee prices improve, their quarterly performance will improve as well. Also, again, we have good visibility to that. Now, as we bring JDE Peet's into the fold, we will build synergies throughout the year, and that'll obviously have a building impact on our performance as we go through the quarters. Sitting here today, good visibility to the rest of the quarters, which gives us a high level of confidence in our guide. Yeah. Then Chris, your last question, back on Dr Pepper and Creamy Coconut. As you think about Q1 on Dr Pepper, it did reflect a bit of innovation timing shift. Blackberry a year ago launched early in the year and we lapped that, so we saw a little bit of pressure there.

Anthony DiSilvestro: Right. As coffee prices improve, their quarterly performance will improve as well. Also, again, we have good visibility to that. Now, as we bring JDE Peet's into the fold, we will build synergies throughout the year, and that'll obviously have a building impact on our performance as we go through the quarters. Sitting here today, good visibility to the rest of the quarters, which gives us a high level of confidence in our guide.

Speaker #2: As coffee prices improve, their quarterly performance will improve as well. And also again, we have good visibility to that. Now as we bring JDE Peats into the fold, we will build synergies throughout the year.

Speaker #2: And that'll obviously have a building impact on our performance as we go through the quarters. So sitting here today, good visibility to the rest of the quarters.

Speaker #2: And which gives us a high level of confidence in our guide.

Speaker #3: Yeah. And then Chris, your last question, back on Dr. Pepper and creamy coconut. As you think about Q1 on Dr. Pepper, it did reflect a bit of innovation timing shift.

Tim Cofer: Yeah. Then Chris, your last question, back on Dr Pepper and Creamy Coconut. As you think about Q1 on Dr Pepper, it did reflect a bit of innovation timing shift. Blackberry a year ago launched early in the year and we lapped that, so we saw a little bit of pressure there.

Speaker #3: So Blackberry a year ago launched early in the year. And we lapped that. So we saw a little bit of pressure there. But as I mentioned in my prepared remarks, our three core Dr. Pepper lines regular, zero, and diet Dr. Pepper collectively grew share.

Tim Cofer: As I mentioned in my prepared remarks, our three core Dr Pepper lines, regular, zero, and diet Dr Pepper, collectively grew share. Overall, feel great about Dr Pepper momentum. Now layering Dr Pepper Creamy Coconut. We've got a lot of confidence Dr Pepper Creamy Coconut's going to be a big success this year. Already in the first few weeks, we've seen a ton on social and in-store activity. There's a lot of excitement building as we roll into summer on Dr Pepper Creamy Coconut, and I do think that'll be an important contributor year-over-year for brand Dr Pepper. On top of that, I would tell you we're going after some unique occasions and consumers. There's still distribution gaps we can close. Dr Pepper Zero Sugar continues to grow at a double-digit rate and has upside, and we're layering on our enhanced precision and personalized marketing capabilities.

Speaker #3: So overall, feel great about Pepper momentum. Now layer in creamy coconut. And we've got a lot of confidence. Creamy coconut's going to be a big success this year.

Speaker #3: Already in the first few weeks, we've seen a ton on social and in-store activity. There's a lot of excitement building. As we roll into summer on creamy coconut.

Speaker #3: And I do think that'll be an important contributor year to go. For brand Dr. Pepper. On top of that, I would tell you we still have we're going after some unique occasions and consumers.

Speaker #3: There's still distribution gaps we can close. Dr. Pepper zero sugar continues to grow at a double-digit rate and has upsized. And we're layering on our enhanced precision and personalized marketing capabilities.

Tim Cofer: Dr Pepper will be a great growth standout. We expect another year of share growth and a meaningful contributor to outsized growth in U.S. Refreshment Beverages.

Speaker #3: So, Dr Pepper will be a great growth standout. We expect another year of share growth and a meaningful contributor to outsized growth in U.S. refreshment beverages.

Speaker #4: The next question comes from Michael Laverry with Piper Sandler. Please go ahead.

Operator 2: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.

Operator: The next question comes from Michael Lavery with Piper Sandler. Please go ahead.

Speaker #5: Thank you. Good morning. You touched on each of the segments and just unpacked how some of the year unfolds. Helpful color but could you walk us through the JDEP piece of that and just considerations on what's left for the rest of the year and how to think about just moving parts in what's going on there?

Operator 1: Thank you. Good morning. You touched on each of the segments and just unpacked how some of the year unfolds. Helpful color. Could you walk us through the JDE Peet's piece of that and just considerations on what's left for the rest of the year and how to think about just moving parts in what's going on there?

Michael Lavery: Thank you. Good morning. You touched on each of the segments and just unpacked how some of the year unfolds. Helpful color. Could you walk us through the JDE Peet's piece of that and just considerations on what's left for the rest of the year and how to think about just moving parts in what's going on there?

Speaker #3: Sure. Let me start by saying, overall, we closed the deal April 1st. And I think, overall, I'd tell you what we've learned in the last few weeks confirms everything we saw in our planning process and in the deal close period.

Tim Cofer: Sure. Let me start by saying, overall, we closed the deal 1 April, and I think overall, I'd tell you what we've learned in the last few weeks confirms everything we saw in our planning process and in the deal close period. This is a business that has a healthy foundation, strong brands, strong capabilities, and a talented team. I'm seeing already the energy and the opportunity behind both their, what they called, reignite the amazing strategy, which is in its early stages but has lots of runway, and now the combination benefits of combining legacy Keurig Green Mountain with JDE Peet's. We've announced and we can confirm confidence in the $400 million in synergies as well as some incremental revenue opportunities, in particular here in North America, between the Peet's brands and the Keurig brands. Feel very good broadly about what we've seen since the close.

Speaker #3: This is a business that has a healthy foundation. Strong brand, strong capabilities. And a talented team. I'm seeing already the energy and the opportunity behind both their what they called reignite the amazing strategy which is in its early stages, but has lots of runway.

Speaker #3: And now the combination benefits of combining legacy Keurig Green Mountain with JDE Peet's. We've announced, and we can confirm confidence in the $400 million in synergies.

Speaker #3: As well as some incremental revenue opportunities in particular here in North America between the Peats brands and the Keurig brands. So feel very good broadly about what we've seen since the close.

Speaker #3: In terms of performance of the business, obviously, we just took ownership of the business, so I'll speak at a high level on what we've seen year to date.

Tim Cofer: In terms of performance of the business, obviously, we just took ownership of the business, so I'll speak at a high level on what we've seen year to date. I would say the trends are consistent with our expectations, even back to when we announced the deal. Obviously back in 2025, they delivered a solid year managing through the very unfavorable coffee price inflation, and we are on track for another good year here in 2026. I would say the phasing of the results will be influenced by commodity cost timing, just like we're seeing in the KDP coffee business. The profit will be more constrained in this inflationary H1. We saw that in Q1. We expect that to continue into Q2. At the same time, we have good visibility to accelerating trends in H2 as green coffee becomes more favorable.

Speaker #3: I would say the trends are consistent with our expectations. Even back to when we announced the deal, obviously back in '25, they delivered a solid year.

Speaker #3: Managing through the very unfavorable sea price inflation. And we are on track for another good year here in 2026. I would say the phasing of the results will be influenced by commodity cost timing just like we're seeing in the KDP coffee business.

Speaker #3: And the profit will be more constrained in this inflationary first half. We saw that in Q1. We expect that to continue into Q2. But at the same time, we have good visibility to accelerating trends in the second half as green coffee becomes more favorable.

Speaker #4: The next question comes from Andrea Teixeira with JP Morgan. Please go ahead.

Operator 2: The next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

Operator: The next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

Speaker #6: Thank you. Good morning, everyone. I was hoping to see if you can talk about as the green coffee prices improve, are you planning to roll back some of the pricing you had for coffee pods to just reignite volumes and improve operating leverage?

Andrea Teixeira: Thank you. Good morning, everyone. I was hoping to see if you can talk about, as the green coffee prices improve, are you planning to roll back some of the pricing you had for coffee pods to just reignite volumes and improve operating leverage? Just as a clarification, as we decompose U.S. Refreshment Beverages volume mix, in particular because of Ghost, can you comment on how it behaved on a more organic basis? Thank you.

Speaker #6: And just as a clarification, as we decompose the US refreshment beverages volume mix, in particular because of ghost, can you comment on how it behaves on more organic basis?

Speaker #6: Thank you.

Tim Cofer: Sure. I'll start on the coffee pricing question. In coffee, our pricing in 2026 that you're seeing in the sales bridge is primarily the carryover from 2025 actions that we took to offset inflation. As we talked about, the inflation is persisting in Q1 and Q2 of this year as we see it come through the P&L. As we move into H2, the current

Anthony DiSilvestro: Sure. I'll start on the coffee pricing question. In coffee, our pricing in 2026 that you're seeing in the sales bridge is primarily the carryover from 2025 actions that we took to offset inflation. As we talked about, the inflation is persisting in Q1 and Q2 of this year as we see it come through the P&L. As we move into H2, the current

Speaker #3: Sure. I'll start on the coffee pricing question. So in coffee, our pricing in 2026 that you're seeing in the sales bridge is primarily the carryover from 2025 actions that we took to offset inflation.

Speaker #3: And as we talked about, the inflation is persisting in the first and second quarter of this year as we see it come through the P&L.

Speaker #3: And as we move into the second half, the current coffee price pullback should ease pressure on our P&L. So we should see a moderating impact of year-over-year pricing as that happens and that moderation comes through in the second half.

Tim Cofer: Coffee price pullback should ease pressure on our P&L. We should see a moderating impact of year-over-year pricing as that happens, and that moderation comes through in H2, and we lap some of those prior year increases. Beyond that, it's probably not appropriate for us to speculate on future pricing actions. We'll certainly continue to monitor the inflationary environment. We keep an eye on the elasticities. We are mindful of any price gaps, and certainly prioritize providing value to our consumers as we consider these longer-term pricing actions.

Anthony DiSilvestro: Coffee price pullback should ease pressure on our P&L. We should see a moderating impact of year-over-year pricing as that happens, and that moderation comes through in H2, and we lap some of those prior year increases. Beyond that, it's probably not appropriate for us to speculate on future pricing actions. We'll certainly continue to monitor the inflationary environment. We keep an eye on the elasticities. We are mindful of any price gaps, and certainly prioritize providing value to our consumers as we consider these longer-term pricing actions.

Speaker #3: And we lapped some of those prior year increases. Beyond that, it's probably not appropriate for us to speculate on future pricing actions. We'll certainly continue to monitor the inflationary environment.

Speaker #3: We keep an eye on the elasticities. We are mindful of any price gaps, and certainly prioritize providing value to our consumers as we consider these longer-term pricing actions.

Speaker #6: Good. And then, Andrea, you asked a question related to ghost. And I think I mentioned that in response to Dara's question. Q1 did benefit from some incremental year-over-year ghost distribution benefits.

Tim Cofer: Good. Then Andrea, you asked a question related to Ghost, and I think I mentioned that in response to Dara's question. Q1 did benefit from some incremental year-over-year Ghost distribution benefits. If I had to dimensionalize that's worth a couple of points, in terms of that one-time impact as we lap that, a couple of points to the USRB growth performance. Now, we've cycled that kind of one-time benefit, and now we're just in core KDP DSD growth, which we expect will continue to be outsized, right? There's still distribution growth opportunities, feature and display, cold cooler presence, as well as a robust innovation slate for Ghost. Ghost will continue to be an outsized growth driver, but Q1 in particular benefited from a couple of months of outsized performance.

Speaker #6: And if I had to dimensionalize that, that's worth a couple of points. In terms of that one-time impact as we lap that a couple of points to the USRB growth performance.

Speaker #6: Now, we've cycled that kind of one-time benefit, and now we're just in core KDP DSD growth, which we expect will continue to be outsized, right?

Speaker #6: There's still distribution. Growth opportunities feature in display. Cold cooler presence, as well as a robust innovation slate for Ghost. So Ghost will continue to be an outsized growth driver.

Speaker #6: But Q1 in particular benefited from a couple of months of outsized performance.

Operator 2: The next question comes from Peter Galbo with Bank of America. Please go ahead.

Operator: The next question comes from Peter Galbo with Bank of America. Please go ahead.

Speaker #4: The next question comes from Peter Galbo with Bank of America. Please go ahead.

Speaker #7: Hey, good morning, Tim and Anthony. Thanks for the question. Anthony, I wanted to go back to a comment that you made around kind of being hedged on input costs that may be tied to the Middle East, at least for the remainder of this year.

Peter Galbo: Hey, good morning, Tim and Anthony. Thanks for the question. Anthony, I wanted to go back to a comment that you made around kind of being hedged on input costs that may be tied to the Middle East, at least for the remainder of this year. I think maybe it would just be helpful to sensitize or help us sensitize some of the exposures to things like aluminum and PET if we do get a prolonged kind of rally here in resins and aluminum costs that lasts into 2027. Just any additional color you can help us with there as we start to contemplate maybe what the margin implications could be going forward. Thanks very much.

Speaker #7: I think maybe it would just be helpful to sensitize or help us sensitize some of the exposures to things like aluminum and PET if we do get a prolonged kind of rally here in resins and aluminum costs that lasts into '27.

Speaker #7: So just any additional color you can help us with there, as we start to contemplate maybe what the margin implication could be going forward.

Speaker #7: Thanks very much.

David Brown: Sure. Look, as with many CPG companies, we have both direct and indirect exposure to commodities that have been impacted by the Middle East conflict. This includes a number of inputs tied to the packaging and energy areas such as aluminum, resins, diesel that's in our DSD network, freight costs. I would say that no single one of those inputs has an outsized impact on our cost structure, but they're all important. As we've seen the recent inflationary moves, we have a very systematic and comprehensive hedging program, and those hedges and forward cover are in place to help insulate us in the near term from that volatility. For 2026, we are largely hedged and wouldn't expect to see the recent movement impact our PNL in 2026.

Anthony DiSilvestro: Sure. Look, as with many CPG companies, we have both direct and indirect exposure to commodities that have been impacted by the Middle East conflict. This includes a number of inputs tied to the packaging and energy areas such as aluminum, resins, diesel that's in our DSD network, freight costs. I would say that no single one of those inputs has an outsized impact on our cost structure, but they're all important. As we've seen the recent inflationary moves, we have a very systematic and comprehensive hedging program, and those hedges and forward cover are in place to help insulate us in the near term from that volatility. For 2026, we are largely hedged and wouldn't expect to see the recent movement impact our PNL in 2026.

Speaker #3: Sure. Sure. Look, as with many CBG companies, we have bow direct and indirect exposure to commodities that have been impacted by the Middle East conflict.

Speaker #3: And this includes a number of inputs tied to the packaging and energy areas such as aluminum, resins, diesel, that's in our DSD network, freight costs.

Speaker #3: And I would say that no single one of those inputs has an outsized impact on our cost structure, but they're all important. And as we've seen the recent inflationary moves, we have a very systematic and comprehensive hedging program.

Speaker #3: And those hedges and forward cover are in place to help insulate us in the near term from that volatility. For 2026, we are largely hedged.

Speaker #3: And I wouldn't expect to see the recent movement impact our P&L in 2026. But I would say to the extent those higher prices sustain, we would develop mitigating action plans that we would execute longer term to protect our margins.

David Brown: I would say, to the extent those higher prices sustain, we would develop mitigating action plans that we would execute longer term to protect our margins.

Anthony DiSilvestro: I would say, to the extent those higher prices sustain, we would develop mitigating action plans that we would execute longer term to protect our margins.

Operator 2: The next question comes from Robert Moskow with TD Cowen. Please go ahead.

Operator: The next question comes from Robert Moskow with TD Cowen. Please go ahead.

Speaker #4: The next question comes from Robert Moscow with TD Cowan. Please go ahead.

Robert Moskow: Hi, thank you for the question. You may have mentioned it before, but you said in your prepared remarks that after the split you'll have optionality for value-enhancing capital actions. I want to know if you could give any more color on what those actions might entail, and would they have anything to do with the convertible you have and the minority investments?

Speaker #8: Hi. Thank you for the question. You may have mentioned it before, but you said in your prepared remarks that after the split, you'll have optionality for value-enhancing capital actions.

Speaker #8: I want to know if you could give any more color on what those actions might entail. And would they have anything to do with the convertible you have and the minority investments?

Speaker #3: Yeah. I'll take that. And I did make that comment as it relates to BEVCO, I think, specifically. Obviously, both companies on the other side of this separation will have the independent optionality to make the best choices for their business and their shareholders.

Tim Cofer: Yeah, I'll take that. I did make that comment as it relates to BevCo, I think specifically. Obviously, both companies on the other side of this separation will have the independent optionality to make the best choices for their business and their shareholders. As I think about BevCo, let me start by saying that I love this portfolio, the leadership positions we have across the LRB categories, the advantage capabilities that we've built, and really this very entrepreneurial challenger culture that runs through our company. I'm confident that with these set of characteristics and advantages, we can deliver consistent top-tier results, and we can create a lot of value. As an independent company, I do believe we'll have some additional strategic optionality that perhaps was less actionable under a combined KDP umbrella. What could those look like? One's around route to market.

Speaker #3: As I think about BEVCO, let me start by saying that I love this portfolio. The leadership positions we have, across the LRB categories, the advantaged capabilities that we've built and really this very entrepreneurial challenger culture that runs through our company.

Speaker #3: And I'm confident that with these set of characteristics and advantages, we can deliver consistent top-tier results. And we can create a lot of value.

Speaker #3: As an independent company, we do believe we'll have some additional strategic optionalities that perhaps were less actionable under a combined KDP umbrella. And what could those look like?

Speaker #3: I mean, ones around route to market. I'm a big believer in the power of DSD. It's a source of competitive advantage. And I do think today it is optimal for us to own DSD in most markets.

Tim Cofer: I'm a big believer in the power of DSD. It's a source of competitive advantage, and I do think today it is optimal for us to own DSD in most markets. We take it a very local decision case by case, and we let the scale and the economics and what's best for our brands dictate that ultimate route to market. As a standalone, BevCo will be incentivized to continue to test the optimal model as it relates route to market. I think as a standalone company, we've got that optionality. The other area is just around portfolio and continuing to future-proof this portfolio, ensure this portfolio is structurally advantaged. Pursuing white space expansion has always been a priority for KDP, and I think BevCo will be even more agile and even more proactive in this area. We can consider earlier-stage partnerships, new geographies, more creative structures.

Speaker #3: We take it a very local decision, case by case. And we let the scale and the economics and what's best for our brands dictate that ultimate route to market.

Speaker #3: But as a standalone BEVCO, we'll be incentivized to continue to test the optimal model as it relates to route to market. And I think as a standalone company, we've got that optionality.

Speaker #3: The other areas, just around portfolio and continuing to future-proof this portfolio, ensure this portfolio is structurally advantaged. Pursuing whitespace expansion has always been a priority for KDP.

Speaker #3: And I think BEVCO will be even more agile and even more proactive in this area. We can consider earlier stage partnerships, new geographies, more creative structures.

Speaker #3: So overall, I've got a lot of conviction in the future BEVCO and our ability to drive healthy top and bottom line growth in our current portfolio and with enhanced optionality.

Tim Cofer: Overall, I've got a lot of conviction in the future of BevCo and our ability to drive healthy top and bottom-line growth in our current portfolio and with enhanced optionality.

Operator 2: The next question comes from Kaumil Gajrawala with Jefferies. Please go ahead.

Operator: The next question comes from Kaumil Gajrawala with Jefferies. Please go ahead.

Speaker #4: The next question comes from Camille Garjavala with Jefferies. Please go ahead.

Kaumil Gajrawala: Hey, everyone. Good morning. I guess one quick just clarification on the guidance for Q2. Is that total company guidance or is it, I guess, legacy KDP? And then sort of drafting off of Robert's question on the portfolio, maybe just to add to that what Anthony had mentioned on the potential sale of non-core assets, what types of things would that be? And is the intention just to maybe have a tighter portfolio there? And/or is it more, in the spirit of bringing down leverage?

Speaker #8: Hey, everyone. Good morning. I guess one quick just clarification on the guidance for Q2. Is that total company guidance, or is it, I guess, legacy KDP?

Speaker #8: And then sort of drafting off of Robert's question on the portfolio, maybe just to add to that, what Anthony had mentioned on the potential sale of non-core assets, what types of things would that be?

Speaker #8: And is the intention just to maybe have a tighter portfolio there? And or is it more in the spirit of bringing down leverage?

Speaker #3: Yeah. In answer to your first question, the high single digit is total company outlook for the second quarter. In terms of your other question, just stepping back a little bit, we are very focused on committed to investment-grade ratings, not only for KDP, but for the two future companies.

Tim Cofer: Yeah. In answer to your first question, the high single digit is total company outlook for Q2. In terms of your other question, just stepping back a little bit, we are very focused on, committed to investment-grade ratings, not only for KDP but for the two future companies. Our ability to de-leverage is primarily driven by our ability to generate significant free cash flow. You heard it in our prepared remarks; we are expecting $2.5 billion of free cash flow, which includes nine months of JDE Peet's and all the related costs of the debt financing. We also said that free cash flow obviously will support our dividend and enable us to de-leverage by about a half a turn per year.

Speaker #3: And our ability to de-leverage is primarily driven by our ability to generate significant free cash flow. And you heard it in our prepared remarks.

Speaker #3: We are expecting $2.5 billion of free cash flow, which includes nine months of JDEP and all the related costs of the debt financing.

Speaker #3: We also said that free cash flow, obviously, will support our dividend. And enable us to de-leverage by about a half a term per year.

Tim Cofer: That'll get us to our stated leverage targets at separation, which is 3.5x to 4x for BevCo, 3.75x to 4.25x for Global Coffee Co. We also said we'll look for additional opportunities to accelerate de-leveraging. It's not appropriate to get into any specific details, but there are a number of things that we're looking at across non-core assets and minority investments to help us along.

Speaker #3: And that'll get us to our stated leverage targets at separation, which is three and a half to four times for BEVCO, three and three-quarters to four and a quarter for global Coffee Co.

Speaker #3: But we also said we'll look for additional opportunities to accelerate de-leveraging—not appropriate, again, in any specific details—but there are a number of things that we're looking at across non-core assets and minority investments to help us along.

Operator 2: The last question today comes from Filippo Falorni with Citi. Please go ahead.

Operator: The last question today comes from Filippo Falorni with Citi. Please go ahead.

Speaker #4: The last question today comes from Filippo Filorni with Citi. Please go ahead.

Filippo Falorni: Hi. Good morning, everyone. I wanted to ask on your energy drink portfolio. We continue to see very solid growth for both Ghost and Bloom in tracked channel data. Can you comment a bit on the shelf space gains that you're realizing in the spring resets? Like, how much room do you see in terms of further distribution for both brands? On the other side, C4 is being a little bit softer. Do you see any cannibalization from Ghost, or what are the plans to re-accelerate that brand? Thank you.

Speaker #9: Hi. Good morning, everyone. I wanted to ask on your energy drink portfolio we continue to see very solid growth for both ghost and bloom in track channel data.

Speaker #9: Can you comment a bit on the shelf space gains that you're realizing in the spring resets? How much room do you see in terms of further distribution for both brands?

Speaker #9: And then on the other side, C4 has been a little bit softer. Do you see any cannibalization from ghost, or what are the plans to re-accelerate that brand?

Speaker #9: Thank you.

Speaker #3: Sure. Thanks, Filippo. You've heard me say this many times. Big believer in energy as a category. It's 29 billion. It's growing mid-teens. And there are structural growth drivers in place that suggest this is a category that continues to have a long runway for growth.

Tim Cofer: Sure. Thanks, Filippo. You've heard me say this many times, big believer in energy as a category. It's $29 billion. It's growing mid-teens. There are structural growth drivers in place that suggest this is a category that continues to have a long runway for growth. I think there's distribution expansion, particularly when you think about channels outside of C-store. There's household penetration upside. There's occasions to go after. There's cohorts, obviously female-forward brands are experiencing a tremendous growth right now, and we have one of those in our portfolio in Bloom. It's a great category, strong growth, and we see continued runway. We like the approach we've taken. We've taken a portfolio approach. We have four brands of scale that we go to market with, Ghost, a great lifestyle brand, C4 in performance, Bloom, female forward, and Black Rifle in mainstream, and feel good about that position.

Speaker #3: I think there's distribution expansion particularly when you think about channels outside of C-store. There's household penetration upside. There's occasions to go after. There's cohorts obviously female forward brands are experiencing a tremendous growth right now.

Speaker #3: And we have one of those in our portfolio in bloom. So it's a great category, strong growth. And we see continued runway. We like the approach we've taken.

Speaker #3: We've taken a portfolio approach. We have four brands of scale that we go to market with: ghost, a great lifestyle brand; C4 in performance; bloom female forward; and Black Rifle in mainstream.

Speaker #3: And feel good about that position. And you saw continued market share growth here in the first quarter, and we expect that to continue on the year.

Tim Cofer: You saw continued market share growth here in Q1, and we expect that to continue on the year. Our portfolio's well over $1 billion now, and we see continued upside. As it relates to your other two kind of sub-questions, one on shelf space, and one on C4. On shelf space, we had a successful sell-in cycle for our energy portfolio this year, and we are beginning to see and would expect on the year meaningful distribution gains, incremental TDPs or total distribution points, including in the critical convenience retail channel, expanded space as well in kind of up and down the street. You're seeing that particularly with Ghost and with Bloom. On C4, we feel great about our partnership with Nutrabolt. And what we're building together on C4, we've created a lot of value for both parties since we first took distribution back in 2023.

Speaker #3: Our portfolio is well over a billion dollars now. And we see continued upside. As it relates to your other two kind of sub-questions on one on shelf space and one on C4, on shelf space, we had a successful sell-in cycle for our energy portfolio this year.

Speaker #3: And we are beginning to see, and would expect on the year, meaningful distribution gains—incremental TDPs, or total distribution points—including in the critical convenience retail channel.

Speaker #3: Expanded space as well in kind of up and down the street. And you're seeing that particularly with ghost and with bloom. On C4, we feel great about our partnership with Neutral Bolt.

Speaker #3: And what we're building together on C4, we've created a lot of value for both parties since we first took distribution back in 2023. C4 is more than doubled its retail sales.

Tim Cofer: C4 has more than doubled its retail sales, added more than a point of market share. As it relates year-end performance, it is fair to say we made some decisions together with our Nutrabolt partners to rationalize some elements of the portfolio. There was a smart sub-line that we're no longer distributing through DSD, and the ultimate line has been repositioned for even stronger performance, and that's in the high stimulation, 300 mg type of caffeine segment. When you adjust for those factors, we feel good about the underlying trends and kind of the core yellow can performance line, excited about the innovation that we're bringing to market with our Nutrabolt partners, and confident in C4's long runway ahead to drive brand momentum.

Speaker #3: Added more than a point of market share. And as it relates near-end performance, it is fair to say we made some decisions together with our Neutral Bolt partners to rationalize some elements of the portfolio.

Speaker #3: So there was a smart subline that we're no longer distributing through DSD. And the ultimate line has been repositioned for even stronger performance. And that's in the high stimulation 300-meg type of caffeine segment.

Speaker #3: So, when you adjust for those factors, we feel good about the underlying trends and kind of the core Yellow Can performance line. Excited about the innovation that we're bringing to market with our Neutral Bolt partners.

Speaker #3: And confident in C4's long runway ahead to drive brand momentum.

Operator 3: This concludes our question and answer session. I would like to turn the conference back over to Chethan Mallela for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Chethan Mallela for any closing remarks.

Speaker #4: This concludes our question and answer session. I would like to turn the conference back over to Chetan Malala for any closing remarks.

Speaker #1: Thanks, Betsy. And thanks, everyone, for joining us today and for your interest in KDP. The IR team is available if you have any follow-ups.

Chethan Mallela: Thanks, Betsy, and thanks everyone for joining us today and for your interest in KDP. The IR team is available if you have any follow-ups. Thanks so much and have a great day.

Speaker #1: Thanks so much. And have a great day.

Operator 3: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Q1 2026 Keurig Dr Pepper Inc Earnings Call

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