Keurig Dr Pepper Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Keurig Dr. Pepper's earnings call for the third quarter of 2020. 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 Keurig Dr. Pepper's Vice President of Investor Relations, Mr. Tyson Seeley. Mr. Seeley, please go ahead.

Thank you, and hello, everyone. Thanks for joining us. Earlier this morning, we issued our press release for the third quarter of 2020. If you need a copy, you can get one on our website at kerrydrpepper.com in the investors section. Consistent with previous quarters, today we will be discussing our performance on an adjusted basis, excluding items affecting comparability. The company believes that the adjusted basis provides investors with additional insight into our business and operating performance trends. While the exclusion of items affecting comparability is not in accordance with GAAP, we believe that the adjusted performance basis provides meaningful comparisons and an appropriate basis for discussion of our performance. Details of exclusive items are included in the reconciliation tables included in our press release and our 10Q, which will be filed later today. Due to the inability to predict the amount and timing of certain impacts outside of the company's control, we do not reconcile our guidance. Here with me virtually today to discuss our third quarter 2020 results, our KDP Chairman and CEO, Bob Gangort, our CFO, and our Chief Corporate Affairs Officer. And finally, our discussion this morning may include forward-looking statements which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially. And the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of these risks and uncertainties is contained in the company's filings with the SEC. With that, I'll hand it over to Bob.

Thanks, Tyson, and good morning, everyone. I hope everyone participating on this call continues to be well. The last few months have been extremely volatile given the COVID crisis. While consumer mobility has increased and the economy has opened up somewhat, the coming months are likely to remain unpredictable as rates of infection in North America appear to be on the rise. As we'll discuss today, KDP continues to navigate well through the pandemic by anticipating and adjusting to trends in consumer behavior, driving brands, categories, and channels with growth potential in order to offset other areas that are challenged. As we've said over the past seven months, the pandemic does not represent a short-term windfall for us. Instead, this is a day-to-day mix management effort across both channels and products, which is enabled by the flexibility of our business model and the outstanding executional capabilities of our team. We monitor consumer mobility trends on a near daily basis to adjust our product mix, channel focus, and production planning, and continue to view this metric as a reliable leading indicator for running our business. Most of all, we continue to be thankful to our team members who have driven the results we reported today, and the work our organization has done to give back to our communities when they are in need. Ozan will take you through the specifics of our third quarter results in a few minutes. However, I will tell you that in summary, They were outstanding, nearly 6% revenue growth, 16% adjusted operating income growth, and 22% adjusted diluted EPS growth with continued deleveraging. We gained market share of total liquid refreshment beverages in over 90% of our retail base, driven by gains in the majority of category segments in which we compete. with a number of highlights worth mentioning, such as the 1.4 SharePoint increase in CSDs, driven by growth in the great majority of our CSD brands, strength in the Snapple brand, which delivered a 1.5 SharePoint increase in ready-to-drink tea, and nearly a 1 SharePoint increase in juice drinks, and Core being the fastest-growing premium water brand over the quarter. our beverage concentrate segment saw substantial quarter-over-quarter improvement as restaurants experienced improved traffic. In single-serve coffee, we delivered 10% growth in at-home consumption, driven by increases in both household penetration and an elevated attachment rate, which was partially offset during the quarter by our away-from-home coffee business. which continues to be negatively impacted by persistently low return to work trends in large offices, which is our area of strength, and the timing of some partner shipments. In the fourth quarter, we expect total pod shipments to return to their more normalized mid to high single digit growth rates, despite our expectations that weakness in the away from home channel will continue. Finally, The exceptional growth in brewer sales in advance of the fourth quarter speaks to the enthusiasm retailers have for Keurig in the holiday season, which is upcoming. So with one quarter to go, our guidance for this year remains intact. Now at the high end of what we said we would accomplish in 2020, which means that we continue to meet or exceed the long-term merger targets we communicated over two years ago. Before I turn it over to Ozan, I'd like to take a few minutes to put our quarterly results and several pieces of news that we communicated this week into a longer-term strategic context, all supporting the evolution of KDP to a modern beverage company. We focus much of our past earnings call content on how we are expanding the consumer reach of our brand portfolio. which is a critical driver of long-term profitable growth. That conversation typically focuses on new brands and M&A, but it's very important to point out that the broad share growth we've experienced on existing brands, both before and during the pandemic, has been driven by increased household penetration in both our hot and cold portfolios, which we expect will stick going forward. This is the result of impactful innovation and renovation as well as strong marketing programming that's attracting new consumers into our brands. Growth in existing brands provides the foundation upon which to add new ones. We continue to pursue opportunities to fill white space in our portfolio through national partnerships, such as our recent agreement with Polar, and smaller bets, such as investments that we've made last year in Ashok Energy Drink with Lance Collins, our recently announced Don't Quit Adult Nutrition Protein Drink with Jake Steinfeld, and our recent investment in Revive, a kombucha drink with Pete's Coffee. With regard to the Keurig brand, we've consistently expanded household penetration year in and out. and 2020 is turning out to be an especially strong year for system adoption. Rather than growing household penetration by 2 million households, which is consistent with our recent run rate, we now expect to add approximately 3 million new households in 2020. While attachment rates may move up and down and potentially back up again during another wave of the pandemic, Converting new households into the Keurig system represents a long-term annuity stream that endures well into the future. While portfolio expansion has taken center stage since the merger, we've also been building our unique and valuable distribution platforms, although we haven't discussed them until recently. On our last earnings call, we quantified how important e-commerce has become for us. representing more than 10% of total KDP sales and a larger portion of coffee sales. Yesterday, we announced news regarding our direct store delivery system that is worth placing into a broader strategic context. Since our merger, we have invested in people, technology, and assets to improve the effectiveness of our DSD network. we've also focused on consolidating key independent distributor systems into our company-owned DSD operations, where territories overlap, in order to drive scale and efficiency. Yesterday, we jointly announced with the Honigman Companies an agreement that provides KDP with long-term sales and distribution for key brands, including Canada Dry, Sunkist, 7-Up, and A&W, across 18 counties in New York and New Jersey, reaching 17 million consumers. This follows a string of DSD territory moves and acquisitions across the country over the past two years, including California, New York, and the Midwest. To be clear, our objective is not to control every market with our trucks. but rather to ensure that each market in which we sell our brands has a competitive route to market, regardless of who owns the territory. For example, in late 2019, we partnered with Honickman to facilitate their acquisition of a subscale independent distributor in Virginia. In Alabama, we agreed with our partner, Buffalo Rock, to allow our brands to ride on the same truck with competitive brands, in order to improve frequency and drop size across their system. Whether we operate our trucks in the market or we partner with a local player of scale, every one of these moves ensures better reach in stocks and merchandising for our brand portfolio, which builds our platform for long-term growth. Our strong in-market performance this year demonstrates the value of these system improvements and we believe we have significant opportunity remaining. Important to a modern beverage company is a strong sustainability culture and continuously pushing forward to meet new and more aspirational goals. Earlier this week, we announced that we have begun the transition of our Snapple and Core bottles to 100% recycled PET, or RPET, as it's commonly called. we will continue to expand RPET across our portfolio going forward. Finally, consistent with our goal to build KDP for the long term, we also announced changes earlier this week to our senior leadership team, designed to further improve speed to market and place decision-making closer to our consumers and our customers. Two and a half years into our merger, and with the benefit of learning what has worked so well during the pandemic, This is a decision made from strength, and we're fortunate to have the talent on our leadership team to assume broader operating roles with increased levels of responsibility. Let me now hand it over to Ozan for more details on the quarter.