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 second quarter of 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 Chetan Malala, Vice President of Investor Relations at Keurig Dr Pepper. Please go ahead.

Thank you and hello everyone. Earlier this morning, we issued a press release detailing our second quarter 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 in the coming days. Consistent with previous quarters, we will be discussing our Q2 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.

Thanks Chasen and good morning everyone. In Q2 we delivered another quarter of strong results. We demonstrated healthy momentum across the majority of our business led by U.S. refreshment beverages and our performance exceeded our expectations. Halfway through the year we remain on track to achieve the goals we set at the beginning of 2026, delivering our low double-digit EPS growth guidance, integrating and activating JDE-PETS, and hitting key separation milestones. While we expect the external environment to remain dynamic in the back half, our plans, executional discipline, and year-to-date performance reinforce our confidence in delivering our 2026 guidance while setting up for a successful separation in early 2027. Before turning to our results, let me begin with an update of our transformation work. We successfully closed the acquisition of J.D.E. Peetz in early April and on day one stood up an interim operating model that is purpose-built to support both near-term delivery and separation readiness. The model embeds distinct responsibilities and clear accountability across our KDP enterprise, beverage operating unit, and coffee operating unit leadership teams, all of which are functioning well as we advance our integration and separation priorities. Let me share some key highlights from our work. We've quickly begun to capture coffee co-cost synergies with initial savings flowing through in the second quarter and have also commenced work to offset anticipated beverage co-diss synergies. We've now consolidated our U.S. customers to an integrated sales force and single invoice for the joint Keurig and Peetz portfolio with the transition completed on schedule and without disruption. We've largely finalized our post-separation organizational structures, including the cross-critical operational, commercial and finance functions. We've made significant progress establishing IT and financial reporting readiness for each future company. And we've begun deleveraging our balance sheet following the J.D.E. Pete's close, reducing pro forma management leverage to 4.4 times at quarter end. This was slightly better than our expectations, and we remain on track to end the year with leverage of 4.1 times. In addition, Our search for the future CEO of Global Coffee Co. is well underway. The Nominating and Governance Committee of our Board of Directors is leading the process and has engaged a top tier executive search firm to help identify and evaluate candidates. The role has already attracted considerable interest and we're confident we will recruit the right CEO to shape and execute Global Coffee Co.'s value creation strategy. Let's now turn to our second quarter results. Total net sales grew 75% inclusive of the JDP's acquisition impact. Net sales for legacy KDP increased at a high single digit rate with both net price realization and volume mix contributing. We translated our top line improvement into significant profit growth with consolidated operating income up over 40% and EPS increasing 16% to 57 cents. Overall, our second quarter was ahead of our expectations, primarily driven by upside in our J.D.E. Peets and U.S. refreshment beverages segments. including some timing benefits that Anthony will discuss. We also delivered solid results in KDP International, partly offset by subdued trends in US coffee. Now, let me walk through each segment in more detail. I'll start with US refreshment beverages. Segment net sales and operating income Each grew at a double-digit rate in the second quarter, reflecting strength across both our core portfolio and newer growth platforms. Our largest business, carbonated soft drinks, continued to grow nicely. Category trends were healthy, with consumers responding to the compelling value proposition and significant commercial activity from major players. We gained market share in the quarter, led by Dr Pepper. The brand's Zero Sugar platform sustained its momentum, growing retail sales nearly 30% and gaining more share than any other trademark in the Zero Sugar space, driven by increasing household penetration. This reflected the benefits of marketing support, increased distribution, and greater display activity and we will continue to deploy these levers to drive further expansion. Dr Pepper franchise trends were also fueled by our creamy coconut limited time offering, which launched in April. The response to the innovation has been positive with the distribution build, display support and most importantly, consumers sell through all tracking well ahead of Creamy Coconut's prior market run. Canada Dry also had a robust quarter with retail sales increasing at a double digit rate. Our fruit splash platform continued to serve as a sustainable growth driver with this year's highly incremental strawberry launch performing well. The brand was further supported by our impactful marketing investments including the recent Dry Time is My Time campaign. And Bloom Pop also contributed to our CSD growth. The brand is scaling rapidly, driven by distribution expansion and compelling innovation, and was the leading market share gainer in prebiotic CSDs in the second quarter. Moving to energy drinks, our portfolio achieved a key milestone. crossing the 9% market share threshold in the quarter. Bloom and Ghost were two of the top performing trademarks in the category, underscoring their meaningful consumer resonance and reflecting each brand's great tasting products, authentic positioning, and social media savvy. Growth also came from high quality frontline execution to expand distribution points and cooler penetration, as well as compelling innovation such as Bloom Crisp Apple and Summer Splash and the Ghost 7-Up limited time offering. D4 recently introduced updated packaging across its performance and ultimate lineups with clearer caffeine and benefit communication, bolder flavor cues, and a simplified visual system. This refresh is designed to improve shelf presence and make the portfolio easier to shop and early results are encouraging with a double digit sales lift and significant velocity increases in geographies where it's present. We expect brand momentum to build as the new packaging rolls out more broadly. Overall, we continue to view our energy portfolio as advantaged with a long runway for each of our brands and good visibility to our double-digit market share goal. Beyond energy, we also experienced meaningful traction in other high-growth areas of the segment, like sports hydration, coconut water, and seltzer water. All in, our U.S. refreshment beverages business continues to enjoy strong momentum, and we expect the segment will remain a key growth engine for KDP over the balance of 2026 and beyond. Moving to coffee, we delivered solid results at the enterprise level, but experienced differing dynamics between our U.S. coffee and J.D.E.P. segments. Turning first to U.S. coffee, second quarter performance was relatively consistent with our first quarter, as net sales declined in the low single digits and operating income declined 25%. Year-over-year profit pressure was primarily driven by the impact of significantly higher input costs. As we signaled last quarter, this was due to our hedging approach and inventory positioning, which caused elevated green coffee costs and tariffs to flow through our second quarter P&L. While we always anticipated subdued segment performance in the quarter, the magnitude was larger than we initially estimated. Top and bottom line results were impacted by single serve category volume declines and unfavorable portfolio mix, which reflected increased consumer caution and value seeking behavior. Despite these dynamics, we made progress across the business. Notably, brewer shipments returned to growth, supported by our great coffee without the grind Keurig marketing campaign. And we expect further improvements over the balance of the year. In coffee products, our licensed McCafe K-Cups grew retail sales at a mid single digit rate and expanded market share, reflecting high quality commercial execution and effective marketing. Our cold coffee, La Cologne Ready to Drink platform also drove outsized momentum, growing retail sales over 50% and gaining more than a point of market share, driven by distribution gains, increased display activity and strong velocity. Importantly, we continue to have line of sight to improving segment trends over the balance of the year. Our cost envelope will become more favorable as lower cost inventory and improving tariff impacts flow through the P&L. Our brewer business has started to inflect and should benefit from our commercial activity and we're actioning plans to strengthen trends in pods and other coffee products. Ultimately, we believe our U.S. coffee segment is beginning to turn a corner as we enter the back half and we remain confident in its long-term growth potential. Moving to the JDP segment, quarterly net sales were approximately $2.8 billion and operating income was $414 million. We delivered profitability ahead of our expectations Driven by a couple of factors. First, our teams executed well, particularly in navigating commodity volatility. We maintained pricing discipline as inflationary pressures began to ease, protecting profitability and preserving reinvestment flexibility. In addition, we generated healthy productivity savings through our Reignite the Amazing program. Thank you for joining us today. and was supported by our successful Destinations innovation platform and Awaken the Senses brand marketing campaign. Pete's was another contributor, with retail sales increasing through a combination of pricing and distribution growth. The brand's innovation activity also resonated with consumers, including the launch of Pete's Middle Ground, a half-caffeinated medium roast designed for the afternoon pick-me-up occasion, which achieved healthy on-shelf velocities. Another coffee segment highlight in the second quarter was the successful integration of J.D.E. Peetz and our legacy Keurig business. The newly created coffee operating unit team has collaborated well, establishing integrated business plans, executing unified commercial programs, and beginning to generate initial cost synergies, which are set to build over the balance of the year. In summary, we're pleased with JDP's second quarter results and expect this business will be a significant contributor to our performance in 2026 and over the long term. And finally, our KDP international segment strengthened from the first quarter, as we expected, with net sales growing at a double-digit rate and operating income flat versus the prior year. Segment performance was balanced across our two key markets. In Mexico, pricing was a key driver, but our business also returned to volume growth as the impact of the beverage tax eased. Peña Fial's aids and twist platforms each grew retail sales at robust double-digit rates driven by distribution expansion and in-store execution. Our teams also capitalized on sports enthusiasm through creative marketing activations featuring Squirt, Pena Fial Mineral Water, and Clamato as the green, white, and red of the Mexican flag. This activity contributed to healthy second quarter trends for each of these brands. Canada growth was similarly broad-based. Our cold beverage performance was driven by a combination of pricing and volume mix with robust trends across CSDs, alcohol alternatives, and newer categories like energy and ready to drink tea. In coffee, growth was led by price, though both pod and brewer shipments were also positive, underscoring the health of the Keurig ecosystem in Canada. Overall, we have momentum in our KDP international segment and expect the business to deliver solid results over the balance of the year. In closing, our second quarter results capped a successful first half of 2026. We exceeded our EPS expectations for the quarter reinforcing visibility to our full year guidance. We closed the J.D. Peetz acquisition and quickly advanced integration activities, including synergy work streams. And we made important progress on key separation milestones. While there is still meaningful work ahead in the back half, we're confident in our ability to deliver on our 2026 commitments while advancing preparations to establish two world-class standalone companies. And with that, I'll turn the call over to Anthony to walk through our financial results and outlook in more detail.