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What changed in Keurig Dr Pepper's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Keurig Dr Pepper's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+263 added−320 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-22)

Top changes in Keurig Dr Pepper's 2024 10-K

263 paragraphs added · 320 removed · 204 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe own a diverse portfolio of well-known beverage brands. Many of our brands enjoy high levels of consumer awareness, preference, and loyalty rooted in their rich heritage. This portfolio provides our customers with a wide variety of products to meet consumers' needs and provides us with a platform for growth and profitability.
Biggest changeOur vision is to be a total beverage leader, offering a beverage for every need, anytime, anywhere. We support our purpose and vision with five key strategies: Champion consumer-obsessed brand building. We own a diverse portfolio of well-known beverage brands. Many of our brands enjoy high levels of consumer awareness, preference, and loyalty rooted in their rich heritage.
Key K-Cup pod brands include Van Houtte, Tim Hortons, and McCafé, as well as other partner and private label brands. Product Innovation and New Partnerships We are focused on a robust innovation pipeline within our portfolio of products to build household penetration of our business.
Key K-Cup pod brands include McCafé, Tim Hortons, and Van Houtte, as well as other partner and private label brands. Product Innovation and New Partnerships We are focused on a robust innovation pipeline within our portfolio of products to build household penetration of our business.
We distribute our brewers using third-party distributors, retail partners and directly to consumers through our website at www.keurig.com. International Our International segment includes: • Sales in Canada, Mexico, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of the Company's own brands and third-party brands, to third-party bottlers, distributors, and retailers.
We distribute our brewers using third-party distributors, retail partners and directly to consumers through our website at www.keurig.com. International Our International segment includes: • Sales in Canada, Mexico, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers.
Key brands in this segment include Dr Pepper, Canada Dry, Mott’s, Snapple, A&W, 7UP, Sunkist soda, Squirt, Hawaiian Punch, Core Hydration, Bai, C4 Energy, Clamato, Evian, Yoo-Hoo, Big Red, and Vita Coco. U.S. Coffee Our U.S.
Key brands in this segment include Dr Pepper, Canada Dry, Mott’s, A&W, 7UP, Snapple, Sunkist soda, Squirt, C4 Energy, Hawaiian Punch, Electrolit, Core Hydration, Bai, Evian, Clamato, Yoo-Hoo, Vita Coco, and Big Red. U.S. Coffee Our U.S.
However, this data does not include the fountain or vending channels, or small independent retail outlets, which together represent a meaningful portion of the U.S. beverage market. This data does not include certain customers and e-commerce sales which represents a significant portion of our Coffee Systems segment.
However, this data does not include the fountain or vending channels, or small independent retail outlets, which together represent a meaningful portion of the U.S. beverage market. This data does not include certain customers and e-commerce sales which represents a significant portion of our U.S. Coffee segment.
We license various trademarks from third parties, which generally allow us to manufacture and distribute certain products or brands throughout the U.S. and/or Canada and Mexico. For example, we license trademarks for Sunkist soda, Rose's, and Margaritaville from third parties.
We license various trademarks from third parties, which generally allow us to manufacture and distribute certain products or brands throughout the U.S. and/or Canada and Mexico. For example, we license trademarks for Sunkist soda and Rose's from third parties.
These core values are: • Team First. Win together. Be the kind of person you want on your team. • Deliver Big. Achieve our commitments. Then push beyond the expected. • Think Bold. Challenge the usual. Dare to try something new. • Be Fearless and Fair. Tell the truth with courage. Listen and act with respect.
Our four core values are: • Team First. Win together. Be the kind of person you want on your team. • Deliver Big. Achieve our commitments. Then push beyond the expected. • Think Bold. Challenge the usual. Dare to try something new. • Be Fearless and Fair. Tell the truth with courage. Listen and act with respect.
In Canada, we have approximately 1,400 employees, with approximately 500 covered by union collective bargaining agreements. We also have approximately 200 employees in Europe and Asia. Our collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.
In Canada, we have approximately 1,400 employees, with approximately 400 covered by union collective bargaining agreements. We also have approximately 300 employees in Europe and Asia. Our collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.
Retailers purchase finished beverages, K-Cup pods, appliances, and accessories directly from us. Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers throughout the U.S., Canada, and Mexico. Our largest retailer, Walmart, represented approximately 17% of our consolidated net sales in 2023.
Retailers purchase finished beverages, K-Cup pods, appliances, and accessories directly from us. Our portfolio of strong brands, operational scale and experience in the beverage industry has enabled us to maintain strong relationships with major retailers throughout the U.S., Canada, and Mexico. Our largest retailer, Walmart, represented approximately 16% of our consolidated net sales in 2024.
We have cultivated relationships with leading beverage brands to create long-term partnerships that enable us and our partners to benefit equitably in future value creation, and where appropriate, we bring these partner brands into our owned portfolio through acquisitions. We continually evaluate making investments in companies that fill in whitespace in our portfolio.
We have cultivated relationships with leading beverage brands to create long-term partnerships that enable us and our partners to benefit equitably in future value creation, and where appropriate, we bring these partner brands into our owned portfolio through acquisitions. We continually evaluate making investments in companies that fill in whitespace in our portfolio. Generate fuel for growth.
Our market share data for our brewers is also based on information provided by Circana. The data presented is based upon Circana’s Consumer Tracking Service for Coffeemakers in the U.S. and represents the twelve month period ended December 31, 2023. 9 Table of Contents
Our market share data for our brewers is also based on information provided by Circana. The data presented for our brewers is based upon Circana’s Consumer Tracking Service for Coffeemakers in the U.S. and represents the twelve month period ended December 31, 2024. 8 Table of Contents
We actively manage transportation of our products using our fleet (owned and leased) of approximately 6,900 vehicles in the U.S. and 2,000 in Mexico, as well as third party logistics providers. With our Keurig.com website, we have a leading direct-to-consumer e-commerce platform which provides us insights and expertise in the e-commerce channel.
We actively manage transportation of our products using our fleet (owned and leased) of approximately 7,100 vehicles in the U.S. and 2,200 in Mexico, as well as third party logistics providers. With our Keurig.com website, we have a leading direct-to-consumer e-commerce platform which provides us insights and expertise in the e-commerce channel.
KDP has a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, Mott's, The Original Donut Shop, Clamato, and Core Hydration, as well as the Keurig brewing system.
KDP has a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, and The Original Donut Shop, as well as the Keurig brewing system.
Beverage concentrates, which are highly concentrated proprietary flavors, are combined with carbonation, water, sweeteners, and other ingredients, packaged in aluminum cans, PET bottles, and glass bottles, and sold as a packaged beverage to retailers and, ultimately, the end consumer.
Beverage concentrates, which are highly concentrated proprietary flavors, are combined with carbonation, water, sweeteners, and other ingredients, packaged in cans, bottles, or other packaging, and sold as a packaged beverage to retailers and, ultimately, the end consumer.
End-use Consumers We have a robust e-commerce platform at www.keurig.com where end-use consumers can purchase brewers, accessories, K-Cup pods, and other coffee products, such as bagged traditional coffee and cold brew. COMPETITORS The beverage industry is highly competitive and continues to evolve in response to changing consumer preferences.
End-use Consumers We have robust e-commerce platforms at www.keurig.com and www.keurig.ca where end-use consumers can purchase brewers, accessories, K-Cup pods, and other coffee products, such as bagged traditional coffee and cold brew. 4 Table of Contents COMPETITORS The beverage industry is highly competitive and continues to evolve in response to changing consumer preferences.
We regularly launch new brewers with new features and benefits, technological advances, sustainable attributes, and changes in aesthetics to provide a variety of options to suit individual consumer preferences. We also continuously innovate and renovate our portfolio of K-Cup pods and beverages to provide an expansive array of flavors.
We regularly launch new brewers with new features and benefits, technological advances, sustainable attributes, and changes in aesthetics to provide a variety of options to suit individual consumer preferences. We also continuously innovate and renovate our portfolio of K-Cup pods and beverages to provide an expansive array of flavors. Effective December 31, 2024, we acquired a controlling interest in GHOST.
Our highly efficient business model, both from a cost and a cash perspective, gives us optionality to invest internally and pursue investments, partnerships, acquisitions, or other opportunities to continue to drive growth and create value. 1 Table of Contents OUR PRODUCTS AND OPERATING STRUCTURE We are a leading integrated brand owner, manufacturer, and distributor of beverages in the U.S., Canada, Mexico and the Caribbean.
Our highly efficient business model, focused on an optimized capital structure, gives us optionality to invest internally and pursue investments, partnerships, acquisitions, or other opportunities to continue to drive growth and create value. 1 Table of Contents OUR PRODUCTS AND OPERATING STRUCTURE We are a leading integrated brand owner, manufacturer, and distributor of beverages in the U.S., Canada, Mexico, and the Caribbean.
As of December 31, 2023, our portfolio of partner brands included, but was not limited to, C4 energy drinks, evian water, Vita Coco coconut water, Polar Beverages seltzer water, Accelerator energy drinks, La Colombe shelf-stable RTD coffee, and Peet's RTD coffee. SEASONALITY The beverage market is subject to some seasonal variations.
As of December 31, 2024, our portfolio of partner brands included, but was not limited to, C4 energy drinks, Electrolit instant hydration beverages, evian water, Vita Coco coconut water, Polar Beverages seltzer water, La Colombe shelf-stable RTD coffee, Black Rifle Coffee Company energy drinks, and Peet's RTD coffee. SEASONALITY The beverage market is subject to some seasonal variations.
Competition is generally based on brand recognition, taste, quality, price, availability, selection and convenience, as well as factors related to corporate responsibility and sustainability. We compete with multinational corporations with significant financial resources. In our bottling and manufacturing operations, we also compete with a number of smaller bottlers and distributors and a variety of smaller, regional, and private label manufacturers.
Competition is generally based on brand recognition, taste, quality, price, availability, selection, and convenience, among other factors. We compete with multinational corporations with significant financial resources. In our bottling and manufacturing operations, we also compete with a number of smaller bottlers and distributors and a variety of smaller, regional, and private label manufacturers.
Flexible and scalable route-to-market network, with unique e-commerce expertise. We have strategically-located distribution capabilities, which enable us to better align our operations with our customers and our sales channels, to ensure our products are available to meet consumer demand, to reduce transportation costs, and to have greater control over the timing and coordination of new product launches.
We have strategically-located distribution capabilities, which enable us to better align our operations with our customers and our sales channels, to ensure our products are available to meet consumer demand, to reduce transportation costs, and to have greater control over the timing and coordination of new product launches.
We generally review and consider median market pay levels when assessing total compensation, but pay decisions are based on a more comprehensive set of considerations such as company performance, individual performance, experience, and internal equity. We continually monitor key talent metrics including employee engagement and employee turnover.
We generally review and consider median market pay levels when assessing total compensation, but pay decisions are based on a more comprehensive set of considerations such as company performance, individual performance, experience, and internal equity.
We make available, free of charge through this website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Exchange Act, are also available free of charge on our website at http://www.keurigdrpepper.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
Key beverage brands include Peñafiel, Clamato, Squirt, Canada Dry, Dr Pepper, Mott’s, and Crush. • Sales in Canada from the manufacture and distribution of finished goods relating to the Company's single serve brewers, K-Cup pods, and other coffee products to partners and retailers.
Key beverage brands include Peñafiel, Clamato, Squirt, Canada Dry, Dr Pepper, Mott’s, and Crush. • Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products to partners and retailers, as well as directly to consumer through our website at www.keurig.ca.
HUMAN CAPITAL RESOURCES Our Employees We have approximately 28,100 employees, primarily located in North America. In the U.S., we have approximately 21,700 employees, of which approximately 5,000 employees are covered by union collective bargaining agreements. In Mexico, we have approximately 4,800 employees, of which approximately 3,600 are covered by union collective bargaining agreements.
HUMAN CAPITAL RESOURCES Our Employees We have approximately 29,400 employees, primarily located in North America. In the U.S., we have approximately 22,400 employees, of which approximately 5,100 employees are covered by union collective bargaining agreements. In Mexico, we have approximately 5,300 employees, of which approximately 4,000 are covered by union collective bargaining agreements.
Our total package of benefits is designed to support the physical, mental, and financial health of our employees, and we currently provide access to medical, dental, vision, life insurance, retirement benefits,and disability benefits, as well as assistance with major life activities such as adoption, childbirth, and eldercare, among other benefits. 6 Table of Contents Our Culture Together with our employees, we created a set of core values that are a unifying force for our team and are the cornerstone of KDP's culture.
Our total package of benefits is designed to support the physical, mental, and financial health of our employees, and we currently provide access to medical, dental, vision, life insurance, retirement benefits, and disability benefits, as well as assistance with major life activities such as adoption, childbirth, and eldercare, among other benefits.
Although these companies offer competing brands in categories we participate in, many are also our partners or customers, as they purchase beverage concentrates or K-Cup pods directly from us. 4 Table of Contents MATERIAL RESOURCES Raw Materials The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, represent approximately 55% of our cost of sales and include green coffee, water, aluminum cans and ends, PET bottles and caps, including both virgin and rPET, CO 2 , sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, cocoa, teas, juices, and other ingredients.
MATERIAL RESOURCES Raw Materials The principal raw materials we use in our business, which we commonly refer to as ingredients and materials, represent approximately 55% of our cost of sales and include green coffee, water, aluminum cans and ends, PET bottles and caps, including both virgin and rPET, CO 2 , sweeteners, paper products, K-Cup pod packaging materials, fruit, glass bottles and enclosures, cocoa, teas, juices, and other ingredients.
Of these, a majority are utility patents and the remainder are design patents. We view these patents as valuable assets but we do not view any single patent as critical to our success. We also have pending patent applications associated with Keurig brewers and K-Cup pod technology.
We hold U.S. and international patents related to Keurig brewers and coffee pod technology. Of these, a majority are utility patents and the remainder are design patents. We view these patents as valuable assets but we do not view any single patent as critical to our success.
Net sales to Walmart are included in all reportable segments. Bottlers and Distributors In the U.S. and Canada, we generally grant manufacturing and distribution licenses for our carbonated soft drinks to bottlers for specific geographic areas that are exclusive and long-term, and they have historically been perpetual in many cases.
Net sales to Walmart are included in all reportable segments. Bottlers and Distributors In the U.S. and Canada, we generally grant manufacturing and distribution licenses for our carbonated soft drinks to bottlers for specific geographic areas that are typically exclusive and long-term. These bottlers may be affiliated with Coca-Cola or with PepsiCo, or they may be independent.
In this segment, we manufacture and distribute beverage concentrates, syrups, and finished beverages of our brands to third-party bottlers, distributors, retailers, and, ultimately, the end consumer. We manufacture beverage concentrates and syrups, which we then sell throughout the U.S. to third party bottlers or use them in our own manufacturing systems.
We manufacture beverage concentrates and syrups, which we then sell throughout the U.S. to third party bottlers or use them in our own manufacturing systems.
We have been able to translate those insights and experiences to our cold business as the number of fulfillment options that are better suited economically for beverages has evolved, leading to growth in the e-commerce channel. High-performing team driving better, faster decisions, enabled by technology. We believe that our team and the culture we have created are a competitive advantage.
We have been able to translate those insights and experiences to our LRB business as the number of fulfillment options that are better suited economically for beverages has evolved, leading to growth in the e-commerce channel.
We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We offer more than 125 owned, licensed, and partner brands, available nearly everywhere people shop and consume beverages through our sales and distribution network.
We have some of the most recognized beverage brands in North America, with significant consumer awareness levels and long histories that evoke strong emotional connections with consumers. We have a portfolio of more than 125 owned, licensed, and partner brands, as well as powerful distribution capabilities.
GOVERNMENTAL REGULATIONS ON OUR BUSINESS In the normal course of our business, we are subject to a variety of federal, state, and local laws and regulations in the countries in which we do business.
Our report on our impact, which is issued annually, is available on our website at www.keurigdrpepper.com. 7 Table of Contents GOVERNMENTAL REGULATIONS ON OUR BUSINESS In the normal course of our business, we are subject to a variety of federal, state, and local laws and regulations in the countries in which we do business.
Generally, we may terminate bottling and distribution agreements only for cause, change in control, or breach of agreements, and the bottler or distributor may terminate without cause upon giving certain specified notice and complying with other applicable conditions.
These agreements prohibit bottlers and distributors from selling the licensed products outside their exclusive territory and from selling any imitative products in that territory. Generally, we may terminate bottling and distribution agreements only for cause or change in control, and the bottler or distributor may terminate without cause upon giving certain specified notice and complying with other applicable conditions.
We take steps that we believe are appropriate to protect such innovation. 5 Table of Contents Licensing Arrangements We license various trade names from our partners in order to manufacture K-Cup pods.
We also have pending patent applications associated with our brewers and with coffee pod technology. We take steps that we believe are appropriate to protect such innovation. Licensing Arrangements We license various trade names from our partners in order to manufacture and distribute K-Cup pods.
MARKET AND INDUSTRY DATA The market and industry data in this Annual Report on Form 10-K is from Circana, an independent industry source, and is based on retail dollar sales and sales volumes in 2023.
Information on any of our websites is not incorporated by reference in this document or any of our other filings with the SEC. MARKET AND INDUSTRY DATA The market and industry data in this Annual Report on Form 10-K is from Circana, an independent industry source, and is based on retail dollar sales and sales volumes in 2024.
In many countries outside the U.S., Canada and Mexico, the manufacturing and distribution rights to many of our CSD brands, including our Dr Pepper trademark and formula, are owned by third parties, including, in certain cases, competitors such as Coca-Cola. We hold U.S. and international patents related to Keurig brewers and K-Cup pod technology.
Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained. 5 Table of Contents In many countries outside the U.S., Canada, and Mexico, the manufacturing and distribution rights to many of our CSD brands, including our Dr Pepper trademark and formula, are owned by third parties, including, in certain cases, competitors such as Coca-Cola.
We manufacture approximately 80% of the pods in the single serve format in the U.S. on a dollar share basis. 2 Table of Contents We manufacture and sell 100% of the K-Cup pods of certain brands, including Green Mountain Coffee Roasters, The Original Donut Shop, and McCafé, to retailers, away from home channel participants, and end-use consumers.
We manufacture and sell 100% of the K-Cup pods of our owned and licensed brands, including Green Mountain Coffee Roasters, The Original Donut Shop, and McCafé, to retailers, away from home channel participants, and end-use consumers. We manufacture K-Cup pods for our partner brands, who in turn sell them to retailers and consumers.
We own numerous trademarks in our portfolio within the U.S., Canada, Mexico, and other countries. Depending upon the jurisdiction, trademarks are valid as long as they are in use and/or their registrations are properly maintained.
We own numerous trademarks in our portfolio within the U.S., Canada, Mexico, and other countries.
Our employee benefits programs strive to deliver competitive benefits that are effective in attracting and retaining talent, that create a culture of well-being and inclusiveness, and that meet the diverse needs of our employees.
We continually monitor key talent metrics including employee engagement and employee turnover. 6 Table of Contents Our employee benefits programs strive to deliver competitive benefits that are effective in attracting and retaining talent, and that create a culture of well-being and inclusiveness, designed to support each team member’s unique needs.
Segment financial data, including financial information about foreign and domestic operations, is included in Note 7 of the Notes to our Consolidated Financial Statements. U.S. Refreshment Beverages Our U.S. Refreshment Beverages segment is a brand owner, manufacturer, and distributor of liquid refreshment beverages, or LRBs, in the U.S.
Operating and Reportable Segments As of December 31, 2024, our operating structure consists of three operating and reportable segments: U.S. Refreshment Beverages, U.S. Coffee, and International. Segment financial data, including financial information about foreign and domestic operations, is included in Note 8 of the Notes to our Consolidated Financial Statements. U.S. Refreshment Beverages Our U.S.
We drive growth in our business through investments in innovation, renovation, and marketing to support our portfolio of owned brands and partnerships with other leading beverage brands. We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow our share of beverage occasions.
This portfolio provides our customers with a wide variety of products to meet consumers' needs and provides us with a platform for growth and profitability. We drive growth in our business through investments in innovation, renovation, and marketing to support our portfolio of owned brands and partnerships with other leading beverage brands.
Certain cities and municipalities within the U.S. have also passed various taxes on the distribution of sugar-sweetened and diet beverages, which are at different stages of enactment.
Certain cities and municipalities within the U.S. have passed various taxes on the distribution of sugar-sweetened and diet beverages, which are at different stages of enactment. We expect that legislation or regulations like those described above will continue to be proposed in the future at local, state and federal levels, both in the U.S. and elsewhere.
We also entered into a long-term agreement with Grupo PiSA to sell, distribute and merchandise Electrolit, a premium hydration beverage, across the U.S, beginning in early 2024. 3 Table of Contents CUSTOMERS We primarily serve the following types of customers: Retailers Retailers include supermarkets, hypermarkets, mass merchandisers, club stores, e-commerce retailers, office superstores, vending machines, fountains, grocery and drug stores, convenience stores, and other small outlets.
We began distributing under both of these agreements during the fourth quarter of 2024. 3 Table of Contents CUSTOMERS We primarily serve the following types of customers: Retailers Retailers include supermarkets, hypermarkets, mass merchandisers, club stores, e-commerce retailers, office superstores, vending machines, fountains, grocery and drug stores, convenience stores, and other small outlets.
Employee Health and Safety KDP uses a wide variety of strategies and programs to support the health and safety of our employees.
Employee Health and Safety KDP uses a wide variety of strategies and programs to support the health and safety of our employees. Our Environmental Health & Safety team considers all aspects of what our employees may encounter and works to minimize risk. Key to these efforts are data and preventive actions.
Generally, we are able to sell these brands to our away from home channel participants and directly to consumers through our website at www.keurig.com. We also have agreements for manufacturing, distributing, and selling K-Cup pods for tea under brands such as Celestial Seasonings and Bigelow.
Generally, we are able to sell these partner brands to our away from home channel participants and directly to consumers through our website at www.keurig.com. We also participate in private label manufacturing arrangements. 2 Table of Contents Our U.S. Coffee segment manufactures K-Cup pods using freshly roasted and ground coffee as well as tea, cocoa, and other products.
KDP measures Lost Time Incident Rate, a reliable indication of Total Recordable Injuries Rate severity, and uses a risk reduction process that thoroughly analyzes injuries and near misses. Diversity and Inclusion Innovative ideas come from a diverse workforce, and KDP is committed to both.
KDP measures Lost Time Incident Rate, a reliable indication of Total Recordable Injuries Rate severity, and uses a risk reduction process that thoroughly analyzes injuries and near misses. OUR IMPACT As a leading beverage company, we have the opportunity and responsibility to make a positive impact for people, communities, and planet.
We also produce and sell K-Cup pods for cocoa, including through a licensing agreement for the Swiss Miss brand, and hot apple cider, including under our own brand, Mott's. Our U.S. Coffee segment manufactures K-Cup pods using freshly roasted and ground coffee as well as tea, cocoa, and other products.
Our partner brands include Starbucks, Dunkin', Folgers, and Peet's, among others. We have agreements for manufacturing, distributing, and selling K-Cup pods for tea under brands such as Celestial Seasonings and Bigelow. We produce and sell K-Cup pods for cocoa, including through a licensing agreement for the Swiss Miss brand, and hot apple cider, including under our own brand, Mott's.
Just as each of our brands brings its own personality to our product portfolio, each KDP employee brings their own unique set of experiences, perspectives, and background to our business. KDP is embracing those differences to drive rapid change, inspire innovation, and better connect with our customers and consumers.
Just as each of our brands brings its own personality to our product portfolio, each of our employees brings their own unique set of experiences, perspectives, and flavor to our business. We believe that to best innovate and deliver for our consumers and customers, our workforce should represent them.
Our primary competitors include Coca-Cola, PepsiCo, Starbucks Corporation, The J.M. Smucker Company, The Kraft Heinz Company, and Nestlé S.A.
Our primary competitors include Coca-Cola, PepsiCo, Starbucks Corporation, The J.M. Smucker Company, The Kraft Heinz Company, and Nestlé S.A. Although these companies offer competing brands in categories we participate in, many are also our partners or customers, as they purchase beverage concentrates or K-Cup pods directly from us.
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Today, we trade on Nasdaq under the symbol KDP, and we are a member of the Nasdaq 100 Index. OUR STRENGTHS AND STRATEGY Our scalable business model provides a platform for future growth, focused on: Strong, balanced portfolio of leading, consumer-preferred brands with proven ability to expand via innovation, renovation and partnerships.
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Today, we trade on Nasdaq under the symbol KDP. OUR STRENGTHS AND STRATEGY Our strategic framework starts with our purpose to Drink Well. Do Good. We aim to enhance the experience of every beverage occasion and to make a positive impact for people, communities, and the planet.
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When we approach our customers, we do so as a modern beverage company, strengthened through our use of data and technology. Bold ESG commitments and collaborations making positive impacts. We have worked diligently to embed conscious and responsible business practices into the foundation of our company.
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We lead with deep consumer insights that inform our brand positioning and surface opportunities to address unmet needs. We have a robust innovation program, which is designed to meet consumers' changing flavor and beverage preferences and to grow our share of beverage occasions. Amplify our route-to-market advantage.
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Our holistic ESG strategy is positioned to drive tangible and scalable solutions in service of doing more and better for our people, our environment and our communities. Highly efficient business model, driving significant cash flow and investments.
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We continually invest in digital tools and capabilities as part of our route-to-market strategy, and as one element of a holistic digital transformation across KDP. Shape our now and next beverage portfolio.
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We have a portfolio of brands with the ability to satisfy every consumer need, anytime and anywhere – hot or cold, at home or on-the-go, at work, or at play. Operating and Reportable Segments As of December 31, 2023, our operating structure consists of three operating and reportable segments: U.S. Refreshment Beverages, U.S. Coffee, and International.
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We focus on critical transformational investments that drive continuous productivity and network optimization. We also maintain an emphasis on lean overheads in order to drive increasing operating leverage and fund our investments in our growth opportunities. Dynamically allocate capital.
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We also manufacture K-Cup pods for our partner brands, who in turn sell them to retailers and consumers. Our partner brands include Starbucks, Dunkin', Folgers, Peet's, Newman’s Own Organics, Caribou Coffee, and Community Coffee, among others. We also participate in private label manufacturing arrangements.
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Refreshment Beverages segment is a brand owner, manufacturer, and distributor of LRBs in the U.S. In this segment, we manufacture and distribute beverage concentrates, syrups, and finished beverages of our brands to third-party bottlers, distributors, retailers, and, ultimately, the end consumer.
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During 2023, we launched our Keurig K-Iced family of brewers, featuring an innovative brew over ice process that allows consumers to brew both hot and iced beverages with a single coffeemaker. In addition, we expanded our ICED K-Cup pod offerings to include a variety of options that can be brewed over ice and are compatible with all Keurig models.
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Founded in 2016, GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading ready-to-drink energy brand. We initially purchased a 60% stake in GHOST, and we also entered into an agreement which requires us to buy the remaining 40% of GHOST in 2028.
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We launched a limited edition “Start Me Up” iced coffee kit in collaboration with The Rolling Stones, which featured a custom-designed K-Iced brewer and a customized coffee blend. We launched Dr Pepper Strawberries & Cream and Dr Pepper Strawberries & Cream Zero Sugar.
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During 2024, we launched our Keurig K-Brew+Chill brewer that features Quick Chill Technology which delivers iced beverages at temperatures below 60 degrees straight from the brewer, as well as the ability to brew hot beverages. In addition, we announced our multi-year innovation agenda with the Keurig Alta brewer and K-Rounds plastic- and aluminum-free pods.
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We also expanded our Core Hydration enhanced water portfolio with Core Hydration+, a nutrient enhanced water with real fruit extracts and essences, in Vibrance (grapefruit), Immunity (lemon), and Calm (cucumber). In Mexico, we elevated our mineral water portfolio with Peñafiel Soft, which has no calories or sugar.
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We debuted Canada Dry Fruit Splash, which partners classic ginger ale with cherry flavors and a splash of real fruit juice, as well as a limited edition offering of Dr Pepper Creamy Coconut. We launched Mott’s Active, a hydrating juice beverage for kids with naturally sourced electrolytes, no added sugar, and no artificial flavors, in Blastin’ Berry and Watermelon Burst.
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Finally, we joined forces with Blue Bell Creameries to create Dr Pepper Float ice cream, which provides us a royalty from these sales. We entered into a new partnership with Philz Coffee to provide two unique coffee blends in K-Cup pod format.
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We entered into new partnerships with The Brooklyn Roasting Company, Kahawa 1893, Killah Coffee, and Punk Bunny Coffee, among others, to provide their signature coffee blends in K-Cup pod format. We expanded our partnership with Black Rifle Coffee Company to include a sales and distribution agreement for Black Rifle Energy.
Removed
We invested in, and simultaneously entered into a long-term strategic partnership with, La Colombe, which enables us to sell and distribute La Colombe shelf-stable varieties of RTD coffee and to license, manufacture, and distribute La Colombe branded K-Cup pods, both of which began in the fourth quarter of 2023.
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We also entered into an agreement with Nutrabolt to distribute Bloom RTD energy beverages.
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These bottlers may be affiliated with Coca-Cola or with PepsiCo, or they may be independent. These agreements prohibit bottlers and distributors from selling the licensed products outside their exclusive territory and from selling any imitative products in that territory.
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Our Culture Together with our employees, we created a set of core values that define how we work together and are the cornerstone of KDP's culture. We embrace a challenger mindset, which, together with our strategy and core values, are the unifying force for our team and guide our actions, each and every day.
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From training on risks from non-routine tasks, such as unexpected maintenance on equipment, to installing automated systems to prevent trailers from shifting during loading and unloading, our Environmental Health & Safety team considers all aspects of what our employees may encounter and works to minimize risk. Key to these efforts are data and preventive actions.
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KDP Impact is our multi-year environmental, social, and governance agenda comprised of strategic initiatives that aim to make a positive impact with every drink. Rooted in action, realized through partnerships, and measured in results, we focus our commitments in the seven key impact areas where we can create meaningful change.
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To focus our efforts on diversity and inclusion at KDP, we have established executive-level governance, including participation by our CEO, as well as a Diversity and Inclusion leadership team, comprised of committed leaders from across KDP to help set priorities and lead two-way dialogue throughout the organization, including in our Employee Resource Groups.
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These seven key impact areas are as follows: • Climate and nature action • Water use and stewardship • Packaging and circular economy • Human rights, responsible sourcing, and supply chain livelihoods • Consumer health and well-being • Employee health, safety, and well-being; and • Corporate governance and ethics.
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In 2020, we set representation goals for management at or above the Director level, known as Director+. As of December 31, 2023, our global workforce was approximately 21% female, while our global Director+ workforce was approximately 32%, as compared to our baseline of 26% in 2020.
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We are committed to transparency and disclosure of our strategies, programs, progress, and governance.
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Approximately 48% of our U.S. workforce was comprised of people of color, with our U.S. Director+ workforce comprised of approximately 19% of people of color, as compared to our baseline of 17% in 2020.
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Regulators have also expressed concerns about the processing and use of particular ingredients or additives in beverage products.
Removed
We expect that legislation or regulations like those described above will continue to be proposed in the future at local, state and federal levels, both in the U.S. and elsewhere. 7 Table of Contents CORPORATE RESPONSIBILITY We are committed to acting responsibly, and our ambition is to ensure our beverages make a positive impact with every drink. Drink Well.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRestrictions on business activities, which have been or may be imposed or expanded as a result of political and economic instability, deterioration of economic relations between countries or otherwise, could impact our profitability.
Biggest changeRestrictions on business activities, which have been or may be imposed or expanded as a result of political and economic instability, deterioration of economic relations between countries, such as changes in or terminations of existing trade agreements, or the imposition of tariffs (including recent U.S. tariffs imposed or threatened to be imposed on Canada, Mexico, China, and other countries, and any retaliatory actions taken by such countries), or otherwise, could impact our profitability or otherwise have an adverse effect on our business.
We may fund our share repurchases through a combination of cash flow from operations, borrowings, a combination of the two, or other sources of liquidity.
We may fund our share repurchases through cash flow from operations, borrowings, a combination of the two, or other sources of liquidity.
Our users’ data and customer information may be improperly accessed, used or disclosed if these third-party commercial partners fail to adopt or adhere to adequate information security practices, or fail to comply with their respective online policies, or in the event of a breach of our networks.
Our users’ data and customer information may be improperly accessed, used or disclosed if these third-party commercial partners fail to adopt or adhere to adequate information security practices, or fail to comply with their respective online policies, or in the event of a breach of our or their networks.
We use information technology and third-party service providers to support our global business processes and activities, including supporting critical business operations; communicating with our suppliers, customers and employees; maintaining financial information and effective accounting processes and financial and disclosure controls; engaging in mergers and acquisitions and other corporate transactions; conducting research and development activities; meeting regulatory, legal and tax requirements; and executing various digital marketing and consumer promotion activities.
We, and our third-party service providers, use information technology to support our global business processes and activities, including supporting critical business operations; communicating with our suppliers, customers, and employees; maintaining financial information and effective accounting processes and financial and disclosure controls; engaging in mergers and acquisitions and other corporate transactions; conducting research and development activities; meeting regulatory, legal and tax requirements; and executing various digital marketing and consumer promotion activities.
The raw materials and other supplies, including agricultural commodities (such as coffee, apples, and corn), fuel and packaging materials, transportation, and other supply chain inputs that we use for the manufacturing, production, and distribution of our products are subject to price volatility and fluctuations in availability caused by many factors, which include changes in supply and demand; supplier capacity constraints; inflation; weather conditions (including the effects of climate change); wildfires and other natural disasters; disease or pests; agricultural uncertainty; cost increases in farm inputs; health epidemics, pandemics, or other contagious outbreaks; labor shortages, strikes, or work stoppages; changes in or the enactment of new laws and regulations; governmental actions or controls (including import/export restrictions, such as new or increased tariffs, sanctions, quotas, or trade barriers); port congestion or delays; transport capacity constraints; cybersecurity incidents or other disruptions; political uncertainties; acts of terrorism; governmental instability; speculation in global trading of commodities, such as coffee; or fluctuations in foreign currency exchange rates.
The raw materials and other supplies, including agricultural commodities (such as coffee, apples, and corn), fuel and packaging materials, transportation, and other supply chain inputs that we use for the manufacturing, production, and distribution of our products are subject to price volatility and fluctuations in availability caused by many factors, which include changes in supply and demand; supplier capacity constraints; inflation; weather conditions (including the effects of climate change); wildfires and other natural disasters; disease or pests; agricultural uncertainty; cost increases in farm inputs; health epidemics, pandemics, or other contagious outbreaks; labor shortages, strikes, or work stoppages; changes in or the enactment of new laws and regulations; governmental actions or controls (including import/export restrictions, such as new, increased, or retaliatory tariffs, sanctions, quotas, or trade barriers); port congestion or delays; transport capacity constraints; cybersecurity incidents or other disruptions; political uncertainties; acts of terrorism; governmental instability; speculation in global trading of commodities, such as coffee; or fluctuations in foreign currency exchange rates.
If we do not allocate and effectively manage the resources necessary to continue building and maintaining our information technology infrastructure, or if we fail to timely identify or appropriately respond to cyberattacks or other cyber incidents, including with respect to third-party service providers, our business has been and can continue to be adversely affected, which has resulted in and can continue to result in some or all of the following: business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data (including confidential information that we process and maintain about our employees or consumers through our e-commerce platform) through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation or a negative impact on employee morale or the loss of current or potential customers, all of which can adversely affect our business.
If we do not allocate and effectively manage the resources necessary to continue building and maintaining our information technology infrastructure, or if we fail to identify in a timely manner or appropriately respond to cyberattacks or other cyber incidents, including with respect to third-party service providers, our business has been and can continue to be adversely affected, which has resulted in and can continue to result in some or all of the following: business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data (including confidential information that we process and maintain about our employees or consumers through our e-commerce platform) through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation or a negative impact on employee morale or the loss of current or potential customers, all of which can adversely affect our business.
We regularly review our product portfolio and evaluate strategic transactions, such as equity method investments, to gain entry into categories where we do not participate or to expand our presence in areas where our participation is currently limited.
We regularly review our product portfolio and evaluate strategic transactions, such as equity method investments, generally to gain entry into categories where we do not participate or to expand our presence in areas where our participation is currently limited.
We may also experience delays in extending our respective internal control over financial reporting to new acquisitions or investments, which may increase the risk of misstatements in our financial records and in our consolidated financial statements.
In addition, we may also experience delays in extending our respective internal control over financial reporting to new acquisitions or investments, which may increase the risk of misstatements in our financial records and in our consolidated financial statements.
Competition in the labor market for qualified employees has increased alongside current and prospective employees’ changing expectations for compensation, benefits, and flexible work models. Unplanned turnover or failure to develop and implement succession plans for senior management and other key personnel, including our CEO, could deplete our institutional knowledge base and erode our competitiveness.
Competition in the labor market for qualified employees has increased alongside current and prospective employees’ changing expectations for compensation, benefits, and flexible work models. Unplanned turnover or failure to develop and implement succession plans for senior management and other key personnel could deplete our institutional knowledge base and erode our competitiveness.
The actual manner, timing, amount, value and counterparties of any repurchases under the program will be determined in our discretion and will depend on a number of factors, including the market price of our common stock, trading volume, other capital management objectives and opportunities, applicable legal requirements, applicable tax effects, and general market and economic conditions.
The actual manner, timing, amount, value and counterparties of any repurchases under the program will be determined at our discretion and will depend on a number of factors, including the market price of our common stock, trading volume, other capital management objectives and opportunities, applicable legal requirements, applicable tax effects, and general market and economic conditions.
Our corporate image and reputation has in the past been, and could in the future be, adversely impacted by a variety of factors, including: any failure by us or our business partners to achieve goals or maintain high standards relating to ethical, business and environmental, social and governance practices, including with respect to human rights, child labor laws, diversity, equity and inclusion, workplace conditions, employee health and safety, the nutrition profile of our products, packaging, water use and impact on the environment; any failure to address health or other concerns about our products, products we distribute or particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity or an increase in public health costs; our research and development efforts; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; consumer perception of our advertising campaigns, sponsorship arrangements, marketing programs, use of social media and our response to political and social issues or catastrophic events; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
Our corporate image and reputation has in the past been, and could in the future be, adversely impacted by a variety of factors, including: any failure by us or our business partners to achieve goals or maintain high standards relating to ethical and business practices, including with respect to human rights, child labor laws, workplace conditions, employee health and safety, the nutrition profile of our products, packaging, water use and impact on the environment; any failure to address health or other concerns about our products, products we distribute or particular ingredients in our products, including concerns regarding whether certain of our products contribute to obesity or an increase in public health costs; our research and development efforts; any product quality or safety issues, including the recall of any of our products; any failure to comply with laws and regulations; consumer perception of our advertising campaigns, sponsorship arrangements, marketing programs, use of social media and our response to political and social issues or catastrophic events; or any failure to effectively respond to negative or inaccurate comments about us on social media or otherwise regarding any of the foregoing.
If we are unable to meet the consumer where and when they desire their products or if we are unable to respond to changes in distribution channels, our financial results could be adversely impacted. 11 Table of Contents Concerns about the safety, quality, or health effects of our products could negatively affect our business.
If we are unable to meet the consumer where and when they desire their products or if we are unable to respond to changes in distribution channels, our financial results could be adversely impacted. 10 Table of Contents Concerns about the safety, quality, or health effects of our products could negatively affect our business.
In addition, price decreases in commodities that we have effectively hedged could also increase our cost of goods sold for mark-to-market changes in the derivative instruments. 10 Table of Contents We operate in intensely competitive categories, and our potential inability to compete effectively could adversely impact our business.
In addition, price decreases in commodities that we have effectively hedged could also increase our cost of goods sold for mark-to-market changes in the derivative instruments. 9 Table of Contents We operate in intensely competitive categories, and our potential inability to compete effectively could adversely impact our business.
In addition, our quality management protocols, which are designed to ensure product quality and safety, may not be sufficiently robust to fully manage the expanded range of product offerings introduced through new investments, licensing or distribution agreements, which may increase our costs or subject us to negative publicity.
Our quality management protocols, which are designed to ensure product quality and safety, may not be sufficiently robust to fully manage the expanded range of product offerings introduced through new investments, licensing or distribution agreements, which may increase our costs or subject us to negative publicity.
Damage to our reputation or brand image could decrease demand for our products, thereby adversely affecting our business. 12 Table of Contents If we do not successfully manage our acquisitions of and investments in new businesses or brands, our operating results may adversely be affected.
Damage to our reputation or brand image could decrease demand for our products, thereby adversely affecting our business. 11 Table of Contents If we do not successfully manage our acquisitions of and investments in new businesses or brands, our operating results may adversely be affected.
The results of audits or related disputes could have a material adverse effect on our financial statements for the period or periods for which the applicable final determinations are made and for periods for which the statute of limitations is open. 23 Table of Contents
The results of audits or related disputes could have a material adverse effect on our financial statements for the period or periods for which the applicable final determinations are made and for periods for which the statute of limitations is open. 21 Table of Contents
If we are unable to protect our intellectual property rights, our brands, products and business could be harmed. We also license various trademarks from third parties and license our trademarks to third parties. In some countries, third parties own certain trademarks and related intellectual property that we own in other countries.
If we are unable to protect our intellectual property rights, our brands, products and business could be harmed. We also license various intellectual property rights from third parties and license certain intellectual property rights to third parties. In some countries, third parties own certain intellectual property that we own in other countries.
Any adverse publicity resulting from allegations made in litigation claims or legal proceedings may also adversely affect our reputation, which in turn could adversely affect our results of operations. Increased concerns related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance.
Any adverse publicity resulting from allegations made in litigation claims or legal proceedings may also adversely affect our reputation, which in turn could adversely affect our results of operations. 18 Table of Contents Increased concerns related to the use or disposal of plastics or other packaging materials can adversely affect our business and financial performance.
Any of the foregoing can adversely affect our business. 22 Table of Contents Water scarcity and quality could adversely affect our business. Water is the primary ingredient in many of our products and is used across our operations. The competition for water among domestic, agricultural and manufacturing users is increasing in the countries where we operate.
Any of the foregoing can adversely affect our business. Water scarcity and quality could adversely affect our business. Water is the primary ingredient in many of our products and is used across our operations. The competition for water among domestic, agricultural, and manufacturing users is increasing in the countries where we operate.
We have ongoing programs to invest and upgrade our manufacturing, distribution and other facilities, including expansive investments in manufacturing facilities in Spartanburg, South Carolina and Allentown, Pennsylvania. These investments require us to rely on third parties for the construction and renovation of our facilities and manufacturing of our production equipment.
We have ongoing programs to invest and upgrade our manufacturing, distribution and other facilities, including expansive investments in our manufacturing facility in Spartanburg, South Carolina. These investments require us to rely on third parties for the construction and renovation of our facilities and manufacturing of our production equipment.
Any such impairment would result in us recognizing a non-cash charge in our Consolidated Statements of Income, which could adversely affect our results of operations and increase our effective tax rate. 16 Table of Contents RISKS RELATING TO OUR RELATIONSHIPS WITH THIRD PARTIES We depend on third-party bottling and distribution companies for a significant portion of our business.
Any such impairment would result in us recognizing a non-cash charge in our Consolidated Statements of Income, which could adversely affect our results of operations and our effective tax rate. RISKS RELATING TO OUR RELATIONSHIPS WITH THIRD PARTIES We depend on third-party bottling and distribution companies for a significant portion of our business.
These disruptions could have a negative impact on the ability of our customers to timely pay their obligations, the ability of our vendors to supply materials timely, or the risk of counterparty default, each of which could reduce our cash flow.
These disruptions could have a negative impact on the ability of our customers to pay their obligations on time, the ability of our vendors to supply materials in a timely manner, or the risk of counterparty default, each of which could reduce our cash flow.
Consumers’ preferences continually evolve due to a variety of factors, including changing demographics of the population, social trends, changes in consumer lifestyles and consumption patterns, concerns or perceptions regarding the health effects or environmental impact of our products or packaging, concerns regarding the location of origin or source of ingredients and products, changes in consumers' spending habits, negative publicity, economic downturn, or other factors.
Consumers’ preferences continually evolve due to a variety of factors, including changing demographics of the population, social trends, changes in consumer lifestyles and consumption patterns, including from the use of weight loss drugs, concerns or perceptions regarding the health effects or environmental impact of our products or packaging, concerns regarding the location of origin or source of ingredients and products, changes in consumers' spending habits, negative publicity, economic downturn, or other factors.
Additionally, significant changes in laws or regulations may reduce our ability or inclination to take advantage of our share repurchase program. Determinations in the future that a significant impairment of the value of our goodwill and other indefinite-lived intangible assets has occurred could have a material adverse effect on our financial performance.
Additionally, significant changes in laws or regulations may reduce our ability or inclination to take advantage of our share repurchase program. 14 Table of Contents Determinations in the future that a significant impairment of the value of our goodwill and other indefinite-lived intangible assets has occurred could have a material adverse effect on our financial statements.
The imposition or proposed imposition of additional limitations on the marketing or sale of our products has in the past and could continue to reduce overall consumption of our products, lead to negative publicity or leave consumers with the perception that our products do not meet their health and wellness needs, resulting in an adverse effect on our business and financial performance.
The imposition or proposed imposition of bans or restrictions on the use of certain ingredients or substances in products, or of additional limitations on the marketing or sale of our products, has in the past and could continue to reduce overall consumption of our products, lead to negative publicity or leave consumers with the perception that our products do not meet their health and wellness needs, resulting in an adverse effect on our business and financial performance.
Climate change or related legislation could adversely affect our business. Climate change may increase the frequency or severity of natural disasters and other extreme weather conditions, which could pose physical risks to our facilities, impair our production capabilities, disrupt our supply chain or impact demand for our products.
Climate change may increase the frequency or severity of natural disasters and other extreme weather conditions, which could pose physical risks to our facilities, impair our production capabilities, disrupt our supply chain, or impact demand for our products.
These factors will continue to put pressure on our business and financial performance. There can be no assurance that we will succeed in limiting future cost increases, and continued upward cost pressure could have a material adverse effect on our business and financial performance.
There can be no assurance that we will succeed in limiting future cost increases, and continued upward cost pressure could have a material adverse effect on our business and financial performance.
In addition, our continuity of business applications and operations has been, and may in the future be, disrupted by other issues, including cybersecurity attacks (which may include social engineering, business email compromise, cyber extortion, denial of service, attempts to exploit vulnerabilities, hacking, website defacement, theft of passwords and other credentials or unauthorized use of computing resources for digital currency mining); issues with or errors in systems’ maintenance or security; migration of applications to the cloud; power outages; hardware or software failures; telecommunication failures; natural disasters; terrorist attacks; unintentional or malicious actions of employees or contractors; and fires and other catastrophic occurrences and other cyber incidents.
In addition, our continuity of business applications and operations has been, and may in the future be, disrupted by other issues, including cybersecurity attacks (which may include social engineering, business email compromise, cyber extortion, denial of service, attempts to exploit vulnerabilities, hacking, website defacement, theft of passwords and other credentials, or unauthorized use of computing resources for digital currency mining); issues with or errors in systems’ maintenance or security; migration of applications to the cloud; power outages; hardware or software failures; telecommunication failures; natural disasters; terrorist attacks; unintentional or malicious actions of employees or contractors; and fires and other catastrophic occurrences and other cyber incidents. 19 Table of Contents Like most major corporations, we are regularly subject to cyberattacks and other cyber incidents, including the types of attacks and incidents described above.
If any of these third-party service providers or vendors do not perform effectively, or if we fail to adequately monitor their performance (including compliance with service level agreements or regulatory or legal requirements), we may experience business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation, a negative impact on employee morale or the loss of current or potential customers, all of which can adversely affect our business.
If any of these third-party service providers or vendors do not perform effectively, or if we fail to adequately monitor their performance (including compliance with service level agreements or regulatory or legal requirements), we may experience business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation, a negative impact on employee morale or the loss of current or potential customers, all of which can adversely affect our business. 16 Table of Contents These third parties are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and market risks of their own.
RISKS RELATED TO OUR FINANCIAL PERFORMANCE We negotiate with our suppliers to optimize our terms and conditions, including payment terms, and reductions in our payment terms with our suppliers could adversely affect our liquidity.
RISKS RELATED TO OUR FINANCIAL PERFORMANCE We negotiate with our suppliers to optimize our terms and conditions, including payment terms, and reductions in our payment terms with our suppliers could adversely affect our liquidity. We negotiate with our suppliers to optimize our terms and conditions, which includes the consideration of payment terms.
Various jurisdictions have adopted and may seek to adopt significant additional product labeling or warning requirements or limitations on the marketing or sale of our products because of what they contain or allegations that they cause adverse health effects.
Various jurisdictions have adopted and may seek to adopt bans or restrictions on the use of certain ingredients or substances in products, as well as significant additional product labeling or warning requirements or limitations on the marketing or sale of our products because of what they contain or allegations that they cause adverse health effects.
We have no operations in Russia, Ukraine, or the Middle East, but due to the impact of the conflicts on the global economy, we have experienced and may continue to experience supply chain constraints; inflation in input costs, logistics, manufacturing and labor costs; volatility in fuel and commodity prices and fluctuations in foreign exchange rates and interest rates, any of which could adversely impact our results of operations.
We have no operations in Russia, Ukraine, or the Middle East, but due to the impact of the ongoing conflicts in those regions on the global economy, we have experienced and may continue to experience supply chain constraints; inflation in input costs, logistics, manufacturing, and labor costs; volatility in fuel and commodity prices and fluctuations in foreign exchange rates and interest rates, any of which could adversely impact our results of operations. 17 Table of Contents U.S. and international laws and regulations could adversely affect our business.
In addition, adverse public opinion, third-party studies, or other allegations, whether or not valid, regarding the perceived or potential negative health effects of ingredients in our beverage products, such as concerns about the caloric intake associated with soft drinks or the use of artificial sweeteners in our beverages, or chemicals of concern or other substances in our ingredients or materials, may contribute to actual or threatened legal action against us, negative consumer perception of our products, additional government regulation, or new or increased taxes on our products, any of which could result in decreased demand for our products or reformulations of existing products to remove such ingredients or substances, which may be costly and reduce their appeal.
In addition, adverse public opinion, third-party studies, or other allegations, whether or not valid, regarding the perceived or potential negative health effects of processing or ingredients in our beverage products, such as concerns about the caloric intake associated with soft drinks or the use of synthetic colors, nutritive and non-nutritive sweeteners or other additives in our beverages, or chemicals of concern or other substances in our ingredients or materials, may contribute to actual or threatened legal action against us, negative consumer perception of our products, new or increased taxes on our products, or additional government regulation, including new or changing restrictions on the inclusion of our products in benefit programs, such as the U.S. supplemental nutrition assistance program known as SNAP, any of which could result in decreased demand for our products or reformulations of existing products to remove such ingredients or substances, which may be costly and reduce their appeal.
In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial.
In certain circumstances, our contracts with payment card processors and payment card networks (such as Visa, Mastercard, American Express, and Discover) generally require us to adhere to payment card network rules which could make us liable to payment card issuers and others if information in connection with payment cards and payment card transactions that we process is compromised, which liabilities could be substantial. 20 Table of Contents Climate change or related legislation could adversely affect our business.
As of December 31, 2023, we had $52,130 million of total assets, of which $20,202 million were goodwill and $23,287 million were other intangible assets. Intangible assets include both definite and indefinite-lived intangible assets in connection with brands, trade names, acquired technology, customer relationships, and contractual arrangements.
As of December 31, 2024, we had $53,430 million of total assets, of which $20,053 million were goodwill and $23,634 million were other intangible assets. Intangible assets include both definite and indefinite-lived intangible assets in connection with brands, trade names, acquired technology, customer relationships, and contractual arrangements.
We conduct impairment tests on goodwill and all indefinite-lived intangible assets annually, as of October 1, or more frequently if circumstances indicate that all or a portion of the carrying amount of an asset may not be recoverable. In addition, definite-lived intangible assets and property, plant and equipment are evaluated for impairment or accelerated depreciation as circumstances indicate.
We conduct impairment tests on goodwill and all indefinite-lived intangible assets annually, as of October 1, or more frequently if circumstances indicate that all or a portion of the carrying amount of an asset may not be recoverable.
Our international business is also subject to U.S. laws, regulations and policies, including anti-corruption and export laws and regulations. 19 Table of Contents Any significant change in laws or regulations or their interpretation, in any of these jurisdictions, or the introduction of higher standards or more stringent laws or regulations, could result in increased compliance costs or capital expenditures or significant challenges to our ability to continue to produce and sell products that generate a significant portion of our sales and profits.
Any significant change in laws or regulations or their interpretation, in any of these jurisdictions, or the introduction of higher standards or more stringent laws or regulations, could result in increased compliance costs or capital expenditures or significant challenges to our ability to continue to produce and sell products that generate a significant portion of our sales and profits.
We also regularly enter into strategic relationships for the manufacture and/or distribution of beverage products from partner brand owners, including in emerging or fast-growing segments in which we may not currently have a brand presence.
We also regularly enter into strategic relationships for the manufacture and/or distribution of beverage products from partner brand owners, including in emerging or fast-growing segments in which we may not currently have a brand presence. If our partner brands terminate their agreements with us, it could negatively affect our revenues and results of operations.
Adverse events affecting those third parties or their products could also negatively impact our brands. 14 Table of Contents Failure to attract, retain, develop and motivate a highly skilled and diverse workforce, or failure to effectively manage changes in our workforce such as labor shortages, employee turnover and increases in wages, could significantly impact our operations.
Failure to attract, retain, develop and motivate a highly skilled and diverse workforce, or failure to effectively manage changes in our workforce such as labor shortages, employee turnover and increases in wages, could significantly impact our operations.
Reductions in our payment terms have negatively affected, and could continue to negatively affect, our liquidity and our ability to maintain our cash conversion cycle to maximize our working capital.
Reductions in our payment terms have negatively affected, and could continue to negatively affect, our liquidity and our ability to maintain our cash conversion cycle to maximize our working capital. Reduced payment terms have contributed to, and could continue to contribute to, our need to utilize various financing arrangements for short-term liquidity.
We have experienced delays related to the production equipment contained within our manufacturing facilities, including delays in receiving the equipment or in operating the equipment according to specifications outlined by the manufacturer, which have led to increased costs, and we may continue to experience such delays and cost increases. 13 Table of Contents Increases in our cost of employee benefits in the future could reduce our profitability.
We have experienced delays related to the production equipment contained within our manufacturing facilities, including delays in receiving the equipment or in operating the equipment according to specifications outlined by the manufacturer, which have led to increased costs, and we may continue to experience such delays and cost increases. 12 Table of Contents We depend on key information systems, and our use of information technology exposes us to business disruptions that could adversely affect us.
If our manufacturers were to cease or interrupt production or otherwise fail to supply brewers to us as agreed, we would be unable to obtain brewers for an indeterminate period of time, which could adversely affect our product sales and operating results. 18 Table of Contents The majority of the distribution of our brewers, beverage concentrates and syrups is handled by third-party order fulfillment companies in the U.S.
If our manufacturers were to cease or interrupt production or otherwise fail to supply brewers to us as agreed, we would be unable to obtain brewers for an indeterminate period of time, which could adversely affect our product sales and operating results.
Changes in legislation restricting the sale of K-Cup pods could reduce our sales and profits. 20 Table of Contents Significant additional labeling or warning requirements or limitations on the marketing or sale of our products may inhibit sales of affected products.
Changes in legislation could restrict the sale of our products that use such packaging materials, which could reduce our sales and profits. Significant additional labeling or warning requirements or limitations on the marketing or sale of our products may inhibit sales of affected products.
As a result, we are subject to the risk that the activities associated with our third-party service providers can adversely affect our business even if the attack or breach does not directly impact our systems or information. 21 Table of Contents Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party service providers, have not had a material effect on our business, financial condition or results of operations, such incidents could have a material adverse effect on us in the future.
Although the cybersecurity incidents that we have experienced to date, as well as those reported to us by our third-party service providers, have not had a material effect on our business, financial condition, or results of operations, such incidents could have a material adverse effect on us in the future.
Additional employees have sought and may continue to seek to be covered by collective bargaining agreements, which may be facilitated by changing labor laws and regulations. These agreements typically expire every three to four years at various dates. We may not be able to renew our existing collective bargaining agreements on satisfactory terms or at all.
Many of our employees that are involved in the manufacturing or distribution of our products are covered by collective bargaining agreements. Additional employees have sought and may continue to seek to be covered by collective bargaining agreements, which may be facilitated by changing labor laws and regulations. These agreements typically expire every three to four years at various dates.
Our profitability is substantially affected by costs for employee health care, pension and other retirement programs and other benefits. In recent years, these costs have increased significantly due to factors such as increases in health care costs, declines in investment returns on pension assets, and changes in discount rates used to calculate pension and related liabilities.
In recent years, these costs have increased significantly due to factors such as increases in health care costs, declines in investment returns on pension assets, and changes in discount rates used to calculate pension and related liabilities. These factors will continue to put pressure on our business and financial performance.
However, security measures cannot guarantee that we will be successful in preventing or responding to all cyber incidents, systems disruptions, system compromises or misuses of data.
Security measures, including network security, backup and disaster recovery, upgrading systems and networks, enhanced training, and other security measures to protect our systems and data, cannot guarantee that we will be successful in preventing or responding to all cyber incidents, systems disruptions, system compromises, or misuses of data.
If our partner brands terminate their agreements with us, it could negatively affect our revenues and results of operations. 17 Table of Contents Equity method investments are managed independently of us and may have different interests than we do. Their decisions could impact our financial performance.
Equity method investments are managed independently of us and may have different interests than we do. Their decisions could impact our financial performance.
While we have procedures in place for assessing risk along with selecting, managing and monitoring our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk.
We do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. We have in the past, and may in the future, experience indirect impacts of events that take place at our third-party service providers and other business partners.
These systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, other security issues or supplier defaults. Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures.
Our information systems contain proprietary and other confidential information related to our business. These systems and services are vulnerable to interruptions or other failures resulting from, among other things, natural disasters, terrorist attacks, software, equipment or telecommunications failures, processing errors, computer viruses, other security issues or supplier defaults.
Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers may adversely affect our business.
Any inability to resolve a significant dispute with any of our key customers, a change in the business condition (financial or otherwise) of any of our key customers, even if unrelated to us, a significant reduction in sales to any key customer, or the loss of any of our key customers may adversely affect our business. 15 Table of Contents Failure to maintain strategic relationships with brand owners and private label brands could adversely impact our future growth and business, potentially resulting in the termination of those agreements.
In October 2021, our Board authorized the Company to repurchase up to $4 billion of our outstanding common stock over a four-year period, beginning on January 1, 2022, potentially enabling us to return value to shareholders. Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
We cannot guarantee that our share repurchase program will be fully consummated or that our share repurchase program will enhance long-term stockholder value. In October 2021, our Board authorized KDP to repurchase up to $4 billion of our outstanding common stock over a four-year period, beginning on January 1, 2022, potentially enabling us to return value to shareholders.
For example, the Dr Pepper trademark and formula is owned by Coca-Cola in some countries outside North America.
For example, the Dr Pepper trademark and formula is owned by Coca-Cola in some countries outside North America. Adverse events affecting those third parties or their products could also negatively impact our brands.
From time to time, we acquire or invest in businesses or brands, form joint ventures, and enter into licensing and distribution agreements. In evaluating such endeavors, we are required to make difficult judgments regarding the value of business strategies, opportunities, technologies and other assets, and the risks and cost of potential liabilities.
In evaluating strategic transactions, we are required to make difficult judgments regarding the value of business strategies, opportunities, technologies and other assets, and the risks and cost of potential liabilities.
We may not achieve the strategic and financial objectives for such transactions. If we are unable to achieve such objectives, our consolidated results could be negatively affected. Failure to realize benefits or successfully manage the potential negative consequences of our productivity initiatives can adversely affect our financial performance.
Our ability to manage and improve the performance of acquired businesses or brands and our other investments and ventures will impact our financial performance. We may not achieve the strategic and financial objectives for such transactions. If we are unable to achieve such objectives, our consolidated results could be negatively affected.
The impairment tests require us to make an estimate of the fair value of our reporting units and other intangible assets. We have in the past recorded impairments and could do so again as a result of changes in assumptions, estimates or circumstances, some of which are beyond our control.
We have in the past recorded impairments, including during the year ended December 31, 2024, and could do so again as a result of changes in assumptions, estimates or circumstances, some of which are beyond our control.
U.S. and international laws and regulations could adversely affect our business. We are subject to a variety of federal, state and local laws and regulations in the U.S., Canada, Mexico and other countries in which we conduct business.
We are subject to a variety of federal, state, and local laws and regulations in the U.S., Canada, Mexico, and other countries in which we conduct business. These laws and regulations apply to many aspects of our business, including the manufacture, safety, sourcing, labeling, storing, transportation, marketing, advertising, distribution, pricing, and sale of our products.
This could result in labor disputes, strikes, or work stoppages, which could impair our ability to manufacture and distribute our products and result in a substantial loss of sales. The terms of existing, renewed or expanded agreements could also significantly increase our costs or negatively affect our ability to increase operational efficiency.
We may not be able to renew our existing collective bargaining agreements on satisfactory terms or at all. This could result in labor disputes, strikes, or work stoppages, which could impair our ability to manufacture and distribute our products and result in a substantial loss of sales.
We pursue strategic initiatives that are transformative in nature and are expected to generate significant cost savings, or productivity, over time. These strategic initiatives have included investments in new technologies and optimization of certain processes and of our manufacturing footprint.
These strategic initiatives have included investments in new technologies and optimization of certain processes and of our manufacturing footprint.
Our expanding international business will also expose us to economic factors, regulatory requirements, increasing competition and other risks associated with doing business in foreign countries.
Other laws and regulations that may impact our business relate to competition and antitrust, the environment, relations with distributors and retailers, employment, privacy, health, and trade practices. Our expanding international business will also expose us to economic factors, regulatory requirements, increasing competition, and other risks associated with doing business in foreign countries, including import or export restrictions and tariffs.
Failure to maintain strategic relationships with brand owners and private label brands could adversely impact our future growth and business, potentially resulting in the termination of those agreements. We regularly enter into strategic relationships for the manufacturing, distribution, and sale of K-Cup pods with partner customers, as well as with retailers for their private label brands.
We regularly enter into strategic relationships for the manufacturing, distribution, and sale of K-Cup pods with partner customers, as well as with retailers for their private label brands. As independent companies, our strategic partners make their own business decisions which may not align with our interests.
We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience union activity, including new unionization, labor disputes or work stoppages. Many of our employees that are involved in the manufacturing or distribution of our products are covered by collective bargaining agreements.
Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, including employees with specialized capabilities, can damage our business results and our reputation. 13 Table of Contents We may not be able to renew collective bargaining agreements on satisfactory terms, or we could experience union activity, including new unionization, labor disputes or work stoppages.
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Furthermore, we may incur unforeseen liabilities and obligations in connection with any such transactions, including in connection with the integration or management of the businesses or brands, and may encounter unexpected difficulties and costs in integrating them into our operating, governance and internal control structures.
Added
Such risks may be increased if government officials make public statements about alleged risks purportedly associated with processing, particular ingredients used in our products, or unintentional contaminants that may be present in the water supply.
Removed
Any acquisitions, investments or ventures may also disrupt ongoing business activity or result in the diversion of management attention and resources from other initiatives and operations. Our ability to manage and improve the performance of acquired businesses or brands and our other investments and ventures will impact our financial performance.
Added
From time to time, we acquire or invest in businesses or brands, form joint ventures, and enter into licensing and distribution agreements.
Removed
We depend on key information systems, and our use of information technology exposes us to business disruptions that could adversely affect us. Our information systems contain proprietary and other confidential information related to our business.
Added
If we are unable to complete such transactions or successfully integrate and develop acquired businesses, including the effective management of integration activities, we could fail to achieve the expected increases in revenues and operating results or the anticipated synergies and cost savings.
Removed
Failure to attract, retain, develop, and motivate a highly skilled and diverse workforce, including employees with specialized capabilities, or to maintain a culture that fosters inclusivity and diversity, including by increasing representation of underrepresented communities, can damage our business results and our reputation.
Added
Additional acquisition risks include the diversion of management attention from our existing business, potential loss of key employees, suppliers, or customers from the acquired business, assumption of unforeseen risks and liabilities, and greater than anticipated operating costs of the acquired business. Any of these factors could adversely affect our financial results.
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As part of ongoing efforts to decrease our cash conversion cycle and manage our working capital, we negotiate with our suppliers to optimize our terms and conditions, which includes the consideration of payment terms. As part of this process, we strive to seek extended payment terms in commercial negotiations with potential suppliers.
Added
Failure to realize benefits or successfully manage the potential negative consequences of our productivity initiatives can adversely affect our financial performance. We pursue strategic initiatives that are transformative in nature and are expected to generate significant cost savings, or productivity, over time.
Removed
Reduced payment terms have contributed to, and could continue to contribute to, our need to utilize various financing arrangements for short-term liquidity. 15 Table of Contents We cannot guarantee that our share repurchase program will be fully consummated or that our share repurchase program will enhance long-term stockholder value.
Added
Security, backup and disaster recovery measures may not be adequate or implemented properly to avoid such disruptions or failures.
Removed
As independent companies, our strategic partners make their own business decisions which may not align with our interests.
Added
The terms of existing, renewed or expanded agreements could also significantly increase our costs or negatively affect our ability to increase operational efficiency. Increases in our cost of employee benefits in the future could reduce our profitability. Our profitability is substantially affected by costs for employee health care, pension and other retirement programs and other benefits.
Removed
These third parties are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and market risks of their own.
Added
Our repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares.
Removed
We have in the past, and may in the future, experience indirect impacts of events that take place at our third-party service providers and other business partners.
Added
In addition, definite-lived intangible assets, property, plant, and equipment, and equity method investments are evaluated for impairment or accelerated depreciation as circumstances indicate. The impairment tests require us to make an estimate of the fair value of our reporting units and other intangible assets.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeITEM 1C. CYBERSECURITY We use information technology and third-party service providers to support our global business processes and activities, which exposes us to cybersecurity risks. KDP’s risk management strategy includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers.
Biggest changeITEM 1C. CYBERSECURITY We, and our third-party service providers, use information technology to support our global business processes and activities, which exposes us to cybersecurity risks. KDP’s overall risk management system includes ongoing cybersecurity risk assessment and reporting, incident management, and a diligence and risk management process for third-party service providers.
For additional description of cybersecurity risks and potential related impacts on us, refer to the risk factors captioned “ Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us ” and “ The use of information technology by our third party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us ” in Item 1A, Risk Factors, in this Annual Report on Form 10-K. 24 Table of Contents
For additional description of cybersecurity risks and potential related impacts on us, refer to the risk factors captioned “ Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions that could adversely affect us ” and “ The use of information technology by our third party commercial partners and service providers exposes us to business disruptions or other negative impacts that could adversely affect us ” in Item 1A, Risk Factors, in this Annual Report on Form 10-K. 22 Table of Contents
We have an overall incident management plan, which is intended to provide guidance and protocols to facilitate timely notification and communication to key internal and external stakeholders during an incident. A subset of this incident management plan is our Security Incident Response Plan, or SIRP, which is based on leading cybersecurity incident response practices.
We have an overall incident management plan, which is intended to provide guidance and protocols to facilitate timely notification and communication to key internal and external stakeholders, as appropriate, during an incident. A subset of this incident management plan is our Security Incident Response Plan, or SIRP, which is based on leading cybersecurity incident response practices.
Our CISO has more than 25 years of experience in cybersecurity and information technology, including, prior to joining KDP in 2019, more than 11 years as a principal in Ernst & Young’s cybersecurity practice. Our CISO reports directly to our Chief Information Officer, who also has over 36 years of experience in information technology and cybersecurity.
Our CISO has more than 26 years of experience in cybersecurity and information technology, including, prior to joining KDP in 2019, more than 11 years as a principal in Ernst & Young’s cybersecurity practice. Our CISO reports directly to our Chief Information Officer, who also has over 37 years of experience in information technology and cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeCoffee International Total Owned Leased Owned Leased Owned Leased Owned Leased United States Production facilities 6 12 1 5 — — 7 17 Warehouse and distribution facilities 27 61 — 8 — — 27 69 International Production facilities 1 — — — 3 2 4 2 Warehouse and distribution facilities — — — — 5 63 5 63 Total 34 73 1 13 8 65 43 151 We believe our facilities are well-maintained and adequate, that they are being appropriately utilized, except for our next-generation coffee production facility in Spartanburg, South Carolina, and that they have sufficient production capacity for their present intended purposes.
Biggest changeCoffee International Total Owned Leased Owned Leased Owned Leased Owned Leased United States Production facilities 7 12 1 4 — — 8 16 Warehouse and distribution facilities 27 64 — 8 — — 27 72 Foreign Production facilities 1 — — — 3 2 4 2 Warehouse and distribution facilities — — — — 5 65 5 65 Total 35 76 1 12 8 67 44 155 We believe our facilities are well-maintained and adequate, that they are being appropriately utilized, and that they have sufficient capacity for their present intended purposes.
ITEM 2. PROPERTIES We have two global corporate headquarters, located in Burlington, Massachusetts and Frisco, Texas, both of which are leased. The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, 2023: U.S. Refreshment Beverages U.S.
ITEM 2. PROPERTIES We have two global corporate headquarters, located in Burlington, Massachusetts and Frisco, Texas, both of which are leased. The following table summarizes our principal manufacturing plants and principal warehouse and distribution facilities by geography and reportable segment as of December 31, 2024: U.S. Refreshment Beverages U.S.
The extent of utilization of such facilities varies based on seasonal demand for our products and the status of our investments to maintain or upgrade various technologies or equipment within such facilities.
The extent of utilization of such facilities varies based on seasonal demand for our products and the status of our investments to maintain or upgrade various technologies or equipment within such facilities. During the year ended December 31, 2024, we announced the planned closure of our Windsor, Virginia manufacturing facility, which is expected to take place in 2025.
Removed
As of December 31, 2023, the facility that we are establishing in Spartanburg, South Carolina was significantly underutilized due to delays in the manufacture and installation of certain manufacturing lines, as well as delays exacerbated by the COVID-19 pandemic.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We are occasionally subject to litigation or other legal proceedings relating to our business. Refer to Note 17 of the Notes to our Consolidated Financial Statements related to commitments and contingencies, which is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are occasionally subject to litigation or other legal proceedings relating to our business. Refer to Note 18 of the Notes to our Consolidated Financial Statements related to commitments and contingencies, which is incorporated herein by reference.
Removed
The Staff of the SEC (the “Staff”) is investigating certain statements by the Company regarding the recyclability of our K-Cup pods, including statements in prior Exchange Act reports. We have been cooperating with this investigation and responding to the Staff’s various requests for information.
Removed
In the course of cooperating with this investigation, we have reviewed our prior statements about the recyclability of K-Cup pods, and we continue to believe they were appropriate, accurate and in compliance with the securities laws. We cannot predict the timing or eventual outcome of this investigation, but do not expect it to have a material impact on the Company.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF TOTAL STOCKHOLDER RETURN The following performance graph compares the cumulative total returns of KDP for a five-year period with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index. We believe that these indices convey an accurate assessment of our performance as compared to the industry.
Biggest changeKDP's Board has declared a regular quarterly cash dividend and expects to continue to pay such dividends on a quarterly basis. COMPARISON OF TOTAL STOCKHOLDER RETURN The following performance graph compares the cumulative total returns of KDP for a five-year period with the cumulative total returns of the S&P 500 Index and the S&P Food and Beverage Select Industry Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on Nasdaq's Global Select Market under the ticker symbol "KDP". As of December 31, 2023, there were 8,315 stock holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on Nasdaq's Global Select Market under the ticker symbol "KDP". As of December 31, 2024, there wer e 7,692 stock holders of record of our common stock.
The $4 billion authorization is effective for four years, beginning on January 1, 2022 and expiring on December 31, 2025, and does not require the purchase of any minimum number of shares.
The $4 billion authorization is effective for four years, beginning on January 1, 2022 and expiring on December 31, 2025, and does not require the purchase of any minimum number of shares. As of December 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.
The graph assumes that $100 was invested on December 31, 2018, with dividends reinvested quarterly. 26 Table of Contents ISSUER REPURCHASES OF EQUITY SECURITIES On October 1, 2021, our Board authorized a share repurchase program of up to $4 billion of our outstanding common stock, potentially enabling us to return value to shareholders.
ISSUER REPURCHASES OF EQUITY SECURITIES On October 1, 2021, our Board authorized a share repurchase program of up to $4 billion of our outstanding common stock, potentially enabling us to return value to shareholders.
Removed
KDP's Board has declared a regular quarterly cash dividend and expects to continue to pay such dividends on a quarterly basis. Information on securities authorized for issuance under our equity compensation plans has been omitted and will be incorporated by reference, when filed, from our Proxy Statement.
Added
The graph assumes that $100 was invested on December 31, 2019, with dividends reinvested quarterly. Performance shown in the graph is not necessarily indicative of future performance.
Removed
The following table summarizes shares repurchased by us under this program during the fourth quarter of 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Amount of Dollars that May Yet be Used to Purchase Shares Under the Program October 1 to October 31 2,000,000 $ 29.95 2,000,000 $ 3,103,859,210 November 1 to November 30 6,120,798 30.77 6,120,798 2,915,505,309 December 1 to December 31 10,900 31.22 10,900 2,915,165,022 Total 8,131,698 $ 30.57 8,131,698 $ 2,915,165,022
Added
We did not repurchase any shares during the fourth quarter of 2024 .

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeReferences in the financial tables to percentage changes that are not meaningful are denoted by "NM". 30 Table of Contents For the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022: Consolidated Operations The following table sets forth our consolidated results of operations for the years ended December 31, 2023 and 2022: For the Year Ended December 31, Dollar Percentage (in millions, except per share amounts) 2023 2022 Change Change Net sales $ 14,814 $ 14,057 $ 757 5.4 % Cost of sales 6,734 6,734 — — Gross profit 8,080 7,323 757 10.3 Selling, general, and administrative expenses 4,912 4,645 267 5.7 Impairment of intangible assets 2 477 (475) NM Gain on litigation settlement — (299) 299 NM Other operating income, net (26) (105) 79 NM Income from operations 3,192 2,605 587 22.5 Interest expense, net 496 693 (197) (28.4) Loss on early extinguishment of debt — 217 (217) NM Gain on sale of equity method investment — (50) 50 NM Impairment of investments and note receivable — 12 (12) NM Other (income) expense, net (61) 14 (75) NM Income before provision for income taxes 2,757 1,719 1,038 60.4 Provision for income taxes 576 284 292 102.8 Net income including non-controlling interest 2,181 1,435 746 52.0 Less: Net loss attributable to non-controlling interest — (1) 1 NM Net income attributable to KDP $ 2,181 $ 1,436 $ 745 51.9 % Earnings per common share: Basic $ 1.56 $ 1.01 $ 0.55 54.5 % Diluted 1.55 1.01 0.54 53.5 % Gross margin 54.5 % 52.1 % 240 bps Operating margin 21.5 % 18.5 % 300 bps Effective tax rate 20.9 % 16.5 % 440 bps Sales Volume.
Biggest changeReferences in the financial tables to percentage changes that are not meaningful are denoted by "NM". 27 Table of Contents For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023: Consolidated Operations The following table sets forth our consolidated results of operations for the years ended December 31, 2024 and 2023: For the Year Ended December 31, Dollar Percentage (in millions, except per share amounts) 2024 2023 Change Change Net sales $ 15,351 $ 14,814 $ 537 3.6 % Cost of sales 6,822 6,734 88 1.3 Gross profit 8,529 8,080 449 5.6 Selling, general, and administrative expenses 5,013 4,912 101 2.1 Impairment of goodwill 306 — 306 NM Impairment of other intangible assets 412 2 410 NM Other operating expense (income), net 207 (26) 233 NM Income from operations 2,591 3,192 (601) (18.8) Interest expense, net 735 496 239 48.2 Impairment of investments and note receivable 2 — 2 NM Other (income) expense, net (60) (61) 1 NM Income before provision for income taxes 1,914 2,757 (843) (30.6) Provision for income taxes 473 576 (103) (17.9) Net income $ 1,441 $ 2,181 $ (740) (33.9) % Earnings per common share: Basic $ 1.06 $ 1.56 $ (0.50) (32.1) % Diluted 1.05 1.55 (0.50) (32.3) % Gross margin 55.6 % 54.5 % 110 bps Operating margin 16.9 % 21.5 % (460) bps Effective tax rate 24.7 % 20.9 % 380 bps Sales Volume.
Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers, and other coffee products to partners, retailers, and directly to consumers through our Keurig.com website. • The International segment reflects sales in international markets, including the following: ◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. ◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products. 28 Table of Contents VOLUME In evaluating our performance, we use different volume measures for LRB and for K-Cup pods and appliances.
Coffee segment reflects sales in the U.S. from the manufacture and distribution of finished goods relating to our K-Cup pods, single serve brewers, and other coffee products to partners, retailers, and directly to consumers through our Keurig.com website. • The International segment reflects sales in international markets, including the following: ◦ Sales in Canada, Mexico, the Caribbean, and other international markets from the manufacture and distribution of branded concentrates, syrup, and finished beverages, including sales of our own brands and third-party brands, to third-party bottlers, distributors, and retailers. ◦ Sales in Canada from the manufacture and distribution of finished goods relating to our single serve brewers, K-Cup pods, and other coffee products. 25 Table of Contents VOLUME In evaluating our performance, we use different volume measures for LRB and for K-Cup pods and appliances.
A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations. As of December 31, 2023, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.
A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations. As of December 31, 2024, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2023 and 2022 and year-over-year comparisons between the years ended December 31, 2023 and 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses the years ended December 31, 2024 and 2023 and year-over-year comparisons between the years ended December 31, 2024 and 2023.
Refer to Note 5 of the Notes to our Consolidated Financial Statements and Item 7A, Quantitative and Qualitative Disclosures About Market Risk for management's discussion of how we manage our exposure to commodity risk.
Refer to Note 6 of the Notes to our Consolidated Financial Statements and Item 7A, Quantitative and Qualitative Disclosures About Market Risk for management's discussion of how we manage our exposure to commodity risk.
None of our subsidiaries organized outside of the U.S., nor any of the subsidiaries held by Maple Parent Holdings Corp. prior to the DPS Merger, nor any of the subsidiaries acquired after the DPS Merger (collectively, the "Non-Guarantors") guarantee the Notes.
None of our subsidiaries organized outside of the U.S., any of the subsidiaries held by Maple Parent Holdings Corp. prior to the DPS Merger, or any of the subsidiaries acquired after the DPS Merger (collectively, the "Non-Guarantors") guarantee the Notes.
Our liability for uncertain tax positions contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various tax positions. Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities.
Our liability for uncertain tax positions contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various tax positions. 38 Table of Contents Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities.
Refer to Note 18 of the Notes to our Consolidated Financial Statements for additional information on our investments in VIEs. EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 2 of the Notes to our Consolidated Financial Statements for a discussion of recently issued accounting standards and recently adopted provisions of U.S.
Refer to Note 19 of the Notes to our Consolidated Financial Statements for additional information on our investments in VIEs. EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS Refer to Note 2 of the Notes to our Consolidated Financial Statements for a discussion of recently issued accounting standards and recently adopted provisions of U.S. GAAP .
We believe that the following events, trends and uncertainties may also impact liquidity: • Our ability to either repay existing debt maturities through cash flow from operations or refinance through future issuances of senior unsecured notes; • Our ability to access and/or renew our committed financing arrangements ; • Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $4,000 million; • Future mergers, acquisitions, or debt or equity investments, which may include brand ownership companies, regional bottling companies, distributors, and/or distribution rights to further extend our geographic coverage; • Seasonality and other variability in our operating cash flows, which could impact short-term liquidity; • Our continued payment of regular quarterly dividends; • Future repurchases of our common stock or special dividends to drive total shareholder return; • Our continued capital expenditures; • Fluctuations in our tax obligations; and • A significant downgrade in our credit ratings could limit i) our ability to issue debt at terms that are favorable to us, or ii) a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program. 44 Table of Contents CRITICAL ACCOUNTING ESTIMATES The process of preparing our consolidated financial statements in conformity with U.S.
We believe that the following events, trends and uncertainties may also impact liquidity: • Our ability to either repay existing debt maturities through cash flow from operations or refinance through future issuances of senior unsecured notes; • Our ability to access and/or renew our committed financing arrangements ; • Our ability to issue unsecured uncommitted commercial paper notes on a private placement basis; • Future mergers, acquisitions, or debt or equity investments, which may include brand ownership companies, regional bottling companies, distributors, and/or distribution rights to further extend our geographic coverage; • Seasonality and other variability in our operating cash flows, which could impact short-term liquidity; • Our continued payment of regular quarterly dividends; • Future repurchases of our common stock or special dividends to drive total shareholder return; • Our continued capital expenditures; • Fluctuations in our tax obligations; and • A potential significant downgrade in our credit ratings, which could limit i) our ability to issue debt at terms that are favorable to us, or ii) a financial institution's willingness to participate in our accounts payable program and reduce the attractiveness of the accounts payable program to participating suppliers who may sell payment obligations from us to financial institutions, which could impact our accounts payable program. 35 Table of Contents CRITICAL ACCOUNTING ESTIMATES The process of preparing our consolidated financial statements in conformity with U.S.
As of October 1, 2023, we performed a quantitative analysis for goodwill and all of our indefinite lived brand assets, whereby we used an income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value.
As of October 1, 2024, we performed a quantitative analysis for goodwill and certain of our indefinite lived brand assets, whereby we used an income approach, or in some cases a combination of income and market based approaches, to determine the fair value of our assets, as well as an overall consideration of market capitalization and enterprise value.
If a quantitative analysis is required, the following would be required: • The impairment test for indefinite lived intangible assets encompasses calculating a fair value of an indefinite lived intangible asset and comparing the fair value to its carrying value.
If a quantitative analysis is required: • The impairment test for indefinite lived intangible assets encompasses calculating a fair value of an indefinite lived intangible asset and comparing the fair value to its carrying value.
The following summarizes our cash activity for the years ended December 31, 2023, 2022, and 2021: Principal Sources of Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from our operations, and borrowing capacity currently available under our 2022 Revolving Credit Agreement.
The following summarizes our cash activity for the years ended December 31, 2024, 2023, and 2022: Principal Sources of Capital Resources Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from our operations, and borrowing capacity currently available under our Revolving Credit Agreement and our Term Loan Agreement.
Our investments in beverage startup companies generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.
Our investments generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.
Results of Operations by Segment The following tables set forth net sales and income from operations for our segments for the years ended December 31, 2022 and 2021, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.
Results of Operations by Segment The following tables set forth net sales and income from operations for our reportable segments for the years ended December 31, 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.
These assumptions could be negatively impacted by various risks discussed in Item 1A, Risk Factors , in this Annual Report on Form 10-K. 45 Table of Contents Critical assumptions for quantitative analyses include revenue growth and profit performance over the next five year period, as well as an appropriate discount rate and long-term growth rate, as applicable.
These assumptions could be negatively impacted by various risks discussed in Item 1A, Risk Factors , in this Annual Report on Form 10-K. 36 Table of Contents Critical assumptions and estimates for quantitative analyses include revenue growth and profit performance over the next five year period, based on our strategic plan, as well as an appropriate discount rate and long-term growth rate, as applicable.
Investments in Variable Interest Entities We have made equity investments in entities that are considered VIEs, including Nutrabolt and Chobani. We would consolidate a VIE for which we are determined to be the primary beneficiary.
Investments in Variable Interest Entities We hold equity investments in entities that are considered VIEs, including Nutrabolt and Chobani. We would be required to consolidate a VIE for which we are determined to be the primary beneficiary.
The following table provides the percentage change in sales volumes for the International segment compared to the prior year period: Percentage Change LRB 5.5 % K-Cup pods 3.3 % Appliances 2.4 % Net Sales.
The following table provides the percentage change in sales volumes for the International segment compared to the prior year period: Percentage Change LRB 5.6 % K-Cup pods 6.6 Appliances 8.2 Net Sales.
We continue to manage all aspects of our business, including monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing cost management strategies through our productivity initiatives, and developing new opportunities for growth such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
We continue to manage all aspects of our business, including, but not limited to, monitoring the financial health of our customers, suppliers, and other third-party relationships, implementing gross margin enhancement strategies through our productivity initiatives, and developing new opportunities for growth such as innovation and agreements with partners to distribute brands that are accretive to our portfolio.
At any time, and from time to time, we may seek additional deleveraging, refinancing or liquidity enhancing transactions, including entering into transactions to repurchase or redeem of outstanding indebtedness, increase the size of our commercial paper program, or otherwise seek transactions to reduce interest expense, extend debt maturities and improve our capital and liquidity structure .
At any time, and from time to time, we may seek additional deleveraging, refinancing, or liquidity enhancing transactions, including entering into transactions to repurchase or redeem outstanding indebtedness or otherwise seek transactions to reduce interest expense, extend debt maturities, and improve our capital and liquidity structure .
Refer to Note 18 of the Notes to our Consolidated Financial Statements for further information. 43 Table of Contents UNCERTAINTIES AND TRENDS AFFECTING LIQUIDITY AND CAPITAL RESOURCES Disruptions in financial and credit markets, including those caused by inflation due to global economic uncertainty and the associated rise in interest rates, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors.
Refer to Note 19 of the Notes to our Consolidated Financial Statements for further information. UNCERTAINTIES AND TRENDS AFFECTING LIQUIDITY AND CAPITAL RESOURCES Disruptions in financial and credit markets, including those caused by global economic uncertainty and fluctuations in interest rates, may impact our ability to manage normal commercial relationships with our customers, suppliers, and creditors.
OVERVIEW KDP is a leading beverage company in North America that manufactures, markets, distributes and sells hot and cold beverages and single serve brewing systems. KDP has a broad portfolio of iconic beverage brands, including Dr Pepper, Canada Dry, Green Mountain Coffee Roasters, Snapple, Mott's, The Original Donut Shop, Clamato, and Core Hydration, as well as the Keurig brewing system.
OVERVIEW KDP is a leading beverage company in North America that manufactures, markets, distributes and sells hot and cold beverages and single serve brewing systems. We have a broad portfolio of iconic beverage brands, including Keurig, Dr Pepper, Canada Dry, Mott's, A&W, Peñafiel, Snapple, 7UP, Green Mountain Coffee Roasters, GHOST, Clamato, Core Hydration, and The Original Donut Shop.
Our integrated business model enables us to be more flexible and responsive to the changing needs of our large retail customers and allows us to more fully leverage our scale and reduce costs by creating greater geographic manufacturing and distribution coverage.
Our integrated business model enables us to be more flexible and responsive to the changing needs of our large retail customers and allows us to more fully leverage our scale and reduce costs by creating greater geographic manufacturing and distribution coverage. SEGMENTS Our operating and reportable segments are as follows: • The U.S.
The following schedules present the summarized financial information for the Parent and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from; amounts due to, and transactions with Non-Guarantors are disclosed separately.
The following schedules present the summarized financial information for Keurig Dr Pepper Inc. (the “Parent”) and the Guarantors on a combined basis after intercompany eliminations; the Parent and the Guarantors' amounts due from and amounts due to Non-Guarantors are disclosed separately.
(2) Includes $1,399 million and $1,186 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of December 31, 2023 and December 31, 2022, respectively. 49 Table of Contents
(2) Includes $1,997 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of December 31, 2024 and December 31, 2023, respectively. 41 Table of Contents
This performance reflected favorable net price realization of 7.0% and favorable FX translation of 0.5%, partially offset by unfavorable volume/mix of 2.1%. Gross Profit. Gross profit increased $757 million, or 10.3%, to $8,080 million for the year ended December 31, 2023 compared to $7,323 million in the prior year.
This performance reflected volume/mix growth of 2.7% and favorable net price realization of 1.2%, slightly offset by unfavorable impacts from FX translation of 0.3%. Gross Profit. Gross profit increased $449 million, or 5.6%, to $8,529 million for the year ended December 31, 2024 compared to $8,080 million in the prior year.
An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective tax rate in the period of resolution.
An unfavorable tax settlement generally would require use of our cash and may result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement may be recognized as a reduction in our effective tax rate in the period of resolution. Business Combinations We record acquisitions using the purchase method of accounting.
RESIDUAL VALUE GUARANTEES We have a number of leasing arrangements and one licensing arrangement with the Veyron SPEs. Each one of these arrangements contain a residual value guarantee. As of December 31, 2023, we have not recorded any liabilities as it is not probable that we will have to make any payments required under the residual value guarantee.
RESIDUAL VALUE GUARANTEES We have a number of leasing arrangements and one licensing arrangement with VIEs for which we are not the primary beneficiary. Each one of these arrangements contain an RVG. As of December 31, 2024, we have not recorded any liabilities as it is not probable that we will have to make any payments required under the RVGs.
Net sales increased 15.0% to $1,922 million in the year ended December 31, 2023, compared to $1,672 million in the prior year period, reflecting higher net price realization of 5.5%, volume/mix growth of 5.0%, and favorable FX translation effects of 4.5%. Income from Operations.
Net sales increased 6.8% to $2,053 million in the year ended December 31, 2024, compared to $1,922 million in the prior year period, reflecting volume/mix growth of 6.2% and higher net price realization of 3.0%, partially offset by unfavorable FX translation of 2.4%. Income from Operations.
Coffee 1,158 1,215 International 475 373 Unallocated corporate costs (924) (944) Income from operations $ 3,192 $ 2,605 U.S. Refreshment Beverages The following table provides selected information for our U.S.
Coffee 1,079 1,158 International 545 475 Unallocated corporate costs (911) (924) Total income from operations $ 2,591 $ 3,192 29 Table of Contents U.S. Refreshment Beverages The following table provides selected information about our U.S.
Income from operations increased $102 million, or 27.3%, to $475 million for the year ended December 31, 2023 compared to $373 million in the prior year period.
Income from operations increased $70 million, or 14.7%, to $545 million for the year ended December 31, 2024 compared to $475 million in the prior year period.
Revenue Recognition We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied. Accruals for customer incentives, sales returns, and marketing programs are established for the expected payout based on contractual terms, volume-based metrics, and/or historical trends.
Accruals for customer incentives, sales returns, and marketing programs are established for the expected payout based on contractual terms, volume-based metrics, and/or historical trends.
Net sales increased 9.1% to $8,821 million in the year ended December 31, 2023, compared to $8,083 million in the prior year period, driven by favorable net price realization of 9.6%, which was partially offset by unfavorable volume/mix impacts of 0.5%. Income from Operations.
Net sales increased 5.8% to $9,331 million in the year ended December 31, 2024, compared to $8,821 million in the prior year period, driven by favorable net price realization of 3.1% and volume/mix growth of 2.7%. Income from Operations.
Net sales decreased 5.4% to $4,071 million for the year ended December 31, 2023 compared to $4,302 million in the prior year period, driven by volume/mix declines of 7.9% which were partially offset by favorable net price realization of 2.5%. Income from Operations.
Net sales decreased 2.6% to $3,967 million for the year ended December 31, 2024 compared to $4,071 million in the prior year period, driven by unfavorable net price realization of 3.6%, partially offset by volume/mix growth of 1.0%. Income from Operations.
GAAP: For the Year Ended December 31, (in millions) 2023 2022 Segment Results — Net sales U.S. Refreshment Beverages $ 8,821 $ 8,083 U.S. Coffee 4,071 4,302 International 1,922 1,672 Net sales $ 14,814 $ 14,057 For the Year Ended December 31, (in millions) 2023 2022 Segment Results — Income from Operations U.S. Refreshment Beverages $ 2,483 $ 1,961 U.S.
GAAP: For the Year Ended December 31, (in millions) 2024 2023 Net sales U.S. Refreshment Beverages $ 9,331 $ 8,821 U.S. Coffee 3,967 4,071 International 2,053 1,922 Total net sales $ 15,351 $ 14,814 For the Year Ended December 31, (in millions) 2024 2023 Income from Operations U.S. Refreshment Beverages $ 1,878 $ 2,483 U.S.
A 10% change in the accrual for our customer incentives, sales returns and marketing programs would have affected our income from operations by $53 million for the year ended December 31, 2023. 47 Table of Contents Income Taxes We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions based upon one of the following: • the tax position is not “more likely than not” to be sustained, • the tax position is “more likely than not” to be sustained, but for a lesser amount, or • the tax position is “more likely than not” to be sustained, but not in the financial period in which the tax position was originally taken.
Income Taxes We establish income tax liabilities to remove some or all of the income tax benefit of any of our income tax positions based upon one of the following: • the tax position is not “more likely than not” to be sustained, • the tax position is “more likely than not” to be sustained, but for a lesser amount, or • the tax position is “more likely than not” to be sustained, but not in the financial period in which the tax position was originally taken.
The following table sets forth changes in sales volume for the year ended December 31, 2023 compared to the prior year: LRB (0.1) % K-Cup pods (3.9) % Appliances (9.4) % Net Sales. Net sales increased $757 million, or 5.4%, to $14,814 million for the year ended December 31, 2023 compared to $14,057 million in the prior year.
The following table provides the change in sales volume compared to the prior year: Percentage Change LRB 1.8 % K-Cup pods 0.8 % Appliances 7.4 % Net Sales. Net sales increased $537 million, or 3.6%, to $15,351 million for the year ended December 31, 2024 compared to $14,814 million in the prior year.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, for the years ended December 31, 2023, 2022, and 2021 primarily related to the manufacturing and warehousing facilities discussed above, as well as our Newbridge, Ireland facility in 2022 and 2021.
Capital expenditures, which includes both purchases of property, plant, and equipment and amounts included in accounts payable and accrued expenses, for the years ended December 31, 2024 and 2023, primarily related to investments in manufacturing capabilities, both in the U.S. and internationally.
The Guarantors are 100% owned either directly or indirectly by us and jointly and severally guarantee, subject to the release provisions described below, our obligations under the Notes.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION The Notes are fully and unconditionally guaranteed by certain of our direct and indirect subsidiaries (the "Guarantors"), as defined in the indentures governing the Notes. The Guarantors are 100% owned either directly or indirectly by us and jointly and severally guarantee, subject to the release provisions described below, our obligations under the Notes.
When such events or changes occur, we evaluate the fair value compared to our carrying value of the investment. We also perform this evaluation every reporting period for each investment for which our carrying value has exceeded the fair value.
When such events or changes occur, we evaluate the fair value compared to our carrying value of the investment.
The calculation of each component of the cash conversion cycle is provided below: Component Calculation (on a trailing twelve month basis) DIO (Average inventory divided by cost of sales) * Number of days in the period DSO (Accounts receivable divided by net sales) * Number of days in the period DPO (Accounts payable * Number of days in the period) divided by cost of sales and SG&A expenses The following table summarizes our cash conversion cycle.
The calculation of each component of the cash conversion cycle is provided below: Component Calculation (on a trailing twelve month basis) DIO (Average inventory divided by cost of sales) * Number of days in the period DSO (Accounts receivable divided by net sales) * Number of days in the period DPO (Accounts payable * Number of days in the period) divided by cost of sales and SG&A expenses The following table summarizes our cash conversion cycle: December 31, 2024 2023 DIO 68 71 DSO 36 34 DPO 92 113 Cash conversion cycle 12 (8) Our cash conversion cycle increased 20 days to approximately 12 days as of December 31, 2024 as compared to (8) days as of December 31, 2023, which was primarily driven by the decrease in DPO, reflecting the reduction of payment terms for certain suppliers.
Refreshment Beverages segment for the years ended December 31, 2023 and 2022: For the Year Ended December 31, Dollar Percentage (in millions) 2023 2022 Change Change Net sales $ 8,821 $ 8,083 $ 738 9.1 % Income from operations 2,483 1,961 522 26.6 % Operating margin 28.1 % 24.3 % 380 bps Sales Volume.
Refreshment Beverages segment’s results: For the Year Ended December 31, Dollar Percentage (in millions) 2024 2023 Change Change Net sales $ 9,331 $ 8,821 $ 510 5.8 % Income from operations 1,878 2,483 (605) (24.4) % Operating margin 20.1 % 28.1 % (800) bps Sales Volume.
Excluding our suppliers who require cash at date of purchase or sale, our current payment terms with our suppliers generally range from 10 to 360 days. We also enter into agreements with third party administrators to allow participating suppliers to track payment obligations from us, and, if voluntarily elected by the supplier, sell payment obligations from us to financial institutions.
We also enter into agreements with third party administrators to allow participating suppliers to track payment obligations from us, and, if voluntarily elected by the supplier, sell payment obligations from us to financial institutions. Suppliers can sell one or more of our payment obligations at their sole discretion and our rights and obligations to our suppliers are not impacted.
Sensitivity Analysis - Long-Term Growth Rate For goodwill, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term growth rate used to determine the fair value of the reporting units as of October 1, 2023, would not change our conclusion. 46 Table of Contents For the indefinite-lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term revenue growth rate used to determine the fair value of those assets as of October 1, 2023, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Long-Term Growth Rate Long-Term Growth Rate Decrease of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% $ — $ — $ — $ — Less than 25% 2,246 2,465 3,858 4,265 25 - 50% 2,339 3,018 727 912 In excess of 50% 14,756 28,985 14,756 27,183 .
WD reporting unit, but would not change our conclusion on any other reporting units. 37 Table of Contents For the indefinite-lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term revenue growth rate used to determine the fair value of those assets as of October 1, 2024, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Long-Term Growth Rate Long-Term Growth Rate Decrease of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% (1) $ 280 $ 280 $ 1,730 $ 1,660 Less than 25% 2,580 2,900 1,130 1,310 25 - 50% 1,488 2,160 1,627 2,240 In excess of 50% 14,481 34,490 14,342 32,150 (1) Carrying value at the selected long-term growth rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2024.
Repurchases of Common Stock Our Board authorized a four-year share repurchase program, ending December 31, 2025, of up to $4 billion of our outstanding common stock, potentially enabling us to return value to shareholders. We repurchased and retired $706 million and $379 million of common stock during the years ended December 31, 2023 and 2022.
Repurchases of Common Stock Our Board authorized a four-year share repurchase program, ending December 31, 2025, of up to $4 billion of our outstanding common stock. Repurchases and retirements of common stock, including payments on our share excise tax obligation, were $1,110 million and $706 million during the years ended December 31, 2024 and 2023, respectively.
The following table provides the range of rates used in the analysis as of October 1, 2023: Rate Minimum Maximum Discount rates 8.0 % 13.5 % Long-term growth rates — % 4.0 % Royalty rates 1.0 % 10.0 % The following table shows the non-cash impairment charges that were recorded for indefinite lived brand assets for the years presented: Year Ended December 31, (in millions) 2023 2022 2021 Non-cash impairment charges for indefinite lived brand assets $ — $ 472 $ — Sensitivity Analysis - Discount Rate For goodwill, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of the reporting units as of October 1, 2023, would not change our conclusion.
The following table provides the range of rates used in the analysis as of October 1, 2024: Rate Minimum Maximum Discount rates 7.0 % 9.5 % Long-term growth rates — % 3.5 % The following table shows the non-cash impairment charges that were recorded for goodwill and for indefinite lived brand assets for the years presented: Year Ended December 31, (in millions) 2024 2023 2022 Goodwill (1) $ 306 $ — $ — Indefinite lived brand assets (2) 412 — 472 (1) Goodwill attributed to the U.S.
Net income attributable to KDP increased $745 million, or 51.9%, to $2,181 million for the year ended December 31, 2023 as compared to $1,436 million in the prior year. Diluted EPS.
Net income decreased $740 million, or 33.9%, to $1,441 million for the year ended December 31, 2024 as compared to $2,181 million in the prior year. Diluted EPS. Diluted EPS decreased 32.3% to $1.05 per diluted share as compared to $1.55 in the prior year.
Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Refer to Note 2 of the Notes to our Consolidated Financial Statements for additional information on our obligations to participating suppliers. Sources of Liquidity - Financing Refer to Note 4 of the Notes to our Consolidated Financial Statements for management's discussion of our financing arrangements.
We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Refer to Note 2 of the Notes to our Consolidated Financial Statements for additional information on our obligations to participating suppliers.
Impairment Assessment of Equity Method Investments Without Readily Determinable Fair Values Equity method investments are reviewed each reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment.
If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the financial statements may be exposed to potential impairment of the intangible assets and goodwill, as discussed in Impairment Assessment of Goodwill and Other Indefinite Lived Intangible Assets above. 39 Table of Contents Impairment Assessment of Equity Method Investments Without Readily Determinable Fair Values Equity method investments are reviewed quarterly to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment.
Refer to Item 1A, Risk Factors , as well as the Uncertainties and Trends Affecting Liquidity section below, for more information about risks and uncertainties facing us. Some of these items have led to inflation in input costs, logistics, manufacturing, and labor costs, which has further led to fluctuation in interest rates.
Refer to Item 1A, Risk Factors , as well as the Uncertainties and Trends Affecting Liquidity and Capital Resources section below, for more information about risks and uncertainties facing us.
For the brand and trade name indefinite-lived intangible assets quantitatively assessed, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of those assets as of October 1, 2023, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Discount Rate Discount Rate Increase of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% $ — $ — $ 28 $ 27 Less than 25% 2,274 2,493 4,445 4,903 25 - 50% 2,339 3,018 2,537 3,747 In excess of 50% 14,767 29,002 12,370 23,106 Trade Names In excess of 50% 2,478 5,930 2,478 5,490 .
For the indefinite-lived priority brand assets quantitatively assessed, holding all other assumptions in the analysis constant, including the revenue and profit performance assumption, the effect of a 0.50% increase in the discount rate used to determine the fair value of those assets as of October 1, 2024, would impact the amount of headroom over the carrying value of the following assets as follows (in millions): Selected Discount Rate Discount Rate Increase of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Brands 0% (1) $ 280 $ 280 $ 1,730 $ 1,620 Less than 25% 2,580 2,900 1,130 1,290 25 - 50% 1,488 2,160 1,627 2,210 In excess of 50% 14,481 34,490 14,342 31,650 (1) Carrying value at the selected discount rate reflects the results of the annual impairment analysis recognized during the year ended December 31, 2024.
Purchases of Intangible Assets We have invested in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to ensure competitive distribution scale for our brands. From time to time, we additionally acquire brand ownership companies to expand our portfolio.
Investments in unconsolidated affiliates were $7 million and $316 million for the years ended December 31, 2024 and 2023, respectively. 34 Table of Contents Acquisitions of Businesses and Purchases of Intangible Assets We have invested in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to enhance competitive distribution scale.
We also have an active shelf registration statement, filed with the SEC on August 19, 2022, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board. 41 Table of Contents Sources of Liquidity - Asset Sale-Leaseback Transactions We have leveraged our strategic asset investment program to create value from certain assets to enable reinvestment in KDP.
We also have an active shelf registration statement, filed with the SEC on August 19, 2022, which allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities, and warrants from time to time in one or more offerings at the direction of our Board. 33 Table of Contents Debt Ratings Our credit ratings are as follows: Rating Agency Long-Term Debt Rating Commercial Paper Rating Outlook Moody's Baa1 P-2 Stable S&P BBB A-2 Stable These debt and commercial paper ratings impact the interest we pay on our financing arrangements.
The summarized financial information for the Parent and Guarantors were as follows: (in millions) For the Year Ended December 31, 2023 Net sales $ 9,147 Gross profit 4,796 Income from operations 1,284 Net income attributable to KDP 2,181 December 31, (in millions) 2023 2022 Current assets $ 1,957 $ 1,712 Non-current assets 48,029 45,721 Total assets (1) $ 49,986 $ 47,433 Current liabilities $ 6,749 $ 4,797 Non-current liabilities 16,689 17,463 Total liabilities (2) $ 23,438 $ 22,260 (1) Includes $56 million and $3 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of December 31, 2023 and December 31, 2022, respectively.
The consolidating schedules are provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and guarantor subsidiaries. 40 Table of Contents The summarized financial information for the Parent and Guarantors were as follows: (in millions) For the Year Ended December 31, 2024 Net sales $ 9,720 Gross profit 5,082 Income from operations 600 Net income attributable to KDP 1,441 December 31, (in millions) 2024 2023 Current assets $ 2,373 $ 1,957 Non-current assets 49,827 48,029 Total assets (1) $ 52,200 $ 49,986 Current liabilities $ 6,101 $ 6,749 Non-current liabilities 20,984 16,689 Total liabilities (2) $ 27,085 $ 23,438 (1) Includes $115 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of December 31, 2024 and December 31, 2023, respectively.
Capital expenditures included in accounts payable and accrued expenses were $276 million, $213 million, and $189 million for the years ended December 31, 2023, 2022, and 2021, respectively, which primarily related to these investments. 42 Table of Contents Investments in Unconsolidated Affiliates From time to time, we expect to invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio.
Investments in Unconsolidated Affiliates From time to time, we invest in beverage startup companies or in brand ownership companies to grow our presence in certain product categories, or enter into various licensing and distribution agreements to expand our product portfolio.
Purchases of property, plant and equipment were $425 million, $353 million, and $423 million for the years ended December 31, 2023, 2022, and 2021, respectively.
As of December 31, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program. Capital Expenditures Purchases of property, plant, and equipment were $563 million and $425 million for the years ended December 31, 2024 and 2023, respectively.
Discount rates are based on a weighted average cost of equity and cost of debt, adjusted with various risk premiums. Long-term growth rates are based on the long-term inflation forecast, industry growth and the long-term economic growth potential.
Long-term growth rates are based on the long-term inflation forecast, industry and category growth trends, and the long-term economic growth potential.
Coffee segment for the years ended December 31, 2023 and 2022: For the Year Ended December 31, Dollar Percentage (in millions) 2023 2022 Change Change Net sales $ 4,071 $ 4,302 $ (231) (5.4) % Income from operations 1,158 1,215 (57) (4.7) % Operating margin 28.4 % 28.2 % 20 bps Sales Volume.
Coffee The following table provides selected information about our U.S. Coffee segment’s results: For the Year Ended December 31, Dollar Percentage (in millions) 2024 2023 Change Change Net sales $ 3,967 $ 4,071 $ (104) (2.6) % Income from operations 1,079 1,158 (79) (6.8) % Operating margin 27.2 % 28.4 % (120) bps Sales Volume.
Sales volumes for the year ended December 31, 2023 decreased approximately 1.0% compared to the prior year period, as growth in Dr Pepper, as well as C4 Energy as a result of our sales and distribution partnership with Nutrabolt, was more than offset by softness in the rest of our portfolio, driven by category declines. Net Sales.
Sales volumes for the year ended December 31, 2024 increased approximately 1.0% compared to the prior year period. Growth in carbonated soft drinks and the contributions from partnerships, such as Electrolit and C4, was partially offset by softness in our still beverages portfolio. Net Sales.
This performance primarily reflected the impact to gross profit of the strong growth in net sales (12 percentage points) and a favorable change in unrealized commodity mark-to-market impacts (2 percentage points), partially offset by net inflation in ingredients and materials (3 percentage points).
This performance primarily reflected the gross profit impact of net sales growth (3 percentage points), a net benefit from changes in ingredients, materials, and productivity (2 percentage points), and earned equity from the achievement of milestones associated with certain distribution agreements (1 percentage point), partially offset by net increases in other manufacturing costs (1 percentage point).
EXECUTIVE SUMMARY Financial Overview As Reported, in millions (except Diluted EPS) 29 Table of Contents Key Events During and Subsequent to the Fourth Quarter of 2023 Strategic Partnership with Grupo PiSA Effective October 23, 2023, we executed an agreement for a strategic partnership with Grupo PiSA to sell and distribute Electrolit instant hydration beverages within the U.S., which is expected to begin in early 2024.
EXECUTIVE SUMMARY Financial Overview As Reported, in millions (except Diluted EPS) 26 Table of Contents Key Events During and Subsequent to the Fourth Quarter of 2024 On October 23, 2024, we entered into a definitive agreement with GHOST, and certain other parties named therein, to acquire a controlling interest in GHOST.
K-Cup pod volume decreased 5.1% for the year ended December 31, 2023 compared to the prior year period, reflecting softer at-home coffee category trends. Appliance volume decreased 10.3% in the year ended December 31, 2023, driven by category softness in small appliances and retailer inventory shifts.
K-Cup pod volume was flat for the year ended December 31, 2024 compared to the prior year period. Appliance volume increased 7.3% in the year ended December 31, 2024, driven by Keurig market share momentum and improving coffeemaker category trends. Net Sales.
Sensitivity Analysis - Royalty Rate For the indefinite-lived trade names quantitatively assessed, holding all other assumptions in the analysis constant, including the discrete period revenue performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the royalty rate used to determine the fair value of those trade names as of October 1, 2023, would impact the amount of headroom over the carrying value of those trade names as follows (in millions): Selected Royalty Rate Royalty Rate Decrease of 0.50% Headroom Percentage Carrying Value Fair Value Carrying Value Fair Value Trade Names In excess of 50% 2,478 5,930 2,478 5,580 Refer to Note 3 of the Notes to our Consolidated Financial Statements for additional information about our impairment assessments.
Sensitivity Analysis - Long-Term Growth Rate For goodwill, holding all other assumptions in the analysis constant, including the discrete period revenue and profit performance assumptions as well as the discount rates, the effect of a 0.50% decrease in the long-term growth rate used to determine the fair value of the reporting units as of October 1, 2024, would result in additional non-cash impairment charges of $147 million to our U.S.
Sources of Liquidity - Operations Net cash provided by operating activities decreased $1,508 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Sources of Liquidity - Operations Net cash provided by operating activities increased $890 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, driven by the favorable comparison in working capital versus the prior year period. 32 Table of Contents Cash Conversion Cycle Our cash conversion cycle is defined as DIO and DSO less DPO.
Warehouse Direct, and Direct Store Delivery) • U.S. Coffee (reporting unit: U.S.
Our reportable segments as of October 1, 2024 were: • U.S. Refreshment Beverages (reporting units: U.S. Beverage Concentrates, U.S. Warehouse Direct, and Direct Store Delivery) • U.S. Coffee (reporting unit: U.S.
This performance reflected the impact to gross profit of higher net price realization and volume/mix growth (34 percentage points) and favorable FX impacts (8 percentage points), partially offset by net inflation in ingredients and materials (13 percentage points).
This performance reflected the gross profit impact of volume/mix growth and higher net price realization (25 percentage points) and a net benefit from changes in ingredients, materials, and productivity (5 percentage points), partially offset by increased transportation and warehousing expenses (5 percentage points) and higher marketing investment (5 percentage points). 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Overview We believe our financial condition and liquidity remain strong.
Income from operations decreased $57 million, or 4.7%, to $1,158 million for the year ended December 31, 2023, compared to $1,215 million in the prior year period, as a result of the impact to gross profit of the decrease in net sales (5 percentage points), unfavorable year-over-year comparisons for asset sale-leasebacks and a business interruption recovery (4 percentage points), and net inflation in ingredients and materials (1 percentage point), partially offset by decreases in other manufacturing costs (2 percentage points) and other operating costs.
Income from operations decreased $79 million, or 6.8%, to $1,079 million for the year ended December 31, 2024, compared to $1,158 million in the prior year period, driven by the gross profit impact of the net sales decrease (11 percentage points), partially offset by a net benefit from changes in ingredients, materials, and productivity (3 percentage points). 30 Table of Contents International The following table provides selected information about our International segment’s results: For the Year Ended December 31, Dollar Percentage (in millions) 2024 2023 Change Change Net sales $ 2,053 $ 1,922 $ 131 6.8 % Income from operations 545 475 70 14.7 % Operating margin 26.5 % 24.7 % 180 bps Sales Volume.
The effective tax rate increased 440 bps to 20.9% for the year ended December 31, 2023, compared to 16.5% in the prior year, primarily driven by the revaluation of state deferred tax liabilities due to legislative changes in the prior year. Net Income Attributable to KDP.
The effective tax rate increased 380 bps to 24.7% for the year ended December 31, 2024, compared to 20.9% in the prior year, primarily driven by the impact of our non-cash goodwill impairment charge (270 bps) and the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (100 bps). Net Income.
Gamgort will continue to serve as our Executive Chairman after the transition occurs. Uncertainties and Trends Affecting Our Business We believe the North American beverage market is influenced by certain key trends and uncertainties.
On January 31, 2025, we repaid the amount outstanding under the Term Loan Agreement using proceeds from commercial paper. Uncertainties and Trends Affecting Our Business We believe the North American beverage market is influenced by certain key trends and uncertainties.
Income from operations of $1,961 million for the year ended December 31, 2022 was flat compared to the year ended December 31, 2021, primarily driven by the impact of non-cash impairment charges (24 percentage points), led by Bai and Schweppes, which were partially offset by impact of the non-recurring gain on the settlement of litigation with BodyArmor (14 percentage points).
Income from operations decreased $605 million, or 24.4%, to $1,878 million for the year ended December 31, 2024 compared to $2,483 million for the prior year period. This decrease was primarily driven by the non-cash goodwill and intangible impairment charges (29 percentage points) and the accrued termination fee associated with ABI (9 percentage points).
Gross margin increased 240 bps versus the prior year to 54.5%. 31 Table of Contents Selling, General and Administrative Expenses. SG&A expenses increased $267 million, or 5.7%, to $4,912 million for the year ended December 31, 2023 compared to $4,645 million in the prior year.
SG&A expenses increased $101 million, or 2.1%, to $5,013 million for the year ended December 31, 2024 compared to $4,912 million in the prior year, led by increases in transportation and warehousing expenses (2 percentage points) and people costs (1 percentage point), partially offset by reduced costs associated with productivity projects (1 percentage point). 28 Table of Contents Impairment of Goodwill.
Regular Quarterly Dividends We have declared total dividends of $0.830 per share, $0.775 per share, and $0.7125 per share for the years ended December 31, 2023, 2022, and 2021.
We dynamically adjust our cash deployment plans based on the specific opportunities available in a given period, but over time we allocate capital to balance each of these priorities. Regular Quarterly Dividends We have declared total dividends of $0.89 per share and $0.83 per share for the years ended December 31, 2024 and 2023, respectively.
These transactions are generally accounted for as an asset acquisition, as the majority of the transaction price represents the acquisition of an intangible asset. Purchases of intangible assets were $56 million, $45 million, and $32 million for the years ended December 31, 2023, 2022, and 2021, respectively.
Refer to Note 4 of the Notes to our Consolidated Financial Statements for further information about these acquisitions. Purchases of intangible assets were $59 million and $56 million for the years ended December 31, 2024 and 2023, respectively.
Removed
As a result of the change in our operating and reportable segments effective January 1, 2023, this section also presents year-over-year comparisons between the years ended December 31, 2022 and 2021 on a revised segment basis.
Added
Discussions of the periods prior to the year ended December 31, 2023 that are not included in this Annual Report on Form 10-K are found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 and the discussion therein for the year ended December 31, 2023 compared to the year ended December 31, 2022 is incorporated by reference into this Annual Report.
Removed
SEGMENTS Effective January 1, 2023, we revised our segment structure to align with how our CODM manages the business, assesses performance and allocates resources. Our operating and reportable segments consist of the following: • The U.S.
Added
Founded in 2016, GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading ready-to-drink energy brand. Under the terms of the agreement, we initially purchased a 60% stake in GHOST for aggregate consideration of approximately $1 billion on December 31, 2024.
Removed
Appointment of Chief Operating Officer On November 6, 2023, we appointed Tim Cofer as Chief Operating Officer, reporting to Chairman and CEO, Bob Gamgort. Mr. Cofer will work side by side with Mr. Gamgort in the Chief Operating Officer capacity, with an expected transition to CEO in the second quarter of 2024. Mr.
Added
We also entered into an agreement requiring us to purchase the remaining equity interests in GHOST in 2028. The initial payment was funded primarily by proceeds drawn from the Term Loan Agreement.
Removed
These impacts have created headwinds for our business that may continue into 2024. As a result of these inflationary pressures, we have increased the pricing on a number of our products across our portfolio. Consequently, we may incur a reduction of volume or net sales, which, combined with the inflationary pressures, could impact our margins and operating results.
Added
We also executed an agreement with GHOST and ABI which transfers the distribution rights for GHOST products from ABI to us, effective March 3, 2025, for a termination payment to ABI of $225 million which will be paid during the first quarter of 2025. Refer to Note 4 of the Notes to our Consolidated Financial Statements for additional information.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThese derivative instruments are generally based on SOFR and a credit spread. As of December 31, 2023, certain of our outstanding forward starting swaps, with a total notional value of $1,200 million, are expected to begin such payments or receipts in the first quarter of 2024.
Biggest changeThese derivative instruments are generally based on SOFR and a credit spread. As of December 31, 2024, all of our outstanding forward starting swaps, with a total notional value of $1,700 million, are expected to begin such payments or receipts in 2025.
Refer to Note 5 of the Notes to our Consolidated Financial Statements for further information about our derivative instruments. FOREIGN EXCHANGE RISK The majority of our net sales, expenses, and capital purchases are transacted in U.S. dollars. However, we have exposure with respect to foreign exchange rate fluctuations.
Refer to Note 6 of the Notes to our Consolidated Financial Statements for further information about our derivative instruments. FOREIGN EXCHANGE RISK The majority of our net sales, expenses, and capital purchases are transacted in U.S. dollars. However, we have exposure with respect to foreign exchange rate fluctuations.
We estimate that the potential impact to our interest rate expense associated with variable rate interest payments resulting from a hypothetical interest rate change of 1%, based on amounts outstanding as of December 31, 2023, would be an increase or decrease of approximately $33 million.
We estimate that the potential impact to our interest rate expense associated with variable rate interest payments resulting from a hypothetical interest rate change of 1%, based on amounts outstanding as of December 31, 2024, would be an increase or decrease of approximately $47 million.
As of December 31, 2023, a 10% change (up or down) in commodity prices is estimated to increase or decrease the fair value of these derivative instruments by approximately $45 million. Any increase or decrease in the value of the commodities derivatives instruments would have an approximately offsetting change in the underlying hedged risk. 50 Table of Contents
As of December 31, 2024, a 10% change (up or down) in commodity prices is estimated to increase or decrease the fair value of these derivative instruments by approximately $51 million. Any increase or decrease in the value of the commodities derivatives instruments would have an approximately offsetting change in the underlying hedged risk. 42 Table of Contents
We use derivative instruments such as foreign exchange forward contracts to manage a portion of our exposure to changes in foreign exchange rates. As of December 31, 2023, we had derivative contracts outstanding with notional values of $1,135 million maturing at various dates through December 2024.
We use derivative instruments such as foreign exchange forward contracts to manage a portion of our exposure to changes in foreign exchange rates. As of December 31, 2024, we had derivative contracts outstanding with notional values of $976 million maturing at various dates through September 2026.
The fair value of foreign currency derivatives that do not qualify for hedge accounting resulted in a net unrealized loss of $3 million as of December 31, 2023, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $40 million.
The fair value of foreign currency derivatives that do not qualify for hedge accounting resulted in a net unrealized gain of $10 million as of December 31, 2024, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $38 million.
The fair value of foreign currency derivatives that qualify for hedge accounting resulted in a net unrealized loss of $13 million as of December 31, 2023, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $49 million.
The fair value of foreign currency derivatives that qualify for hedge accounting resulted in a net unrealized gain of $41 million as of December 31, 2024, and the impact of a 10% weakening in the U.S. dollar is estimated to decrease the fair value by approximately $50 million.
As of December 31, 2023, we had derivative contracts outstanding with a notional value of $500 million maturing at various dates through December 2025. The fair market value of these contracts as of December 31, 2023 was a net liability of $52 million.
As of December 31, 2024, we had derivative contracts outstanding with a notional value of $515 million maturing at various dates through July 2026. The fair market value of these contracts as of December 31, 2024 was a net liability of $51 million.
As of December 31, 2023, the carrying value of our fixed-rate debt, excluding lease obligations, was $11,095 million, and our variable-rate debt was $2,096 million, comprised entirely of commercial paper. From time to time, we also enter into interest rate contracts that effectively result in variable-rate interest payments or receipts.
As of December 31, 2024, the face value of our fixed-rate debt, excluding lease obligations, was $12,743 million, and our variable-rate debt was $2,956 million, inclusive of commercial paper. From time to time, we also enter into interest rate contracts that effectively result in variable-rate interest payments or receipts.

Other KDP 10-K year-over-year comparisons