KDP · 8-K · 20260806PR000048

Gross Margin Drivers

Keurig Dr Pepper Inc. · 2026-08-06 · Importance 78 · Surprise 74

Second-quarter reported gross profit increased to $3.07 billion from $2.26 billion, while reported gross margin declined to 41.9% from 54.2%. Adjusted gross profit increased to $3.40 billion and adjusted gross margin declined to 46.5% from 55.0%. The principal adjustment was a $314 million JDE Peet’s acquired-inventory step-up, while adjusted gross profit also reflected $3 million of Network Optimization costs and $3 million of JDE Peet’s transformation and corporate-action costs. Inflationary pressures reduced profitability despite productivity savings and sales growth.

Key facts

• Third Quarter of 2025 Pro forma gross profit: $3,287 and gross margin: 47.6% source
• Fourth Quarter of 2025 Pro forma gross profit: $3,368 and gross margin: 44.7% source
• First Quarter of 2026 Pro forma gross profit: $2,954 and gross margin: 43.3% source
• Second quarter reported consolidated gross profit: $3,066 million and gross margin 41.9% source
• Second quarter adjusted gross profit: $3,396 million and adjusted gross margin 46.5% source
• Inventory step-up (items affecting comparability) for the last twelve months ended June 30, 2026: $314 source