View These Patents As Valuable Assets but We Do Not View Any Single Patent As Critical to Our Success
KEURIG DR PEPPER DR KEURIG 2020 ANNUAL REPORT ANNUAL 2020 A MODERN BEVERAGE COMPANY 2020 ANNUAL REPORT FINANCIAL HIGHLIGHTS All Information is presented on an Adjusted basis* 2018–2020 All amounts are in millions except Earnings Per Share 2019–2020 2018 Two-Year Twelve months ended December 31 2020 2019 Change Pro Forma Avg. Change Net Sales $11,618 $11,120 4.5% $11,024 2.7% Constant Currency Net Sales Growth 5.0% 4.1% 1 Cost of Sales 5,092 4,792 6.3% 4,864 2.3% Selling, General and Administrative Expenses 3,374 3,483 -3.1% 3,556 -2.6% Other Operating (Income) Expense, Net (39) (45) NM (16) NM Income from Operations 3,191 2,890 10.4% 2,620 10.4% Constant Currency Income from Operations Growth 10.8% 10.7% % Net Sales 27.5% 26.0% 150 bps 23.8% 185 bps Interest Expense 542 553 -2.0% 635 -7.6% Other Income, Net 17 19 -10.5% 3 NM Income before Taxes 2,632 2,318 13.5% 1,982 15.2% Provision for Income Taxes 644 591 9.0% 524 10.9% Effective Tax Rate 24.5% 25.5% -100 bps 26.4% -100 bps Net Income 1,988 1,727 15.1% 1,458 16.8% Diluted Earnings Per Share $1.40 $1.22 14.8% $1.04 16.0% Diluted Shares 1,422 1,419 0.2% 1,401 0.7% * Please refer to the Form 10-K, included with this report, for reconciliations from GAAP to Adjusted results 1 Reflects underlying net sales growth 2018–2019 KDP Management Leverage Ratio* 2020 Net Sales by Segment in billions 12/31/20 3.6X 12/31/19 4.5X 2.4X 12/31/18 5.4X $0.5 7/9/18 6.0X $1.3 *See Management Leverage Ratio reconciliation and calculation on page 12 $4.4 Operating Cash Flow in billions 2020 $2.5 2019 $2.5 $5.4 2018 $1.6 Total Shareholder Return 150% 131% 2020 Net Sales 120% Constant Currency Growth 90% 84% Coffee Systems +4.8% 60% 54% Packaged Beverages +8.5% 30% 0% Beverage Concentrates -6.2% 2016 2017 2018 2019 2020 Latin America Beverages +3.8% KDP1 S&P 500 S&P 500 Food & Beverage Index 1Represents DPS through 7/9/2018 and KDP 7/10/2018 to 12/31/2020 Bob Gamgort Chairman and Chief Executive Officer DEAR SHAREHOLDERS As I write this letter, cautious optimism is in the air.
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