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Item 1. Financial Statements

2025-04-24 compared with 2024-10-24 · 245 added, 326 removed, 527 unchanged (52% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

( UNAUDITED )

Third Quarter First Nine Months

First Quarter

(in millions, except per share data) 2025 2024

3 unchanged sentences

Selling, general, and administrative expenses 1,192 1,176

Impairment of intangible assets — 2 — 2

Other operating (income) expense, net ( 7 ) ( 4 ) 8 ( 9 )

Other operating income, net ( 8 ) ( 1 )

Income from operations 801 765

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

( UNAUDITED )

Third Quarter First Nine Months

First Quarter

(in millions) 2025 2024

Net income $ 517 $ 454

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments 13 ( 56 )

Net change in cash flow hedges, net of tax of $ 1 and $ — , respectively

6 9 25 ( 90 )

Total other comprehensive (loss) income ( 63 ) ( 126 ) ( 301 ) 42

Total other comprehensive income (loss) 1 ( 58 )

Comprehensive income $ 518 $ 396

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

( UNAUDITED )

September 30, December 31,

March 31, December 31,

(in millions, except share and per share data) 2025 2024

28 unchanged sentences

Preferred stock, $ 0.01 par value, 15,000,000 shares authorized, no shares issued

Common stock, $ 0.01 par value, 2,000,000,000 shares authorized, 1,356,443,009 and 1,390,446,043 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 2,000,000,000 shares authorized, 1,358,162,801 and 1,356,664,609 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively

Additional paid-in capital 19,711 19,712

Retained earnings 4,997 4,793

Accumulated other comprehensive income 14 315

Accumulated other comprehensive loss ( 275 ) ( 276 )

Total stockholders' equity 24,447 24,243

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

( UNAUDITED )

First Nine Months

First Quarter

(in millions) 2025 2024

8 unchanged sentences

Employee stock-based compensation expense 22 28

Loss (gain) on disposal of property, plant and equipment 19 ( 3 )

Unrealized loss (gain) on foreign currency 14 ( 4 )

Unrealized loss on derivatives 23 44

Settlements of interest rate contracts — 54

(Gain) loss on disposal of property, plant, and equipment ( 6 ) 1

Unrealized loss on foreign currency — 8

Unrealized (gain) loss on derivatives ( 62 ) 10

Equity in earnings of unconsolidated affiliates ( 10 ) ( 7 )

Earned equity from distribution arrangements ( 10 ) ( 45 )

Impairment of intangible assets — 2

Other, net ( 2 ) 3

Changes in assets and liabilities:

Changes in assets and liabilities, excluding the effects of business acquisitions:

Trade accounts receivable 164 42

7 unchanged sentences

Investing activities:

Acquisitions of businesses ( 85 ) —

Purchases of property, plant, and equipment ( 120 ) ( 158 )

8 unchanged sentences

(UNAUDITED, CONTINUED)

First Nine Months

First Quarter

(in millions) 2025 2024

2 unchanged sentences

Repayments of Notes

Net (repayment) issuance of commercial paper ( 153 ) 750

Net issuance (repayment) of commercial paper 1,356 ( 188 )

Repayment of term loan ( 990 ) —

Proceeds from structured payables 8 23

5 unchanged sentences

Other, net ( 3 ) ( 21 )

Net cash used in financing activities ( 504 ) ( 697 )

Net cash (used in) provided by financing activities ( 7 ) 158

Cash, cash equivalents, restricted cash, and restricted cash equivalents:

3 unchanged sentences

Ending balance $ 751 $ 317

Supplemental cash flow disclosures of non-cash investing activities:

Supplemental cash flow disclosures of non-cash investing and financing activities:

Capital expenditures included in accounts payable and accrued expenses $ 176 $ 189

Earned equity from distribution arrangements 10 45

Equity received in exchange for modification of related party contract 19 —

Acquisitions of businesses 18 —

Transaction costs included in accounts payable and accrued expenses — 13

Supplemental cash flow disclosures of non-cash financing activities:

Dividends declared but not yet paid 313 292

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

( UNAUDITED )

Common Stock Issued Additional

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity

(in millions, except per share data) Shares Amount

Balance as of January 1, 2024 1,390.4 $ 14 $ 20,788 $ 4,559 $ 315 $ 25,676

Balance as of December 31, 2024 1,356.7 $ 14 $ 19,712 $ 4,793 $ ( 276 ) $ 24,243

Net income — — — 517 — 517

Other comprehensive loss — — — — ( 58 ) ( 58 )

Other comprehensive income — — — — 1 1

Dividends declared, $ 0.23 per share

— — — ( 313 ) — ( 313 )

Repurchases of common stock, inclusive of excise tax obligation ( 38.0 ) — ( 1,114 ) — — ( 1,114 )

Shares issued under employee stock-based compensation plans and other 1.5 — — — — —

3 unchanged sentences

1,358.2 $ 14 $ 19,711 $ 4,997 $ ( 275 ) $ 24,447

Net income — — — 515 — 515

Other comprehensive loss — — — — ( 180 ) ( 180 )

Dividends declared, $ 0.215 per share

— — — ( 292 ) — ( 292 )

Shares issued under employee stock-based compensation plans and other 0.2 — — — — —

Tax withholdings related to net share settlements — — ( 2 ) — — ( 2 )

Stock-based compensation and stock options exercised — — 24 — — 24

Balance as of June 30, 2024

1,355.8 $ 14 $ 19,683 $ 4,944 $ 77 $ 24,718

Net income — — — 616 — 616

Other comprehensive loss — — — — ( 63 ) ( 63 )

Dividends declared, $ 0.23 per share

— — — ( 311 ) — ( 311 )

Shares issued under employee stock-based compensation plans and other 0.6 — — — — —

Tax withholdings related to net share settlements — — ( 15 ) — — ( 15 )

Stock-based compensation and stock options exercised — — 24 — — 24

Balance as of September 30, 2024

1,356.4 $ 14 $ 19,692 $ 5,249 $ 14 $ 24,969

Common Stock Issued Additional

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Non-controlling Interest Total Equity

Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total Stockholders' Equity

(in millions, except per share data) Shares Amount

Balance as of January 1, 2023

1,408.4 $ 14 $ 21,444 $ 3,539 $ 129 $ 25,126 $ ( 1 ) $ 25,125

Net income — — — 467 — 467 — 467

Other comprehensive income — — — — 26 26 26

Dividends declared, $ 0.20 per share

— — — ( 282 ) — ( 282 ) — ( 282 )

Repurchases of common stock, inclusive of excise tax obligation ( 6.6 ) — ( 232 ) — — ( 232 ) — ( 232 )

Shares issued under employee stock-based compensation plans and other 1.9 — — — — — — —

Tax withholdings related to net share settlements — — ( 31 ) — — ( 31 ) — ( 31 )

Stock-based compensation and stock options exercised — — 29 — — 29 — 29

Balance as of March 31, 2023

1,403.7 $ 14 $ 21,210 $ 3,724 $ 155 $ 25,103 $ ( 1 ) $ 25,102

Net income — — — 503 — 503 — 503

Other comprehensive income — — — — 142 142 — 142

Dividends declared, $ 0.20 per share

— — — ( 279 ) — ( 279 ) — ( 279 )

Repurchases of common stock, inclusive of excise tax obligation ( 7.0 ) — ( 229 ) — — ( 229 ) — ( 229 )

Shares issued under employee stock-based compensation plans and other 0.2 — — — — — — —

Tax withholdings related to net share settlements — — ( 1 ) — — ( 1 ) — ( 1 )

Stock-based compensation and stock options exercised — — 29 — — 29 — 29

Balance as of June 30, 2023

1,396.9 $ 14 $ 21,009 $ 3,948 $ 297 $ 25,268 $ ( 1 ) $ 25,267

Balance as of December 31, 2023 1,390.4 $ 14 $ 20,788 $ 4,559 $ 315 $ 25,676

Net income — — — 454 — 454

6 unchanged sentences

Stock-based compensation and stock options exercised — — 28 — — 28

Non-controlling interest surrender of shares — — — ( 1 ) — ( 1 ) 1 —

Balance as of September 30, 2023

Balance as of March 31, 2024

1,355.6 $ 14 $ 19,661 $ 4,721 $ 257 $ 24,653

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

References in this Quarterly Report on Form 10-Q to "KDP", "the Company", "we", or "our", refer to Keurig Dr Pepper Inc.

References in this Quarterly Report on Form 10-Q to "KDP", "we", “us”, and "our", refer to Keurig Dr Pepper Inc.

and all wholly-owned subsidiaries included in the unaudited condensed consolidated financial statements.

9 unchanged sentences

These unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report.

References to the "third quarter" indicate the quarterly periods ended September 30, 2024 and 2023.

References to the "first quarter" indicate the quarterly periods ended March 31, 2025 and 2024.

USE OF ESTIMATES

7 unchanged sentences

The following table summarizes our long-term obligations:

(in millions) September 30, 2024 December 31, 2023

(in millions) March 31, 2025 December 31, 2024

$ 12,954 $ 12,948

Term loan — 990

current portion of long-term obligations ( 1,027 ) ( 1,026 )

1 unchanged sentence

The following table summarizes our short-term borrowings and current portion of long-term obligations:

(in millions) September 30, 2024 December 31, 2023

(in millions) March 31, 2025 December 31, 2024

Commercial paper notes $ 2,972 $ 1,616

5 unchanged sentences

SENIOR UNSECURED NOTES

Our Notes consisted of the following:

(in millions, except %) Maturity Date Rate September 30, 2024 December 31, 2023

2024 Notes March 15, 2024 0.750 % $ — $ 1,150

(in millions, except %) Maturity Date Rate March 31, 2025 December 31, 2024

2025 Merger Notes May 25, 2025 4.417 % $ 529 $ 529

24 unchanged sentences

(1) The carrying amount includes unamortized discounts, debt issuance costs, and fair value adjustments related to the DPS Merger.

(2) The 2027-B Notes bear interest at a rate equal to Compounded SOFR (as defined in the respective indenture) plus 0.88 % per annum, and the rate is reassessed quarterly.

On March 7, 2024, we completed the issuance of the 2027-B Notes, the 2027-C Notes, the 2029-B Notes, the 2031-B Notes, and the 2034 Notes, with an aggregate principal amount of $ 3 billion.

The discount associated with these notes was approximately $ 5 million, and the Company incurred $ 16 million in debt issuance costs.

The proceeds from the issuance were used for our share repurchase program, to repay outstanding commercial paper, and to repay the 2024 Notes at maturity, with the remainder intended for general corporate purposes.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

(2) The 2027-B Notes bear interest at a rate equal to Compounded SOFR (as defined in the respective supplemental indenture) plus 0.88 % per annum, and the rate is reassessed quarterly.

VARIABLE-RATE BORROWING ARRANGEMENTS

Term Loan Agreement

On January 31, 2025, we repaid the first tranche of the Term Loan Agreement using proceeds from commercial paper.

As of March 31, 2025, the second tranche of up to $ 250 million remains available and undrawn.

Revolving Credit Agreement

On March 31, 2025, we entered into the 2025 Revolving Credit Agreement among KDP, as borrower, the lenders and issuing banks party thereto, and JPMorgan Chase, Bank, N.A., as administrative agent.

We incurred approximately $ 4 million in deferred financing fees related to the issuance.

The following table summarizes information about the 2025 Revolving Credit Agreement:

Amounts Outstanding

(in millions) Maturity Date Capacity September 30, 2024 December 31, 2023

(in millions) Maturity Date Capacity March 31, 2025 December 31, 2024

2025 Revolving Credit Agreement (1)

February 23, 2027 $ 4,000 $ — $ —

(1) The Revolving Credit Agreement has $ 200 million letters of credit available, none of which were utilized as of September 30, 2024.

As of September 30, 2024, KDP was in compliance with its minimum interest coverage ratio relating to the Revolving Credit Agreement .

March 31, 2030 $ 4,000 $ — $ —

(1) The 2025 Revolving Credit Agreement has a $ 200 million letter of credit limit, with none utilized as of March 31, 2025.

The 2025 Revolving Credit Agreement replaced our previous revolving credit agreement.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Borrowings under the 2025 Revolving Credit Agreement will bear interest at a rate per annum equal to, at our option, the term SOFR rate plus a margin of 0.750 % to 1.250 % or the alternative base rate plus a margin of zero to 0.250 %, in each case, depending on the rating of certain of our index debt.

The 2025 Revolving Credit Agreement contains customary representations and warranties for investment grade financings.

The 2025 Revolving Credit Agreement also contains (i) certain customary affirmative covenants, including those that impose certain reporting and/or performance obligations on us and our subsidiaries, (ii) certain customary negative covenants that generally limit, subject to various exceptions, us and our subsidiaries from taking certain actions, including, without limitation, incurring liens and consummating certain fundamental changes, (iii) a financial covenant in the form of a minimum interest coverage ratio of 3.25 to 1.00, and (iv) customary events of default (including a change of control) for financings of this type.

As of March 31, 2025, we were in compliance with our minimum interest coverage ratio with respect to the 2025 Revolving Credit Agreement .

Commercial Paper Program

The following table provides information about our weighted average borrowings under our commercial paper program:

Third Quarter First Nine Months

First Quarter

(in millions, except %) 2025 2024

2 unchanged sentences

Letter of Credit Facility

In addition to the portion of the Revolving Credit Agreement reserved for issuance of letters of credit, KDP has an incremental letter of credit facility.

Under this facility, $ 150 million is available for the issuance of letters of credit, $ 74 million of which was utilized as of September 30, 2024 and $ 76 million of which remains available for use.

In addition to the portion of the 2025 Revolving Credit Agreement reserved for issuance of letters of credit, we have an incremental letter of credit facility.

Under this facility, $ 150 million is available for the issuance of letters of credit, $ 72 million of which was utilized as of March 31, 2025 and $ 78 million of which remains available for use.

FAIR VALUE DISCLOSURES

2 unchanged sentences

The difference between the fair value and the carrying value represents the theoretical net premium or discount that would be paid or received to retire all the Notes and related unamortized costs to be incurred at such date.

The fair value of our Notes was $ 12,531 million and $ 10,486 million as of September 30, 2024 and December 31, 2023, respectively.

KALIL ACQUISITION

Overview and Purchase Price

On May 30, 2024, we entered into an agreement with Kalil, under which we agreed to acquire all of Kalil’s production, sales, and distribution assets for total consideration of $ 103 million, subject to certain adjustments outlined in the agreement.

Kalil is an independent bottler with bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration.

On August 9, 2024, we completed the Kalil Acquisition, and approximately $ 8 million of cash was held back and placed in escrow.

The fair value of our Notes was $ 12,151 million and $ 12,036 million as of March 31, 2025 and December 31, 2024, respectively.

GHOST TRANSACTIONS

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.

Under the terms of the agreement, we initially purchased a 60 % stake in GHOST for aggregate consideration of $ 999 million, which included customary adjustments, and closed on December 31, 2024.

We also entered into an agreement which requires us to purchase the remaining equity interests in GHOST in 2028.

As of March 31, 2025, we have finalized our allocation of consideration to the net tangible and intangible assets acquired and liabilities assumed in the GHOST Transactions based on estimated fair values as of December 31, 2024.

There were no significant measurement period adjustments recorded during the first quarter of 2025.

KEURIG DR PEPPER INC.

1 unchanged sentence

(UNAUDITED, CONTINUED)

Allocation of Consideration Exchanged

Our preliminary allocation of consideration exchanged to the net tangible and intangible assets acquired and liabilities assumed in the Kalil Acquisition is based on estimated fair values as of August 9, 2024.

The following is a summary of the preliminary allocation of consideration exchanged to the estimated fair values of assets acquired and liabilities assumed in the Kalil Acquisition as of September 30, 2024:

(in millions) Fair Value

Inventory (1)

Property, plant, and equipment (2)

Other intangible assets 38

Total consideration exchanged 103

Holdback placed in Escrow (3)

Acquisition of business $ 95

(1) As of September 30, 2024, we accrued the $ 10 million as a payable to Kalil, which is included as a non-cash investing activity within the supplemental cash flow disclosures of the unaudited condensed consolidated statement of cash flows for the first nine months of 2024.

(2) We preliminarily valued real property using the cost approach and land using the sales comparison approach, a form of the market approach.

We preliminarily valued personal property using a combination of the cost approach and the sales comparison approach.

(3) The amount held in escrow is included within the Restricted cash and restricted cash equivalents line of the unaudited condensed consolidated balance sheet as of September 30, 2024 and is considered a non-cash investing activity within the supplemental cash flow disclosures of the unaudited condensed consolidated statement of cash flows for the first nine months of 2024.

The Kalil Acquisition preliminarily resulted in $ 10 million of goodwill.

The preliminary goodwill to be recognized is primarily attributable to the assembled workforce.

The goodwill created in the Kalil Acquisition is expected to be deductible for tax purposes.

Goodwill and Other Intangible Assets

3 unchanged sentences

Coffee International Total

Balance as of January 1, 2024 $ 8,714 $ 8,622 $ 2,866 $ 20,202

Acquisitions (1)

Balance as of December 31, 2024 $ 8,855 $ 8,622 $ 2,576 $ 20,053

Foreign currency translation — — 9 9

Balance as of September 30, 2024 $ 8,724 $ 8,622 $ 2,732 $ 20,078

(1) Acquisition activity during the first nine months of 2024 represents the goodwill recorded as a result of the Kalil Acquisition.

Refer to Note 3 for additional information .

INTANGIBLE ASSETS OTHER THAN GOODWILL

The net carrying amounts of intangible assets other than goodwill with indefinite lives are as follows:

(in millions) September 30, 2024 December 31, 2023

Balance as of March 31, 2025

$ 8,855 $ 8,622 $ 2,585 $ 20,062

Trade names 2,479 2,478

Distribution rights (2)

Total $ 21,988 $ 22,109

(1) The change in brands with indefinite lives was driven by unfavorable foreign currency translation impacts of $ 196 million during the first nine months of 2024.

(2) The change in distribution rights with indefinite lives was primarily driven by acquired distribution rights related to Electrolit of $ 49 million.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The net carrying amounts of intangible assets other than goodwill with definite lives are as follows:

September 30, 2024 December 31, 2023

INTANGIBLE ASSETS OTHER THAN GOODWILL

The net carrying amounts of intangible assets other than goodwill are as follows:

March 31, 2025 December 31, 2024

(in millions) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount

Intangible assets with definite lives:

Acquired technology $ 1,146 $ ( 639 ) $ 507 $ 1,146 $ ( 621 ) $ 525

5 unchanged sentences

Total $ 2,200 $ ( 1,126 ) $ 1,074 $ 2,199 $ ( 1,091 ) $ 1,108

Intangible assets with indefinite lives:

Brands $ 19,852 $ 19,848

Trade names 2,478 2,478

Distribution rights 212 200

Total intangible assets with indefinite lives 22,542 22,526

Other intangible assets, net $ 23,616 $ 23,634

Amortization expense for intangible assets with definite lives was as follows:

Third Quarter First Nine Months

First Quarter

(in millions) 2025 2024

Amortization expense $ 34 $ 33

KDP is exposed to market risks arising from adverse changes in interest rates, commodity prices, and FX rates.

KDP manages these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward, future, swap and option contracts and supplier pricing agreements.

KDP does not hold or issue derivative financial instruments for trading or speculative purposes.

We formally designate and account for certain foreign exchange forward contracts and interest rate contracts that meet established accounting criteria under U.S.

We are exposed to market risks arising from adverse changes in interest rates, FX rates, and commodity prices.

We manage these risks through a variety of strategies, including the use of interest rate contracts, FX forward contracts, commodity forward, future, swap, and option contracts, and supplier pricing agreements.

We do not hold or issue derivative financial instruments for trading or speculative purposes.

All derivative instruments are recorded on a gross basis, including those subject to master netting arrangements.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

We formally designate and account for certain interest rate contracts and foreign exchange forward contracts that meet established accounting criteria under U.S.

GAAP as cash flow hedges.

14 unchanged sentences

A natural hedging relationship exists in which changes in the fair value of the instruments act as an economic offset to changes in the fair value of the underlying items.

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in interest expense in the unaudited Condensed Consolidated Statements of Income.

As of September 30, 2024, economic interest rate derivative instruments have maturities ranging from December 2024 to July 2043.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are generally reported in Interest expense, net in the unaudited Condensed Consolidated Statements of Income.

As of March 31, 2025, economic interest rate derivative instruments have maturities ranging from April 2025 to November 2046.

Cash Flow Hedges

As of December 31, 2023, we had $ 500 million of notional amount of forward starting swaps which had been de-designated and terminated;

however, as the forecasted debt transaction was still considered probable, the fair value of the instruments as of the de-designation remained within AOCI.

In March 2024, the forecasted debt transaction took place with the issuance of the 2034 Notes, and the fair value of the instruments began amortizing to Interest expense, net over the term of the 2034 Notes.

From time to time, we designate certain interest rate contracts as cash flow hedges in order to manage the exposures resulting from changes in interest rates as described above.

We had no such contracts outstanding as of March 31, 2025.

FOREIGN EXCHANGE

We are exposed to foreign exchange risk in our international subsidiaries or with certain counterparties in foreign jurisdictions, which may transact in currencies that are different from the functional currencies of our legal entities.

Additionally, the balance sheets of our Canadian and Mexican businesses are subject to exposure from movements in exchange rates.

We are exposed to foreign exchange risk in our foreign subsidiaries and with certain counterparties in foreign jurisdictions, which may transact in currencies that are different from the functional currencies of our legal entities.

Additionally, the balance sheets of these subsidiaries are subject to exposure from movements in exchange rates.

Economic Hedges

3 unchanged sentences

Changes in the fair value of these instruments are recorded in earnings throughout the term of the derivative instrument and are reported in the same caption of the unaudited Condensed Consolidated Statements of Income as the associated risk.

As of September 30, 2024, these FX contracts have maturities ranging from October 2024 to September 2026.

As of March 31, 2025, these FX contracts have maturities ranging from April 2025 to September 2026.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Cash Flow Hedges

1 unchanged sentence

These designated FX forward contracts relate to forecasted inventory purchases in U.S.

dollars of our Canadian and Mexican businesses.

The intent of these FX contracts is to provide predictability in the Company's overall cost structure.

As of September 30, 2024, these FX contracts have maturities ranging from October 2024 to December 2025.

dollars of our foreign subsidiaries.

The intent of these FX contracts is to provide predictability in our overall cost structure.

As of March 31, 2025, these FX contracts have maturities ranging from April 2025 to March 2026.

Economic Hedges

4 unchanged sentences

Unrealized gains and losses are recognized as a component of unallocated corporate costs until our reportable segments are affected by the completion of the underlying transaction, at which time the gain or loss is reflected as a component of the respective segment's income from operations.

As of September 30, 2024, these commodity contracts have maturities ranging from October 2024 to July 2026.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

As of March 31, 2025, these commodity contracts have maturities ranging from April 2025 to January 2027.

NOTIONAL AMOUNTS OF DERIVATIVE INSTRUMENTS

The following table presents the notional amounts of our outstanding derivative instruments by type:

(in millions) September 30, 2024 December 31, 2023

(in millions) March 31, 2025 December 31, 2024

Interest rate contracts

9 unchanged sentences

Interest rate contracts are valued using models based primarily on readily observable market parameters, such as SOFR forward rates, for all substantial terms of our contracts and credit risk of the counterparties.

The fair value of FX forward contracts are valued using quoted forward FX prices at the reporting date.

FX forward contracts are valued using quoted forward FX prices at the reporting date.

Therefore, we have categorized these contracts as Level 2.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Not Designated as Hedging Instruments

1 unchanged sentence

All such instruments are considered Level 2 within the fair value hierarchy.

(in millions) Balance Sheet Location September 30, 2024 December 31, 2023

(in millions) Balance Sheet Location March 31, 2025 December 31, 2024

FX contracts Prepaid expenses and other current assets $ 2 $ 7

Commodity contracts Prepaid expenses and other current assets 22 32

FX contracts Other non-current assets 3 4

Commodity contracts Other non-current assets — 2

3 unchanged sentences

Interest rate contracts Other non-current liabilities 332 345

FX contracts Other non-current liabilities 1 4

Commodity contracts Other non-current liabilities 3 3

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Designated as Hedging Instruments

The following table summarizes the location of the fair value of our derivative instruments which are designated as hedging instruments within the unaudited Condensed Consolidated Balance Sheets.

All such instruments are designated Level 2 within the fair value hierarchy.

(in millions) Balance Sheet Location September 30, 2024 December 31, 2023

All such instruments are considered Level 2 within the fair value hierarchy.

(in millions) Balance Sheet Location March 31, 2025 December 31, 2024

FX contracts Prepaid expenses and other current assets $ 28 $ 41

FX contracts Other non-current assets 4 —

FX contracts Other current liabilities 2 14

FX contracts Other non-current liabilities 1 —

IMPACT OF DERIVATIVE INSTRUMENTS NOT DESIGNATED AS HEDGING INSTRUMENTS

2 unchanged sentences

Amounts include both realized and unrealized gains and losses.

Income Statement Location Third Quarter First Nine Months

Income Statement Location First Quarter

(in millions) 2025 2024

4 unchanged sentences

Commodity contracts SG&A expenses ( 2 ) ( 12 )

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

IMPACT OF CASH FLOW HEDGES

The following table presents the amount of (gains) losses, net, reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income related to derivative instruments designated as cash flow hedging instruments during the periods presented:

Income Statement Location Third Quarter First Nine Months

The following table presents the amount of gains, net, reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income related to derivative instruments designated as cash flow hedging instruments:

Income Statement Location First Quarter

(in millions) 2025 2024

2 unchanged sentences

We expect to reclassify approximately $ 13 million and $ 23 million of pre-tax net gains from AOCI into net income during the next twelve months related to interest rate contracts and FX contracts, respectively.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The following table presents the components of lease cost:

Third Quarter First Nine Months

First Quarter

(in millions) 2025 2024

5 unchanged sentences

Short-term lease cost — 1

Sublease income ( 1 ) — ( 1 ) —

Total lease cost $ 90 $ 90

1 unchanged sentence

The following table presents supplemental cash flow and other information about our leases:

First Nine Months

First Quarter

(in millions) 2025 2024

7 unchanged sentences

The following table presents information about our weighted average discount rate and remaining lease term:

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Weighted average discount rate

7 unchanged sentences

(UNAUDITED, CONTINUED)

Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of September 30, 2024 were as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Future minimum lease payments for non-cancellable leases that have commenced and are reflected on the unaudited Condensed Consolidated Balance Sheets as of March 31, 2025 were as follows:

(in millions) Operating Leases Finance Leases

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SIGNIFICANT LEASES THAT HAVE NOT YET COMMENCED

As of September 30, 2024, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $ 227 million.

These leases are expected to commence between the fourth quarter of 2024 through 2027, with initial lease terms ranging from 5 years to 11 years.

As of March 31, 2025, we have entered into leases that have not yet commenced with estimated aggregated future lease payments of approximately $ 149 million.

These leases are expected to commence between the second quarter of 2025 through 2027, with initial lease terms ranging from 3 years to 7 years.

Our operating and reportable segments consist of the following:

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◦ 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.

Segment results are based on management reports.

◦ Sales in Canada from the manufacture and distribution of finished goods relating to our K-Cup pods, single-serve brewers, and other coffee products.

Segment results are based on management reports provided to the CODM, which is Tim Cofer, our CEO.

Net sales and income from operations are the significant financial measures used to assess the operating performance of our operating segments.

Intersegment sales are recorded at cost and are eliminated in the unaudited Condensed Consolidated Statements of Income.

“Unallocated corporate costs” are excluded from our measurement of segment performance and include unrealized commodity derivative gains and losses, and certain general corporate expenses.

The CODM periodically monitors our actual results and remaining forecast versus our annual budget for these financial measures, and this information is used to assess performance of the reportable segments, determine the payout of short-term incentive plan compensation, and to establish management’s base salaries.

KEURIG DR PEPPER INC.

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(UNAUDITED, CONTINUED)

Information about our operations by reportable segment is as follows:

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

Segment Results – Net sales

Refreshment Beverages $ 2,390 $ 2,270 $ 6,890 $ 6,607

Coffee 976 1,012 2,837 2,913

International 525 523 1,554 1,427

Intersegment sales are recorded at cost and are eliminated in the unaudited Condensed Consolidated Statements of Income.

We have not provided disclosures of intersegment sales or total assets for each reportable segment, as our CODM does not review and is not provided with this information.

“Other segment (income) expense” includes Other operating income, net, as well as other financial statement captions for infrequent charges, such as impairment of goodwill or intangible assets, used to arrive at “Income from operations - reportable segments”.

“Unallocated corporate costs” are excluded from our measurement of segment performance and include unrealized commodity derivative gains and losses and certain general corporate expenses.

Information about our operations and significant expenses by reportable segment is as follows:

(in millions) U.S.

Refreshment Beverages U.S.

Coffee International Total

For the first quarter of 2025:

Net sales $ 2,323 $ 877 $ 435 $ 3,635

Segment Results – Income from operations

Refreshment Beverages $ 722 $ 676 $ 2,054 $ 1,795

Coffee 254 293 730 775

International 157 139 419 331

Cost of sales 937 523 228

SG&A expenses 733 151 119

Other segment (income) expense ( 1 ) 1 ( 2 )

Income from operations - reportable segments $ 654 $ 202 $ 90 $ 946

Unallocated corporate costs ( 145 )

Income from operations 801

Revenue Recognition

We recognize revenue when obligations under the terms of a contract with the customer are satisfied.

Branded product sales, which include LRB, K-Cup pods and appliances, occur once control is transferred.

Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring goods.

The amount of consideration we receive, and revenue we recognize, varies with changes in customer incentives that we offer our customers and end consumers.

Sales taxes and other similar taxes are excluded from revenue.

Costs associated with shipping and handling activities, such as merchandising, are included in SG&A expenses as revenue is recognized.

Interest expense, net 148

Other income, net ( 7 )

Income before provision for income taxes $ 660

(in millions) U.S.

Refreshment Beverages U.S.

Coffee International Total

For the first quarter of 2024:

Net sales $ 2,093 $ 911 $ 464 $ 3,468

Cost of sales 800 497 228

SG&A expenses 679 166 123

Other segment (income) expense ( 1 ) — 1

Income from operations - reportable segments $ 615 $ 248 $ 112 $ 975

Unallocated corporate costs ( 210 )

Income from operations 765

Interest expense, net 178

Other income, net ( 7 )

Income before provision for income taxes $ 594

KEURIG DR PEPPER INC.

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Coffee International Total

For the third quarter of 2024:

$ 2,351 $ 12 $ 348 $ 2,711

K-Cup pods — 733 126 859

Appliances — 203 19 222

Other 39 28 32 99

Net sales $ 2,390 $ 976 $ 525 $ 3,891

For the third quarter of 2023:

$ 2,232 $ — $ 348 $ 2,580

K-Cup pods — 769 120 889

Appliances — 211 20 231

Other 38 32 35 105

Net sales $ 2,270 $ 1,012 $ 523 $ 3,805

For the first nine months of 2024:

For the first quarter of 2025:

$ 2,263 $ 13 $ 277 $ 2,553

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Net sales $ 2,323 $ 877 $ 435 $ 3,635

For the first nine months of 2023:

For the first quarter of 2024:

$ 2,062 $ 4 $ 299 $ 2,365

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Net sales $ 2,093 $ 911 $ 464 $ 3,468

LRB represents net sales of owned, licensed, and partner brands within our portfolio and includes branded concentrates, syrup, and finished beverages, including contract manufacturing of our branded products for our bottlers and distributors.

K-Cup pods represents net sales from owned, licensed, and partner brands and private label owners.

LRB represents net sales of owned and partner brands within our portfolio and includes branded concentrates, syrup, and finished beverages, including contract manufacturing of KDP branded products for our bottlers and distributors.

K-Cup pods represents net sales from owned brands, partner brands, and private label owners.

Net sales for partner brands and private label owners are contractual and long-term in nature.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Earnings Per Share

The following table presents basic and diluted EPS and shares outstanding:

Third Quarter First Nine Months

First Quarter

(in millions, except per share data) 2025 2024

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Anti-dilutive shares excluded from the diluted weighted average shares outstanding calculation 0.8 2.1

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Stock-Based Compensation

The components of stock-based compensation expense are presented below:

Third Quarter First Nine Months

First Quarter

(in millions) 2025 2024

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Outstanding as of December 31, 2024 12,488,799 $ 29.70 2.0 $ 401

Granted 4,248,100 26.63

2,744,772 31.14

Vested and released ( 2,093,792 ) 31.09 70

Forfeited ( 617,618 ) 29.92

Outstanding as of September 30, 2024 12,915,851 $ 29.77 2.2 $ 484

As of September 30, 2024, there was $ 187 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.3 years.

Outstanding as of March 31, 2025 12,522,161 $ 29.77 2.2 $ 429

(1) Beginning in 2025, new RSUs granted vest ratably over 4 years.

As of March 31, 2025, there was $ 205 million of unrecognized compensation cost related to unvested RSUs that is expected to be recognized over a weighted average period of 3.3 years.

PERFORMANCE SHARE UNITS

In March 2025, the Remuneration & Nomination Committee of the Board approved PSU grants.

Each PSU represents the right to receive one share of our common stock.

The PSUs vest 3 years from the grant date, to the extent that the performance metrics are achieved during a predetermined performance period.

The performance metrics include net sales growth and adjusted diluted EPS growth, as defined in the respective grant agreement, and are measured on a constant currency basis.

The payout percentage for all PSUs granted ranges from 0% to 200%.

Beginning in 2025, the fair value of PSUs is determined based on the number of units granted and the grant date price of common stock.

The table below summarizes PSU activity :

PSUs Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions)

Balance as of December 31, 2024 — $ — 0.0 $ —

Granted 443,933 30.71

Forfeited or expired ( 1,314 ) 30.71

Balance as of March 31, 2025 442,619 $ 30.71 2.9 $ 15

As of March 31, 2025, there was $ 9 million of unrecognized compensation cost related to unvested PSUs that is expected to be recognized over a weighted average period of 2.9 years.

KEURIG DR PEPPER INC.

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The following table summarizes our investments in unconsolidated affiliates:

September 30, December 31,

(in millions) 2024 2023

(in millions) March 31, 2025 December 31, 2024

Nutrabolt (1)

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Chobani 312 313

Tractor 54 56

Athletic Brewing (2)

Beverage startup companies 5 5

Investments in unconsolidated affiliates $ 1,568 $ 1,543

(1) We hold a 36.0 % interest on an as-converted basis in Nutrabolt, consisting of 30.9 % in Class A preferred shares acquired through our December 2022 investment, which are treated as in-substance common stock, and 5.1 % in Class B common shares earned through the achievement of certain milestones included in our distribution agreement with Nutrabolt.

(2) In May 2024, we modified our sales agent contract with Tractor.

In exchange, we received additional equity interests, raising our total interest to 23.0 % as of September 30, 2024.

(2) During the first quarter of 2025, we received additional equity interests in Athletic Brewing in accordance with our investment agreement, raising our total interest to 12.2 % as of March 31, 2025.

This earned equity is recorded in Other income, net in the unaudited Condensed Consolidated Statements of Income.

Our effective tax rates were as follows:

Third Quarter First Nine Months

2024 2023 2024 2023

First Quarter

Effective tax rate 21.7 % 23.6 %

For the first nine months of 2024, the change in our effective tax rate was driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions.

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

Accumulated Other Comprehensive Income

For the first quarter of 2025, the change in our effective tax rate was largely driven by a non-cash revaluation of state deferred tax liabilities and a shift in the mix of income from higher tax jurisdictions to lower tax jurisdictions.

Accumulated Other Comprehensive (Loss) Income

The following table provides a summary of changes in AOCI, net of taxes:

(in millions) Foreign Currency Translation Adjustments Pension and Post-Retirement Benefit Liabilities Cash Flow Hedges Accumulated Other Comprehensive Income

For the third quarter of 2024:

Beginning balance $ ( 55 ) $ ( 14 ) $ 146 $ 77

Other comprehensive (loss) income ( 69 ) ( 1 ) 10 ( 60 )

Amounts reclassified from AOCI — 1 ( 4 ) ( 3 )

Total other comprehensive (loss) income ( 69 ) — 6 ( 63 )

Balance as of September 30, 2024 $ ( 124 ) $ ( 14 ) $ 152 $ 14

For the third quarter of 2023:

Beginning balance $ 181 $ ( 10 ) $ 126 $ 297

Other comprehensive (loss) income ( 135 ) — 7 ( 128 )

Amounts reclassified from AOCI — — 2 2

Total other comprehensive (loss) income ( 135 ) — 9 ( 126 )

Balance as of September 30, 2023 $ 46 $ ( 10 ) $ 135 $ 171

For the first nine months of 2024:

Beginning balance $ 202 $ ( 14 ) $ 127 $ 315

Other comprehensive (loss) income ( 326 ) ( 1 ) 32 ( 295 )

Amounts reclassified from AOCI — 1 ( 7 ) ( 6 )

Total other comprehensive (loss) income ( 326 ) — 25 ( 301 )

Balance as of September 30, 2024 $ ( 124 ) $ ( 14 ) $ 152 $ 14

For the first nine months of 2023:

(in millions) Foreign Currency Translation Adjustments Pension and Post-Retirement Benefit Liabilities Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income

For the first quarter of 2025:

Beginning balance $ ( 410 ) $ ( 14 ) $ 148 $ ( 276 )

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Total other comprehensive income (loss) 13 — ( 12 ) 1

Balance as of September 30, 2023 $ 46 $ ( 10 ) $ 135 $ 171

The following table presents the amount of (gains) losses reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income:

Income Statement Caption Third Quarter First Nine Months

Balance as of March 31, 2025 $ ( 397 ) $ ( 14 ) $ 136 $ ( 275 )

For the first quarter of 2024:

Beginning balance $ 202 $ ( 14 ) $ 127 $ 315

Other comprehensive loss ( 56 ) — — ( 56 )

Amounts reclassified from AOCI — — ( 2 ) ( 2 )

Total other comprehensive loss ( 56 ) — ( 2 ) ( 58 )

Balance as of March 31, 2024 $ 146 $ ( 14 ) $ 125 $ 257

KEURIG DR PEPPER INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED, CONTINUED)

The following table presents the amount of gains reclassified from AOCI into the unaudited Condensed Consolidated Statements of Income:

Income Statement Caption First Quarter

(in millions) 2025 2024

Pension and PRMB liabilities SG&A expenses $ 1 $ — $ 1 $ —

Income tax benefit — — — —

Total, net of tax 1 — 1 —

Cash Flow Hedges:

Interest rate contracts (1)

Interest expense $ ( 3 ) $ ( 2 ) $ ( 9 ) $ ( 72 )

Interest rate contracts Interest expense, net $ ( 3 ) $ ( 2 )

FX contracts Cost of sales ( 5 ) —

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Total, net of tax $ ( 5 ) $ ( 2 )

(1) Amounts reclassified from AOCI into interest expense during the first nine months of 2023 include the realized gains associated with the termination of forward starting swaps designated as cash flow hedges of approximately $ 66 million.

Other Financial Information

CASH, CASH EQUIVALENTS, RESTRICTED CASH, AND RESTRICTED CASH EQUIVALENTS

The carrying value of cash, cash equivalents, restricted cash, and restricted cash equivalents is valued as of the balance sheet date equating fair value and is classified as Level 1.

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents reported within the unaudited Condensed Consolidated Balance Sheets to the total of the same amounts shown in the unaudited Condensed Consolidated Statements of Cash Flows:

(in millions) March 31, 2025 December 31, 2024

Cash and cash equivalents $ 653 $ 510

Restricted cash and restricted cash equivalents 80 80

Non-current restricted cash and restricted cash equivalents 18 18

Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 751 $ 608

KEURIG DR PEPPER INC.

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(UNAUDITED, CONTINUED)

Other Financial Information

SELECTED BALANCE SHEET INFORMATION

The tables below provide selected financial information from the unaudited Condensed Consolidated Balance Sheets:

September 30, December 31,

March 31, December 31,

(in millions) 2025 2024

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Equity securities (1)

Non-current restricted cash and restricted cash equivalents 18 18

Other 168 162

Total other non-current assets $ 1,116 $ 1,200

Equity Securities

(1) Fair values of equity securities are determined using quoted market prices from daily exchange traded markets, based on the closing price as of the balance sheet date, and are classified as Level 1.

Unrealized mark-to-market gains and losses are recorded to Other income, net.

The following table presents the amount of unrealized mark-to-market (gains) losses, net, on our equity securities recognized in the unaudited Condensed Consolidated Statements of Income related to these securities during the periods presented.

Third Quarter First Nine Months

(in millions) 2024 2023 2024 2023

Unrealized mark-to-market (gains) losses

Vita Coco $ ( 1 ) $ 1 $ ( 4 ) $ ( 16 )

Rabbi trust ( 2 ) 1 ( 4 ) ( 3 )

During the first quarter of 2025, we recorded a realized gain of $ 34 million on the sale of our investment in Vita Coco.

KEURIG DR PEPPER INC.

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(UNAUDITED, CONTINUED)

September 30, December 31,

March 31, December 31,

(in millions) 2025 2024

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Accrued interest 162 107

Accrued termination fees (1)

Accrued transferable tax credits 119 130

Other accrued expenses 349 391

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Derivative instruments 41 108

Holdback liability 80 80

Total other current liabilities $ 786 $ 835

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Finance lease liability 681 677

Mandatory redemption liability 700 689

Pension and post-retirement liability 28 31

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Deferred compensation liability 31 33

Holdback liability 18 18

Total other non-current liabilities $ 2,724 $ 2,753

Accounts Payable

We have agreements with third party administrators which allow participating suppliers to track our payment obligations, and, if voluntarily elected by the supplier, to sell our payment obligations 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, including amounts due and scheduled payment terms, are not impacted.

We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions.

Outstanding obligations confirmed as valid included in accounts payable as of September 30, 2024 and December 31, 2023 were $ 1,786 million and $ 2,389 million, respectively.

(1) We paid the termination fee related to the GHOST Transactions in full in the first quarter of 2025.

Supplier Financing Arrangements

Outstanding obligations under supplier financing arrangements, which are confirmed as valid and included in accounts payable as of March 31, 2025 and December 31, 2024, were $ 1,759 million and $ 1,740 million, respectively.

KEURIG DR PEPPER INC.

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Commitments and Contingencies

KDP is occasionally subject to litigation or other legal proceedings.

Reserves are recorded for specific legal proceedings when the Company determines that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

We had litigation reserves of $ 2 million and $ 12 million, respectively, as of September 30, 2024 and December 31, 2023.

We are occasionally subject to litigation or other legal proceedings.

Reserves are recorded for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

We had litigation reserves of $ 2 million as of both March 31, 2025 and December 31, 2024.

We have also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made.

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In the months that followed, a number of additional actions, including claims from another coffee manufacturer (JBR, Inc.), as well as putative class actions on behalf of direct and indirect purchasers of Keurig’s products, were filed in various federal district courts, asserting claims and seeking relief substantially similar to the claims asserted and relief sought in the TreeHouse complaint.

Additional similar actions were filed by individual direct purchasers (including McLane Company, Inc., BJ’s Wholesale Club, Inc., Winn-Dixie Stores Inc.

and Bi-Lo Holding LLC) in 2019 and in 2021.

Additional similar actions were filed by individual direct purchasers (including McLane Company, Inc., BJ’s Wholesale Club, Inc., Winn-Dixie Stores Inc., and Bi-Lo Holding LLC) in 2019 and in 2021.

All of these actions were transferred to the SDNY for coordinated pre-trial proceedings (In re:

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Keurig strongly disputes the merits of the claims and the calculation of damages.

As a result, Keurig has fully briefed summary judgment motions that, if successful, would end the cases entirely.

Keurig has also fully briefed other significant motions, including challenges to the validity of plaintiffs’ damages calculations.

In 2021, the parties filed motions challenging the validity of certain of the other parties’ proposed expert opinions.

In January 2025, the court issued a ruling on these motions, granting challenges to certain expert testimony - including Keurig’s challenge to JBR, Inc.’s damages expert - but largely denying the parties’ motions.

Keurig has also fully briefed summary judgment motions that, if successful, would end the cases entirely.

Keurig is also pursuing its opposition to direct purchaser plaintiffs’ motion for class certification.

Certain of Keurig’s motions and opposition have been pending in the SDNY since 2021, with others pending since 2023.

Keurig intends to continue vigorously defending the remaining lawsuits.

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Additionally, as the timelines in these cases may be beyond our control, we can provide no assurance as to whether or when there will be material developments in these matters.

Restructuring

RESTRUCTURING PROGRAMS

2023 CEO Succession and Associated Realignment

In 2023, we began to enact several organization movements to ensure succession plans, to reinforce enterprise capabilities to support growth, and to control costs.

A key component of the program was the appointment of Tim Cofer as Chief Operating Officer, effective November 6, 2023, with Mr.

Cofer succeeding Robert Gamgort as our CEO during the second quarter of 2024.

We are also realigning our executive and operating leadership structure to enable faster decision making and to better support various strategic initiatives.

The program is expected to incur charges of approximately $ 55 million, primarily driven by severance costs, which are expected to be incurred through 2024, and the sign-on bonus for Mr.

KEURIG DR PEPPER INC.

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(UNAUDITED, CONTINUED)

Restructuring

RESTRUCTURING PROGRAMS

2024 Network Optimization

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The relocation began during the second quarter of 2024 and was completed in the third quarter of 2024.

In July 2024, we also announced the closure of our Windsor, Virginia manufacturing facility, which is expected to begin in the first quarter of 2025.

In July 2024, we also announced the closure of our Windsor, Virginia manufacturing facility, which is expected to be completed in the second quarter of 2025.

Our restructuring program also encompasses other costs intended to optimize our manufacturing and distribution footprint throughout our operations.

The restructuring program is expected to incur pre-tax restructuring charges in an estimated range of $ 125 million to $ 145 million, primarily comprised of asset related costs, through the second quarter of 2025.

2023 CEO Succession and Associated Realignment

In 2023, we began to enact several organization movements to ensure succession plans, to reinforce enterprise capabilities to support growth, and to control costs.

A key component of the program was the appointment of Tim Cofer as Chief Operating Officer, effective November 6, 2023, with Mr.

Cofer succeeding Robert Gamgort as our CEO during the second quarter of 2024.

We also realigned our executive and operating leadership structure to enable faster decision making and to better support various strategic initiatives.

The program is expected to incur charges of approximately $ 85 million, primarily driven by severance costs, which were substantially completed as of December 31, 2024, and the sign-on bonus for Mr.

RESTRUCTURING CHARGES

Restructuring and integration expenses for the defined programs during the periods presented were as follows:

Third Quarter First Nine Months

Restructuring expenses for the defined programs were as follows:

First Quarter

(in millions) 2025 2024

2023 CEO Succession and Associated Realignment $ 3 $ 25 $ 16 $ 25

2024 Network Optimization $ 2 $ 2

2023 CEO Succession and Associated Realignment ( 1 ) 2

RESTRUCTURING LIABILITIES

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(in millions) Restructuring Liabilities

Balance as of January 1, 2024 $ 27

Charges to expense 11

Balance as of December 31, 2024 $ 44

Charges to expense and other adjustments ( 3 )

Cash payments ( 5 )

Balance as of September 30, 2024 $ 27

Transactions with Related Parties

REPURCHASE OF KDP COMMON STOCK

In March 2024, JAB BevCo B.V., a subsidiary of JAB, sold 100 million shares of KDP’s common stock through an underwritten secondary offering.

In connection with this offering, we repurchased 35 million shares at the per-share price paid by the underwriter, for a total of $ 1,012 million, which was effected under our existing share repurchase program.

Subsequent Event

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.

Under the terms of the agreement, we will initially purchase a 60 % stake in GHOST for aggregate consideration of $ 990 million and, upon the closing of that transaction, we will enter into a subsequent agreement with GHOST, which will require the remaining equityholders of GHOST to sell their resulting 40 % stake in GHOST to us in 2028.

The transaction is subject to customary closing conditions.

Balance as of March 31, 2025 $ 36

Related Parties

In February 2025, JAB BevCo B.V., a subsidiary of JAB, sold approximately 87 million shares of our common stock through an underwritten secondary offering.

Upon completion of the offering on February 28, 2025, JAB beneficially owned less than 10% of our outstanding common stock, and the three members of our Board affiliated with JAB resigned.

Prior to these transactions, JAB and its affiliates were included in our disclosures of related party transactions.

Effective February 28, 2025, these disclosures are no longer applicable to JAB and its affiliates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements