Keurig Dr Pepper Inc. (NASDAQ:KDP)

The financial data reveals several notable trends related to goodwill and intangible assets over the four-year period ending December 31, 2021.

Goodwill

The goodwill value remained relatively stable, with a slight increase from 20,011 million US dollars in 2018 to 20,184 million in 2020, followed by a marginal decrease to 20,182 million in 2021. This indicates minimal impairment or additions to goodwill during this period.

Brands

The valuation of brands showed minor fluctuations, increasing modestly from 19,712 million in 2018 to 19,948 million in 2019 and then slightly declining to 19,865 million by 2021. This stability suggests consistent brand value maintenance.

Trade Names

Trade names held steady at approximately 2,479 to 2,480 million throughout the years, indicating no significant change in this intangible asset class.

Contractual Arrangements

Contractual arrangements showed a slight increase from 119 million in 2018 to 123 million by 2020 and remained stable thereafter.

Distribution Rights

Distribution rights demonstrated a clear upward trend, starting from a non-reported value in 2018 to 85 million in 2021 for one category, and from 0 in 2018 to 29 million in another category during the same timeframe. This reflects growing investments or acquisitions in distribution rights over the analyzed period.

Intangible Assets Other than Goodwill with Indefinite Lives

The net figure for intangible assets other than goodwill and with indefinite lives showed minor variation, increasing slightly from 22,310 million in 2018 to a peak of 22,565 million in 2019, then slightly decreasing to around 22,553 million by 2021.

Acquired Technology and Customer Relationships

Both acquired technology and customer relationships values remained constant throughout the period, indicating no new acquisitions or impairments in these categories.

Brands and Favorable Leases

The smaller categories of brands and favorable leases showed limited change, with favorable leases being reported only in 2018 at 13 million and absent thereafter.

Intangible Assets Other than Goodwill with Definite Lives - Gross and Net Amounts

The gross amount of intangible assets with definite lives rose modestly from 1,950 million in 2018 to 1,986 million in 2021. However, accumulated amortization increased substantially from -293 million in 2018 to -683 million in 2021. This resulted in a notable decline in the net amount from 1,657 million down to 1,303 million over the same time span, reflecting systematic amortization of these assets.

Total Intangible Assets Other Than Goodwill

The total intangible assets other than goodwill slightly decreased from 23,967 million in 2018 to 23,856 million in 2021, a minor reduction overall.

Goodwill and Other Intangible Assets Combined

The aggregate amount of goodwill and other intangible assets remained generally stable, fluctuating narrowly between 43,978 million and 44,289 million in 2019, trending slightly downward to 44,038 million in 2021.

Reported Total Assets

The reported total assets display a gradual increase over the four-year period, rising from US$48,918 million in 2018 to US$50,598 million in 2021. This indicates a steady growth in the company's overall asset base, with a total increase of approximately 3.4% between 2018 and 2021.

Adjusted Total Assets

The adjusted total assets, which presumably exclude goodwill or other intangible adjustments, also show a consistent upward trend. The values increase from US$28,907 million in 2018 to US$30,416 million in 2021. This growth represents an approximate 5.2% increase over the period, reflecting an expansion in the company's tangible or core asset base.

Reported Stockholders’ Equity

Reported stockholders’ equity increases steadily from US$22,533 million in 2018 to US$24,972 million in 2021, marking an approximate 10.8% growth. This suggests a positive trend in retained earnings or equity financing, reflecting potentially improved financial health or growth of net assets attributable to shareholders.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity, which likely removes goodwill impacts, shows a more pronounced growth trend. It rises from US$2,522 million in 2018 to US$4,790 million in 2021, representing an increase of nearly 90%. This significant growth indicates substantial improvement in the underlying equity value excluding intangible assets, possibly reflecting better operational performance or reductions in intangible asset valuations.

Overall Observations

While both reported and adjusted figures show growth, the adjusted equity and assets reveal a comparatively stronger upward trend. The disparity between reported and adjusted figures underscores the impact of goodwill or similar intangible assets on reported financials. The substantial increase in adjusted stockholders’ equity suggests improved tangible equity strength over time. The steady increases in both asset and equity components point to consistent expansion and strengthening of the company’s financial position during the analyzed periods.

The analysis reveals distinct trends and notable differences between reported and goodwill adjusted financial metrics over the four-year period from 2018 to 2021.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrate a consistent upward trend. The reported ratio increased from 0.15 to 0.25, while the adjusted ratio moved from 0.26 to 0.42. The adjusted values are significantly higher throughout, indicating that goodwill adjustments materially enhance the measure of asset efficiency.

Financial Leverage

Financial leverage ratios exhibit a decreasing trend across both reported and adjusted data. Reported leverage decreased modestly from 2.17 to 2.03. Conversely, adjusted financial leverage shows a pronounced decline from 11.46 down to 6.35, suggesting a considerable impact of goodwill on the leverage calculation, which decreases steadily over time.

Return on Equity (ROE)

ROE increased consistently year over year. The reported ROE grew from a low base of 2.6% to 8.59%, while the adjusted ROE began at a much higher level, 23.24%, advancing to 44.8%. The adjusted ROE levels are substantially greater than those reported, indicating the significant influence of goodwill adjustments on this profitability measure.

Return on Assets (ROA)

The return on assets ratio demonstrates improvement in both reported and adjusted forms. Reported ROA rose from 1.2% to 4.24%, while adjusted ROA increased from 2.03% to 7.06%. The adjusted ROA consistently outperforms the reported figure, reinforcing the positive effect of goodwill adjustments on asset profitability assessment.

Overall, the data shows progressive improvement in operational efficiency, leverage reduction, and profitability metrics. The adjustments for goodwill significantly amplify turnover and return measures while also lowering leverage, suggesting that underlying asset quality and profitability are stronger than reported figures alone would imply.

Total Assets

Reported total assets show a gradual increase over the period, growing from 48,918 million US dollars in 2018 to 50,598 million US dollars in 2021. Adjusted total assets, which exclude goodwill, also exhibit a steady upward trend, rising from 28,907 million in 2018 to 30,416 million US dollars in 2021.

Total Asset Turnover Ratios

Reported total asset turnover demonstrates a positive trend, improving from 0.15 in 2018 to 0.25 in 2021, indicating enhanced efficiency in generating revenue from the asset base. Adjusted total asset turnover, which factors out goodwill, is consistently higher than the reported figure and shows a similar upward trajectory, increasing from 0.26 in 2018 to 0.42 in 2021. This suggests that, excluding goodwill, the company is making more effective use of its tangible and other adjusted assets to generate sales.

Insights

The disparity between reported and adjusted total assets highlights a substantial goodwill component within the asset base. The higher adjusted total asset turnover compared to the reported metric indicates that goodwill inflates the asset base but does not contribute directly to revenue generation. Overall, asset base expansion is moderate, while efficiency improvements in asset utilization are noteworthy, especially when goodwill is excluded.

The analysis of the financial data reveals several notable trends and patterns over the four-year period. Both reported and goodwill adjusted figures provide insight into the company's asset base, equity position, and leverage dynamics.

Total Assets

The reported total assets show a gradual increase from US$48,918 million in 2018 to US$50,598 million in 2021. This represents a steady, albeit modest, growth in the company's asset base. The adjusted total assets, which exclude goodwill, also increased consistently but at a lower absolute scale, rising from US$28,907 million to US$30,416 million during the same period. The disparity between the reported and adjusted figures suggests that goodwill comprises a significant portion of total assets but remains fairly stable relative to overall asset growth.

Stockholders’ Equity

The reported stockholders’ equity similarly increased year-over-year, from US$22,533 million in 2018 to US$24,972 million in 2021. The adjusted stockholders’ equity, excluding goodwill, started significantly lower at US$2,522 million in 2018 and grew to US$4,790 million by 2021. While both measures show growth, the adjusted equity rose at a substantially higher rate proportionally, indicating an improving equity position after removing goodwill's impact.

Financial Leverage

The reported financial leverage ratio, which measures total assets relative to stockholders’ equity, decreased steadily from 2.17 in 2018 to 2.03 in 2021. This decline suggests a gradual reduction in leverage, implying a more conservative capital structure or relatively higher equity growth compared to assets.

The adjusted financial leverage, excluding goodwill, reveals a notably different pattern, starting at a high of 11.46 in 2018 and decreasing significantly to 6.35 in 2021. This sharp reduction indicates a substantial de-leveraging effect when goodwill is excluded, pointing to improved underlying financial stability and equity cushion relative to adjusted assets.

Overall, the data indicates steady asset growth alongside increasing equity. The more pronounced improvement in adjusted equity and reduction in adjusted financial leverage suggest the company is strengthening its financial position when excluding intangible assets. This could enhance resilience and flexibility in managing financial risks over time. The lowering leverage ratios in both reported and adjusted forms reflect a conservative shift in capital structure, potentially reducing financial vulnerability as the company evolves.

The financial data demonstrates distinct trends in both reported and goodwill adjusted measures over the four-year period from December 2018 to December 2021.

Stockholders’ Equity

The reported stockholders' equity increased steadily each year, rising from US$22,533 million in 2018 to US$24,972 million in 2021. This reflects a consistent growth trajectory of approximately 10.8% over the period.

Adjusted stockholders' equity, which presumably excludes goodwill or intangible assets, started significantly lower at US$2,522 million in 2018 but saw a more pronounced increase to US$4,790 million in 2021. This represents an increase of about 89.9%, indicating a substantial improvement in the net tangible equity base during the period.

Return on Equity (ROE)

The reported ROE exhibited a positive upward trend, starting at a modest 2.6% in 2018 and increasing annually to reach 8.59% by 2021. This suggests improved profitability relative to shareholders' equity over time.

The adjusted ROE, which likely measures profitability relative to adjusted stockholders’ equity, was significantly higher than the reported ROE throughout the period. It began exceptionally high at 23.24% in 2018, peaked at 40.65% in 2019, slightly declined to 36.35% in 2020, and then rose again to 44.8% in 2021. These elevated figures indicate strong returns on the tangible equity base, underscoring effective utilization of core equity capital excluding goodwill.

Overall, the company shows consistent equity growth with stronger gains evident in adjusted equity measures. Profitability ratios also improved materially, with adjusted ROE demonstrating superior performance compared to reported figures, highlighting the influence of excluding goodwill on profitability assessment.

Total Assets

Reported total assets demonstrated a gradual increase over the four-year period, rising from 48,918 million USD in 2018 to 50,598 million USD in 2021. This represents an approximate cumulative growth of 3.4%.

Adjusted total assets, which exclude goodwill and provide a potentially more conservative asset valuation, also showed growth, increasing from 28,907 million USD in 2018 to 30,416 million USD in 2021. The increase here is about 5.2%, slightly higher in relative terms compared to reported total assets.

Return on Assets (ROA)

The reported ROA exhibits a positive upward trajectory, improving from 1.2% in 2018 to 4.24% in 2021. The trend indicates steady gains in profitability relative to total reported assets, with a notable acceleration in 2021.

The adjusted ROA, calculated using adjusted total assets, presents an even stronger performance. It increased from 2.03% in 2018 to 7.06% in 2021. This suggests that when excluding goodwill, the company’s asset efficiency and profitability are significantly higher and have improved substantially over time.

Insights

The divergence between reported and adjusted total assets clearly indicates a significant goodwill component on the balance sheet, which impacts asset base valuation.

The consistent improvement in both reported and adjusted ROA suggests enhanced operational efficiency and profitability. The stronger growth in adjusted ROA implies that the core assets (excluding goodwill) are generating increasing returns, which is favorable from an analytical standpoint.

Overall, the data reflects a company that is expanding its asset base modestly while making more effective use of those assets to generate profit over time.