Keurig Dr Pepper Inc. (NASDAQ:KDP)

Current Provision

The current provision for income taxes shows a consistent upward trend over the four years analyzed. Beginning at 283 million US dollars in 2018, it increased significantly to 463 million in 2019, showed a marginal rise to 479 million in 2020, and then rose sharply again to 622 million in 2021. This indicates a growing tax liability within the fiscal periods, potentially reflective of increased taxable income or changes in tax rates impacting the current period.

Deferred Provision

The deferred provision reflects a different pattern. Initially negative at 81 million US dollars in 2018, it became less negative at 23 million in 2019, which indicates a reduction in deferred tax assets or an increase in deferred tax liabilities being recognized. In 2020, it turned more negative again at 51 million, suggesting a reversal or adjustment of deferred tax liabilities or the recognition of additional deferred tax assets. Notably, in 2021, the deferred provision turned positive, recording 31 million US dollars. This shift from negative to positive implies that deferred income tax liabilities increased or deferred tax assets decreased, which may be associated with changes in the timing of tax expense recognition or tax planning strategies.

Provision for Income Taxes

The total provision for income taxes, which comprises both current and deferred components, aligns closely with the trends observed in the current provision due to its larger magnitude. The total tax provision increased markedly from 202 million US dollars in 2018 to 440 million in 2019, dipped slightly to 428 million in 2020, and surged to 653 million in 2021. This overall increase underscores a general rise in tax expense obligations over time, potentially due to higher pre-tax earnings or changes in tax rates or jurisdictions. The notable rise in 2021 is especially significant, reflecting the combined effect of both higher current taxes and the reversal of previously negative deferred tax provisions.

U.S. Federal Statutory Income Tax Rate

The U.S. federal statutory income tax rate remained constant at 21% across all reported years, indicating a stable federal tax base.

State Income Taxes, Net

State income taxes showed a decreasing trend from 5.4% in 2018 to 3.8% in 2021. This gradual reduction suggests improved state tax efficiencies or changes in state-level tax obligations.

U.S. Federal Domestic Manufacturing Benefit

This benefit was only reported in 2018 at -1.5% and was absent in subsequent years, indicating that this tax advantage either expired or was no longer applicable.

Impact of Non-U.S. Operations

The impact of non-U.S. operations on the tax rate was minor and relatively stable, fluctuating between 0.1% and 0.3%, with a slight decline to 0.1% in 2021.

Tax Credits

Tax credits contributed to reducing the tax rate consistently each year, ranging from -0.9% to -1.3%. The largest impact occurred in 2020 at -1.3%, followed by a lesser effect in 2021 at -0.8%.

Valuation Allowance for Deferred Tax Assets

This component varied notably, with a positive impact of 2% in 2018, shifting to a negative impact in 2020 (-1.1%) and 2021 (-0.1%). This indicates changes in the recognition or recoverability of deferred tax assets over the period.

U.S. Taxation of Foreign Earnings

The taxation of foreign earnings declined steadily from 1.8% in 2018 to 0.7% in 2021, reflecting potentially reduced foreign tax liabilities or changes in international tax strategy.

Deferred Rate Change

The deferred rate change showed significant variability, starting at -4.9% in 2018, nearing neutral in 2020 at 0.5%, and becoming slightly negative again at -0.7% in 2021. This suggests fluctuations in expected future tax rates or timing differences.

State Refund

A state refund was recorded only in 2018 at -0.4%, with no subsequent data reported, indicating a one-time tax recovery in that year.

Uncertain Tax Positions

Uncertain tax positions showed isolated effects, recorded at 0.6% in 2018 and -1.3% in 2020, with no impact in other years, reflecting episodic adjustments to tax risk reserves.

U.S. Federal Provision to Return

This item displayed minor fluctuations around zero, with values ranging between -0.6% and 0.1%, suggesting small net impacts on the tax rate from federal provisions related to tax returns.

Excess Tax Deductions on Stock-Based Compensation

Reported only in 2020 at -1%, indicating a specific tax benefit recognized that year related to stock compensation.

Transaction Costs

Transaction costs affected the tax rate only in 2018, contributing an increase of 1.4%, suggesting nonrecurring expenses impacting that year's tax expense.

Impact of the TCJA (Tax Cuts and Jobs Act)

The impact of the TCJA was recorded only in 2018 at 0.5%, reflecting the initial influence of tax legislation before stabilizing in later years.

Other

Other elements influencing the tax rate showed minor fluctuations, increasing from 0.7% in 2018 to 1.3% in 2019, then decreasing to 0.6% by 2021, indicating miscellaneous factors with moderate volatility.

Effective Income Tax Rate

Overall, the effective income tax rate exhibited a downward trend, decreasing from 25.5% in 2018 to 23.3% in 2021. This decline is driven largely by reductions in state income taxes, a lower U.S. taxation of foreign earnings, and various tax credits, partially offset by changes in deferred rate adjustments and valuation allowances.

Operating Lease Liability

Operating lease liabilities show a significant increase from 67 million USD in 2019 to 161 million USD in 2020, with a slight further increase to 166 million USD in 2021. This suggests a notable rise in leased assets or commitments starting in 2019.

Net Operating Losses Carryforwards

Net operating losses carryforwards have steadily decreased from 53 million USD in 2018 to 43 million USD in 2021, indicating utilization or expiration of these tax benefits over time.

Tax Credit Carryforwards

Similarly, tax credit carryforwards have declined gradually from 58 million USD in 2018 to 49 million USD in 2021, reflecting a consistent usage or reduction in available tax credits.

Accrued Expenses

Accrued expenses rose from 96 million USD in 2018 to a peak of 153 million USD in 2020 before declining to 125 million USD in 2021. This pattern implies a temporary increase in liabilities accrued during 2020, followed by a partial reduction.

Share-Based Compensation

Share-based compensation costs increased notably from 21 million USD in 2018 to 36 million USD in 2020, then decreased slightly to 32 million USD in 2021. This reflects greater use of equity incentives peaking in 2020.

Multi-year Upfront Payments

There is a clear declining trend in multi-year upfront payments, decreasing steadily from 21 million USD in 2018 to 13 million USD in 2021, suggesting reduced long-term prepaid commitments.

Equity Method Investments

Equity method investments appear for the first time in 2020 with 29 million USD and nearly doubled to 50 million USD in 2021, indicating increased investments in affiliated entities or joint ventures during this period.

Other Assets

The "Other" category fluctuates, starting at 39 million USD in 2018, decreasing to 27 million USD in 2020, and then rising again to 41 million USD in 2021, showing variable non-specified assets.

Deferred Tax Assets

Deferred tax assets exhibit a strong upward trend, increasing from 288 million USD in 2018 to a peak of 521 million USD in 2020, and hold steady at 519 million USD in 2021, reflecting recognition of increasing future tax benefits.

Valuation Allowances

Valuation allowances decreased negatively from -79 million USD in 2018 to -48 million USD in 2021, indicating reduced reservations against deferred tax assets and potentially improved expectations of asset realizability.

Deferred Tax Assets, Net of Valuation Allowances

The net deferred tax assets, calculated after adjusting for valuation allowances, show a strong increase from 209 million USD in 2018 to 470 million USD in 2020, stabilizing at 471 million USD in 2021, consistent with the growth in deferred tax asset recognition.

Brands, Trade Names, and Other Intangible Assets

Intangible assets related to brands and trade names remain relatively stable but highly negative, fluctuating slightly around -5,900 million USD, indicating significant intangible asset value amortization or impairment effects over the years.

Property, Plant, and Equipment

Property, plant, and equipment balances show a gradual increase in negative values from -277 million USD in 2018 to -314 million USD in 2021, suggesting ongoing capital expenditures or asset write-downs.

Derivative Instruments

Derivative instrument liabilities have steadily decreased from -56 million USD in 2018 to -18 million USD in 2021, indicating reduced exposure or risk mitigation in financial instruments.

Right of Use Assets

Right of use assets increased substantially in negative value from -64 million USD in 2019 to -164 million USD in 2021, paralleling the increase in operating lease liabilities and reflecting recognition of lease-related assets.

Deferred Tax Liabilities

Deferred tax liabilities show a steady increase in negative value from -6,106 million USD in 2018 to -6,415 million USD in 2021, suggesting growing tax obligations arising from temporary differences.

Net Deferred Tax Assets (Liabilities)

The net position remains significantly negative throughout the period, hovering around -5,900 million USD, with minor fluctuations, indicating that deferred tax liabilities materially outweigh deferred tax assets on a net basis.

The financial data reveals the following trends regarding the deferred tax assets and liabilities over the four-year period ending December 31, 2021.

Deferred Tax Assets

The deferred tax assets demonstrated a steady increase from 26 million US dollars in 2018 to 45 million US dollars in 2020, representing a significant rise during this period. However, in 2021, there was a slight decrease to 42 million US dollars, indicating a modest reduction after the peak in 2020.

Deferred Tax Liabilities

The deferred tax liabilities maintained a relatively stable level throughout the period. Starting at 5,923 million US dollars in 2018, the liabilities slightly increased to 6,030 million US dollars in 2019. Subsequently, they showed a marginal decline to 5,993 million US dollars in 2020 and a slight further decrease to 5,986 million US dollars in 2021. These small fluctuations suggest overall stability with minor volatility over the years.

In summary, deferred tax assets experienced notable growth until 2020, followed by a small decline, while deferred tax liabilities remained largely consistent with minor year-to-year changes. This pattern indicates a gradual strengthening of the deferred tax asset position up to 2020, accompanying a stable deferred tax liability environment throughout the time analyzed.

Total Assets

Total assets show a gradual increase over the four-year period. Reported total assets rose modestly from 48,918 million US dollars at the end of 2018 to 50,598 million US dollars by the end of 2021. The adjusted total assets follow a similar trend, slightly lower than reported figures but increasing steadily from 48,892 million to 50,556 million US dollars. This indicates consistent asset growth with minimal difference between reported and adjusted values.

Total Liabilities

Reported total liabilities exhibit a decreasing trend, moving from 26,385 million US dollars in 2018 to 25,626 million US dollars in 2021. Adjusted total liabilities present a sharper decline, dropping from 20,462 million to 19,640 million US dollars over the same period. The divergence between reported and adjusted liabilities suggests adjustments reduce reported liabilities, and both sets indicate a controlled reduction in the company's obligations.

Stockholders’ Equity

Reported stockholders’ equity shows a steady increase each year, growing from 22,533 million US dollars in 2018 to 24,972 million US dollars in 2021. Adjusted stockholders’ equity is consistently higher than reported equity and rises from 28,430 million to 30,916 million US dollars. The upward trend in both reported and adjusted equity reflects strengthening financial position and accumulated earnings or capital growth over the period.

Net Income Attributable to KDP

Reported net income attributable to the company displays significant growth, more than tripling from 586 million US dollars in 2018 to 2,146 million US dollars in 2021. Adjusted net income follows a similar robust growth trajectory, increasing from 505 million to 2,177 million US dollars. The slight difference between reported and adjusted net income suggests that deferred taxes and other adjustments have a marginal impact. The sharp increase over four years indicates enhanced profitability and effective income generation.

Overall Analysis

The financial data reveals consistent asset growth with a controlled reduction in liabilities, resulting in strengthened equity. The company's profitability has substantially improved, as evidenced by the significant rise in both reported and adjusted net incomes. The close alignment between reported and adjusted figures suggests that tax adjustments have a limited but noticeable effect on financial statement totals. The trends reflect positive financial health and operational performance improvements over the observed timeframe.

Net Profit Margin

Both reported and adjusted net profit margins display a consistent upward trend from 2018 through 2021. The reported net profit margin increased from 7.87% in 2018 to 16.92% in 2021, while the adjusted margin rose from 6.79% to 17.16% during the same period. Notably, the adjusted figures closely mirror the reported ones, with a slight difference favoring higher margins in the adjusted data by 2021.

Total Asset Turnover

The total asset turnover ratio, both reported and adjusted, improved steadily over the four years. Starting at 0.15 in 2018, it rose to 0.25 by 2021, indicating enhanced efficiency in utilizing assets to generate revenue. The identical values for reported and adjusted ratios suggest that tax-related adjustments did not affect this metric.

Financial Leverage

Financial leverage measured by both reported and adjusted ratios shows a gradual decline from 2018 to 2021. The reported leverage decreased from 2.17 to 2.03, and the adjusted leverage declined from 1.72 to 1.64. This trend indicates a moderate reduction in the reliance on debt or equity financing relative to assets over time, with adjusted leverage consistently lower than reported leverage, reflecting possible tax effects on leverage calculations.

Return on Equity (ROE)

Reported ROE demonstrates a positive trajectory, more than tripling from 2.6% in 2018 to 8.59% in 2021. Similarly, adjusted ROE increased from 1.78% to 7.04%, maintaining a consistent gap below the reported ROE, reflecting the impact of income tax adjustments. Overall, the increasing trend indicates improved profitability relative to shareholders' equity.

Return on Assets (ROA)

Both reported and adjusted ROA exhibit growth over the period analyzed. Reported ROA rose from 1.2% in 2018 to 4.24% in 2021, while adjusted ROA increased from 1.03% to 4.31%. The slight excess in adjusted ROA over reported ROA by 2021 suggests income tax adjustments have a minor positive effect on asset profitability measures. The upward trend signals more effective asset utilization to generate net income.

Summary Insights

Overall, the financial performance indicators reveal a pattern of improving profitability and operational efficiency. The rising net profit margins and ROE indicate enhanced earnings power over time. Increasing asset turnover ratios suggest more efficient use of assets. The decreasing financial leverage points toward a more conservative capital structure. Adjusted figures, accounting for deferred and reported taxes, tend to moderate some ratios slightly but generally follow the same direction, underscoring consistent underlying performance trends despite tax adjustment impacts.

The financial data shows a clear upward trend in both reported and adjusted net income attributable to the company over the four-year period ending December 31, 2021. The reported net income increased from 586 million US dollars in 2018 to 2,146 million US dollars in 2021. Similarly, the adjusted net income rose from 505 million US dollars in 2018 to 2,177 million US dollars in 2021. This indicates significant profitability growth over the period.

When examining profitability margins, the reported net profit margin has exhibited consistent improvement, growing from 7.87% in 2018 to 16.92% in 2021. The adjusted net profit margin shows a similar positive trend, increasing from 6.79% in 2018 to 17.16% in 2021. The larger increase in adjusted net profit margin compared to the reported figures in the final year suggests that adjustments made to the income tax may have positively influenced the margin metrics.

The relatively close values between reported and adjusted net income and profit margins throughout the period indicate that the impact of deferred taxes and other adjustments remained moderate but became more significant in the latest year. Overall, the data reflects strong and improving profitability performance with increasing efficiency in generating earnings relative to revenue.

Total assets

The reported total assets showed a gradual increase over the four-year period, rising from 48,918 million USD in 2018 to 50,598 million USD in 2021. Similarly, the adjusted total assets exhibited a consistent upward trend, moving from 48,892 million USD in 2018 to 50,556 million USD in 2021. The close proximity between reported and adjusted figures suggests minimal impact from deferred income tax adjustments on total assets.

Total asset turnover

Both reported and adjusted total asset turnover ratios demonstrated a steady improvement over the timeframe. The ratio increased from 0.15 in 2018 to 0.25 in 2021, indicating enhanced efficiency in utilizing assets to generate sales. The identical values for reported and adjusted turnover imply that deferred income tax adjustments did not affect the asset turnover measurement.

Overall trends and insights

The data reveals consistent asset growth coupled with improved efficiency in asset utilization. The parallel movement of reported and adjusted figures suggests that the deferred income tax adjustments have a negligible effect on the key financial metrics presented. This may reflect stability in tax-related accounting impacts during the period analyzed.

Total Assets

The reported total assets show a gradual increase over the four years, rising from 48,918 million US dollars at the end of 2018 to 50,598 million US dollars by the end of 2021. The adjusted total assets follow a similar pattern, increasing slightly from 48,892 million to 50,556 million during the same period. The small difference between reported and adjusted values suggests relatively minor adjustments related to income tax considerations.

Stockholders’ Equity

Reported stockholders’ equity exhibits steady growth, rising from 22,533 million at the end of 2018 to 24,972 million by the end of 2021. Adjusted stockholders’ equity shows a noticeably higher level across all years, starting at 28,430 million and reaching 30,916 million in 2021. The adjustment results in a consistently higher equity base, implying significant impacts from the deferred and reported income tax adjustments on equity figures.

Financial Leverage

Both reported and adjusted financial leverage ratios demonstrate a declining trend, indicating a gradual reduction in the relative amount of debt financing compared to equity. Reported financial leverage decreases from 2.17 in 2018 to 2.03 in 2021, while adjusted financial leverage starts lower and falls from 1.72 to 1.64 over the same period. The adjusted leverage ratios are consistently lower than reported ratios, reflecting the impact of income tax adjustments on the capital structure metrics.

Overall Trends and Insights

The company shows a consistent increase in asset base and equity, highlighting gradual growth and strengthening financial position over the observed periods. Adjustments related to reported and deferred income taxes have a material effect on equity and leverage measures, increasing equity values and consequently reducing leverage ratios when adjustments are applied. This divergence suggests that tax-related accounting adjustments enhance the reported financial solidity and reduce the apparent reliance on debt.

The financial data shows a consistent upward trend in both reported and adjusted net income attributable to Keurig Dr Pepper Inc. over the four-year period. Reported net income increased steadily from 586 million US dollars in 2018 to 2,146 million US dollars in 2021, while adjusted net income followed a similar trajectory, rising from 505 million US dollars in 2018 to 2,177 million US dollars in 2021. This indicates strong profitability growth after accounting for tax adjustments.

Regarding stockholders’ equity, both reported and adjusted figures exhibit moderate growth year over year. Reported stockholders’ equity increased from 22,533 million US dollars in 2018 to 24,972 million US dollars in 2021. Adjusted stockholders’ equity was consistently higher than reported, growing from 28,430 million US dollars in 2018 to 30,916 million US dollars in 2021, which suggests adjustments related to deferred income taxes have a significant impact on equity presentation.

Return on equity (ROE) demonstrates improving profitability relative to shareholder equity over the period. Reported ROE rose from 2.6% in 2018 to 8.59% in 2021, while adjusted ROE showed a similar upward trend, increasing from 1.78% to 7.04%. The gap between reported and adjusted ROE narrows over time, reflecting a convergence in the effects of income tax adjustments on profitability ratios.

Net Income Trends

Both reported and adjusted net income have increased significantly, indicating enhanced profitability despite tax adjustments.

Stockholders’ Equity Trends

Steady growth in both reported and adjusted stockholders’ equity, with adjusted figures consistently higher, illustrating the impact of deferred income tax adjustments on equity.

Return on Equity (ROE)

Improved ROE over the period suggests better efficiency in generating returns for shareholders, with adjustments affecting the magnitude but not the direction of the improvement.

The analysis of the annual reported and deferred income tax adjusted financial data reveals notable trends over the four-year period ending December 31, 2021.

Net Income Attributable

The reported net income attributable demonstrated a consistent upward trend, rising significantly from 586 million US dollars in 2018 to 2,146 million in 2021. This represents a more than threefold increase over the period. Similarly, the adjusted net income showed growth from 505 million in 2018 to 2,177 million in 2021. Both metrics indicate improving profitability, with adjusted net income closely tracking the reported figures but showing slightly higher values in the final year.

Total Assets

The reported total assets increased marginally from 48,918 million US dollars in 2018 to 50,598 million in 2021, reflecting stable asset growth. Adjusted total assets followed an almost identical pattern, rising from 48,892 million to 50,556 million during the same timeframe. The slight increase in total assets suggests a conservative growth in the asset base alongside the significant improvement in net income.

Return on Assets (ROA)

The reported ROA showed a clear positive trajectory, moving from 1.2% in 2018 to 4.24% in 2021. The adjusted ROA exhibited a similar upward pattern, increasing from 1.03% to 4.31%. These increases in ROA metrics indicate enhancing efficiency in generating profit from the asset base, with adjusted ROA slightly outpacing the reported figure by the end of the period.

Overall, the data portrays a company experiencing substantial improvements in profitability and efficient asset utilization over the examined years, with relatively stable asset growth. The close alignment of reported and adjusted values suggests that deferred income tax adjustments have minimal impact on the core financial performance trends.