Keurig Dr Pepper Inc. (NASDAQ:KDP)

The financial data reveals several notable trends and fluctuations in the company's performance over the reported periods. Net sales remained consistent at 100% throughout, serving as a baseline for all other relative metrics.

Cost of Sales

Cost of sales as a percentage of net sales showed variability, initially fluctuating around the low to mid-40% range in 2019 and early 2020. Starting in the latter half of 2020 through 2022, the cost of sales increased markedly, reaching a peak of -50.03% in June 2022. This trend indicates rising cost pressures or changes in the cost structure negatively impacting gross margins.

Gross Profit

Gross profit margins exhibited an inverse pattern to cost of sales. In 2019 and early 2020, gross profit hovered near 56-58%. However, from late 2020 onward, a gradual decline occurred, dropping to just under 50% by mid-2022. This decline corresponds with the increase in cost of sales, suggesting shrinking profitability at the gross level.

Selling, General, and Administrative Expenses (SG&A)

SG&A expenses fluctuated, mostly ranging between -31% and -39% of net sales. A peak expense of nearly -39.34% occurred in Q1 2020, followed by a reduction to near -31% by Q3 2020. However, in 2021 and 2022, these expenses stabilized around -32% to -34%, illustrating a somewhat controlled expense environment despite other financial pressures.

Other Operating Items

Several non-recurring and atypical items impacted results. A significant gain on litigation settlement appeared uniquely in Q1 2022 at 9.71%, and an impairment of intangible assets (-2.15%) occurred in Q4 2020. Other operating income and expenses showed small fluctuations, sometimes positive but mostly modest in magnitude.

Income from Operations

Operating income margin fluctuated visibly, ranging from a low of approximately 16% (Q2 2022) to a high exceeding 31% (Q1 2022). This volatility reflects the interplay of rising costs and periodic gains, with a notable jump in Q1 2022 attributed to the litigation settlement gain.

Interest Expense and Debt-Related Charges

Interest expense declined gradually from around -6.75% in early 2019 to below -3.5% in late 2021, before rising again in 2022 to near -6%. Losses on early extinguishment of debt were generally minor but spiked sharply in Q4 2020 (-3.62%) and appeared again in smaller amounts in 2022, suggesting episodic debt restructuring costs.

Investment Gains and Impairments

A notable gain from the sale of an equity method investment was recorded in Q4 2021 at 15.45%, with a smaller gain of 1.62% in Q1 2022. Impairments of investments and note receivables appeared infrequently and at low levels (below -1%), indicating limited impact from asset write-downs.

Income Before Taxes and Tax Provision

Income before income taxes showed sizable variation, ranging from under 6% in Q2 2022 to a peak above 32% in Q4 2021. Tax provisions fluctuated with income before taxes but generally ranged between -2.5% and -7.8%, except for unusual minor positive tax effects in Q2 2022.

Net Income

Net income attributable to the company followed a pattern similar to pre-tax income, with percentages ranging from a low near 6% in mid-2022 to a high approaching 25% in Q4 2021. The substantial gain in late 2021 contributed to higher profitability, while performance in 2022 declined notably.

In summary, the financial data reflects a company experiencing margin pressures through rising costs, particularly cost of sales, partially offset by controlled SG&A expenses. Occasional non-recurring gains, such as the litigation settlement and equity investment sale, have provided episodic boosts to profitability. Interest expenses and debt-related charges show signs of episodic restructuring activity. Overall, profitability peaked around late 2021 with subsequent volatility and decline into mid-2022.