Dr Pepper Snapple ( DPS ) beat the consensus EPS estimate but fell short of revenue estimates in the first quarter, as the recent acquisition of Bai Brands boosted results for the company. In Q1, sales volume rose 1%, including a 0.2% contribution of the incremental Bai sales to third party distributors. Net sales increased 2%, including a 1 percentage point positive impact of the acquisition of Bai, which had sales of $35 million in Q1. Bai was previously an allied brand for Dr Pepper. Allied brands allow Dr Pepper to leverage its large scale distribution network and participate in growing emerging categories where it doesn't have a considerable presence as of now. The allied brands growth is included in the packaged beverage volumes for Dr Pepper, which is the distribution wing for these small but fast growing brands, such as Vita Coco, etc. Dr Pepper is expected to witness over 1% organic volume growth this year, while the total volume growth is expected to be approximately 2%, inclusive of the Bai acquisition, which closed by the end of January this year.
At the end of last year, Dr Pepper expected 2017 Core EPS in the $4.44 to $4.54 range, but has now increased the range to $4.56 to $4.66, especially due to its high exposure to the domestic market and less exposure to the foreign markets, where negative currency translations could hurt results. Foreign currency translation and transaction were expected to reduce Core EPS by $0.11 , primarily driven by the Mexican peso, but are now expected to reduce Core EPS by only $0.07.
Have more questions on Dr Pepper Snapple? See the links below.
- Earnings Review: Dr Pepper Snapple
- By How Much Does Dr Pepper's Value Rise If Its Margin Grows By More Than Expected?
- How Can Dr Pepper's Latin America Segment Grow In The Next Five Years?
- Dr Pepper Snapple Is Heavily Dependent On CSDs, But That's Not A Problem
Notes:
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2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Dr Pepper Snapple
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
