Keurig Dr Pepper Inc. Barclays 19th Annual Global Consumer Conference

Yeah. Thanks, Lauren. Good morning. Great to be back at the Barclays Conference here in Boston. 2026 is a pivotal year for KDP as we seek, as you said, to establish two advantage pure-play companies next year. This year, our priorities were very clear, oriented around three big themes. Number one, successfully complete the acquisition and the integration of JDE Peet's. Number two, prepare for a successful separation in 2027 into two advantage pure-plays. Number three, and I think most importantly, continue to deliver on the base business results and deliver on our commitments. I feel we've made very good progress on all three, and I would tell you as a headline, we are on track. Let me unpack each of the three. First, on the acquisition and integration. Closed it right on schedule, no major surprises, early April.

Immediately got to work thanks to our work on diligence, a transformation management office. We, for example, in the U.S., moved immediately to one invoice, one sales team, one truck of our combined coffee entity. We started buying coffee together as one entity. We are now the world's largest buyer of green coffee. Third is we started capturing the synergies, right? We've talked about $400 million of synergies over three years, and we hit the ground running in second quarter. You're going to see that ramp in Q3, in Q4, and into 2027. So feel good about early days of integration. Number two is plan for the separation. As you think about what's required to execute a separation, there's a lot. But I feel good based on the milestones we've set that we're making the progress required to set up this 2027 separation. What are those? Number one, name management teams for both new companies.

We've not only named the leadership teams, we've named all of the players all the way down through the organization that will go to Global Coffee Co. and go to Beverage Co. With one, I think, notable exception, as you know, Lauren, and that is the new CEO of Global Coffee Co. I can tell you today here at Barclays, we've made tremendous progress on that. I'm very excited about that future potential CEO, and I think you should expect to hear from us in the near term on naming that CEO that will lead Global Coffee Co. in the future. Second is board of directors. We have to establish two independent boards. Made good progress there. You would've seen we named two new directors to KDP in the last couple of months.

You'll probably see a few more of KDP in the year-to-go timeframe, and then the balance will come on for respective Global Coffee Co. and Beverage Co. next year. Third, making progress on de-leverage. You would've seen just in the last 10 days an announcement about monetization of our Chobani minority equity and a broader deal that we struck with Hamdi and the Chobani team that we feel very good about. Continuing to progress the disentanglements required for separation, the TSAs, et cetera. The other thing I'd tell you is making good progress on the new corporate identities. Newsflash, Lauren, these two companies will not be called Beverage Co. and Global Coffee Co. There will be proper names. That's well underway, so we'll have the new names, the new corporate identities, the new strategic frameworks, et cetera, so that we're ready for next year.

Finally, get ready for early in the year investor day, investor roadshow, investor narrative. So great progress on separation. Third and final, and most important, deliver on our base business commitments. You saw our Q2 print. It ended a very strong front half for the year. We feel very good about what we'll do in the back half. I'll ask Anthony to talk in more detail, but we feel good about the guidance we've provided and our ability to deliver on that guidance on a full-year basis in the back half. That's really underpinned by the way we've set up this interim operating structure. We've got strong TMO, transformation management office, capability, internal, external advisors to prosecute that transformation agenda while allowing the vast majority of our colleagues to focus on base business delivery.

We've also set up an interim operating structure of a coffee operating unit, a beverage operating unit, leaders accountable and empowered to deliver their results. Overall, the model's working well, no real surprises, and as I said, I think we're on track with this transformation and journey. You want to talk about 2026 outlook.

Great. Thanks, Tim. Good morning, everyone. Great to be here. Just a quick note, Tim and I will be making forward-looking statements this morning referencing non-GAAP metrics. Additional information is on our website and in our filings.

As Tim mentioned, the business is performing well. We had a strong first half, and we have good visibility to our full-year guidance, which we can reaffirm here this morning. Our top line is expected to be $25.9 billion-$26.4 billion. That is comprised of two parts, legacy KDP at the upper end of our 4%-6% range, and an incremental $8.5 billion-$8.7 billion contribution from JDE Peet's for the nine months of ownership. At EPS, we expect low double-digit constant currency EPS growth underpinned by legacy KDP at 4%-6% and an additional six to seven points of accretion from the JDEP acquisition. For free cash flow, we are forecasting $2.5 billion of free cash flow, which will support our de-leveraging efforts, which I will talk about later.

As we do this, we are making investments in both of our coffee and beverage businesses to drive long-term sales growth. Sitting here today, we are very confident in the delivery of the guidance and positioning both companies, Global Coffee Co. and Beverage Co., for long-term success.

Yeah, we are very pleased with U.S. Refreshment Beverages. As you look at our performance over the last couple of years, Lauren, you will see both on the top line and bottom line, high single digit, even in some quarters, low double-digit performance. I am not going to promise that type of performance going forward, per se, at the double-digit rate, but feel very good that U.S. Refreshment Beverage can continue to deliver on that algorithmic outlook of MSD sales and HSD EPS. Why, to your question. One, it starts with a great category. North American refreshment beverage, $300 billion TAM. I have worked in CPG 35 years across a lot of different categories. I would tell you, refreshment beverage in North America is one of the most attractive spaces in CPG. It is a consistent growing category. It is a very dynamic category.

It is a category where consumers continue to seek out new experiences, new brands that fit with their lifestyle, their wellness, and they are willing to pay for it. It is also a fairly rational category as it relates pricing dynamics. For those reasons, we continue to favor the category in which we compete. Number two, our portfolio. I think we have an advantage portfolio. It is obviously anchored by our CSDs, Carbonated Soft Drinks position, flagship Dr Pepper, obviously largest among them. But this is a $50 billion category, once again, a consistent grower, and I think still has tailwinds for growth. It is still on a price per ounce basis, is one of the most affordable verticals within LRB, and that suggests to me with the right innovation and RGM tools that we and other leaders bring, that category can continue to grow. I like our portfolio within it.