Dr Pepper Snapple Group Inc. : Post Earnings Coverage as Dr. Pepper Snapple's Sales Gained 2%; Adjusted EPS Grew 4%

Upcoming AWS Coverage on PepsiCo Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 15, 2017 / Active Wall St. announces its post-earnings coverage on Dr. Pepper Snapple Group, Inc. (NYSE: DPS). The Company disclosed its fourth quarter and fiscal 2016 operational and financial results on February 14, 2017. The maker of beverages such as 7Up, Sunkist, and Mott's reported sales numbers that surpassed market expectations. Register with us now for your free membership at:

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One of Dr. Pepper Snapple's competitors within the Beverages - Soft Drinks space, PepsiCo, Inc. (NYSE: PEP), announced on January 18, 2017, that it will release its Q4 2016 (ended December 31, 2016) financial results on Wednesday, February 15, 2017, at approximately 6:30 a.m. ET. The earnings conference call for investors and financial analysts will be webcast at 8 a.m. ET that morning. AWS will be initiating a research report on PepsiCo in the coming days.

Today, AWS is promoting its earnings coverage on DPS; touching on PEP. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended December 31, 2016, Dr. Pepper Snapple's reported net sales increased 2% to $1.59 billion on favorable product and package mix, a 1% increase in sales volumes and higher pricing. Net sales were partially offset by 1% of unfavorable foreign currency translation and unfavorable segment mix. The Company's sales number came in above analysts' consensus of $1.57 billion. For FY16, the Company's reported net sales increased by 3% to $6.44 billion.

For Q4 2016, Dr. Pepper Snapple's reported income from operations was $335 million, which included $11 million in unrealized commodity mark-to-market gains and $3 million in expenses related to its acquisition of Bai. Reported income from operations was $322 million in Q4 2015. The Company's currency neutral core income from operations for the reported quarter was $330 million compared to $329 million in Q4 2015. For FY16, Dr. Pepper Snapple's reported income from operations was $1.43 billion compared to reported income from operations in FY15 of $1.30 billion. The Company's core income from operations was $1.38 billion, up 5%, representing 21.5% of net sales compared to 20.9% in the prior year.

Dr. Pepper Snapple reported Q4 2016 EPS of $0.90, which included a $0.11 per diluted share loss on the early extinguishment of certain debt. Reported EPS were $0.97 in Q4 2015. For the reported quarter, the Company's Core EPS were $1.04, up 4% compared to $1.00 in the prior year's same period. The earnings number came in below analysts' consensus of $1.06 per share. For the year, the Company reported earnings of $4.54 per diluted share compared to $3.97 per diluted share in the prior year. Core EPS were $4.39, up 9% compared to $4.02 in the prior year.

Segment Results

For Q4 2016, Dr. Pepper Snapple's Bottler case's (BCS) sales volume was flat, with carbonated soft drinks (CSD) increasing 1% and non-carbonated beverages (NCB) decreasing 1%. By geography, US and Canada volume was flat, while Mexico and the Caribbean volume increased 5%.

During Q4 2016, in CSD, Squirt grew 8% driven by strong performance in Mexico and the US Schweppes grew 7% on distribution gains in sparkling waters and growth in the ginger ale category. The Company's Core 4 brands increased 3% as a mid-single-digit increase in Canada Dry and a low-single-digit increase in 7UP were partially offset by a low-single-digit decrease in A&W. Sunkist was flat in Q4 2016. Peñafiel grew 1%, while Crush decreased 1%. Brand Dr. Pepper decreased 1% in the reported quarter, primarily driven by timing in fountain foodservice performance.

In NCB, for Q4 2016, Snapple decreased 3% and Hawaiian Punch declined 5% on category headwinds and higher pricing on single-serve packages. Mott's decreased 2% in the reported quarter as growth in sauce was more than offset by declines in juices. The Company's water category increased 8% on strong growth in Bai, Core Hydration, and FIJI. Clamato increased 13% on distribution gains, increased promotional activity and product innovation.

For Q4 2016, Dr. Pepper Snapple's Beverage Concentrates' net sales increased 4% to $332 million driven by concentrate price increases taken earlier in the year, favorable product mix, lower discounts, and a 1% increase in concentrate shipments. SOP increased 7% to $212 million, as the increase in net sales was partially offset by a $1 million increase in planned marketing investments.

Dr. Pepper Snapple's Packaged Beverages net sales increased 3% for Q4 2016 to $1.14 billion on favorable product and package mix and price increases. SOP decreased 3% to $179 million as net sales growth, favorable logistics costs and ongoing productivity improvements were more than offset by increases in certain operating expenses, including $4 million of health and welfare and insurance costs and additional frontline labor costs focused on driving better execution.

The Company reported that net sales for Latin America Beverages increased 6% in Q4 2016, driven by a 5% increase in sales volumes, favorable product and package mix and higher net pricing. SOP was flat as the segment incurred $8 million of higher US dollar denominated input costs.

Cash Flow

For FY16, Dr. Pepper Snapple generated $939 million of cash from operating activities compared to $991 million in FY15. The Company's capital spending totaled $180 million compared to $179 million in the year ago same period. The Company returned $905 million to shareholders in the form of stock repurchases of $519 million and dividends of $386 million.

Guidance

For FY17, Dr. Pepper Snapple is forecasting organic volume growth of approximately 1% and total volume growth of close to 2%. The Company is expecting net sales growth of about 4.5%, including over 1% of negative foreign currency translation impact. Dr. Pepper Snapple expects strong free cash flow, capable of funding both a 9.4% dividend increase and repurchases of its common stock of $450 million to $500 million. The Company expects FY17 Core EPS in the $4.44 to $4.54 range.

Stock Performance

At the closing bell, on Tuesday, February 14, 2017, Dr. Pepper Snapple's stock marginally slipped 0.45%, ending the trading session at $93.07. A total volume of 2.09 million shares were traded at the end of the day, which was higher than the 3-month average volume of 1.36 million shares. In the last three months and previous twelve months, shares of the Company have advanced 13.66% and 3.54%, respectively. Moreover, the stock gained 2.65% since the start of the year. The Company's shares are trading at a PE ratio of 20.16 and have a dividend yield of 2.28%. At Tuesday's closing price, the stock's net capitalization stands at $17.03 billion.

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