Dr Pepper Snapple Q1 Results Top Estimates, Backs 2014 Outlook

(RTTNews) - Non-alcoholic beverage maker Dr Pepper Snapple Group, Inc. (DPS) reported Wednesday a profit for the first quarter that surged 46 percent from last year, reflecting improved operating margins and sales growth amid increased sales volumes.

Both core earnings per share and quarterly sales topped analysts' expectations. The company also reaffirmed its core earnings and sales growth guidance for the full-year 2014.

"We had a strong start to the year. Once again, our teams remained focused and executed against our strategy in a highly competitive and challenged environment. We maintained distribution and availability across our key CSD brands and packages and gained distribution on our key juice and tea brands and packages," President and CEO Larry Young said in a statement.

The Plano, Texas-based maker of Dr Pepper, 7UP, Mott's, Snapple, Canada Dry, reported net income of $155 million or $0.78 per share for the first quarter, higher than $106 million or $0.51 per share in the prior-year quarter.

Excluding items, core earnings was $0.74 per share, compared to last year's $0.53 per share. On average, 15 analysts polled by Thomson Reuters expected the company to report earnings of $0.59 per share for the quarter. Analysts' estimates usually exclude special items.

Net sales for the quarter edged up 1 percent or 2 percent in constant currency, to $1.40 billion from $1.38 billion in the same quarter last year, and topped twelve Wall Street analysts' consensus estimate of $1.38 billion by a whisker.

Sales growth was aided by sales volume growth of 1 percent, favorable product and package mix and net pricing, partially offset by unfavorable segment mix and 1 percentage point of foreign currency. Net sales for beverage concentrates grew 7 percent or 8 percent in constant currency, while packaged beverages net sales were down 1 percent from last year. Meanwhile, net sales for Latin America beverages improved 12 percent or 17 percent in constant currency, from a year ago.

Total bottler case sales volume for the quarter declined 1 percent from last year, with carbonated soft drinks volume declining 1 percent and non-carbonated beverages volume decreasing 2 percent. Dr Pepper volume decreased 4 percent and Core 4 brands, which include TEN, reported flat volumes.

Geographically, volumes also declined 2 percent in the U.S. and Canada, but grew 3 percent in the Caribbean and Mexico.

Operating margin for the quarter improved 430 basis points to 18.6 percent from last year's 14.3 percent.

Looking ahead to fiscal 2014, the company said it continues to expect core earnings in the range of $3.38 to $3.46 per share, on projected annual net sales growth between flat and up 1 percent. Street is currently looking for full-year 2014 earnings of $3.41 per share, on revenue growth of 0.5 percent to $6.03 billion.

"Our 2014 priorities remain unchanged. Our teams will continue to build the TEN platform with programming focused on driving awareness and trial, provide consumers with a range of products that meet their evolving needs and execute with excellence in the marketplace," Young added.

In Wednesday's regular trading session, DPS is currently trading at $54.15, up $1.76 or 3.36% on a volume of 0.14 million shares.