Keurig Dr Pepper Inc (NYSE:KDP) Q2 2019 Earnings Conference Call - Final Transcript

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Keurig Dr Pepper's Earnings Call for the Second Quarter of 2019. This conference is being recorded and there will be a question-and-answer session at the end of the call.

I would now like to introduce your host for today's conference, Keurig Dr Pepper Vice President of Investor Relations, Mr. Tyson Seely. Mr. Seely, please go ahead.

Thank you, and hello, everyone. Thanks for joining us. Earlier this morning, we issued our press release for the second quarter of 2019. If you need a copy, you can get one on our website at keurigdrpepper.com in the Investor section.

Consistent with previous quarters, today, we will be discussing our results -- performance on an adjusted basis excluding items affecting comparability and with regard to the year ago period. Our financial performance also takes into account pro forma adjustments due to the merger. The company believes that adjusted and adjusted pro forma basis provide investors with additional insight into our business and operating performance trends. While these pro forma adjustments and the exclusion of items affecting comparability are not in accordance with GAAP, we believe that the adjusted and adjusted pro forma basis provide meaningful comparisons and an appropriate basis for a discussion of our performance. Details on the excluded items are included in the reconciliation tables included in our press release and our 10-Q, which will be filed later today. Due to the inability to predict the amount and timing of certain impacts outside of the company's control, we do not reconcile our guidance.

Here with me to discuss our second quarter 2019 results and our outlook for the balance of the year are KDP Chairman and CEO, Bob Gamgort; our CFO, Ozan Dokmecioglu; and our Chief Corporate Affairs Officer Maria Sceppaguercio.

And finally, our discussion this morning may include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to a number of key risks and uncertainties that could cause actual results to differ materially and the company undertakes no obligation to update these statements based upon subsequent events. A detailed discussion of the risks and uncertainties is contained in the company's filings with the SEC.

With that, I'll hand it over to Bob.

Thanks, Tyson, and thanks to everyone for dialing in. The second quarter was another good one for KDP. All four of our segments again registered underlying net sales growth with coffee systems leading the performance this quarter. We also grew dollar consumption and held or grew market share in a number of our key categories. Our recent slate of innovation is performing well in the market, and we remain confident on our plans in this area for the balance of the year, which I will talk about shortly.

Operating income advanced nearly 10% despite a more than 3 percentage point headwind related to the comparison against a gain recorded in Q2 last