Keurig Dr Pepper Inc (NYSE:KDP) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 08:00 am ET
testament to the dedication and commitment of our team, and I can't thank KDP employees enough for all that they are doing day in and day out. As you know, the environment in which we are operating continues to be extremely volatile with covert cases spiking again forcing some regions into a second phase of shutdown, all of which impacts consumer mobility and beverage consumption behavior.
TDP was performing exceptionally well before the crisis. We delivered well for all stakeholders during the crisis as evidenced by the results we're discussing today, and we fully expect to emerge as an even stronger company when we get to the other side. Until there is a widely available vaccine or treatment, we believe the macro environment will be bumpy and uncertain, requiring us to continue to be focused, flexible and responsive.
Two years ago this month we completed the merger that created Keurig Dr Pepper, which at that time we described as the new challenger in the beverage industry. With the integration complete, we believe we have created a modern beverage company, with a broad reaching portfolio of hot and cold beverages delivered by a diversified route to market network that provides unmatched reach and efficiency, and with highly unique ecosystems in our coffee business and DSD network that leverage partnerships and technology to create value.
Equally important, we have built a culture that emphasizes excellence in execution and delivery. The covert crisis is by no means a windfall for TDP. We have been required to focus resources on the areas of our business that are aligned with changing consumer trends, such as at-home coffee, multipack cold beverages, large-format retail, and e-commerce to offset significant weakness in away from home coffee, on premise beverage consumption and convenience stores.
The impact of these mixed changes on margin are significant, which has required us to deliver volume and revenue growth while tightly controlling the cost side of our P&L, and still investing in our future. Our executional capabilities have certainly been tested by the crisis and we're proud of how we've performed to date. In the two years since the merger, we have exceeded our merger commitments for net sales growth of 2% to 3% and adjusted diluted EPS growth of 15% to 17%.
In fact, in the eight quarters since our merger close, adjusted diluted EPS has grown at an average annual rate of 20%. In the second quarter, which we believe will be the most challenging environment we face this year, constant currency net sales advanced nearly 3%. Constant currency adjusted operating income grew 11%, and adjusted diluted EPS was up 10%. Further, we have reduced our management leverage ratio to 4 times as compared to the 6 times ratio at the time of the merger.
Ozan will take you through a more detailed review of our financial results by segment in a few minutes. To bring the concept of a modern beverage company to life, let me use several performance highlights from