Dr Pepper Snapple Group Inc. (NYSE: DPS) reported first quarter 2014 EPS of $0.78 compared to $0.51 in the prior year period. Core EPS were $0.74 compared to $0.53 in the prior year.

For the quarter, reported net sales increased 1 percent as a sales volume increase of 1 percent, favorable product and package mix and net pricing were partially offset by unfavorable segment mix and 1 percentage point of foreign currency. Reported segment operating profit (SOP) increased 14 percent, or $40 million, on net sales growth, lower commodity costs, including an unfavorable year-over-year LIFO comparison, and ongoing productivity improvements.

Reported income from operations for the quarter was $260 million, including $12 million of unrealized commodity mark-to-market gains. Reported income from operations was $197 million in the prior year period, including $7 million of unrealized commodity mark-to-market losses. Core income from operations was $248 million, up 21.6 percent compared to the prior year period.

DPS President and CEO Larry Young said, “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. We continued to invest behind our well-loved brands and engaged with our consumers and shoppers through innovative marketing programs. Rapid Continuous Improvement (RCI) continues to be embedded throughout the organization and we’re making good progress on our lean tracks. 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.”

BCS (BOTTLER CASE SALES) VOLUME
For the quarter, BCS volume declined 1 percent with carbonated soft drinks (CSDs) declining 1 percent and non-carbonated beverages (NCBs) declining 2 percent.

In CSDs, the category continued to face significant headwinds. Dr Pepper volume decreased 4 percent. Our Core 4 brands, which include TEN, were flat as a mid-single digit increase in Canada Dry was partially offset by a mid-single digit decrease in Sunkist soda and a low-single digit decline in A&W. 7UP was flat in the quarter. Peñafiel increased double-digits on new product innovation, and Squirt declined high-single digits. Fountain foodservice volume decreased 3 percent in the quarter.

In NCBs, Hawaiian Punch volume declined 8 percent on category headwinds and increased competitive activity. Mott’s declined 1 percent in the quarter, lapping double-digit growth in the prior year. These declines were partially offset by a 2 percent increase in Snapple and a 3 percent increase in Clamato.

By geography, U.S. and Canada volume declined 2 percent, and Mexico and the Caribbean volume increased 3 percent.

SALES VOLUME
Sales volume increased 1 percent for the quarter primarily driven by concentrate shipment timing.

Beverage Concentrates
Net sales for the quarter increased 8 percent on a 3 percent volume increase driven by concentrate shipment timing, concentrate price increases taken at the beginning of the year and favorable discounts driven by shipment volume timing. SOP increased 14 percent on net sales growth and lower marketing investments of $4 million.

Packaged Beverages
Net sales declined 1 percent for the quarter as growth in contract manufacturing was more than offset by branded volume declines. SOP increased 16 percent on favorable commodity costs, including an unfavorable LIFO comparison, ongoing productivity improvements and lower labor and benefit costs. These were partially offset by lower net sales.

Latin America Beverages
Net sales for the quarter increased 17 percent reflecting favorable mix, higher retail pricing associated with the pass-through of the sugar tax in Mexico and a 2 percent volume increase, which was partially offset by increased discounts. SOP increased 63 percent as net sales growth and ongoing productivity improvements were partially offset by increases in transportation costs.

Corporate and other items
For the quarter, corporate costs totaled $57 million, including a $12 million unrealized commodity mark-to-market gain and lower professional fees and information technology expenses. Corporate costs in the prior year period were $80 million, including a $7 million unrealized commodity mark-to-market loss.

Net interest expense decreased $9 million for the quarter compared to the prior year.

For the quarter, the reported effective tax rate was 34.3 percent, as a $2 million deferred tax benefit due to a New York State law change decreased the effective tax rate by 0.9 percent.

Cash flow
For the quarter, the company generated $129 million of cash from operating activities compared to $77 million in the prior year period. Capital spending totaled $37 million compared to $46 million in the prior year period. The company returned $135 million to shareholders in the form of stock repurchases ($60 million) and dividends ($75 million).

2014 full year guidance
The company continues to expect full year reported net sales to be flat to up 1 percent and Core EPS to be in the $3.38 to $3.46 range.

Packaging and ingredient costs, including LIFO impacts, are expected to decrease COGS by 2 percent on a constant volume/mix basis.

The company expects its core tax rate to be approximately 35.5 percent.

The company continues to expect capital spending to be approximately 3 percent of net sales.

The company expects to repurchase $375 million to $400 million of its common stock.