Coca-Cola Consolidated Reports First Quarter 2024 Results and Announces the Intention to Repurchase Up to $3.1 Billion of its Common Stock
Coca-Cola Consolidated reported strong first-quarter results with an increase in income from operations, operating margin, and gross profit. The company plans to repurchase up to $3.1 billion of its Common Stock. Net sales increased by 1%, driven by a price increase and improved volume in the Sparkling category. The company's gross margin improved by 50 basis points, and net income saw a significant improvement. The Company also announced its intention to utilize debt to optimize its balance sheet and return cash to stockholders.
Income from operations increased by $9 million, or 5%, in the first quarter of 2024 compared to the same period in 2023.
Operating margin improved to 13.5% in the first quarter of 2024, up from 13.1% in the first quarter of 2023.
Gross profit increased to $640.6 million in the first quarter of 2024, a 3% improvement over the previous year.
Net sales grew by 1% to $1.6 billion in the first quarter of 2024, driven by a price increase and volume growth in the Sparkling category.
Comparable standard physical case volume increased by 0.7% in the first quarter of 2024.
SD&A expenses increased by 2% in the first quarter of 2024, with expenses as a percentage of net sales also rising.
Net income on an adjusted basis saw a smaller increase of $10.7 million in the first quarter of 2024 compared to the same period in 2023.
Insights
- Income from operations for the first quarter of 2024 was
$215 million , up$9 million , or5% , versus the first quarter of 2023. - Operating margin for the first quarter of 2024 was
13.5% as compared to13.1% for the first quarter of 2023, an increase of 40 basis points. - The Company intends to purchase up to
$3.1 billion of its Common Stock through both a modified “Dutch auction” tender offer for up to$2.0 billion of its Common Stock and a separate share purchase agreement with The Coca‑Cola Company.
Key Results
| First Quarter | ||||||||||
| (in millions) | 2024 | 2023 | Change | |||||||
| Standard physical case volume | 82.1 | 82.5 | (0.4)% | |||||||
| Comparable standard physical case volume(1) | 82.1 | 81.5 | ||||||||
| Net sales | $ | 1,591.6 | $ | 1,571.6 | ||||||
| Gross profit | $ | 640.6 | $ | 624.1 | ||||||
| Gross margin | 40.2 | % | 39.7 | % | ||||||
| Income from operations | $ | 215.4 | $ | 206.1 | ||||||
| Operating margin | 13.5 | % | 13.1 | % | ||||||
| Beverage Sales | First Quarter | |||||||||
| (in millions) | 2024 | 2023 | Change | |||||||
| Sparkling bottle/can | $ | 952.0 | $ | 920.6 | ||||||
| Still bottle/can | $ | 511.6 | $ | 509.6 | ||||||
| (1) | Comparable standard physical case volume is presented for purposes of consistent comparison of selling performance between periods and is adjusted to eliminate the estimated impact of the additional selling day in the first quarter of 2023. | |
First Quarter 2024 Review
CHARLOTTE, N.C., May 06, 2024 (GLOBE NEWSWIRE) -- Coca‑Cola Consolidated, Inc. (NASDAQ: COKE) today reported operating results for the first quarter ended March 29, 2024.
“Our solid first quarter results build on the improved profit margins and strong free cash flow we achieved in 2023,” said J. Frank Harrison, III, Chairman and Chief Executive Officer. “Our sustained strong performance gives us the confidence to announce our intended repurchase of up to
Net sales increased
Standard physical case volume was down
Gross profit in the first quarter of 2024 was
“We’re very pleased with our balanced profit growth and overall margin performance in the first quarter,” said Dave Katz, President and Chief Operating Officer. “We achieved a solid mix of volume and pricing growth while tightly managing our operating expenses. Our comparable volume growth of almost
Selling, delivery and administrative (“SD&A”) expenses in the first quarter of 2024 increased
Income from operations in the first quarter of 2024 was
Net income in the first quarter of 2024 was
Cash flows provided by operations for the first quarter of 2024 were
Intention to Repurchase Shares
The Company currently intends to purchase up to
Under the Purchase Agreement, the Company has agreed to buy, and a subsidiary of The Coca‑Cola Company has agreed to sell, at a purchase price equal to the price paid by the Company in the tender offer, a number of shares of Common Stock such that The Coca‑Cola Company would beneficially own
“We believe that the proposed share repurchase enables us to optimize our balance sheet by raising a prudent amount of debt in order to return cash to stockholders,” said Mr. Harrison. “We intend to utilize our solid financial position and projected strong cash flow to delever over the coming years while maintaining our current regular quarterly dividend and a solid investment grade rating profile.”
J. Frank Harrison, III will not participate in the tender offer with respect to the Common Stock he beneficially owns.
The Company intends to fund the repurchase with a combination of new funded debt and cash on hand.
| (a) | All comparisons are to the corresponding period in the prior year unless specified otherwise. | |
| (b) | The discussion of the operating results for the first quarter ended March 29, 2024 includes selected non-GAAP financial information, such as “comparable” and “adjusted” results. The schedules in this news release reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures. | |
| CONTACTS: | ||
| Ashley Brown (Media) | Scott Anthony (Investors) | |
| Director, External Communications | Executive Vice President & Chief Financial Officer | |
| (803) 979-2849 | (704) 557-4633 | |
| Ashley.Brown@cokeconsolidated.com | Scott.Anthony@cokeconsolidated.com | |
A PDF accompanying this release is available at: http://ml.globenewswire.com/Resource/Download/861a9ae2-3a03-49d2-8559-45e866072618
About Coca-Cola Consolidated, Inc.
Coca‑Cola Consolidated is the largest Coca‑Cola bottler in the United States. Our Purpose is to honor God in all we do, to serve others, to pursue excellence and to grow profitably. For over 122 years, we have been deeply committed to the consumers, customers and communities we serve and passionate about the broad portfolio of beverages and services we offer. We make, sell and distribute beverages of The Coca‑Cola Company and other partner companies in more than 300 brands and flavors across 14 states and the District of Columbia, to approximately 60 million consumers.
Headquartered in Charlotte, N.C., Coca‑Cola Consolidated is traded on The Nasdaq Global Select Market under the symbol “COKE”. More information about the Company is available at www.cokeconsolidated.com. Follow Coca‑Cola Consolidated on Facebook, X, Instagram and LinkedIn.
Additional Information Regarding the Tender Offer
The information in this press release describing the Tender Offer is for informational purposes only and does not constitute an offer to buy or the solicitation of an offer to sell shares in the Tender Offer. Coca-Cola Consolidated has not yet commenced the Tender Offer described herein, and there can be no assurance that Coca-Cola Consolidated will commence the Tender Offer on the terms described in this press release. The Tender Offer will be made only pursuant to an Offer to Purchase and the related materials that Coca-Cola Consolidated will file with the SEC, and will distribute to its stockholders on the commencement date of the Tender Offer. Stockholders should read the Offer to Purchase and related materials carefully and in their entirety because they will contain important information, including the terms and conditions of the Tender Offer. When they are available, stockholders of the Company may obtain a free copy of the Tender Offer statement on Schedule TO, the Offer to Purchase and other documents that the Company will file with the SEC from the SEC’s website at www.sec.gov. When they are available, stockholders also will be able to obtain a copy of these documents, without charge, from Innisfree M&A Incorporated, the information agent for the Tender Offer, toll free at 1-877-456-3507. Stockholders are urged to carefully read all of those materials when they become available prior to making any decision with respect to the Tender Offer.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this news release are “forward-looking statements” that involve risks and uncertainties which we expect will or may occur in the future and may impact our business, financial condition and results of operations. The words “anticipate,” “believe,” “expect,” “intend,” “project,” “may,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements. Such forward-looking statements include our plan to commence the tender offer and ability to complete the share repurchase on the terms and timing described herein, or at all. These forward-looking statements reflect the Company’s best judgment based on current information, and, although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may vary materially from the projected results and expectations discussed in this news release. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: increased costs (including due to inflation), disruption of supply or unavailability or shortages of raw materials, fuel and other supplies; the reliance on purchased finished products from external sources; changes in public and consumer perception and preferences, including concerns related to product safety and sustainability, artificial ingredients, brand reputation and obesity; changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients and product safety and sustainability; decreases from historic levels of marketing funding support provided to us by The Coca‑Cola Company and other beverage companies; material changes in the performance requirements for marketing funding support or our inability to meet such requirements; decreases from historic levels of advertising, marketing and product innovation spending by The Coca‑Cola Company and other beverage companies, or advertising campaigns that are negatively perceived by the public; any failure of the several Coca‑Cola system governance entities of which we are a participant to function efficiently or on our best behalf and any failure or delay of ours to receive anticipated benefits from these governance entities; provisions in our beverage distribution and manufacturing agreements with The Coca‑Cola Company that could delay or prevent a change in control of us or a sale of our Coca‑Cola distribution or manufacturing businesses; the concentration of our capital stock ownership; our inability to meet requirements under our beverage distribution and manufacturing agreements; changes in the inputs used to calculate our acquisition related contingent consideration liability; technology failures or cyberattacks on our information technology systems or our effective response to technology failures or cyberattacks on our customers’, suppliers’ or other third parties’ information technology systems; unfavorable changes in the general economy; the concentration risks among our customers and suppliers; lower than expected net pricing of our products resulting from continued and increased customer and competitor consolidations and marketplace competition; the effect of changes in our level of debt, borrowing costs and credit ratings on our access to capital and credit markets, operating flexibility and ability to obtain additional financing to fund future needs; the failure to attract, train and retain qualified employees while controlling labor costs, and other labor issues; the failure to maintain productive relationships with our employees covered by collective bargaining agreements, including failing to renegotiate collective bargaining agreements; changes in accounting standards; our use of estimates and assumptions; changes in tax laws, disagreements with tax authorities or additional tax liabilities; changes in legal contingencies; natural disasters, changing weather patterns and unfavorable weather; climate change or legislative or regulatory responses to such change; and the impact of any pandemic or public health situation. These and other factors are discussed in the Company’s regulatory filings with the United States Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The forward-looking statements contained in this news release speak only as of this date, and the Company does not assume any obligation to update them, except as may be required by applicable law.
| FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||
| First Quarter | ||||||||
| (in thousands, except per share data) | 2024 | 2023 | ||||||
| Net sales | $ | 1,591,626 | $ | 1,571,642 | ||||
| Cost of sales | 951,067 | 947,536 | ||||||
| Gross profit | 640,559 | 624,106 | ||||||
| Selling, delivery and administrative expenses | 425,153 | 418,052 | ||||||
| Income from operations | 215,406 | 206,054 | ||||||
| Interest (income) expense, net | (2,716 | ) | 2,929 | |||||
| Other (income) expense, net | (4,713 | ) | 43,923 | |||||
| Income before taxes | 222,835 | 159,202 | ||||||
| Income tax expense | 57,094 | 41,075 | ||||||
| Net income | $ | 165,741 | $ | 118,127 | ||||
| Basic net income per share: | ||||||||
| Common Stock | $ | 17.68 | $ | 12.60 | ||||
| Weighted average number of Common Stock shares outstanding | 8,369 | 8,369 | ||||||
| Class B Common Stock | $ | 17.68 | $ | 12.60 | ||||
| Weighted average number of Class B Common Stock shares outstanding | 1,005 | 1,005 | ||||||
| Diluted net income per share: | ||||||||
| Common Stock | $ | 17.66 | $ | 12.57 | ||||
| Weighted average number of Common Stock shares outstanding – assuming dilution | 9,387 | 9,395 | ||||||
| Class B Common Stock | $ | 17.46 | $ | 12.51 | ||||
| Weighted average number of Class B Common Stock shares outstanding – assuming dilution | 1,018 | 1,026 | ||||||
| FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
| (in thousands) | March 29, 2024 | December 31, 2023 | ||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 401,260 | $ | 635,269 | ||||
| Short-term investments | 183,639 | — | ||||||
| Trade accounts receivable, net | 551,439 | 539,873 | ||||||
| Other accounts receivable | 127,836 | 119,469 | ||||||
| Inventories | 361,086 | 321,932 | ||||||
| Prepaid expenses and other current assets | 89,593 | 88,585 | ||||||
| Total current assets | 1,714,853 | 1,705,128 | ||||||
| Property, plant and equipment, net | 1,321,681 | 1,320,563 | ||||||
| Right-of-use assets - operating leases | 116,129 | 122,708 | ||||||
| Leased property under financing leases, net | 4,373 | 4,785 | ||||||
| Other assets | 156,140 | 145,213 | ||||||
| Goodwill | 165,903 | 165,903 | ||||||
| Other identifiable intangible assets, net | 818,013 | 824,642 | ||||||
| Total assets | $ | 4,297,092 | $ | 4,288,942 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current portion of obligations under operating leases | $ | 25,085 | $ | 26,194 | ||||
| Current portion of obligations under financing leases | 2,536 | 2,487 | ||||||
| Dividends payable | — | 154,666 | ||||||
| Accounts payable and accrued expenses | 890,255 | 907,987 | ||||||
| Total current liabilities | 917,876 | 1,091,334 | ||||||
| Deferred income taxes | 185,001 | 128,435 | ||||||
| Pension and postretirement benefit obligations and other liabilities | 892,375 | 927,113 | ||||||
| Noncurrent portion of obligations under operating leases | 96,979 | 102,271 | ||||||
| Noncurrent portion of obligations under financing leases | 4,382 | 5,032 | ||||||
| Long-term debt | 599,293 | 599,159 | ||||||
| Total liabilities | 2,695,906 | 2,853,344 | ||||||
| Equity: | ||||||||
| Stockholders’ equity | 1,601,186 | 1,435,598 | ||||||
| Total liabilities and equity | $ | 4,297,092 | $ | 4,288,942 | ||||
| FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| First Quarter | ||||||||
| (in thousands) | 2024 | 2023 | ||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 165,741 | $ | 118,127 | ||||
| Depreciation expense, amortization of intangible assets and deferred proceeds, net | 46,751 | 43,509 | ||||||
| Deferred income taxes | 56,616 | 40,743 | ||||||
| Fair value adjustment of acquisition related contingent consideration | (5,541 | ) | 41,654 | |||||
| Change in current assets and current liabilities | (44,257 | ) | (49,538 | ) | ||||
| Change in noncurrent assets and noncurrent liabilities | (25,958 | ) | (12,436 | ) | ||||
| Other | 921 | 2,635 | ||||||
| Net cash provided by operating activities | $ | 194,273 | $ | 184,694 | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchases and disposals of short-term investments | $ | (182,690 | ) | $ | — | |||
| Additions to property, plant and equipment | (77,040 | ) | (52,700 | ) | ||||
| Other | (3,532 | ) | 158 | |||||
| Net cash used in investing activities | $ | (263,262 | ) | $ | (52,542 | ) | ||
| Cash Flows from Financing Activities: | ||||||||
| Cash dividends paid | $ | (154,666 | ) | $ | (32,808 | ) | ||
| Payments of acquisition related contingent consideration | (9,700 | ) | (6,499 | ) | ||||
| Other | (654 | ) | (712 | ) | ||||
| Net cash used in financing activities | $ | (165,020 | ) | $ | (40,019 | ) | ||
| Net (decrease) increase in cash during period | $ | (234,009 | ) | $ | 92,133 | |||
| Cash at beginning of period | 635,269 | 197,648 | ||||||
| Cash at end of period | $ | 401,260 | $ | 289,781 | ||||
| COMPARABLE AND NON-GAAP FINANCIAL MEASURES(c) The following tables reconcile reported results (GAAP) to comparable and adjusted results (non-GAAP): |
Results for the first quarter of 2023 include one additional selling day compared to the first quarter of 2024. For comparison purposes, the estimated impact of the additional selling day in the first quarter of 2023 has been excluded from our comparable(b) volume results.
| First Quarter | |||||||||
| (in millions) | 2024 | 2023 | Change | ||||||
| Standard physical case volume | 82.1 | 82.5 | (0.4 | )% | |||||
| Volume related to extra day in fiscal period | — | (1.0 | ) | ||||||
| Comparable standard physical case volume | 82.1 | 81.5 | 0.7 | % | |||||
| First Quarter 2024 | ||||||||||||||||||||||||
| (in thousands, except per share data) | Gross profit | SD&A expenses | Income from operations | Income before taxes | Net income | Basic net income per share | ||||||||||||||||||
| Reported results (GAAP) | $ | 640,559 | $ | 425,153 | $ | 215,406 | $ | 222,835 | $ | 165,741 | $ | 17.68 | ||||||||||||
| Fair value adjustment of acquisition related contingent consideration | — | — | — | (5,541 | ) | (4,172 | ) | (0.45 | ) | |||||||||||||||
| Fair value adjustments for commodity derivative instruments | 1,156 | (43 | ) | 1,199 | 1,199 | 903 | 0.10 | |||||||||||||||||
| Total reconciling items | 1,156 | (43 | ) | 1,199 | (4,342 | ) | (3,269 | ) | (0.35 | ) | ||||||||||||||
| Adjusted results (non-GAAP) | $ | 641,715 | $ | 425,110 | $ | 216,605 | $ | 218,493 | $ | 162,472 | $ | 17.33 | ||||||||||||
| Adjusted % Change vs. First Quarter 2023 | 2.8 | % | 2.3 | % | 3.6 | % | ||||||||||||||||||
| First Quarter 2023 | ||||||||||||||||||||||||
| (in thousands, except per share data) | Gross profit | SD&A expenses | Income from operations | Income before taxes | Net income | Basic net income per share | ||||||||||||||||||
| Reported results (GAAP) | $ | 624,106 | $ | 418,052 | $ | 206,054 | $ | 159,202 | $ | 118,127 | $ | 12.60 | ||||||||||||
| Fair value adjustment of acquisition related contingent consideration | — | — | — | 41,654 | 31,361 | 3.35 | ||||||||||||||||||
| Fair value adjustments for commodity derivative instruments | 395 | (2,690 | ) | 3,085 | 3,085 | 2,323 | 0.25 | |||||||||||||||||
| Total reconciling items | 395 | (2,690 | ) | 3,085 | 44,739 | 33,684 | 3.60 | |||||||||||||||||
| Adjusted results (non-GAAP) | $ | 624,501 | $ | 415,362 | $ | 209,139 | $ | 203,941 | $ | 151,811 | $ | 16.20 | ||||||||||||
| (c) | The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of the financial statements with additional, meaningful financial information that should be considered, in addition to the measures reported in accordance with GAAP, when assessing the Company’s ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting. | |
FAQ
<p>What were Coca-Cola Consolidated's net sales in the first quarter of 2024?</p>
Net sales for Coca-Cola Consolidated in the first quarter of 2024 were $1.6 billion.
<p>How much does Coca-Cola Consolidated plan to repurchase of its Common Stock?</p>
Coca-Cola Consolidated plans to repurchase up to $3.1 billion of its Common Stock.
<p>What was the change in gross profit for Coca-Cola Consolidated in the first quarter of 2024?</p>
Gross profit for Coca-Cola Consolidated increased to $640.6 million in the first quarter of 2024, a 3% improvement over the previous year.
<p>How did Coca-Cola Consolidated's operating margin change in the first quarter of 2024?</p>
Coca-Cola Consolidated's operating margin improved to 13.5% in the first quarter of 2024, up from 13.1% in the first quarter of 2023.
<p>What was the change in SD&A expenses for Coca-Cola Consolidated in the first quarter of 2024?</p>
SD&A expenses for Coca-Cola Consolidated increased by 2% in the first quarter of 2024.
