Coca-Cola Consolidated Reports Second Quarter and First Half 2023 Results
- Net sales increased by 9% in the second quarter of 2023 compared to the same period in 2022.
- Gross profit increased by 22% to $672 million in the second quarter of 2023.
- Gross margin improved by 410 basis points to 38.6% in the second quarter of 2023.
- Income from operations for the first half of 2023 was $440 million, up 58% compared to the first half of 2022.
- Operating margin increased by 400 basis points to 13.3% in the first half of 2023.
- None.
- Second quarter of 2023 net sales increased
9% versus the second quarter of 2022.
- Gross profit in the second quarter of 2023 was
$672 million , an increase of22% versus the second quarter of 2022. Gross margin in the second quarter of 2023 improved by 410 basis points(a) to38.6% .
- Income from operations for the first half of 2023 was
$440 million , up$161 million , or58% , versus the first half of 2022. Operating margin for the first half of 2023 was13.3% as compared to9.3% for the first half of 2022, an increase of 400 basis points.
Key Results
Second Quarter | First Half | |||||||||||||||||||||
(in millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||
Standard physical case volume(1) | 92.6 | 96.4 | (4.0) | % | 175.0 | 181.5 | (3.6) | % | ||||||||||||||
Net sales | $ | 1,738.8 | $ | 1,595.2 | 9.0 | % | $ | 3,310.5 | $ | 2,999.6 | 10.4 | % | ||||||||||
Gross profit | $ | 671.6 | $ | 550.7 | 22.0 | % | $ | 1,295.7 | $ | 1,058.2 | 22.4 | % | ||||||||||
Gross margin | 38.6 | % | 34.5 | % | 39.1 | % | 35.3 | % | ||||||||||||||
Income from operations | $ | 233.7 | $ | 147.3 | 58.6 | % | $ | 439.7 | $ | 278.3 | 58.0 | % | ||||||||||
Operating margin | 13.4 | % | 9.2 | % | 13.3 | % | 9.3 | % | ||||||||||||||
Beverage Sales | Second Quarter | First Half | ||||||||||||||||||||
(in millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||
Sparkling bottle/can | $ | 1,004.4 | $ | 879.9 | 14.1 | % | $ | 1,918.7 | $ | 1,655.9 | 15.9 | % | ||||||||||
Still bottle/can | $ | 573.6 | $ | 539.6 | 6.3 | % | $ | 1,082.9 | $ | 1,006.8 | 7.6 | % |
(1) A standard physical case is a volume metric used to standardize differing package configurations in order to measure delivered cases on an equivalent basis.
Second Quarter and First Half 2023 Review
CHARLOTTE, N.C., Aug. 02, 2023 (GLOBE NEWSWIRE) -- Coca‑Cola Consolidated, Inc. (NASDAQ: COKE) today reported operating results for the second quarter ended June 30, 2023 and the first half of fiscal 2023.
“The strong business momentum we attained early this year continued in the second quarter as we posted another quarter of very strong profit growth and achieved a record high operating margin of
Net sales increased
Standard physical case volume declined
Gross profit in the second quarter of 2023 was
“Our strong second quarter results reinforce the success we are having with our retail partners in commercializing our local marketing plans and providing our consumers with a variety of affordable packages,” said Dave Katz, President and Chief Operating Officer. “This is a very dynamic period as we see consumers shifting between retail channels, especially within supermarkets, Club and Value stores. As overall volume slowed in the second quarter, we have proactively engaged with our retail partners to help drive consumer traffic and transaction growth for the balance of this year.”
Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2023 increased
Income from operations in the second quarter of 2023 was
Net income in the second quarter of 2023 was
Second quarter net income was adversely impacted by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, driven by changes in the discount rate and future cash flow projections used to compute the fair value of the liability. Second quarter net income was also adversely impacted by the partial settlement of our primary pension plan, which resulted in a non-cash charge of
Income tax expense for the second quarter of 2023 was
Cash flows provided by operations for first half 2023 were
(a) | All comparisons are to the corresponding period in the prior year unless specified otherwise. |
(b) | The discussion of the operating results for the second quarter ended June 30, 2023 and the first half of fiscal 2023 includes selected non-GAAP financial information, such as “adjusted” results. The schedules in this news release reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures. |
CONTACTS: | ||
Josh Gelinas (Media) | Scott Anthony (Investors) | |
Vice President, Communications | Executive Vice President & Chief Financial Officer | |
(704) 807-3703 | (704) 557-4633 | |
Josh.Gelinas@cokeconsolidated.com | Scott.Anthony@cokeconsolidated.com | |
A PDF accompanying this release is available at: http://ml.globenewswire.com/Resource/Download/b58d7ce8-9221-46bf-9fa4-16942fe4485d
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 121 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, Twitter, Instagram and LinkedIn.
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. 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; the inability to attract and retain front-line employees in a tight labor market; 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 technology systems or our effective response to technology failures or cyberattacks on our customers’, suppliers’ or other third parties’ technology systems; unfavorable changes in the general economy; changes in our top customer relationships and marketing strategies; 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 the COVID-19 pandemic, any variants of the virus and any other similar 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, 2022. 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) |
Second Quarter | First Half | |||||||||||
(in thousands, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||
Net sales | $ | 1,738,832 | $ | 1,595,215 | $ | 3,310,474 | $ | 2,999,573 | ||||
Cost of sales | 1,067,255 | 1,044,556 | 2,014,791 | 1,941,338 | ||||||||
Gross profit | 671,577 | 550,659 | 1,295,683 | 1,058,235 | ||||||||
Selling, delivery and administrative expenses | 437,907 | 403,366 | 855,959 | 779,957 | ||||||||
Income from operations | 233,670 | 147,293 | 439,724 | 278,278 | ||||||||
Interest expense, net | 1,353 | 7,146 | 4,282 | 14,845 | ||||||||
Pension plan settlement expense | 39,777 | — | 39,777 | — | ||||||||
Other expense, net | 27,788 | 6,199 | 71,711 | 2,920 | ||||||||
Income before taxes | 164,752 | 133,948 | 323,954 | 260,513 | ||||||||
Income tax expense | 42,433 | 34,386 | 83,508 | 67,561 | ||||||||
Net income | $ | 122,319 | $ | 99,562 | $ | 240,446 | $ | 192,952 | ||||
Basic net income per share: | ||||||||||||
Common Stock | $ | 13.05 | $ | 10.62 | $ | 25.65 | $ | 20.58 | ||||
Weighted average number of Common Stock shares outstanding | 8,369 | 8,369 | 8,369 | 7,863 | ||||||||
Class B Common Stock | $ | 13.05 | $ | 10.62 | $ | 25.65 | $ | 20.62 | ||||
Weighted average number of Class B Common Stock shares outstanding | 1,005 | 1,005 | 1,005 | 1,511 | ||||||||
Diluted net income per share: | ||||||||||||
Common Stock | $ | 13.02 | $ | 10.59 | $ | 25.59 | $ | 20.53 | ||||
Weighted average number of Common Stock shares outstanding – assuming dilution | 9,396 | 9,399 | 9,396 | 9,399 | ||||||||
Class B Common Stock | $ | 13.01 | $ | 10.59 | $ | 25.51 | $ | 20.56 | ||||
Weighted average number of Class B Common Stock shares outstanding – assuming dilution | 1,027 | 1,030 | 1,027 | 1,536 | ||||||||
FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
(in thousands) | June 30, 2023 | December 31, 2022 | ||||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | 430,172 | $ | 197,648 | ||
Trade accounts receivable, net | 586,104 | 515,928 | ||||
Other accounts receivable | 113,229 | 90,417 | ||||
Inventories | 333,874 | 347,545 | ||||
Prepaid expenses and other current assets | 84,634 | 94,263 | ||||
Total current assets | 1,548,013 | 1,245,801 | ||||
Property, plant and equipment, net | 1,176,339 | 1,183,730 | ||||
Right-of-use assets - operating leases | 128,759 | 140,588 | ||||
Leased property under financing leases, net | 5,608 | 6,431 | ||||
Other assets | 132,017 | 115,892 | ||||
Goodwill | 165,903 | 165,903 | ||||
Other identifiable intangible assets, net | 837,898 | 851,200 | ||||
Total assets | $ | 3,994,537 | $ | 3,709,545 | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities: | ||||||
Current portion of obligations under operating leases | $ | 26,440 | $ | 27,635 | ||
Current portion of obligations under financing leases | 2,393 | 2,303 | ||||
Dividends payable | — | 32,808 | ||||
Accounts payable and accrued expenses | 863,149 | 842,410 | ||||
Total current liabilities | 891,982 | 905,156 | ||||
Deferred income taxes | 151,630 | 150,222 | ||||
Pension and postretirement benefit obligations and other liabilities | 857,426 | 813,680 | ||||
Noncurrent portion of obligations under operating leases | 108,500 | 118,763 | ||||
Noncurrent portion of obligations under financing leases | 6,299 | 7,519 | ||||
Long-term debt | 598,992 | 598,817 | ||||
Total liabilities | 2,614,829 | 2,594,157 | ||||
Equity: | ||||||
Stockholders’ equity | 1,379,708 | 1,115,388 | ||||
Total liabilities and equity | $ | 3,994,537 | $ | 3,709,545 | ||
FINANCIAL STATEMENTS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
First Half | ||||||||
(in thousands) | 2023 | 2022 | ||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 240,446 | $ | 192,952 | ||||
Depreciation expense, amortization of intangible assets and deferred proceeds, net | 87,185 | 85,852 | ||||||
Fair value adjustment of acquisition related contingent consideration | 67,174 | (1,436 | ) | |||||
Pension plan settlement expense | 39,777 | — | ||||||
Deferred income taxes | (7,848 | ) | 11,189 | |||||
Change in current assets and current liabilities | (41,957 | ) | (59,004 | ) | ||||
Change in noncurrent assets and noncurrent liabilities | (6,061 | ) | 12,151 | |||||
Other | 4,622 | 1,831 | ||||||
Net cash provided by operating activities | $ | 383,338 | $ | 243,535 | ||||
Cash Flows from Investing Activities: | ||||||||
Additions to property, plant and equipment | $ | (92,893 | ) | $ | (145,182 | ) | ||
Acquisition of distribution rights | — | (30,149 | ) | |||||
Other | (5,766 | ) | 3,717 | |||||
Net cash used in investing activities | $ | (98,659 | ) | $ | (171,614 | ) | ||
Cash Flows from Financing Activities: | ||||||||
Cash dividends paid | $ | (37,495 | ) | $ | (4,687 | ) | ||
Payments of acquisition related contingent consideration | (13,376 | ) | (18,710 | ) | ||||
Other | (1,284 | ) | (2,035 | ) | ||||
Net cash used in financing activities | $ | (52,155 | ) | $ | (25,432 | ) | ||
Net increase in cash during period | $ | 232,524 | $ | 46,489 | ||||
Cash at beginning of period | 197,648 | 142,314 | ||||||
Cash at end of period | $ | 430,172 | $ | 188,803 | ||||
NON-GAAP FINANCIAL MEASURES(c) The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP): |
Second 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) | $ | 671,577 | $ | 437,907 | $ | 233,670 | $ | 164,752 | $ | 122,319 | $ | 13.05 | |||||||
Fair value adjustment of acquisition related contingent consideration | — | — | — | 25,520 | 19,214 | 2.05 | |||||||||||||
Fair value adjustments for commodity derivative instruments | 1,097 | (224 | ) | 1,321 | 1,321 | 994 | 0.10 | ||||||||||||
Supply chain optimization | 474 | — | 474 | 474 | 357 | 0.04 | |||||||||||||
Pension plan settlement expense | — | — | — | 39,777 | 29,948 | 3.19 | |||||||||||||
Total reconciling items | 1,571 | (224 | ) | 1,795 | 67,092 | 50,513 | 5.38 | ||||||||||||
Adjusted results (non-GAAP) | $ | 673,148 | $ | 437,683 | $ | 235,465 | $ | 231,844 | $ | 172,832 | $ | 18.43 | |||||||
Adjusted % Change vs. Second Quarter 2022 | 19.3 | % | 8.2 | % | 47.1 | % | |||||||||||||
Second Quarter 2022 | |||||||||||||||||||
(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) | $ | 550,659 | $ | 403,366 | $ | 147,293 | $ | 133,948 | $ | 99,562 | $ | 10.62 | |||||||
Fair value adjustment of acquisition related contingent consideration | — | — | — | 4,021 | 3,028 | 0.32 | |||||||||||||
Fair value adjustments for commodity derivative instruments | 13,663 | 998 | 12,665 | 12,665 | 9,536 | 1.02 | |||||||||||||
Supply chain optimization | 84 | (33 | ) | 117 | 117 | 88 | 0.01 | ||||||||||||
Total reconciling items | 13,747 | 965 | 12,782 | 16,803 | 12,652 | 1.35 | |||||||||||||
Adjusted results (non-GAAP) | $ | 564,406 | $ | 404,331 | $ | 160,075 | $ | 150,751 | $ | 112,214 | $ | 11.97 |
First Half 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) | $ | 1,295,683 | $ | 855,959 | $ | 439,724 | $ | 323,954 | $ | 240,446 | $ | 25.65 | |||||||||||
Fair value adjustment of acquisition related contingent consideration | — | — | — | 67,174 | 50,575 | 5.40 | |||||||||||||||||
Fair value adjustments for commodity derivative instruments | 1,492 | (2,914 | ) | 4,406 | 4,406 | 3,317 | 0.35 | ||||||||||||||||
Supply chain optimization | 823 | — | 823 | 823 | 620 | 0.07 | |||||||||||||||||
Pension plan settlement expense | — | — | — | 39,777 | 29,948 | 3.19 | |||||||||||||||||
Total reconciling items | 2,315 | (2,914 | ) | 5,229 | 112,180 | 84,460 | 9.01 | ||||||||||||||||
Adjusted results (non-GAAP) | $ | 1,297,998 | $ | 853,045 | $ | 444,953 | $ | 436,134 | $ | 324,906 | $ | 34.66 | |||||||||||
Adjusted % Change vs. First Half 2022 | 21.9 | % | 8.4 | % | 60.4 | % | |||||||||||||||||
First Half 2022 | |||||||||||||||||||||||
(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) | $ | 1,058,235 | $ | 779,957 | $ | 278,278 | $ | 260,513 | $ | 192,952 | $ | 20.58 | |||||||||||
Fair value adjustment of acquisition related contingent consideration | — | — | — | (1,436 | ) | (1,081 | ) | (0.12 | ) | ||||||||||||||
Fair value adjustments for commodity derivative instruments | 6,169 | 7,223 | (1,054 | ) | (1,054 | ) | (794 | ) | (0.08 | ) | |||||||||||||
Supply chain optimization | 89 | (72 | ) | 161 | 161 | 121 | 0.01 | ||||||||||||||||
Total reconciling items | 6,258 | 7,151 | (893 | ) | (2,329 | ) | (1,754 | ) | (0.19 | ) | |||||||||||||
Adjusted results (non-GAAP) | $ | 1,064,493 | $ | 787,108 | $ | 277,385 | $ | 258,184 | $ | 191,198 | $ | 20.39 |
(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. |
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