Coca-Cola Reports Fourth Quarter and Full-Year 2022 Results
The Coca-Cola Company reported fourth-quarter results showing net revenues of $10.1 billion, a 7% increase, while full-year revenues grew 11% to $43.0 billion. Organic revenues rose by 15% in Q4 and 16% for the year. Operating income increased 24% for the quarter but just 6% for the full year. EPS declined by 16% to $0.47 for the quarter but grew 7% on a comparable basis for the year. Cash flow from operations fell 13% to $11.0 billion. Despite a 1% decline in unit case volume for Q4, the company gained market share in nonalcoholic beverages, notably in developing markets.
- Net revenues increased 7% to $10.1 billion for Q4.
- Full-year revenues grew 11% to $43.0 billion.
- Organic revenues grew 15% for Q4 and 16% for the full year.
- Operating income up 24% for the quarter, 6% for the year.
- Comparable EPS grew 7% to $2.48 for the full year.
- Gained value share in nonalcoholic beverages.
- Unit case volume declined 1% for Q4.
- EPS declined 16% to $0.47 for Q4.
- Cash flow from operations decreased 13% to $11.0 billion.
- Free cash flow fell 15% to $9.5 billion.
Global Unit Case Volume Declined
Net Revenues Grew
Organic Revenues (Non-GAAP) Grew
Operating Income Grew
Comparable Currency Neutral Operating Income (Non-GAAP) Grew
Fourth Quarter EPS Declined
Full-Year EPS Declined
Cash Flow from Operations Was
Full-Year Free Cash Flow (Non-GAAP) Was
Company Provides 2023 Financial Outlook
Highlights |
Quarterly / Full-Year Performance |
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Revenues: For the quarter, net revenues were strong, growing
7% to . Organic revenues (non-GAAP) grew$10.1 billion 15% . Organic revenue (non-GAAP) performance was strong across operating segments and included12% growth in price/mix and2% growth in concentrate sales. The quarter included one additional day, which resulted in a 1-point tailwind to revenue growth. The quarter also benefited from the timing of concentrate shipments. For the full year, net revenues grew11% to , and organic revenues (non-GAAP) grew$43.0 billion 16% . This performance was driven by11% growth in price/mix and5% growth in concentrate sales.
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Operating margin: For the quarter, operating margin, which included items impacting comparability, was
20.5% versus17.7% in the prior year, while comparable operating margin (non-GAAP) was22.7% versus22.1% in the prior year. For the full year, operating margin, which included items impacting comparability, was25.4% versus26.7% in the prior year, while comparable operating margin (non-GAAP) was28.7% in both the current year and the prior year. For both the quarter and the full year, operating margin benefited from strong topline growth but was unfavorably impacted by the BODYARMOR acquisition, higher operating costs, an increase in marketing investments versus the prior year, currency headwinds and items impacting comparability.
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Earnings per share: For the quarter, EPS declined
16% to , and comparable EPS (non-GAAP) was even at$0.47 . EPS performance included the impact of a 12-point currency headwind, while comparable EPS (non-GAAP) performance included the impact of an 11-point currency headwind. For the full year, EPS declined$0.45 3% to , and comparable EPS (non-GAAP) grew$2.19 7% to . EPS performance included the impact of an 11-point currency headwind, while comparable EPS (non-GAAP) performance included the impact of a 10-point currency headwind.$2.48
- Market share: For both the quarter and the full year, the company gained value share in total nonalcoholic ready-to-drink (“NARTD”) beverages, which included share gains in both at-home and away-from-home channels.
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Cash flow: Cash flow from operations was
for the full year, a decline of$11.0 billion versus the prior year, as strong business performance was more than offset by the deliberate buildup of inventory in the face of a volatile commodity environment, cycling working capital benefits from the prior year, and higher tax payments and annual incentive payments in 2022. Free cash flow (non-GAAP) was$1.6 billion , a decline of$9.5 billion versus the prior year.$1.7 billion
Company Updates |
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Evolving company leadership to fuel growth: The company continues to focus on having the right leaders and organizational structure to deliver on its growth strategy, while also developing talent for the future. Through recent leadership appointments, the company continued to optimize its organizational design, connecting functions end-to-end while identifying key opportunities to drive meaningful growth over the long term. During the quarter,
John Murphy began an expanded role as President and Chief Financial Officer, and added oversight ofGlobal Ventures , Bottling Investments, Platform Services, customer and commercial leadership, and online-to-offline digital transformation. The company also namedHenrique Braun to the newly created role of President, International Development to oversee seven of the company’s nine operating units. Braun will steward growth of the consumer base across developing and emerging markets as well as developed markets. Braun will partner withNikos Koumettis , President of theEurope operating unit, andJennifer Mann , President of theNorth America operating unit, on global operational strategy in order to scale best practices and help ensure the company captures growth opportunities across all of its markets.
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Leveraging digital engagement to connect with more consumers: By linking consumption occasions with consumer passion points, the company is building deeper connections with consumers and reaching them in new and unique ways. The company successfully executed on the Coca-Cola® “Believing is Magic” global campaign for FIFA World Cup Qatar 2022 by creating end-to-end, digitally driven experiences. The company developed its own digital platform, the
Coca-Cola Fan Zone , which was activated in 41 markets and featured social experiences for soccer fans. Approximately 5 million consumers interacted with this platform. Through an exclusive partnership with Panini, the official licensed sticker album of FIFA World Cup Qatar 2022, soccer fans were able to trade physical and digital stickers, which drove approximately 28 million product label scans, up approximately400% versus the 2018 FIFA World Cup.
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Progressing on ambitious packaging goals: The company continues to collaborate with partners to address challenges and create a circular economy for packaging. The company has built a broad spectrum of partnerships to help accelerate progress toward our 2030 packaging collection goal. In
India , the company partnered with the grocery delivery service Zepto for a “return and recycle” initiative for PET bottles. Consumers can access the “Return PET Bottles” feature on the Zepto app, where they can opt to return four empty PET bottles, to be collected by Zepto riders. This initiative establishes an organized process of PET bottle collection with full traceability to help ensure effective plastic waste management. InLatin America , the company partnered with the food aggregator Rappi to collect empty PET bottles. Inthe Philippines , the company is transitioning the existing PET packaging of some of its brands to100% recycled PET, excluding caps and labels, utilizing new sources of recycled PET from the joint venture investment PETValue, the first bottle-to-bottle recycling facility in the country. The new packaging formats for Coca-Cola® Original Taste and Wilkins® Pure will expand the company’s lineup in recycled plastic packaging in the country. The company also has approximately50% of its portfolio in the country in returnable glass bottles.
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Building a fit-for-purpose balance sheet: The company is focused on having a balance sheet that supports sustainable value creation. In 2022, the company completed the refranchising of company-owned bottling operations in
Cambodia toSwire Coca-Cola Limited , a subsidiary of Swire Pacific Limited, and completed the sale of its stake in the bottler inEgypt to Coca-Cola HBC AG. The company also announced the refranchising of company-owned bottling operations inVietnam , which was completed inJanuary 2023 , and the company agreed to sell its stake in the bottler inPakistan . Additionally, once market conditions become more favorable, the company intends to list Coca-Cola Beverages Africa as a publicly traded company via an initial public offering, which we believe will occur subsequent to 2023. The company continually evaluates the most effective use of capital to align with its objective of focusing resources on building consumer-loved brands and driving growth.
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Update on ongoing tax litigation with the
IRS : InNovember 2020 , theU.S. Tax Court (“Tax Court”) issued an opinion in the company’s 2015 transfer pricing litigation with theInternal Revenue Service (“IRS”), in which the Tax Court predominantly sided with theIRS . The company intends to assert its claims on appeal and vigorously defend its position. In this opinion, the Tax Court reserved ruling on the effect of Brazilian legal restrictions on the payment of royalties by the company’s licensee inBrazil until after the Tax Court issued its opinion in a separate case involving the 3M Company. The Tax Court issued that opinion in the 3M case onFebruary 9, 2023 . As previously disclosed, the company expects that the Tax Court will now proceed to consider the impact of the 3M opinion on the company’s case and ultimately issue a final decision in the company’s case. The potential impact of the 3M decision for the payment of royalties in the company’s case is already reflected in the company’s previously disclosed estimates of the amounts of potential additional tax and interest that could become due if theIRS were ultimately to prevail in the courts.
Operating Review – Three Months Ended |
Revenues and Volume |
|||||||||
Percent Change |
Concentrate
|
Price/Mix |
Currency
|
Acquisitions,
|
Reported Net
|
|
Organic
|
|
Unit Case
|
Consolidated |
2 |
12 |
(8) |
1 |
7 |
|
15 |
|
(1) |
|
(6) |
15 |
(16) |
0 |
(7) |
|
9 |
|
(5) |
|
6 |
26 |
(7) |
0 |
25 |
|
32 |
|
2 |
|
1 |
12 |
0 |
1 |
14 |
|
12 |
|
0 |
|
8 |
7 |
(14) |
2 |
3 |
|
15 |
|
(1) |
|
3 |
5 |
(13) |
0 |
(5) |
|
8 |
|
8 |
Bottling Investments |
2 |
14 |
(12) |
0 |
4 |
|
16 |
|
1 |
Operating Income and EPS |
||||
|
||||
Percent Change |
Reported
|
Items Impacting
|
Currency Impact |
Comparable
|
Consolidated |
24 |
13 |
(10) |
21 |
|
(18) |
4 |
(17) |
(5) |
|
22 |
(2) |
(10) |
34 |
|
6 |
(6) |
0 |
12 |
|
6 |
(6) |
(9) |
22 |
|
(71) |
(17) |
0 |
(55) |
Bottling Investments |
(15) |
10 |
(7) |
(18) |
|
|
|
|
|
Percent Change |
Reported EPS |
Items Impacting
|
Currency Impact |
Comparable
|
Consolidated |
(16) |
(16) |
(11) |
11 |
Note: Certain rows may not add due to rounding. |
|
1 |
For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any. |
2 |
Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section. |
3 |
Unit case volume is computed based on average daily sales. |
4 |
Due to the combination of multiple business models in the |
Operating Review – Year Ended |
Revenues and Volume |
|||||||||
Percent Change |
Concentrate
|
Price/Mix |
Currency
|
Acquisitions,
|
Reported Net
|
|
Organic
|
|
Unit Case
|
Consolidated |
5 |
11 |
(7) |
2 |
11 |
|
16 |
|
5 |
|
2 |
16 |
(14) |
0 |
5 |
|
18 |
|
3 |
|
7 |
17 |
(5) |
0 |
19 |
|
24 |
|
6 |
|
1 |
12 |
0 |
6 |
19 |
|
13 |
|
2 |
|
8 |
3 |
(9) |
0 |
3 |
|
11 |
|
6 |
|
13 |
0 |
(11) |
0 |
1 |
|
13 |
|
13 |
Bottling Investments |
12 |
7 |
(9) |
0 |
10 |
|
19 |
|
12 |
Operating Income and EPS |
||||
Percent Change |
Reported
|
Items Impacting
|
Currency
|
Comparable
|
Consolidated |
6 |
(5) |
(8) |
19 |
|
6 |
3 |
(15) |
18 |
|
13 |
0 |
(6) |
19 |
|
12 |
(5) |
0 |
18 |
|
(1) |
(2) |
(8) |
9 |
|
(37) |
(1) |
(2) |
(33) |
Bottling Investments |
3 |
(7) |
(9) |
19 |
|
|
|
|
|
Percent Change |
Reported EPS |
Items Impacting
|
Currency
|
Comparable
|
Consolidated |
(3) |
(9) |
(10) |
17 |
Note: Certain rows may not add due to rounding. |
|
1 |
For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes, if any. |
2 |
Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section. |
3 |
Due to the combination of multiple business models in the |
In addition to the data in the preceding tables, operating results included the following:
Consolidated |
-
Unit case volume declined
1% for the quarter. When compared to 2019 volume levels, fourth quarter unit case volume growth was in line with the third quarter. For the fourth quarter, strong growth inBrazil ,India ,Great Britain andMexico was more than offset by the suspension of business inRussia . For the full year, unit case volume grew5% as broad-based growth across all operating segments was driven by strength in away-from-home channels and ongoing investments in the marketplace. Developed markets grew low single digits for the quarter and mid single digits for the year, driven by growth across most markets. Developing and emerging markets declined low single digits for the quarter and grew mid single digits for the year. This performance benefited from strong growth inIndia andBrazil and was unfavorably impacted by the suspension of business inRussia .
Unit case volume performance included the following:
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Sparkling soft drinks were even for the quarter and grew
4% for the year, benefiting from strong performance inLatin America andAsia Pacific and unfavorably impacted by the suspension of business inRussia . Trademark Coca-Cola was even for the quarter, as strong performance inBrazil andPhilippines was offset by the suspension of business inRussia , and grew4% for the year, driven by broad-based strength across all geographic operating segments. Coca-Cola® Zero Sugar grew9% for the quarter and11% for the year, driven by strong growth across developed markets as well as developing and emerging markets. Sparkling flavors declined2% for the quarter and grew5% for the year. This performance benefited from strong growth inIndia andthe United States and was unfavorably impacted by the suspension of business inRussia .
-
Juice, value-added dairy and plant-based beverages declined
7% for the quarter and grew3% for the year. This performance benefited from strong growth in developed markets and was unfavorably impacted by the suspension of business inRussia .
-
Water, sports, coffee and tea were even for the quarter and grew
6% for the year. Water was even for the quarter and grew5% for the year. This performance benefited from strong growth inLatin America and was unfavorably impacted by a decline inChina due to varying levels of pandemic-related mobility restrictions. Sports drinks grew1% for the quarter and8% for the year, driven by strong performance inLatin America andEurope ,Middle East andAfrica . Coffee grew11% for the quarter and13% for the year, primarily driven by cycling the impact of pandemic-related Costa® retail store closures in theUnited Kingdom in the prior year and the continued expansion of Costa® coffee across markets. Tea declined9% for the quarter and grew1% for the year. This performance benefited from strong growth of Fuze® Tea inLatin America and was unfavorably impacted by doğadan® performance inTurkey .
-
Price/mix grew
12% for the quarter and11% for the year. This was primarily driven by pricing actions in the marketplace across operating segments along with favorable channel and package mix. For the quarter, concentrate sales were 3 points ahead of unit case volume, primarily due to one additional day along with the timing of concentrate shipments.
-
Operating income grew
24% for the quarter and6% for the year, which included items impacting comparability and currency headwinds. Comparable currency neutral operating income (non-GAAP) grew21% for the quarter and19% for the year. For both the quarter and the year, this performance was driven by strong organic revenue (non-GAAP) growth across all operating segments, partially offset by higher operating costs and an increase in marketing investments versus the prior year.
|
-
Unit case volume declined
5% for the quarter, as strong growth inWestern Europe was more than offset by the suspension of business inRussia .
-
Price/mix grew
15% for the quarter, driven by pricing actions across operating units along with inflationary pricing inTurkey . For the quarter, concentrate sales were 1 point behind unit case volume, largely due to the timing of concentrate shipments.
-
For the quarter, operating income declined
18% , which included items impacting comparability and a 27-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined5% for the quarter, as strong organic revenue (non-GAAP) growth across most operating units was more than offset by higher operating costs and an increase in marketing investments versus the prior year.
-
For the year, the company gained value share in total NARTD beverages, led by share gains in
France ,Spain andPoland .
|
-
Unit case volume grew
2% for the quarter, with solid growth across most categories. Growth was led byBrazil andMexico .
-
Price/mix grew
26% for the quarter, driven by pricing actions in the marketplace and favorable channel and package mix, in addition to inflationary pricing inArgentina . For the quarter, concentrate sales were 4 points ahead of unit case volume, primarily due to one additional day along with cycling the timing of concentrate shipments in the prior year.
-
Operating income grew
22% for the quarter, which included a 12-point currency headwind and items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew34% for the quarter, primarily driven by strong organic revenue (non-GAAP) growth, partially offset by higher operating costs and an increase in marketing investments versus the prior year.
-
For the year, the company lost value share in total NARTD beverages, as share gains in
Brazil andArgentina were more than offset by pressure in sparkling soft drinks inMexico .
|
- Unit case volume was even during the quarter, as growth in sparkling soft drinks, juice drinks and value-added dairy beverages was offset by declines in other beverage categories.
-
Price/mix grew
12% for the quarter, primarily driven by pricing actions in the marketplace and the continued recovery in the fountain business.
-
Operating income grew
6% for the quarter, which included items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew12% for the quarter, driven by strong organic revenue (non-GAAP) growth, partially offset by higher operating costs and an increase in marketing investments versus the prior year.
- The company gained value share in total NARTD beverages for the year, driven by the continued recovery in away-from-home channels along with strong performance in at-home channels for sparkling soft drinks and value-added dairy beverages.
|
-
Unit case volume declined
1% for the quarter, driven by strong growth inIndia andVietnam , which was more than offset by a decline inChina due to varying levels of pandemic-related mobility restrictions.
-
Price/mix grew
7% for the quarter, primarily driven by pricing actions in the marketplace, partially offset by negative geographic mix. For the quarter, concentrate sales were 9 points ahead of unit case volume, primarily due to the timing of concentrate shipments.
-
Operating income grew
6% for the quarter, which included items impacting comparability and a 15-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew22% for the quarter, primarily driven by organic revenue (non-GAAP) growth across all operating units, partially offset by higher operating costs.
-
For the year, the company gained value share in total NARTD beverages, led by share gains in
India ,Australia ,Japan andSouth Korea .
|
-
Net revenues declined
5% and organic revenues (non-GAAP) grew8% for the quarter. Net revenues included a 13-point currency headwind. Revenue performance benefited from cycling the impact of pandemic-related Costa retail store closures in theUnited Kingdom in the prior year.
- Operating income and comparable currency neutral operating income (non-GAAP) both declined for the quarter, as solid organic revenue (non-GAAP) growth was more than offset by higher operating costs.
Bottling Investments |
-
Unit case volume grew
1% for the quarter, driven by strength inIndia andVietnam .
-
Price/mix grew
14% for the quarter, driven by pricing actions across most markets.
-
Operating income declined
15% for the quarter, which included items impacting comparability and a 9-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined18% for the quarter, as strong organic revenue (non-GAAP) growth was more than offset by higher operating costs.
Capital Allocation Update |
-
Reinvesting in the business: The company continued to invest in its various lines of business and spent
on capital expenditures in 2022, an increase of$1.5 billion 9% versus the prior year.
-
Continuing to grow the dividend: The company paid dividends totaling
during 2022. The company has increased its dividend in each of the last 60 years.$7.6 billion
- Consumer-centric M&A: In 2022, the company did not make any significant acquisitions. The company continues to evaluate inorganic growth opportunities through brands and capabilities.
-
Share repurchases: In 2022, the company issued
of shares in connection with the exercise of stock options by employees, and the company purchased$0.8 billion of shares. Consequently, net share repurchases (non-GAAP) were$1.4 billion . The company’s remaining share repurchase authorization is approximately$0.6 billion .$8 billion
Outlook |
The 2023 outlook information provided below includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The company is not able to reconcile full-year 2023 projected organic revenues (non-GAAP) to full-year 2023 projected reported net revenues, full-year 2023 projected comparable net revenues (non-GAAP) to full-year 2023 projected reported net revenues, full-year 2023 projected comparable cost of goods sold (non-GAAP) to full-year 2023 projected reported cost of goods sold, full-year 2023 projected underlying effective tax rate (non-GAAP) to full-year 2023 projected reported effective tax rate, full-year 2023 projected comparable currency neutral EPS (non-GAAP) to full-year 2023 projected reported EPS, or full-year 2023 projected comparable EPS (non-GAAP) to full-year 2023 projected reported EPS without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the exact timing and exact impact of acquisitions, divestitures and structural changes throughout 2023; the exact impact of changes in commodity costs throughout 2023; the exact timing and exact amount of items impacting comparability throughout 2023; and the exact impact of fluctuations in foreign currency exchange rates throughout 2023. The unavailable information could have a significant impact on the company’s full-year 2023 reported financial results.
Full Year 2023
The company expects to deliver organic revenue (non-GAAP) growth of
For comparable net revenues (non-GAAP), the company expects a
The company expects commodity price inflation to be a mid single-digit percentage headwind on comparable cost of goods sold (non-GAAP) based on the current rates and including the impact of hedged positions.
The company’s underlying effective tax rate (non-GAAP) is estimated to be
Given the above considerations, the company expects to deliver comparable currency neutral EPS (non-GAAP) growth of
Comparable EPS (non-GAAP) percentage growth is expected to include a
The company expects to generate free cash flow (non-GAAP) of approximately
First Quarter 2023 Considerations
Comparable net revenues (non-GAAP) are expected to include a
Comparable EPS (non-GAAP) percentage growth is expected to include a
The first quarter has one less day compared to first quarter 2022.
Notes |
- All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period, unless otherwise noted.
- All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales in the fourth quarter, unless otherwise noted, and are computed on a reported basis for the full year. “Unit case” means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings), with the exception of unit case equivalents for Costa non-ready-to-drink beverage products which are primarily measured in number of transactions. “Unit case volume” means the number of unit cases (or unit case equivalents) of company beverages directly or indirectly sold by the company and its bottling partners to customers or consumers.
-
“Concentrate sales” represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the company to its bottling partners or other customers. For Costa non-ready-to-drink beverage products, “concentrate sales” represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in unit case equivalents) sold by the company to customers or consumers. In the reconciliation of reported net revenues, “concentrate sales” represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for the geographic operating segments and the
Global Ventures operating segment after considering the impact of structural changes, if any. For the Bottling Investments operating segment for the fourth quarter, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any. For the Bottling Investments operating segment for the full year, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume after considering the impact of structural changes, if any. The Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.
- “Price/mix” represents the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.
- First quarter 2022 financial results were impacted by one less day as compared to first quarter 2021, and fourth quarter 2022 financial results were impacted by one additional day as compared to fourth quarter 2021. Unit case volume results for the quarters are not impacted by the variances in days due to the average daily sales computation referenced above.
Conference Call |
The company is hosting a conference call with investors and analysts to discuss fourth quarter and full-year 2022 operating results today,
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