Coca-Cola Consolidated Inc
For the period ended Sep 27, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 27, 2024 · Filed Oct 30, 2024
COKE$207.89-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-28; filed 2024-07-31.
0000317540-24-000046
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-27; filed 2024-10-30.
0000317540-24-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 149 current paragraphs.
75 unchanged; 59 reworded; 13 added; 15 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
As noted in our second quarter 2024 results, we have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-direct store delivery (“DSD”) method of distribution. As a result, these cases are not included in our 2024 reported case sales. The 2024 impact of this distribution change reduced our reported case sales by 1.8% during the third quarter and 0.9% during the first nine months.
Current report
Third Quarter Results
Current report
Interest Expense (Income), Net
Current report
Mark-to-market on acquisition related contingent consideration increased $49.7 million from an increase of $18.9 million in the third quarter of 2023 to an increase of $68.6 million in the third quarter of 2024. During the third quarter of 2024, the $68.6 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, as well as a decrease in the WACC used to calculate the fair value of the liability. During the third quarter of 2023, the $18.9 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, partially offset by an increase in the WACC used to calculate the fair value of the liability.
Current report
First Nine Months Results
Current report
We have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution. As a result, these cases are not included in our 2024 reported case sales. The 2024 impact of this distribution change reduced our reported case sales by 0.9% during the first nine months of 2024.
Current report
Mark-to-market on acquisition related contingent consideration increased $4.8 million from an increase of $86.0 million in the first nine months of 2023 to an increase of $90.9 million in the first nine months of 2024. During the first nine months of 2024, the $90.9 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments. During the first nine months of 2023, the $86.0 million increase in the fair value of the acquisition related contingent consideration liability also was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.
Current report
•A decrease in accounts payable, trade of $36.6 million, primarily due to the timing of cash payments.
Current report
•An increase in accounts payable to The Coca-Cola Company of $89.7 million, primarily due to the timing of cash payments and increases in certain raw material and concentrate input costs, higher payments related to certain marketing programs and increases to our acquisition related sub-bottling payments.
Current report
•An increase in other accrued liabilities of $38.7 million, primarily driven by an increase in accrued interest on new debt balances and an increase in the liability related to the acquisition related contingent consideration.
Current report
On August 20, 2024, the Company announced that its Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $1.00 billion of the Company’s Common Stock. The Company expects share repurchases to be made from time to time in the open market or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, the prevailing market price, applicable legal requirements and other factors. The new share repurchase authorization is discretionary and has no expiration date. As of September 27, 2024, the Company had not repurchased any shares of Common Stock under the new share repurchase program.
Current report
On August 20, 2024, the Company announced that its Board of Directors had declared an increased quarterly cash dividend of $2.50 per share (up from $0.50 per share) on the Company’s Common Stock and Class B Common Stock, payable on November 8, 2024 to stockholders of record of the Common Stock and the Class B Common Stock as of the close of business on October 25, 2024. The total dividends payable as of September 27, 2024 were approximately $22 million.
Current report
(1)Net cash provided by operating activities in the first nine months of 2024 included net income tax payments of $171.2 million and pension plan contributions of $2.0 million. Net cash provided by operating activities in the first nine months of 2023 included net income tax payments of $146.5 million and pension plan contributions of $16.3 million.
Removed paragraphs (15)
Previous report
Direct store delivery (“DSD”) is our preferred and primary route to market. However, as our business becomes more complex with an increasing number of brands and packages, we are expanding our delivery methods to include routes to market outside our traditional DSD capabilities. We receive fees associated with our non-DSD sales that benefit our overall profitability but the volume is not reported as part of our standard physical case volume. For example, we have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution which reduced our reported case sales by 0.8% in the second quarter of 2024.
Previous report
Net income in the first half of 2024 was $338.6 million, compared to $240.4 million in the first half of 2023, an improvement of $98.1 million. Net income for the second quarter of 2023 and the first half of 2023 was adversely impacted by the partial settlement of our primary pension plan benefit liabilities during the first half of 2023, which resulted in a non-cash charge of $39.8 million.
Previous report
Second Quarter Results
Previous report
Mark-to-market on acquisition related contingent consideration increased $2.3 million in the second quarter of 2024 as compared to the second quarter of 2023.
Previous report
First Half Results
Previous report
Interest (Income) Expense, Net
Previous report
Mark-to-market on acquisition related contingent consideration decreased $44.9 million in the first half of 2024 as compared to the first half of 2023.
Previous report
The change in the fair value of the acquisition related contingent consideration liability in the first half of 2024 as compared to the first half of 2023 was primarily driven by changes in the WACC and future cash flow projections used to calculate the fair value of the liability.
Previous report
Other Comprehensive (Loss) Income, Net of Tax
Previous report
•An increase in accounts receivable, trade of $61.9 million, driven primarily by increased net sales.
Previous report
•An increase in share repurchase obligation to The Coca-Cola Company of $553.7 million, due to a purchase agreement executed during the first half of 2024, as further discussed below and in Note 2 to the condensed consolidated financial statements.
Previous report
•A decrease in accrued compensation of $59.4 million, primarily as a result of the timing of bonus and incentive payments in the first half of 2024.
Previous report
On June 10, 2024, the Company entered into a term loan agreement, providing for a senior unsecured term loan facility in the aggregate principal amount of up to $800 million, maturing on June 10, 2027, and a senior unsecured term loan facility in the aggregate principal amount of up to $500 million, maturing on June 10, 2029 (collectively, the “Term Loan Facilities”). The Company did not draw any loans under the Term Loan Facilities during the second quarter of 2024. On June 20, 2024, the Company gave notice, effective as of June 27, 2024, of its permanent reduction to $0 of the commitments under the Term Loan Facilities. Upon the effectiveness of the notice, the aggregate commitments under the Term Loan Facilities were reduced in accordance with their terms from $1.30 billion to $0. As of June 28, 2024, there were no amounts outstanding under the Term Loan Facilities.
Previous report
(1)Net cash provided by operating activities included net income tax payments of $109.8 million in the first half of 2024 and $90.2 million in the first half of 2023.
Previous report
$300 million to $350 million, with remaining anticipated expenditures in the second half of 2024 of approximately $140 million to $190 million. Over the next five years, the Company anticipates additions to property, plant and equipment to be in the range of approximately $250 million to $300 million annually.
Reworded paragraphs (59)
Previous wording
•The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended June 28, 2024 (the “second quarter” of fiscal 2024 (“2024”)) and June 30, 2023 (the “second quarter” of fiscal 2023 (“2023”)) and the six-month periods ended June 28, 2024 (the “first half” of 2024) and June 30, 2023 (the “first half” of 2023).
Current wording
•The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended September 27, 2024 (the “third quarter” of fiscal 2024 (“2024”)) and September 29, 2023 (the “third quarter” of fiscal 2023 (“2023”)) and the nine-month periods ended September 27, 2024 (the “first nine months” of 2024) and September 29, 2023 (the “first nine months” of 2023).
Previous wording
•The changes in cash flows for the first half of 2024 and the first half of 2023.
Current wording
•The changes in cash flows for the first nine months of 2024 and the first nine months of 2023.
Previous wording
We distribute, market and manufacture nonalcoholic beverages in territories spanning 14 states and the District of Columbia. The Company was incorporated in 1980 and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largest Coca‑Cola bottler in the United States. Approximately 85% of our total bottle/can sales volume to retail customers consists of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for several other beverage companies, including Keurig Dr Pepper Inc. (“Dr Pepper”) and Monster Energy Company. Our Purpose is to honor God in all we do, to serve others, to pursue excellence and to grow profitably. Our Common Stock is traded on The Nasdaq Global Select Market under the symbol “COKE.”
Current wording
We distribute, market and manufacture nonalcoholic beverages in territories spanning 14 states and the District of Columbia. The Company was incorporated in 1980 and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largest Coca‑Cola bottler in the United States. Approximately 85% of our total bottle/can sales volume to retail customers consists of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for several other beverage companies, including Keurig Dr Pepper Inc. (“Dr Pepper”) and Monster Energy Company. Our Purpose is to honor God in all we do, to serve others, to pursue excellence and to grow profitably. Our Common Stock, par value $1.00 per share (“Common Stock”), is traded on The Nasdaq Global Select Market under the symbol “COKE.”
Previous wording
Net sales increased 3.3% to $1.80 billion in the second quarter of 2024 and increased 2.3% to $3.39 billion in the first half of 2024. Sparkling and Still net sales increased 4.4% and 4.2%, respectively, compared to the second quarter of 2023. The net sales growth was driven by pricing actions taken during the first quarter of 2024.
Current wording
Net sales increased 3.1% to $1.77 billion in the third quarter of 2024 and increased 2.6% to $5.15 billion in the first nine months of 2024. Sparkling and Still net sales increased 5.8% and 1.7%, respectively, compared to the third quarter of 2023. The net sales improvement was driven by Sparkling volume growth and pricing actions taken during the first quarter of 2024.
Previous wording
Standard physical case volume was down 1.2% in the second quarter of 2024 and down 0.8% in the first half of the year. For the first half of 2024, comparable standard physical case volume, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, decreased 0.3% compared to the first half of 2023, which included one additional selling day. Sparkling category volume remained relatively flat during the second quarter of 2024 with strong performance of multi-serve can packages sold in larger retail stores. Still category physical case volume declined 3.5% during the second quarter of 2024. We continue to see softness in Dasani casepack water as well as BODYARMOR but we experienced strength in several key brands including Monster, POWERade, Core Power and vitaminwater.
Current wording
Standard physical case volume was down 2.1% in the third quarter of 2024 and down 1.3% in the first nine months of the year. For the first nine months of 2024, comparable standard physical case volume, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, decreased 0.9% compared to the first nine months of 2023, which included one additional selling day. Sparkling category volume increased 0.8% during the third quarter with continued strong performance of multi-serve can packages sold in larger retail stores. Still category physical case volume declined 9.7% during the third quarter of 2024.
Previous wording
Gross profit in the second quarter of 2024 was $716.7 million, an increase of $45.1 million, or 7%. Gross margin in the second quarter of 2024 improved 130 basis points to 39.9%. Pricing actions taken during the first quarter of 2024 along with steady commodity prices were the largest contributors to the overall improvement in gross margin. Gross profit in the first half of 2024 was $1.36 billion, an increase of $61.6 million, or 4.8%.
Current wording
Gross profit in the third quarter of 2024 was $698.0 million, an increase of $36.5 million or 5.5%. Gross margin improved 90 basis points to 39.5%. Pricing actions taken during the first quarter of 2024 along with stable commodity prices contributed to the overall improvement in gross margin. Additionally, our product mix shifted towards Sparkling beverages, which typically carry higher gross margins, during the third quarter of 2024. Gross profit in the first nine months of 2024 was $2.06 billion, an increase of $98.1 million or 5.0%.
Previous wording
Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2024 increased $19.7 million, or 5%. SD&A expenses as a percentage of net sales increased 30 basis points to 25.5% in the second quarter of 2024. The increase in SD&A expenses as compared to the second quarter of 2023 was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation. SD&A expenses in the first half of 2024 increased $26.8 million, or 3.1%. SD&A expenses as a percentage of net sales in the first half of 2024 increased 20 basis points to 26.1% as compared to the first half of 2023.
Current wording
Selling, delivery and administrative (“SD&A”) expenses in the third quarter of 2024 increased $25.7 million, or 5.8%. SD&A expenses as a percentage of net sales increased 70 basis points to 26.7% in the third quarter of 2024. The increase in SD&A expenses as compared to the third quarter of 2023 was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation accruals reflecting the strong operating performance in 2024. SD&A expenses in the first nine months of 2024 increased $52.5 million or 4.0%. SD&A expenses as a percentage of net sales in the first nine months of 2024 increased 40 basis points to 26.3% as compared to the first nine months of 2023.
Previous wording
Income from operations in the second quarter of 2024 was $259.1 million, compared to $233.7 million in the second quarter of 2023, an increase of 11%. For the first half of 2024, income from operations increased $34.8 million to $474.5 million, an increase of 8%. Operating margin for the first half of 2024 was 14.0% as compared to 13.3% for the first half of 2023, an increase of 70 basis points.
Current wording
Income from operations in the third quarter of 2024 was $227.1 million, compared to $216.3 million in the third quarter of 2023, an increase of 5.0%. For the first nine months of 2024, income from operations increased $45.6 million to $701.6 million, an increase of 7.0%. Operating margin for the first nine months of 2024 was 13.6% as compared to 13.1% for the first nine months of 2023, an increase of 50 basis points.
Previous wording
The change in the fair value of the acquisition related contingent consideration liability in the second quarter of 2024 as compared to the second quarter of 2023 was primarily driven by changes in the future cash flow projections and WACC used to calculate the fair value of the liability.
Current wording
Net income in the third quarter of 2024 was $115.6 million, compared to $92.1 million in the third quarter of 2023, an improvement of $23.5 million. Net income for the third quarter of 2024 and the third quarter of 2023 was adversely impacted by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, driven by increases in the future cash flow projections and changes to the discount rate used to compute the fair value of the liability.
Previous wording
Net income in the second quarter of 2024 was $172.8 million, compared to $122.3 million in the second quarter of 2023, an improvement of $50.5 million. On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the second quarter of 2024 was $192.8 million, compared to $172.5 million in the second quarter of 2023, an increase of $20.3 million. Income tax expense for the second quarter of 2024 was $59.4 million, compared to $42.4 million for the second quarter of 2023, resulting in an effective income tax rate of approximately 26% for both periods.
Current wording
Net income in the first nine months of 2024 was $454.2 million, compared to $332.5 million in the first nine months of 2023, an increase of $121.6 million. On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the first nine months of 2024 was $521.9 million, compared to $488.3 million in the first nine months of 2023, an increase of $33.6 million. Net income for the first nine months of 2023 was adversely impacted by the settlement of our primary pension plan benefit liabilities during the prior year, which resulted in a non-cash charge of $117.1 million. Income tax expense for the first nine months of 2024 was $156.4 million, compared to $112.4 million for the first nine months of 2023, resulting in an effective income tax rate of 25.6% and 25.3% for the first nine months of 2024 and 2023, respectively.
Previous wording
Cash flows provided by operations for the first half of 2024 were $437.1 million, compared to $383.3 million for the first half of 2023. Cash flows from operations reflected our strong operating performance during the first half of 2024. In the first half of
Current wording
Cash flows provided by operations for the first nine months of 2024 were $707.9 million, compared to $644.5 million for the first nine months of 2023. Cash flows from operations reflected our strong operating performance during the first nine months of 2024. In the first nine months of 2024, we invested $287.3 million in capital expenditures as we continue to enhance our supply chain and invest for future growth. During the quarter, we purchased our leased Nashville, Tennessee production facility for approximately $56 million. For the full year of 2024, we expect capital expenditures to total approximately $350 million.
Previous wording
Supply Chain Optimization: We are continually focused on optimizing our supply chain, which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities to increase capacity, expand production capabilities, reduce overall production costs and add automation to allow the Company to better serve its customers and consumers. The Company undertook significant capital expenditures to optimize our supply chain and to invest for future growth during 2023, and expects to continue to make significant investments during 2024. Over the past five years, the Company has made capital expenditures of approximately $200 million related to fleet, $125 million related to automation and $470 million related to supply chain improvements.
Current wording
Supply Chain Optimization: We are continually focused on optimizing our supply chain, which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities to increase capacity, expand production capabilities, reduce overall production costs and add automation to allow the Company to better serve its customers and consumers. The Company has made significant capital investments to optimize our supply chain and to invest for future growth during 2024. During the third quarter of 2024, we purchased our leased Nashville, Tennessee production facility for approximately $56 million. Between 2019 and 2023, the Company made capital investments of approximately $200 million related to fleet, $125 million related to automation and $470 million related to supply chain improvements.
Previous wording
Optimal Route to Market: We are focused on implementing optimal methods of distribution of our products within our territory. Our typical DSD method uses Company-owned vehicles and warehouses, but we are increasingly using alternative methods of distribution. For example, in instances of post-mix delivery for use in fountain machines, we have shifted our delivery method towards alternative distributors in order to enhance customer service and profitability. In instances of bottle/can delivery, we are shifting certain products for certain customers and channels of business to alternative routes to market. These alternative routes to market include third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure. These bottle/can arrangements generally come with favorable commercial terms for the Company. During both the second quarter of 2024 and the first half of 2024, more than half of our post-mix gallons and less than 10% of our bottle/can volume was delivered through alternative routes to market.
Current wording
Optimal Route to Market: We are focused on implementing optimal methods of distribution of our products within our territory. DSD is our preferred and primary route to market. Our typical DSD method uses Company-owned vehicles and warehouses, but we are increasingly using alternative methods of distribution. For example, in instances of post-mix delivery for use in fountain machines, we have shifted our delivery method towards alternative distributors in order to enhance customer service and profitability. In instances of bottle/can delivery, we are shifting certain products for certain customers and channels of business to alternative routes to market. These alternative routes to market include third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure. These bottle/can arrangements generally come with favorable commercial terms for the Company. During both the third quarter of 2024 and the first nine months of 2024, more than half of our post-mix gallons and less than 10% of our bottle/can volume was delivered through alternative routes to market.
Previous wording
Digitally Enabled Selling Platform: Through our investment in CONA Services LLC, we, along with other Coca-Cola bottlers, are building a digitally enabled selling platform called MyCoke 360 that we believe will enable us to better serve our customers. This platform will enable a more seamless order and payment platform for certain customers and we expect this platform will enable us to enhance customer service and create more selling opportunities for our teammates. This platform is targeted to certain on-premise and small store customers.
Current wording
Digitally Enabled Selling Platform: Through our investment in CONA Services LLC, we, along with other Coca-Cola bottlers, have built a digitally enabled selling platform called MyCoke 360 that we believe will enable us to better serve our customers. This platform will enable a more seamless order and payment platform for certain customers and we expect this platform will enable us to enhance customer service and create more selling opportunities for our teammates. This platform is targeted to certain on-premise and small store customers.
Previous wording
The Company’s results of operations for the second quarter of 2024 and the second quarter of 2023 are highlighted in the table below and discussed in the following paragraphs.
Current wording
The Company’s results of operations for the third quarter of 2024 and the third quarter of 2023 are highlighted in the table below and discussed in the following paragraphs.
Previous wording
Net sales increased $57.1 million, or 3.3%, to $1.80 billion in the second quarter of 2024, as compared to $1.74 billion in the second quarter of 2023. The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $65 million. The increase in net sales was partially offset by a decline in external freight revenue and lower case sales volume as compared to the second quarter of 2023.
Current wording
Net sales increased $53.2 million, or 3.1%, to $1.77 billion in the third quarter of 2024, as compared to $1.71 billion in the third quarter of 2023. The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $60 million. The increase in net sales was partially offset by lower case sales volume within the Still category and a decline in external freight revenue as compared to the third quarter of 2023.
Previous wording
The decline in post-mix sales and other in the second quarter of 2024 as compared to the second quarter of 2023 was related to a shift in how we deliver post-mix products to our customers. The Company has shifted to a broader use of alternative distributors, rather than Company-owned vehicles and warehouses, to deliver post-mix products to customers in our territory. We receive a fee from a vendor on these post-mix gallons delivered to locally managed customers in our territory, which is recorded as a reduction to cost of sales. This transition has occurred over the past several years but accelerated in 2023 and is expected to continue to be more prevalent throughout 2024. More than half of the post-mix gallons sold to local customers in our franchise territory in the second quarter of 2024 were delivered using these alternative distribution methods.
Current wording
The decline in post-mix sales and other in the third quarter of 2024 as compared to the third quarter of 2023 was related primarily to a shift in how we deliver post-mix products to our customers. The Company has shifted to a broader use of alternative distributors, rather than Company-owned vehicles and warehouses, to deliver post-mix products to customers in our territory. We receive a fee from our brand partners on these post-mix gallons delivered to locally managed customers in our territory, which is recorded as a reduction to cost of sales. This transition has occurred over the past several years and has accelerated throughout 2024. More than half of the post-mix gallons sold to local customers in our franchise territory in the third quarter of 2024 were delivered using these alternative distribution methods.
Previous wording
The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses. In order to serve our customers in the most efficient way, as well as in response to customer demands, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than through Company-owned vehicles and warehouses.
Current wording
The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses. In order to serve our customers in the most efficient way, as well as in response to customer demands, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than through Company-owned vehicles and warehouses. We have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution. As a result, these cases are not included in our 2024 reported case sales. The 2024 impact of this distribution change reduced our reported case sales by 1.8% during the third quarter of 2024.
Previous wording
As a result of not physically delivering the product, the sales volume delivered using these alternative methods of distribution is not reflected in our volume metrics. However, because we have the exclusive distribution rights for nonalcoholic beverages within our franchise territory, we receive fees for the delivery of qualified product in our territory. These fees are reported in net sales. Changes in the delivery of our products to our customers has impacted, and will continue to impact, our reported volume and net sales. This transition has occurred over the past several years but accelerated in 2023 and is expected to continue to be more prevalent throughout 2024. Less than 10% of the bottle/can volume sold in our franchise territory in the second quarter of 2024 was delivered using these alternative distribution methods.
Current wording
As a result of not physically delivering the product, the sales volume delivered using these alternative methods of distribution is not reflected in our volume metrics. However, because we have the exclusive distribution rights for nonalcoholic beverages within our franchise territory, we receive fees from our brand partners for the delivery of qualified product in our territory. These fees are reported in net sales. Changes in the delivery of our products to our customers has impacted, and are expected to continue to impact, our reported volume and net sales. This transition has occurred over the past several years and has accelerated throughout 2024. Less than 10% of the bottle/can volume sold in our franchise territory in the third quarter of 2024 was delivered using these alternative distribution methods.
Previous wording
Inputs representing a substantial portion of the Company’s cost of sales include: (i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles, carbon dioxide and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs. In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits and post-mix funding from brand companies. Raw material costs, excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.
Current wording
Inputs representing a substantial portion of the Company’s cost of sales include: (i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles, carbon dioxide and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs. In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits and post-mix funding from brand companies. Input costs, including underlying commodities and excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.
Previous wording
Cost of sales increased $12.0 million, or 1.1%, to $1.08 billion in the second quarter of 2024, as compared to $1.07 billion in the second quarter of 2023. The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $30 million. The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the second quarter of 2023.
Current wording
Cost of sales increased $16.7 million, or 1.6%, to $1.07 billion in the third quarter of 2024, as compared to $1.05 billion in the third quarter of 2023. The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $30 million. The increase in cost of sales was partially offset by lower case sales volume and a decline in external freight volume as compared to the third quarter of 2023.
Previous wording
The Company relies on advertising and sales promotions in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and to promote sales in the Company’s territories. Certain of these marketing and advertising expenditures are made pursuant to annual arrangements. Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $49.3 million in the second quarter of 2024 and $46.1 million in the second quarter of 2023.
Current wording
The Company relies on advertising and sales promotions in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and to promote sales in the Company’s territories. Certain of these marketing and advertising expenditures are made pursuant to annual arrangements. Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $48.5 million in the third quarter of 2024 and $43.2 million in the third quarter of 2023.
Previous wording
SD&A expenses increased $19.7 million, or 4.5%, to $457.6 million in the second quarter of 2024, as compared to $437.9 million in the second quarter of 2023. SD&A expenses as a percentage of net sales increased to 25.5% in the second quarter of 2024 from 25.2% in the second quarter of 2023. The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation.
Current wording
SD&A expenses increased $25.7 million, or 5.8%, to $471.0 million in the third quarter of 2024, as compared to $445.3 million in the third quarter of 2023. SD&A expenses as a percentage of net sales increased to 26.7% in the third quarter of 2024 from 26.0% in the third quarter of 2023. The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation accruals reflecting the strong operating performance in 2024.
Previous wording
Shipping and handling costs included in SD&A expenses were $200.0 million in the second quarter of 2024 and $192.8 million in the second quarter of 2023.
Current wording
Shipping and handling costs included in SD&A expenses were approximately $206 million in the third quarter of 2024 and approximately $200 million in the third quarter of 2023.
Previous wording
Interest (income) expense, net changed $3.0 million, or 219.7%, to $1.6 million of interest income, net in the second quarter of 2024, as compared to $1.4 million of interest expense, net in the second quarter of 2023. The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances, partially offset by an increase in interest expense on higher debt balances in the second quarter of 2024, as compared to the second quarter of 2023.
Current wording
Interest expense (income), net changed $3.7 million to $2.2 million of interest expense, net in the third quarter of 2024, as compared to $1.5 million of interest income, net in the third quarter of 2023. The change in interest expense (income), net was primarily a result of an increase in interest expense on higher debt balances in the third quarter of 2024, as compared to the third quarter of 2023, partially offset by an increase in interest income due to higher cash, cash equivalent and short-term investment balances.
Previous wording
Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories subject to acquisition related sub-bottling payments to fair value. The fair value is determined by discounting future expected acquisition related sub-bottling payments required under the Company’s comprehensive beverage agreements, which extend through the life of the related distribution assets acquired in each distribution territory, using the Company’s estimated weighted average cost of capital (“WACC”), which is impacted by many factors, including long-term interest rates and future cash flow projections. The life of these distribution assets is generally 40 years. The Company is required to pay the current portion of the acquisition related sub-bottling payments on a quarterly basis.
Current wording
Each reporting period, the Company adjusts its acquisition related contingent consideration liability to fair value, which is determined by discounting future expected acquisition related sub-bottling payments using the Company’s estimated weighted average cost of capital (“WACC”) and future cash flow projections, and records the fair value adjustment as mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations.
Previous wording
Other expense, net decreased $1.6 million to $0.7 million in the second quarter of 2024, as compared to $2.3 million in the second quarter of 2023. The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement plan liabilities.
Current wording
Other expense, net increased $0.1 million to $0.7 million in the third quarter of 2024, as compared to $0.6 million in the third quarter of 2023. The increase in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement medical benefit plan liabilities.
Previous wording
The Company’s effective income tax rate was 25.6% for the second quarter of 2024 and 25.8% for the second quarter of 2023. The Company’s income tax expense increased $17.0 million, or 40.0%, to $59.4 million for the second quarter of 2024, as compared to $42.4 million for the second quarter of 2023. The increase in income tax expense was primarily attributable to higher income before taxes during the second quarter of 2024 compared to the second quarter of 2023.
Current wording
The Company’s effective income tax rate was 25.7% for the third quarter of 2024 and 23.9% for the third quarter of 2023. The Company’s income tax expense increased $11.0 million, or 38.2%, to $39.9 million for the third quarter of 2024, as compared to $28.9 million for the third quarter of 2023. The increase in income tax expense was primarily attributable to higher income before taxes during the third quarter of 2024 compared to the third quarter of 2023.
Previous wording
Other comprehensive income, net of tax decreased $27.8 million in the second quarter of 2024 as compared to the second quarter of 2023. The decrease was primarily related to the partial settlement of the primary Company-sponsored pension plan (the “Primary Plan”) benefit liabilities during the second quarter of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.
Current wording
Other comprehensive income, net of tax was $0.5 million in the third quarter of 2024, as compared to $57.2 million in the third quarter of 2023. The decrease was primarily related to the settlement of the primary Company-sponsored pension plan (the
Previous wording
Our results of operations for the first half of 2024 and the first half of 2023 are highlighted in the table below and discussed in the following paragraphs.
Current wording
Our results of operations for the first nine months of 2024 and the first nine months of 2023 are highlighted in the table below and discussed in the following paragraphs.
Previous wording
Net sales increased $77.1 million, or 2.3%, to $3.39 billion in the first half of 2024, as compared to $3.31 billion in the first half of 2023. The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $115 million. The increase in net sales was partially offset by lower case sales volume and a decline in external freight revenue as compared to the first half of 2023. The first half of 2024 included one less selling day compared to the first half of 2023.
Current wording
Net sales increased $130.3 million, or 2.6%, to $5.15 billion in the first nine months of 2024, as compared to $5.02 billion in the first nine months of 2023. The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $170 million. The increase in net sales was partially offset by lower case sales volume within the Still category and a decline in external freight revenue as compared to the first nine months of 2023. The first nine months of 2024 included one less selling day compared to the first nine months of 2023.
Previous wording
Cost of sales increased $15.5 million, or 0.8%, to $2.03 billion in the first half of 2024, as compared to $2.01 billion in the first half of 2023. The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $50 million. The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the first half of 2023.
Current wording
Cost of sales increased $32.2 million, or 1.1%, to $3.10 billion in the first nine months of 2024, as compared to $3.07 billion in the first nine months of 2023. The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $80 million. The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the first nine months of 2023.
Previous wording
Total marketing funding support from The Coca‑Cola Company and other beverage companies was $94.6 million in the first half of 2024, as compared to $83.1 million in the first half of 2023.
Current wording
Total marketing funding support from The Coca‑Cola Company and other beverage companies was $143.1 million in the first nine months of 2024, as compared to $126.3 million in the first nine months of 2023.
Previous wording
SD&A expenses increased $26.8 million, or 3.1%, to $882.7 million in the first half of 2024, as compared to $856.0 million in the first half of 2023. SD&A expenses as a percentage of net sales increased to 26.1% in the first half of 2024 from 25.9% in the first half of 2023. The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation.
Current wording
SD&A expenses increased $52.5 million, or 4.0%, to $1.35 billion in the first nine months of 2024, as compared to $1.30 billion in the first nine months of 2023. SD&A expenses as a percentage of net sales increased to 26.3% in the first nine months of 2024 from 25.9% in the first nine months of 2023. The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation accruals reflecting the strong operating performance in 2024.
Previous wording
Shipping and handling costs included in SD&A expenses were $393.0 million in the first half of 2024 and $386.0 million in the first half of 2023.
Current wording
Shipping and handling costs included in SD&A expenses were approximately $599 million in the first nine months of 2024 and approximately $586 million in the first nine months of 2023.
Previous wording
Interest (income) expense, net changed $8.6 million, or 201.3%, to $4.3 million of interest income, net in the first half of 2024, as compared to $4.3 million of interest expense, net in the first half of 2023. The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances, partially offset by an increase in interest expense on higher debt balances in the first half of 2024, as compared to the first half of 2023.
Current wording
Interest (income) expense, net changed $4.9 million to $2.1 million of interest income, net in the first nine months of 2024, as compared to $2.8 million of interest expense, net in the first nine months of 2023. The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances, partially offset by an increase in interest expense on higher debt balances in the first nine months of 2024, as compared to the first nine months of 2023.
Previous wording
Other expense, net decreased $3.0 million to $1.5 million in the first half of 2024, as compared to $4.5 million in the first half of 2023. The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement plan liabilities.
Current wording
Other expense, net decreased $2.9 million to $2.3 million in the first nine months of 2024, as compared to $5.1 million in the first nine months of 2023. The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement medical benefit plan liabilities.
Previous wording
The Company’s effective income tax rate was 25.6% for the first half of 2024 and 25.8% for the first half of 2023. The Company’s income tax expense increased $33.0 million, or 39.5%, to $116.5 million for the first half of 2024, as compared to $83.5 million for the first half of 2023. The increase in income tax expense was primarily attributable to higher income before taxes during the first half of 2024 compared to the first half of 2023.
Current wording
The Company’s effective income tax rate was 25.6% for the first nine months of 2024 and 25.3% for the first nine months of 2023. The Company’s income tax expense increased $44.0 million, or 39.2%, to $156.4 million for the first nine months of 2024, as compared to $112.4 million for the first nine months of 2023. The increase in income tax expense was primarily attributable to higher income before taxes during the first nine months of 2024 compared to the first nine months of 2023.
Previous wording
Other comprehensive loss, net of tax was $0.1 million in the first half of 2024 and other comprehensive income, net of tax was $28.6 million in the first half of 2023. The change was primarily related to the partial settlement of the Primary Plan benefit liabilities during the first half of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.
Current wording
Other comprehensive income, net of tax was $0.3 million in the first nine months of 2024 and $85.8 million in the first nine months of 2023. The decrease was primarily related to the settlement of the Primary Plan benefit liabilities during the first nine months of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.
Previous wording
The Company evaluates segment reporting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”). The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM. Asset information is not provided to the CODM.
Current wording
The Company evaluates segment reporting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”). The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM. Segment asset information is not provided to the CODM.
Showing the first 40 of 59 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
“Primary Plan”) benefit liabilities during the third quarter of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.
Current report — wording carried from elsewhere
Other Comprehensive Income, Net of Tax
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
2024, we invested approximately $159 million in capital expenditures as we continue to enhance our supply chain and invest for future growth. For the full year of 2024, we expect our capital expenditures to be between approximately $300 million and $350 million.
Previous report — wording carried elsewhere
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; the impact of any pandemic or public health situation; and the risks discussed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for 2023 and elsewhere in this report.