• Coca-Cola Consolidated Reports First Quarter 2023 Results

    المصدر: Nasdaq GlobeNewswire / 03 مايو 2023 16:10:03   America/New_York

    • First quarter of 2023 net sales increased 12% versus the first quarter of 2022.
    • Gross profit in the first quarter of 2023 was $624 million, an increase of 23% versus the first quarter of 2022. Gross margin in the first quarter of 2023 improved by 360 basis points(a) to 39.7%.
    • Income from operations for the first quarter of 2023 was $206 million, up $75 million, or 57%, versus the first quarter of 2022.

    Key Results

     First Quarter  
    (in millions)2023
     2022
     Change
    Standard physical case volume(1) 82.5   85.1  (3.1)%
    Net sales$1,571.6  $1,404.4  11.9%
    Gross profit$624.1  $507.6  23.0%
    Gross margin 39.7%  36.1%  
    Income from operations$206.1  $131.0  57.3%
          
    Beverage SalesFirst Quarter  
    (in millions)2023
     2022
     Change
    Sparkling bottle/can$920.6  $775.6  18.7%
    Still bottle/can$509.6  $467.9  8.9%

    (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.

    First Quarter 2023 Review

    CHARLOTTE, N.C., May 03, 2023 (GLOBE NEWSWIRE) -- Coca‑Cola Consolidated, Inc. (NASDAQ: COKE) today reported operating results for the first quarter ended March 31, 2023.

    “We are off to a very good start to 2023 with solid operating performance and strong financial results,” said J. Frank Harrison, III, Chairman and Chief Executive Officer. “Our revenue growth management and operating strategies continue to deliver impressive free cash flow results that provide us the ability to make consistent, targeted reinvestments in the business. These investments, which range from front-line teammate compensation to strategic supply chain projects, have been key to sustaining our business momentum and continuing to build on our success.”

    Net sales increased 12% to $1.57 billion in the first quarter of 2023. The increase in net sales was driven primarily by price increases taken across our product portfolio during the second half of 2022 and the beginning of 2023. Consumer traffic patterns continue to change within our sales channels as more consumers return to pre-covid work and leisure routines. Total shopping trips to large stores have declined as meal occasions away from home continue to increase, resulting in increased consumer activity at convenience retail stores, restaurants and other on-premise locations where consumers typically consume our products immediately after purchase. Sales at club stores also benefited from consumers seeking value-oriented packages.

    Standard physical case volume declined 3.1% in the first quarter of 2023, which included the impact of one less selling day compared to the first quarter of 2022. On a comparable(b) basis, standard physical case volume declined 2.0% with Sparkling category volume up 0.2% during the first quarter of 2023. Still category volume declined 7.9% on a comparable(b) basis as our sports drink brands cycled significant growth in the first quarter of 2022 and new competitors entered the category. We experienced strong sales momentum with other Still beverages such as smartwater, Gold Peak and fairlife products. Overall, our product portfolio continues to perform well versus historical price elasticities typically associated with higher pricing.

    Gross profit in the first quarter of 2023 was $624.1 million, an increase of $116.5 million, or 23%, while gross margin improved 360 basis points to 39.7%. Adjusted(b) gross profit in the first quarter of 2023 was $624.9 million, which represented an increase of $124.8 million, or 25%. The improvement in gross profit resulted from stable volume on our Sparkling brands, higher prices for our products and a moderation of prices for certain commodities.

    “We achieved extraordinary profit growth this quarter through solid volume performance of our Sparkling brands and strong gross margin expansion while managing through this high cost, inflationary environment,” said Dave Katz, President and Chief Operating Officer. “We are very encouraged by our success this quarter and we have a robust plan in place for the remainder of the year. We are actively investing with our retail partners as we approach the summer selling season aimed at supporting their overall commercial plans and driving consumer engagement in the category.”

    “Pricing growth in the first quarter was above our expected annual rate and we expect the rate of increase to slow as we hurdle our 2022 price increases later this year,” Mr. Katz continued. “Similarly, we expect our operating expense growth to moderate this year as we cycle front-line teammate investments made throughout 2022.”

    Selling, delivery and administrative (“SD&A”) expenses in the first quarter of 2023 increased $41.5 million, or 11%. SD&A expenses as a percentage of net sales decreased 20 basis points to 26.6% in the first quarter of 2023. On an adjusted(b) basis, SD&A expenses in the first quarter of 2023 increased $32.6 million, or 9%. The increase in SD&A expenses related primarily to an increase in labor costs, resulting from certain compensation and benefits adjustments made during 2022 in order to remain competitive in the current, highly competitive labor environment. In addition, broad inflationary increases across a number of SD&A categories pushed expenses higher during the quarter.

    Income from operations in the first quarter of 2023 was $206.1 million, compared to $131.0 million in the first quarter of 2022, an increase of 57%. On an adjusted(b) basis, income from operations in the first quarter of 2023 increased 79% as compared to the first quarter of 2022.

    Net income in the first quarter of 2023 was $118.1 million, compared to $93.4 million in the first quarter of 2022, an improvement of $24.7 million. First 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. Income tax expense for the first quarter of 2023 was $41.1 million, compared to $33.2 million in the first quarter of 2022, resulting in an effective income tax rate of approximately 26% for both periods.

    Cash flows provided by operations for first quarter 2023 were $184.7 million, compared to $130.9 million for first quarter 2022. Cash flows from operations reflected our strong operating performance and the timing of certain working capital payments and receipts during the first quarter. In the first quarter of 2023, we invested $52.7 million in capital expenditures as we continue to optimize our supply chain and invest for future growth. In fiscal year 2023, we expect our capital expenditures to be between $250 million and $300 million.

    (a)All comparisons are to the corresponding period in the prior year unless specified otherwise.
    (b)The discussion of the operating results for the first quarter ended March 31, 2023 includes selected non-GAAP financial information, such as “comparable” and “adjusted” results. The schedules in this news release reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures.


    CONTACTS: 
    Josh Gelinas (Media)Scott Anthony (Investors)
    Vice President, CommunicationsExecutive Vice President & Chief Financial Officer
    (704) 807-3703(704) 557-4633
    Josh.Gelinas@cokeconsolidated.comScott.Anthony@cokeconsolidated.com

    A PDF accompanying this release is available at: http://ml.globenewswire.com/Resource/Download/e6d3aea4-0f91-417a-b74d-7a216cd80636

    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)

      First Quarter
    (in thousands, except per share data) 2023 2022
    Net sales $1,571,642 $1,404,358 
    Cost of sales  947,536  896,782 
    Gross profit  624,106  507,576 
    Selling, delivery and administrative expenses  418,052  376,591 
    Income from operations  206,054  130,985 
    Interest expense, net  2,929  7,699 
    Other expense (income), net  43,923  (3,279)
    Income before taxes  159,202  126,565 
    Income tax expense  41,075  33,175 
    Net income $118,127 $93,390 
         
    Basic net income per share:    
    Common Stock $12.60 $9.96 
    Weighted average number of Common Stock shares outstanding  8,369  7,357 
         
    Class B Common Stock $12.60 $9.99 
    Weighted average number of Class B Common Stock shares outstanding  1,005  2,016 
         
    Diluted net income per share:    
    Common Stock $12.57 $9.94 
    Weighted average number of Common Stock shares outstanding – assuming dilution  9,395  9,396 
         
    Class B Common Stock $12.51 $9.96 
    Weighted average number of Class B Common Stock shares outstanding – assuming dilution  1,026  2,039 

    FINANCIAL STATEMENTS 
    CONDENSED CONSOLIDATED BALANCE SHEETS 
    (UNAUDITED)

    (in thousands) March 31, 2023 December 31, 2022
    ASSETS    
    Current Assets:    
    Cash and cash equivalents $289,781 $197,648
    Trade accounts receivable, net  538,079  515,928
    Other accounts receivable  100,166  90,417
    Inventories  337,313  347,545
    Prepaid expenses and other current assets  88,288  94,263
    Total current assets  1,353,627  1,245,801
    Property, plant and equipment, net  1,170,003  1,183,730
    Right-of-use assets - operating leases  134,304  140,588
    Leased property under financing leases, net  6,020  6,431
    Other assets  125,312  115,892
    Goodwill  165,903  165,903
    Other identifiable intangible assets, net  844,526  851,200
    Total assets $3,799,695 $3,709,545
         
    LIABILITIES AND EQUITY    
    Current Liabilities:    
    Current portion of obligations under operating leases $27,321 $27,635
    Current portion of obligations under financing leases  2,347  2,303
    Dividends payable    32,808
    Accounts payable and accrued expenses  782,907  842,410
    Total current liabilities  812,575  905,156
    Deferred income taxes  191,204  150,222
    Pension and postretirement benefit obligations and other liabilities  842,846  813,680
    Noncurrent portion of obligations under operating leases  113,040  118,763
    Noncurrent portion of obligations under financing leases  6,917  7,519
    Long-term debt  598,860  598,817
    Total liabilities  2,565,442  2,594,157
         
    Equity:    
    Stockholders’ equity  1,234,253  1,115,388
    Total liabilities and equity $3,799,695 $3,709,545

    FINANCIAL STATEMENTS 
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
    (UNAUDITED)

      First Quarter
    (in thousands) 2023 2022
    Cash Flows from Operating Activities:    
    Net income $118,127  $93,390 
    Depreciation expense, amortization of intangible assets and deferred proceeds, net  43,509   43,269 
    Fair value adjustment of acquisition related contingent consideration  41,654   (5,457)
    Deferred income taxes  40,743   33,130 
    Change in current assets and current liabilities  (49,538)  (32,415)
    Change in noncurrent assets and noncurrent liabilities  (12,436)  (1,724)
    Other  2,635   688 
    Net cash provided by operating activities $184,694  $130,881 
         
    Cash Flows from Investing Activities:    
    Additions to property, plant and equipment $(52,700) $(104,353)
    Acquisition of distribution rights     (30,149)
    Other  158   1,981 
    Net cash used in investing activities $(52,542) $(132,521)
         
    Cash Flows from Financing Activities:    
    Cash dividends paid $(32,808) $(2,344)
    Payments of acquisition related contingent consideration  (6,499)  (9,822)
    Payments on financing lease obligations  (558)  (1,375)
    Debt issuance fees  (154)  (48)
    Net cash used in financing activities $(40,019) $(13,589)
         
    Net increase (decrease) in cash during period $92,133  $(15,229)
    Cash at beginning of period  197,648   142,314 
    Cash at end of period $289,781  $127,085 

    COMPARABLE AND NON-GAAP FINANCIAL MEASURES(c) 
    The following tables reconcile reported results (GAAP) to comparable and adjusted results (non-GAAP):

    Results for the first quarter of 2022 include one additional selling day compared to the first quarter of 2023. For comparison purposes, the estimated impact of the additional selling day in the first quarter of 2022 has been excluded from our comparable(b) volume results.

      First Quarter  
    (in millions) 2023 2022  Change
    Standard physical case volume 82.5 85.1  (3.1)%
    Volume related to extra day in fiscal period  (1.0)  
    Comparable standard physical case volume 82.5 84.1  (2.0)%


     First Quarter 2023
    (in thousands, except per share data) Gross profit SD&A
    expenses
     Income from
    operations
     Income
    before taxes
     Net income Basic net
    income per
    share
    Reported results (GAAP) $624,106 $418,052  $206,054 $159,202 $118,127 $12.60
    Fair value adjustment of acquisition related contingent consideration         41,654  31,361  3.35
    Fair value adjustments for commodity derivative instruments  395  (2,690)  3,085  3,085  2,323  0.25
    Supply chain optimization  349     349  349  263  0.03
    Total reconciling items  744  (2,690)  3,434  45,088  33,947  3.63
    Adjusted results (non-GAAP) $624,850 $415,362  $209,488 $204,290 $152,074 $16.23
                        
    Adjusted % change vs. Q1 2022  24.9%  8.5%   78.6%         


     First 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) $507,576  $376,591  $130,985  $126,565  $93,390  $9.96 
    Fair value adjustment of acquisition related contingent consideration           (5,457)  (4,109)  (0.44)
    Fair value adjustments for commodity derivative instruments  (7,494)  6,225   (13,719)  (13,719)  (10,330)  (1.10)
    Supply chain optimization  5   (39)  44   44   33    
    Total reconciling items  (7,489)  6,186   (13,675)  (19,132)  (14,406)  (1.54)
    Adjusted results (non-GAAP) $500,087  $382,777  $117,310  $107,433  $78,984  $8.42 

     

    (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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