• Coca-Cola Consolidated Reports Second Quarter and First Half 2022 Results

    ソース: Nasdaq GlobeNewswire / 02 8 2022 15:10:01   America/Chicago

    • Second quarter of 2022 net sales increased 11% versus the second quarter of 2021, with physical case volume growth of 1.0%(a).
    • Gross profit in the second quarter of 2022 was $551 million, an increase of 11% versus the second quarter of 2021. Gross margin remained flat at 34.5%, while adjusted(b) gross margin improved by 90 basis points to 35.4%.
    • Income from operations for the first half of 2022 was $278 million, up $63 million, or 29%, versus the first half of 2021.

    Key Results

      Second Quarter   First Half  
    (in millions)  2022   2021  Change  2022   2021  Change
    Physical case volume  97.4   96.4  1.0%  183.8   183.3  0.3%
    Net sales $1,595.2  $1,433.1  11.3% $2,999.6  $2,702.9  11.0%
    Gross profit $550.7  $494.9  11.3% $1,058.2  $943.6  12.1%
    Gross margin  34.5%  34.5%    35.3%  34.9%  
    Income from operations $147.3  $120.9  21.9% $278.3  $215.0  29.4%
                 
    Beverage Sales Second Quarter   First Half  
    (in millions)  2022   2021  Change  2022   2021  Change
    Sparkling bottle/can $879.9  $754.7  16.6% $1,655.9  $1,448.5  14.3%
    Still bottle/can $539.6  $499.0  8.1% $1,006.8  $919.1  9.5%
                           

    Second Quarter and First Half 2022 Review

    CHARLOTTE, N.C., Aug. 02, 2022 (GLOBE NEWSWIRE) -- Coca‑Cola Consolidated, Inc. (NASDAQ: COKE) today reported operating results for the second quarter ended July 1, 2022 and the first half of fiscal 2022.

    “Our strong operating performance this quarter reflects solid execution across all aspects of our business. While supply chain challenges and cost inflation continue to impact our business, our team is successfully executing pricing and packaging strategies that are driving profitable growth,” said J. Frank Harrison, III, Chairman and Chief Executive Officer. “I am thankful for all of our teammates who live out Our Purpose every day as they serve our communities, customers and consumers with excellence.”

    Net sales increased 11% to $1.60 billion in the second quarter of 2022, while physical case volume increased 1.0%. The increase in net sales was driven primarily by price increases taken on most of our Sparkling and Still beverages over the last year. Sparkling beverage volume increased 1.8% in the quarter, as consumer demand remained strong, especially for our multi-serve can packages. Sales of Sparkling single-serve products sold in immediate consumption channels also continued to perform well, with volume increasing 1.9% in the quarter. Still beverage volume decreased 0.6% in the quarter, as certain brands within this category were impacted by supply chain issues. We continue to see strong sales momentum in several key brands within the Still category, including Monster, smartwater and BODYARMOR. Net sales increased 11% and physical case volume increased 0.3% in the first half of 2022.

    Gross profit in the second quarter of 2022 increased $55.7 million, or 11%, while gross margin remained flat at 34.5%. Adjusted(b) gross profit in the second quarter of 2022 was $564.4 million, which represented an increase of $69.8 million, or 14%. Adjusted(b) gross margin was 35.4%, an increase of 90 basis points compared to the second quarter of 2021. The improvement in gross profit resulted from strong price realization and solid volume growth in our Sparkling beverages, which enabled higher gross margins during this period of rising input and production costs. Gross profit in the first half of 2022 increased $114.6 million, or 12%.

    “We are pleased with our strong second quarter performance, especially considering the challenging operating environment we faced. While we experienced numerous supply chain challenges during the quarter, our team effectively overcame them to post strong growth in volume, pricing and operating income,” said Dave Katz, President and Chief Operating Officer. “We are making operational and infrastructure investments to alleviate these short-term disruptions, and we believe we will emerge with an even stronger, more flexible manufacturing and distribution network for the long term.”

    Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2022 increased $29.3 million, or 8%. SD&A expenses as a percentage of net sales decreased 80 basis points to 25.3% in the second quarter of 2022. The increase in SD&A expenses related primarily to an increase in labor costs as compared to the second quarter of 2021. Over the last year, we have made compensation adjustments across our workforce to remain competitive in a tight labor market. In addition, SD&A expenses across a number of categories increased during the quarter as a result of the current, high inflationary environment. SD&A expenses in the first half of 2022 increased $51.4 million, or 7%. SD&A expenses as a percentage of net sales in the first half of 2022 decreased 100 basis points to 26.0% as compared to the first half of 2021.

    “Consumer demand for our products has remained strong, despite price increases to overcome high commodity and operating cost inflation,” continued Mr. Katz. “We will continue to expand the number of affordable packaging solutions across our brand portfolio as we believe these offerings are a key factor in the continued steady consumer demand for our products. As we take additional pricing in the second half of this year, we will carefully monitor consumer response and remain agile in this evolving operating environment.”

    Income from operations in the second quarter of 2022 was $147.3 million, compared to $120.9 million in the second quarter of 2021, an increase of $26.4 million, or 22%. On an adjusted(b) basis, income from operations in the second quarter of 2022 was $160.1 million, an increase of 33%. For the first half of 2022, income from operations increased $63.2 million to $278.3 million.

    Net income in the second quarter of 2022 was $99.6 million, compared to $48.2 million in the second quarter of 2021, an improvement of $51.4 million. Net income increased $91.4 million in the first half of 2022 to $193.0 million as compared to the first half of 2021.

    Cash flows provided by operations for the first half of 2022 were $243.5 million, compared to $271.4 million for the first half of 2021. Our strong operating performance, led by our top‑line growth and effective management of operating expenses, drove cash flows from operations during the period. Cash flows from operations were impacted by changes in working capital, which reflect seasonality and the timing of certain cash payments and receipts. We continue to invest in long‑term strategic projects to optimize our supply chain and broaden our brand portfolio.

    (a) All comparisons are to the corresponding period in the prior year unless specified otherwise.
    (b) The discussion of the operating results for the second quarter ended July 1, 2022 and the first half of fiscal 2022 includes selected non-GAAP financial information, such as “adjusted” results. The schedules in this news release reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures.

    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, serve others, pursue excellence and grow profitably. For over 120 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 inability to attract and retain front-line employees in a tight labor market; 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 COVID-19 pandemic and other pandemic outbreaks in the future; 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; and climate change or legislative or regulatory responses to such change. 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, 2021. The forward-looking statements contained in this news release speak only as of this date, and the Company does not assume any obligation to update them, except as may be required by applicable law.

     
    FINANCIAL STATEMENTS
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (UNAUDITED)
     
      Second Quarter First Half
    (in thousands, except per share data)  2022  2021  2022  2021
    Net sales $1,595,215 $1,433,086 $2,999,573 $2,702,943
    Cost of sales  1,044,556  938,146  1,941,338  1,759,300
    Gross profit  550,659  494,940  1,058,235  943,643
    Selling, delivery and administrative expenses  403,366  374,079  779,957  728,598
    Income from operations  147,293  120,861  278,278  215,045
    Interest expense, net  7,146  8,365  14,845  17,111
    Other expense, net  6,199  47,041  2,920  59,096
    Income before taxes  133,948  65,455  260,513  138,838
    Income tax expense  34,386  17,275  67,561  37,295
    Net income $99,562 $48,180 $192,952 $101,543
             
    Basic net income per share:        
    Common Stock $10.62 $5.14 $20.58 $10.83
    Weighted average number of Common Stock shares outstanding  8,369  7,141  7,863  7,141
             
    Class B Common Stock $10.62 $5.14 $20.62 $10.83
    Weighted average number of Class B Common Stock shares outstanding  1,005  2,232  1,511  2,232
             
    Diluted net income per share:        
    Common Stock $10.59 $5.12 $20.53 $10.79
    Weighted average number of Common Stock shares outstanding – assuming dilution  9,399  9,407  9,399  9,407
             
    Class B Common Stock $10.59 $5.12 $20.56 $10.79
    Weighted average number of Class B Common Stock shares outstanding – assuming dilution  1,030  2,266  1,536  2,266


     
    FINANCIAL STATEMENTS
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)
     
    (in thousands) July 1, 2022 December 31, 2021
    ASSETS    
    Current Assets:    
    Cash and cash equivalents $188,803 $142,314
    Trade accounts receivable, net  539,806  454,934
    Other accounts receivable  91,166  91,615
    Inventories  303,539  302,851
    Prepaid expenses and other current assets  86,844  78,068
    Assets held for sale  3,045  6,880
    Total current assets  1,213,203  1,076,662
    Property, plant and equipment, net  1,081,604  1,030,688
    Right-of-use assets - operating leases  137,026  139,877
    Leased property under financing leases, net  7,254  64,211
    Other assets  112,133  120,486
    Goodwill  165,903  165,903
    Other identifiable intangible assets, net  864,545  847,743
    Total assets $3,581,668 $3,445,570
         
    LIABILITIES AND EQUITY    
    Current Liabilities:    
    Current portion of obligations under operating leases $24,771 $22,048
    Current portion of obligations under financing leases  2,214  6,060
    Accounts payable and accrued expenses  825,448  806,748
    Current portion of debt  125,000  —
    Total current liabilities  977,433  834,856
    Deferred income taxes  148,151  136,432
    Pension and postretirement benefit obligations and other liabilities  830,023  852,001
    Noncurrent portion of obligations under operating leases  117,056  122,046
    Noncurrent portion of obligations under financing leases  8,692  65,006
    Long-term debt  598,633  723,443
    Total liabilities  2,679,988  2,733,784
         
    Equity:    
    Stockholders’ equity  901,680  711,786
    Total liabilities and equity $3,581,668 $3,445,570


     
    FINANCIAL STATEMENTS
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)
     
      First Half
    (in thousands)  2022   2021 
    Cash Flows from Operating Activities:    
    Net income $192,952  $101,543 
    Depreciation expense, amortization of intangible assets and deferred proceeds, net  85,852   87,883 
    Deferred income taxes  11,189   2,293 
    Fair value adjustment of acquisition related contingent consideration  (1,436)  56,981 
    Change in current assets and current liabilities  (59,004)  24,332 
    Change in noncurrent assets and noncurrent liabilities  12,151   (7,853)
    Other  1,831   6,206 
    Net cash provided by operating activities $243,535  $271,385 
         
    Cash Flows from Investing Activities:    
    Additions to property, plant and equipment $(145,182) $(80,308)
    Acquisition of BODYARMOR distribution rights  (30,149)  (1,998)
    Other  3,717   (46)
    Net cash used in investing activities $(171,614) $(82,352)
         
    Cash Flows from Financing Activities:    
    Payments of acquisition related contingent consideration $(18,710) $(19,920)
    Cash dividends paid  (4,687)  (4,687)
    Payments on financing lease obligations  (1,904)  (2,368)
    Debt issuance fees  (131)  (147)
    Payments on term loan facility  —   (217,500)
    Borrowings under revolving credit facility  —   55,000 
    Net cash used in financing activities $(25,432) $(189,622)
         
    Net increase (decrease) in cash during period $46,489  $(589)
    Cash at beginning of period  142,314   54,793 
    Cash at end of period $188,803  $54,204 


     
    NON-GAAP FINANCIAL MEASURES(c) The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP):
     
      Second Quarter 2022
    (in thousands, except per share data) Gross profit SD&A
    expenses    		 Income from
    operations    		 Income
    before taxes    		 Net income  Basic net
    income per
    share
    Reported results (GAAP) $550,659  $403,366  $147,293  $133,948  $99,562  $10.62 
    Fair value adjustment of acquisition related contingent consideration  —   —   —   4,021   3,028   0.32 
    Fair value adjustments for commodity derivative instruments  13,663   998   12,665   12,665   9,536   1.02 
    Supply chain optimization  84   (33)  117   117   88   0.01 
    Total reconciling items  13,747   965   12,782   16,803   12,652   1.35 
    Adjusted results (non-GAAP) $564,406  $404,331  $160,075  $150,751  $112,214  $11.97 
                             
    Adjusted % change vs. Q2 2021  14.1%  8.1%  32.6%            


      Second Quarter 2021
    (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) $494,940  $374,079  $120,861  $65,455  $48,180  $5.14 
    Fair value adjustment of acquisition related contingent consideration  —   —   —   45,983   34,487   3.67 
    Fair value adjustments for commodity derivative instruments  (2,128)  505   (2,633)  (2,633)  (1,975)  (0.21)
    Supply chain optimization  1,828   (652)  2,480   2,480   1,860   0.20 
    Total reconciling items  (300)  (147)  (153)  45,830   34,372   3.66 
    Adjusted results (non-GAAP) $494,640  $373,932  $120,708  $111,285  $82,552  $8.80 


      First Half 2022
    (in thousands, except per share data) Gross profit SD&A
    expenses    		 Income from
    operations    		 Income
    before taxes    		 Net income  Basic net
    income per
    share
    Reported results (GAAP) $1,058,235  $779,957  $278,278  $260,513  $192,952  $20.58 
    Fair value adjustment of acquisition related contingent consideration  —   —   —   (1,436)  (1,081)  (0.12)
    Fair value adjustments for commodity derivative instruments  6,169   7,223   (1,054)  (1,054)  (794)  (0.08)
    Supply chain optimization  89   (72)  161   161   121   0.01 
    Total reconciling items  6,258   7,151   (893)  (2,329)  (1,754)  (0.19)
    Adjusted results (non-GAAP) $1,064,493  $787,108  $277,385  $258,184  $191,198  $20.39 
                             
    Adjusted % change vs. 1H 2021  12.8%  8.0%  29.4%            


      First Half 2021
    (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) $943,643  $728,598  $215,045  $138,838  $101,543  $10.83 
    Fair value adjustment of acquisition related contingent consideration  —   —   —   56,981   42,736   4.56 
    Fair value adjustments for commodity derivative instruments  (2,416)  1,065   (3,481)  (3,481)  (2,611)  (0.28)
    Supply chain optimization  2,104   (758)  2,862   2,862   2,147   0.23 
    Total reconciling items  (312)  307   (619)  56,362   42,272   4.51 
    Adjusted results (non-GAAP) $943,331  $728,905  $214,426  $195,200  $143,815  $15.34 


    (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 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.


    MEDIA CONTACT: INVESTOR CONTACT:
    Kimberly Kuo Scott Anthony
    Senior Vice President
    Public Affairs, Communications
    & Sustainability
    		 Executive Vice President &
    Chief Financial Officer
    Kimberly.Kuo@cokeconsolidated.com Scott.Anthony@cokeconsolidated.com 
    (704) 557-4584 (704) 557-4633

    A PDF accompanying this release is available at: http://ml.globenewswire.com/Resource/Download/36af37b9-f964-41f9-a38b-45b46cb2f2d1


    Primary Logo

シェアする