Coca-Cola Consolidated, Inc. (NASDAQ: COKE) today reported
operating results for the first quarter ended April 2, 2021.
“Our business performed incredibly well in the first quarter of
2021 thanks to the continued hard work and dedication of our
teammates. While we face continued challenges in 2021, we are
building on positive momentum from 2020 to deliver strong operating
results so far this year,” said J. Frank Harrison, III,
Chairman and Chief Executive Officer. “As we approach the summer
months, we believe our business is well-positioned to stay agile
and responsive to our customers. Our Purpose remains front and
center in all we do, as we continue to prioritize the health and
wellness of our teammates, and to advance our commitment to
diversity, sustainability and service in our communities.”
Physical case volume increased 4.8% in the first quarter of
2021. Sparkling beverages maintained steady growth and certain
Still brands, including BodyArmor, AHA and Monster, also performed
well versus prior year. Sparkling category volume increased 4.5% in
the first quarter of 2021, while Still beverage volume increased
5.5%. Sales of multi-serve packages in larger retail stores
remained very strong, while single-serve sales improved in small
stores and accounts where our products are consumed on-premise. Our
first quarter of 2021 included one additional selling day compared
to the first quarter of 2020 and we estimate it impacted our
physical case growth rates by approximately 1%.
Revenue increased 8.3% in the first quarter of 2021. The
increase in revenue from our bottle/can Sparkling beverages was
driven primarily by price realization on most Sparkling packages.
Sales of multi-serve PET packages were especially strong in the
quarter as we adjusted our commercial plans to emphasize these
packages to complement our assortment of multi-serve can products
in take-home outlets. Sales in take-home channels continue to
outpace other channels, but we are seeing improvement in on-premise
selling channels as COVID-related restrictions are being lifted
throughout our territory.
Gross profit increased $43.4 million, or 10.7%, while gross
margin increased 70 basis points to 35.3%. The improvement in
gross profit and gross margin was primarily due to price
realization within our Sparkling category. In addition, favorable
product mix, including the shift within Sparkling to multi-serve
PET packages, helped to expand margins. We expect our major input
costs, including aluminum, PET and high fructose corn syrup, to
rise through the balance of the year which will put pressure on our
gross margins. We currently plan to pass along price increases to
our customers later this year in an effort to offset this expected
cost pressure.
“We are very pleased with our first quarter results as we built
on the success of revenue and operating cost initiatives we
established in 2020. Our results reflect the continued strong
consumer demand for our future consumption products and were
further boosted by improved sales in our immediate consumption
channels,” said Dave Katz, President and Chief Operating Officer.
“Our results also benefited from strong execution of brand
initiatives across our portfolio in the first 100 days of this
year including Coca-Cola Zero Sugar, AHA, BodyArmor, smartwater and
Coca-Cola with Coffee.”
Selling, delivery and administrative (“SD&A”) expenses in
the first quarter of 2021 decreased $18.0 million, or 4.8%.
SD&A expenses as a percentage of net sales decreased
390 basis points in the first quarter of 2021. The decrease in
SD&A expenses related primarily to lower labor costs as a
result of adjustments we made to our operating model during the
second quarter of 2020. Additionally, we generated favorable
results in a number of expense categories due to the diligent
management of our variable operating expenses, including delivery,
marketing, and travel & entertainment expenses. As we progress
through the year, we expect our operating expenses to increase as
business channels reopen and we service our full portfolio of
customers.
“While we expect continued uncertainty in the marketplace during
2021 coupled with higher operating expenses and increased input
costs, we are confident in our ability to mitigate these headwinds
with thoughtful adjustments to our commercial plan and operating
model,” Mr. Katz continued. “Our brands are strong, and our
customers are rebounding as COVID-related restrictions are lifting.
As a result, we remain optimistic about our ability to deliver
strong results in 2021.”
Income from operations in the first quarter of 2021 was
$94.2 million, compared to $32.8 million in the first
quarter of 2020, an increase of 187%. On an adjusted(c) basis,
income from operations in the first quarter of 2021 was
$93.7 million, an increase of 155%.
Net income in the first quarter of 2021 was $53.4 million,
compared to $14.7 million in the first quarter of 2020, an
improvement of $38.7 million. Net income in the first quarter
of 2021 was adversely impacted by fair value adjustments to our
acquisition related contingent consideration liability, driven
primarily by changes in future cash flow projections, offset by an
increase in the discount rate used to value the liability. Fair
value adjustments to this liability are non-cash in nature and a
routine part of our quarterly financial closing process. Income tax
expense for the first quarter of 2021 was $20.0 million,
compared to $5.4 million in the first quarter of 2020. The
increase was the result of higher pre-tax income.
Cash flows provided by operations for the first quarter of 2021
were $81.9 million, compared to $32.3 million for the
first quarter of 2020. The significant increase in operating cash
flows for the first quarter of 2021 was a result of our strong
operating performance led by our top line growth, expanded gross
margins and effective management of operating expenses. We also
remained focused on the effective management of our working
capital. This strong cash flow generation and working capital
management has allowed us to reduce our long-term debt balance by
more than $170 million since the end of the first quarter of
2020. Additionally, we continue to invest in long-term strategic
projects to optimize our supply chain and better serve our
customers, including the opening of our new automated warehouse
facility in Whitestown, Indiana in April 2021.
(a) All comparisons are to the corresponding period in the prior
year unless specified otherwise. The first quarter of 2021 included
one additional selling day compared to the first quarter of 2020.
We do not believe the additional selling day had a material impact
on our financial results.(b) Fountain syrups are dispensed through
equipment that mixes with carbonated or still water, enabling
fountain retailers to sell finished products to consumers in cups
or glasses.(c) The discussion of the results for the first quarter
ended April 2, 2021 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
119 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 over 66 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 Information Regarding Forward-Looking
Statements
Certain statements contained in this news release are
“forward-looking statements” that involve risks and uncertainties.
The words “anticipate,” “believe,” “expect,” “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, disruption of supply 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
obesity, artificial ingredients, product safety and sustainability
and brand reputation; changes in government regulations related to
nonalcoholic beverages, including regulations related to obesity,
public health, artificial ingredients and product safety and
sustainability; the COVID-19 pandemic and other pandemic outbreaks
in the future; 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, 2020. 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 required by applicable law.
FINANCIAL STATEMENTSCONDENSED
CONSOLIDATED STATEMENTS OF
OPERATIONS(UNAUDITED)
|
|
First Quarter |
(in
thousands, except per share data) |
|
2021 |
|
2020 |
Net sales |
|
$ |
1,269,857 |
|
|
$ |
1,173,021 |
|
Cost of sales |
|
821,154 |
|
|
767,726 |
|
Gross profit |
|
448,703 |
|
|
405,295 |
|
Selling, delivery and
administrative expenses |
|
354,519 |
|
|
372,474 |
|
Income from operations |
|
94,184 |
|
|
32,821 |
|
Interest expense, net |
|
8,746 |
|
|
9,561 |
|
Other expense, net |
|
12,055 |
|
|
2,298 |
|
Income before income taxes |
|
73,383 |
|
|
20,962 |
|
Income tax expense |
|
20,020 |
|
|
5,361 |
|
Net income |
|
53,363 |
|
|
15,601 |
|
Less: Net income attributable to
noncontrolling interest |
|
— |
|
|
939 |
|
Net income attributable
to Coca‑Cola Consolidated, Inc. |
|
$ |
53,363 |
|
|
$ |
14,662 |
|
|
|
|
|
|
Basic net income per
share based on net income attributable to Coca‑Cola Consolidated,
Inc.: |
|
|
|
|
Common Stock |
|
$ |
5.69 |
|
|
$ |
1.56 |
|
Weighted average number of Common
Stock shares outstanding |
|
7,141 |
|
|
7,141 |
|
|
|
|
|
|
Class B Common Stock |
|
$ |
5.69 |
|
|
$ |
1.56 |
|
Weighted average number of Class
B Common Stock shares outstanding |
|
2,232 |
|
|
2,232 |
|
|
|
|
|
|
Diluted net income per
share based on net income attributable to Coca‑Cola Consolidated,
Inc.: |
|
|
|
|
Common Stock |
|
$ |
5.67 |
|
|
$ |
1.55 |
|
Weighted average number of Common
Stock shares outstanding – assuming dilution |
|
9,409 |
|
|
9,444 |
|
|
|
|
|
|
Class B Common Stock |
|
$ |
5.67 |
|
|
$ |
1.55 |
|
Weighted average number of Class
B Common Stock shares outstanding – assuming dilution |
|
2,268 |
|
|
2,303 |
|
FINANCIAL STATEMENTSCONDENSED
CONSOLIDATED BALANCE
SHEETS(UNAUDITED)
(in
thousands) |
|
April 2, 2021 |
|
December 31, 2020 |
ASSETS |
|
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
51,828 |
|
|
$ |
54,793 |
|
Trade accounts receivable,
net |
|
439,374 |
|
|
403,825 |
|
Other accounts receivable |
|
95,341 |
|
|
86,287 |
|
Inventories |
|
257,363 |
|
|
225,757 |
|
Prepaid expenses and other
current assets |
|
76,592 |
|
|
74,146 |
|
Assets held for sale |
|
6,350 |
|
|
6,429 |
|
Total current assets |
|
926,848 |
|
|
851,237 |
|
Property, plant and equipment,
net |
|
1,021,198 |
|
|
1,022,722 |
|
Right-of-use assets -
operating leases |
|
129,445 |
|
|
134,383 |
|
Leased property under
financing leases, net |
|
68,453 |
|
|
69,867 |
|
Other assets |
|
112,995 |
|
|
111,781 |
|
Goodwill |
|
165,903 |
|
|
165,903 |
|
Other identifiable intangible
assets, net |
|
859,990 |
|
|
866,557 |
|
Total assets |
|
$ |
3,284,832 |
|
|
$ |
3,222,450 |
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Current portion of obligations
under operating leases |
|
$ |
19,388 |
|
|
$ |
19,766 |
|
Current portion of obligations
under financing leases |
|
5,909 |
|
|
5,860 |
|
Accounts payable and accrued
expenses |
|
658,610 |
|
|
621,434 |
|
Total current liabilities |
|
683,907 |
|
|
647,060 |
|
Deferred income taxes |
|
159,845 |
|
|
139,423 |
|
Pension and postretirement
benefit obligations and other liabilities |
|
782,191 |
|
|
792,605 |
|
Noncurrent portion of
obligations under operating leases |
|
115,487 |
|
|
119,923 |
|
Noncurrent portion of
obligations under financing leases |
|
68,756 |
|
|
69,984 |
|
Long-term debt |
|
909,304 |
|
|
940,465 |
|
Total liabilities |
|
2,719,490 |
|
|
2,709,460 |
|
|
|
|
|
|
Equity: |
|
|
|
|
Stockholders’ equity |
|
565,342 |
|
|
512,990 |
|
Total liabilities and equity |
|
$ |
3,284,832 |
|
|
$ |
3,222,450 |
|
FINANCIAL STATEMENTSCONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED)
|
|
First Quarter |
(in
thousands) |
|
2021 |
|
2020 |
Cash Flows from Operating Activities: |
|
|
|
|
Net income |
|
$ |
53,363 |
|
|
$ |
15,601 |
|
Depreciation expense,
amortization of intangible assets and deferred proceeds, net |
|
43,526 |
|
|
43,559 |
|
Fair value adjustment of
acquisition related contingent consideration |
|
10,998 |
|
|
712 |
|
Deferred income taxes |
|
19,980 |
|
|
5,910 |
|
Change in current assets and
current liabilities |
|
(38,662 |
) |
|
(42,310 |
) |
Change in noncurrent assets
and noncurrent liabilities |
|
(9,133 |
) |
|
8,106 |
|
Other |
|
1,838 |
|
|
711 |
|
Net cash provided by
operating activities |
|
$ |
81,910 |
|
|
$ |
32,289 |
|
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
|
Additions to property, plant
and equipment |
|
$ |
(37,204 |
) |
|
$ |
(33,093 |
) |
Other |
|
(2,438 |
) |
|
765 |
|
Net cash used in
investing activities |
|
$ |
(39,642 |
) |
|
$ |
(32,328 |
) |
|
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
|
Payments on revolving credit
facility and term loan facility |
|
$ |
(31,250 |
) |
|
$ |
(132,500 |
) |
Borrowings under revolving
credit facility |
|
— |
|
|
185,000 |
|
Payments of acquisition
related contingent consideration |
|
(10,046 |
) |
|
(10,452 |
) |
Cash dividends paid |
|
(2,343 |
) |
|
(2,344 |
) |
Principal payments on
financing lease obligations |
|
(1,447 |
) |
|
(1,485 |
) |
Debt issuance fees |
|
(147 |
) |
|
(46 |
) |
Net cash provided by
(used in) financing activities |
|
$ |
(45,233 |
) |
|
$ |
38,173 |
|
|
|
|
|
|
Net increase (decrease) in
cash during period |
|
$ |
(2,965 |
) |
|
$ |
38,134 |
|
Cash at beginning of
period |
|
54,793 |
|
|
9,614 |
|
Cash at end of
period |
|
$ |
51,828 |
|
|
$ |
47,748 |
|
NON-GAAP FINANCIAL MEASURES(d)
The following tables reconcile reported results (GAAP) to
adjusted results (non-GAAP):
|
|
First Quarter 2021 |
(in
thousands, except per share data) |
|
Gross profit |
|
SD&A expenses |
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Basic net income per share |
Reported results (GAAP) |
|
$ |
448,703 |
|
|
$ |
354,519 |
|
|
$ |
94,184 |
|
|
$ |
73,383 |
|
|
$ |
53,363 |
|
|
$ |
5.69 |
|
Fair value adjustment of
acquisition related contingent consideration |
|
— |
|
|
— |
|
|
— |
|
|
10,998 |
|
|
8,249 |
|
|
0.89 |
|
Fair value adjustments for
commodity derivative instruments |
|
(288 |
) |
|
560 |
|
|
(848 |
) |
|
(848 |
) |
|
(636 |
) |
|
(0.07 |
) |
Supply chain optimization |
|
276 |
|
|
(106 |
) |
|
382 |
|
|
382 |
|
|
287 |
|
|
0.03 |
|
Total reconciling
items |
|
(12 |
) |
|
454 |
|
|
(466 |
) |
|
10,532 |
|
|
7,900 |
|
|
0.85 |
|
Adjusted results
(non-GAAP) |
|
$ |
448,691 |
|
|
$ |
354,973 |
|
|
$ |
93,718 |
|
|
$ |
83,915 |
|
|
$ |
61,263 |
|
|
$ |
6.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted % change vs. Q1 2020 |
|
|
10.1 |
% |
|
|
(4.2 |
)% |
|
|
154.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2020 |
(in
thousands, except per share data) |
|
Gross profit |
|
SD&A expenses |
|
Income from operations |
|
Income before income taxes |
|
Net income |
|
Basic net income per share |
Reported results (GAAP) |
|
$ |
405,295 |
|
|
$ |
372,474 |
|
|
$ |
32,821 |
|
|
$ |
20,962 |
|
|
$ |
14,662 |
|
|
$ |
1.56 |
|
Fair value adjustment of
acquisition related contingent consideration |
|
— |
|
|
— |
|
|
— |
|
|
712 |
|
|
535 |
|
|
0.06 |
|
Fair value adjustments for
commodity derivative instruments |
|
1,536 |
|
|
(2,329 |
) |
|
3,865 |
|
|
3,865 |
|
|
2,906 |
|
|
0.31 |
|
Supply chain optimization |
|
648 |
|
|
571 |
|
|
77 |
|
|
77 |
|
|
58 |
|
|
0.01 |
|
Total reconciling
items |
|
2,184 |
|
|
(1,758 |
) |
|
3,942 |
|
|
4,654 |
|
|
3,499 |
|
|
0.38 |
|
Adjusted results
(non-GAAP) |
|
$ |
407,479 |
|
|
$ |
370,716 |
|
|
$ |
36,763 |
|
|
$ |
25,616 |
|
|
$ |
18,161 |
|
|
$ |
1.94 |
|
(d) 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 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 &
Communities |
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/9bba2f64-de6f-4489-be8f-b23944b74310
Coca Cola Consolidated (NASDAQ:COKE)
Historical Stock Chart
From Apr 2024 to May 2024
Coca Cola Consolidated (NASDAQ:COKE)
Historical Stock Chart
From May 2023 to May 2024