Coca‑Cola Bottling Co. Consolidated (NASDAQ:COKE) today reported
operating results for the third quarter ended October 1, 2017
and the first three quarters of fiscal 2017.
Frank Harrison, Chairman and Chief Executive Officer, said, “We
are excited about completing the significant expansion of our
Company in early October with the final transactions in our planned
growth through the acquisition of additional franchise distribution
territory and production capacity from
The Coca‑Cola Company. Our expansion, which began in
2014, has seen the Company grow significantly, expanding our
geographic footprint and customers and consumers we serve. This
expansion has also brought 10,000 new teammates to the Coke
Consolidated family, helping to extend our Company’s impact on many
new communities.”
Hank Flint, President and Chief Operating Officer, added, “The
third quarter was one of the more challenging quarters we have
experienced in several years with softer than expected sales
performance in certain channels of trade. The third quarter was
also impacted by hurricanes, which resulted in negative product
sourcing impacts and a noticeable shift in product mix during
September to lower margin case pack water. Despite these
challenges, the Company continued to grow with total sales rising
by almost 37%, comparable net sales increasing by 1.4% and
comparable equivalent unit case volume growing by 1.0%. We have
continued to build our capability and capacity to serve our
significantly larger distribution footprint and, with our expansion
now completed, we will strengthen our focus on our expanded sales
and commercial opportunities and driving operational improvement
and efficiency across the entire Company. We are also most grateful
to our over 16,000 teammates whose commitment and outstanding
efforts have been integral to our successful growth.”
Third Quarter 2017 Operating Review
|
|
Third Quarter 2017% Change
Compared toThird Quarter 2016 |
|
|
First Three Quarters 2017%
Change Compared toFirst Three Quarters
2016 |
|
|
|
Consolidated |
|
Comparable(a) |
|
|
Consolidated |
|
Comparable(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
36.9 |
% |
|
1.4 |
% |
|
|
38.1 |
% |
|
2.0 |
% |
Income from
operations |
|
|
-9.2 |
% |
|
-15.0 |
% |
|
|
-9.2 |
% |
|
-5.1 |
% |
Net income per share -
basic |
|
|
-25.0 |
% |
|
-29.5 |
% |
|
|
-35.3 |
% |
|
-9.2 |
% |
Equivalent unit case
volume(b) |
|
|
31.8 |
% |
|
1.0 |
% |
|
|
34.1 |
% |
|
1.6 |
% |
Sparkling |
|
|
27.2 |
% |
|
-0.6 |
% |
|
|
30.5 |
% |
|
0.5 |
% |
Still |
|
|
41.2 |
% |
|
4.3 |
% |
|
|
42.3 |
% |
|
4.1 |
% |
(a) The discussion of the third quarter and first three
quarters results includes selected non-GAAP financial information,
such as “comparable” results. See discussion of “Non-GAAP Financial
Measures” for descriptions and reconciliations.(b) Equivalent
unit case volume is defined as 24 8-ounce servings or 192
ounces.
- Consolidated net sales increased $313.5 million, or 36.9%,
to $1.16 billion in the third quarter of 2017, compared to
$849.0 million in the third quarter of 2016. The increase in
net sales was primarily driven by acquisitions and an increase in
comparable net sales of 1.4%. The increase in comparable net sales
in the third quarter of 2017 was driven by an increase in
comparable equivalent unit case volume of 1.0%. The still product
portfolio, which generally has a higher sales price per unit than
the sparkling portfolio, primarily contributed to the increase in
comparable net sales.
- Consolidated income from operations decreased
$3.7 million, or 9.2%, to $36.1 million in the third
quarter of 2017 from $39.8 million in the third quarter of
2016. The decrease was primarily driven by a $3.4 million
increase in expansion transaction expenses and $2.8 million of
amortization expense related to the conversion of distribution
rights from indefinite lived intangible assets to long lived
intangible assets in the first quarter of 2017.Comparable income
from operations, which represents the same geographic territories
in all periods presented, decreased $6.8 million, or 15.0%, to
$38.3 million in the third quarter of 2017 from
$45.1 million in the third quarter of 2016. The decrease was
primarily driven by a challenging retail sales environment, storm
related negative sourcing impacts and shifts in product mix to
lower-margin case pack water.
- Other income is primarily comprised of the quarterly
mark-to-market fair value adjustment for the Company’s acquisition
related contingent consideration liability for territories acquired
from Coca‑Cola Refreshments USA, Inc. (“CCR”), a wholly-owned
subsidiary of The Coca‑Cola Company, since May 2014.
These mark-to-market adjustments are non-cash and reflect changes
in underlying assumptions used to calculate the estimated liability
in the acquired territories subject to sub-bottling fees. These
assumptions include long-term interest rates, projected future
operating results and final settlements of territory values, as
agreed upon with CCR, which generally occur beyond one year from
the individual territory acquisition dates.The mark-to-market
adjustment was a $5.3 million benefit in the third quarter of
2017, compared to a $7.3 million benefit in the third quarter
of 2016. The adjustment in the third quarter of 2017 was primarily
a result of changes in the risk-free interest rate and the
adjustment in the third quarter of 2016 was primarily driven by a
change in the projected future operating results of the Expansion
Territories subject to sub-bottling fees and changes in the
risk-free interest rate.
- Consolidated basic net income per share was $1.86 in the third
quarter of 2017, as compared to consolidated basic net income per
share of $2.48 in the third quarter of 2016. Comparable basic net
income per share was $1.65 in the third quarter of 2017, as
compared to $2.34 in the third quarter of 2016.
- Cash flows provided by operating activities were
$202.4 million in the first three quarters of 2017, which was
an increase of $74.3 million compared to the first three
quarters of 2016. In addition to the cash generated from the newly
acquired expansion territories, the increase was driven by a
one-time fee of $87.1 million received from CCR in the first
quarter of 2017 for the conversion of the Company’s and its
subsidiaries’ then existing bottling agreements with
The Coca‑Cola Company or CCR to a new and final form
comprehensive beverage agreement.Additions to property, plant and
equipment during the first three quarters of 2017 were
$115.0 million, which excludes $161.2 million in
property, plant and equipment acquired in the Company’s expansion
transactions completed during the first half of 2017. In addition,
during the third quarter of 2017 the Company paid
$56.5 million toward the purchase price of transactions that
closed on October 2, 2017.
- On October 2, 2017, subsequent to the end of the third
quarter of 2017, the Company and its non-wholly owned subsidiary,
Piedmont Coca‑Cola Bottling Partnership (“Piedmont”), completed
three transactions: (1) the Company acquired territory in
Arkansas and production facilities in Memphis, Tennessee and West
Memphis, Arkansas from CCR in exchange for the Company’s
territories in portions of southern Alabama, southeastern
Mississippi, southwestern Georgia and northwestern Florida,
territories in and around Somerset, Kentucky and its production
facility in Mobile, Alabama, (2) the Company acquired
sub-bottling rights to territory in and around Memphis, Tennessee
from CCR, and (3) the Company acquired territory in and around
Spartanburg, South Carolina and a portion of territory in and
around Bluffton, South Carolina from Coca‑Cola Bottling Company
United, Inc. (“United”) in exchange for territories previously
served by the Company’s production facilities in Florence, Alabama
and Laurel, Mississippi and Piedmont acquired the remainder of the
territory in and around Bluffton, South Carolina from United in
exchange for Piedmont’s territory in northeastern Georgia. With the
closing of these transactions, the Company completed its multi-year
Coca‑Cola system transformation transactions with
The Coca‑Cola Company. The Company has not yet completed
the calculations to determine whether a gain or loss will occur as
a result of these transactions, however, following the Company’s
preliminary assessment, the Company expects to record a gain
related to these transactions during the fourth quarter of
2017.
About Coca‑Cola Bottling Co. Consolidated
Coke Consolidated is the largest independent Coca‑Cola bottler
in the United States. Our Purpose is to honor God, serve others,
pursue excellence and grow profitably. For 115 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 65 million consumers.
Headquartered in Charlotte, N.C., Coke Consolidated is traded on
the NASDAQ under the symbol COKE. More information about the
company is available at www.cokeconsolidated.com. Follow Coke
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 “believe,” “expect,” “project,” “will,” “should,” “could”
and similar expressions are intended to identify those
forward-looking statements. Factors that might cause Coke
Consolidated’s actual results to differ materially from those
anticipated in forward-looking statements include, but are not
limited to: our inability to integrate the operations and employees
acquired in expansion transactions; lower than expected selling
pricing resulting from increased marketplace competition; changes
in how significant customers market or promote our products;
changes in our top customer relationships; changes in public and
consumer preferences related to nonalcoholic beverages, including
concerns related to obesity and health concerns; unfavorable
changes in the general economy; miscalculation of our need for
infrastructure investment; our inability to meet requirements under
beverage agreements; material changes in the performance
requirements for marketing funding support or our inability to meet
such requirements; decreases from historic levels of marketing
funding support; changes in The Coca‑Cola Company’s and
other beverage companies’ levels of advertising, marketing and
spending on brand innovation; the inability of our aluminum can or
plastic bottle suppliers to meet our purchase requirements; our
inability to offset higher raw material costs with higher selling
prices, increased bottle/can sales volume or reduced expenses;
consolidation of raw material suppliers; incremental risks
resulting from increased purchases of finished goods; sustained
increases in fuel costs or our inability to secure adequate
supplies of fuel; sustained increases in the cost of labor and
employment matters, product liability claims or product recalls;
technology failures or cyberattacks; changes in interest rates; the
impact of debt levels on operating flexibility and access to
capital and credit markets; adverse changes in our credit rating
(whether as a result of our operations or prospects or as a result
of those of The Coca‑Cola Company or other bottlers in
the Coca‑Cola system); changes in legal contingencies; legislative
changes affecting our distribution and packaging; adoption of
significant product labeling or warning requirements; additional
taxes resulting from tax audits; natural disasters and unfavorable
weather; global climate change or legal or regulatory responses to
such change; issues surrounding labor relations with unionized
employees; bottler system disputes; our use of estimates and
assumptions; changes in accounting standards; the impact of
volatility in the financial markets on access to the credit
markets; the impact of acquisitions or dispositions of bottlers by
their franchisors; changes in the inputs used to calculate our
acquisition related contingent consideration liability; and the
concentration of our capital stock ownership. These and other
factors are discussed in the Company’s regulatory filings with the
Securities and Exchange Commission, including those in the
Company’s fiscal 2016 Annual Report on Form 10-K, Item 1A. Risk
Factors. 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 law.
—Enjoy Coca‑Cola—
Financial Statements
COCA‑COLA BOTTLING CO.
CONSOLIDATED |
CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
|
Third Quarter |
|
|
First Three Quarters |
|
(in
thousands, except per share data) |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Net sales |
|
$ |
1,162,526 |
|
|
$ |
849,028 |
|
|
$ |
3,197,519 |
|
|
$ |
2,314,868 |
|
Cost of sales |
|
|
752,202 |
|
|
|
521,838 |
|
|
|
2,039,996 |
|
|
|
1,424,073 |
|
Gross profit |
|
|
410,324 |
|
|
|
327,190 |
|
|
|
1,157,523 |
|
|
|
890,795 |
|
Selling, delivery and
administrative expenses |
|
|
374,194 |
|
|
|
287,389 |
|
|
|
1,060,472 |
|
|
|
783,857 |
|
Income from
operations |
|
|
36,130 |
|
|
|
39,801 |
|
|
|
97,051 |
|
|
|
106,938 |
|
Interest expense,
net |
|
|
10,697 |
|
|
|
8,452 |
|
|
|
30,607 |
|
|
|
27,621 |
|
Other income (expense),
net |
|
|
5,226 |
|
|
|
7,325 |
|
|
|
(32,569 |
) |
|
|
(26,100 |
) |
Loss on exchange of
franchise territory |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
692 |
|
Income before income
taxes |
|
|
30,659 |
|
|
|
38,674 |
|
|
|
33,875 |
|
|
|
52,525 |
|
Income tax expense |
|
|
11,748 |
|
|
|
13,121 |
|
|
|
11,800 |
|
|
|
18,681 |
|
Net income |
|
|
18,911 |
|
|
|
25,553 |
|
|
|
22,075 |
|
|
|
33,844 |
|
Less: Net
income attributable to noncontrolling interest |
|
|
1,595 |
|
|
|
2,411 |
|
|
|
3,462 |
|
|
|
5,091 |
|
Net income
attributable to Coca-Cola Bottling Co. Consolidated |
|
$ |
17,316 |
|
|
$ |
23,142 |
|
|
$ |
18,613 |
|
|
$ |
28,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net
income per share based on net income attributable to Coca-Cola
Bottling Co. Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.86 |
|
|
$ |
2.48 |
|
|
$ |
2.00 |
|
|
$ |
3.09 |
|
Weighted average number
of Common Stock shares outstanding |
|
|
7,141 |
|
|
|
7,141 |
|
|
|
7,141 |
|
|
|
7,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common
Stock |
|
$ |
1.86 |
|
|
$ |
2.48 |
|
|
$ |
2.00 |
|
|
$ |
3.09 |
|
Weighted average number
of Class B Common Stock shares outstanding |
|
|
2,193 |
|
|
|
2,172 |
|
|
|
2,188 |
|
|
|
2,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income per share based on net income attributable to Coca-Cola
Bottling Co. Consolidated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
$ |
1.85 |
|
|
$ |
2.47 |
|
|
$ |
1.99 |
|
|
$ |
3.08 |
|
Weighted average number
of Common Stock shares outstanding – assuming dilution |
|
|
9,374 |
|
|
|
9,353 |
|
|
|
9,369 |
|
|
|
9,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common
Stock |
|
$ |
1.84 |
|
|
$ |
2.47 |
|
|
$ |
1.97 |
|
|
$ |
3.07 |
|
Weighted average number
of Class B Common Stock shares outstanding – assuming dilution |
|
|
2,233 |
|
|
|
2,212 |
|
|
|
2,228 |
|
|
|
2,207 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COCA‑COLA BOTTLING CO.
CONSOLIDATED |
CONSOLIDATED CONDENSED BALANCE
SHEETS |
(Unaudited) |
|
(in
thousands) |
|
October 1, 2017 |
|
|
January 1, 2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
11,922 |
|
|
$ |
21,850 |
|
Trade accounts
receivable, net |
|
|
376,236 |
|
|
|
267,213 |
|
Accounts receivable,
other |
|
|
103,978 |
|
|
|
97,361 |
|
Inventories |
|
|
191,943 |
|
|
|
143,553 |
|
Prepaid expenses and
other current assets |
|
|
129,674 |
|
|
|
63,834 |
|
Assets held for
sale |
|
|
128,963 |
|
|
|
- |
|
Total current assets |
|
|
942,716 |
|
|
|
593,811 |
|
Property, plant and
equipment, net |
|
|
939,270 |
|
|
|
812,989 |
|
Leased property under
capital leases, net |
|
|
29,259 |
|
|
|
33,552 |
|
Other assets |
|
|
104,111 |
|
|
|
86,091 |
|
Franchise rights |
|
|
- |
|
|
|
533,040 |
|
Goodwill |
|
|
152,701 |
|
|
|
144,586 |
|
Other identifiable
intangible assets, net |
|
|
743,039 |
|
|
|
245,415 |
|
Total assets |
|
$ |
2,911,096 |
|
|
$ |
2,449,484 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
|
|
|
Current portion of
obligations under capital leases |
|
$ |
7,963 |
|
|
$ |
7,527 |
|
Accounts payable and
accrued expenses |
|
|
559,152 |
|
|
|
450,380 |
|
Liabilities held for
sale |
|
|
19,967 |
|
|
|
- |
|
Total current liabilities |
|
|
587,082 |
|
|
|
457,907 |
|
Deferred income
taxes |
|
|
153,765 |
|
|
|
174,854 |
|
Pension, postretirement
and other liabilities |
|
|
624,122 |
|
|
|
505,251 |
|
Long-term debt and
obligations under capital leases |
|
|
1,163,011 |
|
|
|
948,448 |
|
Total liabilities |
|
|
2,527,980 |
|
|
|
2,086,460 |
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Stockholders'
equity |
|
|
293,761 |
|
|
|
277,131 |
|
Noncontrolling
interest |
|
|
89,355 |
|
|
|
85,893 |
|
Total liabilities and equity |
|
$ |
2,911,096 |
|
|
$ |
2,449,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COCA‑COLA BOTTLING CO.
CONSOLIDATED |
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
|
First Three Quarters |
|
(in
thousands) |
|
2017 |
|
|
2016 |
|
Cash Flows from
Operating Activities: |
|
|
|
|
|
|
|
|
Consolidated net
income |
|
$ |
22,075 |
|
|
$ |
33,844 |
|
Depreciation expense
and amortization of intangible assets and deferred proceeds |
|
|
120,293 |
|
|
|
83,386 |
|
Deferred income
taxes |
|
|
(24,741 |
) |
|
|
5,509 |
|
Proceeds from
conversion of Legacy Territories bottling agreements |
|
|
87,066 |
|
|
|
- |
|
Stock compensation
expense |
|
|
6,473 |
|
|
|
4,445 |
|
Fair value adjustment
of acquisition related contingent consideration |
|
|
23,140 |
|
|
|
26,060 |
|
Change in assets and
liabilities (exclusive of acquisitions) |
|
|
(36,173 |
) |
|
|
(29,620 |
) |
Other |
|
|
4,292 |
|
|
|
4,501 |
|
Net cash
provided by operating activities |
|
|
202,425 |
|
|
|
128,125 |
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
|
Acquisition of
Expansion Territories related investing activities |
|
|
(291,465 |
) |
|
|
(174,571 |
) |
Additions to property,
plant and equipment (exclusive of acquisitions) |
|
|
(114,953 |
) |
|
|
(124,599 |
) |
Other |
|
|
(1,483 |
) |
|
|
(6,883 |
) |
Net cash used
in investing activities |
|
|
(407,901 |
) |
|
|
(306,053 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
|
|
|
|
|
Borrowings under
Revolving Credit Facility, Term Loan Facility and Senior Notes |
|
|
458,000 |
|
|
|
610,000 |
|
Payments on Revolving
Credit Facility and Senior Notes |
|
|
(238,000 |
) |
|
|
(409,757 |
) |
Cash dividends
paid |
|
|
(6,995 |
) |
|
|
(6,980 |
) |
Payments on acquisition
related contingent consideration |
|
|
(11,650 |
) |
|
|
(10,470 |
) |
Principal payments on
capital lease obligations |
|
|
(5,594 |
) |
|
|
(5,279 |
) |
Other |
|
|
(213 |
) |
|
|
(867 |
) |
Net cash
provided by financing activities |
|
|
195,548 |
|
|
|
176,647 |
|
|
|
|
|
|
|
|
|
|
Net decrease during
period |
|
|
(9,928 |
) |
|
|
(1,281 |
) |
Cash at beginning of
period |
|
|
21,850 |
|
|
|
55,498 |
|
Cash at end of
period |
|
$ |
11,922 |
|
|
$ |
54,217 |
|
Non-GAAP Financial Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (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. Further, given the transformation of the Company’s
business through expansion transactions with
The Coca‑Cola Company, the Company believes these
non-GAAP financial measures allow users to better appreciate the
impact of these transactions on the Company’s 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.
The following tables reconcile reported GAAP results to
comparable results for the third quarter of 2017 and the third
quarter of 2016:
|
|
Third Quarter 2017 |
|
(in
thousands, except per share data) |
|
Netsales |
|
|
Incomefrom
operations |
|
|
Income beforeincome
taxes |
|
|
Netincome |
|
|
Basic net incomeper
share |
|
Reported
results (GAAP) |
|
$ |
1,162,526 |
|
|
$ |
36,130 |
|
|
$ |
30,659 |
|
|
$ |
17,316 |
|
|
$ |
1.86 |
|
Fair value adjustments
for commodity hedges |
A |
|
- |
|
|
|
(3,401 |
) |
|
|
(3,401 |
) |
|
|
(2,088 |
) |
|
|
(0.22 |
) |
Amortization of
converted distribution rights |
B |
|
- |
|
|
|
2,760 |
|
|
|
2,760 |
|
|
|
1,695 |
|
|
|
0.18 |
|
2017 & 2016
acquisitions impact |
C |
|
(478,272 |
) |
|
|
(10,329 |
) |
|
|
(10,329 |
) |
|
|
(6,342 |
) |
|
|
(0.68 |
) |
Expansion transaction
expenses |
D |
|
- |
|
|
|
13,148 |
|
|
|
13,148 |
|
|
|
8,073 |
|
|
|
0.85 |
|
Fair value adjustment
of acquisition related contingent consideration |
E |
|
- |
|
|
|
- |
|
|
|
(5,225 |
) |
|
|
(3,208 |
) |
|
|
(0.34 |
) |
Total
reconciling items |
|
|
(478,272 |
) |
|
|
2,178 |
|
|
|
(3,047 |
) |
|
|
(1,870 |
) |
|
|
(0.21 |
) |
Comparable
results (non-GAAP) |
|
$ |
684,254 |
|
|
$ |
38,308 |
|
|
$ |
27,612 |
|
|
$ |
15,446 |
|
|
$ |
1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter 2016 |
|
(in
thousands, except per share data) |
|
Netsales |
|
|
Incomefrom
operations |
|
|
Income beforeincome
taxes |
|
|
Netincome |
|
|
Basic net incomeper
share |
|
Reported
results (GAAP) |
|
$ |
849,028 |
|
|
$ |
39,801 |
|
|
$ |
38,674 |
|
|
$ |
23,142 |
|
|
$ |
2.48 |
|
Fair value adjustments
for commodity hedges |
A |
|
- |
|
|
|
(388 |
) |
|
|
(388 |
) |
|
|
(239 |
) |
|
|
(0.03 |
) |
2016 acquisitions
impact |
C |
|
(174,420 |
) |
|
|
(2,512 |
) |
|
|
(2,512 |
) |
|
|
(1,545 |
) |
|
|
(0.17 |
) |
Expansion transaction
expenses |
D |
|
- |
|
|
|
9,780 |
|
|
|
9,780 |
|
|
|
6,015 |
|
|
|
0.65 |
|
Impact of changes in
product supply governance |
F |
|
- |
|
|
|
(1,614 |
) |
|
|
(1,614 |
) |
|
|
(993 |
) |
|
|
(0.11 |
) |
Fair value adjustment
of acquisition related contingent consideration |
E |
|
- |
|
|
|
- |
|
|
|
(7,365 |
) |
|
|
(4,530 |
) |
|
|
(0.48 |
) |
Total
reconciling items |
|
|
(174,420 |
) |
|
|
5,266 |
|
|
|
(2,099 |
) |
|
|
(1,292 |
) |
|
|
(0.14 |
) |
Comparable
results (non-GAAP) |
|
$ |
674,608 |
|
|
$ |
45,067 |
|
|
$ |
36,575 |
|
|
$ |
21,850 |
|
|
$ |
2.34 |
|
The following tables reconcile reported GAAP results to
comparable results for the first three quarters of 2017 and the
first three quarters of 2016:
|
|
First Three Quarters 2017 |
|
(in
thousands, except per share data) |
|
Netsales |
|
|
Income fromoperations |
|
|
Income beforeincome
taxes |
|
|
Netincome |
|
|
Basic net incomeper
share |
|
Reported
results (GAAP) |
|
$ |
3,197,519 |
|
|
$ |
97,051 |
|
|
$ |
33,875 |
|
|
$ |
18,613 |
|
|
$ |
2.00 |
|
Fair value adjustments
for commodity hedges |
A |
|
- |
|
|
|
(2,541 |
) |
|
|
(2,541 |
) |
|
|
(1,560 |
) |
|
|
(0.16 |
) |
Amortization of
converted distribution rights |
B |
|
- |
|
|
|
5,520 |
|
|
|
5,520 |
|
|
|
3,390 |
|
|
|
0.36 |
|
January 2016 Expansion
Transactions settlement |
G |
|
- |
|
|
|
- |
|
|
|
9,442 |
|
|
|
5,797 |
|
|
|
0.62 |
|
2017 & 2016
acquisitions impact |
C |
|
(1,215,827 |
) |
|
|
(30,099 |
) |
|
|
(30,099 |
) |
|
|
(18,480 |
) |
|
|
(1.97 |
) |
Expansion transaction
expenses |
D |
|
- |
|
|
|
32,374 |
|
|
|
32,374 |
|
|
|
19,877 |
|
|
|
2.09 |
|
Fair value adjustment
of acquisition related contingent consideration |
E |
|
- |
|
|
|
- |
|
|
|
23,140 |
|
|
|
14,208 |
|
|
|
1.52 |
|
Total
reconciling items |
|
|
(1,215,827 |
) |
|
|
5,254 |
|
|
|
37,836 |
|
|
|
23,232 |
|
|
|
2.46 |
|
Comparable
results (non-GAAP) |
|
$ |
1,981,692 |
|
|
$ |
102,305 |
|
|
$ |
71,711 |
|
|
$ |
41,845 |
|
|
$ |
4.46 |
|
|
|
First Three Quarters 2016 |
|
(in
thousands, except per share data) |
|
Netsales |
|
|
Income fromoperations |
|
|
Income beforeincome
taxes |
|
|
Netincome |
|
|
Basic net incomeper
share |
|
Reported
results (GAAP) |
|
$ |
2,314,868 |
|
|
$ |
106,938 |
|
|
$ |
52,525 |
|
|
$ |
28,753 |
|
|
$ |
3.09 |
|
Fair value adjustments
for commodity hedges |
A |
|
- |
|
|
|
(4,198 |
) |
|
|
(4,198 |
) |
|
|
(2,583 |
) |
|
|
(0.28 |
) |
2016 acquisitions
impact |
C |
|
(372,550 |
) |
|
|
(17,220 |
) |
|
|
(17,220 |
) |
|
|
(10,591 |
) |
|
|
(1.14 |
) |
Expansion transaction
expenses |
D |
|
- |
|
|
|
23,208 |
|
|
|
23,208 |
|
|
|
14,273 |
|
|
|
1.54 |
|
Special charitable
contribution |
H |
|
- |
|
|
|
4,000 |
|
|
|
4,000 |
|
|
|
2,460 |
|
|
|
0.26 |
|
Exchange of franchise
territories |
I |
|
- |
|
|
|
- |
|
|
|
692 |
|
|
|
426 |
|
|
|
0.05 |
|
Impact of changes in
product supply governance |
F |
|
- |
|
|
|
(4,932 |
) |
|
|
(4,932 |
) |
|
|
(3,034 |
) |
|
|
(0.33 |
) |
Fair value adjustment
of acquisition related contingent consideration |
E |
|
- |
|
|
|
- |
|
|
|
26,060 |
|
|
|
16,027 |
|
|
|
1.72 |
|
Total
reconciling items |
|
|
(372,550 |
) |
|
|
858 |
|
|
|
27,610 |
|
|
|
16,978 |
|
|
|
1.82 |
|
Comparable
results (non-GAAP) |
|
$ |
1,942,318 |
|
|
$ |
107,796 |
|
|
$ |
80,135 |
|
|
$ |
45,731 |
|
|
$ |
4.91 |
|
Following is an explanation of non-GAAP adjustments:
A. The Company enters into derivative
instruments from time to time to hedge some or all of its projected
purchases of aluminum, PET resin, diesel fuel and unleaded gasoline
for the Company’s delivery fleet and other vehicles in order to
mitigate commodity risk. The Company accounts for commodity hedges
on a mark-to-market basis.
B. The Company and
The Coca‑Cola Company entered into a comprehensive
beverage agreement on March 31, 2017 (as amended, the "Final
CBA"). Concurrent with entering into the Final CBA in the first
quarter of 2017, the Company converted its franchise rights for the
Legacy Territories to distribution rights, to be amortized over an
estimated useful life of 40 years. Adjustment reflects the net
amortization expense associated with the conversion of the
Company's franchise rights.
C. Adjustment reflects the financial
performance of the 2016 and 2017 Expansion Transactions.
D. Adjustment reflects expenses related to
the Expansion Transactions, which primarily include professional
fees and expenses related to due diligence, and information
technologies system conversions.
E. This non-cash, fair value adjustment of
acquisition-related contingent consideration fluctuates based on
factors such as long-term interest rates, projected future results,
and final settlements of acquired territory values.
F. Adjustment reflects the gross profit on
sales to other Coca‑Cola bottlers prior to the adoption of the
Final Regional Manufacturing Agreement (the “Final RMA”) on
March 31, 2017. Under the terms of the Final RMA, a
standardized pricing methodology was implemented, which reduced the
gross profit on net sales of the Company to other Coca‑Cola
bottlers. To compensate the Company for its reduction of gross
profit under the terms of the Final RMA,
The Coca‑Cola Company has agreed to provide the Company
an aggregate valuation adjustment through a payment or credit.
G. Adjustment includes a charge within
other expense for net working capital and other fair value
adjustments related to the January 2016 Expansion Transactions that
were made beyond one year from the acquisition date.
H. A special charitable contribution was
made during the first quarter of 2016.
I. Adjustment relates to the post-closing
adjustment under the 2015 Asset Exchange Agreement completed in the
second quarter of 2016.
Media Contact:Kimberly Kuo Senior Vice
President, Public Affairs,Communications and
Communities704-557-4584
Investor Contact:Clifford M.
Deal, III Senior Vice
President &
CFO704-557-4633
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