Coca-Cola Consolidated, Inc. (NASDAQ: COKE) today reported
operating results for the first quarter ended April 1, 2022.
“After achieving record operating performance in 2021, we are
off to a very strong start in 2022. Our teammates are doing a
tremendous job serving our customers and consumers as demand for
our brands remains solid,” said J. Frank Harrison, III,
Chairman and Chief Executive Officer. “I am pleased that our strong
operating results and cash flow are enabling us to further
strengthen our Company for continued growth. Two examples of recent
investments include the purchase of our Charlotte, N.C. production
facility for $60 million and the acquisition of the BODYARMOR
distribution rights in our Mid-Atlantic territory for
$30 million.”
Net sales increased 11% to $1.40 billion in the first
quarter of 2022, while physical case volume decreased 0.6%. The
increase in net sales was driven primarily by pricing actions taken
on most of our Sparkling and Still beverages during the second half
of 2021 and the beginning of 2022. While Sparkling beverage volume
decreased 1.5% in the quarter, category demand remained strong when
considering the higher pricing in the marketplace. Sales of
single-serve products sold in small stores and other immediate
consumption channels continued to perform well as on-premise
outlets return to pre-pandemic operating levels. Sparkling
immediate consumption packages were up 4.6% in the quarter. Still
beverage volume increased 1.6% in the quarter driven primarily by
BODYARMOR, which we began distributing in our Mid-Atlantic
territory at the beginning of 2022.
Gross profit in the first quarter of 2022 increased
$58.9 million, or 13%, while gross margin improved
80 basis points to 36.1%. Adjusted(b) gross profit in the
first quarter of 2022 was $500.1 million, which represented an
increase of $51.4 million or 12%. Adjusted(b) gross margin was
35.6%, an increase of 30 basis points compared to the first
quarter of 2021. The improvement in gross profit was primarily due
to strong price realization which led to improved gross margins
during this period of high commodity price inflation.
“Our first quarter results reflect our continued success
balancing volume, pricing and operating expense control, and we
have made good progress in recruiting and retaining talent for a
number of our front-line positions,” said Dave Katz, President and
Chief Operating Officer. “We continue to work through global and
regional supply chain challenges that have negatively impacted our
ability to service our customers at the highest levels. We are
optimistic that these circumstances will continue to improve,
enabling us to more fully meet the continued strong demand of our
customers and consumers.”
“As we approach the key Summer selling season, we are confident
in our ability to respond to the current high commodity cost
environment with effective pricing strategies,” continued Mr. Katz.
“We are also mindful of the pressure consumers are facing as food
inflation impacts all major grocery categories, and we are working
in close partnership with The Coca-Cola Company and our
other brand partners to ensure we have affordable package solutions
across our brand portfolio.”
Selling, delivery and administrative (“SD&A”) expenses in
the first quarter of 2022 increased $22.1 million, or 6%.
SD&A expenses as a percentage of net sales decreased
110 basis points to 26.8% in the first quarter of 2022. The
increase in SD&A expenses related primarily to an increase in
payroll expenses as a result of compensation adjustments made in
2021 in order to remain competitive in a tight labor market. In
addition, higher levels of inflation contributed to the overall
increase in SD&A expenses across a number of spending
categories.
Income from operations in the first quarter of 2022 was
$131.0 million, compared to $94.2 million in the first
quarter of 2021, an increase of 39%. On an adjusted(b) basis,
income from operations in the first quarter of 2022 was
$117.3 million, an increase of 25%.
Net income in the first quarter of 2022 was $93.4 million,
compared to $53.4 million in the first quarter of 2021, an
improvement of $40.0 million.
Cash flows provided by operations for the first quarter of 2022
were $130.9 million, compared to $81.9 million for the
first quarter of 2021. The significant increase in operating cash
flows for the first quarter of 2022 was a result of our strong
operating performance. 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 results for
the first quarter ended April 1, 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 STATEMENTSCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(UNAUDITED) |
|
|
|
First Quarter |
(in thousands, except per share data) |
|
2022 |
|
2021 |
Net sales |
|
$ |
1,404,358 |
|
|
$ |
1,269,857 |
Cost of sales |
|
|
896,782 |
|
|
|
821,154 |
Gross profit |
|
|
507,576 |
|
|
|
448,703 |
Selling, delivery and
administrative expenses |
|
|
376,591 |
|
|
|
354,519 |
Income from operations |
|
|
130,985 |
|
|
|
94,184 |
Interest expense, net |
|
|
7,699 |
|
|
|
8,746 |
Other (income) expense, net |
|
|
(3,279 |
) |
|
|
12,055 |
Income before taxes |
|
|
126,565 |
|
|
|
73,383 |
Income tax expense |
|
|
33,175 |
|
|
|
20,020 |
Net income |
|
$ |
93,390 |
|
|
$ |
53,363 |
|
|
|
|
|
Basic net income per
share: |
|
|
|
|
Common Stock |
|
$ |
9.96 |
|
|
$ |
5.69 |
Weighted average number of Common
Stock shares outstanding |
|
|
7,357 |
|
|
|
7,141 |
|
|
|
|
|
Class B Common Stock |
|
$ |
9.99 |
|
|
$ |
5.69 |
Weighted average number of Class
B Common Stock shares outstanding |
|
|
2,016 |
|
|
|
2,232 |
|
|
|
|
|
Diluted net income per
share: |
|
|
|
|
Common Stock |
|
$ |
9.94 |
|
|
$ |
5.67 |
Weighted average number of Common
Stock shares outstanding – assuming dilution |
|
|
9,396 |
|
|
|
9,409 |
|
|
|
|
|
Class B Common Stock |
|
$ |
9.96 |
|
|
$ |
5.67 |
Weighted average number of Class
B Common Stock shares outstanding – assuming dilution |
|
|
2,039 |
|
|
|
2,268 |
|
FINANCIAL STATEMENTSCONDENSED CONSOLIDATED
BALANCE SHEETS(UNAUDITED) |
|
(in
thousands) |
|
April 1, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
|
Current
Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
127,085 |
|
$ |
142,314 |
Trade accounts receivable,
net |
|
|
458,541 |
|
|
454,934 |
Other accounts receivable |
|
|
92,141 |
|
|
91,615 |
Inventories |
|
|
276,278 |
|
|
302,851 |
Prepaid expenses and other
current assets |
|
|
94,151 |
|
|
78,068 |
Assets held for sale |
|
|
3,022 |
|
|
6,880 |
Total current assets |
|
|
1,051,218 |
|
|
1,076,662 |
Property, plant and equipment,
net |
|
|
1,071,731 |
|
|
1,030,688 |
Right-of-use assets -
operating leases |
|
|
138,856 |
|
|
139,877 |
Leased property under
financing leases, net |
|
|
7,666 |
|
|
64,211 |
Other assets |
|
|
119,340 |
|
|
120,486 |
Goodwill |
|
|
165,903 |
|
|
165,903 |
Other identifiable intangible
assets, net |
|
|
871,218 |
|
|
847,743 |
Total assets |
|
$ |
3,425,932 |
|
$ |
3,445,570 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Current portion of obligations
under operating leases |
|
$ |
23,556 |
|
$ |
22,048 |
Current portion of obligations
under financing leases |
|
|
2,171 |
|
|
6,060 |
Accounts payable and accrued
expenses |
|
|
743,344 |
|
|
806,748 |
Current portion of debt |
|
|
125,000 |
|
|
— |
Total current liabilities |
|
|
894,071 |
|
|
834,856 |
Deferred income taxes |
|
|
169,827 |
|
|
136,432 |
Pension and postretirement
benefit obligations and other liabilities |
|
|
830,735 |
|
|
852,001 |
Noncurrent portion of
obligations under operating leases |
|
|
119,814 |
|
|
122,046 |
Noncurrent portion of
obligations under financing leases |
|
|
9,264 |
|
|
65,006 |
Long-term debt |
|
|
598,574 |
|
|
723,443 |
Total liabilities |
|
|
2,622,285 |
|
|
2,733,784 |
|
|
|
|
|
Equity: |
|
|
|
|
Stockholders’ equity |
|
|
803,647 |
|
|
711,786 |
Total liabilities and equity |
|
$ |
3,425,932 |
|
$ |
3,445,570 |
|
|
|
FINANCIAL
STATEMENTSCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(UNAUDITED) |
|
|
|
|
|
First Quarter |
(in
thousands) |
|
2022 |
|
2021 |
Cash Flows from Operating Activities: |
|
|
|
|
Net income |
|
$ |
93,390 |
|
|
$ |
53,363 |
|
Depreciation expense,
amortization of intangible assets and deferred proceeds, net |
|
|
43,269 |
|
|
|
43,526 |
|
Deferred income taxes |
|
|
33,130 |
|
|
|
19,980 |
|
Fair value adjustment of
acquisition related contingent consideration |
|
|
(5,457 |
) |
|
|
10,998 |
|
Change in current assets and
current liabilities |
|
|
(32,415 |
) |
|
|
(38,662 |
) |
Change in noncurrent assets
and noncurrent liabilities |
|
|
(1,724 |
) |
|
|
(9,133 |
) |
Other |
|
|
688 |
|
|
|
1,838 |
|
Net cash provided by
operating activities |
|
$ |
130,881 |
|
|
$ |
81,910 |
|
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
|
Additions to property, plant
and equipment |
|
$ |
(104,353 |
) |
|
$ |
(37,204 |
) |
Acquisition of BODYARMOR
distribution rights |
|
|
(30,149 |
) |
|
|
(1,998 |
) |
Other |
|
|
1,981 |
|
|
|
(440 |
) |
Net cash used in
investing activities |
|
$ |
(132,521 |
) |
|
$ |
(39,642 |
) |
|
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
|
Payments of acquisition
related contingent consideration |
|
$ |
(9,822 |
) |
|
$ |
(10,046 |
) |
Cash dividends paid |
|
|
(2,344 |
) |
|
|
(2,343 |
) |
Payments on financing lease
obligations |
|
|
(1,375 |
) |
|
|
(1,447 |
) |
Debt issuance fees |
|
|
(48 |
) |
|
|
(147 |
) |
Payments on term loan
facility |
|
|
— |
|
|
|
(31,250 |
) |
Net cash used in
financing activities |
|
$ |
(13,589 |
) |
|
$ |
(45,233 |
) |
|
|
|
|
|
Net decrease in cash during
period |
|
$ |
(15,229 |
) |
|
$ |
(2,965 |
) |
Cash at beginning of
period |
|
|
142,314 |
|
|
|
54,793 |
|
Cash at end of
period |
|
$ |
127,085 |
|
|
$ |
51,828 |
|
|
NON-GAAP
FINANCIAL MEASURES(c) The
following tables reconcile reported results (GAAP) to adjusted
results (non-GAAP): |
|
|
|
First Quarter 2022 |
(in
thousands, except per share data) |
|
Gross profit |
|
SD&Aexpenses |
|
Income fromoperations |
|
Income beforetaxes |
|
Net income |
|
Basic netincome 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted % change vs. Q1 2021 |
|
|
11.5 |
% |
|
|
7.8 |
% |
|
|
25.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2021 |
(in
thousands, except per share data) |
|
Gross profit |
|
SD&Aexpenses |
|
Income fromoperations |
|
Income beforetaxes |
|
Net income |
|
Basic netincome pershare |
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 |
|
(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/a7ecc230-6ad7-4190-844b-d83c53b8b1af
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