false000031754000003175402023-08-022023-08-02


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2023
COCA-COLA CONSOLIDATED, INC.
(Exact name of registrant as specified in its charter)

Delaware0-928656-0950585
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
4100 Coca-Cola Plaza
Charlotte, NC
28211
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (980) 392-8298
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareCOKEThe Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    



Item 2.02.    Results of Operations and Financial Condition.

On August 2, 2023, Coca-Cola Consolidated, Inc. (the “Company”) issued a news release reporting its financial results for the second quarter ended June 30, 2023 and the first half of fiscal 2023. A copy of the news release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.


Item 9.01.    Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit No.DescriptionIncorporated by Reference or
Filed/Furnished Herewith
99.1Furnished herewith.
104Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.Filed herewith.

The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in any such filing.



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COCA-COLA CONSOLIDATED, INC.
Date: August 2, 2023
By:/s/ F. Scott Anthony
F. Scott Anthony
Executive Vice President and Chief Financial Officer


Exhibit 99.1
logoa.jpg
News Release


Coca-Cola Consolidated Reports
Second Quarter and First Half 2023 Results

Second quarter of 2023 net sales increased 9% versus the second quarter of 2022.

Gross profit in the second quarter of 2023 was $672 million, an increase of 22% versus the second quarter of 2022. Gross margin in the second quarter of 2023 improved by 410 basis points(a) to 38.6%.

Income from operations for the first half of 2023 was $440 million, up $161 million, or 58%, versus the first half of 2022. Operating margin for the first half of 2023 was 13.3% as compared to 9.3% for the first half of 2022, an increase of 400 basis points.

Key Results
 
Second Quarter
 First Half
(in millions)20232022Change20232022Change
Standard physical case volume(1)
92.6 96.4 (4.0)%175.0 181.5 (3.6)%
Net sales$1,738.8 $1,595.2 9.0 %$3,310.5 $2,999.6 10.4 %
Gross profit$671.6 $550.7 22.0 %$1,295.7 $1,058.2 22.4 %
Gross margin38.6 %34.5 %39.1 %35.3 %
Income from operations$233.7 $147.3 58.6 %$439.7 $278.3 58.0 %
Operating margin13.4 %9.2 %13.3 %9.3 %
Beverage Sales
Second Quarter
 First Half
(in millions)20232022Change20232022Change
Sparkling bottle/can$1,004.4 $879.9 14.1 %$1,918.7 $1,655.9 15.9 %
Still bottle/can$573.6 $539.6 6.3 %$1,082.9 $1,006.8 7.6 %

(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.



Second Quarter and First Half 2023 Review

CHARLOTTE, August 2, 2023 – Coca‑Cola Consolidated, Inc. (NASDAQ: COKE) today reported operating results for the second quarter ended June 30, 2023 and the first half of fiscal 2023.

“The strong business momentum we attained early this year continued in the second quarter as we posted another quarter of very strong profit growth and achieved a record high operating margin of 13.4%,” said J. Frank Harrison, III, Chairman and Chief Executive Officer. “Our results are a testament to the strength of our brands and the dedication of our people as we navigate the current retail environment and the ever-evolving preferences of our consumers. I believe the plans we have in place for the second half will enable us to build on our first-half success, further strengthen our field operations and drive continued consumer engagement with our brands.”

Net sales increased 9% to $1.74 billion in the second quarter of 2023 and increased 10% to $3.31 billion in the first half of 2023. The increase in net sales was driven primarily by price increases taken across our product portfolio over the last year.

Standard physical case volume declined 4.0% in the second quarter of 2023 and declined 3.6% in the first half of 2023. Sparkling category volume decreased 2.1% during the second quarter; however, our Sparkling portfolio continues to perform well versus historical price elasticities typically associated with higher pricing. Sales in Immediate Consumption continue to perform well, outpacing sales of take-home packages. Still volume declined 8.9% during the second quarter as the overall sports drinks category slowed considerably. Other Still categories such as energy and enhanced water continue to perform well with Monster and smartwater both achieving solid growth in the quarter.

Gross profit in the second quarter of 2023 was $671.6 million, an increase of $120.9 million, or 22%, while gross margin improved 410 basis points to 38.6%. The improvement in gross profit resulted primarily from higher prices for our products and a moderation of prices for certain commodities. Gross profit in the first half of 2023 was $1.30 billion, an increase of $237.4 million, or 22%. The Company continues to expect pricing growth to slow in the second half of 2023 as we hurdle 2022 price increases.

“Our strong second quarter results reinforce the success we are having with our retail partners in commercializing our local marketing plans and providing our consumers with a variety of affordable packages,” said Dave Katz, President and Chief Operating Officer. “This is a very dynamic period as we see consumers shifting between retail channels, especially within supermarkets, Club and Value stores. As overall volume slowed in the second quarter, we have proactively engaged with our retail partners to help drive consumer traffic and transaction growth for the balance of this year.”




Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2023 increased $34.5 million, or 9%. SD&A expenses as a percentage of net sales decreased 10 basis points to 25.2% in the second quarter of 2023. The increase in SD&A expenses related primarily to an increase in labor costs, resulting from certain compensation and benefits adjustments made in the prior year to retain and reward our teammates in a challenging labor environment. In addition, broad inflationary increases across a number of SD&A categories pushed expenses higher during the quarter. SD&A expenses in the first half of 2023 increased $76.0 million, or 10%. SD&A expenses as a percentage of net sales in the first half of 2023 decreased 10 basis points to 25.9% as compared to the first half of 2022. We expect the rate of increase to slow in the second half of this year as we hurdle labor adjustments made in late 2022.

Income from operations in the second quarter of 2023 was $233.7 million, compared to $147.3 million in the second quarter of 2022, an increase of 59%. On an adjusted(b) basis, income from operations in the second quarter of 2023 increased 47% as compared to the second quarter of 2022. Operating margin for the second quarter of 2023 was 13.4% as compared to 9.2% in the second quarter of 2022, an increase of 420 basis points.

Net income in the second quarter of 2023 was $122.3 million, compared to $99.6 million in the second quarter of 2022, an improvement of $22.8 million. On an adjusted(b) basis, net income in the second quarter of 2023 was $172.8 million, compared to $112.2 million in the second quarter of 2022, an increase of $60.6 million.

Second 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. Second quarter net income was also adversely impacted by the partial settlement of our primary pension plan, which resulted in a non-cash charge of $39.8 million. In the third quarter of 2023, the Company expects to record an additional non-cash charge of approximately $79 million related to the remaining settlement of the primary pension plan.

Income tax expense for the second quarter of 2023 was $42.4 million, compared to $34.4 million in the second quarter of 2022, resulting in an effective income tax rate of approximately 26% for both periods. For the second quarter of 2023, basic net income per share was $13.05 and adjusted(b) basic net income per share was $18.43.

Cash flows provided by operations for first half 2023 were $383.3 million, compared to $243.5 million for first half 2022. Cash flows from operations reflected our strong operating performance and the timing of certain working capital payments and receipts during the second quarter. In the first half of 2023, we invested $92.9 million in capital expenditures as we continue to optimize our supply chain and invest for the future growth of small bottle PET packages and mini cans. 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 second quarter ended June 30, 2023 and the first half of fiscal 2023 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.

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

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.

###




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FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Second QuarterFirst Half
(in thousands, except per share data)2023202220232022
Net sales$1,738,832 $1,595,215 $3,310,474 $2,999,573 
Cost of sales1,067,255 1,044,556 2,014,791 1,941,338 
Gross profit671,577 550,659 1,295,683 1,058,235 
Selling, delivery and administrative expenses437,907 403,366 855,959 779,957 
Income from operations233,670 147,293 439,724 278,278 
Interest expense, net1,353 7,146 4,282 14,845 
Pension plan settlement expense39,777 — 39,777 — 
Other expense, net27,788 6,199 71,711 2,920 
Income before taxes164,752 133,948 323,954 260,513 
Income tax expense 42,433 34,386 83,508 67,561 
Net income$122,319 $99,562 $240,446 $192,952 
Basic net income per share:
Common Stock$13.05 $10.62 $25.65 $20.58 
Weighted average number of Common Stock shares outstanding8,369 8,369 8,369 7,863 
Class B Common Stock$13.05 $10.62 $25.65 $20.62 
Weighted average number of Class B Common Stock shares outstanding1,005 1,005 1,005 1,511 
Diluted net income per share:
Common Stock$13.02 $10.59 $25.59 $20.53 
Weighted average number of Common Stock shares outstanding – assuming dilution9,396 9,399 9,396 9,399 
Class B Common Stock$13.01 $10.59 $25.51 $20.56 
Weighted average number of Class B Common Stock shares outstanding – assuming dilution1,027 1,030 1,027 1,536 




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FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)June 30, 2023December 31, 2022
ASSETS
Current Assets:
Cash and cash equivalents$430,172 $197,648 
Trade accounts receivable, net586,104 515,928 
Other accounts receivable113,229 90,417 
Inventories333,874 347,545 
Prepaid expenses and other current assets84,634 94,263 
Total current assets1,548,013 1,245,801 
Property, plant and equipment, net1,176,339 1,183,730 
Right-of-use assets - operating leases128,759 140,588 
Leased property under financing leases, net5,608 6,431 
Other assets132,017 115,892 
Goodwill165,903 165,903 
Other identifiable intangible assets, net837,898 851,200 
Total assets$3,994,537 $3,709,545 
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of obligations under operating leases$26,440 $27,635 
Current portion of obligations under financing leases2,393 2,303 
Dividends payable— 32,808 
Accounts payable and accrued expenses863,149 842,410 
Total current liabilities891,982 905,156 
Deferred income taxes151,630 150,222 
Pension and postretirement benefit obligations and other liabilities857,426 813,680 
Noncurrent portion of obligations under operating leases108,500 118,763 
Noncurrent portion of obligations under financing leases6,299 7,519 
Long-term debt598,992 598,817 
Total liabilities2,614,829 2,594,157 
Equity:
Stockholders’ equity1,379,708 1,115,388 
Total liabilities and equity$3,994,537 $3,709,545 




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FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Half
(in thousands)20232022
Cash Flows from Operating Activities:
Net income$240,446 $192,952 
Depreciation expense, amortization of intangible assets and deferred proceeds, net87,185 85,852 
Fair value adjustment of acquisition related contingent consideration67,174 (1,436)
Pension plan settlement expense39,777 — 
Deferred income taxes(7,848)11,189 
Change in current assets and current liabilities(41,957)(59,004)
Change in noncurrent assets and noncurrent liabilities(6,061)12,151 
Other4,622 1,831 
Net cash provided by operating activities$383,338 $243,535 
Cash Flows from Investing Activities:
Additions to property, plant and equipment$(92,893)$(145,182)
Acquisition of distribution rights— (30,149)
Other(5,766)3,717 
Net cash used in investing activities$(98,659)$(171,614)
Cash Flows from Financing Activities:
Cash dividends paid$(37,495)$(4,687)
Payments of acquisition related contingent consideration(13,376)(18,710)
Other(1,284)(2,035)
Net cash used in financing activities$(52,155)$(25,432)
Net increase in cash during period$232,524 $46,489 
Cash at beginning of period197,648 142,314 
Cash at end of period$430,172 $188,803 





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NON-GAAP FINANCIAL MEASURES(c)
The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP):
Second Quarter 2023
(in thousands, except per share data)Gross profitSD&A expensesIncome from operationsIncome before taxesNet income Basic net income per share
Reported results (GAAP)$671,577 $437,907 $233,670 $164,752 $122,319 $13.05 
Fair value adjustment of acquisition related contingent consideration— — — 25,520 19,214 2.05 
Fair value adjustments for commodity derivative instruments1,097 (224)1,321 1,321 994 0.10 
Supply chain optimization474 — 474 474 357 0.04 
Pension plan settlement expense— — — 39,777 29,948 3.19 
Total reconciling items1,571 (224)1,795 67,092 50,513 5.38 
Adjusted results (non-GAAP)$673,148 $437,683 $235,465 $231,844 $172,832 $18.43 
Adjusted % Change vs. Second Quarter 202219.3 %8.2 %47.1 %

Second Quarter 2022
(in thousands, except per share data)Gross profitSD&A expensesIncome from operationsIncome before taxesNet 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 instruments13,663 998 12,665 12,665 9,536 1.02 
Supply chain optimization84 (33)117 117 88 0.01 
Total reconciling items13,747 965 12,782 16,803 12,652 1.35 
Adjusted results (non-GAAP)$564,406 $404,331 $160,075 $150,751 $112,214 $11.97 




First Half 2023
(in thousands, except per share data)Gross profitSD&A expensesIncome from operationsIncome before taxesNet income Basic net income per share
Reported results (GAAP)$1,295,683 $855,959 $439,724 $323,954 $240,446 $25.65 
Fair value adjustment of acquisition related contingent consideration— — — 67,174 50,575 5.40 
Fair value adjustments for commodity derivative instruments1,492 (2,914)4,406 4,406 3,317 0.35 
Supply chain optimization823 — 823 823 620 0.07 
Pension plan settlement expense— — — 39,777 29,948 3.19 
Total reconciling items2,315 (2,914)5,229 112,180 84,460 9.01 
Adjusted results (non-GAAP)$1,297,998 $853,045 $444,953 $436,134 $324,906 $34.66 
Adjusted % Change vs. First Half 202221.9 %8.4 %60.4 %

First Half 2022
(in thousands, except per share data)Gross profitSD&A expensesIncome from operationsIncome before taxesNet 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 instruments6,169 7,223 (1,054)(1,054)(794)(0.08)
Supply chain optimization89 (72)161 161 121 0.01 
Total reconciling items6,258 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 

(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.

v3.23.2
Document and Entity Information Document
Aug. 02, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 02, 2023
Entity Registrant Name COCA-COLA CONSOLIDATED, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 0-9286
Entity Tax Identification Number 56-0950585
Entity Address, Address Line One 4100 Coca-Cola Plaza
Entity Address, City or Town Charlotte
Entity Address, State or Province NC
Entity Address, Postal Zip Code 28211
City Area Code (980)
Local Phone Number 392-8298
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $1.00 per share
Trading Symbol COKE
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0000317540
Amendment Flag false

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