On July 31, 2024, Coca-Cola Consolidated Inc (COKE, Financial) released its 8-K filing detailing the financial results for the second quarter and first half of 2024. The company, which sells nonalcoholic beverage products in the United States, reported a 3% increase in net sales for Q2 2024 compared to Q2 2023, alongside a 7% increase in gross profit.
Company Overview
Coca-Cola Consolidated Inc (COKE, Financial) is the largest Coca-Cola bottler in the United States. The company purchases concentrate and syrups from other beverage manufacturers under a license, then produces, packages, markets, and distributes the beverages to retailers. Its primary licensor is Coca-Cola Co., which allows it to exclusively market, produce, and distribute Coca-Cola products in specified parts of the U.S., including North Carolina, South Carolina, West Virginia, and parts of Alabama, Georgia, Tennessee, Virginia, Indiana, and Kentucky. The company operates in two segments: Nonalcoholic Beverages and All Other segments.
Performance and Challenges
For the second quarter of 2024, Coca-Cola Consolidated Inc (COKE, Financial) reported net sales of $1.8 billion, a 3.3% increase from $1.7 billion in Q2 2023. Gross profit rose to $717 million, a 6.7% increase from $672 million in the same period last year. The gross margin improved by 130 basis points to 39.9%. Income from operations was $259 million, up 10.9% from $234 million in Q2 2023, with an operating margin of 14.4%, up from 13.4%.
Financial Achievements
The company's financial achievements are significant in the nonalcoholic beverages industry, where margins can be tight. The increase in net sales and gross profit indicates effective pricing strategies and cost management. The improvement in operating margin reflects the company's focus on operational efficiency and margin management.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $1,795.9 million | $1,738.8 million | 3.3% |
| Gross Profit | $716.7 million | $671.6 million | 6.7% |
| Gross Margin | 39.9% | 38.6% | 1.3% |
| Income from Operations | $259.1 million | $233.7 million | 10.9% |
| Operating Margin | 14.4% | 13.4% | 1.0% |
Commentary and Analysis
“We are pleased to report strong second quarter results that reflect our continued focus on margin management and operating efficiency,” said J. Frank Harrison, III, Chairman and Chief Executive Officer. “In addition to reaching higher levels of profitability this quarter, we made important progress in our commitment to build long-term value for our stockholders through a significant repurchase of our common shares.”
Despite the positive financial performance, the company faced challenges with a slight decline in standard physical case volume, down 1.2% in Q2 2024 and 0.8% in the first half of 2024. This decline was partly due to a shift in distribution methods for certain products, such as Dasani water sold in Walmart stores, which reduced reported case sales by 0.8%.
Income Statement Highlights
Net income for Q2 2024 was $172.8 million, compared to $122.3 million in Q2 2023, an improvement of $50.5 million. On an adjusted basis, net income was $192.8 million, up from $172.5 million in Q2 2023. Income tax expense for Q2 2024 was $59.4 million, resulting in an effective tax rate of approximately 26%.
Cash Flow and Investments
Cash flows provided by operations for the first half of 2024 were $437.1 million, compared to $383.3 million for the first half of 2023. The company invested $159 million in capital expenditures during the first half of 2024, focusing on enhancing its supply chain and preparing for future growth. For the full year of 2024, capital expenditures are expected to be between $300 million and $350 million.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Coca-Cola Consolidated Inc for further details.
