Coca-Cola Consolidated, Inc. (COKE) Bundle
Understanding Coca-Cola Consolidated, Inc. (COKE) Revenue Streams
Understanding Coca-Cola Consolidated, Inc.’s Revenue Streams
In examining the financial health of Coca-Cola Consolidated, Inc. (COKE) for 2024, a critical component is the analysis of its revenue streams. This section delves into the breakdown of primary revenue sources, year-over-year growth rates, contributions from various business segments, and any significant changes impacting revenue.
Breakdown of Primary Revenue Sources
As of the third quarter of 2024, the total net sales reached $1.77 billion, reflecting an increase of 3.1% compared to $1.71 billion in the third quarter of 2023. The revenue is primarily derived from two main categories:
- Bottle/can sales: This includes sparkling and still beverages.
- Other sales: This comprises sales to other Coca-Cola bottlers and post-mix sales.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for the first nine months of 2024 was 2.6%, with net sales increasing from $5.02 billion in 2023 to $5.15 billion in 2024. The following table summarizes the net sales growth:
| Period | Net Sales (in billions) | Year-over-Year Growth (%) |
|---|---|---|
| Q3 2023 | $1.71 | - |
| Q3 2024 | $1.77 | 3.1% |
| First 9 Months 2023 | $5.02 | - |
| First 9 Months 2024 | $5.15 | 2.6% |
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, the revenue contribution from different segments was as follows:
| Segment | Net Sales (in thousands) | Percentage of Total Sales (%) |
|---|---|---|
| Nonalcoholic Beverages | $1,751,495 | 99.2% |
| All Other | $86,230 | 4.9% |
| Eliminations | ($72,073) | - |
| Total Net Sales | $1,765,652 | 100% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams were observed in the first nine months of 2024. Notably:
- Sparkling Beverages: Revenue increased by 4.6% to $3.03 billion compared to $2.89 billion in the same period of 2023.
- Still Beverages: Revenue grew by 2.1% to $1.69 billion, up from $1.66 billion.
- Post-Mix Sales: Experienced a decline of 14.7%, dropping from $202.97 million to $173.18 million.
The overall increase in revenue has largely been driven by higher average bottle/can sales prices, which contributed approximately $170 million to net sales growth, despite a decline in sales volume for certain categories.
A Deep Dive into Coca-Cola Consolidated, Inc. (COKE) Profitability
A Deep Dive into Coca-Cola Consolidated's Profitability
Gross Profit Margin: In the third quarter of 2024, the gross profit was $698.0 million, reflecting a gross margin of 39.5%, an increase of 90 basis points compared to the previous year. For the first nine months of 2024, gross profit totaled $2.06 billion, up 5.0% from $1.96 billion in 2023.
Operating Profit: Income from operations for the third quarter of 2024 was $227.1 million, a 5.0% increase from $216.3 million in the same quarter of 2023. For the first nine months of 2024, income from operations rose to $701.6 million, compared to $655.9 million in 2023, marking a 7.0% increase.
Net Profit: Net income for the third quarter of 2024 was $115.6 million, compared to $92.1 million in the same quarter of 2023, representing an increase of 25.6%. For the first nine months, net income reached $454.2 million, up from $332.5 million in 2023, an increase of 36.5%.
Trends in Profitability Over Time
Over the past year, the company has demonstrated consistent growth in profitability metrics. The gross margin increased from 38.6% in Q3 2023 to 39.5% in Q3 2024. The operating margin for the first nine months improved from 13.1% in 2023 to 13.6% in 2024.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the average gross margin in the nonalcoholic beverages industry stands around 35%, positioning the company above the industry average at 39.5%. The operating margin is also favorable, with industry averages around 10%, while the company reports 13.6%.
Analysis of Operational Efficiency
Cost management has been a focal point, with selling, delivery, and administrative (SD&A) expenses totaling $1.35 billion for the first nine months of 2024, up 4.0% from the previous year. However, SD&A as a percentage of net sales increased from 25.9% to 26.3%.
| Metric | Q3 2024 | Q3 2023 | Change % | First 9 Months 2024 | First 9 Months 2023 | Change % |
|---|---|---|---|---|---|---|
| Net Sales | $1,765.7 million | $1,712.4 million | 3.1% | $5,153.2 million | $5,022.9 million | 2.6% |
| Gross Profit | $698.0 million | $661.6 million | 5.5% | $2,055.3 million | $1,957.2 million | 5.0% |
| Operating Income | $227.1 million | $216.3 million | 5.0% | $701.6 million | $655.9 million | 7.0% |
| Net Income | $115.6 million | $92.1 million | 25.6% | $454.2 million | $332.5 million | 36.5% |
| Gross Margin | 39.5% | 38.6% | 90 bps | 39.9% | 39.0% | 90 bps |
| Operating Margin | 12.9% | 12.6% | 30 bps | 13.6% | 13.1% | 50 bps |
The effective income tax rate for the first nine months of 2024 was 25.6%, slightly higher than 25.3% in the previous year. This reflects the increased net income before taxes of $610.6 million in 2024, compared to $444.9 million in 2023.
Debt vs. Equity: How Coca-Cola Consolidated, Inc. (COKE) Finances Its Growth
Debt vs. Equity: How Coca-Cola Consolidated, Inc. Finances Its Growth
Overview of Debt Levels
As of September 27, 2024, Coca-Cola Consolidated, Inc. reported total long-term debt of $1.79 billion, a significant increase from $599.2 million at the end of 2023. The company also had short-term investments totaling $215 million.
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at approximately 1.39, calculated from total debt of $1.79 billion and total equity of $1.28 billion. This ratio is higher than the industry average, which typically ranges from 0.5 to 1.0 for beverage companies, indicating a heavier reliance on debt financing.
Recent Debt Issuances
In May 2024, the company issued $1.20 billion in bonds, comprised of $700 million in 2029 Senior Bonds with a 5.25% interest rate and $500 million in 2034 Senior Bonds at 5.45%. These bonds are unsecured obligations and rank equally with existing senior unsecured debt. The proceeds from these bonds were primarily used for capital expenditures and refinancing existing debt.
Credit Ratings
The company's credit rating remains investment grade, reflecting its ability to manage debt levels effectively. Regular monitoring of counterparty credit ratings is conducted to mitigate financing risks.
Balancing Debt and Equity Financing
Coca-Cola Consolidated actively balances its financing strategies, utilizing both debt and equity. The company has repurchased shares amounting to $574 million during the first nine months of 2024. The capital expenditures for the year are projected to be approximately $350 million, focusing on optimizing supply chain operations.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Long-term Debt | $1,790 |
| Total Short-term Investments | $215 |
| Debt-to-Equity Ratio | 1.39 |
| Bond Issuance | $1,200 |
| Share Repurchases | $574 |
| Projected Capital Expenditures | $350 |
Assessing Coca-Cola Consolidated, Inc. (COKE) Liquidity
Assessing Coca-Cola Consolidated, Inc.'s Liquidity
Current Ratio: As of September 27, 2024, the current ratio was approximately 2.06, calculated from current assets of $1.53 billion and current liabilities of $743.0 million.
Quick Ratio: The quick ratio was approximately 1.48, indicating that the company has sufficient liquid assets to cover its current liabilities without relying on inventory.
Analysis of Working Capital Trends
Net working capital as of September 27, 2024, was $1.53 billion, reflecting an increase of $916.5 million from December 31, 2023. This growth was influenced by an increase in cash and cash equivalents of $600.7 million and short-term investments of $215.0 million.
Cash Flow Statements Overview
During the first nine months of 2024, cash flows provided by operating activities totaled $707.9 million, an increase of $63.3 million compared to the same period in 2023. The breakdown is as follows:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Operating Activities | $707,900 | $644,500 | $63,400 |
| Investing Activities | ($508,000) | ($160,900) | ($347,100) |
| Financing Activities | $400,800 | ($65,100) | $465,900 |
Potential Liquidity Concerns or Strengths
The company has demonstrated strong liquidity positions with sufficient cash and equivalents, totaling $1.24 billion as of September 27, 2024. The liquidity is further supported by short-term investments of $215.0 million, primarily in U.S. Treasury securities and investment-grade corporate bonds.
The company’s ability to generate cash from operations, evidenced by the increase in cash flows, indicates robust operational health. However, the increase in cash used in investing activities to $508.0 million may suggest aggressive growth strategies that could impact future liquidity if not managed effectively.
Is Coca-Cola Consolidated, Inc. (COKE) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of Coca-Cola Consolidated, Inc. (COKE), we will analyze key financial metrics including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, as well as the stock price trends, dividend yield, payout ratios, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial metric for evaluating whether a stock is overvalued or undervalued. As of 2024, the P/E ratio for COKE stands at 18.6, based on earnings per share (EPS) of $49.71 for the first nine months of the year.
Price-to-Book (P/B) Ratio
The P/B ratio provides insight into how the market values the company relative to its book value. Currently, COKE's P/B ratio is 2.2 with a book value per share of $25.00.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is another essential valuation metric. For COKE, the EV is approximately $7.43 billion and EBITDA for the first nine months of 2024 is $800 million, resulting in an EV/EBITDA ratio of 9.3.
Stock Price Trends
COKE's stock price has shown a notable trend over the past 12 months. The stock opened at $800 and has fluctuated between $750 and $950, currently trading at approximately $925.
Dividend Yield and Payout Ratios
COKE has been consistent with its dividend payments. The annual dividend is $16.00 per share, yielding a dividend yield of around 1.73%. The dividend payout ratio is approximately 32% based on the net income of $454.2 million for the first nine months of 2024.
Analyst Consensus on Stock Valuation
The current consensus among analysts for COKE is a hold rating, with several analysts suggesting that the stock is fairly valued at its current price levels.
| Metric | Value |
|---|---|
| P/E Ratio | 18.6 |
| P/B Ratio | 2.2 |
| EV/EBITDA Ratio | 9.3 |
| Stock Price | $925 |
| Annual Dividend | $16.00 |
| Dividend Yield | 1.73% |
| Dividend Payout Ratio | 32% |
| Analyst Consensus | Hold |
Key Risks Facing Coca-Cola Consolidated, Inc. (COKE)
Key Risks Facing Coca-Cola Consolidated, Inc.
The financial health of Coca-Cola Consolidated, Inc. is influenced by various internal and external risk factors. Understanding these risks is crucial for investors looking to navigate the company's financial landscape in 2024.
Industry Competition
The nonalcoholic beverage industry is highly competitive, with significant pressure from both national and regional brands. Key competitors include local bottlers of PepsiCo and Dr. Pepper. The principal methods of competition involve pricing, product quality, marketing, and distribution efficiency. As of the latest reports, the company has seen a decline in standard physical case volume by 1.3% in the first nine months of 2024 compared to the same period in 2023.
Regulatory Changes
Changes in government regulations related to health and safety standards, environmental concerns, and labeling requirements can impact operational costs and product offerings. The company must adapt to these regulations, which can require significant investment in compliance measures.
Market Conditions
Fluctuations in commodity prices, particularly for raw materials like aluminum and PET resin, pose a financial risk. The company enters into commodity derivative instruments to hedge against these price fluctuations. In the first nine months of 2024, the company recognized a fair value adjustment of $(1,345) thousand related to these instruments.
Operational Risks
Operational challenges, including supply chain disruptions and labor shortages, can affect production efficiency. In 2024, the company made capital investments of approximately $350 million to enhance its supply chain capabilities. Additionally, the shift to non-direct store delivery for certain products has impacted reported case sales by 1.8%.
Financial Risks
Financial risks include rising interest rates and increased debt levels. The company reported net interest expense of $2.1 million in the first nine months of 2024, which reflects the impact of higher debt balances. The effective income tax rate was 25.6% for the first nine months of 2024, an increase from 25.3% in the previous year.
Strategic Risks
The company's strategic decisions regarding product lines and market expansions carry inherent risks. For instance, the decline in post-mix sales by 19.7% in the third quarter of 2024 compared to the previous year indicates challenges in maintaining market share.
Mitigation Strategies
The company has implemented various strategies to mitigate these risks, including enhancing its supply chain and investing in technology to improve operational efficiency. The total capital expenditures for 2024 are expected to be approximately $350 million, focusing on optimizing operations.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Pressure from national and regional brands | Decline in case volume by 1.3% | Enhancing product quality and marketing strategies |
| Regulatory Changes | Compliance with new health and safety standards | Increased operational costs | Investment in compliance measures |
| Market Conditions | Fluctuations in commodity prices | Financial exposure through commodity derivatives | Hedging against price fluctuations |
| Operational Risks | Supply chain disruptions and labor shortages | Reduced production efficiency | Capital investments in supply chain enhancements |
| Financial Risks | Rising interest rates affecting debt levels | Increased interest expenses | Monitoring and managing debt levels |
| Strategic Risks | Decisions on product lines and market expansion | Potential market share loss | Regular market analysis and strategy adjustments |
Future Growth Prospects for Coca-Cola Consolidated, Inc. (COKE)
Future Growth Prospects for Coca-Cola Consolidated, Inc.
Analysis of Key Growth Drivers
Key growth drivers for the company include product innovations, market expansions, and strategic acquisitions. In the third quarter of 2024, net sales increased by $53.2 million, or 3.1%, reaching $1.77 billion compared to $1.71 billion in the same quarter of 2023. The primary contributor to this growth was a higher average bottle/can sales price per unit, contributing approximately $60 million to net sales.
Future Revenue Growth Projections and Earnings Estimates
For the first nine months of 2024, net sales totaled $5.15 billion, an increase of $130.3 million, or 2.6%, from $5.02 billion in the same period of 2023. The revenue growth is expected to be driven by continued strength in the sparkling beverage category, which saw a 5.8% increase in net sales in the third quarter of 2024.
Strategic Initiatives or Partnerships
The company is focusing on optimizing its supply chain and enhancing its distribution methods. During the first nine months of 2024, capital expenditures were approximately $287.3 million, with expectations to total around $350 million for the full year. These investments are aimed at improving operational efficiency and expanding production capabilities.
Competitive Advantages
The company benefits from a robust distribution network and strong brand recognition. In the first nine months of 2024, the gross profit was $2.06 billion, reflecting an increase of $98.1 million, or 5.0%, compared to the same period in 2023. The gross margin improved to 39.5% for the third quarter of 2024, up 90 basis points from the previous year, attributed to effective pricing strategies and a favorable product mix towards higher-margin sparkling beverages.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $1.77 billion | $1.71 billion | 3.1% |
| Gross Profit | $698 million | $661 million | 5.5% |
| Net Income | $115.6 million | $92.1 million | 25.5% |
| Capital Expenditures | $287.3 million | N/A | N/A |
| Gross Margin | 39.5% | N/A | N/A |
Overall, the combination of strategic investments, a focus on high-margin products, and an optimized supply chain positions the company favorably for future growth.
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Article updated on 8 Nov 2024
Resources:
- Coca-Cola Consolidated, Inc. (COKE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Coca-Cola Consolidated, Inc. (COKE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Coca-Cola Consolidated, Inc. (COKE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.