Coca-Cola Consolidated(COKE) - 2024 Q4 - Annual Report

Financial Performance - Net sales increased by $245.9 million, or 3.7%, to $6.90 billion in 2024 compared to $6.65 billion in 2023[191] - Gross profit rose by $154.5 million, or 5.9%, with gross margin increasing by 80 basis points to 39.9% in 2024[175] - Income from operations increased by $85.9 million to $920.4 million, while net income rose by $224.8 million to $633.1 million in 2024[177] - Sparkling beverage net sales increased by 5.5% to $4.11 billion, while still beverage net sales rose by 3.6% to $2.23 billion in 2024[192] - Net sales for the Nonalcoholic Beverages segment reached $6.84 billion in 2024, compared to $6.56 billion in 2023, reflecting a growth of approximately 4.3%[214] - Gross profit for the Company was $2.75 billion in 2024, an increase from $2.60 billion in 2023, representing a growth of approximately 6.0%[219] - Basic net income per share increased to $70.10 in 2024 from $43.56 in 2023, reflecting a significant growth in profitability[219] Cash Flow and Investments - Cash flows from operations for 2024 were $876.4 million, up from $810.7 million in 2023[178] - Capital expenditures for 2024 were $371.0 million, focusing on supply chain enhancements and future growth[178] - The company expects to continue significant investments in supply chain optimization during fiscal year 2025[184] - Cash provided by operating activities was $876.4 million, an increase of $65.7 million compared to 2023[239] - Cash used in investing activities during 2024 was $682.2 million, an increase of $386.9 million from 2023, primarily due to higher additions to property, plant, and equipment of $371.0 million[240] - Cash provided by financing activities was $306.4 million in 2024, a change of $384.1 million from cash used in financing activities of $77.7 million in 2023, driven by bond proceeds of $1.20 billion[244] Expenses and Costs - Selling, delivery, and administrative expenses increased by $68.6 million, or 3.9%, representing 26.6% of net sales in 2024[176] - Cost of sales increased by $91.4 million, or 2.3%, to $4.15 billion in 2024 compared to $4.06 billion in 2023, primarily due to higher input costs[200] - Selling, delivery, and administrative (SD&A) expenses rose by $68.6 million, or 3.9%, to $1.83 billion in 2024, with labor costs accounting for approximately $48 million of the increase[203] - The net impact of commodity derivative instruments on the consolidated statements of operations was a decrease in cost of sales of $590, and an increase in SD&A expenses of $2,647 in 2024[256] - Inflation has increased both cost of goods sold and selling, general & administrative (SD&A) expenses for the Company[299] Debt and Financing - Total debt as of December 31, 2024, was $1.79 billion, up from $599.2 million on December 31, 2023[228] - The Company completed the issuance of $700 million in 2029 Senior Bonds and $500 million in 2034 Senior Bonds on May 29, 2024[231] - The Company has a maximum borrowing capacity of $500 million under its Revolving Credit Facility, maturing on June 10, 2029[232] - As of December 31, 2024, the company had outstanding debt of $1.80 billion, with approximately $350 million due in fiscal year 2025[247] Tax and Regulatory - The effective income tax rate decreased to 26.1% in 2024 from 26.7% in 2023, while income tax expense increased by $74.4 million, or 49.9%, to $223.5 million[209] - The Company does not recognize a tax benefit unless it is more likely than not that the benefit will be sustained on audit[276] Assets and Liabilities - Total assets increased by $1.02 billion to $5.31 billion as of December 31, 2024, compared to $4.29 billion on December 31, 2023[220] - Net working capital rose by $620.3 million to $1.23 billion on December 31, 2024[220] - Cash and cash equivalents increased by $500.6 million, primarily due to bond proceeds of $1.20 billion and strong operating performance[222] - The ending balance of the Level 3 liability related to acquisition contingent consideration was $654.2 million as of 2024, down from $669.3 million in 2023[237] Shareholder Returns - The Board of Directors approved an increase in the quarterly cash dividend from $0.50 to $2.50 per share on August 20, 2024[235] - The Company repurchased 14,391.5 shares of Common Stock for an aggregate purchase price of $13.3 million, representing 0.2% of the shares outstanding as of June 18, 2024[225] Market and Economic Conditions - Walmart and Kroger accounted for approximately 29% of total net sales in 2024, maintaining similar percentages from 2023[196] - A 10% increase in key commodity prices would increase costs by approximately $66 million over the next 12 months[294] - The annual rate of inflation in the U.S. was 2.9% in 2024, 3.4% in 2023, and 6.5% in 2022, affecting commodity prices relevant to the Company's business[298] - The Company can offset cost increases by raising selling prices, but consumer buying power may limit this ability[299] - If consumers reduce their purchase volume due to higher prices, selling price increases may not fully cover the Company's cost increases[299] Pension and Benefits - Pension costs for the Bargaining Plan were $3.7 million in both 2024 and 2023[281] - The discount rate for the Bargaining Plan was 5.89% in 2024 and 5.16% in 2023, significantly impacting projected benefit obligations[280] - A 0.25% increase in the discount rate assumption would decrease the projected benefit obligation by $1,842,000, while a decrease would increase it by $1,965,000[282] - The discount rate for the postretirement benefit obligation was 5.68% in 2024 and 5.02% in 2023[285] - The actual return on pension plan assets for the Bargaining Plan was a gain of 3.7% in 2024 and a gain of 13.5% in 2023[280] Impairment and Valuation - The Company did not identify any impairment triggers related to property, plant, and equipment and other intangibles during 2024 and 2023[267] - The Company performed its annual impairment test of goodwill and determined there was no impairment for both 2024 and 2023[270] - The fair value of the acquisition related contingent consideration liability is influenced by the Company's WACC and estimated future payments, with a 10-basis point change in the risk-free interest rate resulting in a $6 million change in liability[273]