What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-07-31 · 191 added, 173 removed, 375 unchanged (49% of the section changed)

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The condensed consolidated financial statements presented are:

• The financial position as of June 28, 2024 and December 31, 2023.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended June 28, 2024 (the “second quarter” of fiscal 2024 (“2024”)) and June 30, 2023 (the “second quarter” of fiscal 2023 (“2023”)) and the six-month periods ended June 28, 2024 (the “first half” of 2024) and June 30, 2023 (the “first half” of 2023).

• The changes in cash flows for the first half of 2024 and the first half of 2023.

• The financial position as of September 27, 2024 and December 31, 2023.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended September 27, 2024 (the “third quarter” of fiscal 2024 (“2024”)) and September 29, 2023 (the “third quarter” of fiscal 2023 (“2023”)) and the nine-month periods ended September 27, 2024 (the “first nine months” of 2024) and September 29, 2023 (the “first nine months” of 2023).

• The changes in cash flows for the first nine months of 2024 and the first nine months of 2023.

Our Business and the Nonalcoholic Beverage Industry

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Our Purpose is to honor God in all we do, to serve others, to pursue excellence and to grow profitably.

Our Common Stock is traded on The Nasdaq Global Select Market under the symbol “COKE.”

Our Common Stock, par value $1.00 per share (“Common Stock”), is traded on The Nasdaq Global Select Market under the symbol “COKE.”

We offer a range of nonalcoholic beverage products and flavors, including both sparkling and still beverages, designed to meet the demands of our consumers.

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Executive Summary

Net sales increased 3.3% to $1.80 billion in the second quarter of 2024 and increased 2.3% to $3.39 billion in the first half of 2024.

Sparkling and Still net sales increased 4.4% and 4.2%, respectively, compared to the second quarter of 2023.

The net sales growth was driven by pricing actions taken during the first quarter of 2024.

Standard physical case volume was down 1.2% in the second quarter of 2024 and down 0.8% in the first half of the year.

For the first half of 2024, comparable standard physical case volume, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, decreased 0.3% compared to the first half of 2023, which included one additional selling day.

Sparkling category volume remained relatively flat during the second quarter of 2024 with strong performance of multi-serve can packages sold in larger retail stores.

Still category physical case volume declined 3.5% during the second quarter of 2024.

We continue to see softness in Dasani casepack water as well as BODYARMOR but we experienced strength in several key brands including Monster, POWERade, Core Power and vitaminwater.

Direct store delivery (“DSD”) is our preferred and primary route to market.

However, as our business becomes more complex with an increasing number of brands and packages, we are expanding our delivery methods to include routes to market outside our traditional DSD capabilities.

We receive fees associated with our non-DSD sales that benefit our overall profitability but the volume is not reported as part of our standard physical case volume.

For example, we have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution which reduced our reported case sales by 0.8% in the second quarter of 2024.

Gross profit in the second quarter of 2024 was $716.7 million, an increase of $45.1 million, or 7%.

Gross margin in the second quarter of 2024 improved 130 basis points to 39.9%.

Pricing actions taken during the first quarter of 2024 along with steady commodity prices were the largest contributors to the overall improvement in gross margin.

Gross profit in the first half of 2024 was $1.36 billion, an increase of $61.6 million, or 4.8%.

Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2024 increased $19.7 million, or 5%.

SD&A expenses as a percentage of net sales increased 30 basis points to 25.5% in the second quarter of 2024.

The increase in SD&A expenses as compared to the second quarter of 2023 was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation.

SD&A expenses in the first half of 2024 increased $26.8 million, or 3.1%.

SD&A expenses as a percentage of net sales in the first half of 2024 increased 20 basis points to 26.1% as compared to the first half of 2023.

Income from operations in the second quarter of 2024 was $259.1 million, compared to $233.7 million in the second quarter of 2023, an increase of 11%.

For the first half of 2024, income from operations increased $34.8 million to $474.5 million, an increase of 8%.

Operating margin for the first half of 2024 was 14.0% as compared to 13.3% for the first half of 2023, an increase of 70 basis points.

Net income in the second quarter of 2024 was $172.8 million, compared to $122.3 million in the second quarter of 2023, an improvement of $50.5 million.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the second quarter of 2024 was $192.8 million, compared to $172.5 million in the second quarter of 2023, an increase of $20.3 million.

Income tax expense for the second quarter of 2024 was $59.4 million, compared to $42.4 million for the second quarter of 2023, resulting in an effective income tax rate of approximately 26% for both periods.

Net income in the first half of 2024 was $338.6 million, compared to $240.4 million in the first half of 2023, an improvement of $98.1 million.

Net income for the second quarter of 2023 and the first half of 2023 was adversely impacted by the partial settlement of our primary pension plan benefit liabilities during the first half of 2023, which resulted in a non-cash charge of $39.8 million.

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.

Cash flows from operations reflected our strong operating performance during the first half of 2024.

In the first half of

2024, we invested approximately $159 million in capital expenditures as we continue to enhance our supply chain and invest for future growth.

For the full year of 2024, we expect our capital expenditures to be between approximately $300 million and $350 million.

Net sales increased 3.1% to $1.77 billion in the third quarter of 2024 and increased 2.6% to $5.15 billion in the first nine months of 2024.

Sparkling and Still net sales increased 5.8% and 1.7%, respectively, compared to the third quarter of 2023.

The net sales improvement was driven by Sparkling volume growth and pricing actions taken during the first quarter of 2024.

Standard physical case volume was down 2.1% in the third quarter of 2024 and down 1.3% in the first nine months of the year.

For the first nine months of 2024, comparable standard physical case volume, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, decreased 0.9% compared to the first nine months of 2023, which included one additional selling day.

Sparkling category volume increased 0.8% during the third quarter with continued strong performance of multi-serve can packages sold in larger retail stores.

Still category physical case volume declined 9.7% during the third quarter of 2024.

As noted in our second quarter 2024 results, we have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-direct store delivery (“DSD”) method of distribution.

As a result, these cases are not included in our 2024 reported case sales.

The 2024 impact of this distribution change reduced our reported case sales by 1.8% during the third quarter and 0.9% during the first nine months.

Gross profit in the third quarter of 2024 was $698.0 million, an increase of $36.5 million or 5.5%.

Gross margin improved 90 basis points to 39.5%.

Pricing actions taken during the first quarter of 2024 along with stable commodity prices contributed to the overall improvement in gross margin.

Additionally, our product mix shifted towards Sparkling beverages, which typically carry higher gross margins, during the third quarter of 2024.

Gross profit in the first nine months of 2024 was $2.06 billion, an increase of $98.1 million or 5.0%.

Selling, delivery and administrative (“SD&A”) expenses in the third quarter of 2024 increased $25.7 million, or 5.8%.

SD&A expenses as a percentage of net sales increased 70 basis points to 26.7% in the third quarter of 2024.

The increase in SD&A expenses as compared to the third quarter of 2023 was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation accruals reflecting the strong operating performance in 2024.

SD&A expenses in the first nine months of 2024 increased $52.5 million or 4.0%.

SD&A expenses as a percentage of net sales in the first nine months of 2024 increased 40 basis points to 26.3% as compared to the first nine months of 2023.

Income from operations in the third quarter of 2024 was $227.1 million, compared to $216.3 million in the third quarter of 2023, an increase of 5.0%.

For the first nine months of 2024, income from operations increased $45.6 million to $701.6 million, an increase of 7.0%.

Operating margin for the first nine months of 2024 was 13.6% as compared to 13.1% for the first nine months of 2023, an increase of 50 basis points.

Net income in the third quarter of 2024 was $115.6 million, compared to $92.1 million in the third quarter of 2023, an improvement of $23.5 million.

Net income for the third quarter of 2024 and the third quarter of 2023 was adversely impacted by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, driven by increases in the future cash flow projections and changes to the discount rate used to compute the fair value of the liability.

Net income in the first nine months of 2024 was $454.2 million, compared to $332.5 million in the first nine months of 2023, an increase of $121.6 million.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the first nine months of 2024 was $521.9 million, compared to $488.3 million in the first nine months of 2023, an increase of $33.6 million.

Net income for the first nine months of 2023 was adversely impacted by the settlement of our primary pension plan benefit liabilities during the prior year, which resulted in a non-cash charge of $117.1 million.

Income tax expense for the first nine months of 2024 was $156.4 million, compared to $112.4 million for the first nine months of 2023, resulting in an effective income tax rate of 25.6% and 25.3% for the first nine months of 2024 and 2023, respectively.

Cash flows provided by operations for the first nine months of 2024 were $707.9 million, compared to $644.5 million for the first nine months of 2023.

Cash flows from operations reflected our strong operating performance during the first nine months of 2024.

In the first nine months of 2024, we invested $287.3 million in capital expenditures as we continue to enhance our supply chain

and invest for future growth.

During the quarter, we purchased our leased Nashville, Tennessee production facility for approximately $56 million.

For the full year of 2024, we expect capital expenditures to total approximately $350 million.

Areas of Emphasis

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We are continually focused on optimizing our supply chain, which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities to increase capacity, expand production capabilities, reduce overall production costs and add automation to allow the Company to better serve its customers and consumers.

The Company undertook significant capital expenditures to optimize our supply chain and to invest for future growth during 2023, and expects to continue to make significant investments during 2024.

Over the past five years, the Company has made capital expenditures of approximately $200 million related to fleet, $125 million related to automation and $470 million related to supply chain improvements.

The Company has made significant capital investments to optimize our supply chain and to invest for future growth during 2024.

During the third quarter of 2024, we purchased our leased Nashville, Tennessee production facility for approximately $56 million.

Between 2019 and 2023, the Company made capital investments of approximately $200 million related to fleet, $125 million related to automation and $470 million related to supply chain improvements.

Cash Flow Generation :

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We are focused on implementing optimal methods of distribution of our products within our territory.

DSD is our preferred and primary route to market.

Our typical DSD method uses Company-owned vehicles and warehouses, but we are increasingly using alternative methods of distribution.

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These bottle/can arrangements generally come with favorable commercial terms for the Company.

During both the second quarter of 2024 and the first half of 2024, more than half of our post-mix gallons and less than 10% of our bottle/can volume was delivered through alternative routes to market.

During both the third quarter of 2024 and the first nine months of 2024, more than half of our post-mix gallons and less than 10% of our bottle/can volume was delivered through alternative routes to market.

Digitally Enabled Selling Platform :

Through our investment in CONA Services LLC, we, along with other Coca-Cola bottlers, are building a digitally enabled selling platform called MyCoke 360 that we believe will enable us to better serve our customers.

Through our investment in CONA Services LLC, we, along with other Coca-Cola bottlers, have built a digitally enabled selling platform called MyCoke 360 that we believe will enable us to better serve our customers.

This platform will enable a more seamless order and payment platform for certain customers and we expect this platform will enable us to enhance customer service and create more selling opportunities for our teammates.

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Results of Operations

Second Quarter Results

The Company’s results of operations for the second quarter of 2024 and the second quarter of 2023 are highlighted in the table below and discussed in the following paragraphs.

Second Quarter

Third Quarter Results

The Company’s results of operations for the third quarter of 2024 and the third quarter of 2023 are highlighted in the table below and discussed in the following paragraphs.

Third Quarter

(in thousands) 2024 2023 Change

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Income from operations 227,055 216,260 10,795

Interest (income) expense, net (1,620) 1,353 (2,973)

Interest expense (income), net 2,187 (1,516) 3,703

Mark-to-market on acquisition related contingent consideration 68,592 18,864 49,728

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$ 116,075 $ 149,307 $ (33,232)

Net sales increased $57.1 million, or 3.3%, to $1.80 billion in the second quarter of 2024, as compared to $1.74 billion in the second quarter of 2023.

Net sales increased $53.2 million, or 3.1%, to $1.77 billion in the third quarter of 2024, as compared to $1.71 billion in the third quarter of 2023.

The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $60 million.

The increase in net sales was partially offset by a decline in external freight revenue and lower case sales volume as compared to the second quarter of 2023.

The increase in net sales was partially offset by lower case sales volume within the Still category and a decline in external freight revenue as compared to the third quarter of 2023.

Net sales by product category were as follows:

Second Quarter

Third Quarter

(in thousands) 2024 2023 % Change

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Total net sales $ 1,765,652 $ 1,712,428 3.1 %

The decline in post-mix sales and other in the second quarter of 2024 as compared to the second quarter of 2023 was related to a shift in how we deliver post-mix products to our customers.

The decline in post-mix sales and other in the third quarter of 2024 as compared to the third quarter of 2023 was related primarily to a shift in how we deliver post-mix products to our customers.

The Company has shifted to a broader use of alternative distributors, rather than Company-owned vehicles and warehouses, to deliver post-mix products to customers in our territory.

We receive a fee from a vendor on these post-mix gallons delivered to locally managed customers in our territory, which is recorded as a reduction to cost of sales.

This transition has occurred over the past several years but accelerated in 2023 and is expected to continue to be more prevalent throughout 2024.

More than half of the post-mix gallons sold to local customers in our franchise territory in the second quarter of 2024 were delivered using these alternative distribution methods.

We receive a fee from our brand partners on these post-mix gallons delivered to locally managed customers in our territory, which is recorded as a reduction to cost of sales.

This transition has occurred over the past several years and has accelerated throughout 2024.

More than half of the post-mix gallons sold to local customers in our franchise territory in the third quarter of 2024 were delivered using these alternative distribution methods.

Product category sales volume of standard physical cases (as defined below) and the percentage change by product category were as follows:

Second Quarter

Third Quarter

(in thousands) 2024 2023 % Change

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In order to serve our customers in the most efficient way, as well as in response to customer demands, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than through Company-owned vehicles and warehouses.

We have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution.

As a result, these cases are not included in our 2024 reported case sales.

The 2024 impact of this distribution change reduced our reported case sales by 1.8% during the third quarter of 2024.

As a result of not physically delivering the product, the sales volume delivered using these alternative methods of distribution is not reflected in our volume metrics.

However, because we have the exclusive distribution rights for nonalcoholic beverages within our franchise territory, we receive fees for the delivery of qualified product in our territory.

However, because we have the exclusive distribution rights for nonalcoholic beverages within our franchise territory, we receive fees from our brand partners for the delivery of qualified product in our territory.

These fees are reported in net sales.

Changes in the delivery of our products to our customers has impacted, and will continue to impact, our reported volume and net sales.

This transition has occurred over the past several years but accelerated in 2023 and is expected to continue to be more prevalent throughout 2024.

Less than 10% of the bottle/can volume sold in our franchise territory in the second quarter of 2024 was delivered using these alternative distribution methods.

Changes in the delivery of our products to our customers has impacted, and are expected to continue to impact, our reported volume and net sales.

This transition has occurred over the past several years and has accelerated throughout 2024.

Less than 10% of the bottle/can volume sold in our franchise territory in the third quarter of 2024 was delivered using these alternative distribution methods.

Cost of Sales

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In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits and post-mix funding from brand companies.

Raw material costs, excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.

Cost of sales increased $12.0 million, or 1.1%, to $1.08 billion in the second quarter of 2024, as compared to $1.07 billion in the second quarter of 2023.

Input costs, including underlying commodities and excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.

Cost of sales increased $16.7 million, or 1.6%, to $1.07 billion in the third quarter of 2024, as compared to $1.05 billion in the third quarter of 2023.

The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $30 million.

The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the second quarter of 2023.

The increase in cost of sales was partially offset by lower case sales volume and a decline in external freight volume as compared to the third quarter of 2023.

The Company relies on advertising and sales promotions in the marketing of its products.

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Certain of these marketing and advertising expenditures are made pursuant to annual arrangements.

Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $49.3 million in the second quarter of 2024 and $46.1 million in the second quarter of 2023.

Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $48.5 million in the third quarter of 2024 and $43.2 million in the third quarter of 2023.

Selling, Delivery and Administrative Expenses

SD&A expenses include the following:

sales management labor costs, distribution costs resulting from transporting finished products from distribution centers to customer locations, distribution center overhead including depreciation expense, distribution center warehousing costs, delivery vehicles and cold drink equipment, point-of-sale expenses, advertising expenses, cold drink

equipment repair costs, amortization of intangible assets and administrative support labor and operating costs.

Labor costs represent approximately 60% of total SD&A expenses on an annual basis.

SD&A expenses increased $19.7 million, or 4.5%, to $457.6 million in the second quarter of 2024, as compared to $437.9 million in the second quarter of 2023.

SD&A expenses as a percentage of net sales increased to 25.5% in the second quarter of 2024 from 25.2% in the second quarter of 2023.

The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation.

Shipping and handling costs included in SD&A expenses were $200.0 million in the second quarter of 2024 and $192.8 million in the second quarter of 2023.

Interest (Income) Expense, Net

Interest (income) expense, net changed $3.0 million, or 219.7%, to $1.6 million of interest income, net in the second quarter of 2024, as compared to $1.4 million of interest expense, net in the second quarter of 2023.

The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances, partially offset by an increase in interest expense on higher debt balances in the second quarter of 2024, as compared to the second quarter of 2023.

SD&A expenses increased $25.7 million, or 5.8%, to $471.0 million in the third quarter of 2024, as compared to $445.3 million in the third quarter of 2023.

SD&A expenses as a percentage of net sales increased to 26.7% in the third quarter of 2024 from 26.0% in the third quarter of 2023.

The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation accruals reflecting the strong operating performance in 2024.

Shipping and handling costs included in SD&A expenses were approximately $206 million in the third quarter of 2024 and approximately $200 million in the third quarter of 2023.

Interest Expense (Income), Net

Interest expense (income), net changed $3.7 million to $2.2 million of interest expense, net in the third quarter of 2024, as compared to $1.5 million of interest income, net in the third quarter of 2023.

The change in interest expense (income), net was primarily a result of an increase in interest expense on higher debt balances in the third quarter of 2024, as compared to the third quarter of 2023, partially offset by an increase in interest income due to higher cash, cash equivalent and short-term investment balances.

Mark-to-Market on Acquisition Related Contingent Consideration

Mark-to-market on acquisition related contingent consideration increased $2.3 million in the second quarter of 2024 as compared to the second quarter of 2023.

Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories subject to acquisition related sub-bottling payments to fair value.

The fair value is determined by discounting future expected acquisition related sub-bottling payments required under the Company’s comprehensive beverage agreements, which extend through the life of the related distribution assets acquired in each distribution territory, using the Company’s estimated weighted average cost of capital (“WACC”), which is impacted by many factors, including long-term interest rates and future cash flow projections.

The life of these distribution assets is generally 40 years.

The Company is required to pay the current portion of the acquisition related sub-bottling payments on a quarterly basis.

The change in the fair value of the acquisition related contingent consideration liability in the second quarter of 2024 as compared to the second quarter of 2023 was primarily driven by changes in the future cash flow projections and WACC used to calculate the fair value of the liability.

Each reporting period, the Company adjusts its acquisition related contingent consideration liability to fair value, which is determined by discounting future expected acquisition related sub-bottling payments using the Company’s estimated weighted average cost of capital (“WACC”) and future cash flow projections, and records the fair value adjustment as mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations.

Mark-to-market on acquisition related contingent consideration increased $49.7 million from an increase of $18.9 million in the third quarter of 2023 to an increase of $68.6 million in the third quarter of 2024.

During the third quarter of 2024, the $68.6 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, as well as a decrease in the WACC used to calculate the fair value of the liability.

During the third quarter of 2023, the $18.9 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, partially offset by an increase in the WACC used to calculate the fair value of the liability.

Other Expense, Net

Other expense, net decreased $1.6 million to $0.7 million in the second quarter of 2024, as compared to $2.3 million in the second quarter of 2023.

The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement plan liabilities.

Other expense, net increased $0.1 million to $0.7 million in the third quarter of 2024, as compared to $0.6 million in the third quarter of 2023.

The increase in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement medical benefit plan liabilities.

Income Tax Expense

The Company’s effective income tax rate was 25.6% for the second quarter of 2024 and 25.8% for the second quarter of 2023.

The Company’s income tax expense increased $17.0 million, or 40.0%, to $59.4 million for the second quarter of 2024, as compared to $42.4 million for the second quarter of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the second quarter of 2024 compared to the second quarter of 2023.

The Company’s effective income tax rate was 25.7% for the third quarter of 2024 and 23.9% for the third quarter of 2023.

The Company’s income tax expense increased $11.0 million, or 38.2%, to $39.9 million for the third quarter of 2024, as compared to $28.9 million for the third quarter of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the third quarter of 2024 compared to the third quarter of 2023.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax decreased $27.8 million in the second quarter of 2024 as compared to the second quarter of 2023.

The decrease was primarily related to the partial settlement of the primary Company-sponsored pension plan (the “Primary Plan”) benefit liabilities during the second quarter of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.

First Half Results

Our results of operations for the first half of 2024 and the first half of 2023 are highlighted in the table below and discussed in the following paragraphs.

Other comprehensive income, net of tax was $0.5 million in the third quarter of 2024, as compared to $57.2 million in the third quarter of 2023.

The decrease was primarily related to the settlement of the primary Company-sponsored pension plan (the

“Primary Plan”) benefit liabilities during the third quarter of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.

First Nine Months Results

Our results of operations for the first nine months of 2024 and the first nine months of 2023 are highlighted in the table below and discussed in the following paragraphs.

First Nine Months

(in thousands)

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Net income 454,177 332,539 121,638

Other comprehensive (loss) income, net of tax (127) 28,561 (28,688)

Other comprehensive income, net of tax 324 85,775 (85,451)

Comprehensive income

$ 454,501 $ 418,314 $ 36,187

Net sales increased $77.1 million, or 2.3%, to $3.39 billion in the first half of 2024, as compared to $3.31 billion in the first half of 2023.

Net sales increased $130.3 million, or 2.6%, to $5.15 billion in the first nine months of 2024, as compared to $5.02 billion in the first nine months of 2023.

The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $170 million.

The increase in net sales was partially offset by lower case sales volume and a decline in external freight revenue as compared to the first half of 2023.

The first half of 2024 included one less selling day compared to the first half of 2023.

The increase in net sales was partially offset by lower case sales volume within the Still category and a decline in external freight revenue as compared to the first nine months of 2023.

The first nine months of 2024 included one less selling day compared to the first nine months of 2023.

Net sales by product category were as follows:

First Nine Months

(in thousands) 2024 2023 % Change

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Product category sales volume of standard physical cases and the percentage change by product category were as follows:

First Nine Months

(in thousands) 2024 2023 % Change

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Total bottle/can sales volume 263,423 266,821 (1.3) %

We have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution.

As a result, these cases are not included in our 2024 reported case sales.

The 2024 impact of this distribution change reduced our reported case sales by 0.9% during the first nine months of 2024.

The following table summarizes the percentage of the Company’s total bottle/can sales volume to its largest customers, as well as the percentage of the Company’s total net sales that such volume represents:

First Nine Months

Approximate percent of the Company’s total bottle/can sales volume:

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Cost of Sales

Cost of sales increased $15.5 million, or 0.8%, to $2.03 billion in the first half of 2024, as compared to $2.01 billion in the first half of 2023.

Cost of sales increased $32.2 million, or 1.1%, to $3.10 billion in the first nine months of 2024, as compared to $3.07 billion in the first nine months of 2023.

The increase in cost of sales was driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $80 million.

The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the first half of 2023.

Total marketing funding support from The Coca‑Cola Company and other beverage companies was $94.6 million in the first half of 2024, as compared to $83.1 million in the first half of 2023.

The increase in cost of sales was partially offset by a decline in external freight volume and lower case sales volume as compared to the first nine months of 2023.

Total marketing funding support from The Coca‑Cola Company and other beverage companies was $143.1 million in the first nine months of 2024, as compared to $126.3 million in the first nine months of 2023.

Selling, Delivery and Administrative Expenses

SD&A expenses increased $26.8 million, or 3.1%, to $882.7 million in the first half of 2024, as compared to $856.0 million in the first half of 2023.

SD&A expenses as a percentage of net sales increased to 26.1% in the first half of 2024 from 25.9% in the first half of 2023.

The increase in SD&A expenses was primarily driven by an increase in labor costs, mostly related to annual wage adjustments and overall inflation.

Shipping and handling costs included in SD&A expenses were $393.0 million in the first half of 2024 and $386.0 million in the first half of 2023.

SD&A expenses increased $52.5 million, or 4.0%, to $1.35 billion in the first nine months of 2024, as compared to $1.30 billion in the first nine months of 2023.

SD&A expenses as a percentage of net sales increased to 26.3% in the first nine months of 2024 from 25.9% in the first nine months of 2023.

Shipping and handling costs included in SD&A expenses were approximately $599 million in the first nine months of 2024 and approximately $586 million in the first nine months of 2023.

Interest (Income) Expense, Net

Interest (income) expense, net changed $8.6 million, or 201.3%, to $4.3 million of interest income, net in the first half of 2024, as compared to $4.3 million of interest expense, net in the first half of 2023.

The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances, partially offset by an increase in interest expense on higher debt balances in the first half of 2024, as compared to the first half of 2023.

Interest (income) expense, net changed $4.9 million to $2.1 million of interest income, net in the first nine months of 2024, as compared to $2.8 million of interest expense, net in the first nine months of 2023.

The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash, cash equivalent and short-term investment balances,

partially offset by an increase in interest expense on higher debt balances in the first nine months of 2024, as compared to the first nine months of 2023.

Mark-to-Market on Acquisition Related Contingent Consideration

Mark-to-market on acquisition related contingent consideration decreased $44.9 million in the first half of 2024 as compared to the first half of 2023.

The change in the fair value of the acquisition related contingent consideration liability in the first half of 2024 as compared to the first half of 2023 was primarily driven by changes in the WACC and future cash flow projections used to calculate the fair value of the liability.

Mark-to-market on acquisition related contingent consideration increased $4.8 million from an increase of $86.0 million in the first nine months of 2023 to an increase of $90.9 million in the first nine months of 2024.

During the first nine months of 2024, the $90.9 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

During the first nine months of 2023, the $86.0 million increase in the fair value of the acquisition related contingent consideration liability also was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

Other Expense, Net

Other expense, net decreased $3.0 million to $1.5 million in the first half of 2024, as compared to $4.5 million in the first half of 2023.

The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement plan liabilities.

Other expense, net decreased $2.9 million to $2.3 million in the first nine months of 2024, as compared to $5.1 million in the first nine months of 2023.

The decrease in other expense, net was primarily driven by changes in the actuarial assumptions related to our pension and postretirement medical benefit plan liabilities.

Income Tax Expense

The Company’s effective income tax rate was 25.6% for the first half of 2024 and 25.8% for the first half of 2023.

The Company’s income tax expense increased $33.0 million, or 39.5%, to $116.5 million for the first half of 2024, as compared to $83.5 million for the first half of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the first half of 2024 compared to the first half of 2023.

Other Comprehensive (Loss) Income, Net of Tax

Other comprehensive loss, net of tax was $0.1 million in the first half of 2024 and other comprehensive income, net of tax was $28.6 million in the first half of 2023.

The change was primarily related to the partial settlement of the Primary Plan benefit liabilities during the first half of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.

The Company’s effective income tax rate was 25.6% for the first nine months of 2024 and 25.3% for the first nine months of 2023.

The Company’s income tax expense increased $44.0 million, or 39.2%, to $156.4 million for the first nine months of 2024, as compared to $112.4 million for the first nine months of 2023.

The increase in income tax expense was primarily attributable to higher income before taxes during the first nine months of 2024 compared to the first nine months of 2023.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was $0.3 million in the first nine months of 2024 and $85.8 million in the first nine months of 2023.

The decrease was primarily related to the settlement of the Primary Plan benefit liabilities during the first nine months of 2023, which resulted in the reclassification of the gross actuarial losses associated with the Primary Plan out of accumulated other comprehensive loss during that period.

Segment Operating Results

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The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM.

Asset information is not provided to the CODM.

Segment asset information is not provided to the CODM.

The Company believes three operating segments exist.

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The Company’s segment results are as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

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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.

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.

The following tables reconcile reported results (GAAP) to comparable and adjusted results (non-GAAP):

Second Quarter 2024

Third Quarter 2024

(in thousands, except per share data) Gross profit SD&A expenses Income from operations Income before taxes Net income Basic net income per share

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Adjusted results (non-GAAP) $ 696,610 $ 470,350 $ 226,260 $ 223,360 $ 166,677 $ 18.81

Second Quarter 2023

Third Quarter 2023

(in thousands, except per share data) Gross profit SD&A expenses Income from operations Income before taxes Net income Basic net income per share

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Adjusted results (non-GAAP) $ 661,575 $ 445,993 $ 215,582 $ 216,489 $ 164,020 $ 17.50

Results for the first half of 2023 include one additional selling day compared to the first half of 2024.

For comparison purposes, the estimated impact of the additional selling day in the first half of 2023 has been excluded from our comparable volume results.

Results for the first nine months of 2023 include one additional selling day compared to the first nine months of 2024.

For comparison purposes, the estimated impact of the additional selling day in the first nine months of 2023 has been excluded from our comparable volume results.

First Nine Months

(in thousands) 2024 2023 Change

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Comparable standard physical case volume 263,423 265,898 (0.9) %

First Half 2024

First Nine Months 2024

(in thousands, except per share data) Gross

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Adjusted results (non-GAAP) $ 2,053,960 $ 1,353,284 $ 700,676 $ 700,575 $ 521,910 $ 57.11

First Half 2023

First Nine Months 2023

(in thousands, except per share data) Gross

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The Company accounts for its commodity derivative instruments on a mark-to-market basis.

(3) This non-cash settlement expense relates to the partial settlement of the Primary Plan benefit liabilities during the second quarter of 2023.

(3) This non-cash settlement expense relates to the settlement of the Primary Plan benefit liabilities during the first nine months of 2023.

Financial Condition

Total assets were $5.66 billion as of June 28, 2024, which was an increase of $1.37 billion from December 31, 2023.

Net working capital, defined as current assets less current liabilities, was $1.50 billion as of June 28, 2024, which was an increase of $882.9 million from December 31, 2023.

Significant changes in net working capital as of June 28, 2024 as compared to December 31, 2023 were as follows:

• An increase in cash and cash equivalents of $1.06 billion, primarily as a result of bond proceeds received of $1.20 billion and strong operating performance, partially offset by purchases of short-term investments of $213.1 million, dividend payments of $159.4 million and capital expenditures of $159.4 million.

• An increase in short-term investments of $198.8 million, primarily due to the purchase of short-term investments during the first half of 2024.

• An increase in accounts receivable, trade of $61.9 million, driven primarily by increased net sales.

• An increase in accounts payable to The Coca-Cola Company of $109.1 million, primarily due to the timing of cash payments.

• An increase in share repurchase obligation to The Coca-Cola Company of $553.7 million, due to a purchase agreement executed during the first half of 2024, as further discussed below and in Note 2 to the condensed consolidated financial statements.

• A decrease in accrued compensation of $59.4 million, primarily as a result of the timing of bonus and incentive payments in the first half of 2024.

• A decrease in dividends payable of $154.7 million, due to the payment of a special cash dividend during the first half of 2024.

Total assets were $5.27 billion as of September 27, 2024, which was an increase of $983.8 million from December 31, 2023.

Net working capital, defined as current assets less current liabilities, was $1.53 billion as of September 27, 2024, which was an increase of $916.5 million from December 31, 2023.

Significant changes in net working capital as of September 27, 2024 as compared to December 31, 2023 were as follows:

• An increase in cash and cash equivalents of $600.7 million, primarily as a result of bond proceeds received of $1.20 billion and strong operating performance, partially offset by the payment related to shares repurchased from a subsidiary of The Coca‑Cola Company for an aggregate purchase price of $553.7 million, as further discussed below.

• An increase in short-term investments of $215.0 million, primarily due to the purchase of short-term investments during the first nine months of 2024.

• An increase in accounts receivable from The Coca-Cola Company of $36.5 million, primarily driven by the timing of cash receipts.

• A decrease in accounts payable, trade of $36.6 million, primarily due to the timing of cash payments.

• An increase in accounts payable to The Coca-Cola Company of $89.7 million, primarily due to the timing of cash payments and increases in certain raw material and concentrate input costs, higher payments related to certain marketing programs and increases to our acquisition related sub-bottling payments.

• An increase in other accrued liabilities of $38.7 million, primarily driven by an increase in accrued interest on new debt balances and an increase in the liability related to the acquisition related contingent consideration.

• A decrease in dividends payable of $132.8 million, due to the payment of a special cash dividend during the first nine months of 2024, partially offset by the declaration of approximately $22 million of dividends during the third quarter of 2024 that were not yet paid.

Liquidity and Capital Resources

The Company’s sources of capital include cash flows from operations, available credit facilities and the issuance of debt and equity securities.

As of June 28, 2024, the Company had $1.70 billion in cash and cash equivalents.

As of September 27, 2024, the Company had $1.24 billion in cash and cash equivalents.

The Company’s cash equivalent balance consisted predominantly of investments in money market funds and U.S.

Treasury securities with maturities of 90 days or less.

As of June 28, 2024, the Company had $198.8 million in short-term investments, which consisted primarily of U.S.

As of September 27, 2024, the Company had $215.0 million in short-term investments, which consisted primarily of U.S.

Treasury securities and investment-grade corporate bonds with maturities of one year or less.

The Company has obtained its long-term debt from public markets, private placements and bank facilities.

Management believes the Company has sufficient sources of capital available to finance its business plan, to meet its working capital requirements and to maintain an appropriate level of capital spending for at least the next 12 months from the issuance of the condensed consolidated financial statements.

On May 6, 2024, the Company announced its intention to purchase up to $3.10 billion in value of its Common Stock through both a modified “Dutch auction” tender offer (the “Tender Offer”) for up to $2.00 billion of its Common Stock and a separate share purchase agreement (the “Purchase Agreement”) with Carolina Coca-Cola Bottling Investments, Inc., an indirect wholly owned subsidiary of The Coca‑Cola Company (“CCCBI”).

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On June 21, 2024, the Company announced the final results of the Tender Offer, which expired on June 18, 2024.

In accordance with the terms and conditions of the Tender Offer, the Company repurchased 14,391.5 shares of its Common Stock at a price of $925 per share, for an aggregate purchase price of $13.3 million, excluding fees and expenses relating to the Tender Offer.

In accordance with the terms and conditions of the Tender Offer, the Company repurchased 14,391.5 shares of its Common Stock at a purchase price of $925 per share, for an aggregate purchase price of $13.3 million, excluding fees and expenses relating to the Tender Offer.

The shares repurchased represented 0.2% of the shares of the Company’s Common Stock that were issued and outstanding as of June 18, 2024.

Pursuant to the Purchase Agreement entered into on May 6, 2024 with CCCBI, the Company agreed to purchase and CCCBI agreed to sell, at the purchase price in the Tender Offer, a number of shares of the Company’s Common Stock (the “Share Repurchase”) such that CCCBI would beneficially own shares of the Company’s Common Stock representing 21.5% of the Company’s total outstanding shares of Common Stock and Class B Common Stock immediately following the closing of the Share Repurchase (calculated assuming all issued and outstanding shares of Class B Common Stock were converted into Common Stock and taking into account the shares of Common Stock purchased in the Tender Offer, which is referred to herein as the “fully diluted calculation”).

The Share Repurchase was conditioned on, among other things, completion of the Tender Offer and, in the case of CCCBI’s obligation to close, the purchase price being no less than $925 per share.

Based on the fully diluted calculation following the expiration of the Tender Offer, the Company announced on June 21, 2024 its intention to purchase 598,619 shares of its Common Stock from CCCBI in the Share Repurchase at a price of $925 per share, for an aggregate purchase price of $553.7 million.

The Share Repurchase closed on July 5, 2024.

The Company’s long-term debt as of June 28, 2024 and December 31, 2023 was as follows:

(in thousands) Maturity Date June 28, 2024 December 31, 2023

Pursuant to the Purchase Agreement entered into on May 6, 2024 with CCCBI, the Company agreed to purchase and CCCBI agreed to sell, at the purchase price in the Tender Offer, a number of shares of the Company’s Common Stock (the “Share Repurchase”) such that CCCBI would beneficially own shares of the Company’s Common Stock representing 21.5% of the Company’s total outstanding shares of Common Stock and Class B Common Stock, par value $1.00 per share (“Class B Common Stock”), immediately following the closing of the Share Repurchase (calculated assuming all issued and outstanding shares of Class B Common Stock were converted into Common Stock and taking into account the shares of Common Stock purchased in the Tender Offer).

The Share Repurchase was conditioned on, among other things, the completion of the Tender Offer and, in the case of CCCBI’s obligation to close, the purchase price being no less than $925 per share.

On July 5, 2024, the Company repurchased and retired 598,619 shares of its Common Stock in the Share Repurchase at a purchase price of $925 per share, for an aggregate purchase price of $553.7 million.

On August 20, 2024, the Company announced that its Board of Directors had approved a new share repurchase program under which the Company is authorized to repurchase up to $1.00 billion of the Company’s Common Stock.

The Company expects share repurchases to be made from time to time in the open market or through private transactions or block trades.

The timing and amount of repurchases will depend on market conditions, the prevailing market price, applicable legal requirements and other factors.

The new share repurchase authorization is discretionary and has no expiration date.

As of September 27, 2024, the Company had not repurchased any shares of Common Stock under the new share repurchase program.

The Company’s long-term debt as of September 27, 2024 and December 31, 2023 was as follows:

(in thousands) Maturity Date September 27, 2024 December 31, 2023

Senior bonds (the “2025 Senior Bonds”) net of unamortized discount (1)

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(2) The 2029 Senior Bonds were issued at 99.843% of par.

(3) The 2029 Senior Bonds and the 2034 Senior Bonds were issued in connection with the financing of the Tender Offer and the Share Repurchase initiated during the second quarter of 2024, as discussed above.

(3) The 2029 Senior Bonds and the 2034 Senior Bonds were issued in connection with the financing of the Tender Offer and the Share Repurchase, as discussed above.

(4) The Company’s revolving credit facility has an aggregate maximum borrowing capacity of $500 million.

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The Company will pay interest on the 2029 Senior Bonds and the 2034 Senior Bonds semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2024.

On June 10, 2024, the Company entered into a term loan agreement, providing for a senior unsecured term loan facility in the aggregate principal amount of up to $800 million, maturing on June 10, 2027, and a senior unsecured term loan facility in the aggregate principal amount of up to $500 million, maturing on June 10, 2029 (collectively, the “Term Loan Facilities”).

The Company did not draw any loans under the Term Loan Facilities during the second quarter of 2024.

On June 20, 2024, the Company gave notice, effective as of June 27, 2024, of its permanent reduction to $0 of the commitments under the Term Loan Facilities.

Upon the effectiveness of the notice, the aggregate commitments under the Term Loan Facilities were reduced in accordance with their terms from $1.30 billion to $0.

As of June 28, 2024, there were no amounts outstanding under the Term Loan Facilities.

Also on June 10, 2024, the Company entered into an amended and restated credit agreement (the “Revolving Credit Facility Agreement”), providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $500 million (the “Revolving Credit Facility”), maturing on June 10, 2029.

On June 10, 2024, the Company entered into an amended and restated credit agreement (the “Revolving Credit Facility Agreement”), providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $500 million (the “Revolving Credit Facility”), maturing on June 10, 2029.

The Revolving Credit Facility Agreement replaced the Company’s previous credit agreement, dated as of July 9, 2021.

Subject to obtaining commitments from lenders and satisfying other conditions specified therein, at the Company’s option, the Revolving Credit Facility may be increased by up to $250 million.

Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to, at the Company’s option, either (i) Base Rate (as defined in the Revolving Credit Facility Agreement) plus an applicable rate or (ii) Term SOFR (as defined in the Revolving Credit Facility Agreement) plus the SOFR Adjustment (as defined in the Revolving Credit Facility Agreement) and an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”).

Borrowings under the Revolving Credit Facility bear interest at a per annum rate equal to, at the Company’s option, either (i) the Base Rate (as defined in the Revolving Credit Facility Agreement) plus an applicable rate or (ii) Term SOFR (as defined in the Revolving Credit Facility Agreement) plus the SOFR Adjustment (as defined in the Revolving Credit Facility Agreement) and an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”).

In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the Revolving Credit Facility ranging from 0.060% to 0.175% per annum, depending on the Company’s Debt Rating.

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a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreement.

The Company was in compliance with these covenants as of June 28, 2024.

The Company was in compliance with these covenants as of September 27, 2024.

These covenants have not restricted, and are not expected to restrict, the Company’s liquidity or capital resources.

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Lower credit ratings could result in higher borrowing costs for the Company or reduced access to capital markets, which could have a material adverse impact on the Company’s operating results or financial position.

As of June 28, 2024, the Company’s credit ratings and outlook for its long-term debt were as follows:

As of September 27, 2024, the Company’s credit ratings and outlook for its long-term debt were as follows:

Credit Rating Rating Outlook

Moody’s Baa1 Stable

Standard & Poor’s BBB+ Negative

Standard & Poor’s BBB+ Stable

The Company’s Board of Directors has declared, and the Company has paid, dividends on the Common Stock and the Class B Common Stock and each class of common stock has participated equally in all dividends each quarter for more than 30 years.

The amount and frequency of future dividends will be determined by the Company’s Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given that dividends will be declared or paid in the future.

We review supplier terms and conditions on an ongoing basis, and have negotiated payment term extensions in recent years in connection with our efforts to improve cash flow and working capital.

Separate from those term extension actions, the Company has an agreement with a third-party financial institution to facilitate a supply chain finance (“SCF”) program, which allows qualifying suppliers to sell their receivables from the Company to the financial institution in order to negotiate shorter payment terms on outstanding receivable arrangements.

On August 20, 2024, the Company announced that its Board of Directors had declared an increased quarterly cash dividend of $2.50 per share (up from $0.50 per share) on the Company’s Common Stock and Class B Common Stock, payable on November 8, 2024 to stockholders of record of the Common Stock and the Class B Common Stock as of the close of business on October 25, 2024.

The total dividends payable as of September 27, 2024 were approximately $22 million.

We review supplier terms and conditions on an ongoing basis, and we have negotiated payment term extensions in recent years in connection with our efforts to improve cash flow and working capital.

Separate from those term extension actions, the Company has an agreement with a third-party financial institution to facilitate a supply chain finance program (“SCF program”), which allows qualifying suppliers to sell their receivables from the Company to the financial institution in order to negotiate shorter payment terms on their outstanding receivable arrangements.

The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier’s participation in the SCF program.

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Following is a summary of the Level 3 activity:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

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A summary of cash-based activity is as follows:

First Nine Months

(in thousands) 2024 2023

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Total cash sources $ 1,980,550 $ 644,990

Purchases of short-term investments $ 213,123 $ —

Payments related to share repurchases $ 574,009 $ —

Additions to property, plant and equipment 287,333 152,260

Purchases of short-term investments 283,488 —

Cash dividends paid 163,733 42,182

Payments of acquisition related contingent consideration 44,243 20,979

Payments related to share repurchases 14,471 —

Debt issuance fees 15,365 244

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Net increase in cash during period $ 600,737 $ 418,569

(1) Net cash provided by operating activities included net income tax payments of $109.8 million in the first half of 2024 and $90.2 million in the first half of 2023.

(1) Net cash provided by operating activities in the first nine months of 2024 included net income tax payments of $171.2 million and pension plan contributions of $2.0 million.

Net cash provided by operating activities in the first nine months of 2023 included net income tax payments of $146.5 million and pension plan contributions of $16.3 million.

Cash Flows From Operating Activities

During the first half of 2024, cash provided by operating activities was $437.1 million, which was an increase of $53.8 million as compared to the first half of 2023.

The increase was primarily a result of our strong operating performance during the first half of 2024.

During the first nine months of 2024, cash provided by operating activities was $707.9 million, which was an increase of $63.3 million as compared to the first nine months of 2023.

The increase was primarily a result of our strong operating performance during the first nine months of 2024.

Cash Flows From Investing Activities

During the first half of 2024, cash used in investing activities was $362.2 million, which was an increase of $263.5 million as compared to the first half of 2023.

The increase was primarily a result of the purchase of short-term investments of $213.1 million during the first half of 2024, as well as additions to property, plant and equipment, which were $159.4 million during the first half of 2024 and $92.9 million during the first half of 2023.

There were $29.5 million and $23.4 million of additions to property, plant and equipment accrued in accounts payable, trade as of June 28, 2024 and June 30, 2023, respectively.

During the first nine months of 2024, cash used in investing activities was $508.0 million, which was an increase of $347.1 million as compared to the first nine months of 2023.

The increase was primarily a result of additions to property, plant and equipment, which were $287.3 million during the first nine months of 2024 and $152.3 million during the first nine months of 2023.

There were $34.8 million and $32.4 million of additions to property, plant and equipment accrued in accounts payable, trade as of September 27, 2024 and September 29, 2023, respectively.

The Company also had purchases of short-term investments, net of proceeds, of $211.3 million during the first nine months of 2024, as compared to no net activity during the first nine months of 2023.

The additions to property, plant and equipment reflect the Company’s focus on optimizing its supply chain and investing for future growth.

The Company anticipates additions to property, plant and equipment in 2024 to be in the range of approximately

$300 million to $350 million, with remaining anticipated expenditures in the second half of 2024 of approximately $140 million to $190 million.

Over the next five years, the Company anticipates additions to property, plant and equipment to be in the range of approximately $250 million to $300 million annually.

During the third quarter of 2024, we purchased our leased Nashville, Tennessee production facility for approximately $56 million.

The Company anticipates additions to property, plant and equipment in 2024 will be approximately $350 million.

Over the next five years, the Company anticipates additions to property, plant and equipment will be in the range of approximately $250 million to $300 million annually.

Cash Flows From Financing Activities

During the first half of 2024, cash provided by financing activities was $989.1 million, as compared to cash used in financing activities of $52.2 million during the first half of 2023, a change of $1.04 billion.

The change was primarily the result of bond proceeds of $1.20 billion, offset by dividend payments of $159.4 million, during the first half of 2024.

The dividend payments of $159.4 million included a special cash dividend of $16.00 per share, as compared to dividend payments of $37.5 million during the first half of 2023, which included a special cash dividend of $3.00 per share.

The Company also paid $14.5 million during the first half of 2024 related to share repurchases and associated fees.

The Company had cash payments for acquisition related contingent consideration of $23.7 million during the first half of 2024 and $13.4 million during the first half of 2023.

During the first nine months of 2024, cash provided by financing activities was $400.8 million, as compared to cash used in financing activities of $65.1 million during the first nine months of 2023, a change of $465.9 million.

The change was primarily the result of bond proceeds of $1.20 billion, offset by share repurchase and related fee payments of $574.0 million and dividend payments of $163.7 million, during the first nine months of 2024.

The dividend payments of $163.7 million during the first nine

months of 2024 included a special cash dividend of $16.00 per share, as compared to dividend payments of $42.2 million (including a special cash dividend of $3.00 per share) during the first nine months of 2023.

The Company had cash payments for acquisition related contingent consideration of $44.2 million during the first nine months of 2024 and $21.0 million during the first nine months of 2023.

For the next five future years, the Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling payments will be in the range of approximately $50 million to $80 million.

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The net impact of the commodity derivative instruments on the condensed consolidated statements of operations was as follows:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

(Decrease) increase in cost of sales $ (1,542) $ 786 $ (1,472) $ 3,770

Increase in SD&A expenses 295 1,692 618 5,629

Increase (decrease) in SD&A expenses 1,267 (403) 1,885 5,226

Net impact $ (275) $ 383 $ 413 $ 8,996

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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 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;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis