What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-20 compared with 2024-02-21 · 240 added, 176 removed, 365 unchanged (53% of the section changed)

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Net sales increased 3.7% to $6.90 billion in 2024, with standard physical case volume down 0.6% when compared to the prior year.

The increase in net sales was driven primarily by price increases across our product portfolio during the second half of 2022 and the beginning of 2023.

Volume continued to outperform the price elasticities we have historically experienced with higher pricing.

In the second quarter of 2024, we 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 volume.

The impact of this distribution change reduced our reported case volume by 0.8% for the fiscal year.

Sparkling and Still net sales increased 5.5% and 3.6%, respectively, compared to 2023.

While Sparkling volume decreased 0.3% in 2023, we experienced strong consumer demand for our multi-serve can packages as well as our Immediate Consumption products.

Brands within the Sparkling category benefited from solid performance in our on-premise sales channels, as more consumers returned to pre-COVID work and leisure routines.

Additionally, Sparkling sales at our Club store channels were strong as consumers sought value-oriented packages during 2023.

Still volume decreased 6.1% in 2023, as the overall Sports Drinks category slowed considerably.

Other Still categories such as Energy and Enhanced Water continued to perform well, with Monster Energy and glacéau smartwater both achieving solid growth in 2023.

The net sales improvement was driven by the continued strength in Sparkling volume growth and pricing actions taken at the beginning of 2024.

In addition, several brands within our Still portfolio, including Monster, Powerade and smartwater, had strong volume performance, which also fueled the overall growth in net sales in 2024.

Lastly, sales to our large retail customers, including club and value stores, outpaced other selling channels as consumer demand for multi-serve, value-oriented packages remained strong throughout the year.

Gross profit in 2024 increased $154.5 million, or 5.9%, while gross margin increased 80 basis points to 39.9%.

The improvement in gross profit resulted primarily from higher prices for our products and a moderation of prices for certain commodities.

Compared to 2022, gross margin also benefited from the increased mix of Sparkling beverages, which generally carry higher gross margins than Still packages.

The improvement in gross profit resulted primarily from higher prices for our products and a continued moderation of costs on certain commodities.

Compared to 2023, gross margin also benefited from the increased mix of Sparkling beverages, which generally carry higher gross margins than Still products.

Selling, delivery and administrative (“SD&A”) expenses in 2024 increased $68.6 million, or 3.9%.

SD&A expenses as a percentage of net sales in 2024 increased 10 basis points to 26.6% as compared to 2023.

The increase in SD&A expenses related primarily to an increase in labor costs and certain investments in our teammates, including incentive compensation expense, to reward their performance and contributions in achieving strong operating results.

Income from operations in 2023 increased $193.4 million to $834.5 million.

Income tax expense in 2023 was $149.1 million, compared to $144.9 million in 2022.

The effective income tax rate for 2023 was 26.7%, compared to 25.2% for 2022.

The increase in the effective income tax rate was primarily the result of lower income before taxes and an increase in certain nondeductible amounts as compared to 2022.

Net income decreased $21.8 million in 2023 to $408.4 million as compared to 2022.

Net income in 2023 was adversely impacted by fair value adjustments to our acquisition related contingent consideration liability, driven by changes in the discount rate and future cash flow projections used to calculate the fair value of the liability.

Additionally, net income in 2023 included a non-cash charge of $112.8 million related to the full settlement of our primary pension plan benefit liabilities.

Cash flows provided by operations in 2023 were $810.7 million, compared to $554.5 million in 2022.

The increase in SD&A expenses related primarily to annual wage and benefits adjustments.

Income from operations in 2024 increased $85.9 million to $920.4 million and net income in 2024 increased $224.8 million to $633.1 million, as compared to 2023.

The Company’s income tax expense increased $74.4 million to $223.5 million in 2024, as compared to $149.1 million in 2023, primarily as a result of higher income before taxes.

Net income in the prior year was adversely impacted by the settlement of our primary pension plan benefit liabilities, which resulted in a non-cash charge of $112.8 million in 2023.

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

Cash flows from operations for 2024 were $876.4 million, compared to $810.7 million for 2023.

Cash flows from operations reflected our strong operating performance during 2024.

During 2023, we invested $282.3 million in capital expenditures as we continued to optimize our supply chain and invest for future growth.

In 2024, we invested $371.0 million in capital expenditures as we continue to enhance our supply chain and invest for future growth.

Areas of Emphasis

Key priorities for the Company include executing our commercial strategy, executing our revenue management strategy, optimizing our supply chain, generating cash flow, determining the optimal route to market and creating a digitally enabled selling platform.

Commercial Execution:

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Our ability to obtain shelf space within stores and remain in-stock across our portfolio of brands and packages in a profitable manner will have a significant impact on our results.

We are focused on execution at every step in our supply chain, including raw material and finished product procurement, manufacturing conversion, transportation, warehousing and distribution, to ensure in-store execution can occur.

execution can occur.

We continue to invest in tools and technology to enable our teammates to operate more effectively and efficiently with our customers and to drive long-term value in our business.

We also continue to focus on opportunities to enhance the customer experience by adapting to changes in our customer landscape, enabling operational flexibility and focusing on customer service.

Revenue Management:

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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.

The Company undertook significant capital expenditures to optimize our supply chain and to invest for future growth during 2024, and expects to continue to make significant investments during fiscal year 2025.

During 2024, we purchased our Nashville, Tennessee production facility, which was previously leased, for approximately $56 million.

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

Cash Flow Generation:

We have several initiatives in place to optimize cash flow, improve profitability and prudently manage capital expenditures.

We have several initiatives in place to optimize cash flow, improve profitability, prudently manage capital expenditures and enhance capital returns to our stockholders.

We believe strengthening our balance sheet gives us the flexibility to make optimal capital allocation decisions for long-term value creation.

We have and expect to continue to return value to our stockholders.

Optimal Route to Market:

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

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

For example, in instances of post-mix delivery for use in fountain machines, we have shifted our delivery method to alternative distributors in order to enhance customer service and profitability.

In instances of bottle/can delivery, we are shifting certain products for certain customers and channels of business to alternative routes to market.

DSD is our preferred and primary route to market.

Our typical DSD method uses Company-owned vehicles and warehouses, but we increasingly shifted to alternative methods of distribution in 2024 as compared to 2023.

For example, in instances of post-mix delivery for use in fountain machines, we have shifted and continue to shift our delivery method towards alternative distributors in order to enhance profitability and customer service.

In instances of bottle/can delivery, we have shifted certain products for certain customers and channels of business to alternative routes to market.

These alternative routes to market include third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure.

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

In 2023, 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 2024, nearly two-thirds of our post-mix gallons and less than 10% of our bottle/can volume was delivered through alternative routes to market.

We expect to continue to use alternative methods of distribution to deliver post-mix and bottle/can products in future years and, where beneficial, to seek out additional opportunities to shift to alternative methods of distribution.

Digitally Enabled Selling Platform:

Through our investment in CONA, 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.

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.

This platform is targeted to certain on-premise and small store customers.

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

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

This platform is currently targeted to certain on-premise and small store customers.

Results of Operations

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Income from operations 920,350 834,451 85,899

Interest (income) expense, net (918) 24,792 (25,710)

Interest expense (income), net 1,848 (918) 2,766

Mark-to-market on acquisition related contingent consideration 59,166 159,354 (100,188)

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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 $250 million.

The increase in net sales was partially offset by lower case sales volume as compared to 2022, which decreased net sales by approximately $110 million.

Net sales by product category were as follows:

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Total net sales $ 6,899,716 $ 6,653,858 3.7 %

The decline in post-mix sales and other in 2023 as compared to 2022 was related 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 be more prevalent in 2024.

More than half of the post-mix gallons sold to local customers in our franchise territory in 2023 were delivered using these alternative distribution methods.

The decline in post-mix sales and other in 2024 as compared to 2023 was related primarily to a shift in how we deliver post-mix products to our customers in order to enhance profitability and customer service.

During 2024, the Company 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 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 accelerated throughout 2024.

Nearly two-thirds of the post-mix gallons sold to local customers in our franchise territory in 2024 were delivered using these alternative methods of distribution.

We expect to continue to shift to a broader use of alternative distributors to deliver post-mix products to customers in our territory in future years.

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

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The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses.

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.

In order to serve our customers in the most efficient way, respond to customer demands and increase profitability, 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 impact of this distribution change reduced our reported case sales by 0.8% during 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 non-alcoholic 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 be more prevalent in 2024.

Less than 10% of the bottle/can volume sold in our franchise territory in 2023 was delivered using these alternative routes to market.

Changes in the delivery of our products to our customers impacted our reported volume and net sales in 2024 as compared to 2023 as we accelerated the transition of bottle/can sales volume to alternative methods of distribution.

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

We expect to continue to use alternative methods of distribution to deliver bottle/can products in future years and, where beneficial, to seek out additional opportunities to shift to alternative methods of distribution.

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:

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

Wal-Mart Stores, Inc.

The Kroger Company 14 % 12 %

The Kroger Co.

Total approximate percent of the Company’s total bottle/can sales volume 36 % 35 %

Approximate percent of the Company’s total net sales:

Wal-Mart Stores, Inc.

The Kroger Company 11 % 10 %

The Kroger Co.

Total approximate percent of the Company’s total net sales 29 % 28 %

(1) Includes bottle/can sales volume related to the Walmart, Sam’s Club and Walmart Neighborhood Market chains.

(2) Includes bottle/can sales volume related to the Kroger and Harris Teeter chains.

Cost of Sales

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(i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles, carbon dioxide and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs.

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 represent approximately 20% of total cost of sales on an annual basis.

distribution fees of certain products and marketing credits and post-mix funding from brand companies.

Input costs, including underlying commodity costs for aluminum cans, plastic bottles, carbon dioxide and sweetener, as well as labels and other packaging materials, and excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.

Cost of sales increased $91.4 million, or 2.3%, to $4.15 billion in 2024, as compared to $4.06 billion in 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 $180 million.

The increase in cost of sales was partially offset by lower case sales volume as compared to 2022, which decreased cost of sales by approximately $40 million.

The increase in cost of sales was primarily driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $120 million.

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

The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and to promote sales in the Company’s territories.

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 $164.5 million in 2023, as compared to $147.3 million in 2022.

Our brand partners also provide funding related to the delivery of post-mix gallons to locally managed customers within the Company’s territory.

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

Total 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 $186.5 million in 2024, as compared to $164.5 million in 2023.

Selling, Delivery and Administrative Expenses

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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 $68.6 million, or 3.9%, to $1.83 billion in 2024, as compared to $1.76 billion in 2023.

SD&A expenses as a percentage of net sales increased to 26.6% in 2024 from 26.5% in 2023.

Of the increase in SD&A expenses, approximately $72 million was related to an increase in labor costs and certain investments in our teammates, including incentive compensation expense, to reward their performance and contributions in achieving strong operating results.

In addition, approximately $30 million of the increase in SD&A expenses was attributable to higher transportation costs, including fleet repairs, as well as changes in our fuel commodity hedge positions as compared to 2022.

Approximately $12 million of the increase in SD&A expenses was driven by an increase in commitments to various charities and donor-advised funds in light of the Company’s financial performance.

Of the increase in SD&A expenses, approximately $48 million was related to an increase in labor costs, mostly related to annual wage adjustments and increased incentive compensation expense reflecting the strong operating performance in 2024.

Shipping and handling costs included in SD&A expenses were approximately $806 million in 2024 and approximately $780 million in 2023.

Interest (Income) Expense, Net

Interest (income) expense, net in 2023 totaled $0.9 million of interest income, net, as compared to $24.8 million of interest expense, net in 2022.

The change in interest (income) expense, net was primarily a result of an increase in interest income due to higher cash and cash equivalent balances and increased yields as compared to 2022.

The increase in yields was due to the rising rate environment and related to cash deposits and investments in money market funds and U.S.

Treasury securities, which contributed to additional interest income as compared to the prior year.

Interest Expense (Income), Net

Interest expense (income), net changed $2.8 million to $1.8 million of interest expense, net in 2024, as compared to $0.9 million of interest income, net in 2023.

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

In 2024, the Company had $62.0 million of interest expense and $60.2 million of interest income.

In 2023, the Company had $23.9 million of interest expense and $24.8 million of interest income.

Mark-to-Market on Acquisition Related Contingent Consideration

Mark-to-market on acquisition related contingent consideration increased $127.1 million to $159.4 million in 2023, as compared to $32.3 million in 2022.

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 CBA, 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 2023 as compared to 2022 was primarily driven by changes in the discount rate and projections of future cash flows used to calculate the fair value of the liability.

Pension Plan Settlement Expense

During 2023, the Company recognized a non-cash charge of $112.8 million related to the full settlement of the primary Company-sponsored pension plan (the “Primary Plan”) benefit liabilities, including final premium adjustments, which was recorded as pension plan settlement expense in the consolidated statement of operations for that year.

The charge related primarily to a reclassification of actuarial losses from accumulated other comprehensive loss.

As of December 31, 2023, there were no gross actuarial losses included in accumulated other comprehensive loss associated with the Primary Plan.

As of December 31, 2022, there were approximately $117 million of gross actuarial losses included in accumulated other comprehensive loss associated with the Primary Plan.

See Note 17 to the consolidated financial statements for additional information related to the Company’s pension plans.

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 WACC and future cash flow projections, and records the fair value adjustment as mark-to-market on acquisition related contingent consideration in the consolidated statement of operations.

Mark-to-market on acquisition related contingent consideration was an increase of $59.2 million in 2024 and an increase of $159.4 million in 2023.

During 2024, the $59.2 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 increases in the WACC used to calculate the fair value of the liability.

During 2023, the $159.4 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 decreases in the WACC used to calculated the fair value of the liability.

Other Expense, Net

Other expense, net decreased $3.1 million to $2.7 million in 2024, as compared to $5.7 million in 2023.

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

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

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The Company’s income tax expense increased $74.4 million, or 49.9%, to $223.5 million in 2024, as compared to $149.1 million in 2023.

The increase in the effective income tax rate was primarily attributable to lower income before taxes and an increase in certain nondeductible amounts during 2023 as compared to 2022.

The decrease in the effective income tax rate was primarily attributable to higher income before taxes.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was $6.2 million in 2024 and $80.6 million in 2023.

As noted in the discussion of pension plan settlement expense above, the Company recognized a non-cash charge of $112.8 million during 2023 related to the full settlement of the Primary Plan benefit liabilities.

A corresponding benefit was recognized within other comprehensive income, net of tax due to the reclassification of certain previously recognized actuarial losses from accumulated other comprehensive loss.

See Note 17 to the consolidated financial statements for additional information related to the Company’s pension plans.

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

The Company believes three operating segments exist.

Segment asset information is not provided to the CODM.

The Company has three operating segments, each identified by its unique products and services.

Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations.

The additional two operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.”

The additional two operating segments, which include Data Ventures, Inc.

and the Red Classic subsidiaries, do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.” The accounting policies of the Nonalcoholic Beverages segment are the same as those described in the summary of significant accounting policies.

The CODM uses net sales, gross profit and income from operations in the annual budgeting and forecasting process.

Monthly, the CODM considers budget-to-actual variances and current year to prior year variances for these profit measures when making strategic business decisions and allocating resources to Company operations.

The Company’s segment results are as follows:

(in thousands) 2023 2022

Nonalcoholic Beverages $ 6,562,622 $ 6,081,357

All Other 370,748 399,359

Eliminations (1)

Fiscal Year 2024

(in thousands) Nonalcoholic Beverages All Other Eliminations (1)

Net sales $ 6,839,045 $ 346,377 $ (285,706) $ 6,899,716

Cost of goods sold 4,138,869 219,204 (211,536) 4,146,537

Gross profit 2,700,176 127,173 (74,170) 2,753,179

Selling, delivery and administrative expenses:

Payroll costs (2)

$ 1,146,375 $ 53,656 $ — $ 1,200,031

Consolidated net sales $ 6,653,858 $ 6,200,957

Fleet costs (3)

103,444 31,475 — 134,919

Depreciation and amortization expense (4)

103,444 2,000 — 105,444

All other segment items (5)

439,686 26,919 (74,170) 392,435

Total selling, delivery and administrative expenses 1,792,949 114,050 (74,170) 1,832,829

Income from operations $ 907,227 $ 13,123 $ — $ 920,350

Nonalcoholic Beverages $ 841,491 $ 639,136

All Other (7,040) 1,911

Consolidated income from operations $ 834,451 $ 641,047

Total depreciation and amortization expense (4)

$ 177,521 $ 16,270 $ — $ 193,791

Fiscal Year 2023

(in thousands) Nonalcoholic Beverages All Other Eliminations (1)

Net sales $ 6,562,622 $ 370,748 $ (279,512) $ 6,653,858

Cost of goods sold 3,999,292 263,307 (207,452) 4,055,147

Gross profit 2,563,330 107,441 (72,060) 2,598,711

Selling, delivery and administrative expenses:

Payroll costs (2)

$ 1,094,849 $ 56,729 $ — $ 1,151,578

Fleet costs (3)

106,235 32,945 — 139,180

Depreciation and amortization expense (4)

95,320 2,114 — 97,434

All other segment items (5)

425,434 22,694 (72,060) 376,068

Total selling, delivery and administrative expenses 1,721,838 114,482 (72,060) 1,764,260

Income from operations $ 841,492 $ (7,041) $ — $ 834,451

Total depreciation and amortization expense (4)

$ 164,484 $ 12,482 $ — $ 176,966

(1) The entire net sales elimination represents net sales from the All Other segment to the Nonalcoholic Beverages segment.

Sales between these segments are recognized at either fair market value or cost depending on the nature of the transaction.

Adjusted Results (Non-GAAP)

The entire cost of goods sold and SD&A eliminations represent costs incurred by the All Other segment in the generation of net sales to the Nonalcoholic Beverages segment.

(2) Payroll costs includes compensation, incentive plans, defined contribution plans, healthcare benefits and tax-advantaged spending accounts.

(3) Fleet costs includes fleet repairs, maintenance and fuel and oil costs.

(4) Total depreciation and amortization expense is included within both cost of goods sold and SD&A expenses.

For segment reporting, the difference between total depreciation and amortization expense and the portion within SD&A expenses is the amount within cost of goods sold.

(5) All other segment items includes information technology costs, stewardship, insurance and other costs incurred in the selling and delivery of the Company’s products.

Comparable and Adjusted Results (Non-GAAP)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).

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The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting.

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

The tables below reconcile reported results (GAAP) to comparable and adjusted results (non-GAAP).

Results for 2024 include one additional selling day compared to 2023.

For comparison purposes, the estimated impact of the additional selling day in 2024 has been excluded from our comparable volume results.

(in thousands) 2024 2023 Change

Standard physical case volume 353,103 355,367 (0.6) %

Volume related to extra day in fiscal period (965) —

Comparable standard physical case volume 352,138 355,367 (0.9) %

Fiscal Year 2024

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728 (547) 1,275 1,275 959 0.11

Supply chain optimization (3)

1,296 — 1,296 1,296 975 0.10

Pension plan settlement expense (4)

— — — 112,796 84,823 9.05

Total reconciling items 728 (547) 1,275 60,441 45,452 5.03

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(1,220) (2,281) 1,061 1,061 798 0.09

Supply chain optimization (3)

Pension plan settlement expense (3)

— — — 112,796 84,823 9.05

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

(3) This adjustment reflects expenses within the Nonalcoholic Beverages segment as the Company continues to optimize efficiency opportunities across its business.

(4) This non-cash settlement expense relates to the termination of the Primary Plan during 2023.

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

Financial Condition

Total assets increased $579.4 million to $4.29 billion on December 31, 2023, as compared to $3.71 billion on December 31, 2022.

Net working capital, defined as current assets less current liabilities, was $613.8 million on December 31, 2023, which was an increase of $273.1 million from December 31, 2022.

Total assets increased $1.02 billion to $5.31 billion on December 31, 2024, as compared to $4.29 billion on December 31, 2023.

Net working capital, defined as current assets less current liabilities, was $1.23 billion on December 31, 2024, which was an increase of $620.3 million from December 31, 2023.

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

• An increase in cash and cash equivalents of $437.6 million, primarily as a result of cash flows relating to our strong operating performance.

• An increase in accounts receivable, trade of $23.9 million, driven primarily by increased net sales and the timing of cash receipts.

• A decrease in inventories of $25.6 million, primarily due to lower inventory levels for certain manufacturing materials compared to December 31, 2022.

• An increase in accounts payable, trade of $31.8 million, primarily due to the timing of cash payments.

• A decrease in accounts payable to The Coca‑Cola Company of $23.3 million, primarily as a result of the timing of cash payments.

• An increase in other accrued liabilities of $37.0 million, primarily due to an increase in the current portion of the acquisition related contingent consideration liability.

• An increase in cash and cash equivalents of $500.6 million, primarily as a result of bond proceeds received of $1.20 billion and strong operating performance, partially offset by share repurchases and related fee payments totaling $625.7 million, as further discussed below.

• An increase in short-term investments of $301.2 million, primarily due to the purchase of short-term investments during 2024.

• An increase in accounts receivable from The Coca-Cola Company of $37.9 million, primarily driven by the timing of cash receipts.

• An increase in current portion of debt of $349.7 million due to the Company’s senior bonds maturing on November 25, 2025.

• A decrease in accounts payable, trade of $48.7 million, primarily due to the timing of cash payments.

• An increase in accounts payable to The Coca‑Cola Company of $47.8 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 in our acquisition related sub-bottling payments.

• A decrease in dividends payable of $154.7 million, due to the payment of a special cash dividend declared in 2023 during the first quarter of 2024.

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 December 31, 2023, the Company had $635.3 million in cash and cash equivalents.

The Company’s cash equivalents balance at December 31, 2023 consisted predominantly of investments in money market funds and U.S.

Treasury securities with maturities of 90 days or less.

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

As of December 31, 2024, the Company had $1.14 billion in cash and cash equivalents.

The Company’s cash equivalent

balance at December 31, 2024 consisted predominantly of investments in money market funds, time deposits and commercial paper with maturities of 90 days or less.

As of December 31, 2024, the Company had $301.2 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 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 consolidated financial statements.

The Company’s long-term debt as of December 31, 2023 and December 31, 2022 was as follows:

On May 6, 2024, the Company announced its intention to purchase up to $3.10 billion in value of Common Stock through both a modified “Dutch auction” tender offer (the “Tender Offer”) for up to $2.00 billion of 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”).

On May 20, 2024, the Company launched its offer to purchase, for cash, shares of Common Stock at prices specified by the tendering stockholders of not less than $850 nor greater than $925 per share, with shares having an aggregate purchase price of no more than $2.00 billion.

In accordance with the terms and conditions of the Tender Offer, the Company repurchased 14,391.5 shares of 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 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 Common Stock (the “Share Repurchase”) such that CCCBI would beneficially own shares of Common Stock representing 21.5% of the 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).

On July 5, 2024, the Company repurchased and retired 598,619 shares of 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 share repurchase program under which the Company is authorized to repurchase up to $1.00 billion of 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 share repurchase authorization is discretionary and has no expiration date.

As of December 31, 2024, the Company had repurchased 42,895 shares of Common Stock under the share repurchase program for an aggregate purchase price of $51.6 million, excluding fees and expenses relating to the share repurchases.

The Company’s debt as of December 31, 2024 and December 31, 2023 was as follows:

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

Senior bonds and unamortized discount on senior bonds (1)

Senior bonds (the “2025 Senior Bonds”) (1)

11/25/2025 $ 350,000 $ 350,000

Revolving credit facility (2)(3)

Senior notes 10/10/2026 100,000 100,000

Senior bonds (the “2029 Senior Bonds”) (2)(3)

6/1/2029 700,000 —

Revolving credit facility (4)

6/10/2029 — —

Senior notes 3/21/2030 150,000 150,000

Senior bonds (the “2034 Senior Bonds”) (3)(5)

6/1/2034 500,000 —

Unamortized discount on senior bonds (1)(2)(5)

Various (1,482) (17)

Debt issuance costs (12,170) (824)

Total debt $ 1,786,348 $ 599,159

Current portion of debt (1)

Total long-term debt $ 1,436,649 $ 599,159

(1) The senior bonds due in 2025 were issued at 99.975% of par.

(1) The 2025 Senior Bonds were issued at 99.975% of par.

As of December 31, 2024, the 2025 Senior Bonds, net of debt issuance costs and unamortized discount, were classified as current portion of debt in the consolidated balance sheets.

(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, as discussed above.

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

The Company currently believes all banks participating in the revolving credit facility have the ability to and will meet any funding requests from the Company.

(3) During 2023, the Company amended its revolving credit facility to complete the transition of the interest rate index from the London InterBank Offered Rate (LIBOR) to the Secured Overnight Financing Rate (SOFR), as contemplated in the revolving credit facility.

The indenture under which the Company’s senior bonds were issued does not include financial covenants, but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

The agreements under which the Company’s nonpublic debt was issued include two financial covenants:

(5) The 2034 Senior Bonds were issued at 99.893% of par.

On May 29, 2024, the Company completed the issuance and sale of $700 million aggregate principal amount of the 2029 Senior Bonds and $500 million aggregate principal amount of the 2034 Senior Bonds.

The 2029 Senior Bonds and the 2034 Senior Bonds are the Company’s senior unsecured obligations and rank equally with the Company’s existing and future senior unsecured and unsubordinated indebtedness.

The 2029 Senior Bonds mature on June 1, 2029 and the 2034 Senior Bonds mature on June 1, 2034, in each case, unless earlier redeemed or repurchased by the Company.

The 2029 Senior Bonds bear interest at a rate of 5.250% per annum and the 2034 Senior Bonds bear interest at a rate of 5.450% per annum.

The Company pays interest on the 2029 Senior Bonds and the 2034 Senior Bonds semi-annually in arrears on June 1 and December 1 of each year.

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) 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.

The Company currently believes all banks participating in the Revolving Credit Facility have the ability to and will meet any funding requests from the Company.

The indentures under which the 2025 Senior Bonds, the 2029 Senior Bonds and the 2034 Senior Bonds were issued do not include financial covenants, but do limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts.

The agreements under which the Company’s nonpublic debt, including the Revolving Credit Facility, was issued include two financial covenants:

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

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

All outstanding long-term debt has been issued by the Company and none has been issued by any of its subsidiaries.

There are no guarantees of the Company’s long-term debt.

All outstanding debt has been issued by the Company and none has been issued by any of its subsidiaries.

There are no guarantees of the Company’s debt.

The Company’s credit ratings are reviewed periodically by certain nationally recognized rating agencies.

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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 December 31, 2023, the Company’s credit ratings and outlook for its long-term debt were as follows:

As of December 31, 2024, the Company’s credit ratings and outlook for its debt were as follows:

Credit Rating Rating Outlook

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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 25 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.

On December 5, 2023, the Company announced that its Board of Directors had declared (i) a regular quarterly cash dividend of $0.50 per share on the Common Stock and the Class B Common Stock of the Company and (ii) a special cash dividend of $16.00 per share on the Common Stock and the Class B Common Stock of the Company, each payable on February 9, 2024 to stockholders of record of

the Common Stock and the Class B Common Stock as of the close of business on January 26, 2024.

The total dividends paid on February 9, 2024 were approximately $155 million.

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 approved an increase in the regular quarterly cash dividend from $0.50 per share to $2.50 per share on the Common Stock and the Class B Common Stock.

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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Cash Sources:

Proceeds from bond issuance $ 1,200,000 $ —

Net cash provided by operating activities (1)

876,357 810,690

Proceeds from the disposal of short-term investments 150,274 —

Proceeds from the sale of property, plant and equipment 569 695

Total cash sources $ 2,227,200 $ 811,385

Payments related to share repurchases $ 625,654 $ —

Purchases of short-term investments 446,309 —

Additions to property, plant and equipment 371,015 282,304

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Investment in equity method investees 15,720 13,741

Payments on financing lease obligations 2,303 2,988

Debt issuance fees 15,512 340

Acquisition of distribution rights — 30,649

Payments on term loan facility and senior notes — 125,000

Payments on financing lease obligations 2,488 2,303

Total cash uses $ 1,726,645 $ 373,764

Net increase in cash $ 437,621 $ 55,334

(1) Net cash provided by operating activities in 2023 included net income tax payments of $200.8 million and pension plan contributions of $16.3 million.

Net cash provided by operating activities in 2022 included net income tax payments of $141.0 million, pension plan contributions of $26.0 million and payment of deferred payroll taxes under the Coronavirus Aid, Relief and Economic Security Act of $18.7 million.

Net increase in cash during period $ 500,555 $ 437,621

(1) Net cash provided by operating activities in 2024 included net income tax payments of $224.0 million, interest payments of $56.1 million and pension plan contributions of $2.0 million.

Net cash provided by operating activities in 2023 included net income tax payments of $200.8 million, interest payments of $24.0 million and pension plan contributions of $16.3 million.

Cash Flows From Operating Activities

During 2024, cash provided by operating activities was $876.4 million, which was an increase of $65.7 million as compared to 2023.

The cash flows from operations were primarily the result of our strong operating performance.

As a result of the Company’s strong cash flows from operations, the Company was able to invest in property, plant and equipment and to pay a special cash dividend, as further discussed in the following sections.

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

Cash Flows From Investing Activities

During 2023, cash used in investing activities was $295.4 million, which was a decrease of $29.6 million as compared to 2022.

The decrease was partially a result of fewer additions to property, plant and equipment, which were $282.3 million during 2023 and $298.6 million during 2022.

CCBCC Operations, LLC, a wholly owned subsidiary of the Company, purchased the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina during 2022 for a purchase price of $60.0 million, which was included in additions to property, plant and equipment for that period.

During 2024, cash used in investing activities was $682.2 million, which was an increase of $386.9 million as compared to 2023.

The increase was partially a result of higher additions to property, plant and equipment, which were $371.0 million during 2024 and $282.3 million during 2023.

There were $44.9 million and $59.0 million of additions to property, plant and equipment accrued in accounts payable, trade as of December 31, 2024 and December 31, 2023, respectively.

The decrease in cash used in investing activities as compared to 2022 was also driven by the acquisition of $30.1 million of additional BODYARMOR distribution rights during 2022.

The decrease in cash used in investing activities as compared to 2022 was partially offset by an increase of approximately $11 million in our investment in equity method investees.

The Company also had purchases of short-term investments, net of proceeds, of $296.0 million during 2024, as compared to no net activity during 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.

During 2024, the Company purchased its Nashville, Tennessee production facility, which was previously leased, for approximately $56 million.

The Company expects additions to property, plant and equipment in 2025 to be approximately

$300 million.

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

Cash Flows From Financing Activities

During 2023, cash used in financing activities was $77.7 million, which was a decrease of $96.5 million as compared to 2022.

The decrease was primarily a result of the repayment of $125.0 million of debt during 2022.

This was partially offset by dividend payments of $46.9 million during 2023 (which included a special cash dividend of $3.00 per share), as compared to $9.4 million during 2022.

During 2024, cash provided by financing activities was $306.4 million, as compared to cash used in financing activities of $77.7 million during 2023, a change of $384.1 million.

The change was primarily the result of bond proceeds of $1.20 billion, offset by share repurchases and related fee payments of $625.7 million and dividend payments of $185.6 million during 2024.

The dividend payments of $185.6 million during 2024 included a special cash dividend of $16.00 per share, as compared to dividend payments of $46.9 million during 2023 (which included a special cash dividend of $3.00 per share).

The Company had cash payments for acquisition related contingent consideration of $64.3 million during 2024 and $28.2 million during 2023.

For the next five 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 $70 million.

For the next five years (including in fiscal year 2025), 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.

Material Contractual Obligations

The Company had a number of contractual obligations and commercial obligations as of December 31, 2024 that are material to an assessment of the Company’s short- and long-term cash requirements.

The Company has outstanding long-term debt of $600.0 million, none of which is contractually due in 2024.

The remaining interest payments on the Company’s debt obligations are $73.4 million determined in reference to the contractual terms of such debt, of which $23.2 million is due in 2024.

All of the Company’s long-term debt instruments have fixed interest rates, and, thus, are not impacted by fluctuations in interest rates, with the exception of the Company’s revolving credit facility, which did not have any outstanding borrowings as of December 31, 2023.

The Company has outstanding debt of $1.80 billion, approximately $350 million of which is contractually due in fiscal year 2025 and classified as current debt on the consolidated balance sheets.

The remaining interest payments on the Company’s debt obligations are $468.9 million determined in reference to the contractual terms of such debt, of which $85.9 million is due in fiscal year 2025.

All of the Company’s debt instruments have fixed interest rates, and, thus, are not impacted by fluctuations in interest rates, with the exception of the Company’s revolving credit facility, which did not have any outstanding borrowings as of December 31, 2024.

The Company’s acquisition related contingent consideration liability relates to acquisition related sub-bottling payments required in certain distribution territories under the CBA and totaled $654.2 million as of December 31, 2024.

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The Company is obligated to purchase 16.0 million cases of finished product from SAC on an annual basis through June 2034.

Based on information available as of December 31, 2023, the Company estimates this purchase obligation to be $71.1 million, all of which is expected to occur in 2024.

The Company has $146.9 million in total minimum operating lease obligations including interest, of which $29.9 million are due in 2024.

The Company has $8.2 million in total minimum financing lease obligations including interest, of which $2.8 million are due in 2024.

As of December 31, 2023, the Company estimated obligations for its executive benefit plans to be $184.4 million, of which $30.9 million is expected to be paid in 2024.

Based on information available as of December 31, 2024, the Company estimates this purchase obligation to be $1.30 billion, of which an estimated $135 million of purchases is expected to occur in fiscal year 2025.

The Company has $131.4 million in total minimum operating lease obligations including interest, of which $26.8 million are due in fiscal year 2025.

The Company has $5.4 million in total minimum financing lease obligations including interest, of which $2.9 million are due in fiscal year 2025.

As of December 31, 2024, the Company estimated obligations for its executive benefit plans to be $203.5 million, of which $40.0 million is expected to be paid in fiscal year 2025.

The Company provides postretirement benefits for employees meeting specified qualifying criteria.

The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service.

does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future.

As of December 31, 2023, the Company had obligations related to its postretirement benefits plan of $63.8 million, of which $3.2 million is expected to be paid in 2024.

The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future.

As of December 31, 2024, the Company had obligations related to its postretirement benefits plan of $62.1 million, of which $3.6 million is expected to be paid in fiscal year 2025.

The Company is a shareholder of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which the Company is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories.

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The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations.

As of December 31, 2023, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to $130.5 million, of which $30.0 million is expected to be paid in 2024.

On December 5, 2023, the Board of Directors of the Company declared a regular quarterly cash dividend of $0.50 per share, as well as a special cash dividend of $16.00 per share, on the Common Stock and the Class B Common Stock of the Company.

Both dividends are payable on February 9, 2024 to stockholders of record of the Common Stock and the Class B Common Stock as of the close of business on January 26, 2024.

As of December 31, 2023, dividends declared but not yet paid were $154.7 million.

As of December 31, 2024, the future payments related to these contractual arrangements, which expire at various dates through 2034, amounted to $135.5 million, of which $36.8 million is expected to be paid in fiscal year 2025.

Hedging Activities

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(in thousands) 2024 2023

Increase in cost of sales $ 1,656 $ 3,335

Increase (decrease) in SD&A expenses 5,928 (16,390)

(Decrease) increase in cost of sales $ (590) $ 1,656

Increase in SD&A expenses 2,647 5,928

Net impact $ 2,057 $ 7,584

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Actual results could differ significantly from those estimates under different assumptions and conditions.

The Company believes the following discussion addresses the Company’s most critical accounting estimates, which are those the Company believes to be the most important to the portrayal of its financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

The Company believes the following discussion addresses the Company’s most critical accounting estimates, which are those the Company believes to be the most important to the portrayal of its financial condition and results of operations and that require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Any changes in critical accounting estimates are discussed with the Audit Committee of the Company’s Board of Directors during the quarter in which a change is contemplated and prior to making such change.

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The Company’s contracts are derived from customer orders, including customer sales incentives, generated through an order processing and replenishment model.

Generally, the Company’s service contracts and contracts related to the delivery of specifically

identifiable products have a single performance obligation.

Generally, the Company’s service contracts and contracts related to the delivery of specifically identifiable products have a single performance obligation.

Revenues do not include sales or other taxes collected from customers.

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If the Company determines the carrying amount of an asset or asset group is not recoverable based upon the expected undiscounted future cash flows of the asset or asset group, an impairment loss is recorded equal to the excess of the carrying amounts over the estimated fair values of the long-lived assets.

During 2023 and 2022, the Company performed periodic reviews of property, plant and equipment and other intangibles and determined no material impairment existed.

During 2024 and 2023, the Company did not identify any impairment triggers related to property, plant and equipment and other intangibles.

All business combinations are accounted for using the acquisition method.

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The Primary Plan was frozen as of June 30, 2006 and no benefits accrued to participants after that date.

During 2023, the Primary Plan was fully settled, and the Company recognized a non-cash charge of $112.8 million related to the full settlement of the Primary Plan benefit liabilities, which was recorded as pension plan settlement expense in the consolidated statement of operations for that year.

There were no remaining benefit liabilities or associated estimates related to the Primary Plan as of December 31, 2023.

See Note 17 for additional discussion of the termination of the Primary Plan.

During 2023, the Primary Plan was fully settled.

There were no remaining benefit liabilities or associated estimates related to the Primary Plan as of December 31, 2023 or December 31, 2024.

The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements.

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The discount rate used in determining the actuarial present value of the projected benefit obligation for the Bargaining Plan was 5.89% in 2024 and 5.16% in 2023.

The discount rate assumption is generally the estimate which can have the most significant impact on net periodic pension cost and the projected benefit obligation.

The discount rate assumption is generally the estimate which can have the most significant impact on the projected benefit obligation and the net periodic pension cost for the Bargaining Plan.

The Company determines an appropriate discount rate annually for the Bargaining Plan based on the Aon AA Above Median yield curve as of the measurement date and reviews the discount rate assumption at the end of each year.

See Note 18 to the consolidated financial statements for additional information.

Pension costs for the Bargaining Plan were $3.7 million in 2023 and $6.8 million in 2022.

Pension costs for the Bargaining Plan were $3.7 million in both 2024 and 2023.

A 0.25% increase or decrease in the discount rate assumption would have impacted the projected benefit obligation and the net periodic pension cost for the Bargaining Plan as follows:

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Net periodic pension cost in 2024 (211) 224

The weighted average expected long-term rate of return of plan assets used in computing net periodic pension cost for the Bargaining Plan was 7.00% in 2023 and 5.50% in 2022.

The weighted average expected long-term rate of return of plan assets used in computing net periodic pension cost for the Bargaining Plan was 7.00% in both 2024 and 2023.

These rates reflect an estimate of long-term future returns for the pension plan assets, and the estimate is primarily a function of the asset classes (equities versus fixed income) in which the Bargaining Plan assets are invested.

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See Note 18 to the consolidated financial statements for the details by asset type for the Bargaining Plan.

The actual return on pension plan assets for the Bargaining Plan was a gain of 13.5% in 2023 and a loss of 24.6% in 2022.

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.

The Company sponsors a postretirement healthcare plan for employees meeting specified qualifying criteria.

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Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to:

increased costs (including due to inflation), disruption of supply or unavailability or shortages of raw materials, fuel and other supplies;

increased costs (including due to inflation) or disruption, unavailability or shortages of raw materials, fuel and other supplies;

the reliance on purchased finished products from external sources;

changes in public and consumer perception and preferences, including concerns related to product safety and sustainability, artificial ingredients, brand reputation and obesity;

changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients and product safety and sustainability;

decreases from historic levels of marketing funding support provided to us by The Coca‑Cola Company and other beverage companies;

changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients, recycling, sustainability and product safety;

decreases from historic levels of marketing funding support provided to us by

The Coca‑Cola Company and other beverage companies;

material changes in the performance requirements for marketing funding support or our inability to meet such requirements;

decreases from historic levels of advertising, marketing and product innovation spending by The Coca‑Cola Company and other beverage companies, or advertising campaigns that are negatively perceived by the public;

any failure of the several Coca‑Cola system governance entities of which we are a participant to function efficiently or on our best behalf and any failure or delay of ours to receive anticipated benefits from these governance entities;

any failure of the several Coca‑Cola system governance entities of which we are a participant to function efficiently or in our best interest and any failure or delay of ours to receive anticipated benefits from these governance entities;

provisions in our beverage distribution and manufacturing agreements with The Coca‑Cola Company that could delay or prevent a change in control of us or a sale of our Coca‑Cola distribution or manufacturing businesses;

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changes in the inputs used to calculate our acquisition related contingent consideration liability;

technology failures or cyberattacks on our information technology systems or our effective response to technology failures or cyberattacks on our customers’, suppliers’ or other third parties’ information technology systems;

technology failures or cyberattacks on our information technology systems or our effective response to technology failures or cyberattacks on our third-party service providers’, business partners’, customers’, suppliers’ or other third parties’ information technology systems;

unfavorable changes in the general economy;

changes in trade policies, including the imposition of, or increase in, tariffs on imported goods;

the concentration risks among our customers and suppliers;

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climate change or legislative or regulatory responses to such change;

the impact of any pandemic or public health situation;

and the risks discussed in “Item 1A.

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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-K

Item 7. Management’s Discussion and Analysis