What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-30 compared with 2024-10-30 · 229 added, 318 removed, 248 unchanged (69% of the section changed)

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The condensed consolidated financial statements presented are:

• 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.

• The financial position as of March 28, 2025 and December 31, 2024.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended March 28, 2025 (the “first quarter” of fiscal 2025 (“2025”)) and March 29, 2024 (the “first quarter” of fiscal 2024 (“2024”)).

• The changes in cash flows for the first quarter of 2025 and the first quarter of 2024.

Our Business and the Nonalcoholic Beverage Industry

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The Company’s products are sold and distributed in the United States through various channels, which include selling directly to customers, including grocery stores, mass merchandise stores, club stores, convenience stores and drug stores, selling to on-premise locations, where products are typically consumed immediately, such as restaurants, schools, amusement parks and recreational facilities, and selling through other channels such as vending machine outlets.

The Company also distributes its products using alternative routes to market, which include third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure.

The nonalcoholic beverage industry is highly competitive for both sparkling and still beverages.

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Executive Summary

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.

Volume was down 6.6% in the first quarter of 2025.

The first quarter of 2025 had two fewer selling days as compared to the first quarter of 2024, which accounted for approximately 2.1% of the volume decline in the quarter, as discussed in the “Comparable and Adjusted Results (Non-GAAP)” section.

Adjusting for the two additional selling days in the first quarter of 2024, our Sparkling and Still category volume declined 3.0% and 9.0%, respectively.

Volume in the first quarter of 2025 was also lower as compared to the prior year due to the timing of the Easter holiday.

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 reported case sales volume for the first quarter of 2025.

The impact of this distribution change reduced our reported case sales volume by 1.3% during the first quarter of 2025.

Net sales decreased 0.7% to $1.6 billion in the first quarter of 2025.

Net sales in the first quarter of 2025 was negatively impacted by two fewer selling days as compared to the first quarter of 2024, which accounted for approximately $40 million of net sales, or 2.5% of net sales change in the quarter.

The calendar impacts of two fewer selling days and a shift of the Easter holiday were partially offset by our annual 2025 pricing actions that took effect during the quarter.

Sparkling and Still net sales declined 1.9% and 0.5%, respectively, compared to the first quarter of 2024.

The decline in Sparkling category sales during the quarter was partially driven by softness in the Coca-Cola Original Taste brand.

Sales of most remaining core products within the Sparkling category, including zero-sugar and other flavor offerings, demonstrated solid growth compared to the prior year.

Excluding Dasani, net sales within our Still category increased by 1.8%, led primarily by growth within our sports drinks, protein and enhanced water products.

Gross profit in the first quarter of 2025 was $627.1 million, a decrease of $13.5 million, or 2.1%, while gross margin decreased 50 basis points to 39.7%.

During the first quarter of 2025, our product mix shifted slightly towards Still beverages, which typically carry lower gross margins.

Additionally, the timing of annual price increases in the first quarter of 2025 also contributed to the gross margin compression.

Selling, delivery and administrative (“SD&A”) expenses in the first quarter of 2025 increased $12.1 million, or 2.9%.

SD&A expenses as a percentage of net sales in the first quarter of 2025 increased 100 basis points to 27.7% as compared to the first quarter of 2024.

The increase in SD&A expenses was primarily driven by an increase in labor costs related to annual wage adjustments and inflationary pressures across expense categories during the first quarter of 2025.

SD&A expense growth was partially offset by the impact of the two fewer selling days.

Income from operations in the first quarter of 2025 was $189.8 million, compared to $215.4 million in the first quarter of 2024, a decrease of 11.9%.

The two fewer selling days in the first quarter of 2025 accounted for approximately $10 million of the decline in income from operations.

The timing of the Easter holiday also contributed to the decline in income from operations.

Operating margin for the first quarter of 2025 was 12.0% as compared to 13.5% for the first quarter of 2024, a decrease of 150 basis points.

Net income in the first quarter of 2025 was $103.6 million, compared to $165.7 million in the first quarter of 2024, a decline of $62.1 million.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the first quarter of 2025 was $136.3 million, compared to $162.5 million in the first quarter of 2024, a decrease of $26.2 million.

Net income for the first quarter of 2025 was adversely impacted by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, driven primarily by a decrease in the discount rate used to compute the fair value of the liability.

Cash flows from operations for the first quarter of 2025 were $198.2 million, compared to $194.3 million for the first quarter of 2024.

In the first quarter of 2025, we invested approximately $98 million in capital expenditures as we continue to optimize our supply chain and invest for future growth.

In 2025, we expect capital expenditures to be approximately $300 million.

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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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 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.

The Company expects to continue to make significant capital investments to optimize our supply chain and to invest for future growth during 2025.

During the first quarter of 2025, the Company began operations in a new 430,000-square foot automated distribution center in Columbus, Ohio.

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 returned, and expect to continue to return, value to our stockholders.

Optimal Route to Market :

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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.

For example, in instances of post-mix delivery for use in fountain machines, we have shifted our delivery method towards 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.

Our typical DSD method uses Company-owned vehicles and warehouses, but we increasingly shifted to alternative methods of distribution during 2024 and the first quarter of 2025.

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.

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.

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.

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.

During the first quarter of 2025, nearly two-thirds 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, 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.

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

Through our investment in CONA Services LLC, we, along with other Coca-Cola bottlers, have built a digitally enabled selling platform called MyCoke that we believe has enabled, 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

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

First Quarter Results

The Company’s results of operations for the first quarter of 2025 and the first quarter of 2024 are highlighted in the table below and discussed in the following paragraphs.

First Quarter

(in thousands) 2025 2024 Change

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Mark-to-market on acquisition related contingent consideration 42,728 (5,541) 48,269

Pension plan settlement expense — 77,319 (77,319)

Other expense, net 745 828 (83)

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Net income 103,611 165,741 (62,130)

Other comprehensive income, net of tax 451 57,214 (56,763)

Other comprehensive loss, net of tax (14) (153) 139

Comprehensive income

$ 103,597 $ 165,588 $ (61,991)

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 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 decreased $11.6 million, or 0.7%, to $1.58 billion in the first quarter of 2025, as compared to $1.59 billion in the first quarter of 2024.

The largest driver of the decrease in net sales was two fewer selling days during the first quarter of 2025 as compared to the first quarter of 2024.

During the first quarter of 2025, lower case sales volume within both the Still and Sparkling categories, which was partially attributable to the two fewer selling days, decreased net sales by approximately $85 million.

Net sales in the first quarter of 2025 was also lower as compared to the first quarter of 2024 due to the timing of the Easter holiday.

The decrease in net sales was partially offset by higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $40 million.

Net sales was also positively impacted by shifts in product mix during the first quarter of 2025, as certain of the Company’s higher-priced products, including sports drinks, protein and enhanced water products, had strong sales during the quarter.

Net sales by product category were as follows:

Third Quarter

First Quarter

(in thousands) 2025 2024 % Change

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Total net sales $ 1,579,977 $ 1,591,626 (0.7) %

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 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:

Third Quarter

First Quarter

(in thousands) 2025 2024 % Change

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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 using 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, these cases are not included in our reported case sales volume for the first quarter of 2025.

The impact of this distribution change reduced our reported case sales volume by 1.3% during the first quarter of 2025.

There was no impact related to this distribution change during the first quarter of 2024, as the shift had not yet taken place.

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.

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These fees are reported in net sales.

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

Inputs representing a substantial portion of the Company’s cost of sales include:

(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.

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 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.

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 $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 $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

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 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 25.7% 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 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)

2024 2023 Change

Net sales $ 5,153,221 $ 5,022,902 $ 130,319

Cost of sales 3,097,916 3,065,669 32,247

Gross profit 2,055,305 1,957,233 98,072

Selling, delivery and administrative expenses 1,353,704 1,301,249 52,455

Income from operations 701,601 655,984 45,617

Interest (income) expense, net (2,149) 2,766 (4,915)

Mark-to-market on acquisition related contingent consideration 90,877 86,038 4,839

Pension plan settlement expense — 117,096 (117,096)

Other expense, net 2,250 5,146 (2,896)

Income before taxes 610,623 444,938 165,685

Income tax expense 156,446 112,399 44,047

Net income 454,177 332,539 121,638

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

Comprehensive income

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

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 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

Bottle/can sales:

Sparkling beverages $ 3,025,902 $ 2,892,106 4.6 %

Still beverages 1,694,676 1,660,469 2.1 %

Total bottle/can sales 4,720,578 4,552,575 3.7 %

Sales to other Coca‑Cola bottlers 259,459 267,362 (3.0) %

Post-mix sales and other 173,184 202,965 (14.7) %

Total other sales 432,643 470,327 (8.0) %

Total net sales $ 5,153,221 $ 5,022,902 2.6 %

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

Bottle/can sales volume:

Sparkling beverages 196,212 195,395 0.4 %

Still beverages 67,211 71,426 (5.9) %

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.

Changes in the delivery of our products to our customers have increasingly impacted our reported volume and net sales over the past several years as the transition has occurred and accelerated.

Less than 10% of the bottle/can volume sold in our franchise territory during the first quarter of 2025 was delivered using these alternative distribution methods.

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

First Quarter

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

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Cost of Sales

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 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.

Inputs representing a substantial portion of the Company’s cost of sales include:

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.

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 annual cost of sales.

Cost of sales increased $1.8 million, or 0.2%, to $952.9 million in the first quarter of 2025, as compared to $951.1 million in the first quarter of 2024.

The increase in cost of sales was primarily driven by higher input costs and shifts in product mix as compared to the first quarter of 2024.

The increase in cost of sales was largely offset by lower case sales volume during the first quarter of 2025 as compared to the first quarter of 2024, which was partially attributable to the impact of the two fewer selling days during the first quarter of 2025.

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

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 $45.2 million in the first quarter of 2025 and $45.3 million in the first quarter of 2024.

Selling, Delivery and Administrative Expenses

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 $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.

SD&A expenses include the following:

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

SD&A expenses increased $12.1 million, or 2.9%, to $437.3 million in the first quarter of 2025, as compared to $425.2 million in the first quarter of 2024.

SD&A expenses as a percentage of net sales increased to 27.7% in the first quarter of 2025 from 26.7% in the first quarter of 2024.

The increase in SD&A expenses was partially offset by the impact of two fewer selling days during the first quarter of 2025 as compared to the first quarter of 2024.

Shipping and handling costs included in SD&A expenses were approximately $194 million in the first quarter of 2025 and approximately $193 million in the first quarter of 2024.

Interest Expense (Income), Net

Interest expense (income), net changed $9.6 million to $6.9 million of interest expense, net in the first quarter of 2025, as compared to $2.7 million of interest income, net in the first quarter of 2024.

The change in interest expense (income), net was primarily a result of an increase in interest expense on higher debt balances in the first quarter of 2025, as compared to the first quarter of 2024, 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 $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.

Mark-to-market on acquisition related contingent consideration was an increase of $42.7 million in the first quarter of 2025 and a decrease of $5.5 million in the first quarter of 2024.

During the first quarter of 2025, the $42.7 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by a decrease in the WACC used to calculate the fair value of the liability, as compared to December 31, 2024.

During the first quarter of 2024, the $5.5 million decrease in the fair value of the acquisition related contingent consideration liability was primarily driven by an increase in the WACC used to

calculate the fair value of the liability, partially offset 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 $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.

Other expense, net decreased $0.1 million to $0.7 million in the first quarter of 2025, as compared to $0.8 million in the first quarter of 2024.

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 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.

The Company’s effective income tax rate was 25.7% for the first quarter of 2025 and 25.6% for the first quarter of 2024.

The Company’s income tax expense decreased $21.2 million, or 37.2%, to $35.9 million for the first quarter of 2025, as compared to $57.1 million for the first quarter of 2024.

The decrease in income tax expense was primarily attributable to lower income before taxes during the first quarter of 2025 compared to the first quarter of 2024.

Other Comprehensive Loss, Net of Tax

Other comprehensive loss, net of tax was $0.0 million in the first quarter of 2025, as compared to $0.2 million in the first quarter of 2024.

Segment Operating Results

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Segment asset information is not provided to the CODM.

The Company believes three operating segments exist.

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 presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for 2024.

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:

Third Quarter First Nine Months

(in thousands) 2024 2023 2024 2023

Nonalcoholic Beverages $ 1,751,495 $ 1,691,060 $ 5,106,359 $ 4,951,334

All Other 86,230 93,636 260,930 281,186

Eliminations (1)

First Quarter 2025

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

Net sales $ 1,569,000 $ 75,988 $ (65,011) $ 1,579,977

Cost of goods sold 954,935 45,293 (47,355) 952,873

Gross profit 614,065 30,695 (17,656) 627,104

Selling, delivery and administrative expenses:

Payroll costs (2)

$ 265,933 $ 12,772 $ — $ 278,705

Consolidated net sales $ 1,765,652 $ 1,712,428 $ 5,153,221 $ 5,022,902

Fleet costs (3)

23,827 7,683 — 31,510

Depreciation and amortization expense (4)

28,254 538 — 28,792

All other segment items (5)

108,808 7,125 (17,656) 98,277

Total selling, delivery and administrative expenses 426,822 28,118 (17,656) 437,284

Income from operations $ 187,243 $ 2,577 $ — $ 189,820

Nonalcoholic Beverages $ 224,072 $ 217,405 $ 691,239 $ 661,395

All Other 2,983 (1,145) 10,362 (5,411)

Consolidated income from operations $ 227,055 $ 216,260 $ 701,601 $ 655,984

Total depreciation and amortization expense (4)

$ 48,048 $ 5,325 $ — $ 53,373

First Quarter 2024

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

Net sales $ 1,574,712 $ 88,102 $ (71,188) $ 1,591,626

Cost of goods sold 946,456 56,761 (52,150) 951,067

Gross profit 628,256 31,341 (19,038) 640,559

Selling, delivery and administrative expenses:

Payroll costs (2)

$ 262,697 $ 13,276 $ — $ 275,973

Fleet costs (3)

26,078 8,115 — 34,193

Depreciation and amortization expense (4)

25,057 493 — 25,550

All other segment items (5)

102,282 6,193 (19,038) 89,437

Total selling, delivery and administrative expenses 416,114 28,077 (19,038) 425,153

Income from operations $ 212,142 $ 3,264 $ — $ 215,406

Total depreciation and amortization expense (4)

$ 43,098 $ 3,653 $ — $ 46,751

(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.

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)

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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 comparable and adjusted results (non-GAAP):

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

Reported results (GAAP) $ 698,036 $ 470,981 $ 227,055 $ 155,563 $ 115,624 $ 13.20

Fair value adjustment of acquisition related contingent consideration (1)

— — — 68,592 51,652 5.68

Fair value adjustments for commodity derivative instruments (2)

(1,426) (631) (795) (795) (599) (0.07)

Total reconciling items (1,426) (631) (795) 67,797 51,053 5.61

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

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

Reported results (GAAP) $ 661,550 $ 445,290 $ 216,260 $ 120,984 $ 92,093 $ 9.82

Fair value adjustment of acquisition related contingent consideration (1)

— — — 18,864 14,212 1.51

Fair value adjustments for commodity derivative instruments (2)

25 703 (678) (678) (510) (0.05)

Pension plan settlement expense (3)

— — — 77,319 58,225 6.22

Total reconciling items 25 703 (678) 95,505 71,927 7.68

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

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

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

Results for the first quarter of 2024 include two additional selling days compared to the first quarter of 2025.

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

First Quarter

(in thousands) 2025 2024 Change

Standard physical case volume 76,727 82,111 (6.6) %

Volume related to extra day in fiscal period — (923)

Volume related to extra days in fiscal period — (1,760)

Comparable standard physical case volume 76,727 80,351 (4.5) %

First Nine Months 2024

(in thousands, except per share data) Gross

expenses Income from

operations Income before taxes Net

income Basic net income

First Quarter 2025

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

Reported results (GAAP) $ 627,104 $ 437,284 $ 189,820 $ 139,473 $ 103,611 $ 11.88

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Adjusted results (non-GAAP) $ 627,903 $ 437,449 $ 190,454 $ 182,835 $ 136,262 $ 15.62

First Nine Months 2023

(in thousands, except per share data) Gross

expenses Income from

operations Income before taxes Net

income Basic net income

First 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

Reported results (GAAP) $ 640,559 $ 425,153 $ 215,406 $ 222,835 $ 165,741 $ 17.68

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1,156 (43) 1,199 1,199 903 0.10

Pension plan settlement expense (3)

— — — 117,096 88,173 9.41

Total reconciling items 1,156 (43) 1,199 (4,342) (3,269) (0.35)

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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 settlement of the Primary Plan benefit liabilities during the first nine months of 2023.

Financial Condition

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.

Total assets were $5.40 billion as of March 28, 2025, which was an increase of $90.6 million from December 31, 2024.

Net working capital, defined as current assets less current liabilities, was $1.32 billion as of March 28, 2025, which was an increase of $89.1 million from December 31, 2024.

Significant changes in net working capital as of March 28, 2025 as compared to December 31, 2024 were as follows:

• An increase in short-term investments of $38.8 million, primarily due to $150.2 million in purchases of short-term investments during the first quarter of 2025, partially offset by disposals of short-term investments of $112.8 million.

• An increase in accounts payable to The Coca-Cola Company of $47.6 million, primarily due to the timing of cash payments.

• A decrease in accrued compensation of $84.3 million, primarily as a result of the timing of bonus and incentive payments in the first quarter of 2025.

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

As of March 28, 2025, the Company had $1.15 billion in cash and cash equivalents.

The Company’s cash equivalent balance as of March 28, 2025 consisted predominantly of investments in money market funds, time deposits and commercial paper with maturities of 90 days or less.

As of March 28, 2025, the Company had $340.1 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 these 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”).

On May 20, 2024, the Company launched its offer to purchase, for cash, shares of its 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.

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 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, 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 has obtained its debt from public markets, private placements and bank facilities.

On March 4, 2025, the Company announced that its Board of Directors had approved a 10-for-1 forward stock split of Common Stock and the Company’s Class B Common Stock, par value $1.00 per share (“Class B Common Stock”), to be effected through an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”).

The Amendment would also effect a proportionate increase in the number of authorized shares of Common Stock and Class B Common Stock.

The Amendment is subject to stockholder approval at the Company’s 2025 Annual Meeting of Stockholders, which is scheduled to take place on May 13, 2025.

Subject to stockholder approval of the Amendment, each stockholder of record as of the close of business on May 16, 2025 will have nine additional shares for each share of Common Stock or Class B Common Stock held as of such date reflected in the stockholder’s account on or about May 23, 2025.

Trading is expected to begin on a split-adjusted basis on or about May 27, 2025.

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 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)

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

There were no shares of Common Stock repurchased under the share repurchase program during the first quarter of 2025.

As of March 28, 2025, the total remaining share repurchase authorization was $948.4 million.

The Company’s debt as of March 28, 2025 and December 31, 2024 was as follows:

(in thousands) Maturity Date March 28, 2025 December 31, 2024

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

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

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

Senior bonds (the “2029 Senior Bonds”) net of unamortized discount (2)(3)

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

6/1/2029 700,000 700,000

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

Senior bonds (the “2034 Senior Bonds”) net of unamortized discount (3)(5)

Senior bonds (the “2034 Senior Bonds”) (4)

6/1/2034 500,000 500,000

Unamortized discount on senior bonds (1)(2)(4)

Various (1,412) (1,482)

Debt issuance costs (11,639) (12,170)

Total debt 1,786,949 1,786,348

Current portion of debt (1)

349,781 349,699

Total long-term debt $ 1,437,168 $ 1,436,649

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

As of March 28, 2025 and December 31, 2024, the 2025 Senior Bonds, net of debt issuance costs and unamortized discount, were classified as current portion of debt in the condensed 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.

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

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(4) 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 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 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:

The agreements under which the Company’s nonpublic debt, including its 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.

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

The Company was in compliance with these covenants as of March 28, 2025.

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

As of March 28, 2025, 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 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.

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.

Separate from those term extension actions, the Company has an agreement with a third-party financial institution to facilitate a supply chain finance program (the “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.

See Note 13 to the condensed consolidated financial statements for additional information related to the Company’s SCF program.

See Note 13 to the condensed consolidated financial statements for additional information related to the SCF program.

The Company’s only Level 3 asset or liability is the acquisition related contingent consideration liability.

There were no transfers from Level 1 or Level 2 in any period presented.

There were no transfers of assets or liabilities from Level 1 or Level 2 in any period presented.

Fair value adjustments were non-cash and, therefore, did not impact the Company’s liquidity or capital resources.

Following is a summary of the Level 3 activity:

Third Quarter First Nine Months

First Quarter

(in thousands) 2025 2024

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Reclassification to current payables 4,700 (4,500)

Increase in fair value 68,592 18,864 90,877 86,038

Increase (decrease) in fair value 42,728 (5,541)

Ending balance - Level 3 liability $ 681,800 $ 649,596

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A summary of cash-based activity is as follows:

First Nine Months

First Quarter

(in thousands) 2025 2024

Cash Sources:

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

Net cash provided by operating activities (1)

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Total cash sources $ 311,083 $ 195,489

Payments related to share repurchases $ 574,009 $ —

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

Purchases of short-term investments $ 150,157 $ 183,806

Additions to property, plant and equipment 97,866 77,040

Cash dividends paid 21,794 154,666

Payments of acquisition related contingent consideration 19,819 9,700

Debt issuance fees 15,365 244

Investment in equity method investees 4,584 3,632

Payments on financing lease obligations 650 601

Debt issuance fees 232 53

Total cash uses $ 295,102 $ 429,498

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

(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.

Net increase (decrease) in cash during period $ 15,981 $ (234,009)

(1) Net cash provided by operating activities in the first quarter of 2025 included net income tax payments of $1.9 million and net interest payments of $2.5 million.

Net cash provided by operating activities in the first quarter of 2024 included net income tax payments of $2.7 million and net interest payments of $2.6 million.

Cash Flows From Operating Activities

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.

During the first quarter of 2025, cash provided by operating activities was $198.2 million, which was an increase of $3.9 million as compared to the first quarter of 2024.

Cash Flows From Investing Activities

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.

During the first quarter of 2025, cash used in investing activities was $139.7 million, which was a decrease of $123.6 million as compared to the first quarter of 2024.

The decrease was primarily a result of fewer purchases of short-term investments, net of proceeds, as compared to the first quarter of 2024.

Purchases of short-term investments, net of proceeds, were $37.4 million during the first quarter of 2025 and $182.7 million during the first quarter of 2024.

This decrease was partially offset by an increase in additions to property, plant and equipment in the first quarter of 2025 as compared to the first quarter of 2024.

Additions to property, plant and equipment, were $97.9 million during the first quarter of 2025 and $77.0 million during the first quarter of 2024.

There were $28.0 million and $24.3 million of additions to property, plant and equipment accrued in accounts payable, trade as of March 28, 2025 and March 29, 2024, respectively.

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

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 2025 will be approximately $300 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 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.

During the first quarter of 2025, cash used in financing activities was $42.5 million, which was a decrease of $122.5 million as compared to the first quarter of 2024.

The primary driver of the decrease was lower dividend payments as compared to the first quarter of 2024.

The Company made dividend payments of approximately $22 million (including a regular cash dividend of $2.50 per share) during the first quarter of 2025, as compared to dividend payments of approximately $155 million (including a special cash dividend of $16.00 per share and a regular cash dividend of $0.50 per share) during the first quarter of 2024.

The Company had cash payments for acquisition related contingent consideration of $19.8 million during the first quarter of 2025 and $9.7 million during the first quarter of 2024.

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.

Hedging Activities

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

Third Quarter First Nine Months

First Quarter

(in thousands) 2025 2024

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

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

Increase in cost of sales $ 993 $ 1,534

Increase in SD&A expenses 67 323

Net impact $ 1,060 $ 1,857

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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;

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;

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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;

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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our use of estimates and assumptions;

changes in tax laws, disagreements with tax authorities or additional tax liabilities;

tax laws, disagreements with tax authorities or additional tax liabilities;

changes in legal contingencies;

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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-Q

Item 2. Management’s Discussion and Analysis