Coca-Cola Consolidated, Inc. 10-Q

Item 1. Financial Statements. COCA ‑ COLA CONSOLIDATED, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) First Quarter (in thousands, except per share data) 2025 2024 Net sales $ 1,579,977 $ 1,591,626 Cost of sales 952,873 951,067 Gross profit 627,104 640,559 Selling, delivery and administrative expenses 437,284 425,153 Income from operations 189,820 215,406 Interest expense (income), net 6,874 ( 2,716 ) Mark-to-market on acquisition related contingent consideration 42,728 ( 5,541 ) Other expense, net 745 828 Income before taxes 139,473 222,835 Income tax expense 35,862 57,094 Net income $ 103,611 $ 165,741 Basic net income per share: Common Stock $ 11.88 $ 17.68 Weighted average number of Common Stock shares outstanding 7,713 8,369 Class B Common Stock $ 11.88 $ 17.68 Weighted average number of Class B Common Stock shares outstanding 1,005 1,005 Diluted net income per share: Common Stock $ 11.87 $ 17.66 Weighted average number of Common Stock shares outstanding – assuming dilution 8,726 9,387 Class B Common Stock $ 11.86 $ 17.46 Weighted average number of Class B Common Stock shares outstanding – assuming dilution 1,013 1,018 Cash dividends per share: Common Stock $ 2.50 $ 16.50 Class B Common Stock $ 2.50 $ 16.50 See accompanying notes to condensed consolidated financial statements. 1 COCA ‑ COLA CONSOLIDATED, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) First Quarter (in thousands) 2025 2024 Net income $ 103,611 $ 165,741 Other comprehensive loss, net of tax: Defined benefit plan reclassification including pension costs: Actuarial loss ( 6 ) — Prior service credits 3 3 Postretirement benefits reclassification including benefit costs: Actuarial gain — 20 Unrealized loss on short-term investments ( 11 ) ( 176 ) Other comprehensive loss, net of tax ( 14 ) ( 153 ) Comprehensive income $ 103,597 $ 165,588 See accompanying notes to condensed consolidated financial statements. 2 COCA ‑ COLA CONSOLIDATED, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share data) March 28, 2025 December 31, 2024 ASSETS Current Assets: Cash and cash equivalents $ 1,151,805 $ 1,135,824 Short-term investments 340,050 301,210 Accounts receivable, trade 557,186 567,653 Allowance for doubtful accounts ( 14,010 ) ( 14,674 ) Accounts receivable from The Coca‑Cola Company 96,685 89,871 Accounts receivable, other 45,287 40,692 Inventories 340,214 330,395 Prepaid expenses and other current assets 96,217 96,331 Total current assets 2,613,434 2,547,302 Property, plant and equipment, net 1,537,547 1,505,267 Right-of-use assets - operating leases 107,099 112,351 Leased property under financing leases, net 2,727 3,138 Other assets 185,526 181,048 Goodwill 165,903 165,903 Distribution agreements, net 786,029 792,252 Customer lists, net 5,473 5,878 Total assets $ 5,403,738 $ 5,313,139 LIABILITIES AND EQUITY Current Liabilities: Current portion of obligations under operating leases $ 23,199 $ 23,257 Current portion of obligations under financing leases 2,660 2,685 Accounts payable, trade 328,387 334,878 Accounts payable to The Coca‑Cola Company 234,901 187,271 Other accrued liabilities 266,906 246,687 Accrued compensation 84,357 168,692 Current portion of debt 349,781 349,699 Total current liabilities 1,290,191 1,313,169 Deferred income taxes 168,215 132,941 Pension and postretirement benefit obligations 58,914 58,502 Other liabilities 860,595 859,559 Noncurrent portion of obligations under operating leases 87,520 92,362 Noncurrent portion of obligations under financing leases 1,721 2,346 Long-term debt 1,437,168 1,436,649 Total liabilities 3,904,324 3,895,528 Commitments and Contingencies Equity: Common Stock, $ 1.00 par value: 30,000,000 shares authorized; 10,832,748 shares issued 10,833 10,833 Class B Common Stock, $ 1.00 par value: 10,000,000 shares authorized; 1,632,810 shares issued 1,633 1,633 Additional paid-in capital 135,953 135,953 Retained earnings 1,477,000 1,395,183 Accumulated other comprehensive income 1,871 1,885 Treasury stock, at cost: Common Stock – 3,119,660 shares ( 127,467 ) ( 127,467 ) Treasury stock, at cost: Class B Common Stock – 628,114 shares ( 409 ) ( 409 ) Total equity 1,499,414 1,417,611 Total liabilities and equity $ 5,403,738 $ 5,313,139 See accompanying notes to condensed consolidated financial statements. 3 COCA ‑ COLA CONSOLIDATED, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) First Quarter (in thousands) 2025 2024 Cash Flows from Operating Activities: Net income $ 103,611 $ 165,741 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense from property, plant and equipment and financing leases 47,511 40,888 Amortization of intangible assets and deferred proceeds, net 5,862 5,863 Fair value adjustment of acquisition related contingent consideration 42,728 ( 5,541 ) Deferred income taxes 35,278 56,616 Loss on sale of property, plant and equipment 1,369 670 Amortization of debt costs 835 251 Change in current assets less current liabilities ( 19,676 ) ( 44,257 ) Change in other noncurrent assets 6,476 ( 781 ) Change in other noncurrent liabilities ( 25,823 ) ( 25,177 ) Total adjustments 94,560 28,532 Net cash provided by operating activities $ 198,171 $ 194,273 Cash Flows from Investing Activities: Purchases of short-term investments $ ( 150,157 ) $ ( 183,806 ) Proceeds from the disposal of short-term investments 112,755 1,116 Additions to property, plant and equipment ( 97,866 ) ( 77,040 ) Investment in equity method investees ( 4,584 ) ( 3,632 ) Proceeds from the sale of property, plant and equipment 157 100 Net cash used in investing activities $ ( 139,695 ) $ ( 263,262 ) Cash Flows from Financing Activities: Cash dividends paid $ ( 21,794 ) $ ( 154,666 ) Payments of acquisition related contingent consideration ( 19,819 ) ( 9,700 ) Payments on financing lease obligations ( 650 ) ( 601 ) Debt issuance fees ( 232 ) ( 53 ) Net cash used in financing activities $ ( 42,495 ) $ ( 165,020 ) Net increase (decrease) in cash during period $ 15,981 $ ( 234,009 ) Cash at beginning of period 1,135,824 635,269 Cash at end of period $ 1,151,805 $ 401,260 Significant non-cash investing and financing activities: Additions to property, plant and equipment accrued and recorded in accounts payable, trade $ 27,986 $ 24,310 Right-of-use assets obtained in exchange for operating lease obligations 223 74 See accompanying notes to condensed consolidated financial statements. 4 COCA ‑ COLA CONSOLIDATED, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) (in thousands, except per share data) Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Treasury Stock - Common Stock Treasury Stock - Class B Common Stock Total Equity Balance on December 31, 2024 $ 10,833 $ 1,633 $ 135,953 $ 1,395,183 $ 1,885 $ ( 127,467 ) $ ( 409 ) $ 1,417,611 Net income — — — 103,611 — — — 103,611 Other comprehensive loss, net of tax — — — — ( 14 ) — — ( 14 ) Dividends declared: Common Stock ($ 2.50 per share) — — — ( 19,282 ) — — — ( 19,282 ) Class B Common Stock ($ 2.50 per share) — — — ( 2,512 ) — — — ( 2,512 ) Balance on March 28, 2025 $ 10,833 $ 1,633 $ 135,953 $ 1,477,000 $ 1,871 $ ( 127,467 ) $ ( 409 ) $ 1,499,414 (in thousands, except per share data) Common Stock Class B Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock - Common Stock Treasury Stock - Class B Common Stock Total Equity Balance on December 31, 2023 $ 11,431 $ 1,633 $ 135,953 $ 1,352,111 $ ( 4,276 ) $ ( 60,845 ) $ ( 409 ) $ 1,435,598 Net income — — — 165,741 — — — 165,741 Other comprehensive loss, net of tax — — — — ( 153 ) — — ( 153 ) Dividends declared: Common Stock ($ 0.00 per share) — — — — — — — — Class B Common Stock ($ 0.00 per share) — — — — — — — — Balance on March 29, 2024 $ 11,431 $ 1,633 $ 135,953 $ 1,517,852 $ ( 4,429 ) $ ( 60,845 ) $ ( 409 ) $ 1,601,186 See accompanying notes to condensed consolidated financial statements. 5 COCA ‑ COLA CONSOLIDATED, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Critical Accounting Policies The condensed consolidated financial statements include the accounts and the consolidated operations of Coca‑Cola Consolidated, Inc. and its majority-owned subsidiaries (collectively referred to herein as the “Company”). All significant intercompany accounts and transactions have been eliminated. The condensed consolidated financial statements reflect all adjustments, including normal, recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. Each of the Company’s quarters, other than the fourth quarter, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The Company’s fourth quarter and fiscal year end on December 31 regardless of the day of the week on which December 31 falls. The condensed consolidated financial statements presented are: • 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. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for 2024 filed with the United States Securities and Exchange Commission. The preparation of condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Critical Accounting Estimates In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of its results of operations and financial position in the preparation of its condensed consolidated financial statements in conformity with GAAP. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company included in its Annual Report on Form 10-K for 2024 under the caption “Discussion of Critical Accounting Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” a discussion of 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. Recently Adopted Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires additional disclosure of significant segment expenses included in the reported measure of segment profit or loss and regularly provided to the Chief Operating Decision Maker (the “CODM”). It also requires disclosure and a description of the composition of other amounts by reportable segment, disclosure of a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods and disclosure of the CODM’s title and process for assessing a reportable segment’s profit or loss. The new guidance was effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. The Company adopted ASU 2023-07 in the fourth quarter of 2024, noting no material impact on its consolidated financial statements. See Note 4 for disclosure related to the Company’s segment reporting. 6 Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disclosure of specific categories in the rate reconciliation, including additional information for reconciling items that meet a quantitative threshold, and specific disaggregation of income taxes paid and tax expense. The amendment is effective for fiscal years beginning after December 15, 2024. The Company has evaluated the impact ASU 2023-09 will have on its consolidated financial statements and does not expect a material impact upon adoption. In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires disclosure of disaggregated income expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization, among other things. The amendment also requires companies to provide a qualitative description of expense captions not separately disaggregated, as well as the total amount of selling expenses and, annually, the entity’s definition of selling expenses. The amendment is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is in the process of evaluating the impact ASU 2024-03 will have on its consolidated financial statements. 2. Related Party Transactions J. Frank Harrison, III As of March 28, 2025, J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, controlled 1,004,394 shares of the Company’s Class B Common Stock, par value $ 1.00 per share (“Class B Common Stock”), which represented approximately 72 % of the total voting power of the Company’s outstanding Common Stock, par value $ 1.00 per share (“Common Stock”), and Class B Common Stock on a consolidated basis. The Coca‑Cola Company The Company’s business consists primarily of the distribution, marketing and manufacture of nonalcoholic beverages of The Coca‑Cola Company, which is the sole owner of the formulas under which the primary components of the Company’s soft drink products, either concentrate or syrup, are manufactured. As of March 28, 2025, The Coca‑Cola Company owned shares of Common Stock representing approximately 7 % of the total voting power of the outstanding Common Stock and Class B Common Stock on a consolidated basis. The number of shares of Common Stock currently held by The Coca‑Cola Company gives it the right to have a designee proposed by the Company for nomination to the Company’s Board of Directors in the Company’s annual proxy statement. J. Frank Harrison, III and the trustees of certain trusts established for the benefit of certain relatives of the late J. Frank Harrison, Jr. have agreed to vote the shares of Common Stock and Class B Common Stock that they control in favor of such designee. The Coca‑Cola Company does not own any shares of Class B Common Stock. The following table summarizes the significant cash transactions between the Company and The Coca‑Cola Company: First Quarter (in thousands) 2025 2024 Payments made by the Company to The Coca-Cola Company (1) $ 443,256 $ 457,244 Payments made by The Coca-Cola Company to the Company 80,045 55,398 (1) This excludes acquisition related sub-bottling payments made by the Company to CCR (as defined below), a wholly owned subsidiary of The Coca‑Cola Company. More than 80 % of the payments made by the Company to The Coca‑Cola Company were for concentrate, syrup, sweetener and other finished goods products, which were recorded in cost of sales in the condensed consolidated statements of operations and represent the primary components of the soft drink products the Company manufactures and distributes. Payments made by the Company to The Coca‑Cola Company also included payments for marketing programs associated with large, national customers managed by The Coca‑Cola Company on behalf of the Company, which were recorded as a reduction to net sales in the condensed consolidated statements of operations. Other payments made by the Company to The Coca‑Cola Company related to cold drink equipment parts, fees associated with the rights to distribute certain brands and other customary items. 7 Payments made by The Coca‑Cola Company to the Company included annual funding in connection with the Company’s agreement to support certain business initiatives developed by The Coca‑Cola Company and funding associated with the delivery of post-mix products to various customers, both of which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations. Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses. Payments made by The Coca‑Cola Company to the Company also included fountain product delivery and equipment repair services performed by the Company on The Coca‑Cola Company’s equipment, all of which were recorded in net sales in the condensed consolidated statements of operations. Coca‑Cola Refreshments USA, LLC (“CCR”) The Company, The Coca‑Cola Company and CCR entered into comprehensive beverage agreements (as amended, collectively, the “CBA”), related to a multi-year series of transactions, which were completed in October 2017, through which the Company acquired and exchanged distribution territories and manufacturing plants (the “System Transformation”). The CBA requires the Company to make quarterly acquisition related sub-bottling payments to CCR on a continuing basis in exchange for the grant of exclusive rights to distribute, promote, market and sell the authorized brands of The Coca‑Cola Company and related products in certain distribution territories the Company acquired from CCR. These acquisition related sub-bottling payments are based on gross profit derived from the Company’s sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, a beverage product or certain cross-licensed brands applicable to the System Transformation. Acquisition related sub-bottling payments to CCR were $ 19.8 million in the first quarter of 2025 and $ 9.7 million in the first quarter of 2024. The following table summarizes the liability recorded by the Company to reflect the estimated fair value of contingent consideration related to future expected acquisition related sub-bottling payments to CCR: (in thousands) March 28, 2025 December 31, 2024 Current portion of acquisition related contingent consideration $ 72,520 $ 63,982 Noncurrent portion of acquisition related contingent consideration 609,280 590,209 Total acquisition related contingent consideration $ 681,800 $ 654,191 Southeastern Container (“Southeastern”) The Company is a shareholder of Southeastern, a plastic bottle manufacturing cooperative. The Company accounts for Southeastern as an equity method investment. The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was $ 21.5 million as of March 28, 2025 and $ 20.9 million as of December 31, 2024. South Atlantic Canners, Inc. (“SAC”) The Company is a shareholder of SAC, a manufacturing cooperative located in Bishopville, South Carolina. All of SAC’s shareholders are Coca‑Cola bottlers and each has equal voting rights. The Company accounts for SAC as an equity method investment. The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $ 27.6 million as of March 28, 2025 and $ 25.3 million as of December 31, 2024. The Company also guarantees a portion of SAC’s debt; see Note 21 for additional information. The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement. Proceeds from management fees received from SAC, which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $ 2.3 million in both the first quarter of 2025 and the first quarter of 2024. Coca‑Cola Bottlers’ Sales & Services Company LLC (“CCBSS”) Along with all other Coca‑Cola bottlers in the United States and Canada, the Company is a member of CCBSS, a company formed to provide certain procurement and other services with the intention of enhancing the efficiency and competitiveness of the Coca‑Cola bottling system. The Company accounts for CCBSS as an equity method investment and its investment in CCBSS is not material. CCBSS negotiates the procurement for the majority of the Company’s raw materials, excluding concentrate, and the Company receives a rebate from CCBSS for the purchase of these raw materials. The Company had rebates due from CCBSS of $ 16.2 million on March 28, 2025 and $ 14.5 million on December 31, 2024, which were classified as accounts receivable, other in 8 the condensed consolidated balance sheets. Changes in rebates receivable relate to volatility in raw material prices and the timing of cash receipts of rebates. CONA Services LLC (“CONA”) Along with certain other Coca‑Cola bottlers, the Company is a member of CONA, an entity formed to provide business process and information technology services to its members. The Company accounts for CONA as an equity method investment. The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was $ 29.1 million as of March 28, 2025 and $ 27.5 million as of December 31, 2024. Pursuant to an amended and restated master services agreement with CONA, the Company is authorized to use the Coke One North America system (the “CONA System”), a uniform information technology system developed to promote operational efficiency and uniformity among North American Coca‑Cola bottlers. In exchange for the Company’s rights to use the CONA System and receive CONA-related services, it is charged service fees by CONA. The Company incurred service fees to CONA of $ 6.0 million in the first quarter of 2025 and $ 5.7 million in the first quarter of 2024. Related Party Leases The Company leases its headquarters office facility and an adjacent office facility in Charlotte, North Carolina from Beacon Investment Corporation, of which J. Frank Harrison, III is the majority stockholder and Morgan H. Everett, Vice Chair of the Company’s Board of Directors, is a minority stockholder. The annual base rent the Company is obligated to pay under this lease is subject to an adjustment for an inflation factor and the lease expires on December 31, 2029. The principal balance outstanding under this lease was $ 18.5 million on March 28, 2025 and $ 19.3 million on December 31, 2024. Rental payments for this lease were $ 1.0 million in both the first quarter of 2025 and the first quarter of 2024. Long-Term Performance Equity Plan The Long-Term Performance Equity Plan compensates J. Frank Harrison, III based on the Company’s performance. Awards granted to Mr. Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment during a performance period of certain performance measures, each as specified by the Compensation Committee of the Company’s Board of Directors. These awards may be settled in cash and/or shares of Class B Common Stock, based on the average of the closing prices of shares of Common Stock during the last 20 trading days of the performance period. Compensation expense for the Long-Term Performance Equity Plan, which was included in selling, delivery and administrative (“SD&A”) expenses in the condensed consolidated statements of operations, was $ 2.1 million in the first quarter of 2025 and $ 2.0 million in the first quarter of 2024. 3. Revenue Recognition The Company’s sales are divided into two main categories: (i) bottle/can sales and (ii) other sales. Bottle/can sales include products packaged primarily in plastic bottles and aluminum cans. Bottle/can net pricing is based on the invoice price charged to customers reduced by any promotional allowances. Bottle/can net pricing per unit is impacted by the price charged per package, the sales volume generated for each package and the channels in which those packages are sold. Other sales include sales to other Coca‑Cola bottlers, post-mix sales, transportation revenue and equipment maintenance revenue. 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. Revenues do not include sales or other taxes collected from customers. The Company has defined its performance obligations for its contracts as either at a point in time or over time. Bottle/can sales, sales to other Coca‑Cola bottlers and post-mix sales are recognized when control transfers to a customer, which is generally upon delivery and is considered a single point in time (“point in time”). Point in time sales accounted for approximately 98 % of the Company’s net sales in both the first quarter of 2025 and the first quarter of 2024. Other sales, which include revenue for service fees related to the repair of cold drink equipment and delivery fees for freight hauling and brokerage services, are recognized over time (“over time”). Revenues related to cold drink equipment repair are recognized as the respective services are completed using a cost-to-cost input method. Repair services are generally completed in less than one day but can extend up to one month . Revenues related to freight hauling and brokerage services are recognized as the delivery occurs using a miles driven output method. Generally, delivery occurs and freight charges are recognized in the same day. Over time sales orders open at the end of a financial period are not material to the condensed consolidated financial statements. 9 The following table represents a disaggregation of revenue from contracts with customers: First Quarter (in thousands) 2025 2024 Point in time net sales: Nonalcoholic Beverages - point in time $ 1,555,765 $ 1,561,145 Total point in time net sales $ 1,555,765 $ 1,561,145 Over time net sales: Nonalcoholic Beverages - over time $ 13,235 $ 13,567 All Other - over time 10,977 16,914 Total over time net sales $ 24,212 $ 30,481 Total net sales $ 1,579,977 $ 1,591,626 The Company’s allowance for doubtful accounts in the condensed consolidated balance sheets includes a reserve for customer returns and an allowance for credit losses. The Company experiences customer returns primarily as a result of damaged or out-of-date product. At any given time, the Company estimates less than 1 % of bottle/can sales and post-mix sales could be at risk for return by customers. Returned product is recognized as a reduction to net sales. The Company’s reserve for customer returns was $ 5.3 million as of March 28, 2025 and $ 5.2 million as of December 31, 2024. The Company estimates an allowance for credit losses, based on historic days’ sales outstanding trends, aged customer balances, previously written-off balances and expected recoveries up to balances previously written off, in order to present the net amount expected to be collected. Accounts receivable balances are written off when determined uncollectible and are recognized as a reduction to the allowance for credit losses. Following is a summary of activity for the allowance for credit losses during the first quarter of 2025 and the first quarter of 2024: First Quarter (in thousands) 2025 2024 Beginning balance - allowance for credit losses $ 9,524 $ 11,560 Additions charged to expenses and as a reduction to net sales 290 725 Deductions ( 1,079 ) ( 510 ) Ending balance - allowance for credit losses $ 8,735 $ 11,775 4. Segments The Company evaluates segment reporting in accordance with FASB Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the CODM. The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM. 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, 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. 10 The Company’s segment results are as follows: First Quarter 2025 (in thousands) Nonalcoholic Beverages All Other Eliminations (1) Total 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 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 Total depreciation and amortization expense (4) $ 48,048 $ 5,325 $ — $ 53,373 First Quarter 2024 (in thousands) Nonalcoholic Beverages All Other Eliminations (1) Total 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. 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. 11 5. Net Income Per Share The following table sets forth the computation of basic net income per share and diluted net income per share under the two-class method: First Quarter (in thousands, except per share data) 2025 2024 Numerator for basic and diluted net income per Common Stock and Class B Common Stock share: Net income $ 103,611 $ 165,741 Less dividends: Common Stock 19,282 138,088 Class B Common Stock 2,512 16,578 Total undistributed earnings $ 81,817 $ 11,075 Common Stock undistributed earnings – basic $ 72,385 $ 9,888 Class B Common Stock undistributed earnings – basic 9,432 1,187 Total undistributed earnings – basic $ 81,817 $ 11,075 Common Stock undistributed earnings – diluted $ 72,319 $ 9,874 Class B Common Stock undistributed earnings – diluted 9,498 1,201 Total undistributed earnings – diluted $ 81,817 $ 11,075 Numerator for basic net income per Common Stock share: Dividends on Common Stock $ 19,282 $ 138,088 Common Stock undistributed earnings – basic 72,385 9,888 Numerator for basic net income per Common Stock share $ 91,667 $ 147,976 Numerator for basic net income per Class B Common Stock share: Dividends on Class B Common Stock $ 2,512 $ 16,578 Class B Common Stock undistributed earnings – basic 9,432 1,187 Numerator for basic net income per Class B Common Stock share $ 11,944 $ 17,765 Numerator for diluted net income per Common Stock share: Dividends on Common Stock $ 19,282 $ 138,088 Dividends on Class B Common Stock assumed converted to Common Stock 2,512 16,578 Common Stock undistributed earnings – diluted 81,817 11,075 Numerator for diluted net income per Common Stock share $ 103,611 $ 165,741 Numerator for diluted net income per Class B Common Stock share: Dividends on Class B Common Stock $ 2,512 $ 16,578 Class B Common Stock undistributed earnings – diluted 9,498 1,201 Numerator for diluted net income per Class B Common Stock share $ 12,010 $ 17,779 Denominator for basic net income per Common Stock and Class B Common Stock share: Common Stock weighted average shares outstanding – basic 7,713 8,369 Class B Common Stock weighted average shares outstanding – basic 1,005 1,005 Denominator for diluted net income per Common Stock and Class B Common Stock share: Common Stock weighted average shares outstanding – diluted (assumes conversion of Class B Common Stock to Common Stock) 8,726 9,387 Class B Common Stock weighted average shares outstanding – diluted 1,013 1,018 12 First Quarter (in thousands, except per share data) 2025 2024 Basic net income per share: Common Stock $ 11.88 $ 17.68 Class B Common Stock $ 11.88 $ 17.68 Diluted net income per share: Common Stock $ 11.87 $ 17.66 Class B Common Stock $ 11.86 $ 17.46 NOTES TO TABLE (1) For purposes of the diluted net income per share computation for Common Stock, all shares of Class B Common Stock are assumed to be converted; therefore, 100 % of undistributed earnings is allocated to Common Stock. (2) For purposes of the diluted net income per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted. (3) For periods presented during which the Company has net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock includes the dilutive effect of unvested performance shares relative to the Long-Term Performance Equity Plan . For periods presented during which the Company has net loss, the unvested performance shares granted pursuant to the Long-Term Performance Equity Plan are excluded from the computation of diluted net loss per share, as the effect would have been anti-dilutive. See Note 2 for additional information on the Long-Term Performance Equity Plan . (4) The Long-Term Performance Equity Plan awards may be settled in cash and/or shares of Class B Common Stock. Once an election has been made to settle an award in cash, the dilutive effect of unvested performance shares relative to such award is prospectively removed from the denominator in the computation of diluted net income per share. (5) The Company did no t have anti-dilutive unvested performance shares for any periods presented. (6) 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 the Company’s Common Stock. 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. (7) 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 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. The Company calculated the basic and diluted net income per share on an unaudited pro forma basis giving effect to the stock split as if it had been effective for all periods presented. For the first quarter of 2025, both the basic net income per share and the diluted net income per share for both Common Stock and Class B Common Stock were $ 1.19 per share on a pro forma basis (as described above). For the first quarter of 2024, the basic net income per share for both Common Stock and Class B Common Stock were $ 1.77 per share and the diluted net income per share for Common Stock and Class B Common Stock were $ 1.77 per share and $ 1.75 per share, respectively, on a pro forma basis (as described above). 6. Short-Term Investments Short-term investments that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Short-term investments that are not classified as held-to-maturity are carried at fair value and classified as available-for-sale. As of March 28, 2025 and December 31, 2024, all of the Company’s short-term investments were classified as available-for-sale. Realized gains and losses on available-for-sale investments are included in net income. Unrealized gains and losses, net of tax, on available-for-sale investments are included in the condensed consolidated balance sheets as a component of accumulated other comprehensive income. 13 As of March 28, 2025, the Company’s available-for-sale investments consisted of the following cost, unrealized positions and estimated fair value, disaggregated by class of instrument: Gross Unrealized (in thousands) Cost Gains Losses Estimated Fair Value U.S. Treasury securities $ 204,941 $ 71 $ ( 31 ) $ 204,981 Corporate bonds 123,894 29 ( 53 ) 123,870 Commercial paper instruments 10,137 — — 10,137 Asset-backed securities 1,059 3 — 1,062 Total short-term investments $ 340,031 $ 103 $ ( 84 ) $ 340,050 As of December 31, 2024, the Company’s available-for-sale investments consisted of the following cost, unrealized positions and estimated fair value, disaggregated by class of instrument: Gross Unrealized (in thousands) Cost Gains Losses Estimated Fair Value U.S. Treasury securities $ 178,016 $ 67 $ ( 44 ) $ 178,039 Corporate bonds 103,970 77 ( 78 ) 103,969 Commercial paper instruments 17,657 6 — 17,663 Asset-backed securities 1,534 5 — 1,539 Total short-term investments $ 301,177 $ 155 $ ( 122 ) $ 301,210 As of March 28, 2025 and December 31, 2024, all of the Company’s available-for-sale investments were classified as short-term investments in the condensed consolidated balance sheets and had weighted average maturities of less than one year. The Company did not identify any other-than-temporary impairment on its available-for-sale investments during the first quarter of 2025 or the first quarter of 2024. The sale and/or maturity of available-for-sale investments resulted in proceeds of $ 112.8 million during the first quarter of 2025 and $ 1.1 million during the first quarter of 2024. There were no gross realized gains or losses on the Company’s available-for-sale investments during the first quarter of 2025 or the first quarter of 2024. 7. Inventories Inventories consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Finished products $ 222,720 $ 203,373 Manufacturing materials 74,096 84,096 Plastic shells, plastic pallets and other inventories 43,398 42,926 Total inventories $ 340,214 $ 330,395 8. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Repair parts $ 35,570 $ 34,465 Prepaid taxes 11,722 12,119 Prepaid software 11,555 8,616 Prepaid marketing 6,069 5,142 Commodity hedges at fair market value 1,838 2,472 Other prepaid expenses and other current assets 29,463 33,517 Total prepaid expenses and other current assets $ 96,217 $ 96,331 14 9. Property, Plant and Equipment, Net The principal categories and estimated useful lives of property, plant and equipment, net were as follows: (in thousands) March 28, 2025 December 31, 2024 Estimated Useful Lives Land $ 133,070 $ 132,543 Buildings 494,821 493,810 8 - 50 years Machinery and equipment 615,039 563,834 5 - 20 years Transportation equipment 723,996 682,263 3 - 20 years Furniture and fixtures 112,575 113,156 3 - 10 years Cold drink dispensing equipment 461,185 456,984 3 - 17 years Leasehold and land improvements 192,889 192,282 5 - 20 years Software for internal use 43,838 50,293 3 - 10 years Construction in progress 43,499 77,707 Total property, plant and equipment, at cost 2,820,912 2,762,872 Less: Accumulated depreciation and amortization 1,283,365 1,257,605 Property, plant and equipment, net $ 1,537,547 $ 1,505,267 10. Leases Following is a summary of the weighted average remaining lease term and the weighted average discount rate for the Company’s leases: March 28, 2025 December 31, 2024 Weighted average remaining lease term: Operating leases 6.2 years 6.4 years Financing leases 2.8 years 2.9 years Weighted average discount rate: Operating leases 4.1 % 4.1 % Financing leases 5.2 % 5.2 % Following is a summary of the Company’s leases within the condensed consolidated statements of operations: First Quarter (in thousands) 2025 2024 Operating lease costs $ 6,594 $ 7,789 Short-term and variable leases 2,087 3,030 Depreciation expense from financing leases 411 412 Interest expense on financing lease obligations 58 92 Total lease cost $ 9,150 $ 11,323 14 The future minimum lease payments related to the Company’s leases include renewal options the Company has determined to be reasonably certain and exclude payments to landlords for real estate taxes and common area maintenance. Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of March 28, 2025: (in thousands) Operating Leases Financing Leases Remainder of 2025 $ 20,667 $ 2,160 2026 24,700 1,233 2027 21,101 338 2028 16,427 345 2029 15,046 352 Thereafter 27,482 268 Total minimum lease payments including interest $ 125,423 $ 4,696 Less: Amounts representing interest 14,704 315 Present value of minimum lease principal payments 110,719 4,381 Less: Current portion of lease liabilities 23,199 2,660 Noncurrent portion of lease liabilities $ 87,520 $ 1,721 Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of December 31, 2024: (in thousands) Operating Leases Financing Leases 2025 $ 26,799 $ 2,869 2026 24,578 1,233 2027 21,101 338 2028 16,427 345 2029 15,046 352 Thereafter 27,482 268 Total minimum lease payments including interest $ 131,433 $ 5,405 Less: Amounts representing interest 15,814 374 Present value of minimum lease principal payments 115,619 5,031 Less: Current portion of lease liabilities 23,257 2,685 Noncurrent portion of lease liabilities $ 92,362 $ 2,346 Following is a summary of the Company’s leases within the condensed consolidated statements of cash flows: First Quarter (in thousands) 2025 2024 Cash flows from operating activities impact: Operating leases $ 6,243 $ 7,612 Interest payments on financing lease obligations 58 92 Total cash flows from operating activities impact $ 6,301 $ 7,704 Cash flows from financing activities impact: Principal payments on financing lease obligations $ 650 $ 601 Total cash flows from financing activities impact $ 650 $ 601 11. Distribution Agreements, Net Distribution agreements, net, which are amortized on a straight-line basis and have estimated useful lives of 20 to 40 years, consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Distribution agreements at cost $ 990,191 $ 990,191 Less: Accumulated amortization 204,162 197,939 Distribution agreements, net $ 786,029 $ 792,252 15 12. Customer Lists, Net Customer lists, net, which are amortized on a straight-line basis and have estimated useful lives of five to 12 years, consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Customer lists at cost $ 25,288 $ 25,288 Less: Accumulated amortization 19,815 19,410 Customer lists, net $ 5,473 $ 5,878 13. Supply Chain Finance Program 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. The participating suppliers negotiate their outstanding receivable arrangements and associated fees directly with the financial institution, and the Company is not party to those agreements. Once a qualifying supplier elects to participate in the SCF program and reaches an agreement with the financial institution, the supplier elects which individual Company invoices it sells to the financial institution. The supplier invoices that have been confirmed as valid under the SCF program require payment in full by the financial institution to the supplier by the original maturity date of the invoice, or discounted payment at an earlier date as agreed upon with the supplier. 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. All outstanding amounts related to suppliers participating in the SCF program are recorded in accounts payable, trade in the condensed consolidated balance sheets, and associated payments are included in operating activities in the condensed consolidated statements of cash flows. The Company’s outstanding confirmed obligations included in accounts payable, trade in the condensed consolidated balance sheets were $ 58.6 million as of March 28, 2025 and $ 52.2 million as of December 31, 2024. 14. Other Accrued Liabilities Other accrued liabilities consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Current portion of acquisition related contingent consideration $ 72,520 $ 63,982 Accrued insurance costs 62,677 58,040 Accrued marketing costs 43,987 55,879 Employee and retiree benefit plan accruals 28,932 33,446 Accrued interest payable 27,057 7,611 Accrued taxes (other than income taxes) 7,952 6,821 All other accrued expenses 23,781 20,908 Total other accrued liabilities $ 266,906 $ 246,687 15. Commodity Derivative Instruments The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices. In the normal course of business, the Company manages this risk through a variety of strategies, including the use of commodity derivative instruments. The Company does not use commodity derivative instruments for trading or speculative purposes. These commodity derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk. The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these counterparties. Commodity derivative instruments held by the Company are marked to market on a quarterly basis and are recognized in earnings consistent with the expense classification of the underlying hedged item. The Company generally pays a fee for these commodity derivative instruments, which is amortized over the corresponding period of each commodity derivative instrument. Settlements of commodity derivative instruments are included in cash flows from operating activities in the condensed consolidated 16 statements of cash flows. The following table summarizes pre-tax changes in the fair values of the Company’s commodity derivative instruments and the classification of such changes in the condensed consolidated statements of operations: First Quarter (in thousands) 2025 2024 Cost of sales $ ( 799 ) $ ( 1,156 ) Selling, delivery and administrative expenses 165 ( 43 ) Total loss $ ( 634 ) $ ( 1,199 ) All commodity derivative instruments are recorded at fair value as either assets or liabilities in the condensed consolidated balance sheets. The Company has master agreements with the counterparties to its commodity derivative instruments that provide for net settlement of derivative transactions. Accordingly, the net amounts of derivative assets are recognized in either prepaid expenses and other current assets or other assets in the condensed consolidated balance sheets and the net amounts of derivative liabilities are recognized in either other accrued liabilities or other liabilities in the condensed consolidated balance sheets. The following table summarizes the fair values of the Company’s commodity derivative instruments and the classification of such instruments in the condensed consolidated balance sheets: (in thousands) March 28, 2025 December 31, 2024 Prepaid expenses and other current assets $ 1,838 $ 2,472 Total assets $ 1,838 $ 2,472 The following table summarizes the Company’s gross commodity derivative instrument assets and gross commodity derivative instrument liabilities in the condensed consolidated balance sheets: (in thousands) March 28, 2025 December 31, 2024 Gross commodity derivative instrument assets $ 1,838 $ 2,472 Gross commodity derivative instrument liabilities — — The following table summarizes the Company’s outstanding commodity derivative instruments: (in thousands) March 28, 2025 December 31, 2024 Notional amount of outstanding commodity derivative instruments $ 47,214 $ 50,928 Latest maturity date of outstanding commodity derivative instruments December 2025 December 2025 16. Fair Values of Financial Instruments GAAP requires assets and liabilities carried at fair value to be classified and disclosed in one of the following categories: • Level 1: Quoted market prices in active markets for identical assets or liabilities. • Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. • Level 3: Unobservable inputs that are not corroborated by market data. 17 The below methods and assumptions were used by the Company in estimating the fair values of its financial instruments. There were no transfers of assets or liabilities between levels in any period presented. Financial Instrument Fair Value Level Methods and Assumptions Deferred compensation plan assets and liabilities Level 1 The fair value of the Company’s nonqualified deferred compensation plan for certain executives and other highly compensated employees is based on the fair values of associated assets and liabilities, which are held in mutual funds and are based on the quoted market prices of the securities held within the mutual funds. Short-term investments Level 1 The fair values of the Company’s Level 1 short-term investments, which are U.S. Treasury securities, corporate bonds and asset-backed securities, are based on the quoted market prices of those securities which are actively traded on national exchanges. Short-term investments Level 2 The fair values of the Company’s Level 2 short-term investments, which are commercial paper instruments, are based on estimated current market prices and have readily determinable fair market values. Commodity derivative instruments Level 2 The fair values of the Company’s commodity derivative instruments are based on current settlement values at each balance sheet date, which represent the estimated amounts the Company would have received or paid upon termination of those instruments. The Company’s credit risk related to the commodity derivative instruments is managed by requiring high standards for its counterparties and periodic settlements. The Company considers nonperformance risk in determining the fair values of commodity derivative instruments. Debt Level 2 The carrying amounts of the Company’s variable rate debt approximate the fair values due to variable interest rates with short reset periods. The fair values of the Company’s fixed rate debt are based on estimated current market prices. Acquisition related contingent consideration Level 3 The fair value of the Company’s acquisition related contingent consideration is based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data. The following tables summarize the carrying amounts and the fair values by level of the Company’s deferred compensation plan assets and liabilities, short-term investments, commodity derivative instruments, debt and acquisition related contingent consideration: March 28, 2025 (in thousands) Carrying Amount Total Fair Value Fair Value Level 1 Fair Value Level 2 Fair Value Level 3 Assets: Deferred compensation plan assets $ 81,218 $ 81,218 $ 81,218 $ — $ — Short-term investments 340,050 340,050 329,913 10,137 — Commodity derivative instruments 1,838 1,838 — 1,838 — Liabilities: Deferred compensation plan liabilities 81,218 81,218 81,218 — — Debt 1,786,949 1,828,900 — 1,828,900 — Acquisition related contingent consideration 681,800 681,800 — — 681,800 December 31, 2024 (in thousands) Carrying Amount Total Fair Value Fair Value Level 1 Fair Value Level 2 Fair Value Level 3 Assets: Deferred compensation plan assets $ 81,123 $ 81,123 $ 81,123 $ — $ — Short-term investments 301,210 301,210 283,547 17,663 — Commodity derivative instruments 2,472 2,472 — 2,472 — Liabilities: Deferred compensation plan liabilities 81,123 81,123 81,123 — — Debt 1,786,348 1,803,500 — 1,803,500 — Acquisition related contingent consideration 654,191 654,191 — — 654,191 18 The acquisition related contingent consideration was valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs. 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 by discounting future expected acquisition related sub-bottling payments required under the CBA using the Company’s estimated WACC. The future expected acquisition related sub-bottling payments extend through the life of the related distribution assets acquired in each distribution territory, which is generally 40 years. As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the acquisition related sub-bottling payments that will be made in the future under the CBA, and current acquisition related sub-bottling payments (all Level 3 inputs). Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration liability and could materially impact the amount of non-cash expense (or income) recorded each reporting period. The acquisition related contingent consideration liability is the Company’s only Level 3 asset or liability. A summary of the Level 3 activity is as follows: First Quarter (in thousands) 2025 2024 Beginning balance - Level 3 liability $ 654,191 $ 669,337 Payments of acquisition related contingent consideration ( 19,819 ) ( 9,700 ) Reclassification to current payables 4,700 ( 4,500 ) Increase (decrease) in fair value 42,728 ( 5,541 ) Ending balance - Level 3 liability $ 681,800 $ 649,596 As of March 28, 2025 and March 29, 2024, a WACC of 9.0 % and 8.9 %, respectively, was utilized in the valuation of the Company’s acquisition related contingent consideration liability. The increase in the fair value of the acquisition related contingent consideration liability during the first quarter of 2025 was primarily driven by a decrease in the WACC used to calculate the fair value of the liability, as compared to December 31, 2024. This fair value adjustment was recorded in mark-to-market on acquisition related contingent consideration in the condensed consolidated statement of operations for the first quarter of 2025. 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. 17. Income Taxes 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 was $ 35.9 million for the first quarter of 2025 and $ 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. The Company had uncertain tax positions, including accrued interest, of $ 0.4 million on both March 28, 2025 and December 31, 2024, all of which would affect the Company’s effective income tax rate if recognized. While it is expected the amount of uncertain tax positions may change in the next 12 months, the Company does not expect such change would have a material impact on the condensed consolidated financial statements. Prior tax years beginning in year 2021 remain open to examination by the Internal Revenue Service, and various tax years beginning in year 2001 remain open to examination by certain state tax jurisdictions due to loss carryforwards. 18. Pension and Postretirement Benefit Obligations Pension Plan The Company sponsors a pension plan, the Bargaining Plan (the “Bargaining Plan”). The Bargaining Plan is for certain employees under collective bargaining agreements. Benefits under the Bargaining Plan are determined in accordance with negotiated formulas for the respective participants. 19 The components of net periodic pension cost were as follows: First Quarter (in thousands) 2025 2024 Service cost $ 973 $ 1,091 Interest cost 653 589 Expected return on plan assets ( 820 ) ( 763 ) Recognized net actuarial gain ( 9 ) — Amortization of prior service costs 4 4 Net periodic pension cost $ 801 $ 921 Contributions to the Bargaining Plan are based on actuarially determined amounts and are limited to the amounts currently deductible for income tax purposes. The Company did not make any contributions to the Bargaining Plan during the first quarter of 2025. The Company expects to make cash contributions to the Bargaining Plan of up to $ 5 million during 2025. Postretirement Benefits 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. The Company does not prefund these benefits and has the right to modify or terminate certain of these benefits in the future. The components of net periodic postretirement benefit cost were as follows: First Quarter (in thousands) 2025 2024 Service cost $ 323 $ 310 Interest cost 857 781 Recognized net actuarial loss — 26 Net periodic postretirement benefit cost $ 1,180 $ 1,117 19. Other Liabilities Other liabilities consisted of the following: (in thousands) March 28, 2025 December 31, 2024 Noncurrent portion of acquisition related contingent consideration $ 609,280 $ 590,209 Accruals for executive benefit plans 147,036 163,444 Noncurrent deferred proceeds from related parties 96,346 97,112 Other 7,933 8,794 Total other liabilities $ 860,595 $ 859,559 20 20. Debt Following is a summary of the Company’s debt: (in thousands) Maturity Date Interest Rate Interest Paid Public/ Nonpublic March 28, 2025 December 31, 2024 Senior bonds (the “2025 Senior Bonds”) (1) 11/25/2025 3.800 % Semi-annually Public $ 350,000 $ 350,000 Senior notes 10/10/2026 3.930 % Quarterly Nonpublic 100,000 100,000 Senior bonds (the “2029 Senior Bonds”) (2) 6/1/2029 5.250 % Semi-annually Public 700,000 700,000 Revolving credit facility (3) 6/10/2029 Variable Varies Nonpublic — — Senior notes 3/21/2030 3.960 % Quarterly Nonpublic 150,000 150,000 Senior bonds (the “2034 Senior Bonds”) (4) 6/1/2034 5.450 % Semi-annually Public 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 Less: 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 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. (4) The 2034 Senior Bonds were issued at 99.893 % of par. The Company mitigates its financing risk by using multiple financial institutions and only entering into credit arrangements with institutions with investment grade credit ratings. The Company monitors counterparty credit ratings on an ongoing basis. 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 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 March 28, 2025. These covenants have not restricted the Company’s liquidity or capital resources. 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. 21. Commitments and Contingencies Manufacturing Cooperatives The Company is obligated to purchase at least 80 % of its requirements of plastic bottles for certain designated territories from Southeastern. The Company is also obligated to purchase 16.0 million cases of finished product from SAC on an annual basis through June 2034. The Company purchased 6.3 million cases and 6.1 million cases of finished product from SAC in the first quarter of 2025 and the first quarter of 2024, respectively. 21 The following table summarizes the Company’s purchases from these manufacturing cooperatives: First Quarter (in thousands) 2025 2024 Purchases from Southeastern $ 27,274 $ 36,964 Purchases from SAC 53,018 50,556 Total purchases from manufacturing cooperatives $ 80,292 $ 87,520 The Company guarantees a portion of SAC’s debt, which matures in 2028, based on the ratio of SAC’s total liabilities to SAC’s shareholders’ equity as of December 31 of each year. As of March 28, 2025 and December 31, 2024, the ratio of SAC’s total liabilities to SAC’s shareholders’ equity was such that the Company was not required to guarantee any of SAC’s debt. In the event SAC fails to fulfill its commitments under the related debt, the Company would be responsible for payment to the lenders up to the level of the guarantee. The Company does not anticipate SAC will fail to fulfill its commitments related to the debt. The Company further believes SAC has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust the selling prices of its products to adequately mitigate the risk of material loss relating to the Company’s guarantee. The Company holds no assets as collateral against the SAC guarantee, the fair value of which is immaterial to the condensed consolidated financial statements. The Company monitors its investment in SAC and would be required to write down its investment if an impairment, other than a temporary impairment, was identified. No impairment of the Company’s investment in SAC was identified as of March 28, 2025, and there was no impairment identified in 2024. Other Commitments and Contingencies The Company has standby letters of credit, primarily related to its property and casualty insurance programs. These letters of credit totaled $ 39.0 million on both March 28, 2025 and December 31, 2024. The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. As of March 28, 2025, the future payments related to these contractual arrangements, which expire at various dates through 2034, amounted to $ 128.5 million. The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings. The Company is subject to audits by tax authorities in jurisdictions where it conducts business. These audits may result in assessments that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for any assessments likely to result from these audits; however, final assessments, if any, could be different than the amounts recorded in the condensed consolidated financial statements. 22. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) (“AOCI(L)”) is composed of adjustments to the Company’s pension and postretirement medical benefit plans and unrealized gains/losses on the Company’s short-term investments. 22 Following is a summary of AOCI(L) for the first quarter of 2025 and the first quarter of 2024: (in thousands) December 31, 2024 Pre-tax Activity Tax Effect March 28, 2025 Net pension activity: Actuarial gain $ 4,418 $ ( 9 ) $ 3 $ 4,412 Prior service costs ( 85 ) 4 ( 1 ) ( 82 ) Net postretirement benefits activity: Actuarial gain 2,960 — — 2,960 Prior service costs ( 624 ) — — ( 624 ) Unrealized gain on short-term investments 25 ( 14 ) 3 14 Reclassification of stranded tax effects ( 4,809 ) — — ( 4,809 ) Total AOCI(L) $ 1,885 $ ( 19 ) $ 5 $ 1,871 (in thousands) December 31, 2023 Pre-tax Activity Tax Effect March 29, 2024 Net pension activity: Actuarial gain $ 533 $ — $ — $ 533 Prior service costs ( 97 ) 4 ( 1 ) ( 94 ) Net postretirement benefits activity: Actuarial gain 721 26 ( 6 ) 741 Prior service costs ( 624 ) — — ( 624 ) Unrealized loss on short-term investments — ( 232 ) 56 ( 176 ) Reclassification of stranded tax effects ( 4,809 ) — — ( 4,809 ) Total AOCI(L) $ ( 4,276 ) $ ( 202 ) $ 49 $ ( 4,429 ) 23. Supplemental Disclosures of Cash Flow Information Changes in current assets and current liabilities affecting cash were as follows: First Quarter (in thousands) 2025 2024 Short-term investments $ ( 1,451 ) $ ( 1,181 ) Accounts receivable, trade 10,467 ( 12,081 ) Allowance for doubtful accounts ( 664 ) 515 Accounts receivable from The Coca‑Cola Company ( 6,814 ) ( 8,804 ) Accounts receivable, other ( 4,595 ) 437 Inventories ( 9,819 ) ( 39,154 ) Prepaid expenses and other current assets 114 ( 1,008 ) Accounts payable, trade 9,572 ( 1,812 ) Accounts payable to The Coca‑Cola Company 47,630 66,995 Other accrued liabilities 20,219 16,471 Accrued compensation ( 84,335 ) ( 64,635 ) Change in current assets less current liabilities $ ( 19,676 ) $ ( 44,257 ) 23