What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-29 compared with 2025-07-24 · 168 added, 157 removed, 443 unchanged (42% of the section changed)

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The condensed consolidated financial statements presented are:

• The financial position as of June 27, 2025 and December 31, 2024.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended June 27, 2025 (the “second quarter” of fiscal 2025 (“2025”)) and June 28, 2024 (the “second quarter” of fiscal 2024 (“2024”)) and the six-month periods ended June 27, 2025 (the “first half” of 2025) and June 28, 2024 (the “first half” of 2024).

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

• The financial position as of September 26, 2025 and December 31, 2024.

• The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended September 26, 2025 (the “third quarter” of fiscal 2025 (“2025”)) and September 27, 2024 (the “third quarter” of fiscal 2024 (“2024”)) and the nine-month periods ended September 26, 2025 (the “first nine months” of 2025) and September 27, 2024 (the “first nine months” of 2024).

• The changes in cash flows for the first nine months of 2025 and the first nine months 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 Company also distributes its products using alternative routes to market (“ARTM”), 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

Volume was down 0.8% in the second quarter of 2025 and down 3.5% in the first half of the year.

The first half of 2025 had two fewer selling days compared to the first half of 2024, which accounted for approximately 1.0% of the volume decline during the first half of 2025, as discussed in the “Comparable and Adjusted Results (Non-GAAP)” section.

Our Sparkling category volume declined slightly by 0.3% in the second quarter of 2025 and 2.6% in the first half of 2025.

Coca-Cola Original taste continued to be negatively impacted by shifts in consumer demand with the balance of our Sparkling portfolio recording solid growth during the second quarter of 2025.

Still volume declined 2.4% and 6.3% in the second quarter and first half of 2025, respectively.

Volume of our Dasani water packages was down during the second quarter;

however, we experienced solid volume growth in our enhanced water, energy and protein products.

Excluding Dasani, volume within our Still category increased by 2.0% in the second quarter of 2025 and 0.3% in the first half of 2025.

Net sales increased 3.3% to $1.9 billion in the second quarter of 2025 and increased 1.4% to $3.4 billion in the first half of 2025.

Sparkling and Still net sales increased 3.0% and 4.8% in the second quarter of 2025, respectively, compared to the second quarter of 2024.

Sales within supermarkets, club stores and value channels were strong during the second quarter of 2025 as consumers sought value in take-home packages, while sales slowed in our small store convenience outlets and eating and drinking on-premise locations.

The increase in Sparkling category sales during the quarter was driven by pricing realization and solid growth within zero-sugar and other flavor offerings, partially offset by softness in Coca-Cola Original taste.

The increase in sales within our Still category was concentrated in our Monster Energy, Core Power, Topo Chico and smartwater brands.

Gross profit in the second quarter of 2025 was $742.5 million, an increase of $25.8 million, or 3.6%.

Gross margin in the second quarter of 2025 improved 10 basis points to 40.0%.

Pricing realization associated with the annual price increase in the first quarter of 2025 contributed to the modest gross margin expansion.

Gross profit in the first half of 2025 was $1.4 billion, an increase of $12.3 million, or 0.9%.

Selling, delivery and administrative (“SD&A”) expenses in the second quarter of 2025 increased $12.8 million, or 2.8%.

SD&A expenses in the first half of 2025 increased $25.0 million, or 2.8%.

The increase in SD&A expenses in the second quarter and first half of 2025 as compared to the second quarter and first half of 2024 was primarily driven by an increase in labor costs related to annual wage adjustments.

SD&A expenses as a percentage of net sales in the second quarter of 2025 decreased 10 basis points to 25.4% as compared to the second quarter of 2024.

SD&A expenses as a percentage of net sales in the first half of 2025 increased 30 basis points to 26.4% as compared to the first half of 2024.

Income from operations in the second quarter of 2025 was $272.1 million, compared to $259.1 million in the second quarter of 2024, an increase of 5.0%.

Operating margin for the second quarter of 2025 was 14.7% as compared to 14.4% for the second quarter of 2024, an increase of 30 basis points.

For the first half of 2025, income from operations decreased $12.6 million to $461.9 million, a decline of 2.7%.

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

Net income in the second quarter of 2025 was $187.4 million, compared to $172.8 million in the second quarter of 2024, an increase of $14.6 million, or 8.4%.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the second quarter of 2025 was $195.2 million, compared to $192.8 million in the second quarter of 2024, an increase of $2.4 million, or 1.2%.

Income tax expense for the second quarter of 2025 was $65.6 million, compared to $59.4 million for the second quarter of 2024, resulting in an effective income tax rate of approximately 26% for both periods.

Net income in the first half of 2025 was $291.0 million, compared to $338.6 million in the first half of 2024, a decline of $47.6 million, or 14.0%.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the first half of 2025 was $331.4 million, compared to $355.2 million in the first half of 2024, a decrease of $23.8 million, or 6.7%.

Net income for the first half 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 and changes in the future cash flow projections used to compute the fair value of the liability.

Cash flows from operations for the first half of 2025 were $406.2 million, compared to $437.1 million for the first half of 2024.

In the first half of 2025, we invested approximately $157 million in capital expenditures as we continue to optimize our supply chain and invest for future growth.

Volume was up 3.3% in the third quarter of 2025 and down 1.2% in the first nine months of the year.

The first nine months of 2025 had two fewer selling days compared to the first nine months of 2024, which accounted for approximately 0.7% of the first nine-month volume decline, as discussed in the “Comparable and Adjusted Results (Non-GAAP)” section.

Our Sparkling category volume increased by 1.4% in the third quarter of 2025.

The strong Sparkling volume performance was driven primarily by growth within zero-sugar and flavor offerings, while we continued to experience moderating headwinds in demand for Coca-Cola Original Taste.

Still volume increased 8.9% in the third quarter of 2025 as a result of strong performance across many brands.

Monster, Powerade, smartwater, Core Power, Dasani and Topo Chico all achieved volume growth in the third quarter of 2025, reflecting the strength of the brands and strong consumer demand.

Net sales increased 6.9% to $1.9 billion in the third quarter of 2025 and increased 3.3% to $5.3 billion in the first nine months of 2025.

The growth in net sales was primarily the result of annual price increases executed during the first quarter of 2025 and strong volume performance during the third quarter.

Sparkling and Still net sales increased 4.7% and 9.9% in the third quarter of 2025, respectively, compared to the third quarter of 2024.

The increase in Sparkling category net sales was driven primarily by sales of multi-pack, take-home packages sold within our large store, club and value channels.

The increase in Still category net sales was driven primarily by the solid performance of numerous brands across the category sold within large retail and convenience stores.

Gross profit in the third quarter of 2025 was $748.5 million, an increase of $50.5 million, or 7.2%.

Gross margin in the third quarter of 2025 improved 10 basis points to 39.6%.

Gross profit in the first nine months of 2025 was $2.1 billion, an increase of $62.8 million, or 3.1%.

The annual price increases we executed earlier this year across our portfolio have been effective in offsetting the net impact of increased commodity costs, including the continued volatility of import tariffs on aluminum, across our portfolio.

Selling, delivery and administrative (“SD&A”) expenses in the third quarter of 2025 increased $30.9 million, or 6.6%.

The increase in SD&A expenses in the third quarter of 2025 as compared to the third quarter of 2024 was primarily driven by the cost of labor, which includes annual wage adjustments made earlier this year and an additional investment in the base wages of our front-line teammates, which became effective at the beginning of the third quarter.

SD&A expenses as a percentage of net sales in the third quarter of 2025 decreased 10 basis points to 26.6% as compared to the third quarter of 2024.

SD&A expenses in the first nine months of 2025 increased $55.9 million, or 4.1%.

SD&A expenses as a percentage of net sales in the first nine months of 2025 increased 20 basis points to 26.5% as compared to the first nine months of 2024.

Income from operations in the third quarter of 2025 was $246.6 million, compared to $227.1 million in the third quarter of 2024, an increase of 8.6%.

Operating margin for the third quarter of 2025 was 13.1% as compared to 12.9% for the third quarter of 2024, an increase of 20 basis points.

For the first nine months of 2025, income from operations improved $6.9 million to $708.5 million, an increase of 1.0%.

The two fewer selling days in the first nine months of 2025 accounted for an approximately $10 million decrease in income from operations.

Net income in the third quarter of 2025 was $142.3 million, compared to $115.6 million in the third quarter of 2024, an increase of $26.7 million, or 23.1%.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the third quarter of 2025 was $179.2 million, compared to $166.7 million in the third quarter of 2024, an increase of $12.5 million, or 7.5%.

Income tax expense for the third quarter of 2025 was $49.9 million, compared to $39.9 million for the third quarter of 2024, resulting in an effective income tax rate of approximately 26% for both periods.

Net income in the first nine months of 2025 was $433.3 million, compared to $454.2 million in the first nine months of 2024, a decline of $20.8 million, or 4.6%.

On an adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income in the first nine months of 2025 was $510.6 million, compared to $521.9 million in the first nine months of 2024, a decrease of $11.3 million, or 2.2%.

Net income for both the first nine months of 2025 and 2024 was adversely impacted

by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, driven by changes in the discount rate and future cash flow projections used to compute the fair value of the liability.

Cash flows from operations for the first nine months of 2025 were $722.9 million, compared to $707.9 million for the first nine months of 2024.

In the first nine months of 2025, we invested approximately $210 million in capital expenditures as we continue to optimize our supply chain and invest for future growth.

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

In the third quarter of 2025, we returned over $133 million to stockholders through approximately $111 million of share repurchases and approximately $22 million of dividends.

Through the first nine months of 2025, we have returned approximately $211 million to stockholders through repurchases and dividends.

Areas of Emphasis

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

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

The Company has made, and expects to continue to make, significant capital investments to optimize our supply chain and to invest for future growth.

Cash Flow Generation :

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

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

Our typical DSD method uses Company-owned vehicles and warehouses, but we increasingly shifted to alternative methods of distribution, or ARTM, during 2024 and continued to use ARTM during the first nine months 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.

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

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

These fees are reported in net sales.

During the first half 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.

During the first nine months of 2025, nearly two-thirds of our post-mix gallons and less than 10% of our bottle/can volume was delivered through ARTM.

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 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 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

Second Quarter Results

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

Second Quarter

Third Quarter Results

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

Third Quarter

(in thousands) 2025 2024 Change

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Income from operations 246,634 227,055 19,579

Interest expense (income), net 5,948 (1,620) 7,568

Interest expense, net 4,687 2,187 2,500

Mark-to-market on acquisition related contingent consideration 49,350 68,592 (19,242)

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Net income 142,334 115,624 26,710

Other comprehensive (loss) income, net of tax (32) 26 (58)

Other comprehensive income, net of tax 60 451 (391)

Comprehensive income

$ 142,394 $ 116,075 $ 26,319

Net sales increased $59.6 million, or 3.3%, to $1.86 billion in the second quarter of 2025, as compared to $1.80 billion in the second quarter of 2024.

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 $50 million during the second quarter of 2025.

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

The increase in net sales was partially offset by lower case sales volume during the second quarter of 2025 as compared to the second quarter of 2024.

Net sales increased $122.7 million, or 6.9%, to $1.89 billion in the third quarter of 2025, as compared to $1.77 billion in the third quarter of 2024.

The increase in net sales was driven by higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $60 million during the third quarter of 2025.

The increase in net sales was also positively impacted by higher case sales volume, which increased net sales by approximately $60 million during the third quarter of 2025 as compared to the third quarter of 2024.

Net sales by product category were as follows:

Second Quarter

Third Quarter

(in thousands) 2025 2024 % Change

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

Second Quarter

Third Quarter

(in thousands) 2025 2024 % Change

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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.

Changes in the delivery of our products to our customers impacted our reported volume and net sales during 2024 and the first half of 2025.

Changes in the delivery of our products to our customers impacted our reported volume and net sales during 2024 and the first nine months of 2025.

Cost of Sales

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Input costs for products we produce, 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 $33.8 million, or 3.1%, to $1.11 billion in the second quarter of 2025, as compared to $1.08 billion in the second quarter of 2024.

The increase in cost of sales was primarily driven by higher input costs, which increased cost of sales by approximately $35 million during the second quarter of 2025.

Cost of sales also increased due to shifts in product mix to higher cost Still products as compared to the second quarter of 2024.

The increase in cost of sales was partially offset by lower case sales volume during the second quarter of 2025 as compared to the second quarter of 2024.

Cost of sales increased $72.2 million, or 6.8%, to $1.14 billion in the third quarter of 2025, as compared to $1.07 billion in the third quarter of 2024.

The increase in cost of sales was driven by higher case sales volume, which increased cost of sales by approximately $35 million during the third quarter of 2025 as compared to the third quarter of 2024.

The increase in cost of sales was also impacted by higher input costs, which increased cost of sales by approximately $25 million during the third quarter of 2025.

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

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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 $52.4 million in the second quarter of 2025 and $49.3 million in the second quarter of 2024.

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 $56.9 million in the third quarter of 2025 and $48.5 million in the third quarter of 2024.

Selling, Delivery and Administrative Expenses

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

SD&A expenses increased $12.8 million, or 2.8%, to $470.4 million in the second quarter of 2025, as compared to $457.6 million in the second quarter of 2024.

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

SD&A expenses as a percentage of net sales decreased to 25.4% in the second quarter of 2025 from 25.5% in the second quarter of 2024.

Shipping and handling costs included in SD&A expenses were approximately $207 million in the second quarter of 2025 and approximately $200 million in the second quarter of 2024.

Interest Expense (Income), Net

Interest expense (income), net changed $7.6 million to $5.9 million of interest expense, net in the second quarter of 2025, as compared to $1.6 million of interest income, net in the second quarter of 2024.

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

SD&A expenses increased $30.9 million, or 6.6%, to $501.9 million in the third quarter of 2025, as compared to $471.0 million in the third quarter of 2024.

The increase in SD&A expenses was primarily driven by an increase in labor costs related to annual wage adjustments and an additional investment in the base wages of our front-line teammates, which became effective at the beginning of the third quarter of 2025.

SD&A expenses as a percentage of net sales decreased to 26.6% in the third quarter of 2025 from 26.7% in the third quarter of 2024.

Shipping and handling costs included in SD&A expenses were approximately $221 million in the third quarter of 2025 and approximately $206 million in the third quarter of 2024.

Interest Expense, Net

Interest expense, net increased $2.5 million to $4.7 million in the third quarter of 2025, as compared to $2.2 million in the third quarter of 2024.

The increase in interest expense, net was primarily driven by lower interest income on average cash, cash equivalent and short-term investment balances in the third quarter of 2025 as compared to the third quarter of 2024.

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 was an increase of $12.4 million in the second quarter of 2025 and an increase of $27.8 million in the second quarter of 2024.

During the second quarter of 2025, the $12.4 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 and changes in projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

During the second quarter of 2024, the $27.8 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by changes in 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.

Mark-to-market on acquisition related contingent consideration was an increase of $49.4 million in the third quarter of 2025 and an increase of $68.6 million in the third quarter of 2024.

During the third quarter of 2025, the $49.4 million increase in the fair value of the acquisition related contingent consideration liability was driven by a decrease in the WACC used to calculate the fair value of the liability and higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

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.

Other Expense, Net

Other expense, net was $0.8 million in the second quarter of 2025, as compared to $0.7 million in the second quarter of 2024.

Other expense, net was $0.4 million in the third quarter of 2025, as compared to $0.7 million in the third quarter of 2024.

Income Tax Expense

The Company’s effective income tax rate was 25.9% for the second quarter of 2025 and 25.6% for the second quarter of 2024.

The Company’s income tax expense increased $6.2 million, or 10.4%, to $65.6 million for the second quarter of 2025, as compared to $59.4 million for the second quarter of 2024.

The increase in income tax expense was primarily attributable to higher income before taxes during the second quarter of 2025 compared to the second quarter of 2024.

Other Comprehensive (Loss) Income, Net of Tax

Other comprehensive (loss) income, net of tax was $0.0 million in both the second quarter of 2025 and the second quarter of 2024.

First Half Results

Our results of operations for the first half of 2025 and the first half of 2024 are highlighted in the table below and discussed in the following paragraphs.

The Company’s effective income tax rate was 26.0% for the third quarter of 2025 and 25.7% for the third quarter of 2024.

The Company’s income tax expense increased $10.0 million, or 24.9%, to $49.9 million for the third quarter of 2025, as compared to $39.9 million for the third quarter of 2024.

The increase in income tax expense was primarily attributable to higher income before taxes during the third quarter of 2025 as compared to the third quarter of 2024.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was $0.1 million in the third quarter of 2025 and $0.5 million in the third quarter of 2024.

First Nine Months Results

Our results of operations for the first nine months of 2025 and the first nine months of 2024 are highlighted in the table below and discussed in the following paragraphs.

First Nine Months

(in thousands)

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Net income 433,332 454,177 (20,845)

Other comprehensive loss, net of tax (46) (127) 81

Other comprehensive income, net of tax 14 324 (310)

Comprehensive income

$ 433,346 $ 454,501 $ (21,155)

Net sales increased $47.9 million, or 1.4%, to $3.44 billion in the first half of 2025, as compared to $3.39 billion in the first half of 2024.

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 $100 million during the first half of 2025.

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

These improvements were offset by lower case sales volume, which decreased net sales by approximately $120 million, as well as the impact of two fewer selling days in the first half of 2025 as compared to the first half of 2024.

Net sales increased $170.6 million, or 3.3%, to $5.32 billion in the first nine months of 2025, as compared to $5.15 billion in the first nine months of 2024.

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 $160 million during the first nine months of 2025.

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

These improvements were offset by lower case sales volume, which decreased net sales by approximately $60 million, as well as the impact of two fewer selling days in the first nine months of 2025 as compared to the first nine months of 2024.

Net sales by product category were as follows:

First Nine Months

(in thousands) 2025 2024 % Change

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

First Nine Months

(in thousands) 2025 2024 % Change

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

First Nine Months

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

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Cost of Sales

Cost of sales increased $35.6 million, or 1.8%, to $2.07 billion in the first half of 2025, as compared to $2.03 billion in the first half of 2024.

The increase in cost of sales was primarily driven by higher input costs, which increased cost of sales by approximately $80 million during the first half of 2025.

Cost of sales also increased due to shifts in product mix to higher cost Still products as compared to the first half of 2024.

The increase in cost of sales was partially offset by lower case sales volume, which decreased cost of sales by approximately $70 million as compared to the first half of 2024.

Total funding support from The Coca‑Cola Company and other beverage companies was $97.6 million in the first half of 2025, as compared to $94.6 million in the first half of 2024.

Cost of sales increased $107.8 million, or 3.5%, to $3.21 billion in the first nine months of 2025, as compared to $3.10 billion in the first nine months of 2024.

The increase in cost of sales was primarily driven by higher input costs, which increased cost of sales by approximately $105 million during the first nine months of 2025.

Cost of sales also increased due to shifts in product mix to higher cost Still products as compared to the first nine months of 2024.

The increase in cost of sales was partially offset by lower case sales volume, which decreased cost of sales by approximately $35 million as compared to the first nine months of 2024.

Total funding support from The Coca‑Cola Company and other beverage companies was $154.5 million in the first nine months of 2025, as compared to $143.1 million in the first nine months of 2024.

Selling, Delivery and Administrative Expenses

SD&A expenses increased $25.0 million, or 2.8%, to $907.7 million in the first half of 2025, as compared to $882.7 million in the first half of 2024.

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

SD&A expenses as a percentage of net sales increased to 26.4% in the first half of 2025 from 26.1% in the first half of 2024.

Shipping and handling costs included in SD&A expenses were approximately $401 million in the first half of 2025 and approximately $393 million in the first half of 2024.

SD&A expenses increased $55.9 million, or 4.1%, to $1.41 billion in the first nine months of 2025, as compared to $1.35 billion in the first nine months of 2024.

SD&A expenses as a percentage of net sales increased to 26.5% in the first nine months of 2025 from 26.3% in the first nine months of 2024.

Shipping and handling costs included in SD&A expenses were approximately $622 million in the first nine months of 2025 and approximately $599 million in the first nine months of 2024.

Interest Expense (Income), Net

Interest expense (income), net changed $17.2 million to $12.8 million of interest expense, net in the first half of 2025, as compared to $4.3 million of interest income, net in the first half of 2024.

The change in interest expense (income), net was primarily due to an increase in interest expense on higher average debt balances in the first half of 2025, as compared to the first half of 2024, partially offset by an increase in interest income due to higher cash, cash equivalent and short-term investment balances.

Interest expense (income), net changed $19.7 million to $17.5 million of interest expense, net in the first nine months of 2025, as compared to $2.1 million of interest income, net in the first nine months of 2024.

The change in interest expense (income), net was primarily due to an increase in interest expense on higher average debt balances in the first nine months of 2025 as compared to the first nine months of 2024, partially offset by an increase in interest income due to higher average cash, cash equivalent and short-term investment balances.

Mark-to-Market on Acquisition Related Contingent Consideration

Mark-to-market on acquisition related contingent consideration was an increase of $55.1 million in the first half of 2025 compared to an increase of $22.3 million in the first half of 2024.

During the first half of 2025, the $55.1 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 and changes in projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

During the first half of 2024, the $22.3 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by changes in 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.

Mark-to-market on acquisition related contingent consideration was an increase of $104.5 million in the first nine months of 2025 compared to an increase of $90.9 million in the first nine months of 2024.

During the first nine months of 2025, the $104.5 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 well as higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

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.

Other Expense, Net

Other expense, net was $1.5 million in both the first half of 2025 and the first half of 2024.

Other expense, net was $1.9 million in the first nine months of 2025 and $2.3 million in the first nine months of 2024.

Income Tax Expense

The Company’s effective income tax rate was 25.9% for the first half of 2025 and 25.6% for the first half of 2024.

The Company’s income tax expense decreased $15.0 million, or 12.9%, to $101.5 million for the first half of 2025, as compared to $116.5 million for the first half of 2024.

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

Other Comprehensive Loss, Net of Tax

Other comprehensive loss, net of tax was $0.0 million in the first half of 2025 and $0.1 million in the first half of 2024.

The Company’s effective income tax rate was 25.9% for the first nine months of 2025 and 25.6% for the first nine months of 2024.

The Company’s income tax expense decreased $5.1 million, or 3.2%, to $151.4 million for the first nine months of 2025, as compared to $156.4 million for the first nine months of 2024.

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

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was $0.0 million in the first nine months of 2025 and $0.3 million in the first nine months of 2024.

Segment Operating Results

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The Company’s segment results are as follows:

Second Quarter 2025

Third Quarter 2025

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

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$ 49,993 $ 5,093 $ — $ 55,086

Second Quarter 2024

Third Quarter 2024

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

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$ 44,511 $ 4,259 $ — $ 48,770

First Half 2025

First Nine Months 2025

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

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$ 147,427 $ 15,797 $ — $ 163,224

First Half 2024

First Nine Months 2024

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

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

Second Quarter 2025

Third 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 (1)

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Adjusted results (non-GAAP) $ 748,138 $ 501,798 $ 246,340 $ 241,286 $ 179,224 $ 2.06

Second Quarter 2024

Third Quarter 2024

(in thousands, except per share data) Gross profit SD&A expenses Income from operations Income before taxes Net income Basic net income per share (1)

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Adjusted results (non-GAAP) $ 696,610 $ 470,350 $ 226,260 $ 223,360 $ 166,677 $ 1.88

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

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

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

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

First Nine Months

(in thousands) 2025 2024 Change

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Comparable standard physical case volume 260,250 261,663 (0.5) %

First Half 2025

First Nine Months 2025

(in thousands, except per share data) Gross

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Adjusted results (non-GAAP) $ 2,117,217 $ 1,410,348 $ 706,869 $ 687,494 $ 510,637 $ 5.88

First Half 2024

First Nine Months 2024

(in thousands, except per share data) Gross

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Financial Condition

Total assets were $5.54 billion as of June 27, 2025, which was an increase of $228.4 million from December 31, 2024.

Net working capital, defined as current assets less current liabilities, was $1.39 billion as of June 27, 2025, which was an increase of $157.9 million from December 31, 2024.

Significant changes in net working capital as of June 27, 2025 as compared to December 31, 2024 were as follows:

• An increase in cash and cash equivalents of $84.1 million, primarily as a result of strong operating performance and working capital management during the first half of 2025.

• An increase in short-term investments of $49.0 million, primarily due to approximately $270 million of short-term investment purchases during the first half of 2025, partially offset by short-term investment maturities of approximately $225 million.

• An increase in accounts receivable, trade of $36.6 million, primarily due to the timing of cash receipts.

Total assets were $5.67 billion as of September 26, 2025, which was an increase of $355.4 million from December 31, 2024.

Net working capital, defined as current assets less current liabilities, was $1.45 billion as of September 26, 2025, which was an increase of $220.0 million from December 31, 2024.

Significant changes in net working capital as of September 26, 2025 as compared to December 31, 2024 were as follows:

• An increase in cash and cash equivalents of $396.6 million, primarily as a result of strong operating performance and net proceeds from the purchases, sales and maturities of short-term investments during the first nine months of 2025, partially offset by additions to property, plant and equipment and payments related to share repurchases.

• A decrease in short-term investments of $152.1 million, primarily due to the sales and maturities of short-term investments in the third quarter of 2025.

• An increase in accounts payable, trade of $27.5 million and an increase in accounts payable to The Coca-Cola Company of $40.4 million, primarily due to the timing of cash payments.

• A decrease in accrued compensation of $85.7 million, primarily as a result of the timing of bonus and incentive payments in the first half of 2025.

• An increase in other accrued liabilities of $46.2 million, primarily driven by an increase in accrued interest on debt balances and an increase in the liability related to the acquisition related contingent consideration.

• A decrease in accrued compensation of $33.0 million, primarily as a result of the timing of bonus and incentive payments in the first nine months 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 June 27, 2025, the Company had $1.22 billion in cash and cash equivalents.

The Company’s cash equivalent balance as of June 27, 2025 consisted predominantly of investments in money market funds, time deposits and commercial paper with maturities of 90 days or less.

As of June 27, 2025, the Company had $350.2 million in short-term

investments, which consisted primarily of U.S.

As of September 26, 2025, the Company had $1.53 billion in cash and cash equivalents.

The Company’s cash

equivalent balance as of September 26, 2025 consisted predominantly of investments in money market funds, time deposits and commercial paper with maturities of 90 days or less.

As of September 26, 2025, the Company had $149.1 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.

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

On March 4, 2025, the Company announced that its Board of Directors had approved a 10-for-1 forward stock split (the “Stock Split”) of Common Stock and the Company’s Class B Common Stock, par value $1.00 per share (“Class B Common Stock”).

In the third quarter of 2025, the Company retired 31,488,535 shares of Common Stock and 6,281,140 shares of the Company’s Class B Common Stock, par value $1.00 per share (“Class B Common Stock”), included in treasury stock.

The retired treasury stock had a carrying value of approximately $162.6 million.

The retirement of treasury stock was recorded as a reduction to Common Stock and Class B Common Stock at par value, with the excess of carrying value over par value recorded as a deduction from retained earnings.

On March 4, 2025, the Company announced that its Board of Directors had approved a 10-for-1 forward stock split (the “Stock Split”) of Common Stock and Class B Common Stock.

The Stock Split was effected through an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”).

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The par value per share of Common Stock and Class B Common Stock remains unchanged.

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 is authorized to repurchase up to $1.00 billion of Common Stock through the share repurchase program approved by the Company’s Board of Directors and announced by the Company on August 20, 2024 (the “Share Repurchase Program”).

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

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

During the second quarter of 2025, the Company repurchased 291,930 split-adjusted shares of Common Stock under the share repurchase program for an aggregate purchase price of $34.4 million, excluding fees and expenses related to the share repurchases.

As of June 27, 2025, the total remaining share repurchase authorization was $914.0 million.

The Company’s debt as of June 27, 2025 and December 31, 2024 was as follows:

(in thousands) Maturity Date June 27, 2025 December 31, 2024

During the third quarter of 2025, the Company repurchased and retired 961,379 shares of Common Stock under the Share Repurchase Program for an aggregate purchase price of $113.8 million, excluding fees and expenses related to the share repurchases.

As of September 26, 2025, the total remaining share repurchase authorization was $800.1 million.

The Company’s debt as of September 26, 2025 and December 31, 2024 was as follows:

(in thousands) Maturity Date September 26, 2025 December 31, 2024

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

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

As of June 27, 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.

As of September 26, 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.

The Company intends to use cash on hand to repay the 2025 Senior Bonds at maturity.

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

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

The Company was in compliance with these covenants as of June 27, 2025.

The Company was in compliance with these covenants as of September 26, 2025.

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

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

As of June 27, 2025, the Company’s credit ratings and outlook for its debt were as follows:

As of September 26, 2025, the Company’s credit ratings and outlook for its debt were as follows:

Credit Rating Rating Outlook

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Following is a summary of the Level 3 activity:

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2025 2024 2025 2024

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A summary of cash-based activity is as follows:

First Nine Months

(in thousands) 2025 2024

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Additions to property, plant and equipment 209,994 287,333

Payments related to share repurchases 145,698 574,009

Cash dividends paid 65,310 163,733

Payments of acquisition related contingent consideration 51,639 44,243

Payments related to share repurchases 34,410 14,471

Investment in equity method investees 14,709 9,794

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Net increase in cash and cash equivalents during period $ 396,649 $ 600,737

(1) Net cash provided by operating activities in the first half of 2025 included net income tax payments of $111.3 million and net interest payments of $43.7 million.

Net cash provided by operating activities in the first half of 2024 included net income tax payments of $109.8 million and net interest payments of $11.9 million.

(1) Net cash provided by operating activities in the first nine months of 2025 included net income tax payments of $150.3 million, net interest payments of $46.3 million and pension plan contributions of $5.0 million.

Net cash provided by operating activities in the first nine months of 2024 included net income tax payments of $171.2 million, net interest payments of $14.4 million and pension plan contributions of $2.0 million.

Cash Flows From Operating Activities

During the first half of 2025, cash provided by operating activities was $406.2 million, as compared to $437.1 million during the first half of 2024, which was a decrease of $30.9 million.

During the first nine months of 2025, cash provided by operating activities was $722.9 million, as compared to $707.9 million during the first nine months of 2024, which was an increase of $15.0 million.

Cash Flows From Investing Activities

During the first half of 2025, cash used in investing activities was $207.4 million, which was a decrease of $154.8 million as compared to the first half of 2024.

The decline was primarily a result of a decrease in purchases of short-term investments, net of proceeds, of approximately $150 million as compared to the first half of 2024.

Additions to property, plant and equipment were $157.4 million during the first half of 2025 and $159.4 million during the first half of 2024.

There were $34.8 million and $29.5 million of additions to property, plant and equipment accrued in accounts payable, trade as of June 27, 2025 and June 28, 2024, respectively.

During the first nine months of 2025, cash used in investing activities was $61.7 million, which was a decrease of $446.3 million as compared to the first nine months of 2024.

The decline in cash used in investing activities was primarily a result of an increase in net proceeds from the purchases, sales and maturities of short-term investments of approximately $368 million as compared to the first nine months of 2024.

Additions to property, plant and equipment were $210.0 million during the first nine months of 2025 and $287.3 million during the first nine months of 2024.

The decrease in additions to property, plant and equipment was largely due to the purchase of our leased Nashville, Tennessee production facility for approximately $56 million during the third quarter of 2024.

There were $24.0 million and $34.8 million of additions to property, plant and equipment accrued in accounts payable, trade as of September 26, 2025 and September 27, 2024, respectively.

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

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Cash Flows From Financing Activities

During the first half of 2025, cash used in financing activities was $114.8 million, as compared to cash provided by financing activities of $989.1 million during the first half of 2024.

The primary driver of the change was the cash received from the issuance of $1.20 billion of bonds during the first half of 2024, partially offset by higher dividend payments during the first half of 2024.

Dividend payments decreased from $159.4 million during the first half of 2024 to $43.6 million during the first half of 2025.

Dividend payments during the first half of 2024 included special dividend payments of approximately $150 million.

The Company had cash payments for acquisition related contingent consideration of $35.2 million during the first half of 2025 and $23.7 million during the first half 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.

During the first nine months of 2025, cash used in financing activities was $264.6 million, as compared to cash provided by financing activities of $400.8 million during the first nine months of 2024.

The primary driver of the change was the cash received from the issuance of $1.20 billion of bonds during the first nine months of 2024.

Cash used in financing activities related to payments for share repurchases decreased from $574.0 million during the first nine months of 2024 to $145.7 million during the first nine months of 2025.

Dividend payments decreased from $163.7 million during the first nine months of 2024 to

$65.3 million during the first nine months of 2025.

Dividend payments during the first nine months of 2024 included special dividend payments of approximately $150 million.

During the first nine months of 2025, we have returned approximately $211 million to stockholders through share repurchases and dividends.

The Company had cash payments for acquisition related contingent consideration of $51.6 million during the first nine months of 2025 and $44.2 million during the first nine months 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

The Company uses commodity derivative instruments to manage its exposure to fluctuations in certain commodity prices.

The Company uses commodity derivative instruments to manage its exposure to fluctuations in certain commodity prices where practicable.

Fees paid by the Company for commodity derivative instruments are amortized over the corresponding period of the instrument.

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

Second Quarter First Half

Third Quarter First Nine Months

(in thousands) 2025 2024 2025 2024

(Decrease) increase in cost of sales $ (147) $ (1,542) $ 281 $ (1,472)

(Decrease) increase in SD&A expenses (330) 295 (263) 618

Increase in SD&A expenses 273 1,267 10 1,885

Net impact $ 126 $ (275) $ 291 $ 413

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

the concentration risks among our customers and suppliers;

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;

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our use of estimates and assumptions;

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

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

changes in legal contingencies;

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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