Coca-Cola Consolidated, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations of Coca‑Cola Consolidated, Inc., a Delaware corporation (together with its majority-owned subsidiaries, the “Company,” “we,” “us” or “our”), is intended to help the reader understand our financial condition and results of operations and is provided as an addition to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements. The condensed consolidated financial statements include the accounts and the consolidated operations of the Company and its majority-owned subsidiaries. All comparisons are to the corresponding period in the prior year unless specified otherwise. 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 April 3, 2026 and December 31, 2025. • The results of operations, comprehensive income and changes in stockholders’ (deficit) equity for the three-month periods ended April 3, 2026 (the “first quarter” of fiscal 2026 (“2026”)) and March 28, 2025 (the “first quarter” of fiscal 2025 (“2025”)). • The changes in cash flows for the first quarter of 2026 and the first quarter of 2025. Our Business and the Nonalcoholic Beverage Industry We distribute, market and manufacture nonalcoholic beverages in territories spanning 14 states and the District of Columbia. The Company was incorporated in 1980 and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largest Coca‑Cola bottler in the United States. Approximately 85% of our total bottle/can sales volume to retail customers consists of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for several other beverage companies, including Monster Energy Company and Keurig Dr Pepper Inc. (“Dr Pepper”). Our Purpose is to honor God in all we do, to serve others, to pursue excellence and to grow profitably. Our Common Stock, par value $1.00 per share (“Common Stock”), is traded on The Nasdaq Global Select Market under the symbol “COKE.” We offer a range of nonalcoholic beverage products and flavors, including both sparkling and still beverages, designed to meet the demands of our consumers. Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola. Still beverages include energy products and noncarbonated beverages such as bottled water, ready-to-drink tea, ready-to-drink coffee, enhanced water, juices and sports drinks. Our 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. 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. 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 (“ARTM”), which include distribution by 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. Our competitors include bottlers and distributors of nationally and regionally advertised and marketed products, as well as bottlers and distributors of private label beverages. Our principal competitors include local bottlers of PepsiCo, Inc. products and, in some regions, local bottlers of Dr Pepper products. The principal methods of competition in the nonalcoholic beverage industry are new brand and product introductions, point-of-sale merchandising, new vending and dispensing equipment, packaging changes, pricing, sales promotions, product quality, retail 25 space management, customer service, frequency of distribution and advertising. We believe we are competitive in our territories with respect to these methods of competition. Business seasonality results primarily from higher unit sales of the Company’s products in the second and third quarters of the fiscal year, as sales of our products are typically correlated with warmer weather. We believe that we and other manufacturers from whom we purchase finished products have adequate production capacity to meet sales demand for sparkling and still beverages during these peak periods. Sales volume can also be impacted by weather conditions. Fixed costs, such as depreciation expense, are not significantly impacted by business seasonality. Executive Summary Results for the first quarter of 2026 included six additional days compared to the first quarter of 2025. For comparison purposes, the estimated impact of the six additional days in the first quarter of 2026 compared to the first quarter of 2025 has been excluded from our adjusted results, as presented in the “Adjusted Results (Non-GAAP)” section. The Company estimates the impact of the six additional days to be as follows: First Quarter (in millions) 2026 Volume 5.4 Net sales $ 132.0 Gross profit $ 55.0 SD&A expenses $ 25.0 Income from operations $ 30.0 Volume was up 13.4% in the first quarter of 2026, or 6.4% on an adjusted basis. Our Sparkling category volume increased 12.2% in the first quarter of 2026, or 5.3% on an adjusted basis. The strong Sparkling volume performance was driven by growth across the entire portfolio, led by our zero-sugar offerings. In addition, Coca-Cola Original Taste volume grew in the quarter. Still category volume increased 17.5% in the first quarter of 2026, or 10.2% on an adjusted basis. Dasani casepack water accounted for a significant portion of the growth within our Still category. The remaining Still category volume growth was driven by strong performance across many brands, including Monster, Powerade, BODYARMOR and smartwater. In addition, volume in the first quarter of 2026 was also higher as compared to the first quarter of 2025 due to the timing of the Easter holiday, which we estimate impacted total volume by 0.5% to 1.0%. Net sales increased 16.9% to $1.8 billion in the first quarter of 2026, or 8.5% on an adjusted basis. The growth in net sales was primarily the result of strong volume performance and annual pricing actions executed during the first quarter of 2026, as well as a shift in the Easter holiday. Sparkling and Still net sales increased 16.7% and 18.9%, respectively, in the first quarter of 2026 compared to the first quarter of 2025. Sparkling and Still adjusted net sales increased 8.6% and 10.6%, respectively, in the first quarter of 2026 compared to the first quarter of 2025. The increase in Sparkling category net sales was driven primarily by sales of multi-pack, take-home aluminum can packages sold within our large store, club and value channels. Net sales of our single-serve Still products were especially strong in our Energy category for convenience and value store customers. Price/mix in the Still category was unfavorably impacted by the increased Dasani casepack volume, as well as slowing volume in the Protein category due to supply constraints. Gross profit in the first quarter of 2026 was $727.1 million, an increase of $100.0 million, or 15.9%. On an adjusted basis, gross profit increased $41.7 million, or 6.6%. Gross margin in the first quarter of 2026 decreased 30 basis points to 39.4%. Adjusted gross margin in the first quarter of 2026 decreased 70 basis points to 39.1%. The reduction in gross margin resulted primarily from an increase in aluminum costs, which was caused by geopolitical conflicts, supply constraints and the impact of elevated import tariffs. This heightened volatility resulted in approximately $35 million in additional input costs compared to the first quarter of 2025, which outpaced our pricing actions executed during the first quarter. Selling, delivery and administrative (“SD&A”) expenses in the first quarter of 2026 increased $52.3 million, or 12.0%. Approximately $25 million of the increase was related to the six additional days in the first quarter of 2026. Additionally, during the first quarter of 2026, we had a favorable, non-cash fair value adjustment to our fuel hedging positions of $10.0 million. On an adjusted basis, SD&A expenses in the first quarter of 2026 increased $37.5 million, or 8.6%. SD&A expenses as a percentage of net sales decreased to 26.5% in the first quarter of 2026 from 27.7% in the first quarter of 2025. On an adjusted basis, SD&A expenses as a percentage of net sales in the first quarter of 2026 were 27.7%, consistent with the first quarter of 2025. The increase in adjusted SD&A expenses was primarily driven by an additional investment in the base wages of our front-line 26 teammates, which became effective at the beginning of the third quarter of 2025. The remaining increase in adjusted SD&A expenses was primarily driven by an increase in labor costs related to annual wage adjustments and higher medical benefits. Income from operations in the first quarter of 2026 was $237.5 million, compared to $189.8 million in the first quarter of 2025, an increase of $47.7 million, or 25.1%. On an adjusted basis, income from operations in the first quarter of 2026 was $194.6 million, an increase of $4.2 million, most of which was due to the timing of the Easter holiday. Operating margin for the first quarter of 2026 was 12.9% as compared to 12.0% for the first quarter of 2025, an increase of 90 basis points. Adjusted operating margin for the first quarter of 2026 was 11.4% as compared to 12.1% for the first quarter of 2025, a decrease of 70 basis points. Net income in the first quarter of 2026 was $111.6 million, compared to $103.6 million in the first quarter of 2025, an increase of $7.9 million, or 7.7%. On an adjusted basis, net income in the first quarter of 2026 was $119.5 million, compared to $136.3 million in the first quarter of 2025, a decrease of $16.8 million, or 12.3%. The six additional days in the first quarter of 2026 increased net income by approximately $23 million during the quarter. Income tax expense in the first quarter of 2026 was $39.7 million, compared to $35.9 million in the first quarter of 2025, resulting in an effective income tax rate of approximately 26% for the first quarter of 2026. Cash flows from operations for the first quarter of 2026 were $205.3 million, compared to $198.2 million for the first quarter of 2025. During the first quarter of 2026, we repaid $150.0 million of principal on one of our term loans. In fiscal year 2026, we expect capital expenditures to be approximately $300 million. As noted above, the first quarter of 2026 included six extra days as compared to the first quarter of 2025. The fourth quarter of 2026 will include six fewer days as compared to the fourth quarter of 2025. The full fiscal years of 2026 and 2025 have the same number of days. Areas of Emphasis Key priorities for the Company include executing our commercial strategy, executing our revenue management strategy, optimizing our supply chain, generating cash flow, determining the optimal route to market and creating and maintaining a digitally enabled selling platform. Commercial Execution : Our success is dependent on our ability to execute our commercial strategy within our customers’ stores. Our ability to obtain shelf space within stores and remain in-stock across our portfolio of brands and packages in a profitable manner will have a significant impact on our results. We are focused on execution at every step in our supply chain, including raw material and finished product procurement, manufacturing conversion, transportation, warehousing and distribution, to ensure in-store execution can occur. We continue to invest in tools and technology to enable our teammates to operate more effectively and efficiently with our customers and to drive long-term value in our business. We also continue to focus on opportunities to enhance the customer experience by adapting to changes in our customer landscape, enabling operational flexibility and focusing on customer service. Revenue Management : Our revenue management strategy focuses on pricing our brands and packages optimally within product categories and channels, creating effective working relationships with our customers and making disciplined, fact-based decisions. Pricing decisions are made considering a variety of factors, including brand strength, competitive environment, input costs, the roles certain brands play in our product portfolio and other market conditions. Supply Chain Optimization : 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 2026. Cash Flow Generation : We have several initiatives in place to optimize cash flow, improve profitability, prudently manage capital expenditures and enhance capital returns to our stockholders. We believe strengthening our balance sheet gives us the flexibility to make optimal capital allocation decisions for long-term value creation. We have returned, and expect to continue to return, value to our stockholders. Optimal Route to Market : We are focused on implementing optimal methods of distribution of our products within our territories. Direct store delivery (“DSD”) is our preferred and primary route to market. Our typical DSD method uses Company-owned 27 vehicles and warehouses, but we increasingly shifted to alternative methods of distribution, or ARTM, beginning in 2024 and intend to continue using ARTM at similar rates for the foreseeable future. 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 territories, 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 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 territories, we receive fees from our brand partners for the delivery of qualified product in our territories. These fees are reported in net sales but not our reported volume metrics. During the first quarter of 2026, approximately two-thirds of our post-mix gallons and less than 10% of our bottle/can volume were delivered through ARTM. These ratios are consistent with the first quarter of 2025. 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 is currently targeted to certain on-premise and small store customers. Results of Operations First Quarter Results The Company’s results of operations for the first quarter of 2026 and the first quarter of 2025 are highlighted in the table below and discussed in the following paragraphs. Results for the first quarter of 2026 include six additional days compared to the first quarter of 2025. First Quarter (in thousands) 2026 2025 Change Net sales $ 1,846,668 $ 1,579,977 $ 266,691 Cost of sales 1,119,588 952,873 166,715 Gross profit 727,080 627,104 99,976 Selling, delivery and administrative expenses 489,556 437,284 52,272 Income from operations 237,524 189,820 47,704 Interest expense, net 32,063 6,874 25,189 Mark-to-market on acquisition related contingent consideration 53,391 42,728 10,663 Other expense, net 851 745 106 Income before taxes 151,219 139,473 11,746 Income tax expense 39,663 35,862 3,801 Net income 111,556 103,611 7,945 Other comprehensive income (loss), net of tax 1,338 (14) 1,352 Comprehensive income $ 112,894 $ 103,597 $ 9,297 Net Sales Net sales increased $266.7 million, or 16.9%, to $1.85 billion in the first quarter of 2026, as compared to $1.58 billion in the first quarter of 2025. The six additional days in the first quarter of 2026 as compared to the first quarter of 2025 accounted for approximately $132 million of the increase in net sales during the first quarter of 2026. The remaining growth in net sales was primarily the result of increased sales volume and annual pricing actions during the first quarter of 2026, as well as a shift in the Easter holiday. 28 Net sales by product category were as follows: First Quarter (in thousands) 2026 2025 % Change Bottle/can sales: Sparkling beverages $ 1,089,778 $ 933,837 16.7 % Still beverages 605,134 509,157 18.9 % Total bottle/can sales 1,694,912 1,442,994 17.5 % Other sales: Sales to other Coca‑Cola bottlers 92,093 85,936 7.2 % Post-mix sales and other 59,663 51,047 16.9 % Total other sales 151,756 136,983 10.8 % Total net sales $ 1,846,668 $ 1,579,977 16.9 % Product category sales volume of standard physical cases (as defined below) and the percentage change by product category were as follows: First Quarter (in thousands) 2026 2025 % Change Bottle/can sales volume: Sparkling beverages 65,765 58,629 12.2 % Still beverages 21,260 18,098 17.5 % Total bottle/can sales volume 87,025 76,727 13.4 % A standard physical case is a volume metric used to standardize differing package configurations in order to measure delivered cases on an equivalent basis. As the Company evaluates its volume metrics, it reassesses the way in which physical case volume is measured, which may lead to differences from previously presented results in order to conform with current period standard volume measurement techniques, as used by management. Additionally, as the Company introduces new products, it reassesses the category assigned to its products at the SKU level, therefore categorization could differ from previously presented results in order to conform with current period categorization. Any differences are not material. The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses. In order to serve our customers in the most efficient way, respond to customer demands and increase profitability, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than using Company-owned vehicles and warehouses. As a result, these cases are not included in our reported case sales volume for the first quarter of 2026 or the first quarter of 2025. 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 Quarter 2026 2025 Approximate percent of the Company’s total bottle/can sales volume: Walmart Inc. (1) 21 % 21 % The Kroger Co. (2) 15 % 15 % Total approximate percent of the Company’s total bottle/can sales volume 36 % 36 % Approximate percent of the Company’s total net sales: Walmart Inc. (1) 18 % 17 % The Kroger Co. (2) 12 % 12 % Total approximate percent of the Company’s total net sales 30 % 29 % 29 (1) Includes bottle/can sales volume related to the Walmart, Sam’s Club and Walmart Neighborhood Market chains. (2) Includes bottle/can sales volume related to the Kroger and Harris Teeter chains. Cost of Sales Inputs representing a substantial portion of the Company’s cost of sales include: (i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles, carbon dioxide and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs. In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits and post-mix funding from our brand partners. 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% to 25% of total annual cost of sales. Cost of sales increased $166.7 million, or 17.5%, to $1.12 billion in the first quarter of 2026, as compared to $952.9 million in the first quarter of 2025. The six additional days in the first quarter of 2026 as compared to the first quarter of 2025 accounted for approximately $77 million of the increase in cost of sales during the first quarter of 2026. The increase in cost of sales was also impacted by higher input costs, specifically aluminum costs, which included the uncertainty surrounding geopolitical conflicts and the impact of elevated import tariffs. The Company relies extensively on advertising and sales promotions in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and to promote sales in the Company’s territories. Our brand partners also provide funding related to the delivery of post-mix gallons to locally managed customers within the Company’s territories. 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 $47.8 million in the first quarter of 2026 and $45.2 million in the first quarter of 2025. Selling, Delivery and Administrative Expenses SD&A expenses include the following: sales management labor costs, distribution costs resulting from transporting finished products from distribution centers to customer locations, distribution center overhead including depreciation expense, distribution center warehousing costs, delivery vehicles and cold drink equipment, point-of-sale expenses, advertising expenses, cold drink equipment repair costs, amortization of intangible assets and administrative support labor and operating costs. Labor costs represent approximately two-thirds of total annual SD&A expenses. SD&A expenses increased $52.3 million, or 12.0%, to $489.6 million in the first quarter of 2026, as compared to $437.3 million in the first quarter of 2025. The increase in SD&A expenses was primarily attributable to the six additional days in the first quarter of 2026 as compared to the first quarter of 2025, which accounted for approximately $25 million of the increase in SD&A expenses during the first quarter of 2026. Additionally, SD&A expenses increased due to 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 26.5% in the first quarter of 2026 from 27.7% in the first quarter of 2025. Shipping and handling costs included in SD&A expenses were approximately $216 million in the first quarter of 2026 and approximately $194 million in the first quarter of 2025. The increase in shipping and handling costs was primarily driven by the six additional days in the first quarter of 2026. Interest Expense, Net Interest expense, net increased $25.2 million to $32.1 million in the first quarter of 2026, as compared to $6.9 million in the first quarter of 2025. The increase in interest expense, net was driven by a reduction in interest income related to lower cash and short-term investment balances and lower interest rates in the first quarter of 2026 as compared to the first quarter of 2025. The increase was also driven by an increase in interest expense on higher debt balances in the first quarter of 2026 as compared to the first quarter of 2025. 30 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 $53.4 million in the first quarter of 2026 and an increase of $42.7 million in the first quarter of 2025. During the first quarter of 2026, the $53.4 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 first quarter of 2025, the $42.7 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by a decrease in the WACC used to calculate the fair value of the liability. Other Expense, Net Other expense, net was $0.9 million in the first quarter of 2026, as compared to $0.7 million in the first quarter of 2025. Income Tax Expense The Company’s effective income tax rate was 26.2% for the first quarter of 2026 and 25.7% for the first quarter of 2025. The Company’s income tax expense increased $3.8 million, or 10.6%, to $39.7 million for the first quarter of 2026, as compared to $35.9 million for the first quarter of 2025. The increase in income tax expense was primarily attributable to higher income before taxes during the first quarter of 2026 as compared to the first quarter of 2025. Other Comprehensive Income (Loss), Net of Tax Other comprehensive income (loss), net of tax was income of $1.3 million in the first quarter of 2026 and $0.0 million in the first quarter of 2025. Segment Operating Results The Company evaluates segment reporting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (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 two 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 accounting policies of the Nonalcoholic Beverages operating 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 2025. The additional operating segment, which includes the Red Classic subsidiaries, does not meet the quantitative threshold for separate reporting and, therefore, has been reported as “All Other.” Previously, the Company had three operating segments, Nonalcoholic Beverages and two additional operating segments, which included Data Ventures, Inc. and the Red Classic subsidiaries. Since the two additional operating segments did not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, they were combined into “All Other.” As of December 31, 2025, the Data Ventures, Inc. operating segment was dissolved and merged into the Nonalcoholic Beverages operating segment. For reporting purposes, all prior periods presented have been retroactively adjusted to reflect the dissolution of the Data Ventures, Inc. operating segment within the All Other operating segment and the merger of the Data Ventures, Inc. operating segment with the Nonalcoholic Beverages operating segment. 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. 31 The Company’s segment results are as follows: First Quarter 2026 (in thousands) Nonalcoholic Beverages All Other Eliminations (1) Total Net sales $ 1,833,819 $ 89,480 $ (76,631) $ 1,846,668 Cost of goods sold 1,124,213 53,453 (58,078) 1,119,588 Gross profit 709,606 36,027 (18,553) 727,080 Selling, delivery and administrative expenses: Payroll costs (2) $ 312,904 $ 13,830 $ — $ 326,734 Fleet costs (3) 14,633 8,752 — 23,385 Depreciation and amortization expense (4) 30,534 578 — 31,112 All other segment items (5) 120,157 6,721 (18,553) 108,325 Total selling, delivery and administrative expenses 478,228 29,881 (18,553) 489,556 Income from operations $ 231,378 $ 6,146 $ — $ 237,524 Total depreciation and amortization expense (4) $ 51,590 $ 5,312 $ — $ 56,902 First Quarter 2025 (in thousands) Nonalcoholic Beverages All Other Eliminations (1) Total Net sales $ 1,569,097 $ 75,110 $ (64,230) $ 1,579,977 Cost of goods sold 954,935 45,293 (47,355) 952,873 Gross profit 614,162 29,817 (16,875) 627,104 Selling, delivery and administrative expenses: Payroll costs (2) $ 266,679 $ 12,026 $ — $ 278,705 Fleet costs (3) 23,827 7,683 — 31,510 Depreciation and amortization expense (4) 28,256 536 — 28,792 All other segment items (5) 108,157 6,995 (16,875) 98,277 Total selling, delivery and administrative expenses 426,919 27,240 (16,875) 437,284 Income from operations $ 187,243 $ 2,577 $ — $ 189,820 Total depreciation and amortization expense (4) $ 48,050 $ 5,323 $ — $ 53,373 (1) The entire net sales elimination represents net sales from the All Other operating segment to the Nonalcoholic Beverages operating segment. The entire cost of goods sold and SD&A eliminations represent costs incurred by the All Other operating segment in the generation of net sales to the Nonalcoholic Beverages operating 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. Adjusted Results (Non-GAAP) The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of the financial statements with additional, meaningful financial information that should be considered, in addition to the measures reported in accordance with GAAP, when assessing the Company’s ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting. 32 Results for the first quarter of 2026 include six additional days compared to the first quarter of 2025. For comparison purposes, the estimated impact of the additional selling days in the first quarter of 2026 has been excluded from our adjusted volume results and adjusted net sales results. First Quarter 2026 (in millions) Sparkling Still Total Volume 65.7 21.3 87.0 Volume related to extra days in fiscal period (4.1) (1.3) (5.4) Adjusted volume 61.6 20.0 81.6 First Quarter 2025 (in millions) Sparkling Still Total Volume 58.6 18.1 76.7 Reported % Change vs. First Quarter 2025 12.2 % 17.5 % 13.4 % Adjusted % Change vs. First Quarter 2025 5.3 % 10.2 % 6.4 % First Quarter 2026 (in millions) Sparkling Still Total Bottle/can beverage sales $ 1,089.8 $ 605.1 $ 1,694.9 Bottle/can beverage sales related to extra days in fiscal period (75.8) (42.1) (117.9) Adjusted bottle/can beverage sales $ 1,014.0 $ 563.0 $ 1,577.0 First Quarter 2025 (in millions) Sparkling Still Total Bottle/can beverage sales $ 933.8 $ 509.2 $ 1,443.0 Reported % Change vs. First Quarter 2025 16.7 % 18.9 % 17.5 % Adjusted % Change vs. First Quarter 2025 8.6 % 10.6 % 9.3 % The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP): First Quarter 2026 (in thousands, except per share data) Net sales Gross profit SD&A expenses Income from operations Income before taxes Net income Basic net income per share Reported results (GAAP) $ 1,846,668 $ 727,080 $ 489,556 $ 237,524 $ 151,219 $ 111,556 $ 1.68 Fair value adjustment of acquisition related contingent consideration (1) — — — — 53,391 40,203 0.60 Fair value adjustments for commodity derivative instruments (2) — (2,498) 10,377 (12,875) (12,875) (9,695) (0.15) Results of extra days in fiscal period (3) (132,000) (55,000) (25,000) (30,000) (30,000) (22,590) (0.34) Total reconciling items (132,000) (57,498) (14,623) (42,875) 10,516 7,918 0.11 Adjusted results (non-GAAP) $ 1,714,668 $ 669,582 $ 474,933 $ 194,649 $ 161,735 $ 119,474 $ 1.79 33 First Quarter 2025 (in thousands, except per share data) Net sales Gross profit SD&A expenses Income from operations Income before taxes Net income Basic net income per share (4) Reported results (GAAP) $ 1,579,977 $ 627,104 $ 437,284 $ 189,820 $ 139,473 $ 103,611 $ 1.19 Fair value adjustment of acquisition related contingent consideration (1) — — — — 42,728 32,174 0.37 Fair value adjustments for commodity derivative instruments (2) — 799 165 634 634 477 — Total reconciling items — 799 165 634 43,362 32,651 0.37 Adjusted results (non-GAAP) $ 1,579,977 $ 627,903 $ 437,449 $ 190,454 $ 182,835 $ 136,262 $ 1.56 Following is an explanation of non-GAAP adjustments: (1) This non-cash, fair value adjustment of acquisition related contingent consideration fluctuates based on factors such as long-term interest rates and future cash flow projections of the distribution territories subject to acquisition related sub-bottling payments. (2) The Company enters into commodity derivative instruments from time to time to hedge some of its projected purchases of aluminum, as well as some or all of its projected purchases of PET resin, diesel fuel and unleaded gasoline in order to mitigate commodity price risk. The Company accounts for its commodity derivative instruments on a mark-to-market basis. (3) Due to the shift in the fiscal calendar, the first quarter of 2026 contained six extra days when compared to the first quarter of 2025. The fourth quarter of 2026 will include six fewer days as compared to the fourth quarter of 2025. The full fiscal years of 2026 and 2025 have the same number of days. (4) All share or per share amounts impacting the basic net income per share amounts have been retroactively adjusted to reflect the effects of the Stock Split (as defined below) executed by the Company during the second quarter of 2025. Refer to the discussion under “Liquidity and Capital Resources” below for further details related to the Stock Split. Financial Condition Total assets were $4.39 billion as of April 3, 2026, which was an increase of $89.7 million from December 31, 2025. Net working capital, defined as current assets less current liabilities, was $285.3 million as of April 3, 2026, which was a decrease of $12.7 million from December 31, 2025. Significant changes in net working capital as of April 3, 2026 as compared to December 31, 2025 were as follows: • A decrease in cash and cash equivalents of $49.0 million, primarily as a result of the repayment of $150 million on the Five-Year Term Loan Facility (as defined below) and additions to property, plant and equipment during the first quarter of 2026, partially offset by the Company’s strong operating performance during the first quarter of 2026. • An increase in accounts receivable from The Coca-Cola Company of $47.4 million due to the timing of cash receipts. • An increase in inventories of $52.3 million, primarily driven by the timing of seasonal inventory levels. • An increase in accounts payable, trade of $61.2 million, primarily driven by the timing of cash payments. • An increase in accounts payable to The Coca-Cola Company of $97.4 million, primarily driven by the timing of cash payments. • A decrease in accrued compensation of $84.0 million, primarily as a result of the timing of bonus and incentive payments in the first quarter of 2026. 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 April 3, 2026, the Company had $232.9 million in cash and cash equivalents. The Company’s cash equivalent balance as of April 3, 2026 consisted predominantly of investments in money market funds. As of April 3, 2026, the Company did not have any short-term investments. Historically, short-term investments have consisted primarily of U.S. Treasury securities and investment-grade corporate bonds with maturities of one year or less. The Company has obtained its debt from public markets, private placements and bank facilities. Management believes the Company has sufficient sources of capital available to finance its business plan, to meet its working capital requirements and to maintain an appropriate level of capital spending for at least the next 12 months from the issuance of the condensed consolidated financial statements. 34 On November 7, 2025, the Company entered into a purchase agreement (the “Repurchase Agreement”) with Carolina Coca-Cola Bottling Investments, Inc. (the “Seller”), an indirect wholly owned subsidiary of The Coca‑Cola Company, The Coca‑Cola Company and J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, pursuant to which the Company agreed to purchase and the Seller agreed to sell all of the Seller’s shares of Common Stock for a cash payment in the aggregate amount of $2.40 billion (the “Repurchase”). The closing of the Repurchase also occurred on November 7, 2025. The Company funded the purchase price for the Repurchase with cash on hand and a term loan obtained under a certain bridge loan agreement (the “Bridge Facility”), as further discussed below. Upon completion of the Repurchase, the 18,835,460 shares of Common Stock repurchased from the Seller were retired and recorded as a reduction to Common Stock at par value, with the excess of carrying value over par value recorded as a deduction from retained (deficit) earnings. As a result, the Company was in a deficit position as of April 3, 2026. This deficit position does not impact the Company’s ability to pay dividends. 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 its Class B Common Stock, par value $1.00 per share (“Class B Common Stock”). The Stock Split was effected through an amendment to the Company’s Restated Certificate of Incorporation (the “Amendment”). The Amendment also effected a proportionate increase in the number of authorized shares of Common Stock and Class B Common Stock. The Amendment obtained stockholder approval at the Company’s 2025 Annual Meeting of Stockholders, which took place on May 13, 2025. Each stockholder of record as of the close of business on May 16, 2025 received 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 May 23, 2025. Trading began on a split-adjusted basis on May 27, 2025. 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 (the “Share Repurchase Program”) under which the Company was initially authorized to repurchase up to $1.00 billion of Common Stock. On November 7, 2025, the Company’s Board of Directors reduced the total authorization under the Share Repurchase Program from $1.00 billion to $400.0 million. The Company expects share repurchases to be made from time to time in the open market or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, the prevailing market price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. During the first quarter of 2026, the Company did not repurchase any shares of Common Stock under the Share Repurchase Program. As of April 3, 2026, the total remaining authorization under the Share Repurchase Program was $136.3 million. The Company’s debt as of April 3, 2026 and December 31, 2025 was as follows: (in thousands) Maturity Date April 3, 2026 December 31, 2025 Senior notes (1) 10/10/2026 $ 100,000 $ 100,000 Term loan facility (the “Three-Year Term Loan Facility”) (2) 12/8/2028 900,000 900,000 Senior bonds (the “2029 Senior Bonds”) (3) 6/1/2029 700,000 700,000 Revolving credit facility (4) 6/10/2029 — — Senior notes 3/21/2030 150,000 150,000 Term loan facility (the “Five-Year Term Loan Facility”) (2) 12/6/2030 300,000 450,000 Senior bonds (the “2034 Senior Bonds”) (5) 6/1/2034 500,000 500,000 Unamortized discount on senior bonds (3)(5) Various (1,133) (1,201) Debt issuance costs (11,719) (12,790) Total debt 2,637,148 2,786,009 Less: Current portion of debt (1) 100,000 100,000 Total long-term debt $ 2,537,148 $ 2,686,009 (1) As of April 3, 2026 and December 31, 2025, the senior notes maturing in 2026 were classified as current portion of debt in the condensed consolidated balance sheets. (2) The Term Loan Facilities (as defined below) were issued in connection with the financing of the Repurchase, as further discussed above. (3) The 2029 Senior Bonds were issued at 99.843% of par. 35 (4) The Company’s revolving credit facility has an aggregate maximum borrowing capacity of $500 million. The Company currently believes all banks participating in the revolving credit facility have the ability to and will meet any funding requests from the Company. (5) The 2034 Senior Bonds were issued at 99.893% of par. The Company entered into the Bridge Facility, dated as of November 7, 2025, providing for a 364-day senior unsecured bridge term loan facility in the aggregate principal amount of $1.20 billion to fund the Repurchase. Also on November 7, 2025, the Company borrowed $1.20 billion under the Bridge Facility, the full amount available under the Bridge Facility. On December 8, 2025, the Company entered into a term loan agreement, providing for (i) the Three-Year Term Loan Facility, a senior unsecured term loan facility in the aggregate principal amount of up to $900 million, maturing on December 8, 2028 and (ii) the Five-Year Term Loan Facility, a senior unsecured term loan facility in the aggregate principal amount of up to $450 million, maturing on December 6, 2030 (collectively, the “Term Loan Facilities”). Also on December 8, 2025, the Company borrowed $1.35 billion under the Term Loan Facilities, the full amount available under the Term Loan Facilities. In conjunction with the borrowings under the Term Loan Facilities, the Company modified and extinguished the Bridge Facility discussed above, fully repaying the $1.20 billion outstanding under the Bridge Facility through a net cash settlement with the lender. On February 9, 2026, the Company repaid $150 million of the $450 million aggregate principal balance outstanding under the Five-Year Term Loan Facility using cash on hand, bringing the aggregate principal balance outstanding to $300 million. Subsequent to the end of the first quarter of 2026, on April 9, 2026, the Company repaid $75 million of the $300 million aggregate principal balance outstanding under the Five-Year Term Loan Facility using cash on hand, bringing the aggregate principal balance outstanding to $225 million. The indenture under which the 2029 Senior Bonds and the 2034 Senior Bonds were issued does not include financial covenants, but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts. The agreements under which the Company’s nonpublic debt, including its revolving credit facility and the Term Loan Facilities, 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 April 3, 2026. These covenants have not restricted the Company’s liquidity or capital resources. On February 12, 2026, the Company entered into three $150 million fixed rate swap agreements, maturing on February 8, 2027, August 8, 2027 and February 8, 2028 to hedge a portion of the interest rate risk on the Three-Year Term Loan Facility and the Five-Year Term Loan Facility. Over the next 12 months, the Company expects approximately $1 million related to these interest rate swaps to be released from accumulated other comprehensive income (loss). These interest rate swaps are designated as cash flow hedging instruments and changes in their fair values are not expected to be material to the condensed consolidated balance sheets. Changes in the fair values of these interest rate swaps were classified as accumulated other comprehensive income (loss) on the condensed consolidated balance sheets and included in the condensed consolidated statements of comprehensive income. All outstanding debt has been issued by the Company and none has been issued by any of its subsidiaries. There are no guarantees of the Company’s debt. The Company’s credit ratings are reviewed periodically by certain nationally recognized rating agencies. Changes in the Company’s operating results or financial position could result in changes in the Company’s credit ratings. 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 April 3, 2026, the Company’s credit ratings and outlook for its debt were as follows: Credit Rating Rating Outlook Moody’s Baa1 Stable Standard & Poor’s BBB+ Negative The Company’s Board of Directors has declared, and the Company has paid, dividends on the Common Stock and the Class B Common Stock and each class of common stock has participated equally in all dividends declared by the Board of Directors and paid by the Company for more than 30 years. The amount and frequency of future dividends will be determined by the Company’s Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given that dividends will be declared or paid in the future. 36 We review supplier terms and conditions on an ongoing basis, and we have negotiated payment term extensions in recent years in connection with our efforts to improve cash flow and working capital. Separate from those term extension actions, the Company has an agreement with a third-party financial institution to facilitate a supply chain finance program (the “SCF program”), which allows qualifying suppliers to sell their receivables from the Company to the financial institution in order to negotiate shorter payment terms on their outstanding receivable arrangements. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier’s participation in the SCF program. See Note 12 to the condensed consolidated financial statements for additional information related to the SCF program. The Company’s only Level 3 asset or liability is the acquisition related contingent consideration liability. There were no transfers of assets or liabilities from Level 1 or Level 2 in any period presented. Fair value adjustments were non-cash and, therefore, did not impact the Company’s liquidity or capital resources. Following is a summary of the Level 3 activity: First Quarter (in thousands) 2026 2025 Beginning balance - Level 3 liability $ 717,908 $ 654,191 Payments of acquisition related contingent consideration (19,070) (19,819) Reclassification to current payables 800 4,700 Increase in fair value 53,391 42,728 Ending balance - Level 3 liability $ 753,029 $ 681,800 Cash Sources and Uses A summary of cash-based activity is as follows: First Quarter (in thousands) 2026 2025 Cash Sources: Net cash provided by operating activities (1) $ 205,273 $ 198,171 Proceeds from the sale of property, plant and equipment 113 157 Proceeds from the disposal of short-term investments — 112,755 Total cash sources $ 205,386 $ 311,083 Cash Uses: Payments on term loan facility $ 150,000 $ — Additions to property, plant and equipment 63,112 97,866 Payments of acquisition related contingent consideration 19,070 19,819 Cash dividends paid 16,641 21,794 Investment in equity method investees 5,339 4,584 Payments on financing lease obligations 137 650 Debt issuance fees 58 232 Purchases of short-term investments — 150,157 Total cash uses $ 254,357 $ 295,102 Net (decrease) increase in cash and cash equivalents during period $ (48,971) $ 15,981 (1) Net cash provided by operating activities in the first quarter of 2026 included net income tax payments of $2.0 million and net interest payments of $18.3 million. Net cash provided by operating activities in the first quarter of 2025 included net income tax payments of $1.9 million and net interest payments of $2.5 million. Cash Flows from Operating Activities During the first quarter of 2026, cash provided by operating activities was $205.3 million, which was an increase of $7.1 million as compared to the first quarter of 2025. 37 Cash Flows from Investing Activities During the first quarter of 2026, cash used in investing activities was $68.3 million, which was a decrease of $71.4 million as compared to the first quarter of 2025. The decline in cash used in investing activities was primarily a result of the disposal of short-term investments during 2025. There were no purchases of short-term investments in the first quarter of 2026 compared to purchases of short-term investments of $150.2 million in the first quarter of 2025. Additions to property, plant and equipment were $63.1 million during the first quarter of 2026 and $97.9 million during the first quarter of 2025. There were $44.4 million and $28.0 million of additions to property, plant and equipment accrued in accounts payable, trade as of April 3, 2026 and March 28, 2025, respectively. The additions to property, plant and equipment reflect the Company’s focus on optimizing its supply chain and investing for future growth. The Company anticipates additions to property, plant and equipment in 2026 will be approximately $300 million. Cash Flows from Financing Activities During the first quarter of 2026, cash used in financing activities was $185.9 million, which was an increase of $143 million as compared to the first quarter of 2025. The increase in cash used in financing activities was primarily driven by the repayment of $150 million of the $450 million aggregate principal balance outstanding under the Five-Year Term Loan Facility. The Company had cash payments for acquisition related contingent consideration of $19.1 million during the first quarter of 2026 and $19.8 million during 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 $65 million. Commodity Hedging Activities The Company uses commodity derivative instruments, where practicable, to manage its exposure to fluctuations in certain commodity prices. Fees paid by the Company for commodity derivative instruments are amortized over the corresponding period of each instrument. The Company accounts for its commodity derivative instruments on a mark-to-market basis with any expense or income being reflected as an adjustment to cost of sales or SD&A expenses, consistent with the expense classification of the underlying hedged item. The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. The Company has master agreements with the counterparties to its commodity derivative instruments that provide for net settlement of derivative transactions. The net impact of the commodity derivative instruments on the condensed consolidated statements of operations was as follows: First Quarter (in thousands) 2026 2025 (Decrease) increase in cost of sales $ (4,312) $ 993 (Decrease) increase in SD&A expenses (11,953) 67 Net impact $ (16,265) $ 1,060 Cautionary Note Regarding Forward-Looking Statements Certain statements made in this report, or in other public filings, press releases, or other written or oral communications made by the Company, which are not historical facts, are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties which we expect will or may occur in the future and may impact our business, financial condition and results of operations. The words “anticipate,” “believe,” “expect,” “intend,” “project,” “may,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements. These forward-looking statements reflect the Company’s best judgment based on current information, and, although we base these statements on circumstances that we believe to be reasonable when made, there can be no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may vary materially from the projected results and expectations discussed in this report. Factors that might cause the Company’s actual results to differ materially from those anticipated in forward-looking statements include, but are not limited to: increased costs (including due to inflation or uncertainty around tariffs) or disruption, unavailability or shortages of raw materials, fuel and other supplies; the reliance on purchased finished products from external sources; changes in public and consumer perception and preferences, including concerns related 38 to product safety and sustainability, artificial ingredients, brand reputation and obesity; changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients, recycling, sustainability, product safety and benefit programs, including SNAP; decreases from historic levels of marketing funding support provided to us by The Coca‑Cola Company and other beverage companies; material changes in the performance requirements for marketing funding support or our inability to meet such requirements; decreases from historic levels of advertising, marketing and product innovation spending by The Coca‑Cola Company and other beverage companies, or advertising campaigns that are negatively perceived by the public; any failure of the several Coca‑Cola system governance entities of which we are a participant to function efficiently or in our best interest and any failure or delay of ours to receive anticipated benefits from these governance entities; provisions in our beverage distribution and manufacturing agreements with The Coca‑Cola Company that could delay or prevent a change in control of us or a sale of our Coca‑Cola distribution or manufacturing businesses; the concentration of our capital stock ownership; our inability to meet requirements under our beverage distribution and manufacturing agreements; changes in the inputs used to calculate our acquisition related contingent consideration liability; technology failures or cyberattacks on our information technology systems or our effective response to technology failures or cyberattacks on our third-party service providers’, business partners’, customers’, suppliers’ or other third parties’ information technology systems; unfavorable changes in the general economy; changes in trade policies, including the imposition of, or increase in, tariffs on imported goods; the concentration risks among our customers and suppliers; lower than expected net pricing of our products resulting from continued and increased customer and competitor consolidations and marketplace competition; the effect of changes in our level of debt, borrowing costs and credit ratings on our access to capital and credit markets, operating flexibility and ability to obtain additional financing to fund future needs; the failure to attract, train and retain qualified employees while controlling labor costs and other labor issues; the failure to maintain productive relationships with our employees covered by collective bargaining agreements, including failing to renegotiate collective bargaining agreements; changes in accounting standards; our use of estimates and assumptions; changes in tax laws, disagreements with tax authorities or additional tax liabilities; changes in legal contingencies; natural disasters, changing weather patterns and unfavorable weather, or the increased frequency of any such events due to climate change, and public expectations around combatting climate change or legislative or regulatory responses to such change; and the risks discussed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for 2025 and elsewhere in this report. Caution should be taken not to place undue reliance on the forward-looking statements included in this report. The Company assumes no obligation to update any forward-looking statements, except as may be required by law. In evaluating forward-looking statements, these risks and uncertainties should be considered, together with the other risks described from time to time in the Company’s reports and other filings with the United States Securities and Exchange Commission.