What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-24 compared with 2024-07-25 · 103 added, 100 removed, 255 unchanged (44% of the section changed)

4 unchanged sentences

We have based these forward-looking statements on our current views with respect to future events and financial performance.

Our actual financial performance could differ materially from those projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial performance may be better or worse than anticipated.

Our actual financial performance could differ materially from those projected in the forward-looking statements due to a variety of factors, including the inherent uncertainty of estimates, forecasts and projections and the possibility that we are unable to successfully complete the GHOST transaction on the anticipated terms and timing or to successfully integrate GHOST into our business, and our financial performance may be better or worse than anticipated.

Given these uncertainties, you should not put undue reliance on any forward-looking statements.

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EXECUTIVE SUMMARY

Financial Overview - Second Quarter of 2024 as compared to Second Quarter of 2023

Financial Overview - Third Quarter of 2024 as compared to Third Quarter of 2023

As Reported, in millions (except EPS)

Key Events During the Second Quarter of 2024

Key Events During the Third Quarter of 2024

Acquisition of Strategic Assets from Kalil Bottling Company

In May 2024, we announced an agreement to acquire all production, sales, and distribution assets of an independent bottler, Kalil Bottling Company.

Pursuant to the agreement, our DSD operations would gain new bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration.

The business combination is expected to close in the third quarter of 2024.

In August 2024, we completed the Kalil Acquisition, which was previously announced on May 31, 2024.

As a result, our DSD operations gained new bottling and distribution rights in Arizona to key KDP brands, including Canada Dry, 7UP, A&W, Snapple, and Core Hydration.

Refer to Note 3 of the Notes to our Unaudited Condensed Consolidated Financial Statements for additional information.

Increase in Quarterly Dividend

On September 12, 2024, we announced a 7.0% increase in our annualized dividend rate to $0.92 per share, from the previous annualized rate of $0.86 per share, effective with the regular quarterly cash dividend announced on the same day.

Definitive Agreement to Acquire GHOST

On October 23, 2024, we entered into a definitive agreement with GHOST, and certain other parties named therein, to acquire a controlling interest in GHOST.

Founded in 2016, GHOST is a lifestyle sports nutrition business with a portfolio anchored by GHOST Energy, a leading ready-to-drink energy brand.

Under the terms of the agreement, we will initially purchase a 60% stake in GHOST for aggregate consideration of $990 million and, upon the closing of that transaction, we will enter into a subsequent agreement with GHOST, which will require the remaining equityholders of GHOST to sell their resulting 40% stake in GHOST to us in 2028.

The transaction is subject to customary closing conditions.

RESULTS OF OPERATIONS

Second Quarter of 2024 Compared to Second Quarter of 2023

Third Quarter of 2024 Compared to Third Quarter of 2023

Consolidated Operations

The following table sets forth our unaudited condensed consolidated results of operations for the second quarter of 2024 and 2023:

Second Quarter Dollar Percentage

The following table sets forth our unaudited condensed consolidated results of operations for the third quarter of 2024 and 2023:

Third Quarter Dollar Percentage

($ in millions, except per share amounts) 2024 2023 Change Change

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Selling, general and administrative expenses 1,245 1,217 28 2.3

Impairment of intangible assets — 2 (2) NM

Other operating expense, net (7) (4) (3) NM

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Sales Volume.

The following table provides the percentage change in sales volume for the second quarter of 2024 compared to the prior year period:

The following table provides the percentage change in sales volume for the third quarter of 2024 compared to the prior year period:

Percentage Change

K-Cup pods 1.0

Net sales increased $133 million, or 3.5%, to $3,922 million for the second quarter of 2024 compared to $3,789 million in the prior year period.

This performance reflected favorable volume/mix of 1.8%, favorable net price realization of 1.6% and favorable FX translation of 0.1%.

Appliances 13.9

Net sales increased $86 million, or 2.3%, to $3,891 million for the third quarter of 2024 compared to $3,805 million in the prior year period.

This performance reflected volume/mix growth of 3.5%, partially offset by unfavorable impacts from FX translation (0.8%) and net price realization (0.4%).

Gross Profit.

Gross profit increased $131 million, or 6.4%, to $2,172 million for the second quarter of 2024 compared to $2,041 million in the prior year period.

This performance primarily reflected a net benefit from changes in ingredients, materials, and productivity (3 percentage points) and the gross profit impact of net sales growth (3 percentage points).

Gross margin increased 150 bps versus the prior year period to 55.4%.

Gross profit increased $29 million, or 1.4%, to $2,140 million for the third quarter of 2024 compared to $2,111 million in the prior year period.

This performance primarily reflected a net benefit from changes in ingredients, materials, and productivity (3 percentage points), partially offset by increases in other manufacturing costs (1 percentage point).

Selling, General and Administrative Expenses.

SG&A expenses increased $23 million, or 1.8%, to $1,295 million for the second quarter of 2024 compared to $1,272 million in the prior year period, primarily driven by higher people costs.

Other operating expense, net.

Other operating expense of $16 million for the second quarter of 2024 primarily reflected losses on the disposal of assets related to our 2024 Network Optimization program.

SG&A expenses increased $28 million, or 2.3%, to $1,245 million for the third quarter of 2024 compared to $1,217 million in the prior year period, primarily driven by unfavorable changes in unrealized commodity mark-to-market activity (4 percentage points), partially offset by reduced costs associated with restructuring and productivity projects (2 percentage points).

Income from Operations.

Income from operations increased $92 million, or 12.0%, to $861 million for the second quarter of 2024 compared to $769 million in the prior year period, primarily driven by the increase in gross profit.

Income from operations increased $6 million, or 0.7%, to $902 million for the third quarter of 2024, compared to $896 million in the prior year period, as our increase in gross profit was almost fully offset by increased SG&A expenses.

Interest Expense.

Interest expense increased $32 million, or 18.6%, to $204 million for the second quarter of 2024 compared with $172 million in the prior year period.

This change reflected increased weighted average borrowings (29 percentage points), partially offset by favorable year-over-year changes in unrealized mark-to-market activity (12 percentage points).

Effective Tax Rate .

The effective tax rate was 23.4% for the second quarter of 2024, compared to 17.9% in the prior year period, primarily driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (460 bps) and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (170 bps).

Net income increased $12 million, or 2.4%, to $515 million for the second quarter of 2024 as compared to $503 million in the prior year period, as increased income from operations was partially offset by increases in interest expense and our effective tax rate.

Diluted EPS increased 5.6% to $0.38 per diluted share for the second quarter of 2024 as compared to $0.36 in the prior year period, primarily driven by reduced weighted average shares outstanding.

Interest expense decreased $131 million, or 55.3%, to $106 million for the third quarter of 2024 compared with $237 million in the prior year period.

This change reflected favorable year-over-year changes in unrealized mark-to-market activity (71 percentage points), partially offset by increased weighted average borrowings (17 percentage points).

Net income increased $98 million, or 18.9%, to $616 million for the third quarter of 2024 as compared to $518 million in the prior year period, primarily driven by reduced interest expense.

Diluted EPS increased 21.6% to $0.45 per diluted share for the third quarter of 2024 as compared to $0.37 in the prior year period.

Results of Operations by Segment

The following tables set forth net sales and income from operations for our segments for the second quarter of 2024 and 2023, as well as other amounts necessary to reconcile our segment results to our consolidated results presented in accordance with U.S.

Second Quarter

The following tables set forth net sales and income from operations for our segments for the third quarter of 2024 and 2023, as well as other amounts necessary to reconcile our segment results to our consolidated results presented in accordance with U.S.

Third Quarter

(in millions) 2024 2023

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Refreshment Beverages segment's results:

Second Quarter Dollar Change Percentage Change

Third Quarter Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

Sales volume for the second quarter of 2024 decreased 2.6% compared to the prior year period, as the contributions from partnerships, including Electrolit and C4, and growth in select carbonated soft drinks was more than offset by softness in other parts of our portfolio.

Net sales increased 3.3% to $2,407 million for the second quarter of 2024, compared to $2,330 million in the prior year period, driven by favorable net price realization of 2.9% and favorable volume/mix of 0.4%.

Sales volume for the third quarter of 2024 increased 3.7% compared to the prior year period, driven by growth in carbonated soft drinks, as well as contributions from partnerships such as Electrolit and C4.

Net sales increased 5.3% to $2,390 million for the third quarter of 2024, compared to $2,270 million in the prior year period, driven by volume/mix growth of 4.0% and favorable net price realization of 1.3%.

Income from Operations.

Income from operations increased $88 million, or 14.0%, to $717 million for the second quarter of 2024, compared to $629 million for the prior year period.

This performance primarily reflects a net benefit from changes in ingredients, materials, and productivity (7 percentage points) and the gross profit impact of net sales growth (6 percentage points).

Operating margin improved 280 bps versus the prior year period to 29.8%.

Income from operations increased $46 million, or 6.8%, to $722 million for the third quarter of 2024, compared to $676 million for the prior year period.

This performance primarily reflects the gross profit impact of net sales growth (8 percentage points), earned equity from the achievement of milestones associated with certain distribution agreements (3 percentage points), and a net benefit from changes in ingredients, materials, and productivity (2 percentage points), partially offset by increases in transportation and warehousing expenses (4 percentage points) and other manufacturing costs (3 percentage points).

The following table provides selected information about our U.S.

Coffee segment's results:

Second Quarter Dollar Change Percentage Change

Third Quarter Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

K-Cup pod volume increased 0.2% in the second quarter of 2024 compared to the prior year period.

Appliance volume increased 2.1% compared to the prior year period, driven by Keurig market share momentum.

Net sales decreased 2.1% to $950 million for the second quarter of 2024 compared to net sales of $970 million in the prior year period, reflecting unfavorable net price realization of 2.9%, partially offset by favorable volume/mix of 0.8%.

K-Cup pod volume decreased 0.4% in the third quarter of 2024 compared to the prior year period.

Appliance volume increased 14.2% compared to the prior year period, driven by Keurig market share momentum and improving coffeemaker category trends.

Net sales decreased 3.6% to $976 million for the third quarter of 2024 compared to net sales of $1,012 million in the prior year period, reflecting unfavorable net price realization of 6.3%, partially offset by volume/mix growth of 2.7%.

Income from Operations.

Income from operations decreased $22 million, or 8.8%, to $228 million for the second quarter of 2024, compared to $250 million for the prior year period, primarily reflecting the gross profit impact of the decrease in net sales (9 percentage points) and losses on the disposal of assets related to our 2024 Network Optimization program (8 percentage points), partially offset by the net benefit from changes in ingredients, materials, and productivity (7 percentage points).

Operating margin declined 180 bps versus the year ago period to 24.0%.

Income from operations decreased $39 million, or 13.3%, to $254 million for the third quarter of 2024, compared to $293 million for the prior year period, primarily reflecting the gross profit impact of the decrease in net sales (21 percentage points) and losses on the disposal of assets related to our 2024 Network Optimization program (4 percentage points), partially offset by the net benefit from changes in ingredients, materials, and productivity (11 percentage points).

INTERNATIONAL

The following table provides selected information about our International segment's results:

Second Quarter Dollar Change Percentage Change

Third Quarter Dollar Change Percentage Change

(in millions) 2024 2023

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K-Cup pods 10.7

Net sales increased 15.5% to $565 million in the second quarter of 2024, compared to $489 million for the prior year period, reflecting volume/mix growth of 10.4%, higher net price realization of 4.3%, and favorable FX translation impacts of 0.8%.

Appliances 10.1

Net sales increased 0.4% to $525 million in the third quarter of 2024, compared to $523 million for the prior year period, reflecting higher net price realization of 3.4% and volume/mix growth of 3.1%, which was largely offset by unfavorable FX translation impacts of 6.1%.

Income from Operations.

Income from operations increased $38 million, or 33.9%, to $150 million for the second quarter of 2024 compared to $112 million in the prior year period.

This performance primarily reflected the gross profit impact of the growth in net sales (44 percentage points), partially offset by higher marketing investment (9 percentage points) and higher transportation and warehousing expenses (7 percentage points).

Operating margin increased 360 bps from the prior year period to 26.5%.

First Six Months of 2024 Compared to First Six Months of 2023

Income from operations increased $18 million, or 12.9%, to $157 million for the third quarter of 2024 compared to $139 million in the prior year period.

This performance primarily reflected the favorable net price realization (13 percentage points) and the net benefit from changes in ingredients, materials, and productivity (6 percentage points), partially offset by increased transportation and warehousing expenses (7 percentage points).

First Nine Months of 2024 Compared to First Nine Months of 2023

Consolidated Operations

The following table sets forth our unaudited condensed consolidated results of operations for the first six months of 2024 and 2023:

First Six Months Dollar Change Percentage Change

The following table sets forth our unaudited condensed consolidated results of operations for the first nine months of 2024 and 2023:

First Nine Months Dollar Change Percentage Change

($ in millions, except per share amounts) 2024 2023

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Selling, general and administrative expenses 3,716 3,654 62 1.7

Other operating expense (income), net 15 (5) 20 NM

Impairment of intangible assets — 2 (2) NM

Other operating (income) expense, net 8 (9) 17 NM

Income from operations 2,528 2,249 279 12.4

Interest expense 382 195 187 NM

Interest expense 488 432 56 13.0

Other income, net (28) (41) 13 NM

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K-Cup pods 0.5

Net sales increased $248 million, or 3.5%, to $7,390 million for the first six months of 2024 compared to $7,142 million in the prior year period.

This performance reflected favorable net price realization of 2.3%, favorable volume/mix of 0.8%, and favorable FX translation of 0.4%.

Appliances 12.0

Net sales increased $334 million, or 3.1%, to $11,281 million for the first nine months of 2024 compared to $10,947 million in the prior year period.

This performance reflected volume/mix growth of 1.7% and favorable net price realization of 1.4%.

Gross Profit.

Gross profit increased $327 million, or 8.6%, to $4,112 million for the first six months of 2024 compared to $3,785 million in the prior year period.

This performance primarily reflected the gross profit impact of net sales growth (5 percentage points) and a net benefit from changes in ingredients, materials, and productivity (3 percentage points).

Gross margin increased 260 bps versus the prior year period to 55.6%.

Other operating expense (income), net .

Other operating expense (income), net reflected an unfavorable change of $20 million from the prior year period, primarily driven by losses on the disposal of assets related to our 2024 Network Optimization program.

Gross profit increased $356 million, or 6.0%, to $6,252 million for the first nine months of 2024 compared to $5,896 million in the prior year period.

This performance primarily reflected a net benefit from changes in ingredients, materials, and productivity (3 percentage points), the gross profit impact of net sales growth (3 percentage points), and earned equity from the achievement of milestones associated with certain distribution agreements (1 percentage point), partially offset by increases in other manufacturing costs (1 percentage point).

Selling, general and administrative expenses .

SG&A expenses increased $34 million, or 1.4%, to $2,471 million for the first six months of 2024 compared to $2,437 million in the prior year period, primarily driven by higher people costs.

SG&A expenses increased $62 million, or 1.7%, to $3,716 million for the first nine months of 2024 compared to $3,654 million in the prior year period, led by higher people costs.

Other operating (income) expense, net .

Other operating (income) expense, net reflected an unfavorable change of $17 million from the prior year period, primarily driven by losses on the disposal of assets related to our 2024 Network Optimization program.

Income from Operations.

Income from operations increased $273 million, or 20.2%, to $1,626 million for the first six months of 2024 compared to $1,353 million in the prior year period, primarily driven by increased gross profit.

Operating margin increased 310 bps from the prior year period to 22.0%.

Income from operations increased $279 million, or 12.4%, to $2,528 million for the first nine months of 2024 compared to $2,249 million in the prior year period, primarily driven by increased gross profit, partially offset by increased SG&A expenses.

Interest Expense.

Interest expense increased $187 million to $382 million for the first six months of 2024 compared to $195 million for the prior year period, primarily driven by the unfavorable year-over-year change in unrealized mark-to-market activity (54 percentage points), as well as increased weighted average borrowings (42 percentage points).

Interest expense increased $56 million to $488 million for the first nine months of 2024 compared to $432 million for the prior year period, primarily driven by increased weighted average borrowings (29 percentage points), which was partially offset by a favorable year-over-year change in unrealized mark-to-market activity (14 percentage points).

Effective Tax Rate.

The effective tax rate increased 470 bps to 23.5% for the first six months of 2024, compared to 18.8% in the prior year period, primarily driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (290 bps) and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (130 bps).

Net income decreased $1 million, or 0.1%, to $969 million for the first six months of 2024 as compared to $970 million in the prior year period, as increased interest expense and unfavorable changes in our effective tax rate more than offset our increased income from operations.

Diluted EPS increased 1.4% to $0.70 per diluted share for the first six months of 2024 as compared to $0.69 in the prior year period, primarily driven by reduced weighted average shares outstanding.

The effective tax rate increased 350 bps to 23.4% for the first nine months of 2024, compared to 19.9% in the prior year period, primarily driven by the unfavorable comparison to the prior year tax benefit received from a non-cash adjustment (150 bps) and a shift in the mix of income from lower tax jurisdictions to higher tax jurisdictions (100 bps).

Net income increased $97 million, or 6.5%, to $1,585 million for the first nine months of 2024 as compared to $1,488 million in the prior year period, driven by increased income from operations, partially offset by increases in our effective tax rate and interest expense.

Diluted EPS increased 10.5% to $1.16 per diluted share for the first nine months of 2024 as compared to $1.05 in the prior year period.

Results of Operations by Segment

The following tables provide net sales and income from operations for our reportable segments for the first six months of 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.

First Six Months

The following tables provide net sales and income from operations for our reportable segments for the first nine months of 2024 and 2023, as well as the other amounts necessary to reconcile our total segment results to our consolidated results presented in accordance with U.S.

First Nine Months

(in millions) 2024 2023

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Refreshment Beverages segment's results:

First Six Months Dollar Change Percentage Change

First Nine Months Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

Sales volume for the first six months of 2024 decreased approximately 2.2% compared to the prior year period, as the contributions from partnerships, including Electrolit and C4, and growth in select carbonated soft drinks was more than offset by softness in other parts of our portfolio.

Net sales increased 3.8% to $4,500 million in the first six months of 2024, compared to $4,337 million in the prior year period, driven by favorable net price realization of 4.2%, which was partially offset by unfavorable volume/mix of 0.4%.

Sales volume for the first nine months of 2024 decreased approximately 0.3% compared to the prior year period, as growth in carbonated soft drinks, as well as the contributions from partnerships such as Electrolit and C4, were offset by softness in our still portfolio.

Net sales increased 4.3% to $6,890 million in the first nine months of 2024, compared to $6,607 million in the prior year period, driven by favorable net price realization of 3.2% and volume/mix growth of 1.1%.

Income from Operations.

Income from operations increased $213 million, or 19.0%, to $1,332 million for the first six months of 2024 compared to $1,119 million for the prior year period.

This performance was led by the gross profit impact of net sales growth (11 percentage points) and a net benefit from changes in ingredients, materials, and productivity (4 percentage points), as well as earned equity from the achievement of milestones associated with certain distribution agreements (4 percentage points).

Operating margin improved 380 bps versus the year ago period to 29.6%.

Income from operations increased $259 million, or 14.4%, to $2,054 million for the first nine months of 2024 compared to $1,795 million for the prior year period.

This performance was led by the gross profit impact of net sales growth (10 percentage points), a net benefit from changes in ingredients, materials, and productivity (4 percentage points), and earned equity from the achievement of milestones associated with certain distribution agreements (4 percentage points).

The following table provides selected information about our U.S.

Coffee segment's results:

First Six Months Dollar Change Percentage Change

First Nine Months Dollar Change Percentage Change

(in millions) 2024 2023

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Sales Volume.

K-Cup pod volume decreased 0.4% for the first six months of 2024 compared to the prior year period.

Appliance volume increased 11.0% in the first six months of 2024, driven by Keurig market share momentum.

Net sales decreased 2.1% to $1,861 million for the first six months of 2024 compared to $1,901 million in the prior year period, driven by unfavorable net price realization of 2.4%, partially offset by favorable volume/mix of 0.3%.

K-Cup pod volume decreased 0.4% for the first nine months of 2024 compared to the prior year period.

Appliance volume increased 12.4% in the first nine months of 2024, driven by Keurig market share momentum and improving coffeemaker category trends.

Net sales decreased 2.6% to $2,837 million for the first nine months of 2024 compared to $2,913 million in the prior year period, driven by unfavorable net price realization of 3.7%, partially offset by volume/mix growth of 1.1%.

Income from Operations.

Income from operations decreased $6 million, or 1.2%, to $476 million for the first six months of 2024, compared to $482 million in the prior year period, driven by the gross profit impact of the net sales decrease (8 percentage points), partially offset by a net benefit from changes in ingredients, materials, and productivity (7 percentage points).

Operating margin improved 20 bps versus the year ago period to 25.6%.

Income from operations decreased $45 million, or 5.8%, to $730 million for the first nine months of 2024, compared to $775 million in the prior year period, driven by the gross profit impact of the net sales decrease (13 percentage points) and costs associated with our 2024 Network Optimization program (4 percentage points), partially offset by a net benefit from changes in ingredients, materials, and productivity (8 percentage points) and lower people costs (1 percentage points).

INTERNATIONAL

The following table provides selected information about our International segment's results:

First Six Months Dollar Change Percentage Change

First Nine Months Dollar Change Percentage Change

(in millions) 2024 2023

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K-Cup pods 6.9

Net sales increased 13.8% to $1,029 million in the first six months of 2024, compared to $904 million in the prior year period, reflecting volume/mix growth of 7.9%, higher net price realization of 3.3%, and favorable FX translation of 2.6%.

Appliances 8.3

Net sales increased 8.9% to $1,554 million in the first nine months of 2024, compared to $1,427 million in the prior year period, reflecting volume/mix growth of 6.1% and higher net price realization of 3.4%, partially offset by unfavorable FX translation of 0.6%.

Income from Operations.

Income from operations increased $70 million, or 36.5%, to $262 million for the first six months of 2024 compared to $192 million in the prior year period.

This performance reflected the gross profit impact of net sales growth (49 percentage points), partially offset by higher marketing investment (8 percentage points).

Operating margin improved 430 bps versus the year ago period to 25.5%.

Income from operations increased $88 million, or 26.6%, to $419 million for the first nine months of 2024 compared to $331 million in the prior year period.

This performance reflected the gross profit impact of net sales growth (26 percentage points) and a net benefit from changes in ingredients, materials, and productivity (6 percentage points), partially offset by higher marketing investment (6 percentage points) and increased transportation and warehousing expenses (5 percentage points).

CRITICAL ACCOUNTING ESTIMATES

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to have a material effect on our overall business, liquidity, financial condition or results of operations for the foreseeable future.

The following summarizes our cash activity for the first six months of 2024 and 2023:

The following summarizes our cash activity for the first nine months of 2024 and 2023:

Principal Sources of Capital Resources

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Sources of Liquidity - Operations

Net cash provided by operating activities increased $290 million for the first six months of 2024, as compared to the first six months of 2023, driven by the favorable comparison in working capital versus the prior year period.

Net cash provided by operating activities increased $338 million for the first nine months of 2024, as compared to the first nine months of 2023, driven by the favorable comparison in working capital versus the prior year period.

Cash Conversion Cycle

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The following table summarizes our cash conversion cycle:

September 30,

Cash conversion cycle 4 (23)

Our cash conversion cycle increased 41 days to approximately 4 days as of June 30, 2024 as compared to (37) days as of June 30, 2023, which was primarily driven by the decrease in DPO, reflecting the reduction of payment terms for certain suppliers.

Our cash conversion cycle increased 27 days to approximately 4 days as of September 30, 2024 as compared to (23) days as of September 30, 2023, which was primarily driven by the decrease in DPO, reflecting the reduction of payment terms for certain suppliers.

Accounts Payable Program

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A downgrade of one or both of our debt and commercial paper ratings could increase our interest expense and decrease the cash available to fund anticipated obligations.

As of June 30, 2024, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.

As of September 30, 2024, we were in compliance with all debt covenants and we have no reason to believe that we will be unable to satisfy these covenants.

Principal Uses of Capital Resources

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Regular Quarterly Dividends

We have declared total dividends of $0.43 per share and $0.40 per share for the first six months of 2024 and 2023, respectively.

We have declared total dividends of $0.66 per share and $0.615 per share for the first nine months of 2024 and 2023, respectively.

Repurchases of Common Stock

Our Board authorized a four-year share repurchase program, ending December 31, 2025, of up to $4 billion of our outstanding common stock.

We repurchased and retired $1,105 million of common stock during the first six months of 2024.

As of June 30, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.

We repurchased and retired $1,105 million of common stock during the first nine months of 2024.

As of September 30, 2024, $1,810 million remained available for repurchase under the authorized share repurchase program.

Capital Expenditures

Purchases of property, plant and equipment were $273 million and $149 million for the first six months of 2024 and 2023, respectively.

Capital expenditures, which includes both purchases of property, plant and equipment and amounts included in accounts payable and accrued expenses, for the first six months of 2024 and 2023 primarily related to investments in manufacturing capabilities, both in the U.S.

Purchases of property, plant and equipment were $398 million and $271 million for the first nine months of 2024 and 2023, respectively.

Capital expenditures, which includes both purchases of property, plant and equipment and amounts included in accounts payable and accrued expenses, for the first nine months of 2024 and 2023 primarily related to investments in manufacturing capabilities, both in the U.S.

and internationally.

Capital expenditures included in accounts payable and accrued expenses were $173 million and $214 million for the first six months of 2024 and 2023, respectively, which primarily related to these investments.

Capital expenditures included in accounts payable and accrued expenses were $164 million and $196 million for the first nine months of 2024 and 2023, respectively, which primarily related to these investments.

Investments in Unconsolidated Affiliates

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Our investments generally involve acquiring a minority interest in equity securities of a company, in certain cases with a protected path to ownership at our future option.

Purchases of Intangible Assets

Investments in unconsolidated affiliates were $7 million and $308 million for the first nine months of 2024 and 2023, respectively.

Acquisitions of Businesses and Purchases of Intangible Assets

We have invested in the expansion of our DSD network through transactions with strategic independent bottlers or third-party brand ownership companies to ensure competitive distribution scale.

From time to time, we additionally acquire brand ownership companies to expand our portfolio.

These transactions are generally accounted for as an asset acquisition, as the majority of the transaction price represents the acquisition of an intangible asset.

Purchases of intangible assets were $49 million and $55 million for the first six months of 2024 and 2023, respectively.

These transactions could be accounted for either as an acquisition of a business or as an asset acquisition, as the majority of the transaction price represents the acquisition of a single intangible asset.

In the third quarter of 2024, we completed the Kalil Acquisition for total consideration of $103 million.

Purchases of intangible assets were $49 million and $55 million for the first nine months of 2024 and 2023, respectively.

Uncertainties and Trends Affecting Liquidity

Disruptions in financial and credit markets, including those caused by inflation, global economic uncertainty and rising interest rates, may impact our ability to manage normal commercial relationships with our customers, suppliers and creditors.

Disruptions in financial and credit markets, including those caused by inflation, global economic uncertainty and fluctuations in interest rates, may impact our ability to manage normal commercial relationships with our customers, suppliers and creditors.

These disruptions could have a negative impact on the ability of our customers to timely pay their obligations to us, thus reducing our cash flow, or the ability of our vendors to timely supply materials.

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The summarized financial information for the Parent and Guarantors were as follows:

(in millions) For the First Six Months of 2024

(in millions) For the First Nine Months of 2024

Net sales $ 7,173

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Net income 1,585

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Current assets $ 2,287 $ 1,957

6 unchanged sentences

$ 25,166 $ 23,438

(1) Includes $97 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of June 30, 2024 and December 31, 2023, respectively.

(2) Includes $1,476 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of June 30, 2024 and December 31, 2023, respectively.

(1) Includes $157 million and $56 million of intercompany receivables due to the Parent and Guarantors from the Non-Guarantors as of September 30, 2024 and December 31, 2023, respectively.

(2) Includes $1,549 million and $1,399 million of intercompany payables due to the Non-Guarantors from the Parent and Guarantors as of September 30, 2024 and December 31, 2023, respectively.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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