01—Abstract
Summary
Summary of the 10-Q filed October 24, 2024. Cited figures are marked; the original filing is the authoritative source.
The Coca-Cola Company reported net operating revenues of $11.85 billiona for the third quarter of 2024, a slight decrease of 1% compared to the same period last year.
Net income attributable to shareowners was $2.85 billionb, or $0.66 per diluted share, down from $3.09 billion, or $0.71 per diluted share, in the prior year's quarter. The year-to-date net income attributable to shareowners was $8.44 billion, or $1.95 per diluted share, compared to $8.74 billion, or $2.01 per diluted share, for the same period in 2023. The company's financial performance this quarter was significantly impacted by several large, non-recurring items.
Notably, the company recorded substantial other operating charges, including a $919 millionc remeasurement of contingent consideration for the fairlife acquisition and a $760 million impairment of the BodyArmor trademark. These charges, along with unfavorable foreign currency impacts and increased commodity costs, weighed on profitability. Despite these headwinds, the company saw positive price/mix contributions and continued strategic divestitures, such as the refranchising of bottling operations, which contributed to overall revenue stability.
02—Key points
Key Highlights
- Net operating revenues for the third quarter of 2024 were $11.85 billion, a 1% decrease year-over-year, while year-to-date revenues increased by 2% to $35.52 billion.
- Diluted EPS for the third quarter was $0.66, down from $0.71 in the prior year's quarter, reflecting increased operating charges.
- Significant other operating charges were recorded, including $919 million for fairlife contingent consideration remeasurement and $760 million for the BodyArmor trademark impairment, impacting operating income.
- The company generated strong positive price, product, and geographic mix impacts, contributing favorably to net operating revenues.
- Strategic divestitures, particularly the refranchising of bottling operations in India, Bangladesh, and the Philippines, were completed, contributing to the 'Acquisitions & Divestitures' factor in revenue analysis.
- The company paid a $6.0 billion tax liability related to a long-standing IRS dispute, which significantly impacted cash flow from operations for the nine-month period.
- Liquidity remains strong with $13.9 billion in cash and cash equivalents and $4.6 billion in unused backup lines of credit as of September 27, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Coca Cola Co kept $0.24.
- Revenue$11.85B100.0%
- Cost of revenue−$4.66B39.3%
- Gross profit$7.19B60.7%
- Operating costs−$4.68B39.5%
- Operating income$2.51B21.2%
- Interest, other & tax$338.0M2.9%
- Net income$2.85B24.0%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 24, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $11.85B$11.95B | −0.8% |
| Cost of Revenue | $4.66B$4.66B | +0.2% |
| Gross Profit | $7.19B$7.30B | −1.5% |
| SG&A Expenses | $3.64B$3.67B | −0.8% |
| Operating Income | $2.51B$3.27B | −23.2% |
| Interest Expense | $425.00M$368.00M | +15.5% |
| Net Income | $2.85B$3.09B | −7.7% |
| EPS (Basic) | $0.66$0.71 | −7.0% |
| EPS (Diluted) | $0.66$0.71 | −7.0% |
| Shares Outstanding (Basic) | 4.31B4.32B | −0.3% |
| Shares Outstanding (Diluted) | 4.32B4.34B | −0.4% |
05—Questions
Frequently Asked Questions
What caused the decrease in net income for the third quarter?
The decrease in net income for the third quarter was primarily driven by significant "other operating charges." These included a $919 million remeasurement of contingent consideration related to the fairlife acquisition and a $760 million impairment charge for the BodyArmor trademark. These one-time charges substantially impacted the company's operating income and, consequently, its net income.
How did the IRS tax dispute impact the company's financials?
The company paid a $6.0 billion tax liability, including interest, to the IRS on September 10, 2024, related to a transfer pricing dispute for tax years 2007-2009. This payment significantly reduced net cash provided by operating activities for the nine-month period and has been recorded as other noncurrent assets pending appeal. While the company believes it will prevail on appeal, this payment represents a material financial event.
What is the outlook for the company regarding foreign currency exchange rates?
The company anticipates that foreign currency exchange rate fluctuations will continue to have an unfavorable impact on operating income and cash flows from operating activities for the remainder of the year. This is primarily due to a stronger U.S. dollar against several key foreign currencies.
What are the company's capital allocation priorities?
The company's current capital allocation priorities are to invest wisely to support business operations, continue growing its dividend payments, enhance its beverage portfolio through acquisitions, and use excess cash to repurchase shares over time. They expect 2024 capital expenditures to be approximately $2.2 billion.
06—Continue