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COCA COLA CO 8-K Report, Financial Results (Apr 30, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed April 30, 2024
Period End
April 30, 2024
Security
KO
In the record · 2016–202610-K1110-Q338-K143

KO filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 143 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Aug ’22Aug ’22
  2. Leadership change8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed April 30, 2024. Cited figures are marked; the original filing is the authoritative source.

The Coca-Cola Company reported first quarter 2024 results on April 30, 2024, showing a mixed picture beneath a headline that looks alarming.

Reported net revenues rose 3% to $11.3 billiona and organic revenues (non-GAAP) grew 11%, driven by 13% price/mix growth and 1% unit case volume growth. Reported operating income fell 36% to $2.1 billion, with the operating margin contracting to 18.9% from 30.7%. That decline was driven mainly by two non-recurring-style items: a $765 million remeasurement charge on the fairlife contingent consideration liability and a $760 million non-cash impairment of the BODYARMOR trademark, plus currency headwinds.

Excluding these items, comparable operating margin expanded to 32.4% from 31.8%, and comparable currency neutral operating income grew 13%. Reported EPS rose 3% to $0.74b, while comparable EPS (non-GAAP) grew 7% to $0.72, with a 9-point currency headwind. The company reaffirmed a strong underlying trajectory and raised several full-year 2024 guidance items.

Management now expects organic revenue growth of 8% to 9%, comparable currency neutral EPS growth of 11% to 13%, and free cash flow of approximately $9.2 billionc. Comparable EPS growth guidance of 4% to 5% was unchanged, and management flagged a 4% to 5% currency headwind to comparable net revenues and a 7% to 8% currency headwind to comparable EPS, largely due to currency devaluation in markets experiencing intense inflation. Guidance for second quarter 2024 also calls for a roughly 6% currency headwind to comparable net revenues and an 8% to 9% currency headwind to comparable EPS growth.

Investors should note that the reported figures include large non-cash and remeasurement items that distort year-over-year comparisons, so the non-GAAP measures are central to understanding underlying performance. Cash flow from operations improved to $528 milliond from $160 million, and free cash flow turned positive at $158 million, though first quarter cash flow is seasonally small. The company also continues to face an ongoing tax dispute with the U.S. IRS, which is excluded from guidance and represents a potential future liability.

02—Key points

Key Highlights

  1. Net revenues rose 3% to $11.3 billion; organic revenues (non-GAAP) grew 11% on 13% price/mix growth and 1% unit case volume growth
  2. Reported operating income fell 36% to $2.1 billion, with operating margin of 18.9% versus 30.7%, largely due to a $765M fairlife contingent consideration charge and a $760M BODYARMOR trademark impairment
  3. Comparable currency neutral operating income (non-GAAP) grew 13%; comparable operating margin expanded to 32.4% from 31.8%
  4. Reported EPS grew 3% to $0.74; comparable EPS (non-GAAP) grew 7% to $0.72, despite a 9-point currency headwind
  5. Full-year 2024 guidance raised: organic revenue growth of 8% to 9%, comparable currency neutral EPS growth of 11% to 13%, and free cash flow of approximately $9.2 billion
  6. Comparable EPS growth guidance of 4% to 5% unchanged, with currency headwinds of 7% to 8% expected for 2024 and about 8% to 9% for Q2 2024
  7. Operating cash flow of $528M (up $368M year over year) and free cash flow of $158M (up $274M), supported by working capital initiatives

03—Questions

Frequently Asked Questions

  1. Why did reported operating income fall 36% if the business grew?

    The decline reflects items impacting comparability rather than weak underlying operations. Reported operating income absorbed a $765 million charge tied to remeasuring the fairlife contingent consideration liability and a $760 million non-cash impairment of the BODYARMOR trademark. Excluding these and currency effects, comparable currency neutral operating income grew 13%.

  2. What does the full-year 2024 guidance imply for investors?

    Management expects organic revenue growth of 8% to 9% and comparable currency neutral EPS growth of 11% to 13%, indicating strong underlying momentum. However, reported comparable EPS growth is guided to only 4% to 5% because of a 7% to 8% currency headwind, mostly from currency devaluation in highly inflationary markets.

  3. How significant is the currency headwind?

    It is material. Currency reduced reported EPS growth by 7 points and comparable EPS growth by 9 points in the quarter. The company expects 4% to 5% headwinds to comparable net revenues for 2024 and approximately 6% in Q2 2024, which makes reported figures look weaker than constant-currency performance.

  4. Is the IRS tax dispute a risk to the outlook?

    Yes. The company's 19.0% underlying tax rate and its 2024 free cash flow guidance of about $9.2 billion exclude any payments related to the ongoing IRS tax litigation. If the company does not prevail, it could face significant additional tax and interest liabilities that would affect cash flow and earnings.

  5. Is the company's cash generation improving?

    Operating cash flow was $528 million, up from $160 million a year earlier, and free cash flow turned positive at $158 million compared with negative $116 million. Management credited strong business performance and working capital initiatives, though first quarter results are seasonally modest and the full-year cash flow from operations target is about $11.4 billion.

04—Continue

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