Skip to content
AnalystLens

COCA COLA CO 8-K Report, Financial Results (Oct 23, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed October 23, 2024
Period End
October 23, 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 October 23, 2024. Cited figures are marked; the original filing is the authoritative source.

The Coca-Cola Company's Q3 2024 results (quarter ended September 27, 2024) showed a headline picture that looks weak but is distorted by non-recurring items.

Reported net revenues fell 1% to $11.9 billiona and reported operating income fell 23% to $2.5 billion, with reported operating margin compressing to 21.2% from 27.4%. The main drag was a $919 million non-cash charge from remeasuring the contingent consideration liability tied to the 2020 fairlife acquisition, along with a currency headwind. Reported EPS declined 7% to $0.66.

On a comparable basis, which strips out these items, EPS rose 5% to $0.77b, comparable operating margin expanded 104 basis points to 30.7%, and comparable currency-neutral operating income grew 14%. Organic revenues (non-GAAP) grew 9%, driven by 10% price/mix growth against a 1% decline in global unit case volume. Investors should note that the price-led growth was heavily concentrated in markets with intense inflation, such as Argentina, and that volume was negative in several large markets including China, Mexico and Türkiye.

Cash flow was the most significant reported weakness. Operating cash flow for the nine months fell to $2.9 billionc from $8.9 billion, and free cash flow fell to $1.6 billion, primarily because of a $6.0 billion payment to the IRS as a deposit in ongoing tax litigation. Excluding that deposit, free cash flow was $7.6 billion, down $294 million year over year.

The company also raised debt to fund the IRS deposit and the upcoming fairlife contingent consideration payment, which management says will elevate interest expense. Balance sheet changes are visible: long-term debt rose to $43.0 billiond from $35.5 billion, and cash and short-term investments rose to $16.4 billion. Full-year 2024 guidance was updated in several areas.

Organic revenue growth is now expected at about 10%, with comparable currency-neutral EPS growth raised to 14% to 15%. Comparable EPS growth is still guided at 5% to 6%, which reflects a roughly 9% currency headwind, and free cash flow excluding the IRS deposit is still projected at about $9.2 billion.

The company will give 2025 full-year guidance with its fourth-quarter results. The main uncertainties for investors are the outcome of the IRS litigation (the guidance excludes the impact if the company does not prevail), the timing of the fairlife payment, and currency volatility in inflationary markets.

02—Key points

Key Highlights

  1. Reported net revenues fell 1% to $11.9B; organic revenues (non-GAAP) grew 9%, driven by 10% price/mix against a 1% decline in unit case volume.
  2. Reported operating income fell 23% to $2.5B, largely due to a $919M fairlife contingent consideration remeasurement charge and a currency headwind; comparable operating margin rose to 30.7% from 29.7%.
  3. Reported diluted EPS fell 7% to $0.66; comparable EPS (non-GAAP) rose 5% to $0.77, with a 9-point currency headwind.
  4. Operating cash flow for the nine months fell to $2.9B and free cash flow to $1.6B due to a $6.0B IRS tax litigation deposit; excluding the deposit, free cash flow was $7.6B.
  5. Full-year 2024 guidance: organic revenue growth raised to about 10%, comparable currency-neutral EPS growth raised to 14%-15%, comparable EPS growth held at 5%-6%, and free cash flow excluding the IRS deposit projected at about $9.2B.
  6. Total debt increased substantially; long-term debt rose to $43.0B from $35.5B to fund the IRS deposit and the upcoming fairlife payment, with elevated interest expense expected.
  7. Volume was mixed: growth in Brazil, the Philippines and Japan was offset by declines in China, Mexico and Türkiye; the company gained value share in total NARTD beverages overall, but lost share in Mexico and Brazil.

03—Questions

Frequently Asked Questions

  1. Why did reported operating income and EPS decline so sharply if the business performed well?

    The reported decline was driven mainly by a $919 million non-cash charge from remeasuring the contingent consideration liability for the 2020 fairlife acquisition, plus a currency headwind of about 15 points on operating income. Excluding these items, comparable operating income grew 4% reported and 14% on a currency-neutral basis, and comparable EPS rose 5% to $0.77.

  2. How much of the revenue growth came from price rather than volume?

    Nearly all of it. Organic revenue grew 9% while unit case volume declined 1%, so price/mix (up 10%) carried the result. About 4 points of the price/mix growth came from markets experiencing intense inflation, such as Argentina, which raises questions about how sustainable this pricing is in those markets.

  3. What is the impact of the $6.0 billion IRS tax litigation deposit on the company?

    The deposit reduced reported free cash flow to $1.6 billion for the nine months, compared with $7.9 billion a year earlier. Management excludes the deposit from its non-GAAP free cash flow measure, which was $7.6 billion. Guidance for 2024 free cash flow excluding the deposit is about $9.2 billion, and the company's EPS guidance excludes the impact if it does not prevail in the litigation.

  4. What does the updated guidance mean for 2024 and beyond?

    Full-year 2024 guidance was raised for organic revenue growth (about 10%) and comparable currency-neutral EPS growth (14%-15%), while comparable reported EPS growth remains 5%-6% because of an expected 9% currency headwind. Fourth-quarter 2024 is expected to face a further 10% currency headwind to EPS. The company will issue 2025 full-year guidance with fourth-quarter results, and currently expects a mid single-digit currency headwind to 2025 EPS growth.

  5. Why is debt increasing, and what does it mean for the company's financial flexibility?

    The company issued debt to fund the $6.0 billion IRS deposit and to prepare for the upcoming fairlife contingent consideration payment. Long-term debt rose to $43.0 billion from $35.5 billion at year-end 2023, and management expects higher interest expense. Cash and short-term investments also rose to $16.4 billion, which partly offsets the increase in borrowings.

04—Continue

← View all 8-K filings