Vending

Coca-Cola Consolidated 3Q earnings beat expectations, revenue rises 4.5%

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November 4, 2020

Coca-Cola Consolidated Inc. revenue increased 4.5% from $1.27 billion in the third quarter of 2019 to $1.33 billion in the third quarter ended Sept. 27, 2020, according to an earnings report.

The bottler's non GAAP earnings per share of 7.19 beat expectations by $3.76, according to Seeking Alpha. Third quarter earnings were $1.39 last year.

Shares traded at $232.01 Tuesday against a 52-week range of $188.08-$295.56.

Net income jumped from $13 million in the third quarter of 2019 to $51.8 million in 2020.

"We made tough decisions in the early days of the pandemic to adjust both our commercial plan and our operating model. Demand for our products remained strong in the third quarter as consumers continued to adapt to changes in local markets and fluctuations in their daily routines," Dave Katz, president and chief operating officer, said in a press release. "Our team has done an incredible job working through raw material supply issues and manufacturing constraints to keep our products in-stock to support our retail partners and loyal consumers."

Revenue from bottle/can sparkling beverages increased 7.0% driven primarily by volume growth and price realization within the category.

Sales of multi-serve PET packages were especially strong in the quarter as the company adjusted commercial plans to emphasize PET packages and limit product assortment in cans as demand for aluminum cans has exceeded supply this year.

Revenue from still beverages increased 6.0% in the third quarter of 2020 as a result of higher sales volume in small stores and on-premise outlets.

Revenue from fountain syrup, which is primarily sold through restaurants, convenience stores, amusement parks and other on-premise outlets, declined $19.5 million, or 35.2%, during the third quarter of 2020. While the decline in fountain syrup revenue was significant, the company is experiencing gradual improvement compared to the second quarter of 2020, as traffic continues to increase at on-premise outlets.

Physical case volume increased 3.9% in the third quarter of 2020, as sales of multi-serve packages in larger retail stores remained strong and single-serve sales began to gradually improve in small stores and accounts where products are consumed on-premise. Sparkling category volume increased 3.6% in the third quarter of 2020, while still beverages grew 4.5%. Still beverage sales are more tied to smaller outlets than sparkling category, and sales of still products improved as certain government-imposed restrictions were eased or lifted during the third quarter. While volume growth was strong for the third quarter of 2020, sales volume softened in the last two months of the quarter.

"Our 2020 margins, profit and cash flow are all exceeding our initial expectations as we generate strong top-line growth, realize favorable input costs and tightly manage our operating expenses," Katz said in the release. "Lower single-serve sales during the pandemic resulted in gross profit shortfalls that we have more than offset by significantly reducing spending in a number of categories during this unique time. Our operating expenses will increase as businesses, educational institutions and entertainment venues reopen and consumer activity returns to pre-COVID levels, and we expect moderate commodity price inflation to return in 2021 as well."

Net income in the third quarter of 2020 was $51.9 million, compared to $13.0 million in the third quarter of 2019, an improvement of $38.9 million. Net income in the third quarter of 2020 was adversely impacted by fair value adjustments to acquisition related contingent consideration liability, driven by changes in future cash flow projections.

For an update on how the coronavirus pandemic is affecting convenience services, click here.