Global Unit Case Volume Grew 2%

Net Revenues Grew 8%;

Organic Revenues (Non-GAAP) Grew 11%

Operating Income Grew 6%;

Comparable Currency Neutral Operating Income (Non-GAAP) Grew 13%

Operating Margin Was 27.4% Versus 27.9% in the Prior Year;

Comparable Operating Margin (Non-GAAP) Was 29.7% Versus 29.5% in the Prior Year

EPS Grew 9% to $0.71; Comparable EPS (Non-GAAP) Grew 7% to $0.74

The Coca-Cola Company today reported third quarter 2023 results, reflecting continued momentum from the first half of the year. "We delivered an overall solid quarter and are raising our full-year topline and bottom-line guidance in light of our year-to-date performance," said James Quincey, Chairman and CEO of The Coca-Cola Company. "Our leading portfolio of brands, coupled with an aligned and motivated system, positions us to win in the marketplace today while also laying the groundwork for the long term."

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Highlights

Quarterly Performance

Revenues: Net revenues grew 8% to $12.0 billion, and organic revenues (non-GAAP) grew 11%. Revenue performance included 9% growth in price/mix and 2% growth in concentrate sales. Concentrate sales were in line with unit case volume.

Operating margin: Operating margin was 27.4% versus 27.9% in the prior year, while comparable operating margin (non-GAAP) was 29.7% versus 29.5% in the prior year. Operating margin decline was primarily driven by items impacting comparability and currency headwinds. Comparable operating margin (non-GAAP) expansion was primarily driven by strong topline growth and the impact of refranchising bottling operations, partially offset by an increase in marketing investments versus the prior year, as well as currency headwinds.

Earnings per share: EPS grew 9% to $0.71, and comparable EPS (non-GAAP) grew 7% to $0.74. Comparable EPS (non-GAAP) performance included the impact of a 4-point currency headwind.

Market share: The company gained value share in total nonalcoholic ready-to-drink (NARTD) beverages.

Cash flow: Cash flow from operations was $8.9 billion year-to-date, an increase of $861 million versus the prior year, driven by strong business performance and working capital initiatives, partially offset by the transition tax payment made during the second quarter. Free cash flow (non-GAAP) was $7.9 billion year-to-date, an increase of $636 million versus the prior year.

Company Updates

Leveraging consumer passion points on a global stage: Around the world, the company continues to link consumption occasions with consumer passion points to build deeper brand connections. For the FIFA Women's World Cup 2023™, the biggest female sporting event in history, the company activated a system-wide campaign in Australia and New Zealand that focused equally on the business, society and people. The company used the reach and relevance of its brands, including Trademark Coca-Cola® and Powerade®, to connect to the global soccer phenomenon by engaging with fans and players through digital storytelling and on-the-ground brand experiences. The campaign contributed to Asia Pacific gaining both value and volume share for the quarter. The campaign was also activated on a global scale in markets where soccer is a loved sport, such as in Latin America, where fans received real-time messages while watching matches. During the quarter, the company announced a long-term partnership with the U.S. Soccer Federation, showing the company's commitment to continue using its brands to support the sport.

Scaling packaging innovations to continue progress toward a circular economy: The company, in close alignment with its global partners, continues to pursue its World Without Waste packaging goals by designing and increasing availability of packages that include a combination of recycled materials or reusable containers. During the quarter, Coca-Cola HBC AG unveiled a new, state-of-the-art line for refillable glass bottles in Austria, boosting refillable packaging capacity. In the United States, the system expanded the availability of Trademark Coca-Cola 20-ounce bottles made from 100% recycled PET plastic material (rPET), excluding cap and label. With this expansion, these bottles are now available in 11 major U.S. markets. Following authorization for the use of rPET in several markets over the past year, including India in February, at least one of the company's beverages is now available in 100% rPET, excluding cap and label, in India, Indonesia, Thailand and Türkiye.

Building a stronger system while strengthening the balance sheet: The company continues to evaluate its fit-for-purpose balance sheet and the needs required to support its growth agenda. Recently, the company entered into a letter of intent to refranchise company-owned bottling operations in the Philippines to Coca-Cola Europacific Partners (CCEP) and Aboitiz Equity Ventures (AEV). The combination of CCEP, a strong and experienced bottler, and AEV, a leading Philippines conglomerate with more than 100 years of experience in the market, provides a great opportunity to unlock long-term system growth. The remaining assets in the Bottling Investments segment include operations in India, Africa and several smaller locations primarily in Asia Pacific. The company remains committed to successfully listing Coca-Cola Beverages Africa as a public company via an initial public offering once market conditions become more favorable.

Operating Review – Three Months Ended September 29, 2023

Revenues and Volume

*Percent Change*	Concentrate Sales¹	Price/Mix	Currency Impact	Acquisitions, Divestitures and Structural Changes, Net	Reported Net Revenues	Organic Revenues²	Unit Case Volume³
Consolidated	2	9	(2)	(1)	8	11	2
Europe, Middle East & Africa	2	19	(12)	0	10	21	(1)
Latin America	5	15	4	0	24	20	7
North America	1	5	0	0	6	6	0
Asia Pacific	1	1	(4)	0	(2)	2	0
Global Ventures⁴	3	6	6	0	15	9	5
Bottling Investments	10	9	(5)	(9)	4	18	2

Operating Income and EPS

*Percent Change*	Reported Operating Income	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral Operating Income²
Consolidated	6	(3)	(5)	13
Europe, Middle East & Africa	9	1	(15)	22
Latin America	38	3	5	31
North America	18	8	0	10
Asia Pacific	(17)	7	(4)	(19)
Global Ventures	21	(2)	5	18
Bottling Investments	185	85	(9)	109

*Percent Change*	Reported EPS	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral EPS²
Consolidated	9	3	(4)	11

Note: Certain rows may not add due to rounding.
¹For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any.
²Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.
³ Unit case volume is computed based on average daily sales.
⁴Due to the combination of multiple business models in the Global Ventures operating segment, the composition of concentrate sales and price/mix may fluctuate materially from period to period. Therefore, the company places greater focus on revenue growth as the best indicator of underlying performance of the Global Ventures operating segment.

In addition to the data in the preceding tables, operating results included the following:

Consolidated

Unit case volume grew 2% for the quarter. Developed markets grew 2% driven by growth in Mexico and Japan. Developing and emerging markets also grew 2% driven by growth in India and the Philippines.

Unit case volume performance included the following:
- Sparkling soft drinks grew 2%, primarily driven by growth in Latin America and Asia Pacific. Trademark Coca-Cola® grew 2%, primarily driven by growth in Latin America and Asia Pacific. Coca-Cola Zero Sugar grew 3%, reflecting growth in Latin America and North America. Sparkling flavors grew 1%, primarily driven by growth in Latin America, Asia Pacific and North America.
- Juice, value-added dairy and plant-based beverages grew 2%, primarily driven by growth in Minute Maid® Pulpy in China, Santa Clara® in Mexico and fairlife® in the United States.
- Water, sports, coffee and tea grew 1%. Water grew 1%, primarily driven by growth in Latin America. Sports drinks grew 3%, primarily driven by Powerade® in Latin America and Europe, Middle East & Africa. Coffee grew 6%, primarily driven by the strong performance of Costa® coffee in the United Kingdom and China. Tea declined 1%, as growth in Asia Pacific was more than offset by declines in Latin America and doğadan® in Türkiye.

Price/mix grew 9%, primarily driven by pricing actions in the marketplace, including the continued impact of hyperinflationary markets, and favorable segment mix. Concentrate sales were in line with unit case volume.

Operating income grew 6%, which included items impacting comparability and a 4-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 13%, driven by organic revenue (non-GAAP) growth across all operating segments, partially offset by an increase in marketing investments.

Europe, Middle East & Africa

Unit case volume declined 1%, as growth in water, sports, coffee and tea was more than offset by declines in other beverage categories. Volume was impacted by the suspension of business in Russia and a decline in Pakistan.

Price/mix grew 19%, approximately one-third of which was driven by the continued impact of pricing in hyperinflationary markets and the remaining driven by pricing actions across operating units, partially offset by unfavorable geographic mix. Concentrate sales were 3 points ahead of unit case volume, primarily due to the timing of concentrate shipments.

Operating income grew 9%, which included a 13-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 22%, primarily driven by organic revenue (non-GAAP) growth across all operating units, partially offset by an increase in marketing investments and higher operating costs.

The company gained value share in total NARTD beverages, led by share gains in Türkiye, France and Nigeria.

Latin America

Unit case volume grew 7%, with strong growth across nearly all categories, led by Mexico and Brazil.

Price/mix grew 15%, approximately half of which was driven by the continued impact of inflationary pricing in Argentina and the remaining driven by pricing actions in the marketplace and favorable channel mix. Concentrate sales were 2 points behind unit case volume, primarily due to the timing of concentrate shipments.

Operating income grew 38%, which included a 7-point currency tailwind and items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 31%, primarily driven by strong organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments.

The company lost value share in total NARTD beverages, as share gains in Brazil, Colombia and Chile were more than offset by unfavorable mix driven by the inflationary environment in Argentina and share losses in Mexico, Peru and Ecuador.

North America

Unit case volume was even, as growth in sparkling flavors, juice and value-added dairy beverages was offset by declines in other beverage categories.

Price/mix grew 5%, primarily driven by pricing actions already in the marketplace. Concentrate sales were 1 point ahead of unit case volume, primarily due to the timing of concentrate shipments.

Operating income grew 18%, which included items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 10%, driven by organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments.

The company gained value share in total NARTD beverages, driven by sparkling soft drinks, juice and value-added dairy beverages.

Asia Pacific

Unit case volume was even, as growth in Trademark Coca-Cola and other beverage categories was offset by a decline in water. Growth in India and the Philippines was offset by declines in China and Indonesia.

Price/mix grew 1%, primarily driven by pricing actions in the marketplace. Concentrate sales were 1 point ahead of unit case volume, primarily due to the timing of concentrate shipments.

Operating income declined 17%, which included items impacting comparability and a 6-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined 19%, as organic revenue (non-GAAP) growth across all operating units was more than offset by higher operating costs and an increase in marketing investments.

The company gained value share in total NARTD beverages, led by share gains in India, the Philippines, South Korea and Japan.

Global Ventures

Net revenues grew 15%, and organic revenues (non-GAAP) grew 9%. Revenue performance benefited from the strong performance of Costa® coffee in the United Kingdom and China.

Operating income grew 21%, which included items impacting comparability and a 5-point currency tailwind. Comparable currency neutral operating income (non-GAAP) grew 18%, driven by solid organic revenue (non-GAAP) growth, partially offset by higher operating costs.

Bottling Investments

Unit case volume grew 2%, primarily driven by growth in India and the Philippines, partially offset by the impact of refranchising bottling operations.

Price/mix grew 9%, driven by pricing actions across most markets, partially offset by unfavorable geographic mix.

Operating income grew 185%, which included items impacting comparability and a 12-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 109%, driven by strong organic revenue (non-GAAP) growth, partially offset by higher operating costs.

Operating Review – Nine Months Ended September 29, 2023

Revenues and Volume

*Percent Change*	Concentrate Sales¹	Price/Mix	Currency Impact	Acquisitions, Divestitures and Structural Changes, Net	Reported Net Revenues	Organic Revenues²	Unit Case Volume³
Consolidated	1	10	(4)	(1)	6	11	2
Europe, Middle East & Africa	(1)	18	(11)	0	6	17	(3)
Latin America	4	17	(1)	0	20	21	5
North America	0	8	0	0	8	8	0
Asia Pacific	(1)	4	(6)	1	(1)	3	4
Global Ventures⁴	6	2	(1)	0	7	8	5
Bottling Investments	6	9	(8)	(8)	(1)	15	0

Operating Income and EPS

*Percent Change*	Reported Operating Income	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral Operating Income²
Consolidated	2	(5)	(7)	15
Europe, Middle East & Africa	2	1	(14)	15
Latin America	23	0	(2)	25
North America	18	1	0	18
Asia Pacific	(14)	1	(6)	(9)
Global Ventures	30	(10)	1	38
Bottling Investments	12	11	(5)	7

*Percent Change*	Reported EPS	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral EPS²
Consolidated	17	9	(6)	14

Note: Certain rows may not add due to rounding.
¹For Bottling Investments, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any.
²Organic revenues, comparable currency neutral operating income and comparable currency neutral EPS are non-GAAP financial measures. Refer to the Reconciliation of GAAP and Non-GAAP Financial Measures section.
³ Unit case volume is computed based on average daily sales.
⁴Due to the combination of multiple business models in the Global Ventures operating segment, the composition of concentrate sales and price/mix may fluctuate materially from period to period. Therefore, the company places greater focus on revenue growth as the best indicator of underlying performance of the Global Ventures operating segment.

Outlook

The 2023 and 2024 outlook information provided below includes forward-looking non-GAAP financial measures, which management uses in measuring performance. The company is not able to reconcile full-year 2023 projected organic revenues (non-GAAP) to full-year 2023 projected reported net revenues, full-year 2023 projected comparable net revenues (non-GAAP) to full-year 2023 projected reported net revenues, full-year 2023 projected comparable cost of goods sold (non-GAAP) to full-year 2023 projected reported cost of goods sold, full-year 2023 projected underlying effective tax rate (non-GAAP) to full-year 2023 projected reported effective tax rate, full-year 2023 projected comparable currency neutral EPS (non-GAAP) to full-year 2023 projected reported EPS, full-year 2023 projected comparable EPS (non-GAAP) to full-year 2023 projected reported EPS, full-year 2024 projected comparable net revenues (non-GAAP) to full-year 2024 projected reported net revenues, or full-year 2024 projected comparable EPS (non-GAAP) to full-year 2024 projected reported EPS without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the exact timing and exact impact of acquisitions, divestitures and structural changes throughout 2023; the exact impact of changes in commodity costs throughout 2023; the exact timing and exact amount of items impacting comparability throughout 2023 and 2024; and the exact impact of fluctuations in foreign currency exchange rates throughout 2023 and 2024. The unavailable information could have a significant impact on the company's full-year 2023 and full-year 2024 reported financial results.

Full Year 2023

The company expects to deliver organic revenue (non-GAAP) growth of 10% to 11%. – Updated

For comparable net revenues (non-GAAP), the company expects an approximate 4% currency headwind based on the current rates and including the impact of hedged positions, in addition to an approximate 1% headwind from acquisitions, divestitures and structural changes. – Updated

The company expects commodity price inflation to be a mid single-digit percentage headwind on comparable cost of goods sold (non-GAAP) based on the current rates and including the impact of hedged positions. – No Change

The company's underlying effective tax rate (non-GAAP) is estimated to be 19.0%. This does not include the impact of ongoing tax litigation with the IRS, if the company were not to prevail. – Updated

Given the above considerations, the company expects to deliver comparable currency neutral EPS (non-GAAP) growth of 13% to 14% and comparable EPS (non-GAAP) growth of 7% to 8%, versus $2.48 in 2022. – Updated

Comparable EPS (non-GAAP) percentage growth is expected to include an approximate 6% currency headwind based on the current rates and including the impact of hedged positions, in addition to a slight headwind from acquisitions, divestitures and structural changes. – Updated

The company expects to generate free cash flow (non-GAAP) of approximately $9.5 billion through cash flow from operations of approximately $11.4 billion, less capital expenditures of approximately $1.9 billion. This does not include any potential payments related to ongoing tax litigation with the IRS. – No Change

The company continues to expect to repurchase shares to offset dilution resulting from employee stock-based compensation plans and may also use a portion of the proceeds we expect to receive from nonoperating activities to repurchase additional shares. – Updated

Fourth Quarter 2023 Considerations – New

Comparable net revenues (non-GAAP) are expected to include an approximate 4% currency headwind based on the current rates and including the impact of hedged positions, in addition to an approximate 1% headwind from acquisitions, divestitures and structural changes.

Comparable EPS (non-GAAP) percentage growth is expected to include an approximate 8% currency headwind based on the current rates and including the impact of hedged positions.

Full Year 2024 Considerations – New

Comparable net revenues (non-GAAP) are expected to include a low single-digit currency headwind based on the current rates and including the impact of hedged positions.

Comparable EPS (non-GAAP) is expected to include a mid single-digit currency headwind based on the current rates and including the impact of hedged positions.

The company will provide full-year 2024 guidance when it reports fourth quarter earnings.

Notes

All references to growth rate percentages and share compare the results of the period to those of the prior year comparable period, unless otherwise noted.

All references to volume and volume percentage changes indicate unit case volume, unless otherwise noted. All volume percentage changes are computed based on average daily sales, unless otherwise noted. "Unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings), with the exception of unit case equivalents for Costa non-ready-to-drink beverage products which are primarily measured in number of transactions. "Unit case volume" means the number of unit cases (or unit case equivalents) of company beverages directly or indirectly sold by the company and its bottling partners to customers or consumers.

"Concentrate sales" represents the amount of concentrates, syrups, beverage bases, source waters and powders/minerals (in all instances expressed in unit case equivalents) sold by, or used in finished beverages sold by, the company to its bottling partners or other customers. For Costa non-ready-to-drink beverage products, "concentrate sales" represents the amount of beverages, primarily measured in number of transactions (in all instances expressed in unit case equivalents) sold by the company to customers or consumers. In the reconciliation of reported net revenues, "concentrate sales" represents the percent change in net revenues attributable to the increase (decrease) in concentrate sales volume for the geographic operating segments and the Global Ventures operating segment after considering the impact of structural changes, if any. For the Bottling Investments operating segment, this represents the percent change in net revenues attributable to the increase (decrease) in unit case volume computed based on total sales (rather than average daily sales) in each of the corresponding periods after considering the impact of structural changes, if any. The Bottling Investments operating segment reflects unit case volume growth for consolidated bottlers only.

"Price/mix" represents the change in net operating revenues caused by factors such as price changes, the mix of products and packages sold, and the mix of channels and geographic territories where the sales occurred.

First quarter 2023 financial results were impacted by one less day as compared to first quarter 2022, and fourth quarter 2023 financial results will be impacted by one additional day as compared to fourth quarter 2022. Unit case volume results for the quarters are not impacted by the variances in days due to the average daily sales computation referenced above.

Conference Call

The company is hosting a conference call with investors and analysts to discuss third quarter 2023 operating results today, Oct. 24, 2023, at 8:30 a.m. ET. The company invites participants to listen to a live webcast of the conference call on the company's website, http://www.coca-colacompany.com, in the "Investors" section. An audio replay in downloadable digital format and a transcript of the call will be available on the website within 24 hours following the call. Further, the "Investors" section of the website includes certain supplemental information and a reconciliation of non-GAAP financial measures to the company's results as reported under GAAP, which may be used during the call when discussing financial results.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231024483795/en/

Coca-Cola Reports Third Quarter 2023 Results and Raises Full-Year Guidance