Coca-Cola Bottling Co. Consolidated (COKE), the largest independent bottler of products of The Coca-Cola Company (KO) in the United States, reported adjusted earnings of $1.67 per share in the second-quarter 2014. The results exceeded the year-ago earnings of $1.29 per share by 29.5% driven by lower- than-anticipated input costs.
During the quarter, net sales grew 7% year over year to $459.5 million, driven by higher volumes and pricing. Physical case volumes increased approximately 5%, while pricing added approximately 2%.
Though cost of goods sold increased 5.9%, it was much lower than anticipated, which led to gross margin improvement. Gross profits increased 8.9%, while gross margin expanded 70 basis points to 40.4% in the second quarter.
Selling, delivery and administrative expenses continued to increase in the quarter as the company remains on track to make long-term investments to grow its revenue and market share as well as expand the franchise territory.
As part of the planned territory expansion, the company had signed an agreement with The Coca-Cola Company in May 2014 to expand the bottler’s franchise territory to include the Morristown and Johnson City, TN territories. The second quarter included the strong operating results coming from the successful transition of Johnson City and Morristown, TN territories.
Now the bottler has exclusive rights to distribute brands owned by The Coca-Cola Company in these territories, which were earlier served by Coca-Cola Refreshments USA, Inc. (“CCR”), a wholly-owned subsidiary of The Coca-Cola Company. Also, Coca-Cola bottling co. can now distribute certain other brands not owned by The Coca-Cola Company but which were distributed in the Morristown and Johnson City territories by CCR.
Despite higher selling, delivery and administrative expenses, operating income grew 16.2% to $31.3 million owing to higher sales.
On Jul 18, the board of Coca-Cola Bottling Co. declared its quarterly dividend of 25 cents per share to be paid on Aug 15, 2014 to shareholders of record as of Aug 1.
Coca-Cola Bottling Co. produces, markets and distributes non-alcoholic beverages, primarily products of The Coca-Cola Company. The company is the largest independent bottler of The Coca-Cola Company in the United States, distributing these products in eleven states primarily in the Southeast. The company also has similar agreements with Dr Pepper Snapple Group, Inc. (DPS) and other beverage companies to produce, distribute and market their products in some of its regions.
The western European bottler of The Coca-Cola Company - Coca-Cola Enterprises Inc. (CCE) also recently reported second-quarter 2014, wherein its adjusted earnings beat the Zacks Consensus Estimate, while revenues missed the same.