Global Unit Case Volume Grew 3%

Net Revenues Grew 5%;

Organic Revenues (Non-GAAP) Grew 12%

Operating Income Declined 1%;

Comparable Currency Neutral Operating Income (Non-GAAP) Grew 15%

Operating Margin Was 30.7% Versus 32.5% in the Prior Year;

Comparable Operating Margin (Non-GAAP) Was 31.8% Versus 31.4% in the Prior Year

EPS Grew 12% to $0.72; Comparable EPS (Non-GAAP) Grew 5% to $0.68

The Coca-Cola Company today reported first quarter 2023 results, demonstrating resilience in the marketplace despite an operating environment that remains dynamic. "We are encouraged by our first quarter 2023 results," said James Quincey, Chairman and CEO of The Coca-Cola Company. "Our system alignment is stronger than ever, and our networked organization is allowing us to adapt as needed. We continue to invest for the long term, strengthening our capabilities to drive sustainable value for our stakeholders. We have the right portfolio, the right strategy and the right execution to deliver in the marketplace. We are confident in our ability to deliver on our 2023 objectives."

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Highlights

Quarterly Performance

Revenues: Net revenues grew 5% to $11.0 billion, and organic revenues (non-GAAP) grew 12%. Revenue performance included 11% growth in price/mix and 1% growth in concentrate sales. Concentrate sales were 2 points behind unit case volume, largely due to the timing of concentrate shipments and the impact of one less day in the quarter.

Operating margin: Operating margin was 30.7% versus 32.5% in the prior year, while comparable operating margin (non-GAAP) was 31.8% versus 31.4% 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 and higher operating costs versus the prior year as well as currency headwinds.

Earnings per share: EPS grew 12% to $0.72, and comparable EPS (non-GAAP) grew 5% to $0.68. Comparable EPS (non-GAAP) performance included the impact of a 7-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 $160 million, a decline of approximately $460 million versus the prior year, largely due to the timing of working capital initiatives and payments related to acquisitions and divestitures. Free cash flow (non-GAAP) declined approximately $520 million versus the prior year, resulting in negative free cash flow of approximately $120 million.

Company Updates

Growing loved brands through consumer-centric innovation and occasion-based marketing: smartwater®, a billion-dollar brand that is available in 28 markets, grew volume 8% in the first quarter. The company continues to innovate with the brand, recently launching smartwater alkaline with antioxidant to offer premium hydration for consumers with active lifestyles. The innovation features a higher pH level, the antioxidant selenium and a unique electrolyte blend for a crisp, pure taste. The launch was supported by the "Elevate How You Hydrate" marketing campaign, which was promoted through digital platforms such as Spotify, Meta and TikTok, as well as through partnerships with comedian Pete Davidson, Peloton instructor Alex Toussaint and others. The campaign used geolocation apps to drive incremental occasions with on-the-go consumers and segmented experiential sampling in gyms and fitness centers in select U.S. cities.

Driving value through continued excellence in integrated execution in India: The company, in close alignment with its bottling partners, continues to raise the bar in India in integrated execution to deliver value for its customers and consumers. The company grew its business in the first quarter in India by adding retailers, investing in cold-drink equipment and offering the right products at the right price points to recruit consumers. During the first quarter, the company and its bottling partners increased availability by more than 300,000 stores and approximately 40,000 coolers ahead of the summer season and drove approximately 3 billion transactions at affordable price points through single-serve packages and at-home entry packs. The company also increased household penetration via targeted promotions on large packages for the at-home channel. This integrated execution yielded strong results, as the company grew revenue ahead of transactions and grew transactions ahead of volume, while also growing value share in the sparkling soft drinks and juice categories.

Collaborating with cutting-edge technology platforms to experiment, learn and drive results: The company is adopting emerging technologies to drive new approaches, more experimentation and improved speed to market. Coca-Cola is the first company to collaborate with OpenAI and Bain & Company to harness the power of ChatGPT and DALL-E to enhance marketing capabilities and business operations and to build capabilities through cutting-edge artificial intelligence (AI). Within one month of announcing this collaboration, the company launched the "Create Real Magic" platform, which allowed consumers to become digital marketeers by leveraging AI to generate original artwork with iconic creative assets from the Coca-Cola archives. The company is also exploring ways to leverage AI to improve customer service and ordering as well as point-of-sale material creation in collaboration with its bottling partners.

Laying out a roadmap to 2030 Water Security Strategy and driving collective action: Water is a priority for the company because it is essential for beverages and the communities the company serves. Sustainable access to water is critical for the company's success and the resilience of its agricultural supply chain. During the UN 2023 Water Conference in March, the company announced three goals to accelerate action by investing more in its Leadership Locations, which are basins designated based on needs for the company, its supply chain and impacted communities. In addition, the company is working with other partners and stakeholders to improve watershed health and communities' access to clean water and sanitation as part of the Business Leaders' Open Call to Accelerate Action on Water – a partnership to achieve collective positive water impact in at least 100 vulnerable water basins by 2030.

Operating Review – Three Months Ended March 31, 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	11	(6)	(1)	5	12	3
Europe, Middle East & Africa	2	22	(13)	0	10	23	(3)
Latin America	1	18	(5)	0	14	19	5
North America	(2)	11	0	0	9	9	0
Asia Pacific	(2)	5	(8)	2	(3)	3	10
Global Ventures⁴	8	(3)	(8)	0	(3)	5	7
Bottling Investments	3	8	(9)	(7)	(5)	11	(1)

Operating Income and EPS

*Percent Change*	Reported Operating Income	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral Operating Income²
Consolidated	(1)	(7)	(9)	15
Europe, Middle East & Africa	13	1	(17)	28
Latin America	12	2	(8)	18
North America	(2)	(23)	0	21
Asia Pacific	(15)	1	(9)	(7)
Global Ventures	1	(5)	(1)	8
Bottling Investments	(28)	1	(7)	(23)

*Percent Change*	Reported EPS	Items Impacting Comparability	Currency Impact	Comparable Currency Neutral EPS²
Consolidated	12	7	(7)	13

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 3%. Volume performance was driven by strength in away-from-home channels and continued investments in the marketplace. Developed markets grew mid single digits, while developing and emerging markets grew low single digits. Growth in developed markets was led by Mexico, Western Europe and Australia, while growth in developing and emerging markets was led by China, India and Brazil. Developing and emerging markets growth was impacted by the suspension of business in Russia.

Unit case volume performance included the following:

Sparkling soft drinks grew 3%, led by strong performance in Asia Pacific and Latin America, partially offset by the suspension of business in Russia. Trademark Coca-Cola grew 3%, driven by growth across all geographic operating segments. Coca-Cola® Zero Sugar grew 8%, reflecting strong growth across all geographic operating segments. Sparkling flavors grew 3%, driven by Asia Pacific, Latin America and North America, partially offset by Europe, Middle East & Africa.

Juice, value-added dairy and plant-based beverages were even, as strong growth in fairlife® in the United States, Minute Maid® Pulpy in China and Maaza® in India was offset by the suspension of business in Russia.

Water, sports, coffee and tea grew 4%. Water grew 5%, led by strong growth in Asia Pacific and Latin America. Sports drinks declined 1%, primarily driven by BODYARMOR® and Powerade® in the United States. Tea declined 3%, primarily due to doğadan® which was impacted by an earthquake in Türkiye in February. Coffee grew 9%, primarily driven by the strong performance of Costa® coffee in the United Kingdom and China.

Price/mix grew 11%, driven by pricing actions in the marketplace and favorable channel and package mix. Concentrate sales were 2 points behind unit case volume, largely due to the timing of concentrate shipments as well as the impact of one less day in the quarter.

Operating income declined 1%, which included items impacting comparability and an 8-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 15%, driven by strong organic revenue (non-GAAP) growth across all operating segments, partially offset by an increase in marketing investments and higher operating costs versus the prior year.

Europe, Middle East & Africa

Unit case volume declined 3%, as strong growth in Western Europe, Pakistan and South Africa was more than offset by the suspension of business in Russia and the impact of the earthquake in Türkiye in February.

Price/mix grew 22%, driven by pricing actions across operating units along with inflationary pricing in Türkiye. Concentrate sales were 5 points ahead of unit case volume, largely due to the timing of concentrate shipments.

Operating income grew 13%, which included items impacting comparability and a 16-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 28%, as strong organic revenue (non-GAAP) growth across all operating units was partially offset by an increase in marketing investments and higher operating costs versus the prior year.

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

Latin America

Unit case volume grew 5%, with strong growth across all categories. Growth was led by Mexico and Brazil.

Price/mix grew 18%, driven by pricing actions in the marketplace and favorable channel and package mix, in addition to inflationary pricing in Argentina. Concentrate sales were 4 points behind unit case volume, primarily due to the timing of concentrate shipments as well as the impact of one less day in the quarter.

Operating income grew 12%, which included a 6-point currency headwind and items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 18%, primarily driven by strong organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments and higher operating costs versus the prior year.

The company lost value share in total NARTD beverages, as share gains in Brazil, Argentina and Colombia were more than offset by pressure in Mexico.

North America

Unit case volume was even, as growth in sparkling soft drinks and juice, value-added dairy and plant-based beverages was offset by a decline in water, sports, coffee and tea.

Price/mix grew 11%, primarily driven by pricing actions in the marketplace and continued recovery in the fountain business. Concentrate sales were 2 points behind unit case volume, primarily due to the timing of concentrate shipments as well as the impact of one less day in the quarter.

Operating income declined 2%, which included items impacting comparability. Comparable currency neutral operating income (non-GAAP) grew 21%, driven by strong organic revenue (non-GAAP) growth, partially offset by an increase in marketing investments and higher operating costs versus the prior year.

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

Asia Pacific

Unit case volume grew 10%, driven by strong growth across most categories. Growth was led by China, India and Australia.

Price/mix grew 5%, primarily driven by pricing actions in the marketplace, partially offset by negative geographic mix. Concentrate sales were 12 points behind unit case volume, primarily due to cycling the timing of concentrate shipments in the prior year.

Operating income declined 15%, which included items impacting comparability and an 8-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined 7%, primarily driven by higher operating costs versus the prior year.

The company gained value share in total NARTD beverages, led by share gains in Japan, India, Australia and Vietnam.

Global Ventures

Net revenues declined 3%, and organic revenues (non-GAAP) grew 5%. Net revenues included an 8-point currency headwind. Revenue performance benefited from the strong performance of Costa coffee in the United Kingdom and China.

Operating income grew 1%, which included items impacting comparability and a 1-point currency headwind. Comparable currency neutral operating income (non-GAAP) grew 8%, driven by solid organic revenue (non-GAAP) growth as well as a decrease in marketing investments and lower operating costs versus the prior year.

Bottling Investments

Unit case volume declined 1%, primarily driven by the impact of refranchising bottling operations, partially offset by strong growth in India.

Price/mix grew 8%, driven by pricing actions across most markets.

Operating income declined 28%, which included items impacting comparability and a 7-point currency headwind. Comparable currency neutral operating income (non-GAAP) declined 23%, as organic revenue (non-GAAP) growth was more than offset by higher operating costs.

Outlook

The 2023 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, or full-year 2023 projected comparable EPS (non-GAAP) to full-year 2023 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 the exact impact of fluctuations in foreign currency exchange rates throughout 2023. The unavailable information could have a significant impact on the company's full-year 2023 reported financial results.

Full Year 2023

The company expects to deliver organic revenue (non-GAAP) growth of 7% to 8%. – No Change

For comparable net revenues (non-GAAP), the company expects a 2% to 3% 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. – No Change

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 19.5%. This does not include the impact of ongoing tax litigation with the IRS, if the company were not to prevail. – No Change

Given the above considerations, the company expects to deliver comparable currency neutral EPS (non-GAAP) growth of 7% to 9% and comparable EPS (non-GAAP) growth of 4% to 5%, versus $2.48 in 2022. – No Change

Comparable EPS (non-GAAP) percentage growth is expected to include a 3% to 4% 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. – No Change

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

Second Quarter 2023 Considerations – New

Comparable net revenues (non-GAAP) are expected to include a 3% to 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 a 2% to 3% currency headwind based on the current rates and including the impact of hedged positions.

Notes

All references to growth rate percentages, share and stores added 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 first quarter 2023 operating results today, April 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.

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Coca-Cola Reports First Quarter 2023 Results