Coca-Cola Bottling Co. Consolidated (Nasdaq: COKE) today announced results for the second quarter and first half of 2000. Net income was $6.3 million for the second quarter and $4.4 million for the first half, up 2.5% and 159% respectively. On a per share basis, earnings per share were $.72 for the second quarter, even with prior year, and $.50 for the first half, up 150% versus the prior year.
The results for the second quarter and first half reflect lower volume and higher net selling prices. On a constant territory basis, volume is down 6.8% in the second quarter and 7.0% in the first half. The second quarter was impacted by a labor strike in portions of the Company's territory in West Virginia, Ohio and Kentucky, representing approximately 7% of total volume. Although the Company has continued to operate the territory with management personnel, sales have been negatively impacted and the Company is incurring additional expenses. Excluding the branches directly affected by the strike, volume is down 5% for the second quarter and 5.9% on a year-to-date basis. Operating expenses have also been impacted by a reduction in marketing funding from The Coca-Cola Company.
J. Frank Harrison, III, Chairman and CEO, said that he was pleased with the Company's performance through June. Mr. Harrison said, "while comparable volume was down 5% in the quarter, this decline follows several years of accelerated growth. For the second quarter of 1999 and 1998 the Company's volume grew 7% and 14%, respectively. The Company's volume, when viewed over the past few years has been significantly stronger than industry averages, despite the declines we have experienced this year. I believe we will see better volume performance in the second half as prior year hurdles become easier and consumers and customers become more accustomed to higher prices."
James L. Moore, President and COO, said that net revenue per case was up about 8.5% for the second quarter and 9% for the first half of 2000. Mr. Moore said that although these increases are larger than those reported by other publicly held bottling companies, the Company's net price increases are generally comparable, when viewed over a two-year period.
Mr. Moore also said that he expects solid free cash flow as the Company has materially reduced capital spending in an effort to improve returns and gear the Company's asset base to the lower volume in 2000. Mr. Moore said, "the fact that we have already reduced debt by $14 million through June, the period when our debt is historically highest for the year, bodes well for full year free cash flow results."
Forward-looking statements.
Included in this news release are several forward-looking management comments and other statements that reflect management's current outlook for future periods. These expectations are based on the current available competitive, financial and economic data along with the Company's operating plans, and are subject to future events and uncertainties. Among the events or uncertainties which could adversely affect future periods are: lower-than- expected net pricing resulting from increased marketplace competition, an inability to meet performance requirements for expected levels of marketing support payments from The Coca-Cola Company, material changes from expectations in the cost of raw materials and ingredients, higher than expected fuel prices, an inability to meet projections for performance in newly acquired territories and unfavorable interest rate fluctuations. The forward-looking statements in this news release should be read in conjunction with the detailed cautionary statements found on page 19 of the Company's 1999 Annual Report to shareholders.
The results for the second quarter and first half reflect lower volume and higher net selling prices. On a constant territory basis, volume is down 6.8% in the second quarter and 7.0% in the first half. The second quarter was impacted by a labor strike in portions of the Company's territory in West Virginia, Ohio and Kentucky, representing approximately 7% of total volume. Although the Company has continued to operate the territory with management personnel, sales have been negatively impacted and the Company is incurring additional expenses. Excluding the branches directly affected by the strike, volume is down 5% for the second quarter and 5.9% on a year-to-date basis. Operating expenses have also been impacted by a reduction in marketing funding from The Coca-Cola Company.
J. Frank Harrison, III, Chairman and CEO, said that he was pleased with the Company's performance through June. Mr. Harrison said, "while comparable volume was down 5% in the quarter, this decline follows several years of accelerated growth. For the second quarter of 1999 and 1998 the Company's volume grew 7% and 14%, respectively. The Company's volume, when viewed over the past few years has been significantly stronger than industry averages, despite the declines we have experienced this year. I believe we will see better volume performance in the second half as prior year hurdles become easier and consumers and customers become more accustomed to higher prices."
James L. Moore, President and COO, said that net revenue per case was up about 8.5% for the second quarter and 9% for the first half of 2000. Mr. Moore said that although these increases are larger than those reported by other publicly held bottling companies, the Company's net price increases are generally comparable, when viewed over a two-year period.
Mr. Moore also said that he expects solid free cash flow as the Company has materially reduced capital spending in an effort to improve returns and gear the Company's asset base to the lower volume in 2000. Mr. Moore said, "the fact that we have already reduced debt by $14 million through June, the period when our debt is historically highest for the year, bodes well for full year free cash flow results."
Forward-looking statements.
Included in this news release are several forward-looking management comments and other statements that reflect management's current outlook for future periods. These expectations are based on the current available competitive, financial and economic data along with the Company's operating plans, and are subject to future events and uncertainties. Among the events or uncertainties which could adversely affect future periods are: lower-than- expected net pricing resulting from increased marketplace competition, an inability to meet performance requirements for expected levels of marketing support payments from The Coca-Cola Company, material changes from expectations in the cost of raw materials and ingredients, higher than expected fuel prices, an inability to meet projections for performance in newly acquired territories and unfavorable interest rate fluctuations. The forward-looking statements in this news release should be read in conjunction with the detailed cautionary statements found on page 19 of the Company's 1999 Annual Report to shareholders.
Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)
Second Quarter First Half
2000 1999 2000 1999
Net sales $ 270,933 $ 261,037 $ 499,117 $ 481,300
Cost of sales 143,002 145,391 265,245 273,502
Gross margin 127,931 115,646 233,872 207,798
Selling, general and
administrative
expenses 83,815 74,859 158,057 143,083
Depreciation expense 16,224 14,266 32,314 28,914
Amortization of goodwill
and intangibles 3,666 3,346 7,330 6,608
Income from operations 24,226 23,175 36,171 29,193
Interest expense 13,618 12,450 27,554 24,145
Other income (expense),
net (786) (1,239) (1,805) (2,454)
Income before income
taxes 9,822 9,486 6,812 2,594
Federal and state income
taxes 3,505 3,320 2,452 908
Net income $6,317 $6,166 $4,360 $1,686
Basic net income
per share $.72 $.72 $.50 $.20
Diluted net income per
share $.71 $.71 $.50 $.20
Weighted average number of
common shares
outstanding 8,733 8,519 8,733 8,442
Weighted average number of
common shares
outstanding - assuming
dilution 8,837 8,638 8,785 8,563
Income from operations $24,226 $23,175 $36,171 $29,193
Amortization of goodwill
and intangibles 3,666 3,346 7,330 6,608
Depreciation expense 16,224 14,266 32,314 28,914
Operating cash flow $44,116 $40,787 $75,815 $64,715
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