Coca-Cola Consolidated Inc (CCI) is the biggest Coca-Cola bottler in the United States. CCI has the rights to manufacture, produce, package, distribute and sell non-alcoholic drinks, where their trademarks belong to The Coca-Cola Company under the comprehensive beverage agreements (CBA) in exchange of quarterly sub-bottling payments to The Coca-Cola Company. Around 85% of CCI’s sales volume to retail customers consists of products of The Coca-Cola Company. The company also has agreements to distribute beverage products under two other brands: Monster Energy and Dr. Pepper.
In this article, I’ll summarise 7 key findings of CCI from its annual reports. They are as follows:
1. Sales Volume
CCI now operates 10 manufacturing plants and 60 distribution and sales centres which enable it to sell over 353.1 million cases of beverage products in 14 states in the United States. Currently, CCI sells beverage products to grocery stores, convenience stores, restaurants, club stores and drug stores, mass merchandise stores, restaurants, schools and amusement parks. In 2024, the company generated 17% and 12% of its net sales from Walmart and the Kroger Co.
Source: CCI’s Annual Report 2024
Source: CCI’s Annual Reports
2. Profitability
CCI’s revenue had increased at a 10-Year CAGR of 14.73%, up from US$ 1.75 billion in 2014 to US$ 6.90 billion in 2024. Despite rising sales, CCI had recorded a loss in 2018 and low profits in 2019. This is due to CCI’s dipping profit margins resulting from faster growth in cost of sales and selling, delivery and administration expenses. In 2020 onwards, CCI had improved on its margin and thus, delivered growth in its net income from US$ 182.1 million in 2020 to US$ 633.1 million in 2024.
Source: CCI’s Annual Reports
3. Capital Allocation Strategy
In 2015-2024, CCI generated US$ 4.30 billion in operating cash flows. Also, it has raised around US$ 1.26 billion in net debt. From these cash inflows, CCI had allocated approximately 40.5% in capital expenditures, 13.8% in buying subsidiaries, distribution rights & equity method investees, 12.1% in share buybacks, 6.0% in dividend payments, and 5.7% in short-term investments.
Source: CCI’s Annual Reports
4. Efficiency Ratio
In 2015-2024, CCI had kept its inventory and debtor days at about 27.2 days and 31.6 days. So, CCI took on average 58.8 days to convert its inventories into cash. In that ten-year period, it had taken around 26.3 days to pay off its suppliers (mainly The Coca-Cola Company). Hence, in that period, CCI had kept its cash conversion cycle at around 32.5 days.
5. Balance Sheet
In 2015-2024, CCI had maintained its current ratio at above 1.0. In that period, it has reduced its debt-operating cash flows (LTD/OCF) Ratio from 6.75 years in 2018 to 1.64 years in 2024. Such indicated that CCI has increased its ability to pay off its long-term debt quicker if it chooses to do so.
6. 10-for-1 Stock Split
On 4 March 2025, CCI had announced that its board of directors approved a 10-for-1 stock split. The stock split is subject to stockholder approval on 13 May 2025. If it is approved, stockholders shall receive 9 additional shares for each share held. CCI’s shares shall be adjusted downwards to reflect the 10-for-1 stock split. Let’s say, CCI is now trading at US$ 1,395.72 per share and an investor holds 1 share of CCI. After the stock split, the investor would hold 10 shares of CCI and the price of each share of CCI is adjusted 1/10 to US$ 139.57. So, there’s no change in terms of value of his or her shareholdings in CCI.
7. Valuation
Except 2018-2019, CCI’s P/E Ratio averages around 22.30 in 2015-2024.
Conclusion:
CCI had recorded growth in profits in 2020-2024. Its stock price performance had reflected such growth in profits. Its board of directors had decided to undertake a 10-for-1 stock split in order to make its shares more accessible to a broader range of investors in the near future. As investors, we could compare CCI alongside The Coca-Cola Company, CCEP and as well as many other related listed peers in terms of both fundamentals and valuation before making suitable decisions, when building our respective portfolios.
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