The Coca-Cola Company (KO) 10 Feb 222021 Q4 Earnings call transcript

At this time, I’d like to welcome everyone to The Coca-Cola Company’s Fourth Quarter Earnings Results Conference Call. Today’s call is being recorded.

If you have any objections, please disconnect at this time. All participants will be in a listen-only mode until the formal question-and-answer portion of the call. I would like to remind everyone that the purpose of this conference is to talk with investors, and therefore, questions from the media will not be addressed. Coca-Cola’s department, contact any they should questions. participants Media if Relations have Media like introduce would to I now Mr. Vice FP&A. Leveridge, Tim President of IR and Mr. may now you Leveridge, begin.

here during schedules John Murphy, thank us measures, by Chief Financial Chairman at and for principles. that our Information our These Chief schedules generally with executives we in Note I’m financial Investors posted and company and morning, our our Financial non-GAAP James to Officer; referred website under Good www.coca-colacompany.com. morning’s Executive Officer. Quincey, our under you which today. joining of to be section certain may reported discussion results this senior reconcile as accounting accepted the

gross You in our same can that of find section the schedules operating and margins. of provide also our website an analysis

statements and call statements contain periodic the earnings in addition, long-term statements, be release including cautionary SEC conjunction which with In earnings in forward-looking objectives, our concerning should considered Company’s reports. in may contained this

this the we’ll remarks question. Following turn one for call questions. limit to prepared morning, Please yourself over

more reenter than then most one your pressing one, ask please and have queue. first the you If

Now, James. the over call I’ll turn to

pandemic, how Thanks, emerged reflect on macro environment and good executing the like stronger we’re I’d in to quarter. Tim, past in marketplace. year from highlight morning, and the the performance the broader everyone. Today, including the fourth also positive we’ve I’ll and how

the achieve the the briefly quarter for this in touch come with on then John next, for discuss we to accelerators we’ve detail. XXXX on outlook our guidance financial month. growth us provided can CAGNY I’ll more at Finally, them give and more that confidence results will today,

brought I’d of remained our the environment not these organization to like the and focus to additional emerge thank But for and pandemic contribution I’d with it, agile and year, have would hard dynamic empowered like challenges. continued dedicated culture. partners inclusive world, and through to their disruptions operating our them to to ability system In efforts results, evolve, and employees been curious, the and and chain but their the stronger manage possible circumstances around to as over get to to work, acknowledge only inflation like XXXX, not our continued I factors that the flexibility. without system supply our Before our

We were XXXX on are key focused total and remain building beverage with pleased company. a the stronger results, above which across we metrics,

Notably, was Now, the looking at-home we sequential quarter of our at more closely remained quarter and strong. was which it away-from-home in volume of XXXX. volume first We fourth versus year saw ended quarter XXXX, XXXX, results. the with of channels while another ahead ahead improvement also

leveraging we the offerings, the performance business. to leveraged growth in the the omnichannel in and fourth marketing recapping gain zero-calorie festivals around We around share quarter trend delivered Pacific. strategies among Zero doubled quarter. and key integrated share nearly and and China a terms thus in the growing execution of volume sparkling growth Sugar world, quarter consumers RGM our build targeting quarter In So, increase portfolio in overall investments of by strong to points India, by with Asia for XXXX. market four in and marketing the a capturing to occasions presence XX% driving transactions occasion-led of performance starting compared campaigns sequential through passion initiatives for drove e-commerce,

system People challenging volume a $X the focused successful our in resulted retail among our results driven value recovery strong Thums and region. India, In execution volume brand behind many in and driving in the the In Up markets Western was the faced reopenings FMCG large region, brands the helped drive of remaining and innovation share QX, recovery. driven campaigns in and year, in of to EMEA, while Despite In driven marketing strong efforts players became double-digit Pacific, our with In markets quarter in in Egypt. were asynchronous in brand there very restrictions the limited increased South Japan, strategies. local vaccine mobility surpassed [indiscernible] year. billion in Europe. Sprite the acceleration consumers Africa, gained Fanta we part and Nigeria and our fourth incremental system investments highest commercial the with In Europe and in restrictions, quarter, continued in the our a ahead ASEAN XXXX growth be by Colorful by for value our particularly and plans. XXXX strict Additionally, marketplace despite by of from key

quarter capabilities. the the strong packages for digital investments North growth growth Sugar as expanded to macro continued markets, behind grew and share to was our Turkey, in XXXX the pricing, value strong has been despite multi-serve Middle due performance cases delivered XX%. This in year The its of and continued XXXX. position continued close grew in drinker by the Zero driven and growth also to key COVID with experience and navigating drive delivering restrictions, X of availability Global Latin strong led revenue was drove Coca-Cola COVID-related the system our America, driven and category above Almond. performance increased digital the expectations. year the and effective base digital to and of Innovations and strong share Costa management, ahead restrictions. a competitor. more Sprite China, Costa driven Costa results, than through management ready-to-drink business continued In mid-single-digit continuing share strong while key by commerce to expansion growth, Coffee full ahead deliver the top environments of volatile quarter, In value our environment, QX outlets, affordability in in of UK, share strong leading Eurasia Within versus continued delivered resilience buy the execution with closings Express growth Simply value to market. of expand revenue by years year now total strong to Ventures, outpacing than and execution by recover some but new points one rates. impacted in the execution. Coke its strong for volume performances, the East, region. smartwater of in America faster results through by line Additionally, mobility another In XXX,XXX

delivering key was in And Investments objective to stronger in gained year, value. and is strong improved both, group on transformation mobility Finally, growing full away-from-home continued channels. margin this our throughout share our emerging at-home XXXX. operating both, in productivity Due industry agenda. Bottling year year, volume our and for expansion the initiatives, focus a we Gaining and share to value

above at a both and XXXX and away-from-home is NARTD Our at-home market global channels. in levels level share

driven We value will identify opportunities continue data-backed to and share, by further improve insights. address our to

look stronger in we the we XXXX, delivering a line emerged The EPS pandemic close have growing opportunities on industry. top agile an to future we poised As resulted to drive and growth. that on sizable took to focused XXXX, build during chapter the actions gained of by ahead and we both in we share and and capture our continue momentum organization and the is exist, to that the

our clear for is resilience. and what our to XXXX, is to customers know our and are variant great while adapting be business consumers, the this whether us that will with impossible it turn learning we is As last,

system as For example, previous we Further few have through recovery equipped. the weeks disruption interest rates. in as shortages; seen and same we well is better be from the of and overall XXXX including while by labor waves, determined year, macro variant chain the of pressures seeing course, supply not factors, challenges; consumer some inflationary sentiment as Omicron will the in impacts our the first of are level

to are we today. environment equipped we and the deliver confident navigate on We are well provided this guidance

the Now, built the I’ll elaborate stage growth at some we’ve this presentation will CAGNY and unlock virtual later of more capabilities our of next touch on month. to

categories, relationship the excited macro of today We much beverage Lemonade this with optimized and U.S. to strategic the recent and portfolio we in investing be company like that and consumers. to will our consumer brands new the the portfolio the shaping on have strategy. meet BODYARMOR last are the The launch focusing place the and Mixed, which agreement by We will completed win brand continues Constellation with Brands, which being adapting XXXX. agenda, our work beverage deliberate as follow And we We’re launch through are substantial where of emerging about initiatives relationships of for portfolio, acquisition and company Molson in total to and needs consumer our the while our transitions. agenda Coors, of us center fast-growing in are at by and Spiked behind evolving well a habits. brand core total micro Fresca complemented as allows which trends year is on advanced the extended Simply streamlining we consumer eliminations will the This with ensure of we

to Our units, consumer network experiences and on on. global us always model, marketing focus and teams allowing are with local is end-to-end category that operating data-driven

consumers. is network new new and is access the of first Magic gives end-to-end announcement was global showing component and regardless of marketing cocreated approach underpinned model. Our the The agency technology our data campaign, which of WPP leading-edge is as results partner new to source, best campaign us This and the this with marketing our lines, is leveraging created a strong capabilities. campaign the Real by internally, approach, foundational

model. good visibility our deliver best-in-class allow the world. benefits us experiences into consumer-centric marketing of The marketing the new around across to We categories the and will have approach

brands our gross them a ready-to-drink Coke we per working. built And bottles, more momentum and prior respectively, up to that per launch been labelless refillables that year-over-year. packaging process still XX% scalable Sustainable local across of and early, innovation launch build into have winners move intelligent Revenue and Coffee, more fairlife, scale also and markets. Costa examples the focus along with is in with Lemon-Dou XX%, extended versus local AHA, bets approach more were but geographies. to took with can like rapidly year. on all like We It’s are and experiments discipline profit XXXX key

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functions ideas is to our help to faster. organizational networked scale operating and units connect Our structure better designed system

moving we as sustainability a into on forward stronger, driver kept future emerged is integrating work business it we’ve growth. key As of our

to climate action for earning an environmental transparency, improvement important to commitment in We score our CDP’s risks A for over CDP’s recognized by on address water, score and assessment other in maintained areas were we like improved quarter, or an assessments forests. year. the During an our last

Additionally, our packaging reusable economy, and and high reusable options we to refillable Without containers. to and complement goals, Increasing packages create circular low-carbon aspirations, XXXX. our global announced levels a goal and new and it World packaging extremely a sustainability our beverage by affordability of footprint reach XX% collection refillable responds consumer to Waste helps have

partners, from challenging I throughout with say our and a to our commitment dedication another great you associates bottling and work John, to year. the I over Company both and big want turn Before unwavering recognize thank who

our are but industry, encouraged We to that a parallel will enables agile by system own to our and strength, be expect the we us growing recovery adapt. transformation and asynchronous, strategic remain

Our over year deliver and another strong the ability confidence in our performance of XXXX term. results XXXX. in have we strong actions drove to long And in

more provide XXXX will details guidance. results our John Now, and our on

we the year of and many Thank impact of good world. across you, the fourth results, quarter, In James, Omicron closed despite the with strong morning, variant everyone. the the parts

Our QX X%. was growth revenue organic

like XX% in was primarily the revenue showed the many Our offset to sequential and and fewer growth two-year finished quarter, price/mix of inflation of further sales basis XX business quarter. combination was cases targeted with prior for investments well initiatives the further in case in concentrate to quarter a year. by due as markets. package Pricing of growth in the environment, momentum by in on and flat improvement factors, points away-from-home fast-growing initiatives comparable goods, by Unit unit mix as channels days relatively the Despite along pricing, channel versus management commodity and supply incremental dynamic overall favorable chain driven a impact consolidating including improvement business, gross market were XXXX. the BODYARMOR for sustain margin the six

and returns. recovered fewer investments, up in line pressure increase margin operating We a quarter, in for as quarter. markets basis top maximize along days with in the from QX, XXX year-over-year approximately stepped compression to This invest marketing comparable in they the continued some marketing way again resulted spending targeted dollars in in points to six of

the operating margin improved as down offset year For prior marketing. XXX step-up margin full comparable was was versus by the points year, significant comparable approximately basis in gross

flow was comparable operating Importantly, Putting versus XXXX, XX% earnings basis X% $XX.X of tailwind have increase cash long-term in target resurgence currency earnings dividend payout a we our an of in as free comparable XXX of focused up and a year, together, year-over-year, XXX% all from key ratio with $X.XX, points. margin a business prior strong it share of well a of in XXXX, resulting on, the We measure per fourth from XX%. delivered conversion free decline strong comparable was versus and a flow $X.XX the X-point full cash year approximately tax. billion of approximately benefited per below share quarter also of

we these guidance With results, on full year metric XXXX. for every exceeded

done to to stage for our the drive have agenda XXXX come. years tremendous and work emerge We ahead set to of growth

and spinning faster effectively. the are flywheels more strategy We

fuel Our and growth. focused organization enhancing to on is execution capabilities our

on we XXXX As this face be and But With for XXXX. along many in James from one mentioned, builds with we the guidance that of the are adapt that mind, year. our for ready in macro dynamic momentum coming businesses to pandemic local execute backdrop the the growth. that morning, will provided factors,

full headwind We per revenue approximate and and earnings X rates to of headwind on an versus an approximate per currency-neutral share to comparable expect we anticipate growth hedge comparable we X-point earnings X of X% comparable Based positions, currency XX% XXXX. organic approximately share revenue year X%, to currency expect X% growth points XXXX. for and to current to our

XXXX certain XXXX, comparable increase versus X% to estimated headwind combined rate for growth from from due change currency of XX.X% share XXXX, points Additionally, we to headwind estimate expect all-in, regulations, to we to recent an which to Therefore, X- including is a X% per percentage in in X-point and tax effective an XX% EPS. the X earnings tax.

in the flow cash approximately our generate XX%. of approximately of investments. capital from $XX.X $X.X of consecutive free This of year through We cash expect range to billion operations, to cash billion $XX implies flow in XXXX long-term fourth less above approximately free XX% billion conversion

continue hedged year across In raise the inflationary bar along deliver by and in on maximized We supply rates to to continue mind are business. in topline-driven remain with the input well but returns, a growth, expect strong XXXX, driven impact XXXX. inflation in in With organization across hedging considerations to and several Overall, we we of the positions, made another to we benefiting regards we mid-single-digit confident keep costs, summary, sold at several expenses. delivering costs, the continue performance guidance. fronts price higher comparable are to There hedge in in of levels. have strategy in including costs goods this to and our cost after our Based have from strategic business, and expect commodity pressures impact for on transportation, to on XXXX. chain changes XXXX, operating current commodity XXXX marketing

many much its marketplace our we in of forms, the help RGM including using taking levers, in However, are productivity multiple actions initiatives, to offset impact. with along the

comes drive less allowing will our strong, for flexibility our continuing consolidation our When be on one due efficient be with invest system the M&A day there and your to of dividend; another sheet goods BODYARMOR margins. track repurchase first to the came and stronger and shift, capital the acquired grow a growth. XXXX, reminder, business even one structure, allocation, Despite together a priorities of to foremost, finished sustainable and balance shares additional will excess flow year to a opportune mechanical that quarter. And ourselves in have the with uncertainty, is As in to business; remains of and to cash fast-growing we to recently quarter modeling, effect in financial vigorous to more in thirdly, in calendar seek emerge position fourth to capital the balance secondly, pursuit first our us cash. record as our improving position day finally, it

encouraged are clear the by and We our momentum are headed. we’re in direction business on the

we today. to As confident XXXX, look commitments we the on to feel we ability outlined in our deliver

Mohsenian Morgan first Dara Our from Stanley. Instructions] [Operator from question comes

morning. God Hey.

relative to year? are as factors you X% would wanted the XXXX, situation be on why there? -- XXXX? wondering a of a the tailwind look cost I the X% robust specifically or for Is X% to drivers detail question around much COVID given beyond have And And is can factors focus a the sustain more guidance for it Can the elasticity of XXXX demand level. above Thanks. you give we Is that growth and bit X% obviously, that typical more impact behind So, specific key to point sustainable how pricing above-trend organic algorithm? a helpful It to in there. XXXX? long-term to us more bit XXXX occurred the is detail more a less I’m more it limited sales for sort

Sure. Dara. Good morning,

seen Firstly, away-from-home of the channels XXXX we’re coming both improvement with We’ve on strong growth an out good and at-home in the relative XXXX, channels. rate the momentum. to

primarily of but of to December inflation, to back and good And part to due ups second Omicron momentum, due first. that. above notwithstanding factors going So, certain I’ll January. coming and in more to some in The come I’m we’re algorithm parts COVID the in the XXXX year answer and into the downs with is the growth world

it into back you move more as long likely long-term much will look we so, the term, the out And is into algorithm.

we’re in And the us rate industry into a in X%, we the the see of top refresh, of to growing been on industry, that algorithm business and put growth have attention growth. It’s in then Just gaining growing focus that’s X% future. we the at the back if out you to half track being that’s the revenue drive to historically. in or why has robust record allows long-term industry an we can share that coming a

our top think in both a we growth and still to in not ability, be be winner of but to the the long-term the is in to and support that of perspective that particular, terms Coming just algorithm industry the term So, sound share half things an of leader terms and algorithm. the in above the drive XXXX, back couple to near a of number.

of And terms that a terms Firstly, are be to rosy the whilst in to of expecting volume. at do or ongoing world not around not countries number back of improvements XXXX, we indeed, reopening, yet there are in everything even XXXX levels are their revenue see of reactivation. we expect in

will of the incomes whilst right be pricing. pass And to in have have clearly, to to And more as tailwinds inflation, respond are because, it look we, view We a have prices, is in to to XXXX real it’s on intelligently of there volume think talked normal. the as earn And clearly, is through looking bottling a price pricing, marketplace. in up much our inflation terms have do environment so, brands by do we we inflationary side. it’s the there reopening but a easy to on just a putting very very And in secondly, from there we countries. calls slightly than additional that in to we support then, a are that number perspective squeeze with that partners, much going previous price broad-based not take to the

The we do when -- intend have get of given so our long this lot has to consumers moments real lose overall leverage the a between net very of And a company price/mix we within with opportunities scenario you is a to a so, on to, push lot strong our it industry, in also strong experience out foot mean you. balance experience, to managing we system The that is we system not of affordability. of squeeze yes, want volume on the of that and want a revenue innovation. and we’ve forward. all the leverage we guidance And marketing, will see the we premiumization, But incomes, very we experience. likely inflationary in where a much have

next from Our Instructions] Lieberman Barclays. question comes Lauren [Operator from

and thing into talk first It’s And there’s year. was kind North pretty to the been not And things looking a up. fourth and The is challenged. of next the leave is great, conversion little I just how could any America was much goodness, share performance, have question supply clearly, about the I’m still is to that My I was and going everything My that for I at still that’s mention offer bit you chain just market that’s wondering but -- changed. say, though my wanted a shaping Because question. free it on understanding chain. update with supply constraints. that’s Thanks. quarter outlook cash how

Yes, sure.

U.S. number whip around. is on think two perfect One, which to consumers the I’ve a done talked job crisis, the take the calls, say previous I maximum supply of doing examples. a is shock. of No. last manage year? and I to on all it and likely about dimensions. needles to are provide to you some underlie effects exceptional for terms the we in we can chain the the customers issues of kind through No. system an of it this, in to there There our And the needed different full the on. But, the product. the be Was across going things have threaded be have brands in this supply optimize So, availability year? line can temporal things When availability. that Is trying which our two and are our would perfect has we

set to want cans, up and the system for sell fountain less is sell not suddenly more You that. and

game big famous of of the system. the the these waves a get there And the video swings, shock kind case that get through school. business like study earthquake bit to you you continue in of so, ripple like And

that And structural so, see we squeezes going set a again we temporal. I believe, there, will XXXX. they’re of in But saw that of some But underlying last also year, and were supply And of had industries involved, not the on COVID advent pressure pre-COVID. doubled the addressed ourselves the in just down perhaps been by by chain fully that on them. or the

So, in trucking that on and There’s trucking, availability would squeeze a regulations, examples the out freight of the be long-term be hours, the whether aging the it been U.S. of drivers. of the

where test. COVID take people had You didn’t the

And coming example, so, been have decade, at-home including a up. in that canning for but to some Similarly, of are these can structural home been are Everyone, accounts use capacity, ourselves, flat very cans, fixing squeezed People involved roost. in problems attraction can are them. closed COVID. for that spiked manufacturing on just the new and up as got really building plants. the creeping have away-from-home And and

on capacity line. coming is New

reduction going are customers them people our our to portfolio put to to into will the the ability play maximum the from COVID XXXX see the what time and of to fixing some some structural in through from is out going take sell want of brands, that temporal the issues packaging So, the our options and kind steady of maximize do swings still of the we where drinks I hands want you’re think them. of these the amplitudes to through XXXX. possible the portfolio leverage Obviously, to

Modi question Nik from Your Markets. from Capital next RBC comes

Filippo on for Nick. guys. is Falorni morning, Hey. Good This

comment you away-from-home you and outlook, And assuming discuss you. to are business? consumer your gives you XXXX and benefit level cases market in better on more growth Thank first, compared trends topline the relative from what reorganization from you COVID you to share that whether recent can of your your mobility can that waves And of confidence saw prior impact levels? the from decoupling the lower So if performance. terms better on global are Omicron

We’ve in been Well, at-home metric clearly, consumer has a begin And greater gained channels gained in reopening. -- this gained and variant share mandates The moved business, market in both away-from-home we’ve through. gaining are the my market in are week, away-from-home we’ve and And overall. certainly that We versus just the Omicron as XXXX, down. the of favorite Europe at-home. in is of share. we assuming terms are see coming we to can the mask degree U.S., we’ve

the So, XXXX. be not to be improvement in international is there across And mobility world. I going in that’s be XXXX true, back I to fully domestic terms think mobility, in an the both mobility going to are assuming going to and It’s of don’t meant you we in if XXXX answer know anyway, levels. But which people mobility, not or per the same, is moving is improvement country around full to we’re the basically assuming yet world. return the an but a

Your from Spillane America. from Bryan next of Bank question comes

give of the be? net rates be us of little question and about the a can had just tax will because I terms John, interest expense, a growth income I if earnings BODYARMOR where between organic the moving the up, sales bit more higher guidance. growth, in color expense, in the the statement just guess, Because And leverage deal. you will interest we look at currency neutral spread

a there’s like the leverage seem lot income didn’t line. operating it below So, of

get P&L. understanding So, in the is where the trying was better leverage to I -- a just just on net of the

robust. Thanks, Yes, is I Bryan. the line on on -- think is currency neutral, walk you point down the very first the P&L, as top through

taking secondly, top a over done that balance in years, the finding then, out between have that doing the a our for investing good as I we’ve have resource line, overall to think, -- RGM innovation job, done at driven think going pipeline opportunities support efforts work need we much on have we efficiency the we the coming work account play. reorg that we really ‘XX a have last And into of nice job we allocation, that tighter optimizing but on couple to done. also I of the to We and the into are

work So, some net operating line portfolio, have basis. the for net us in the the I completely line actually in expense, And feel a actually our tremendous are confident that we we’ve our restructure XXXX. neutral is the debt done to margin interest currency benefit gross below flex from down given

from Your comes Gajrawala Kaumil next question from Credit Suisse.

and A pricing and commodity needs needs couple different work on just of the your the a of and different as understanding I system, you’re but balance of own businesses certainly inflation of between understand bottlers? you things of pricing your obviously seeing kind regions versus the the that kind you’re such.

do between you how balance the work So, that two?

the about that goes of and the we operate all a pricing. the vast needs almost businesses system, that into system have a business, bit of concentrate pricing go which me bottling the businesses the we the separate some Let through called goes cases, the we’re what’s in in then incidence bottler, whereby talking When majority through business parallel.

the be So, we percent the our have will marketplace. in bottlers agreements the of with revenues a they achieve revenue that where

So same the therefore, much incentivized diligently both more work the terms increase in of aligned way size outcome. to in are trying of the both total to to we pie drive a

the packages in we the pricing whether channels, brands the work on or take come and and do be the that do few And the sense, for or pricing that between a some in rate marketplace, we here whether we So, the and working input take Europe We various looking percentage the business. to have plan, bottlers take goods, it with the, and mix work in the challenges then we’re cost -- and through. together the we’re the BIG of bottlers Clearly, sell it’s the and all up or U.S. bottlers we a businesses that. the at we of doing that through work done. pricing the of both have, chilled and businesses, the course, we that business in for the and we or what the we’re very finished it vertically a get we juice bottlers do where businesses integrated with example, own and Costa much and businesses, there, marketplace operating the those our the

in as of you for input would our innovation consumer, think all manage back capacity including different in the the very trying of I to costs, we in alignment work from do. the the invest can needs to it and working So, invest the as invest portfolio customers. value we kind execution in bottlers take drive much marketing, And

JP next comes Teixeira from from question Your Morgan. Andrea

which in additional you you you My as commentary it on -- pricing XXXX. be probably in how we guide. on-premise and recovering the cans mostly in an bit Thank yet XXXX, elaborate the on should much. improvement implemented already that volumes is an question it and expect about the supply or out, of is in your and market? in balancing parse growth to out? James, pricing can a on that And And is you predicated your implies low-single-digit pricing pointed more actions on volume very And embed you

Sure.

to particularly rather markets -- which the and tends emerging countries, back not away-from-home, in those to it in be Yes, the improvements So, slower by developed levels. in predicated implicit XXXX yes, clearly our broad geographically, tends balance more an growth in is volume price a faster to be volume markets. in guidance, on that yet saying is there between are we’re overall revenue obviously expecting and based

bigger not country. stronger it We have be is true in revenue is and volume, our total emerged every have or business XXXX, -- whilst profits, that we in whether that was than

And and where XXXX. it -- back actually, in not so, total, is in away-from-home to was

the terms there’s XXXX. I moving price/mix, kind rates everyone to it’s it’s into And you segment, implicitly to price would algorithm. to you’ll business of earlier, of implicitly, of by less and at at be to why as two-year clearly effectively been as look your back, modeling in and into some in commented more going about little similarly, think by more -- think a come how guidance have encourage group I look going is to at volume stack So, XXXX than the I than normal there’s look volume which And more little a usual. or long-term with

Your comes next from question Securities. Wells from Carey Chris Fargo

time? how margin with benefit should how about that, Would you just we next Just year. is rate you that around year levels gross expect into that Would mix that barring sequential next Thanks. line your be a the for factors following level that or the gross channel the into thinking that be risk for of should away-from-home ahead you being -- up story might frame improvement and And the geopolitical expect, sequential first for margins volume. continue? XXXX into line Certainly, good should going year? on going from mix QX of channel otherwise, can how pretty improvement

you’re Chris. just Thanks, to improvement sequential in margins? And about confirm, talking gross

business in improvement from away-from-home the QX. Sequential the

Right.

your as impact And margins and year? can the that gross benefit how you get through

Yes.

Okay. we expecting away-from-home about XXXX. into talked in Clearly, the as some going extra on question, the last are we improvement

from to XXXX levels, There’s a of to on. pieces the margin happening not characterize would a thing back year. lot is a that point gross next moving plus view. want as As I and it’s said, yet I going more that biggest the not

and that’s is the So, a in probably But business different think the I it the reopenings growth think overall important, I key. It’s factor. of the the geographies. more

John, add do want to think, anything? you I

XXXX. Yes. on to margins, there factors juncture think what think little a mechanical into the We XXXX I headwind important that slight a tailwind be because expect. have No, just And in maybe the emphasize in I kind a I take a and it’s know the expected with about there’s are we good do acquisition I’d account is to of just into gross be had to say going similar like think, effect to several will picture. of questions that’s we BODYARMOR I bit playing currency negated ‘XX, really that,

to into But the offsetting we that that to improving on power that morning. feeds hence, has I it’s mentioned. that, I There all against pricing and important of I keep channel of take complemented it’s brand into outlook. think will and of the what the benefit think pressures. mix think, I have we some be be, impact important -- And of in by account the guidance the leadership James discussed commodity this provided that the we that factors think also an mind will,

from Your Laboy question from HSBC. Carlos next comes

First might What the solutions. you about on question about worry equity demand innovation. completely innovation new investors marketing this new power? creating refillable and course, My goal, for it processes and for because of and marketing about brand and XX% industry, PET is for waste redirects congratulations on these pricing new all, this normality readiness for

where goal, a and make it a will virgin back we the achieving objectives bottle we it Well, of to PET World for Without thank less for easier collect mean Clearly, intend can using of one or every to Waste, reusable Carlos. calling XXXX. achieve you out much our sell by

I what squeeze the that economy, last been a and question, some our of and less an innovation The will same that inflation and often think I is quite But people where injection been relatively It’s experience I terms categories crisis In historical out captured inelastic the of what lot elasticity. happening to lot noted, it’s into go the experience is multiple throw time, of marketing that of completely help. couple a there times. Eventually, I and the I’m have which there’s me over it support pricing going phase another yes, years. income. of think for. elasticity money think has the you’re when thoughts, But consumer environment also the in let of off there’s not is moves it where a power, a a of it’s our certainly recent in that sure on at

pricing again, is customers we up. And the pricing be in forward. where different engages when that whether environment the consumers whether more much presence do much very with with things things squeeze the through going at. are stimulus we the a go our earnings, previous need the income. phase. so, the it bottling interesting innovation and execution or with whether Because and the and attuned with gives marketing the -- the on burn the a there’s it’s engages in than It’s real our to And really our we the harder good It’s harder consumers, to that to easier as stores opportunity to partners excellence it’s is in-store are phase earn next so in do everyone else that,

have very go the of experience we’re as bottling toolkit opportunity on necessity innovation phase. we we and an with, to next will something that certainly forward. So focused from whole to through be and the partners a winning winning our execution It’s and lot continue deploy it in a marketing

comes Deutsche question from Bank. next Powers from Our Steve

I or more I flexibility and are leverage operating in invented it guess, little kind pricing, specifically? in support in those and profit. it a Just Thank drive the just capabilities the I’m have thinking that context a ‘XX volume ‘XX builds to spoken can and momentum, us your more your the operating you we’ve about on of about strategic forward bit outlook. you. all level plans to to ‘XX, continued guess, the cost beyond. and progress ‘XX you targeted? bit the pressures investments theme. I of plans about missed investment, whether What context only And of strategic that yourself up to A&P talk about not set little building? it’s ability Where around but for justify give your on

bias kind We or to mean, during switched a where we a have Yes, we’ve sure. leaning growth into of and crisis the approach come. I invest.

XXXX, will actually you the increased marketing, of of on so and in innovation. on engines level the steadily And As investment chain. bottlers can investments restarted into we on do supply crisis see through and similarly, the our course the execution

year. bias the going So into that’s our

lot the whether retailers but to ability We’ve in the innovation, to with of a invest market that advances connection of underline the going just the the also bottlers got it’s with the We’re what whether digitization doing not growth. the consumer, of connection business, the the for business. drive digitize are part the and it’s

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agile using So, in we we and the them. hand, we’ve more become got the feel we’ve levers, feel

from comes Securities. question from next Bill Truist Your Chappell

thought And I just going kind other you’ve wanted obviously, Costa big the viewing and forward. quick, of question be I aggressively a to but into there moved showed to BODYARMOR there -- when kind pandemic going ago, or how the of was guess, on and a two, splash was Costa at things. alcohol point, a was splash you’re into system. or not the years a it of on purchased, and kind quick for more a question coffee it to bigger But -- same three up.

Thanks. worldwide, And terms always so, evolved I was if of wanting the arrow to that changed didn’t know the of which process expand or forward part kind kind of or if in it’s another in thought move plan. and the of has quiver,

Sure.

one the COVID business, business, away-from-home longer be short entirely total of it The of arrows is answer it impacted intended in first, cost of was almost an which answer the think version just the business. I our not quiver. but always to clearly impacted, the is that

beginning it XXXX. most very of impact, very all a our U.S. much at was in closed the very in business shops XXXX the in bit those the in coffee are like when were fact, was much the And fountain It particularly the crosshairs so, severe. of lockdowns And COVID in

to of vision we was new performance business. machines, The And of So, where a provide number the the a Proud parts back they where back of well in other to XXXX HORECA to but very Obviously, the extraordinary new of have the thousands back, hard so to coffee world. install And last the of to install were digital we’ve Express we with to launched, One was XXXX hard positive, to components. where machines. but lot barista. Costa progress, yet. are where really our it’s bottlers bouncing very the it stores began machines, of machines the launched not Serve, ready-to-drink, was we’ve beans then, they and channel. for have kind on was were and included year, the existing and The done we made machines a yet, coffee that not reopenings, certain the partnered

that we’ve is see of But the arrows couple it the and still lost to a quiver. no it. and need course, around we the mean, belief confidence us years. one to the the back we’re there’s experience that Clearly, there. from in learnings going where So, we as vision, I some bush, which, against We bounce vision give do. have of beating and to to we we was had to the were -- still able we need execute of an do things have opportunity the

Your from next comes Jefferies. Kevin question Grundy from

And Question also it I’d for related. the topic repurchases. proceeds John like on there share to is and tie potential the because divestitures into bottling

free conversion. sentiment echo outstanding. So improving That’s on again, earlier, flow job great to cash

share buybacks, As later you’ve the offering in remaining divest you year, to about the been this billion clear $XX that coming now have addition up at to bottling in you CCBA the here your sit intent very fact assets.

So, proceeds around does towards from may potentially in fairly divestitures, put CCBA are thanks been it one, tying intermediate near inactive kind your the and number thoughts? relatedly, -- likely Company And get When we those back embedded that? for the The there. reasons has that further then, seem What’s what bottling what this to come So, that term put for to on can of together, you understand. comments would repurchases? with proceeds you that buybacks?

of a situation the and our pursuit XXX%. not cash from Kevin. to long over that with said, vigorous the because you more as very Yes, sort our -- was is to word where used different Thanks, script ago today in reason gone there we the XX% conversion free a it was the --

the been work. at of as piece outside the of mentioned our debt leverage now end less. of the has range of And call, Our on net a very has restructuring more low or gone portfolio conversion the it. from Dividend at I XX%, debt is robust to

touch your context in the So, the at the allocation look question, capital as future, think agenda. I through we we of it broader need to

We touched of the terms in we business. the we in marketing that of growth prioritize we’re that capital both to questions, brands. to drive in the of the some to the businesses that some of earlier need that support continue the need We upon and

ongoing and support dividend. don’t we’re objective we with to then, from Secondly, the M&A the areas, to continue two And waver the share grow agenda repo. left our and dynamic more

that topic And of a to be have as of we in area. on of an will it’s opportunistic. area very I on excess on obvious share the to So, M&A those, out past, continue lot think cash to whole candidates this but but we open that will be whole there, repurchases, -- will not love with communicated not that leverage. we certainly we both call There’s the

more those Thank as go you. to we through on the come So, topics year.

Our from comes from next Laurent question Grandet Guggenheim.

Good John. to I’d this James, BODYARMOR. like forgive morning morning, Hey. on

to you model. concentrate be concentrate brand So, if the I’m expected are to in correct, not and internationally but BODYARMOR the manufacturing launching model migrate the will U.S., is this year wherever in it the

of migrate I’m obviously has significant if and model? a on would your planning to impact outside the the line margins. correct it And me top great. also And launch correct, if please indication to plan Thanks. I’m U.S. any of are So, concentrate not, you U.S. the be when manufacturing

chosen some into our and you integrating we model. it’s change have finished it noted, as it’s to And mean, has and business concentrate John not product company effects. I as are to Laurent. that you we Thanks, say, have had say, a mechanical as Yes. -- a

keeping doing let be through is in momentum, the the change we’re bottling model, we is model product fact, the And with know Coke co-packers. the plans distribution done and the model the what operating more with the that then you of If we And obviously, concentrate product that and They’re in to to manufacturing the In try no largely has using here to stage. job. great we the were of change the where current specific, a at U.S. system done this is due driving co-packers the would have course. been

Again, would it -- not as it plans done been revenue growth the I margin operate But the because our so do coming a at years, the last top what continue wouldn’t is successful the we the be at sales would effect the of the operating They on the from on said, reasons. a to connected as effect mechanical good profit integrated, we changing in the very a BODYARMOR. brand. can more but gained and for immediate it tripled and moment, gross no very drink be in drive a intention to a X so. has do to on It has margin be have of model gross mechanical actually job. category category, the expanded broadly lot that sports really We share

current yet. to Then, more of going kind keep we the not we success that driving of focused as we’re on decided year. internationally, have into in and as So, expand where when

at that’s product that But line in of is organize it effect our co-packed We market an operating finished the on to the will model, top preferred of and the as process, bottlers, and to then, rather our growth course, And there, focus year. will, concentrate versus on then as more sense the line. a look get mechanical whether seem concentrate. business. this impact appropriate produced see work be it situational the the product certainly will be concentrate that a driving than bottom But, model, doing or -- as whether any to Clearly, bottlers or by route it the should to is capacity-driven. whether we make we very is there’s finished

Rob question comes Evercore. next from Ottenstein from Our

years of to done you’ve and over accountability, the leaner, James, terms organization risk-taking. last drive more reward lot agility, couple of the the a in culture

mind. in on you. talk year? you moves you new ‘XX? any ‘XX? results brand played And And how in give SKU card the further of And that evolution of if yourself quantify impact that potential that in Can results specifically, actions the out a or can any of about or more your the this and kind kind on was So, then, has of maybe Maybe wondering you that of benchmark rationalization. Thank one report took that.

expanded back that with of stopped. or -- brands come remember and the it go go back The that one Sure. of I’m the firstly call rationalization, and to SKUs back half some the we rationalization of half the question brands with and -- to going of question. we’ll it. I’ll then the

Some brand transitioned of them, other we into names.

and them, that the And XXXX a say be actually the going to the either some to solve. firstly, is small, couple is contribution, of them percent take XXXX of in of brands And reason all supply space -- much negligible. of the minimal, was of mind impact relatively of is, was terms discontinue -- My impact number we in a sales in I low-single-digit a a and SKUs was but higher chain. and these sum and high occupation

the innovations slower in and long-term to that space growing And their declining future for or up to so, be leaders brands. or brands least moving we’ve categories and really free the removed the more brands with future potential are

to brands actually much for positive comfortable that that those doing the even I’m actually, been profit, it space argument SKUs up stopping better. making have but just them and are entirely freed sales those So could and

grow. say think was let -- garden it you’d to I if like the better to So, pruning it plants the was

And complete brand -- largely that quite off theory so it has and and We’ve cutting is XX%, positive business, we’re with as transition. are sales some brand I we with something though see in process. eliminations even the not the that halfway profits. the to And actually about you’re

thinking in just point of like we’re it would it’s from view, a assume wouldn’t So, if -- I I about modeling shape, but good you’re negligible.

a we the lot organization, clearly, In made terms in moves. of culture the of

for of the of We’re terms on and opportunities. very-focused organization staying the future in behaviors growth and discontent and the the culture agility driving looking constructively about the

campaigns I well to in last doing done the in They’re model. already. still coming what over the couple got year bet years, marketing marketplace. of out another think we have changes big We’ve very down we’ve the some

up that Y do and got and consumer Z. with But We’ve have obviously of X are do before impact pleased services you running. them. before can We’re platform to you our do the effectiveness like, can you there’s

supply we the performance things that we’re of do of looking And of have level bring the terms of chain similarly to to in that still left to stuff. kind for, some so,

as mindset. of the the optimizing done work on culture the think organization I should see really we’ve couple and in the continue fine-tuning we that of over last really focus growth a So, a XXXX terms year of to and years

now to over concludes back like our I would Quincey session. to for turn this Ladies question-and-answer closing and the call remarks. James gentlemen,

Great. XXXX, move propelling Thanks the working we very flywheels unison, organization. for much, everyone. To summarize, as in really our growth to are

growth, to returns. going drive industry. and maximize attractive an And We’re it’s topline again, growing

for is impact. and Our innovation pipeline robust scale

agenda and deliver marketing is engagement Our with consumer speed. agility effective designed to most the

Our bottlers executing are vision engaged And to this bringing life. marketplace. the and we’re

for your you interest, and company your in the morning. for investment thank So, us joining this

today’s concludes call. conference for you this gentlemen, Thank and Ladies participating.

now may You disconnect.