The Coca-Cola Company (KO) Q3 2024 earnings summary

Executive summary

• Organic revenue grew 9% in Q3 2024, with robust value share gains in both at-home and away-from-home channels, despite a 1% decline in volume and a 1% net revenue decline; sequential volume improvement noted.

• Comparable EPS rose 5% to $0.77, overcoming significant currency headwinds and bottler refranchising impacts, while GAAP EPS declined 7% to $0.66 due to non-recurring charges.

• The business demonstrated resilience across a dynamic global landscape, leveraging marketing, innovation, and digital initiatives to drive growth.

• Net operating revenues for Q3 2024 were $11.85B, down 1% year-over-year; nine-month revenues rose 2% to $35.52B.

• Major non-recurring charges included a $919M fairlife contingent consideration remeasurement and $760M BodyArmor trademark impairment.

Financial highlights

• Price/mix growth was 10%, with about 7 points from pricing and 3 points from mix, driven by developed markets outpacing emerging markets.

• Comparable gross margin expanded by 70 bps and operating margin by 100 bps, aided by bottler refranchising; Q3 reported gross margin was 60.7%, and operating margin was 21.2%.

• Free cash flow (excluding IRS deposit) was $7.6B, down $290M year-over-year due to higher taxes, capex, and working capital cycling.

• Net debt leverage at 1.7x EBITDA, below the target range, but expected to rise with a $6.1B fairlife payment in 2025.

• Cash and equivalents rose to $13.94B as of September 27, 2024.

Outlook and guidance

• Raised 2024 guidance: organic revenue growth expected at ~10%, comparable currency-neutral EPS growth at 14-15%, with a 5% currency headwind for revenue and 9% for EPS.

• Comparable EPS (non-GAAP) growth expected at 5–6% vs. $2.69 in 2023.

• Free cash flow excluding IRS deposit projected at ~$9.2B for 2024.

• 2025 outlook: pricing from inflationary markets to moderate, commodity prices stable for industrials but volatile for agriculture, and continued investment in brands and productivity.

• Expect low single-digit currency headwind to revenue and mid-single-digit headwind to EPS in 2025.