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Coca-Cola Bottling (COKE) Incurs Loss in Q1, Shares Down

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Coca-Cola Bottling Co. Consolidated’s shares plunged 21.2% on May 9 after the company reported loss in first-quarter 2018 on May 8, after the closing bell. Higher commodity and transportation costs have been playing spoilsport for this largest Coca-Cola (KO - Free Report) bottler in the United States.

Earnings & Sales Discussion

Adjusted loss per share was 82 cents in the first quarter of fiscal 2018. This compares unfavorably with the year-ago income per share of 67 cents.

Coca-Cola Bottling reported net sales of $1.07 billion, up 23.8% year over year. The upside can be attributed to acquisitions and higher volumes. Meanwhile, organic sales growth was 2.4% in the quarter.

Volume grew 19.6% in the quarter led by acquisition (net of divestitures) results, as well as organic volume growth of 2.2%. In addition, Coca-Cola Bottling witnessed higher price/mix compared with the volume. This has helped the company register higher net sales.

Meanwhile, both the sparkling and still beverage categories’ sales got a major boost in the quarter, with sales from sparkling bottle/can growing 17.3% and the same from still bottle/can increasing 26.7%.

Margins

Gross margin plunged 440 basis points (bps) in the quarter due to higher commodity and transportation costs, a higher mix of sales from the lower-margin acquired territories and shifting product mix.

Evidently, the company reported operating loss of $19 million in the quarter against operating income of $15 million in the year-ago period.

Financials

Cash and cash equivalents were $8.5 million as of Apr 1, 2018 compared with $16.9 million as of Dec 31, 2017.

Net cash used in operating activities was $80.7 million in the quarter versus net cash provided by operating activities of $116.5 million in the prior-year period.

Peer Releases

Monster Beverage Corporation (MNST - Free Report) reported first-quarter 2018 results, wherein the bottom line met the Zacks Consensus Estimate whereas the top line missed the same.

The Coca-Cola Company started 2018 on a strong note, beating the Zacks Consensus Estimate on both counts in first-quarter 2018.

PepsiCo, Inc. (PEP - Free Report) reported first-quarter 2018 results, with both earnings and revenues beating the Zacks Consensus Estimate. The improvement was mainly attributable to strong performance in its international divisions, propelled by higher revenue growth in the developing and emerging markets.

Monster Beverage holds a Zacks Rank #4 (Sell) while Coca-Cola and PepsiCo both carry a Zacks Rank#3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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