COKE 10-K & 10-Q changes, risk factors and insider trading

Raw material costs, including the costs for plastic bottles, aluminum cans, PET resin, carbon dioxide and high-fructose corn syrup, are subject to significant price volatility, which may be worsened by periods of increased demand, supply constraintsconstraints, high inflation or highuncertainty inflation.around tariffs. International or domestic geopolitical or other events, including pandemics, armed conflict or the imposition of tariffs and/or quotas by the U.S. government on any of these raw materials, have adversely impacted and could in the future adversely impact the supply and cost of these raw materials to the Company or render them unavailable at commercially favorable terms or at all. In addition, there are few limits on the prices The Coca‑Cola Company and other beverage companies can charge for concentrate. If the Company cannot offset higher raw material costs with higher selling prices, effective commodity price hedging, increased sales volume or reductions in other costs, the Company’s results of operations and profitability could be adversely affected.

The Company’s success also depends in large part on its ability and the ability of The Coca‑Cola Company and other beverage companies it works with to maintain the brand image of existing products, build up brand image for new products and brand extensions and maintain its corporate reputation and social license to operate. Engagements byof the Company’sCompany or The Coca‑Cola Company or their respective executives in social and public policy debates may occasionally be the subject of criticism from advocacy groups that have differing points of view and could result in adverse media and consumer reaction, including product boycotts. Similarly, the Company’s sponsorship relationships and charitable giving program could subject the Company to negative publicity as a result of actual or perceived views of organizations the Company sponsors or supports financially. Likewise, negative postings or comments on social media or networking websites about the Company, The Coca‑Cola Company or one of the products the Company carries, even if inaccurate or malicious, could generate adverse publicity that could damage the reputation of the Company’s brands or the Company.

Changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients, recycling, sustainabilitysustainability, product safety and productbenefit safety,programs, including SNAP, could reduce demand for the Company’s products and reduce profitability.

Legislation has been proposed in Congress and by certain state and local governments which would prohibit the sale of soft drink products in non-refillable bottles and cans or require a mandatory deposit as a means of encouraging the return of such containers, each in an attempt to reduce solid waste and litter. Similarly, the Company is aware of proposed legislationlegislation, including in the Company’s territory, that would impose fees or taxes on various types of containers that are used in its business, implement new recycling regulations and the reduction of single-use plastics and place the onus on plastic suppliers to identify recycling solutions. The Company is not currently impacted by the policies in such proposed legislation, but it is possible that similar or more restrictive legal requirements may be proposed or enacted within its distribution territories in the future which could adversely impact bottle/can sales. Additionally, legislative priorities for increased recycled content in packaging could adversely impact our margins due to increased demand for such materials. It is also possible that the Company could be a named party in a lawsuit related to the environmental impact of plastics or littering. Any such lawsuit could subject us to liability or damage the reputation of the Company, which could adversely affect the Company’s profitability.

Most beverage products sold by the Company are classified as food or food products and are therefore eligible for purchase using SNAP benefits by consumers purchasing them for home consumption. Energy drinks with a nutrition facts label are also classified as food and are eligible for purchase for home consumption using SNAP benefits, whereas energy drinks classified as a supplement by the FDA are not. Regulators may restrict the use of benefit programs, including SNAP, to purchase certain beverages and foods currently classified as food or food products. Certain states in our territories have implemented, or have announced that they will implement, restrictions on the use of SNAP benefits to purchase of certain of the Company’s products, such as soft drinks or energy drinks.

The Company relies on The Coca‑Cola Company and other beverage companies to invest in the Company through marketing funding and to promote their own company brand identity through external advertising, marketing spending and product innovation. Decreases from historic levels of investment could negatively impact the Company’s business, financial condition and results of operations or profitability.operations.

The Coca‑Cola Company and other beverage companies have historically provided financial support to the Company through marketing funding. While the Company does not believe there will be significant changes to the amount of marketing funding support provided by The Coca‑Cola Company and other beverage companies, the Company’s beverage agreements generally do not obligate such funding and there can be no assurance the historic levels will continue. Decreases in the level of marketing funding provided, material changes in the marketing funding programs’ performance requirements or the Company’s inability to meet the performance requirements for marketing funding could adversely affect the Company’s business, financial condition and results of operations or profitability.operations.

The Company increasingly relies on information technology systems to process, transmit and store electronic information. The Company’s information technology systems are vulnerable to interruption due to a variety of events beyond the Company’s control, including, but not limited to, power outages, computer and telecommunications failures, computer viruses, other malicious computer programs and cyberattacks, denial-of-service attacks, security breaches, catastrophic events such as fires, tornadoes, earthquakes and hurricanes, usage errors by employees and other security issues. In addition, third-party providers of data hosting or cloud services, as well as other vendors, customers and suppliers, are vulnerable to cybersecurity incidents involving data the Company shares with them or data systems the Company relies on. While incidents at our third-party service providers have not materially impacted our business operations, one or more of theseSuch incidents could significantlymaterially impact the Company in the future.

The Company depends heavily upon the efficient operation of technological resources and a failure in these information technology systems or controls could negatively impact the Company’s business, financial condition or results of operations. In addition, the Company continuously upgrades and updates current technology or installs new technology. In order to address risks to its information technology systems, the Company continues to monitor networks and systems, to upgrade security policies and to train its employees, and it requires third-party service providers and business partners, customers, suppliers and other third parties to do the same. The inability to implement upgrades, updates or installations in a timely manner, to train employees effectively in the use of new or updated technology or to obtain the anticipated benefits of the Company’s technology could adversely impact the Company’s business, financial condition,condition or results of operations or profitability.operations. Additionally, the failure of the Company to successfully migrate key data to new systems could lead to data integrity issues, service interruptions or delays and other increased costs that could adversely impact the Company’s business, financial condition or results of operations.

The Company’s financial condition can be impacted by the stabilityperformance of the general economy.

Unfavorable changes in general economic conditions or in the geographic markets in which the Company does business may have the effect of reducing the demand for certain of the Company’s products. For example, economic forces may cause consumers to shift away from purchasing higher-margin products and packages sold through immediate consumption and other highly profitable channels. Periods of sustained high inflation may have adverse impacts on demand for the Company’s products and on the Company’s ability to sustain margins due to higher input costs. In addition, efforts by the government to curb inflation may cause a general economic slowdown. Adverse economic conditions could also increase the likelihood of customer delinquencies and bankruptcies, which would increase the risk of collectability of certain accounts. Each of these factors could adversely affect the Company’s overall business, financial condition and results of operations.

In assessing the Company’s credit strength, credit rating agencies consider the Company’s capital structure, financial policies, consolidated balance sheet and other financial information and may also consider financial information of other bottling and beverage companies. The Company’s credit ratings could be significantly impacted by the Company’s operating performance, changes in the methodologies used by rating agencies to assess the Company’s credit ratings, changes in The Coca‑Cola Company’s credit ratings and the rating agencies’ perception of the impact of credit market conditions on the Company’s current or future financial performance. In November 2025, Standard & Poor’s affirmed the Company’s credit rating of ‘BBB+’ but revised the Company’s rating outlook to negative from stable. Lower credit ratings could significantly increase the Company’s borrowing costs or adversely affect the Company’s ability to obtain additional financing at acceptable interest rates or to refinance existing debt.

Failure to attract, train and retain qualified employees while controlling labor costs and other labor issues could have an adverse effect on the Company’s reputation, business, financial condition and results of operations or profitability.operations.

Natural disasters, changing weather patterns and unfavorable weatherweather, or the increased frequency of any such events due to climate change, and public expectations around combatting climate change or legislative or regulatory responses to such change could negatively impact the Company’s business, financial condition and future results of operations or profitability.operations.

Natural disasters or unfavorable weather conditions in the geographic regions in which the Company or its suppliers operate could have an adverse impact on the Company’s revenue and profitability. For instance, unusually cold or rainy weather during the summer months may have a temporary effect on the demand for the Company’s products and contribute to lower sales, which could adversely affect the Company’s profitability for such periods. Prolonged drought conditions could lead to restrictions on water use, which could adversely affect the Company’s cost and ability to manufacture and distribute products. Hurricanes or similar storms may have a negative sourcing impact or cause shifts in product mix to lower-margin products and packages. There is also concern that climate change could cause significant changes in weather patterns and an increase in the frequency or duration of extreme weather and climate events. These changes could adversely impact some of the Company’s facilities, the availability and cost of key raw materials used by the Company in production or the demand for the Company’s products.

ThereFurthermore, is concern that a gradual increase in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere could cause significant changes in weather patterns and an increase in the frequency or duration of extreme weather and climate events. These changes could adversely impact some of the Company’s facilities, the availability and cost of key raw materials used by the Company in production or the demand for the Company’s products. Publicpublic expectations for reductions in greenhouse gas emissions to combat climate change could result in increased energy, transportation and raw material costs and may require the Company to make additional investments in facilities and equipment. In addition, federal, state or local governmental authorities may propose legislative and regulatory initiatives in response to concerns over climate change, which could directly or indirectly adversely affect the Company’s business, require additional investments or increase the cost of raw materials, fuel, ingredients and water. As a result, the effects of climate change could have a long-term adverse impact on the Company’s business and results of operations.operations

The Company manages its business on the basis of threetwo operating segments. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations. The additional two operating segmentssegment, dowhich includes the Red Classic subsidiaries, does not meet the quantitative thresholdsthreshold for separate reporting, either individually or in the aggregate,reporting and, therefore, havehas been combinedreported intoas “All Other.”

Selling, delivery and administrative (“SD&A”) expenses in 20242025 increased $68.6$88.9 million, or 3.9%.4.8%. SD&A expenses as a percentage of net sales in 20242025 increasedremained 10 basis points to 26.6%stable as compared to 2023.2024. The increase in SD&A expenses relatedwas primarily todriven by the cost of labor, which includes annual wage adjustments made earlier this year and benefitsan adjustments.additional investment in the base wages of our front-line teammates, which became effective at the beginning of the third quarter of 2025.

Income from operations in 20242025 increased $85.9$30.3 million to $920.4$950.7 million and net income in 20242025 increaseddeclined $224.8$62.5 million to $633.1$570.6 million, as compared to 2023.2024. TheOn Company’san adjusted basis, as defined in the “Comparable and Adjusted Results (Non-GAAP)” section, net income taxin expense2025 increasedwas $74.4$668.5 millionmillion, compared to $223.5$678.6 million in 2024, asa decrease of $10.1 million, or 1.5%. As compared to $149.1 million in 2023, primarily as a result of higher income before taxes. Net income in the prior year was adversely impacted by the settlement of our primary pension plan benefit liabilities, which resulted in a non-cash charge of $112.8 million in 2023. Additionally,2024, net income for both 2024 and 20232025 was more adversely impacted by routine, non-cash fair value adjustments to our acquisition related contingent consideration liability, primarily driven by changes in the discount rate and future cash flow projections used to compute the fair value of the liability.liability, and by increased interest expense. Income tax expense for 2025 was $202.3 million, compared to $223.5 million for 2024, resulting in an effective income tax rate of approximately 26% for both periods.

Cash flows from operations for 20242025 were $876.4$931.9 million, compared to $810.7$876.4 million for 2023.2024. Cash flows from operations reflected our strong operating performance during 2024.2025. In 2024,2025, we invested $371.0$312.3 million in capital expenditures as we continue to enhanceoptimize our supply chain and invest for future growth. In fiscal year 2026, we expect capital expenditures to be approximately $300 million. In the fourth quarter of 2025, we repurchased all of the remaining shares of our Common Stock previously owned by The Coca-Cola Company for approximately $2.4 billion. Throughout 2025, we have returned approximately $2.7 billion to stockholders through share repurchases and dividends.

Revenue Management: Our revenue management strategy focuses on pricing our brands and packages optimally within product categories and channels, creating effective working relationships with our customers and making disciplineddisciplined, fact-based decisions. Pricing decisions are made considering a variety of factors, including brand strength, competitive environment, input costs, the roles certain brands play in our product portfolio and other market conditions.

Supply Chain Optimization: We are continually focused on optimizing our supply chain, which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities to increase capacity, expand production capabilities, reduce overall production costs and add automation to allow the Company to better serve its customers and consumers. The Company undertook significant capital expenditures to optimize our supply chain and to invest for future growth during 2024,2025, and expects to continue to make significant investments during fiscal year 2025.2026. During 2024, we purchased our Nashville, Tennessee production facility, which was previously leased, for approximately $56 million. Over the pastfirst fivequarter years,of 2025, the Company madebegan capitaloperations expendituresin ofa approximatelynew $200430,000-square millionfoot relatedautomated todistribution fleet,center $125in millionColumbus, related to automation and $470 million related to supply chain improvements.Ohio.

Optimal Route to Market: We are focused on implementing optimal methods of distribution of our products within our territory.territories. DSD is our preferred and primary route to market. Our typical DSD method uses Company-owned vehicles and warehouses, but we increasingly shifted to alternative methods of distributiondistribution, inor ARTM, during 2024 asand comparedcontinued to 2023.use ARTM during 2025. For example, in instances of post-mix delivery for use in fountain machines, we have shifted and continue to shift our delivery method towards alternative distributors in order to enhance profitability and customer service. InWe instancesreceive ofa bottle/canfee delivery, we have shifted certain products for certain customers and channels of business to alternative routes to market. These alternative routes to market include third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure. These bottle/can arrangements generally come with favorable commercial terms for the Company. During 2024, nearly two-thirds offrom our brand partners on these post-mix gallons anddelivered lessto thanlocally 10%managed customers in our territories, which is recorded as a reduction to cost of our bottle/can volume was delivered through alternative routes to market. We expect to continue to use alternative methods of distribution to deliver post-mix and bottle/can products in future years and, where beneficial, to seek out additional opportunities to shift to alternative methods of distribution.sales.

Digitally Enabled Selling Platform: Through our investment in CONA,CONA Services LLC, we, along with other Coca-Cola bottlers, have built a digitally enabled selling platform called MyCoke that we believe has enabled, and will continue to enableenable, us to better serve our customers. This platform creates a more seamless order and payment platform for certain customers and we expect this platform will continue to enable us to enhance customer service and create more selling opportunities for our teammates. This platform is currently targeted to certain on-premise and small store customers.

Net sales increased $245.9$328.3 million, or 3.7%,4.8%, to $7.23 billion in 2025, as compared to $6.90 billion in 2024, as compared to $6.65 billion in 2023.2024. The largest driver of the increase in net sales was higher average bottle/can sales price per unit charged to retail customers, which increased net sales by approximately $250$215 million. Net sales was also positively impacted by shifts in product mix in 2025, as certain of the Company’s higher-priced brands, including energy, enhanced water and protein products, had strong sales during the period.

The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses. In order to serve our customers in the most efficient way, respond to customer demands and increase profitability, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than through Company-owned vehicles and warehouses. We have shifted the distribution of casepack Dasani water sold in Walmart stores to a non-DSD method of distribution. As a result, these cases are not included in our 2025 or 2024 reported case sales. The impact of this distribution change reduced our reported case sales by 0.8% during 2024.volume.

Inputs representing a substantial portion of the Company’s cost of sales include: (i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles, carbon dioxide and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs. In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits and post-mix funding from brand companies. Input costs,costs for products we produce, including underlying commodity costs for aluminum cans, plastic bottles, carbon dioxide and sweetener, as well as labels and other packaging materials, and excluding concentrate, represent approximately 20% of total cost of sales on an annual basis.

Cost of sales increased $91.4$209.2 million, or 2.3%,5.0%, to $4.36 billion in 2025, as compared to $4.15 billion in 2024, as compared to $4.06 billion in 2023.2024. The increase in cost of sales was primarily driven by higher input costs, including concentrate and manufacturing costs, which increased cost of sales by approximately $120$135 million. Higher input costs included an increase in aluminum costs, which were impacted by elevated import tariffs during 2025. Cost of sales also increased due to shifts in product mix to higher cost Still products as compared to 2024.

The Company relies extensively on advertising and sales promotions in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and to promote sales in the Company’s territories. Our brand partners also provide funding related to the delivery of post-mix gallons to locally managed customers within the Company’s territory.territories. Certain of these marketing, advertising and other funding expenditures are made pursuant to annual arrangements. Total funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $186.5$209.5 million in 2024,2025, as compared to $164.5$186.5 million in 2023.2024.

SD&A expenses include the following: sales management labor costs, distribution costs resulting from transporting finished products from distribution centers to customer locations, distribution center overhead including depreciation expense, distribution center warehousing costs, delivery vehicles and cold drink equipment, point-of-sale expenses, advertising expenses, cold drink equipment repair costs, amortization of intangible assets and administrative support labor and operating costs. Labor costs represent approximately 60%two-thirds of total SD&A expenses on an annual basis.

Interest Expense (Income),Expense, Net

Interest expense (income),expense, net changedincreased $2.8$40.8 million to $42.7 million in 2025, as compared to $1.8 million ofin 2024. The increase in interest expense, net inwas 2024,primarily driven by higher average debt balances during 2025 as compared to $0.92024. In 2025, the Company had $102.9 million of interest income,expense netand in$60.2 2023.million The change inof interest expense (income), net was primarily due to an increase in interest expense on higher debt balances in 2024 as compared to 2023, partially offset by an increase in interest income due to higher cash, cash equivalent and short-term investment balances.income. In 2024, the Company had $62.0 million of interest expense and $60.2 million of interest income. In 2023, the Company had $23.9 million of interest expense and $24.8 million of interest income.

Mark-to-market on acquisition related contingent consideration was an increase of $59.2$131.9 million in 20242025 and an increase of $159.4$59.2 million in 2023.2024. During 2025, the $131.9 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by decreases in the WACC used to calculate the fair value of the liability and higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments. During 2024, the $59.2 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, partially offset by increases in the WACC used to calculate the fair value of the liability. During 2023, the $159.4 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments, as well as decreases in the WACC used to calculated the fair value of the liability.

The Company’s effective income tax rate was 26.2% for 2025 and 26.1% for 2024 and 26.7% for 2023.2024. The Company’s income tax expense increaseddecreased $74.4$21.2 million, or 49.9%,9.5%, to $202.3 million in 2025, as compared to $223.5 million in 2024, as compared to $149.1 million in 2023.2024. The decreaseincrease in the effective income tax rate was primarily attributable to higherlower income before taxes.

Other Comprehensive (Loss) Income, Net of Tax

TheAs of December 31, 2025, the Company has threetwo operating segments, each identified by its unique products and services. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations. The additional two operating segments, which include Data Ventures, Inc. and the Red Classic subsidiaries, do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.” The accounting policies of the Nonalcoholic Beverages operating segment are the same as those described in the summary of significant accounting policies.policies presented in Note 1 to the consolidated financial statements. The additional operating segment, which includes the Red Classic subsidiaries, does not meet the quantitative threshold for separate reporting and, therefore, has been reported as “All Other.”

The tables below reconcile reported results (GAAP) to comparable and adjusted results (non-GAAP). Results for 20242025 include one additionalfewer selling day compared to 2023.2024. For comparison purposes, the estimated impact of the additional selling day in 2024 has been excluded from our comparable volume results. All share or per share amounts impacting the basic net income per share amounts have been retroactively adjusted to reflect the effects of the Stock Split (as defined below) executed by the Company during 2025. Refer to the discussion in “Liquidity and Capital Resources” below for further details related to the Stock Split.

Total assets increaseddecreased $1.02$1.01 billion to $4.30 billion on December 31, 2025, as compared to $5.31 billion on December 31, 2024, as compared to $4.29 billion on December 31, 2023.2024. Net working capital, defined as current assets less current liabilities, was $1.23$298.0 billionmillion on December 31, 2024,2025, which was ana increasedecrease of $620.3$936.1 million from December 31, 2023.2024.

•AnA increasedecrease in current portion of debt of $349.7$249.7 million due to the Company’srepayment of $350 million of senior bondsbonds, maturingnet of issuance costs, which matured on November 25, 2025.2025, offset by the reclassification to current portion of debt of $100 million of senior notes maturing on October 10, 2026.

The Company’s sources of capital include cash flows from operations, available credit facilities and the issuance of debt and equity securities. As of December 31, 2024,2025, the Company had $1.14$281.9 billionmillion in cash and cash equivalents. The Company’s cash equivalent balance at December 31, 20242025 consisted predominantly of investments in money market funds, time deposits and commercial paper with maturities of 90 days or less.funds. As of December 31, 2024,2025, the Company haddid $301.2not millionhave inany short-term investments,investments. whichHistorically, short-term investments have consisted primarily of U.S. Treasury securities and investment-grade corporate bonds with maturities of one year or less. The Company has obtained its debt from public markets, private placements and bank facilities. Management believes the Company has sufficient sources of capital available to finance its business plan, to meet its working capital requirements and to maintain an appropriate level of capital spending for at least the next 12 months from the issuance of the consolidated financial statements.

On August 20, 2024, the Company announced that its Board of Directors had approved a shareShare repurchaseRepurchase programProgram under which the Company iswas initially authorized to repurchase up to $1.00 billion of Common Stock. On November 7, 2025, the Company’s Board of Directors reduced the total authorization under the Share Repurchase Program from $1.00 billion to $400.0 million. The Company expects share repurchases to be made from time to time in the open market or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, the prevailing market price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. AsDuring of December 31, 2024,2025, the Company had repurchased 42,8951,778,081 shares of Common Stock under the shareShare repurchaseRepurchase programProgram for an aggregate purchase price of $51.6$212.0 million, excluding fees and expenses relatingrelated to the share repurchases. As of December 31, 2025, the total remaining share repurchase authorization was $136.3 million.

(1)The 2025 Senior Bonds were issued at 99.975% of par. As of December 31, 2024, theThe 2025 Senior Bonds,Bonds netwere fully repaid during the fourth quarter of debt issuance costs and unamortized discount, were classified as current portion of debt in the consolidated balance sheets.2025.

(3)The 2029Term SeniorLoan BondsFacilities and(as thedefined 2034 Senior Bondsbelow) were issued in connection with the financing of the Tender Offer and the Share Repurchase, as further discussed above.

•The financial position as of AprilJuly 3, 2026 and December 31, 2025.

•The results of operations, comprehensive income and changes in stockholders’ (deficit) equity for the three-month periods ended AprilJuly 3, 2026 (the “firstsecond quarter” of fiscal 2026 (“2026”)) and MarchJune 28,27, 2025 (the “firstsecond quarter” of fiscal 2025 (“2025”)) and the six-month periods ended July 3, 2026 (the “first half” of 2026) and June 27, 2025 (the “first half” of 2025).

•The changes in cash flows for the first quarterhalf of 2026 and the first quarterhalf of 2025.

Volume was up 13.4%7.6% in the second quarter of 2026 and up 10.3% in the first quarterhalf of 2026,the year, or 6.4%7.1% on an adjusted basis.basis, as presented in the “Adjusted Results (Non-GAAP)” section, for the first half of 2026. Our Sparkling category volume increased 12.2%7.0% in the second quarter of 2026 and 9.4% in the first quarterhalf of 2026, or 5.3%6.2% on an adjusted basis.basis, Theas strongpresented in the “Adjusted Results (Non-GAAP)” section. Sparkling volume performancegrowth wasreflected drivenbroad-based by growthgains across the entire portfolio, led by our zero-sugar and flavor offerings. In addition, Coca-Cola Original Taste volume grew in the quarter. Still category volume increased 17.5%9.4% in the second quarter of 2026 and 12.9% in the first quarterhalf of 2026, or 10.2%9.8% on an adjusted basis.basis, Dasanias casepackpresented water accounted for a significant portion ofin the growth“Adjusted withinResults our(Non-GAAP)” Still category.section. The remaining Still category volume growth was driven by strong performance across many brands, including Monster,Core Power, Powerade, BODYARMORsmartwater and smartwater.Monster. Dasani casepack water, which carries a lower net selling price as compared to other Still products, also contributed to a portion of the growth within our Still category. In addition, total volume in the firstsecond quarter of 2026 was also higher as compared to the firstsecond quarter of 2025 due to the timing of the EasterFourth of July holiday, which we estimate impacted total volume by 0.5% toapproximately 1.0%.

Net sales increased 16.9%10.6% to $1.8$2.1 billion in the firstsecond quarter of 2026, or 8.5% on an adjusted basis.2026. The growth in net sales was primarily the result of strongour volume performancegrowth and annual pricing actions executed during the first quarter of 2026,actions, as well as a shift in the Eastertiming of the Fourth of July holiday. Sparkling and Still net sales increased 16.7%9.7% and 18.9%,11.5%, respectively, in the firstsecond quarter of 2026 compared to the first quarter of 2025. Sparkling and Still adjusted net sales increased 8.6% and 10.6%, respectively, in the first quarter of 2026 compared to the firstsecond quarter of 2025. The increase in Sparkling category net sales was driven primarily by sales of multi-pack, take-home aluminum can packages sold within our large store, club and value channels. Net sales of our single-serve Still products were especially strong in our Energy category for convenience and value store customers. Price/mix in the Still category was unfavorably impacted by the increased Dasani casepack volume, as well as slowing volume in the Protein category due to supply constraints.channels.

Gross profit in the firstsecond quarter of 2026 was $727.1$778.4 million, an increase of $100.0$35.9 million, or 15.9%.4.8%. On an adjusted basis, as defined in the “Adjusted Results (Non-GAAP)” section, gross profit increased $41.7$47.3 million, or 6.6%.6.4%. Gross margin in the firstsecond quarter of 2026 decreased 30210 basis points to 39.4%.37.9%. Adjusted gross margin in the firstsecond quarter of 20262026, as presented in the “Adjusted Results (Non-GAAP)” section, decreased 70150 basis points to 39.1%.38.4%. The reduction in gross margin resulted primarily from an increase in aluminum costs, which was caused by geopolitical conflicts, supply constraints and the impact of elevated import tariffs. ThisThese heightenedelevated volatilityaluminum costs resulted in approximately $35$45 million in additional input costs compared to the firstsecond quarter of 2025, which outpaced our annual pricing actions executed during the first quarter.actions.

Selling, delivery and administrative (“SD&A”) expenses in the firstsecond quarter of 2026 increased $52.3$36.7 million, or 12.0%. Approximately $25 million of the increase was related to the six additional days in the first quarter of 2026. Additionally, during the first quarter of 2026, we had a favorable, non-cash fair value adjustment to our fuel hedging positions of $10.0 million. On an adjusted basis, SD&A expenses in the first quarter of 2026 increased $37.5 million, or 8.6%.7.8%. SD&A expenses as a percentage of net sales decreased to 26.5%24.7% in the firstsecond quarter of 2026 from 27.7%25.4% in the first quarter of 2025. On an adjusted basis, SD&A expenses as a percentage of net sales in the first quarter of 2026 were 27.7%, consistent with the firstsecond quarter of 2025. The increase in adjusted SD&A expenses was primarily driven by an additional investment in the base wages of our front-line teammates, which became effective at the beginning of the third quarter of 2025. The remaining increasegrowth in adjusted SD&A expenses was primarilyalso driven by an increase in labor costs related to annual wage adjustmentsadjustments, higher employee benefit costs and higherelevated medicalfuel benefits.costs. In addition, increased volume in the second quarter was also a driver of variable expenses during the quarter. SD&A expenses in the first half of 2026 increased $88.9 million or 9.8%. Approximately $25.0 million of the increase was related to the six additional days in the first half of 2026.

Income from operations in the firstsecond quarter of 2026 was $237.5$271.3 million, compared to $189.8$272.1 million in the firstsecond quarter of 2025, ana increasedecrease of $47.7$0.7 million, or 25.1%.0.3%. On an adjusted basis, as defined in the “Adjusted Results (Non-GAAP)” section, income from operations in the firstsecond quarter of 2026 was $194.6$284.9 million, an increase of $4.2$14.9 million, most of which was due to the timing of the Easter holiday.million. Operating margin for the firstsecond quarter of 2026 was 12.9%13.2% as compared to 12.0%14.7% for the firstsecond quarter of 2025, ana increasedecrease of 90150 basis points. Adjusted operating margin for the firstsecond quarter of 20262026, as presented in the “Adjusted Results (Non-GAAP)” section, was 11.4%13.9% as compared to 12.1%14.6% for the firstsecond quarter of 2025, a decrease of 70 basis points. For the first half of 2026, income from operations increased $47.0 million, or 10.2%. The six additional selling days in the first half of 2026 accounted for approximately $30.0 million of the increase in income from operations.

Net income in the firstsecond quarter of 2026 was $111.6$158.8 million, compared to $103.6$187.4 million in the firstsecond quarter of 2025, ana increasedecline of $7.9$28.6 million, or 7.7%.15.2%. On an adjusted basis, as defined in the “Adjusted Results (Non-GAAP)” section, net income in the firstsecond quarter of 2026 was $119.5$187.7 million, compared to $136.3$195.2 million in the firstsecond quarter of 2025, a decrease of $16.8$7.5 million, or 12.3%.3.8%. TheNet six additional daysincome in the firstsecond quarter of 2026 increasedwas adversely impacted by non-cash, fair value adjustments to both our acquisition related contingent consideration and commodity hedging instruments, as well as an increase in net incomeinterest by approximately $23 million during the quarter.expense.

Cash flows from operations for the first quarterhalf of 2026 were $205.3$420.6 million, compared to $198.2$406.2 million for the first quarterhalf of 2025. During the first quarterhalf of 2026, we repaidinvested $150.0approximately $147 million ofin principalcapital on one of our term loans.expenditures. In fiscal year 2026, we expect capital expenditures to be approximately $300 million. During the second quarter of 2026, we made early repayments of $125 million of principal on one of our term loans, for total year-to-date early term loan repayments of $275 million.

During the first quarterhalf of 2026, approximately two-thirds of our post-mix gallons and less than 10% of our bottle/can volume were delivered through ARTM. These ratios are consistent with the first quarterhalf of 2025.

FirstSecond Quarter Results

The Company’s results of operations for the firstsecond quarter of 2026 and the firstsecond quarter of 2025 are highlighted in the table below and discussed in the following paragraphs. Results for the first quarter of 2026 include six additional days compared to the first quarter of 2025.

Net sales increased $266.7$196.9 million, or 16.9%,10.6%, to $1.85$2.05 billion in the firstsecond quarter of 2026, as compared to $1.58$1.86 billion in the firstsecond quarter of 2025. The six additional days in the first quarter of 2026 as compared to the first quarter of 2025 accounted for approximately $132 million of the increase in net sales during the first quarter of 2026. The remaining growth in net sales was primarily the result of increased case sales volume and annual pricing actions during the firstsecond quarter of 2026, which was up 7.6% as compared to the second quarter of 2025. The growth in net sales was also attributable to higher average bottle/can sales price per unit charged to retail customers, largely as a result of annual pricing actions, as well as a shift in the Eastertiming of the Fourth of July holiday.

The bottle/can sales volume above represents volume that is delivered directly to our customer outlets using Company-owned vehicles and warehouses. In order to serve our customers in the most efficient way, respond to customer demands and increase profitability, the Company has, in certain circumstances, shifted the delivery of our products to third-party distributors, the manufacturer of the product or the customer’s supply chain infrastructure, rather than using Company-owned vehicles and warehouses. As a result, these cases are not included in our reported case sales volume for the first quarterhalf of 2026 or the first quarterhalf of 2025.

Cost of sales increased $166.7$327.7 million, or 17.5%,15.9%, to $1.12$2.39 billion in the first quarterhalf of 2026, as compared to $952.9$2.07 millionbillion in the first quarterhalf of 2025. The increase in cost of sales was largely driven by an increase in case sales volume as compared to the first half of 2025, including the impact of six additional days in the first quarterhalf of 20262026, as compared to the first quarter of 2025which accounted for approximately $77 million of the increase in cost of sales during the first quarterhalf of 2026. The increase in costCost of sales was also impacted throughout the first half of 2026 by higher input costs, specifically aluminum costs, which includedreflected the uncertainty surrounding geopolitical conflictsconflicts, supply constraints and the impact of elevated importtariffs, tariffs.and resulted in approximately $80 million in additional input costs compared to the first half of 2025.

SD&A expenses increased $52.3$88.9 million, or 12.0%,9.8%, to $489.6$1.00 millionbillion in the first quarterhalf of 2026, as compared to $437.3$907.7 million in the first quarterhalf of 2025. The increase in SD&A expenses was primarilypartially attributabledriven toby the six additional days in the first quarterhalf of 2026 as compared to the first quarterhalf of 2025, which accounted for approximately $25 million of the increase in SD&A expenses during the first quarterhalf of 2026. Additionally, SD&A expenses increased due to an increase in labor costs related to annual wage adjustments and an additional investment in the base wages of our front-line teammates, which became effective at the beginning of the third quarter of 2025.2025, an increase in labor costs related to annual wage adjustments and higher employee benefit costs. SD&A expenses as a percentage of net sales decreased to 26.5%25.6% in the first quarterhalf of 2026 from 27.7%26.4% in the first quarterhalf of 2025.

Shipping and handling costs included in SD&A expenses were approximately $216$435 million in the first quarterhalf of 2026 and approximately $194$401 million in the first quarterhalf of 2025. The increase in shipping and handling costs was primarilyalso drivenimpacted by the six additional days in the first quarterhalf of 2026.

Interest expense, net increased $25.2$49.7 million to $32.1$62.5 million in the first quarterhalf of 2026, as compared to $6.9$12.8 million in the first quarterhalf of 2025. The increase in interest expense, net was driven by a reduction in interest income primarily related to lower cash and short-term investment balances and lower interest rates in the first quarterhalf of 2026 as compared to the first quarterhalf of 2025. The increase was also driven by an increase in interest expense on higher debt balances in the first quarterhalf of 2026 as compared to the first quarterhalf of 2025.

Mark-to-market on acquisition related contingent consideration was an increase of $53.4$78.1 million in the first quarterhalf of 2026 andcompared to an increase of $42.7$55.1 million in the first quarterhalf of 2025. During the first quarterhalf of 2026, the $53.4$78.1 million increase in the fair value of the acquisition related contingent consideration liability was driven by a decrease in the WACC used to calculate the fair value of the liability and higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.payments and a decrease in the WACC used to calculate the fair value of the liability. During the first quarterhalf of 2025, the $42.7$55.1 million increase in the fair value of the acquisition related contingent consideration liability was primarily driven by a decrease in the WACC used to calculate the fair value of the liability.liability and changes in projections of future cash flows in the distribution territories subject to acquisition related sub-bottling payments.

Other expense, net was $0.9$1.9 million in the first quarterhalf of 2026,2026 asand compared to $0.7$1.5 million in the first quarterhalf of 2025.

The Company’s effective income tax rate was 26.2% for the first quarterhalf of 2026 and 25.7%25.9% for the first quarterhalf of 2025. The Company’s income tax expense increaseddecreased $3.8$5.5 million, or 10.6%,5.4%, to $39.7$96.0 million for the first quarterhalf of 2026, as compared to $35.9$101.5 million for the first quarterhalf of 2025. The increasedecrease in income tax expense was primarily attributable to higherlower income before taxes during the first quarterhalf of 2026 as compared to the first quarterhalf of 2025.

Other comprehensive income (loss), net of tax was income of $1.3$2.5 million in the first quarterhalf of 2026 and $0.0 million in the first quarterhalf of 2025. The primary driver of the other comprehensive income, net of tax during the first half of 2026 was the mark-to-market adjustments recorded to the Company’s interest rate swap instruments during the period.

Previously, the Company had three operating segments, Nonalcoholic Beverages and two additional operating segments, which included Data Ventures, Inc. and the Red Classic subsidiaries. Since the two additional operating segments did not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, they were combined into “All Other.” As of December 31, 2025, the Data Ventures, Inc. operating segment was liquidated, dissolved and merged into the Nonalcoholic Beverages operating segment. For reporting purposes, all prior periods presented have been retroactively adjusted to reflect the dissolution of the Data Ventures, Inc. operating segment within the All Other operating segment and the merger of the Data Ventures, Inc. operating segment with the Nonalcoholic Beverages operating segment.

The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP) for the second quarter of 2026 and the second quarter of 2025:

(34)Due to the shift in the fiscal calendar, the first quarterhalf of 2026 contained six extra days when compared to the first quarterhalf of 2025. The fourth quarter of 2026 will include six fewer days as compared to the fourth quarter of 2025. The full fiscal years of 2026 and 2025 have the same number of days.

Total assets were $4.39$4.43 billion as of AprilJuly 3, 2026, which was an increase of $89.7$129.5 million from December 31, 2025. Net working capital, defined as current assets less current liabilities, was $285.3$266.4 million as of AprilJuly 3, 2026, which was a decrease of $12.7$31.6 million from December 31, 2025.

Significant changes in net working capital as of AprilJuly 3, 2026 as compared to December 31, 2025 were as follows: