CHARLOTTE, N.C., US – Coca-Cola Consolidated, Inc. reported operating results for the first quarter ended April 2, 2021. “Our business performed incredibly well in the first quarter of 2021 thanks to the continued hard work and dedication of our teammates. While we face continued challenges in 2021, we are building on positive momentum from 2020 to deliver strong operating results so far this year,” said J. Frank Harrison, III, Chairman and Chief Executive Officer.
“As we approach the summer months, we believe our business is well-positioned to stay agile and responsive to our customers. Our Purpose remains front and center in all we do, as we continue to prioritize the health and wellness of our teammates, and to advance our commitment to diversity, sustainability and service in our communities.”
Physical case volume increased 4.8% in the first quarter of 2021. Sparkling beverages maintained steady growth and certain Still brands, including BodyArmor, AHA and Monster, also performed well versus prior year. Sparkling category volume increased 4.5% in the first quarter of 2021, while Still beverage volume increased 5.5%. Sales of multi-serve packages in larger retail stores remained very strong, while single-serve sales improved in small stores and accounts where our products are consumed on-premise. Our first quarter of 2021 included one additional selling day compared to the first quarter of 2020 and we estimate it impacted our physical case growth rates by approximately 1%.
Revenue increased 8.3% in the first quarter of 2021. The increase in revenue from our bottle/can Sparkling beverages was driven primarily by price realization on most Sparkling packages. Sales of multi-serve PET packages were especially strong in the quarter as we adjusted our commercial plans to emphasize these packages to complement our assortment of multi-serve can products in take-home outlets. Sales in take-home channels continue to outpace other channels, but we are seeing improvement in on-premise selling channels as COVID-related restrictions are being lifted throughout our territory.
Gross profit increased $43.4 million, or 10.7%, while gross margin increased 70 basis points to 35.3%. The improvement in gross profit and gross margin was primarily due to price realization within our Sparkling category. In addition, favorable product mix, including the shift within Sparkling to multi-serve PET packages, helped to expand margins. We expect our major input costs, including aluminum, PET and high fructose corn syrup, to rise through the balance of the year which will put pressure on our gross margins. We currently plan to pass along price increases to our customers later this year in an effort to offset this expected cost pressure.
“We are very pleased with our first quarter results as we built on the success of revenue and operating cost initiatives we established in 2020. Our results reflect the continued strong consumer demand for our future consumption products and were further boosted by improved sales in our immediate consumption channels,” said Dave Katz, President and Chief Operating Officer of Coca-Cola Consolidated. “Our results also benefited from strong execution of brand initiatives across our portfolio in the first 100 days of this year including Coca-Cola Zero Sugar, AHA, BodyArmor, smartwater and Coca-Cola with Coffee.”
Selling, delivery and administrative (“SD&A”) expenses in the first quarter of 2021 decreased $18.0 million, or 4.8%. SD&A expenses as a percentage of net sales decreased 390 basis points in the first quarter of 2021. The decrease in SD&A expenses related primarily to lower labor costs as a result of adjustments we made to our operating model during the second quarter of 2020. Additionally, we generated favorable results in a number of expense categories due to the diligent management of our variable operating expenses, including delivery, marketing, and travel & entertainment expenses. As we progress through the year, we expect our operating expenses to increase as business channels reopen and we service our full portfolio of customers.
“While we expect continued uncertainty in the marketplace during 2021 coupled with higher operating expenses and increased input costs, we are confident in our ability to mitigate these headwinds with thoughtful adjustments to our commercial plan and operating model,” Mr. Katz continued. “Our brands are strong, and our customers are rebounding as COVID-related restrictions are lifting. As a result, we remain optimistic about our ability to deliver strong results in 2021.”
Income from operations in the first quarter of 2021 was $94.2 million, compared to $32.8 million in the first quarter of 2020, an increase of 187%. On an adjusted(c) basis, income from operations in the first quarter of 2021 was $93.7 million, an increase of 155%.
Net income in the first quarter of 2021 was $53.4 million, compared to $14.7 million in the first quarter of 2020, an improvement of $38.7 million. Net income in the first quarter of 2021 was adversely impacted by fair value adjustments to our acquisition related contingent consideration liability, driven primarily by changes in future cash flow projections, offset by an increase in the discount rate used to value the liability. Fair value adjustments to this liability are non-cash in nature and a routine part of our quarterly financial closing process. Income tax expense for the first quarter of 2021 was $20.0 million, compared to $5.4 million in the first quarter of 2020. The increase was the result of higher pre-tax income.
Cash flows provided by operations for the first quarter of 2021 were $81.9 million, compared to $32.3 million for the first quarter of 2020. The significant increase in operating cash flows for the first quarter of 2021 was a result of our strong operating performance led by our top line growth, expanded gross margins and effective management of operating expenses. We also remained focused on the effective management of our working capital. This strong cash flow generation and working capital management has allowed us to reduce our long-term debt balance by more than $170 million since the end of the first quarter of 2020. Additionally, we continue to invest in long-term strategic projects to optimize our supply chain and better serve our customers, including the opening of our new automated warehouse facility in Whitestown, Indiana in April 2021.
(a) All comparisons are to the corresponding period in the prior year unless specified otherwise. The first quarter of 2021 included one additional selling day compared to the first quarter of 2020. We do not believe the additional selling day had a material impact on our financial results.
(b) Fountain syrups are dispensed through equipment that mixes with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.
(c) The discussion of the results for the first quarter ended April 2, 2021 includes selected non-GAAP financial information, such as “adjusted” results. The schedules in this news release reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures.
