ATLANTA, U.S. – The Coca-Cola Company is reaffirming its full year 2017 guidance as well as its previously provided full year 2018 outlook considerations.
The company is also reiterating its long-term targets of mid single-digit organic revenue growth (non-GAAP) and high single-digit comparable currency neutral EPS growth (non-GAAP). The company is now targeting comparable currency neutral operating income growth (non-GAAP) of 6 to 8 percent. In addition, the company is introducing a new long-term target of 95 to 100 percent for adjusted free cash flow conversion ratio (non-GAAP) (refer to “Long-Term Targets” below for a definition of this ratio).
The company has set a target for comparable currency neutral operating margin* (non-GAAP) of at least 35 percent by 2020. The company is also providing a near-term expectation for 2018 capital expenditures of $1.9 billion and a long-term expectation for capital expenditures of 4.5 to 5 percent of net revenues.
Senior leaders, led by President and CEO James Quincey, met with investors and analysts yesterday. The meeting included Presentations and a Q&A session. Downloadable files of the audio and video recordings, as well as presentations and transcripts, will be available on the company’s website. Materials for the event will also be available through an app on Apple iOS and Google Android devices. The app is available through the App Store or Google Play under the name Coca-Cola Investor Day 2017.
*Target margin for 2020 is currency neutralized based on 2017 foreign currency exchange rates.
The company outlined its objectives on the investor day as follows:
2017 Outlook
Our 2017 outlook for organic revenues, comparable income before income taxes, comparable currency neutral income before income taxes (structurally adjusted) and comparable EPS are non-GAAP financial measures that exclude or have otherwise been adjusted for items impacting comparability, the impact of changes in foreign currency exchange rates, acquisitions and divestitures, and the impact of structural items, as applicable.
We are not able to reconcile our full year 2017 projected organic revenues (non-GAAP) to our full year 2017 projected reported net revenues, our full year 2017 projected comparable currency neutral income before income taxes (structurally adjusted) (non-GAAP) to our full year 2017 projected reported income before income taxes, or our full year 2017 projected comparable EPS (non-GAAP) to our full year 2017 projected reported EPS without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of items impacting comparability, changes in foreign currency exchange rates and the exact timing of acquisitions, divestitures and/or structural changes that may occur during the remainder of 2017. The unavailable information could have a significant impact on our full year 2017 GAAP financial results.
Long-Term Targets
Our long-term targets for organic revenue growth, comparable currency neutral operating income growth, comparable currency neutral operating margin, comparable currency neutral EPS growth, and adjusted free cash flow conversion ratio are based on non-GAAP financial measures that exclude or have otherwise been adjusted for items impacting comparability, the impact of changes in foreign currency exchange rates, acquisitions and divestitures, and the impact of structural items, as applicable.
We are not able to reconcile our long-term targets for organic revenue growth (non-GAAP), comparable currency neutral operating income growth (non-GAAP), comparable currency neutral operating margin (non-GAAP), comparable currency neutral EPS growth (non-GAAP), and adjusted free cash flow conversion ratio (non-GAAP) to our long-term projections for reported net revenue growth, reported operating income growth, reported operating margin, reported EPS growth, and reported cash flow conversion ratio, respectively, without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of items impacting comparability, changes in foreign currency exchange rates and the exact timing of acquisitions, divestitures and/or structural changes that may occur in future periods. The unavailable information could have a significant impact on our GAAP financial results for future periods.
The company defines adjusted free cash flow conversion ratio (non-GAAP) as free cash flow adjusted for certain cash payments for pension plan contributions (non-GAAP) divided by net income attributable to shareowners of The Coca-Cola Company adjusted for non-cash items impacting comparability (non-GAAP). The company defines free cash flow (non-GAAP) as net cash provided by operating activities less purchases of property, plant and equipment.
