On Wednesday, before the market opened, Coca-Cola’ Q2 earnings reported earnings and revenue that surpassed analysts’ expectations. The Georgia-based company also released a more upbeat and optimistic earnings forecast for the full year.

So, what caused Coca-Cola (NYSE:$KO) to beat analysts’ expectations? Well, according to the beverage maker, shoppers are increasingly searching for Coke’s healthier options, which played a defining role in these results. However, Coca-Cola reported another drop in profit due to the fact that it’s still in the middle of finishing a re-franchising plan.

In premarket trading, Coca-Cola shares jumped 1.5%, but eventually reversed course and fell modestly.

It should not come as a total surprise that Coke saw its 2017 profit drop as the company forewarned investors that this would be the result of their efforts to finish the re-franchising plan.

In Q2 alone, Coke acquired a charge of $653 million in connection to re-franchising.

Let’s take a quick look at what Coke reported versus what Wall Street was expecting:  

• EPS: 59 cents adjusted compared with an estimate of 57 cents adjusted, according to Thomson Reuters analysts’ expectations

 

• Revenue: $9.702 compared with a forecast of $9.652 billion

 

“Our second quarter results demonstrate continued progress against the strategic priorities we have laid out to accelerate the transformation of our business into a total beverage company with balanced growth across a consumer-centric portfolio,” CEO James Quincey said.

For the quarter, Coke’s net revenue decreased 16% to $9.7 billion. The beverage behemoth said sales were affected by unfavorable foreign currency exchange. Additionally, net income dropped to $1.37 billion (32 cents per share not adjusted) in Q2, from $3.45 billion (79 cents per share) in 2016.

In the report, Coke said that the company has made progress during the second quarter in terms of transforming the business’ beverage portfolio, moving away from sugary drinks, and growing their presence in global markets.

Last but not least, Coke’s unit case volume for dairy, juice, and plant-based beverages increased 3% globally. For Coke’s water, sports drink, and enhanced water division, the case volume was up 1%, and tea and coffee case volume was up 2%. To simplify, Coke’s total unit case volume across all divisions was even for the last period.

Moving forward, in regards to the full year ahead, Coke now expects EPS to be flat to a drop of 2%, which is better than a previous forecast for declines of 1% to 3%. In addition, Coca-Cola continues to believe that organic revenue will grow roughly 3%. If there were earnings flat to down 2%, this suggests a profit of $1.87 per share to $1.91 per share for the full year.

“Our performance gives us confidence that we will achieve our full-year financial objectives even in the face of challenging conditions,” CEO Quincey said in the earnings statement.

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