10-QPeriod: Q3 FY2019

PEPSICO INC Quarterly Report for Q3 Ended Sep 7, 2019

Filed October 3, 2019For Securities:PEP

Summary

PepsiCo, Inc. reported its third-quarter and year-to-date financial results for the period ending September 7, 2019. For the 12 weeks ended September 7, 2019, net revenue increased by 4% to $17.19 billion, while operating profit remained flat at $2.86 billion. Diluted earnings per share (EPS) saw a decline of 15% to $1.49, largely due to a higher tax rate and restructuring charges. For the 36 weeks ended September 7, 2019, net revenue grew 3% to $46.52 billion, but operating profit decreased by 1% to $7.59 billion. Diluted EPS fell by 1% to $3.94. The company's overall volume increased, driven by strong performance in snacks and growth in certain beverage categories, although some beverage segments experienced declines. The acquisition of SodaStream significantly contributed to revenue growth, particularly in the ESSA segment. Management highlighted productivity savings as a key offset to increased operating costs and commodity expenses.

Financial Highlights

52 data points
Beta

Revenue

$17.19B

55.2% Gross Margin

Net Income

$2.10B

12.2% Net Margin

EPS (Diluted)

$1.49

Total Assets

$77.44B

Cash & Equivalents

$5.71B

Free Cash Flow

$3.67B

Financial Statements
Beta
Revenue$17.19B
Cost of Revenue$7.69B
Gross Profit$9.49B
SG&A Expenses$6.64B
Operating Income$2.85B
Interest Expense$224.00M
Net Income$2.10B
EPS (Basic)$1.50
EPS (Diluted)$1.49
Shares Outstanding (Basic)1.40B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net revenue for the 12 weeks ended September 7, 2019, rose 4% year-over-year to $17.19 billion.
  • 2Operating profit for the 36 weeks ended September 7, 2019, saw a slight decrease of 1% to $7.59 billion.
  • 3Diluted EPS for the 12-week period declined 15% to $1.49, impacted by higher taxes and restructuring charges.
  • 4Total servings volume increased by 4% for the 12-week period, indicating positive consumer demand.
  • 5The acquisition of SodaStream had a notable impact on revenue growth, particularly in the ESSA segment.
  • 6Restructuring charges and higher commodity costs were identified as key factors impacting profitability.
  • 7The company repurchased approximately $11.8 billion in common stock year-to-date, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

For the 12 weeks ended September 7, 2019, PepsiCo's net revenue increased by 4% to $17.19 billion compared to the same period in the previous year. This growth was supported by volume increases and effective net pricing across several divisions.

The decrease in net income attributable to PepsiCo by 16% to $2.10 billion in the 12-week period was primarily driven by a significant increase in the reported tax rate, which was largely due to the absence of the prior-year favorable tax benefits from international tax audits. Restructuring and impairment charges also negatively impacted net income.

The acquisition of SodaStream contributed positively to revenue growth, especially within the ESSA (Europe Sub-Saharan Africa) segment, where it had a significant impact on beverage volume and net revenue. The acquisition also incurred certain merger and integration charges.

PepsiCo faced increased operating costs, higher commodity costs, and increased advertising and marketing expenses. Productivity savings and effective net pricing were implemented to partially offset these pressures. The company is focused on managing these costs while driving revenue growth.