10-QPeriod: Q3 FY2021

PEPSICO INC Quarterly Report for Q3 Ended Sep 4, 2021

Filed October 5, 2021For Securities:PEP

Summary

PepsiCo, Inc. reported strong financial performance for the period ending September 4, 2021. For the 36 weeks ended, net revenue increased by 13% to $54.2 billion, and operating profit saw a significant increase of 19% to $8.6 billion. Diluted earnings per share also grew by 20% to $4.54. The company highlighted robust organic revenue growth across its segments, driven by a combination of effective net pricing and volume increases, particularly in the Frito-Lay North America, PepsiCo Beverages North America, and international segments. Acquisitions in AMESA and APAC also contributed positively to revenue growth. Despite facing increased commodity and transportation costs, PepsiCo demonstrated effective cost management and productivity savings, which helped to offset these pressures and improve operating margins in several divisions. The company also noted a recovery in consumer demand following the COVID-19 pandemic, especially in its beverage and snack businesses. PepsiCo continues to manage its financial resources effectively, generating substantial operating cash flow and free cash flow, which supports its capital allocation strategies including dividends and share repurchases. The planned divestiture of certain juice brands is also expected to provide further financial flexibility.

Financial Highlights

51 data points
Beta

Revenue

$20.19B

53.5% Gross Margin

Net Income

$2.22B

11.0% Net Margin

EPS (Diluted)

$1.60

Total Assets

$93.25B

Cash & Equivalents

$6.51B

Free Cash Flow

$4.29B

Financial Statements
Beta
Revenue$20.19B
Cost of Revenue$9.39B
Gross Profit$10.79B
SG&A Expenses$7.64B
Operating Income$3.16B
Interest Expense$232.00M
Net Income$2.22B
EPS (Basic)$1.61
EPS (Diluted)$1.60
Shares Outstanding (Basic)1.38B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Net revenue for the 36 weeks ended September 4, 2021, increased by 13% to $54.2 billion compared to the prior year period.
  • 2Operating profit for the 36 weeks ended September 4, 2021, rose by 19% to $8.6 billion, indicating strong operational performance and cost management.
  • 3Diluted earnings per share (EPS) for the 36 weeks ended September 4, 2021, grew by 20% to $4.54, reflecting improved profitability.
  • 4Organic revenue growth was a key driver, with the company reporting a 9% increase for the 12-week period and 8% for the 36-week period, demonstrating underlying business strength across segments.
  • 5The company experienced significant revenue growth in its international segments, including Latin America (27% for 12 weeks), AMESA (33% for 12 weeks), and APAC (27% for 12 weeks), partly due to acquisitions and favorable foreign exchange rates.
  • 6Despite inflationary pressures from commodity and transportation costs, PepsiCo managed to increase operating profit through productivity savings and effective net pricing strategies.
  • 7PepsiCo generated $6.6 billion in net cash from operating activities for the 36 weeks ended September 4, 2021, and $4.4 billion in free cash flow, supporting shareholder returns and strategic investments.

Frequently Asked Questions

For the 12 weeks ended September 4, 2021, PepsiCo reported net revenue of $20.189 billion, an increase of 12% compared to $18.091 billion in the same period last year. Operating profit for the same period increased by 5% to $3.159 billion. For the 36 weeks ended September 4, 2021, net revenue grew 13% to $54.226 billion, and operating profit increased by a significant 19% to $8.600 billion.

Revenue growth was driven by a combination of factors across its segments. Key drivers included effective net pricing, organic volume growth, favorable foreign exchange impacts in international markets, and contributions from recent acquisitions, particularly in the AMESA (Pioneer Foods) and APAC (Be & Cheery) divisions. The company also noted a recovery in consumer demand post-pandemic.

Yes, PepsiCo experienced increased commodity and transportation costs, which impacted operating margins in some segments. However, the company was able to mitigate these pressures through productivity savings, strategic initiatives, and effective net pricing actions, leading to overall operating profit growth and improved margins in several divisions.

PepsiCo entered into an agreement to sell Tropicana, Naked, and other select juice brands in North America, along with an option to sell certain European juice businesses, for approximately $3.3 billion. The transaction is expected to close in late 2021 or early 2022, subject to customary conditions. PepsiCo will retain a 39% noncontrolling interest in a newly formed joint venture and will act as the exclusive distributor for certain channels.