10-QPeriod: Q1 FY2022

PEPSICO INC Quarterly Report for Q1 Ended Mar 19, 2022

Filed April 26, 2022For Securities:PEP

Summary

PepsiCo, Inc. reported strong financial results for the 12 weeks ended March 19, 2022, with net revenue increasing by 9% to $16.2 billion. This growth was significantly boosted by the divestiture of its juice portfolio (Tropicana, Naked, and other select brands) which resulted in a substantial gain. Excluding the impact of this transaction and other items affecting comparability, core operating profit saw a healthy increase, demonstrating the underlying strength of the business. The company navigated inflationary pressures and geopolitical uncertainties, including the conflict in Ukraine, with strategic pricing and productivity initiatives. Key financial highlights include a significant increase in operating profit, largely due to the gain from the Juice Transaction. Despite some segment-level challenges and cost pressures from commodities and transportation, the overall revenue growth was robust, driven by effective net pricing across most divisions. Investors should note the company's ongoing commitment to returning capital to shareholders through dividends and share repurchases, alongside strategic capital allocation for future growth.

Financial Highlights

51 data points
Beta

Revenue

$16.20B

54.1% Gross Margin

Net Income

$4.26B

26.3% Net Margin

EPS (Diluted)

$3.06

Total Assets

$92.96B

Cash & Equivalents

$6.56B

Free Cash Flow

-$174.00M

Financial Statements
Beta
Revenue$16.20B
Cost of Revenue$7.43B
Gross Profit$8.77B
SG&A Expenses$6.58B
Operating Income$5.27B
Interest Expense$240.00M
Net Income$4.26B
EPS (Basic)$3.08
EPS (Diluted)$3.06
Shares Outstanding (Basic)1.38B
Shares Outstanding (Diluted)1.39B

Key Highlights

  • 1Net revenue increased by 9% to $16.2 billion for the 12 weeks ended March 19, 2022, compared to $14.82 billion in the prior year period.
  • 2Operating profit saw a significant increase of 128% to $5.267 billion, largely driven by a $3.322 billion gain from the Juice Transaction.
  • 3Excluding items affecting comparability, core operating profit increased by 6% on a constant currency basis, indicating underlying business strength.
  • 4The company experienced strong organic revenue growth of 14% year-over-year.
  • 5PepsiCo repurchased $1.3 billion of its common stock and increased its annualized dividend by 7% to $4.60 per share, signaling a commitment to shareholder returns.
  • 6The company continues to manage inflationary pressures on commodity and transportation costs through effective net pricing and productivity savings.
  • 7Charges related to the Russia-Ukraine conflict and brand portfolio impairments in Russia impacted operating profit, highlighting geopolitical risks.

Frequently Asked Questions

The Juice Transaction, which involved the sale of Tropicana, Naked, and other select juice brands, resulted in a significant gain of $3.322 billion recognized in the 12 weeks ended March 19, 2022. This transaction boosted net revenue and operating profit considerably for the period. While the divestiture reduced net revenue growth by 7 percentage points in the PBNA segment and 2 percentage points in Europe, the overall gain was a major driver of the company's profitability in the quarter.

PepsiCo is managing inflationary pressures on commodity and transportation costs through a combination of strategies. These include implementing effective net pricing actions across its divisions, focusing on productivity savings, and optimizing its supply chain. While these measures help offset cost increases, the company acknowledges that they can impact margins if not fully passed on to consumers.

The filing highlights several key risks and uncertainties, including the ongoing geopolitical and macroeconomic uncertainty stemming from the Russia-Ukraine conflict, which has led to operational suspensions in Russia and Ukraine and associated charges. Other risks include the continued impact of the COVID-19 pandemic on operations and consumer behavior, supply chain disruptions, commodity price volatility, and potential changes in laws and regulations related to products and packaging.

PepsiCo remains committed to returning capital to shareholders. During the 12 weeks ended March 19, 2022, the company paid $1.5 billion in dividends and repurchased $0.2 billion of its common stock. It also announced a new $10 billion share repurchase program and a 7% increase in its annualized dividend to $4.60 per share, indicating a strong focus on shareholder returns.