10-QPeriod: Q2 FY2024

PEPSICO INC Quarterly Report for Q2 Ended Jun 15, 2024

Filed July 11, 2024For Securities:PEP

Summary

PepsiCo, Inc. (PEP) reported solid financial results for the period ending June 15, 2024. For the twelve weeks ended June 15, 2024, Net Revenue increased by 1% to $22,501 million, and Operating Profit saw a significant increase of 11% to $4,048 million. Diluted Net Income Attributable to PepsiCo per common share rose by 13% to $2.23. For the twenty-four weeks ended June 15, 2024, Net Revenue grew by 1.5% to $40,751 million, and Operating Profit increased by 8% to $6,765 million. Diluted Net Income Attributable to PepsiCo per common share was up 10% to $3.71. The company highlighted effective net pricing and productivity savings as key drivers for these improvements, while also noting some operating cost increases and a decline in organic volume that partially offset gains. The Quaker Foods North America (QFNA) division was significantly impacted by a product recall, leading to a substantial decline in its net revenue and operating profit.

Financial Highlights

51 data points
Beta

Revenue

$22.50B

55.9% Gross Margin

Net Income

$3.08B

13.7% Net Margin

EPS (Diluted)

$2.23

Total Assets

$99.53B

Cash & Equivalents

$6.42B

Free Cash Flow

$2.36B

Financial Statements
Beta
Revenue$22.50B
Cost of Revenue$9.92B
Gross Profit$12.58B
SG&A Expenses$8.53B
Operating Income$4.05B
Interest Expense$234.00M
Net Income$3.08B
EPS (Basic)$2.24
EPS (Diluted)$2.23
Shares Outstanding (Basic)1.38B
Shares Outstanding (Diluted)1.38B

Key Highlights

  • 1Net revenue for the 12 weeks ended June 15, 2024, increased 1% to $22.5 billion, and for the 24 weeks, it increased 1.5% to $40.8 billion.
  • 2Operating profit increased significantly by 11% to $4.0 billion for the 12-week period and by 8% to $6.8 billion for the 24-week period.
  • 3Diluted EPS grew 13% to $2.23 for the 12-week period and 10% to $3.71 for the 24-week period.
  • 4Quaker Foods North America (QFNA) experienced an 18% and 21% decline in net revenue for the 12- and 24-week periods, respectively, due to a product recall, with a substantial impact on operating profit.
  • 5PepsiCo Beverages North America (PBNA) showed resilience with a 1% revenue increase for both periods, and a strong operating profit increase of 37% (12 weeks) and 24% (24 weeks), benefiting from prior-year impairment charges.
  • 6The company's cash flow from operations was $1.3 billion for the 24-week period, down from $2.0 billion in the prior year, leading to negative free cash flow of ($259) million.
  • 7PepsiCo continues to manage its capital structure by returning approximately $8.2 billion to shareholders in 2024 through dividends and share repurchases.

Frequently Asked Questions

Revenue and profit growth were primarily driven by effective net pricing, productivity savings, and in some segments, favorable foreign exchange. The company also benefited from a reduction in prior-year impairment charges in certain divisions.

The Quaker Recall had a substantial negative impact on QFNA, causing a significant decline in net revenue (18% for 12 weeks, 21% for 24 weeks) and operating profit (34% for 12 weeks, 89% for 24 weeks). This was due to lost sales and specific recall-related charges.

For the 24 weeks ended June 15, 2024, free cash flow was negative at ($259) million, a decrease from $628 million in the prior year. This was primarily due to lower operating cash flow and increased capital spending. The company expects to return approximately $8.2 billion to shareholders in 2024 through dividends and share repurchases, funded by its overall liquidity.

PepsiCo is actively managing its debt by issuing new notes and repaying existing long-term debt. The company also has established significant revolving credit facilities. To return value to shareholders, it plans to distribute approximately $8.2 billion in 2024 via dividends and share repurchases.