01—Abstract
Summary
Summary of the 10-Q filed July 11, 2024. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 $3.71b. 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.
02—Key points
Key Highlights
- Net 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.
- Operating 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.
- Diluted EPS grew 13% to $2.23 for the 12-week period and 10% to $3.71 for the 24-week period.
- Quaker 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.
- PepsiCo 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.
- The 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.
- PepsiCo continues to manage its capital structure by returning approximately $8.2 billion to shareholders in 2024 through dividends and share repurchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Pepsico Inc kept $0.14.
- Revenue$22.50B100.0%
- Cost of revenue−$9.92B44.1%
- Gross profit$12.58B55.9%
- Operating costs−$8.53B37.9%
- Operating income$4.05B18.0%
- Interest, other & tax−$965.0M4.3%
- Net income$3.08B13.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 11, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $22.50B$22.32B | +0.8% |
| Cost of Revenue | $9.92B$10.12B | −2.0% |
| Gross Profit | $12.58B$12.20B | +3.1% |
| SG&A Expenses | $8.53B$8.54B | −0.1% |
| Operating Income | $4.05B$3.66B | +10.6% |
| Interest Expense | $234.00M$201.00M | +16.4% |
| Net Income | $3.08B$2.75B | +12.2% |
| EPS (Basic) | $2.24$1.99 | +12.6% |
| EPS (Diluted) | $2.23$1.99 | +12.1% |
| Shares Outstanding (Basic) | 1.38B1.38B | −0.2% |
| Shares Outstanding (Diluted) | 1.38B1.38B | −0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue and profit growth?
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.
How significantly did the Quaker Foods North America (QFNA) recall impact the company's results?
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.
What is the outlook for free cash flow?
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.
How is PepsiCo managing its debt and capital structure?
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.
06—Continue