Summary
PepsiCo, Inc. (PEP) filed an 8-K on February 23, 2012, providing updated financial guidance and long-term targets during the Consumer Analyst Group of New York Conference. The company reiterated its expectation for core constant currency earnings per share (EPS) to decrease by 5% in 2012 from the prior year's $4.40, with a more significant high-single-digit decrease anticipated for the first quarter of 2012 due to expected peak commodity inflation. Foreign exchange is projected to have a 3% unfavorable impact on full-year EPS growth. Beyond the 2012 outlook, PepsiCo reaffirmed its long-term targets, aiming for mid-single-digit constant currency net revenue growth and high-single-digit core constant currency EPS growth following the 2012 transition year. The company also projected a 2012 core tax rate of approximately 27%, targeted nearly $8 billion in operating cash flow, over $6 billion in management operating cash flow, and planned share repurchases of at least $3 billion for 2012. The filing also provided definitions of key non-GAAP terms like 'Core' and 'Constant Currency' and a reconciliation of these measures.
Key Highlights
- 12012 Core Constant Currency EPS expected to decrease by 5% from $4.40 in FY2011, with Q1 2012 seeing a high-single-digit decrease.
- 2Commodity inflation is expected to be highest in Q1 2012, impacting near-term earnings.
- 3Foreign exchange is projected to negatively impact full-year 2012 EPS growth by 3 percentage points.
- 4Long-term targets reaffirmed: mid-single-digit constant currency net revenue growth and high-single-digit core constant currency EPS growth.
- 52012 Core tax rate anticipated to be around 27%.
- 6Targeting nearly $8 billion in cash flow from operating activities and over $6 billion in management operating cash flow for 2012.
- 7Planned share repurchases of at least $3 billion for 2012.