8-KRegulation FD

PEPSICO INC 8-K Report, Regulation FD Disclosure (Sep 8, 2015)

Filed September 8, 2015For Securities:PEP

Summary

PepsiCo Inc. (PEP) filed an 8-K on September 8, 2015, providing an update on its fiscal year 2015 financial guidance ahead of the Barclays Back-to-School Consumer Conference. The company reaffirmed its expectation for 8% core constant currency EPS growth compared to fiscal year 2014. Additionally, PepsiCo anticipates mid-single-digit organic revenue growth. Investors should note the significant unfavorable impact expected from foreign exchange translation, estimated at approximately 11 percentage points on core EPS and 9 percentage points on net revenue growth for the full year. The company also reiterated its commitment to returning capital to shareholders, projecting free cash flow of over $7 billion (excluding certain items). This is expected to support total shareholder returns of $8.5 billion to $9 billion, comprising approximately $4 billion in dividends and $4.5 billion to $5 billion in share repurchases. The filing also details PepsiCo's ongoing productivity initiatives and provides context on potential impacts from Venezuela's currency exchange mechanisms.

Key Highlights

  • 1Reaffirmed fiscal 2015 guidance for 8% core constant currency EPS growth.
  • 2Maintained expectation for mid-single-digit organic revenue growth in fiscal 2015.
  • 3Significant unfavorable foreign exchange impact anticipated: ~11% on core EPS and ~9% on net revenue.
  • 4Projected free cash flow to exceed $7 billion (excluding certain items).
  • 5Planned shareholder returns of $8.5 - $9 billion, split between dividends (~$4 billion) and share repurchases (~$4.5 - $5 billion).
  • 6Details ongoing multi-year productivity plans aimed at strengthening businesses and driving efficiency.
  • 7Provides extensive discussion on the complexities and potential financial impacts of Venezuela's currency exchange rates.

Frequently Asked Questions

PepsiCo expects 8% core constant currency EPS growth for fiscal year 2015, consistent with its previous guidance. However, the company anticipates an unfavorable foreign exchange translation impact of approximately 11 percentage points on this growth.

PepsiCo plans to return $8.5 billion to $9 billion to shareholders in 2015. This includes approximately $4 billion in dividends and $4.5 billion to $5 billion in share repurchases. This is supported by an expected free cash flow of over $7 billion (excluding certain items).

The filing specifically addresses the significant unfavorable impact of foreign exchange rates on reported financial results. Additionally, it extensively discusses the uncertainty and potential financial impacts (including remeasurement and impairment charges) related to the complex and evolving currency exchange mechanisms in Venezuela.

Core results are non-GAAP financial measures that exclude certain items like commodity mark-to-market impacts, restructuring and impairment charges, and specific charges from prior years (like Venezuela remeasurement). PepsiCo believes these measures are indicative of ongoing performance and reflect how management evaluates operating results and trends, providing a clearer view of the underlying business performance.