PepsiCo : Q1 2024 PepsiCo Earnings Press Release

PepsiCo Reports First-Quarter 2024 Results; Affirms 2024

Financial Guidance

Reported (GAAP) First-Quarter 2024 Results

Net revenue growth

Foreign exchange impact on net revenue

Earnings per share (EPS)

EPS change

Foreign exchange impact on EPS

First-Quarter

2.3%

(0.5)%

$1.48

6%

-%

Organic/Core (non-GAAP)1 First-Quarter 2024 Results

Organic revenue growth

Core EPS

Core constant currency EPS change

First-Quarter

2.7%

$1.61

7%

PURCHASE, N.Y. - April 23, 2024 - PepsiCo, Inc. (NASDAQ: PEP) today reported results for the first quarter 2024.

"During the first quarter, our businesses remained agile and performed well, with a strong performance from our International business. We delivered a sequential improvement in our volume trends, and year-over-year growth in our net revenue, operating profit margin and EPS - despite the impact of certain product recalls at Quaker Foods North America and a difficult net revenue growth comparison from the prior year," said Chairman and CEO Ramon Laguarta.

Laguarta continued, "As we look ahead, we will continue to focus our efforts on executing well in the marketplace and delivering great-tasting products that offer convenience and good value to the consumer. We will also continue to elevate and accelerate our productivity initiatives to support continued investments in our brands, capabilities and pep+ initiatives. As a result, we continue to expect to deliver at least 4 percent organic revenue growth and at least 8 percent core constant currency EPS growth in 2024. In addition, our previously announced 7 percent annualized dividend increase is expected to begin with our June 2024 payment and will represent our 52nd consecutive annual increase."

• Please refer to the Glossary for the definitions of non-GAAP financial measures, including "Organic revenue growth," "Core" and "Constant currency," and to "Guidance and Outlook" for additional information regarding PepsiCo's full-year 2024 financial guidance. PepsiCo provides guidance on a non- GAAP basis as we cannot predict certain elements which are included in reported GAAP results, including the impact of foreign exchange and commodity mark-to-market net impacts. Please refer to PepsiCo's Quarterly Report on Form 10-Q for the 12 weeks ended March 23, 2024 (Q1 2024 Form 10-Q) filed with the Securities and Exchange Commission (SEC) for additional information regarding PepsiCo's financial results.

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Summary First-Quarter 2024 Performance

Revenue

Percentage Point Impact

	GAAP	Foreign	Acquisitions	Organic
	Reported	Exchange	and
	% Change	Translation	Divestitures	% Change
Frito-Lay North America	2	-	-	2
Quaker Foods North America (b)	(24)	-	-	(24)
PepsiCo Beverages North	1	-	-	1
America
Latin America	16	(8)	-	8
Europe	3	7	-	10
Africa, Middle East and South	2	4	-	7
Asia
Asia Pacific, Australia and New	6	5	-	11
Zealand and China Region
Total	2	0.5	-	3

Volume(a)

% Change

Convenient	Beverages
Foods
(2)
(22)
	(5)
(0.5)	2
2	7
4.5	2
12	-
(0.5)	-

Operating Profit and EPS

		Percentage Point Impact
	GAAP Reported	Items Affecting	Foreign	Core Constant
	Exchange	Currency
	% Change	Comparability	Translation	% Change
Frito-Lay North America	(3)	1	-	(2)
Quaker Foods North America	(126)	91	-	(35)
PepsiCo Beverages North America	5.5	1	-	6
Latin America	33	(0.5)	(11)	22
Europe	184	(146)	13	50
Africa, Middle East and South Asia	(10)	5	2	(2)
Asia Pacific, Australia and New Zealand and	3	(1)	5	7
China Region
Corporate unallocated expenses	(22)	16	-	(6)
Total	3	1.5	-	5

EPS

6

1.5

-

7

1. Excludes the impact of acquisitions and divestitures. In certain instances, the volume change shown here differs from the impact of organic volume on net revenue performance disclosed in the Organic Revenue Growth Rates table on page A-8, due to the impacts of product mix, nonconsolidated joint venture volume, and, for our franchise-owned beverage businesses, temporary timing differences between bottler case sales (BCS) and concentrate shipments and equivalents (CSE). We report net revenue from our franchise-owned beverage businesses based on CSE. The volume sold by our nonconsolidated joint ventures has no direct impact on our net revenue.
2. Net revenue decline was impacted by a previously announced voluntary recall of certain bars and cereals in our Quaker Foods North America division (Quaker Recall).

Note: Amounts may not sum due to rounding.

Organic revenue and core constant currency results are non-GAAP financial measures. Please refer to the reconciliation of GAAP and non-GAAP information in the attached exhibits and to the Glossary for definitions of "Organic revenue growth," "Core" and "Constant currency."

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Guidance and Outlook

The Company provides guidance on a non-GAAP basis as we cannot predict certain elements which are included in reported GAAP results, including the impact of foreign exchange translation and commodity mark-to-market net impacts.

Consistent with its previous guidance for 2024, the Company continues to expect:

• At least 4 percent increase in organic revenue;
• At least 8 percent increase in core constant currency EPS;
• A core annual effective tax rate of 20 percent; and
• Total cash returns to shareholders of approximately $8.2 billion, comprised of dividends of $7.2 billion and share repurchases of $1.0 billion.

In addition, the Company continues to expect an approximate 1-percentage-point foreign exchange translation headwind to impact reported net revenue and core EPS growth based on current market consensus rates.

This assumption and the guidance above imply 2024 core EPS of at least $8.15, a 7 percent increase compared to 2023 core EPS of $7.62.

Prepared Management Remarks and Live Question and Answer Webcast

At approximately 6:30 a.m. (Eastern time) on April 23, 2024, the Company will post prepared management remarks (in pdf format) of its first quarter 2024 results and business update, including its outlook for 2024, at www.pepsico.com/investors. At 8:15 a.m. (Eastern time) on April 23, 2024, the Company will host a live question and answer session with investors and financial analysts. Further details will be accessible on the Company's website at www.pepsico.com/investors.

Contacts: Investor Relations	Communications
[e-mail]	[e-mail]

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PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Income (in millions except per share amounts, unaudited)

		12 Weeks Ended
Net Revenue		3/23/2024			3/25/2023
$	18,250		$	17,846
Cost of sales		8,248			7,988
Gross profit		10,002			9,858
Selling, general and administrative expenses		7,285			7,229
Operating Profit		2,717			2,629
Other pension and retiree medical benefits income		58			61
Net interest expense and other		(202)			(200)
Income before income taxes		2,573			2,490
Provision for income taxes		520			546
Net income		2,053			1,944
Less: Net income attributable to noncontrolling interests		11			12
Net Income Attributable to PepsiCo	$	2,042		$	1,932
Diluted	$	1.48	$	1.40
Net income attributable to PepsiCo per common share
Weighted-average common shares outstanding		1,380			1,384

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PepsiCo, Inc. and Subsidiaries

Supplemental Financial Information

(in millions and unaudited)

		12 Weeks Ended
		3/23/2024			3/25/2023
Net Revenue
Frito-Lay North America	$	5,676	$	5,583
Quaker Foods North America		593			777
PepsiCo Beverages North America		5,874			5,798
Latin America		2,067			1,777
Europe		1,936			1,886
Africa, Middle East and South Asia		1,040			1,019
Asia Pacific, Australia and New Zealand and China Region		1,064			1,006
Total	$	18,250		$	17,846
Operating Profit/(Loss)
Frito-Lay North America	$	1,554	$	1,599
Quaker Foods North America		(49)			188
PepsiCo Beverages North America		510			483
Latin America		485			364
Europe		202			71
Africa, Middle East and South Asia		152			168
Asia Pacific, Australia and New Zealand and China Region		233			227
Corporate unallocated expenses		(370)			(471)
Total	$	2,717		$	2,629

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PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows

(in millions, unaudited)

		12 Weeks Ended
Operating Activities		3/23/2024			3/25/2023
Net income	$	2,053	$	1,944
Depreciation and amortization		641			590
Impairment and other charges/(credits)		-			(13)
Product recall-related impact		167			-
Cash payments for product recall-related impact		(108)			-
Operating lease right-of-use asset amortization		127			116
Share-based compensation expense		97			93
Restructuring and impairment charges		96			112
Cash payments for restructuring charges		(60)			(64)
Pension and retiree medical plan expense		31			30
Pension and retiree medical plan contributions		(218)			(175)
Deferred income taxes and other tax charges and credits		116			78
Change in assets and liabilities:
Accounts and notes receivable		(96)			(348)
Inventories		(291)			(542)
Prepaid expenses and other current assets		(342)			(288)
Accounts payable and other current liabilities		(3,408)			(2,259)
Income taxes payable		222			290
Other, net		(68)			44
Net Cash Used for Operating Activities		(1,041)			(392)
Investing Activities
Capital spending		(614)			(581)
Sales of property, plant and equipment		7			19
Acquisitions, net of cash acquired, investments in noncontrolled affiliates and		(6)			(16)
purchases of intangible and other assets
Other divestitures, sales of investments in noncontrolled affiliates and other assets		53			85
Short-term investments, by original maturity:
More than three months - purchases		-			(158)
More than three months - maturities		-			100
Three months or less, net		8			19
Other investing, net		(10)			-
Net Cash Used for Investing Activities		(562)			(532)

(Continued on following page)

A - 3

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Statement of Cash Flows (continued)

(in millions, unaudited)

		12 Weeks Ended
Financing Activities		3/23/2024			3/25/2023
Proceeds from issuances of long-term debt		1,761			2,986
Payments of long-term debt		(1,252)			(1,251)
Short-term borrowings, by original maturity:
More than three months - proceeds		2,313			393
More than three months - payments		(1,631)			(1)
Three months or less, net		774			491
Cash dividends paid		(1,767)			(1,608)
Share repurchases		(146)			(160)
Proceeds from exercises of stock options		66			46
Withholding tax payments on restricted stock units and performance stock units
converted		(108)			(116)
Other financing		-			(3)
Net Cash Provided by Financing Activities		10			777
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(38)			(116)
Net Decrease in Cash and Cash Equivalents and Restricted Cash		(1,631)			(263)
Cash and Cash Equivalents and Restricted Cash, Beginning of Year		9,761			5,100
Cash and Cash Equivalents and Restricted Cash, End of Period	$	8,130		$	4,837
Supplemental Non-Cash Activity
Right-of-use assets obtained in exchange for lease obligations	$	259	$	213

A - 4

PepsiCo, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

(in millions except per share amounts)

		(unaudited)
		3/23/2024			12/30/2023
ASSETS
Current Assets
Cash and cash equivalents	$	8,047	$	9,711
Short-term investments		303			292
Accounts and notes receivable, net		10,938			10,815
Inventories:
Raw materials and packaging		2,465			2,388
Work-in-process		97			104
Finished goods		3,007			2,842
		5,569			5,334
Prepaid expenses and other current assets		1,148			798
Total Current Assets		26,005			26,950
Property, Plant and Equipment, net		26,792			27,039
Amortizable Intangible Assets, net		1,173			1,199
Goodwill		17,646			17,728
Other Indefinite-Lived Intangible Assets		13,680			13,730
Investments in Noncontrolled Affiliates		2,734			2,714
Deferred Income Taxes		4,444			4,474
Other Assets		7,566			6,661
Total Assets	$	100,040		$	100,495
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt obligations	$	8,161	$	6,510
Accounts payable and other current liabilities		22,073			25,137
Total Current Liabilities		30,234			31,647
Long-Term Debt Obligations		37,707			37,595
Deferred Income Taxes		4,087			3,895
Other Liabilities		8,822			8,721
Total Liabilities		80,850			81,858
Commitments and contingencies
PepsiCo Common Shareholders' Equity
Common stock, par value 12/3¢ per share (authorized 3,600 shares; issued, net of repurchased common		23			23
stock at par value: 1,375 and 1,374 shares, respectively)
Capital in excess of par value		4,132			4,261
Retained earnings		70,331			70,035
Accumulated other comprehensive loss		(15,179)			(15,534)
Repurchased common stock, in excess of par value (492 and 493 shares, respectively)		(40,260)			(40,282)
Total PepsiCo Common Shareholders' Equity		19,047			18,503
Noncontrolling interests		143			134
Total Equity		19,190			18,637
Total Liabilities and Equity	$	100,040		$	100,495

A - 5

Non-GAAP Measures

In discussing financial results and guidance, the Company refers to the following measures which are not in accordance with U.S. Generally Accepted Accounting Principles (GAAP): organic revenue growth, core results and core constant currency results. We use non-GAAP financial measures internally to make operating and strategic decisions, including the preparation of our annual operating plan, evaluation of our overall business performance and as a factor in determining compensation for certain employees. We believe presenting non-GAAP financial measures provides additional information to facilitate comparison of our historical operating results and trends in our underlying operating results and provides additional transparency on how we evaluate our business. We also believe presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.

We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Examples of items for which we may make adjustments include: amounts related to mark-to-market gains or losses (non-cash); charges related to restructuring plans; charges associated with acquisitions and divestitures; gains associated with divestitures; asset impairment charges (non-cash); product recall-related impact; pension and retiree medical-related amounts, including all settlement and curtailment gains and losses; charges or adjustments related to the enactment of new laws, rules or regulations, such as tax law changes; amounts related to the resolution of tax positions; tax benefits related to reorganizations of our operations; debt redemptions, cash tender or exchange offers; and remeasurements of net monetary assets. See below for a description of adjustments to our GAAP financial measures included herein.

Non-GAAP information should be considered as supplemental in nature and is not meant to be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, our non-GAAP financial measures may not be the same as or comparable to similar non-GAAP measures presented by other companies.

Glossary

We use the following definitions when referring to our non-GAAP financial measures, which may not be the same as or comparable to similar measures presented by other companies:

Acquisitions and divestitures: mergers and acquisition activity, as well as divestitures and other structural changes, including changes in ownership or control in consolidated subsidiaries and nonconsolidated equity investees.

Bottler case sales (BCS): Measure of physical beverage volume shipped to retailers and independent distributors from both PepsiCo and our independent bottlers.

Concentrate shipments and equivalents (CSE): Measure of our physical beverage volume shipments to independent bottlers.

Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current-year U.S. dollar results by the current-year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior-year average foreign exchange rates.

Core: Core results are non-GAAP financial measures which exclude certain items from our financial results. For further information regarding these excluded items, refer to "Items Affecting Comparability" in "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Q1 2024 Form 10-Q and in "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for the fiscal year ended December 30, 2023. For the periods presented, core results exclude the following items:

Mark-to-market net impact

Mark-to-market net gains and losses on commodity derivatives in corporate unallocated expenses. These gains and losses are subsequently reflected in division results when the divisions recognize the cost of the underlying commodity in operating profit.

Restructuring and impairment charges

Expenses related to the multi-year productivity plan publicly announced in 2019, which was expanded and extended through the end of 2028 to take advantage of additional opportunities within the initiatives of the plan.

Acquisition and divestiture-related charges

Acquisition and divestiture-related charges primarily include merger and integration charges and costs associated with divestitures, primarily consulting, advisory and other professional fees.

Impairment and other charges/credits

We recognized impairment charges taken as a result of our quantitative assessments of certain of our indefinite-lived intangible assets and related to our investment in TBG. We also recognized adjustments to the charges recorded in prior years from changes in estimates of previously recorded amounts.

A - 6

Product recall-related impact

We recognized property, plant and equipment and inventory write-offs, product returns, employee severance costs, customer and consumer-related costs and other costs in our Quaker Foods North America division associated with a previously announced voluntary recall of certain bars and cereals.

Pension and retiree medical-related impact

Pension and retiree medical-related impact includes settlement charges related to lump sum distributions exceeding the total of annual service and interest costs.

Effective net pricing: Reflects the year-over-year impact of discrete pricing actions, sales incentive activities and mix resulting from selling varying products in different package sizes and in different countries.

Organic revenue growth: A measure that adjusts for the impacts of foreign exchange translation, acquisitions and divestitures and every five or six years, the impact of an additional week of results (53rd reporting week). We believe organic revenue growth provides useful information in evaluating the results of our business because it excludes items that we believe are not indicative of ongoing performance or that we believe impact comparability with the prior year.

2024 guidance

Our 2024 organic revenue growth guidance excludes the impact of acquisitions, divestitures and other structural changes and foreign exchange translation. Our 2024 core effective tax rate guidance and our 2024 core constant currency EPS growth guidance exclude the mark-to-market net impact included in corporate unallocated expenses, restructuring and impairment charges and other items noted above. Our 2024 core constant currency EPS growth guidance also excludes the impact of foreign exchange translation. We are unable to reconcile our full year projected 2024 organic revenue growth to our full year projected 2024 reported net revenue growth because we are unable to predict the 2024 impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates and because we are unable to predict the occurrence or impact of any acquisitions, divestitures or other structural changes. We are also not able to reconcile our full year projected 2024 core effective tax rate to our full year projected 2024 reported effective tax rate and our full year projected 2024 core constant currency EPS growth to our full year projected 2024 reported EPS growth because we are unable to predict the 2024 impact of foreign exchange or the mark-to-market net impact on commodity derivatives due to the unpredictability of future changes in foreign exchange rates and commodity prices. Therefore, we are unable to provide a reconciliation of these measures.

A - 7