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PepsiCo Reports Third-Quarter 2023 Results; Raises Full-Year EPS Guidance And Provides Initial 2024 Outlook

PURCHASE, New York , October 10, 2023 (press release) –

PepsiCo Reports Third-Quarter 2023 Results; Raises Full-Year EPS Guidance And Provides Initial 2024 Outlook

Reported (GAAP) Third-Quarter and Year-to-Date 2023 Results

 

Third-Quarter

Year-to-Date

Net revenue growth

6.7%

8.9%

Foreign exchange impact on net revenue

(2)%

(2)%

Earnings per share (EPS)

$2.24

$5.62

EPS change

15%

(7)%

Foreign exchange impact on EPS

(2)%

(2)%

Organic/Core (non-GAAP)1 Third-Quarter and Year-to-Date 2023 Results

     
 

Third-Quarter

Year-to-Date

Organic revenue growth

8.8%

11.8%

Core EPS

$2.25

$5.83

Core constant currency EPS change

16%

16%

PURCHASE, N.Y. - October 10, 2023 - PepsiCo, Inc. (NASDAQ: PEP) today reported results for the third quarter 2023.

"We are pleased with our performance as our businesses and associates displayed tremendous agility and resilience across geographies and categories in an evolving and dynamic environment. Given the strength of our businesses and categories and a continued focus on advancing our holistic cost management initiatives, we now expect our full-year 2023 core constant currency EPS to increase 13 percent (previously 12 percent) and continue to expect our full-year 2023 organic revenue to increase 10 percent," said Chairman and CEO Ramon Laguarta .

Laguarta continued, "We believe that our businesses can continue to perform well in the coming years with category growth normalizing, as we have made numerous investments in our brands, manufacturing capacity, go-to-market systems, supply chain, technology, and people, to execute against our strategic framework and modernize our company. Therefore, we expect our full-year 2024 organic revenue and core constant currency EPS growth to be towards the upper end of our long-term targets as we advance towards our vision to become the global leader in beverages and convenient foods by winning with pep+."

  • 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 2023 financial guidance, full-year 2024 financial guidance and long-term financial performance targets. 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 and 36 weeks ended September 9, 2023 (Q3 2023 Form 10-Q) filed with the Securities and Exchange Commission (SEC) for additional information regarding PepsiCo's financial results.

1

Summary Third-Quarter 2023 Performance

Revenue

Percentage Point Impact

 

GAAP

Foreign

Acquisitions

Organic

 

Reported

Exchange

and

 

% Change

Translation

Divestitures

% Change

Frito-Lay North America

7

-

-

7

Quaker Foods North America

5

-

-

5

PepsiCo Beverages North

8

-

(2)

6

America

Latin America

21

(13)

1

9

Europe

2

10

1

13

Africa , Middle East and South

(6)

22

1

17

Asia

Asia Pacific , Australia and New

4

5

-

9

Zealand and China Region

Total

7

2

-

9

Volume(a)

% Change

Convenient

Beverages

Foods

-

1

(6)

  1. 5

    2-
  1. 3
  1. 1

    (1.5) -

Operating Profit and EPS

   

Percentage Point Impact

 
 

GAAP Reported

Items Affecting

Foreign

Core Constant

 

Exchange

Currency

 

% Change

Comparability

Translation

% Change

Frito-Lay North America

5

-

-

5.5

Quaker Foods North America

11

-

-

11

PepsiCo Beverages North America

24

(2)

-

22

Latin America

28

1

(17)

12

Europe

17

2.5

15

34

Africa , Middle East and South Asia

(11)

3

22

13

Asia Pacific , Australia and New Zealand and

20

(2)

4

23

China Region

Corporate unallocated expenses

(23)

45

-

22

Total

20

(8)

2

14

EPS

15

(1)

2

16

  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 growth disclosed in the Organic Revenue Growth Rates tables 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.

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."

2

Summary Year-to-Date 2023 Performance

Revenue

Percentage Point Impact

 

GAAP

Foreign

Acquisitions

Organic

 

Reported

Exchange

and

 

% Change

Translation

Divestitures

% Change

Frito-Lay North America

12

-

-

12

Quaker Foods North America

5

1

-

6

PepsiCo Beverages North

9

-

-

9

America

Latin America

20

(9)

1

12

Europe

7

7

2

15

Africa , Middle East and South

(5)

25

0.5

20

Asia

Asia Pacific , Australia and New

1

5

-

7

Zealand and China Region

Total

9

2

-

12

Volume(a)

% Change

Convenient

Beverages

Foods

-

(3)

(4.5)

  1. 4

    -(3)
  1. 2
  • 3
  1. -

Operating Profit and EPS

   

Percentage Point Impact

 
 

GAAP Reported

Items Affecting

Foreign

Core Constant

 

Exchange

Currency

 

% Change

Comparability

Translation

% Change

Frito-Lay North America

13

-

-

14

Quaker Foods North America

9

-

-

9

PepsiCo Beverages North America

(55)

69

0.5

14

Latin America

28

(8)

(11)

9

Europe

n/m

n/m

13

46

Africa , Middle East and South Asia

(11)

-

22

10

Asia Pacific , Australia and New Zealand and

11

-

5

16

China Region

Corporate unallocated expenses

20

(2)

-

18

Total

(4)

17

2

16

EPS

(7)

21

2

16

  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 growth disclosed in the Organic Revenue Growth Rates tables 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 BCS and 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.

n/m - Not meaningful due to the impact of impairment and other charges in 2022.

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."

3

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.

For fiscal year 2023, the Company now expects to deliver 13 percent core constant currency EPS growth (previously 12 percent).

Consistent with its previous guidance for 2023, the Company continues to expect:

  • 10 percent organic revenue growth;
  • A core annual effective tax rate of 20 percent; and
  • Total cash returns to shareholders of approximately $7.7 billion , comprised of dividends of $6.7 billion and share repurchases of $1.0 billion .

In addition, the Company continues to expect an approximate 2-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 2023 core EPS of $7.54 (previously $7.47 ), an 11 percent increase (previously 10 percent) compared to 2022 core EPS of $6.79 .

For fiscal year 2024, we expect to deliver results towards the upper end of our long-term target ranges for both organic revenue and core constant currency EPS growth. Our long-term target ranges for both organic revenue growth (4 to 6 percent increase) and core constant currency EPS growth (high-single- digit percentage increase) remain unchanged.

Prepared Management Remarks and Live Question and Answer Webcast

At approximately 6:30 a.m. (Eastetime) on October 10, 2023 , the Company will post prepared management remarks (in pdf format) of its third quarter 2023 results and business update, including its outlook for 2023, at www.pepsico.com/investors. At 8:15 a.m. (Eastetime) on October 10, 2023 , 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

investor@pepsico.com

pepsicomediarelations@pepsico.com

4

PepsiCo, Inc. and Subsidiaries

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

   

12 Weeks Ended

     

36 Weeks Ended

 
   

9/9/2023

   

9/3/2022

   

9/9/2023

   

9/3/2022

Net Revenue

$

23,453

 

$

21,971

 

$

63,621

 

$

58,396

Cost of sales

 

10,675

   

10,308

   

28,784

   

27,156

Gross profit

 

12,778

   

11,663

   

34,837

   

31,240

Selling, general and administrative expenses (a)

 

8,757

   

8,295

   

24,528

   

22,262

Gain associated with the Juice Transaction (b)

 

-

   

14

   

-

   

(3,321)

Impairment of intangible assets (c)

 

6

   

1

   

6

   

1,602

Operating Profit

 

4,015

   

3,353

   

10,303

   

10,697

Other pension and retiree medical benefits income

 

62

   

36

   

183

   

168

Net interest expense and other

 

(201)

   

(190)

   

(602)

   

(666)

Income before income taxes

 

3,876

   

3,199

   

9,884

   

10,199

Provision for income taxes

 

760

   

475

   

2,053

   

1,756

Net income

 

3,116

   

2,724

   

7,831

   

8,443

Less: Net income attributable to noncontrolling interests

 

24

   

22

   

59

   

51

Net Income Attributable to PepsiCo

$

3,092

 

$

2,702

 

$

7,772

 

$

8,392

Diluted

                     
                     

Net income attributable to PepsiCo per common share

$

2.24

$

1.95

$

5.62

$

6.04

Weighted-average common shares outstanding

 

1,383

   

1,387

   

1,384

   

1,389

  1. The increase in selling, general and administrative expenses for the 12 and 36 weeks ended September 9, 2023 , as compared to the 12 and 36 weeks ended September 3, 2022 , primarily reflects higher selling and distribution costs as well as higher advertising and marketing expenses.
  2. In the 36 weeks ended September 3, 2022 , we sold our Tropicana, Naked and other select juice brands to PAI Partners for $3.5 billion in cash and a 39% noncontrolling interest in a joint venture, Tropicana Brands Group (TBG), operating across North America and Europe (Juice Transaction).
  3. In the 36 weeks ended September 3, 2022 , we recorded pre-tax impairment charges of $1.6 billion primarily related to the decrease in fair value of our indefinite-lived intangible assets as a result of the Russia - Ukraine conflict.

A - 1

Disclaimer

PepsiCo Inc. published this content on 10 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 October 2023 10:00:39 UTC .

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