PepsiCo, Inc. Q1 2020 Pre-recorded management discussion
Reconciliation of GAAP and Non-GAAPInformation (unaudited)1
In discussing financial results, the Company refers to the following measures which are not in accordance with U.S. Generally Accepted Accounting Principles (GAAP): core results, core constant currency results, free cash flow and organic revenue and adjusted organic revenue growth. We use these non-GAAPfinancial measures internally to make operating and strategic decisions, includingthepreparationofourannualoperatingplan,evaluationofouroverallbusinessperformanceandasafactorindetermining 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 transparencyonhow we evaluateour business. Wealsobelievepresentingthesemeasures allowsinvestorsto viewourperformance 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; amounts associated with mergers, acquisitions, divestitures and other structural changes; estimated amounts related to COVID-19; pension and retiree medical related items; charges or adjustments related to the enactment of new laws, rules or regulations, such as significant 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; asset impairments (non-cash); and remeasurements of net monetary assets.
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 U.S. 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.
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.
Inventory fair value adjustments and merger and integration charges
In the 12 weeks ended March 21, 2020, charges related to our acquisition of BFY Brands, Inc. and Pioneer Food Group Ltd.
Net tax related to the Tax Cuts and Jobs Act
During the fourth quarter of 2017, the TCJ Act was enacted in the United States. In periods subsequent to the enactment of the TCJ Act, we recognized certain tax benefits and/or expenses associated therewith.
Organic revenue and adjusted organic revenue growth
Organicrevenuegrowthadjustsreportednetrevenuegrowthfortheimpactofacquisitions,divestituresandotherstructuralchanges, foreign exchange translation and, when applicable, the impact of the 53rd reporting week. In the 12 weeks ended March 21, 2020, adjusted organic revenue growth further adjusts organic revenue growth for our estimate of the impact of changes in consumer consumption patterns arising from the COVID-19 pandemic. This estimate is based on our internal analysis of expected revenue performance as reflected in our internal records before and after when we believe, based on information currently available to us, the primary markets in each segment appear to have experienced changes in consumer patterns in response to the spread of COVID-19.
2020 core effective tax rate
Our 2020 core effective tax rate expectation excludes the mark-to-market net impact included in corporate unallocated expenses and restructuring and impairment charges. We are not able to reconcile our full year projected 2020 core effective tax rate to our full year projected 2020 reported effective tax rate because we are unable to predict the 2020 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 this measure.
1 For a full discussion of our first quarter 2020 financial results, including definitions we use in discussing our financial results, please refer to our press release issued April 28, 2020 and our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on April 28, 2020.
1
Second quarter 2020 organic revenue performance
Our organic revenue performance expectation for the second quarter of 2020 excludes the impact of acquisitions, divestitures and other structural changes and foreign exchange translation. We are unable to reconcile our second quarter 2020 projected organic revenue performance to our second quarter 2020 projected reported net revenue performance because we are unable to predict the second quarter 2020 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. Therefore, we are unable to provide a reconciliation of this measure.
2
PepsiCo, Inc. and Subsidiaries
Reconciliation of GAAP and Non-GAAP Information
(unaudited)
12 Weeks Ended 3/21/2020 | |||||||||||||||||||||
Impact of | |||||||||||||||||||||
Net Revenue Growth Reconciliation | Reported % | Foreign exchange | Acquisitions and | Organic % | |||||||||||||||||
Change, | Change, Non- | ||||||||||||||||||||
GAAP Measure | translation | divestitures | GAAP Measure | ||||||||||||||||||
PepsiCo | 8% | - | - | 8% | |||||||||||||||||
Developed markets | HSD% | - | - | HSD% | |||||||||||||||||
Developing and emerging markets | HSD% | - | LSD% | HSD% | |||||||||||||||||
Global snacks | HSD% | LSD% | - | HSD% | |||||||||||||||||
Global beverages | HSD% | - | - | HSD% | |||||||||||||||||
Net Revenue Growth Reconciliation | Quarter | Second | |||||||||||||||||||
Ended | Half Ended | ||||||||||||||||||||
3/21/2020 | 12/28/2019 | ||||||||||||||||||||
Reported net revenue growth | 8 | % | 5 | % | |||||||||||||||||
Impact of: | |||||||||||||||||||||
Foreign exchange translation | - | 1 | |||||||||||||||||||
Acquisitions and divestitures | - | (1) | |||||||||||||||||||
Organic revenue growth | 8 | % | 4 | % | |||||||||||||||||
Estimated impact of COVID-19 | 2 | ||||||||||||||||||||
Adjusted organic revenue growth | 5.5 | % | |||||||||||||||||||
12 Weeks Ended 3/21/2020 | |||||||||||||||||||||
Impact of | |||||||||||||||||||||
Net Revenue Growth Reconciliation | Reported % | Foreign | Acquisitions | Organic % | |||||||||||||||||
Change, | exchange | Change, Non- | |||||||||||||||||||
GAAP Measure | translation | and divestitures | GAAP Measure | ||||||||||||||||||
Latin America: | |||||||||||||||||||||
Mexico | DD % | (LSD) % | - % | DD % | |||||||||||||||||
Colombia | - % | HSD % | - % | HSD % | |||||||||||||||||
Brazil | (HSD) % | DD % | - % | MSD % | |||||||||||||||||
Europe: | |||||||||||||||||||||
Turkey | DD % | DD % | - % | DD % | |||||||||||||||||
Russia | HSD % | (MSD) % | - % | MSD % | |||||||||||||||||
Poland | MSD % | LSD % | - % | MSD % | |||||||||||||||||
Africa, Middle East and South Asia: | |||||||||||||||||||||
India | (DD) % | LSD % | DD % | DD % | |||||||||||||||||
Egypt | DD % | (DD) % | - % | DD % | |||||||||||||||||
Pakistan | HSD % | DD % | - % | DD % | |||||||||||||||||
Saudi Arabia | DD % | - % | - % | DD % | |||||||||||||||||
South Africa | MSD % | MSD % | - % | DD % |
Note - Certain amounts above may not sum due to rounding.
3
PepsiCo, Inc. and Subsidiaries | ||
Reconciliation of GAAP and Non-GAAP Information | ||
(unaudited) | ||
Diluted EPS Reconciliation | 12 Weeks Ended | |
3/21/2020 | ||
Reported diluted EPS performance | (4) | % |
Impact of: | ||
Mark-to-market net impact | 11 | |
Restructuring and impairment charges | 1 | |
Inventory fair value adjustments and merger and integration charges | 1 | |
Net tax related to the TCJ Act | 2 | |
Core diluted EPS growth | 10 | |
Impact of foreign exchange translation | - | |
Core constant currency diluted EPS growth | 10 | % |
Note - Certain amounts above may not sum due to rounding.
4
Attachments
- Original document
- Permalink
Disclaimer
PepsiCo Inc. published this content on 28 April 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 April 2020 10:32:03 UTC