PepsiCo, Inc. 10-Q Filing Summary
Business Context and Reporting Period
This filing is a Quarterly Report on Form 10-Q for PepsiCo, Inc. covering the 24-week period ended June 13, 2026. The company operates six reportable segments: PepsiCo Foods North America (PFNA), PepsiCo Beverages North America (PBNA), International Beverages Franchise (IB Franchise), Europe, Middle East and Africa (EMEA), Latin America Foods (LatAm Foods), and Asia Pacific Foods. The report includes unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP.
Key Financial Metrics (24 Weeks Ended June 13, 2026)
- Net Revenue: $43.62 billion (up 7% year-over-year).
- Operating Profit: $7.24 billion (up 65% year-over-year).
- Operating Margin: 16.6% (up from 10.8% in the prior year).
- Net Income Attributable to PepsiCo: $5.31 billion (up 71% year-over-year).
- Diluted Earnings Per Share (EPS): $3.88 (up 72% year-over-year).
- Net Cash Provided by Operating Activities: $2.37 billion.
- Free Cash Flow (Non-GAAP): $1.17 billion.
- Total Debt Obligations: $53.21 billion ($10.60 billion short-term; $42.61 billion long-term).
- Cash and Cash Equivalents: $10.25 billion.
Material Changes Versus Prior Period
The significant increase in operating profit and net income compared to the 24 weeks ended June 14, 2025, is primarily driven by the absence of a $1.86 billion pre-tax impairment charge recorded in the prior year related to the Rockstar and Be & Cheery brands. Additionally, the current period benefited from productivity savings, effective net pricing, and lower restructuring charges. Foreign exchange rates were favorable, contributing approximately 3 percentage points to net revenue growth, driven by the appreciation of the Mexican peso and Russian ruble. Organic revenue grew 2.5%, supported by 1% volume growth and 2% effective net pricing.
Guidance, Outlook, and Risks
Capital Allocation: Management expects to return approximately $8.9 billion to shareholders in 2026, comprising roughly $7.9 billion in dividends and $1.0 billion in share repurchases. A new $10 billion share repurchase program was announced in February 2026, and the annualized dividend was increased by 4% to $5.92 per share.
Productivity Plan: The 2019 Multi-Year Productivity Plan has been extended through 2030. Total expected pre-tax charges are approximately $6.15 billion; $3.8 billion has been incurred to date.
Risks and Contingencies:
- Geopolitical & Currency: Operations in Russia accounted for 6% of consolidated net revenue and 21% of consolidated cash. Volatile conditions in markets including Argentina, Brazil, China, and the Middle East pose ongoing risks.
- Tariffs: The company is seeking refunds for tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA) following a U.S. Supreme Court ruling, though timing and amounts remain uncertain.
- Taxation: Implementation of the OECD model global minimum tax in 2026 has increased the income tax provision.
- Legal: The "Baltimore Matter" lawsuit regarding public nuisance claims remains pending, with oral arguments scheduled for the third quarter of 2026.
Investor Verification Checklist
- Verify the sustainability of operating margins given the one-time benefit from the absence of the prior year's $1.86 billion impairment charge.
- Monitor the progress and cash impact of the extended 2019 Productivity Plan, with $2.35 billion in remaining expected charges.
- Assess the impact of foreign exchange volatility, particularly the Russian ruble and Mexican peso, on future revenue and earnings translation.
- Review the status of tariff recovery claims and potential exposure to new tariffs on raw materials and packaging.
- Confirm the execution of the $10 billion share repurchase program and the impact of the increased dividend on free cash flow.