UPDATE: PepsiCo (PEP) Tops Q2 EPS by 9c, Beats on Revenues
(Updated - July 10, 2018 6:10 AM EDT)
PepsiCo (NASDAQ: PEP) reported Q2 EPS of $1.61, $0.09 better than the analyst estimate of $1.52. Revenue for the quarter came in at $16.1 billion versus the consensus estimate of $16.04 billion.
Summary of Second Quarter Financial Performance:
- Reported second quarter and year-ago results were impacted by a provisional transition tax expense related to the Tax Cuts and Jobs Act (TCJ Act), a non-cash tax benefit associated with our resolution with the Internal Revenue Service (IRS) of all open matters related to the audits of our taxable years 2012 and 2013 (the 2012 and 2013 audit resolution), restructuring charges and commodity mark-to- market net impacts. See A-6 to A-8 for further details
- Reported net revenue increased 2.4 percent. Foreign exchange translation had a 1-percentage-point favorable impact on reported net revenue growth. Organic revenue, which excludes the impacts of foreign exchange translation, structural and other changes, grew 2.6 percent.
- Reported gross margin contracted 20 basis points and core gross margin contracted 35 basis points. Reported operating margin expanded 25 basis points and core operating margin expanded 5 basis points.
- Reported operating profit increased 4 percent and core constant currency operating profit increased 2 percent. Commodity mark-to-market net impacts positively impacted reported operating profit growth by 1 percentage point and restructuring charges had a nominal impact. A gain from refranchising our beverage business in Thailand positively contributed 5 percentage points to both reported and core operating profit growth. The prior-year gain associated with the sale of our minority stake in Britvic plc (Britvic) negatively impacted both reported and core operating profit growth by 3 percentage points. Foreign currency translation positively contributed 1 percentage point to both reported and core operating profit growth.
- The reported and core effective tax rates in the second quarter of 2018 were 36.9 percent and 21 percent, respectively. The reported and core effective tax rates in the second quarter of 2017 were 23.7 and 23.5 percent, respectively. Based primarily on new transition tax guidance related to the TCJ Act issued by the IRS 4 during the second quarter of 2018, we recorded an additional provisional transition tax expense of $777 million which negatively impacted the reported effective tax rate by 27 percentage points. The 2012 and 2013 audit resolution positively impacted the reported effective tax rate by 11 percentage points
- Reported EPS was $1.28, a decrease of 13 percent from the second quarter of 2017. Foreign exchange translation positively contributed 1 percentage point to reported EPS performance
- Core EPS was $1.61, an increase of 8 percent from the second quarter of 2017.Excluding the impact of foreign exchange translation, core constant currency EPS increased 7 percent from the prior -year period (see schedule A-11 for a reconciliation to reported EPS, the comparable GAAP measure).
- Net cash provided by operating activities was $2.4 billion.
For earnings history and earnings-related data on PepsiCo (PEP) click here.