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PepsiCo Inc

PEP
10-QFiled:July 09, 2026

Summary

Full summary

The Print

positive

PepsiCo reported 12-week net revenue of $24,181M (up 6% YoY) and net income attributable to PepsiCo of $2,981M ($2.18 diluted EPS), with operating profit up 125% to $4,023M largely reflecting prior-year impairment charges related to the Rockstar and Be & Cheery brands.

The 12-week operating profit increase of 125% to $4,023M compares against a prior-year period that included $1,860M of impairment and other charges ($1,780M related to the Rockstar brand in PBNA and EMEA and $80M related to the Be & Cheery brand in Asia Pacific Foods). Management attributes the increase primarily to those prior-year impairment charges, productivity savings, effective net pricing, lower restructuring charges and a favorable net impact of acquisition and divestiture-related charges/credits, partially offset by certain operating cost increases. Reported operating margin was 16.6% versus 7.9% in the prior-year period.

  • 12-week net revenue rose 6% to $24,181M from $22,726M, and 24-week net revenue rose 7% to $43,624M from $40,645M.
  • 12-week operating profit increased 125% to $4,023M, which management attributes primarily to prior-year impairment charges related to the Rockstar and Be & Cheery brands, productivity savings, effective net pricing, lower restructuring charges and a favorable net impact of acquisition and divestiture-related charges/credits, partially offset by certain operating cost increases.
  • 12-week net income attributable to PepsiCo rose 136% to $2,981M and diluted EPS rose 137% to $2.18, with the reported tax rate up 3.4 percentage points to 22.0%.
  • Net cash provided by operating activities was $2,365M for the 24 weeks ended June 13, 2026, versus $996M in the prior-year period.

Results That Matter

  • Net Revenue
    Current period
    $24.2B
    Prior period
    $22.7B
    Change
    +6.4%
    Management attributes the increase to a 2-percentage-point favorable foreign exchange translation impact, a 2-percentage-point favorable impact of acquisitions and divestitures and 2% effective net pricing, partially offset by a 1% organic volume decline.
  • Gross Profit
    Current period
    $13.1B
    Prior period
    $12.4B
    Change
    +5.5%
    Gross margin was 54.2% versus 54.7% in the prior-year period.
  • Operating Profit
    Current period
    $4.0B
    Prior period
    $1.8B
    Change
    +124.9%
    Management attributes the increase primarily to prior-year impairment charges related to the Rockstar and Be & Cheery brands, productivity savings, effective net pricing, lower restructuring charges and a favorable net impact of acquisition and divestiture-related charges/credits, partially offset by certain operating cost increases.
  • Net Income Attributable to PepsiCo
    Current period
    $3.0B
    Prior period
    $1.3B
    Change
    —
    The reported tax rate increased 3.4 percentage points to 22.0%, which management attributes primarily to the prior-year release of federal interest accruals and the impairment of the Rockstar brand, as well as the current-year impact of the OECD model global minimum tax, partially offset by higher tax benefits from foreign results.
  • Net Income Attributable to PepsiCo per Common Share - Diluted
    Current period
    $2.2
    Prior period
    $0.92
    Change
    —
    Diluted weighted-average common shares outstanding were 1,369 million versus 1,373 million in the prior-year period.

Earnings Quality & Cash Conversion

Reported 12-week operating profit of $4,023M includes restructuring and impairment charges of $49M, acquisition and divestiture-related charges/credits of $(45)M and a mark-to-market net impact of $40M in corporate unallocated expenses. The filing reports a core, non-GAAP operating profit measure of $4,067M for the 12 weeks ended June 13, 2026, versus $3,911M in the prior-year period, and a core constant currency measure of $3,964M. The prior-year period included $1,860M of impairment and other charges ($1,447M after-tax or $1.05 per share), of which $1,780M related to the Rockstar brand in PBNA and EMEA and $80M related to the Be & Cheery brand in Asia Pacific Foods.

Value Drivers & Capital Allocation

“The net proceeds from the issuances of the above notes were used for general corporate purposes, including the repayment of commercial paper.”

— Filing statement

Return on equity was 13.5% (period net income / period-end equity, not annualized); return on assets 2.7% (period net income / period-end assets, not annualized).

Forward Signals

The filing does not provide full-year guidance. It states that the results for the 12 and 24 weeks ended June 13, 2026 are not necessarily indicative of the results expected for any future period or the full year.

Known trends

  • In 2026, widespread implementation of the OECD model rules for a global minimum tax rate of 15% came into effect in various countries in which we do business, including European Union member states, resulting in an increase in our income tax provision.
  • We have seen and expect to continue to see a further shift to e-commerce, online-to-offline and other online purchasing by consumers.
  • In this changing retail landscape, retailers and buying groups are shifting traditional value propositions, removing our products or otherwise reducing shelf space allocated to our products and focusing on introducing and developing private-label brands.

Subsequent events

  • Subsequent to June 13, 2026, we entered into Thai baht for U.S. dollar cross-currency interest rate swaps with a total notional amount of $0.3 billion and maturity dates ranging from May 2027 to May 2031.

Risks

4 source-verified filing excerpts. Selected excerpts are not a complete risk inventory.

Filing excerpt 1

EvidenceThe imposition of tariffs (including U.S. tariffs imposed or threatened to be imposed on China, the European Union, Canada and Mexico and other countries and any tariffs imposed by such countries) have impacted and could continue to impact our supply chain resulting in increased input costs, including the cost of certain raw materials and packaging.

Filing excerpt 2

EvidenceWhen prices increase, we may or may not pass on such increases to our customers, which may result in reduced volume, revenue, margins and operating results.

Filing excerpt 3

EvidenceThe fair value of all derivative instruments with credit-risk-related contingent features that were in a net liability position as of June 13, 2026 was $53 million.

Filing excerpt 4

EvidenceRussia accounted for 6% of our consolidated assets, including 21% of our consolidated cash and cash equivalents, and 38% of our accumulated currency translation adjustment loss as of June 13, 2026.

Balance Sheet & Liquidity

Leverage: This filing's standardized financial data reports no debt balance under a concept whose scope can be verified. That is an unestablished scope, not zero debt and not a net cash position; no total debt, net debt or debt-to-equity figure is stated.

Liquidity: Cash and cash equivalents were $10,251M as of June 13, 2026, up from $9,159M at December 27, 2025. As of June 13, 2026, there were no outstanding borrowings under the 2026 Five-Year Credit Agreement or the 2026 364-Day Credit Agreement, each of which enables borrowing up to $5.0 billion in U.S. dollars and/or euros.

Working capital: Current assets $32.8B vs. current liabilities $35.1B (current ratio 0.93x). Prior reported balance sheet as of 2025-12-27: $27.9B vs. $32.8B (0.85x).

Maturities & covenants

  • In the 24 weeks ended June 13, 2026, $1.6 billion of U.S. dollar-denominated senior notes and €0.5 billion of euro-denominated senior notes matured and were paid.
  • The 2026 Five-Year Credit Agreement enables us and our borrowing subsidiaries to borrow up to $5.0 billion in U.S. dollars and/or euros, including a $1.2 billion swing line subfacility for euro-denominated borrowings permitted to be borrowed on a same-day basis, subject to customary terms and conditions.
  • The 2026 364-Day Credit Agreement enables us and our borrowing subsidiaries to borrow up to $5.0 billion in U.S. dollars and/or euros, subject to customary terms and conditions.

Notable Footnotes

ItemImpact
Impairment of intangible assets (prior-year period)In the 12 and 24 weeks ended June 14, 2025, pre-tax charges of $1,860 million ($1,447 million after-tax or $1.05 per share) were recorded, of which $1,780 million related to the impairment of the Rockstar brand in the PBNA and EMEA segments and $80 million related to the impairment of the Be & Cheery brand in the Asia Pacific Foods segment.
2019 Multi-Year Productivity PlanThe plan was expanded and extended through the end of 2030, with expected pre-tax charges of approximately $6.15 billion, including cash expenditures of approximately $5.1 billion. Plan-to-date charges through June 13, 2026 were $3,792 million.
Contingent consideration - poppi acquisitionA liability at fair value for contingent consideration of $300 million payable upon achievement of certain performance milestones by the third quarter of 2027 was recorded; as of June 13, 2026, the fair value was $117 million, reflecting a fair value decrease of $45 million and $161 million in the 12 and 24 weeks ended June 13, 2026, respectively, recorded in selling, general and administrative expenses.
Celsius Holdings, Inc. available-for-sale debt securitiesThe Level 3 investment in Celsius had a balance of $1,453 million at June 13, 2026, reflecting net unrealized losses of $289 million and $371 million in the 12 and 24 weeks ended June 13, 2026, respectively.

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AI-generated. Informational only, not investment advice. May be incomplete or contain errors. The authoritative source is always the original SEC filing.