Pepsico, Inc. (NYSE:PEP) Q1 2019 Earnings Conference Call - Final Transcript

Apr 17, 2019 • 07:45 am ET


Pepsico, Inc. (NYSE:PEP) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning and welcome to PepsiCo's First Quarter 2019 Earnings Conference Call. Your lines have been placed on listen-only until the question-and-answer session. (Operator Instructions) Today's call is being recorded and will be archived at

It is now my pleasure to introduce Mr. Jamie Caulfield, Senior Vice President of Investor Relations. Mr. Caulfield, you may begin.

Jamie Caulfield

Thank you, operator, and good morning, everyone. I'm joined this morning by PepsiCo's Chairman and CEO, Ramon Laguarta; and PepsiCo's Vice Chairman and CFO, Hugh Johnston. We'll begin today's call with some brief prepared comments from Ramon and Hugh and then we'll open the call up to your questions. Before we begin, please take note of our cautionary statement. This conference call includes forward-looking statements, including statements regarding 2019 guidance, based on currently available information. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from those predicted.

Statements made on this conference call should be considered together with cautionary statements and other information contained in today's earnings release and in our most recent periodic reports filed with the SEC. When discussing our financial results on today's call, we will refer to certain non-GAAP measures which exclude certain items from our reported results. Such items include the impacts of certain tax related matters, foreign exchange translation, acquisitions, divestitures, structural and other changes, and restructuring charges. You should refer to the glossary and other attachments to this morning's earnings release and to the Investors section of PepsiCo's website under the Earnings Information tab to find full explanations and reconciliations of these non-GAAP measures.

And now, it's my pleasure to introduce Ramon Laguarta.

Ramon Laguarta

Thank you, Jamie. Good morning, everyone. About two months ago we shared with you in some detail our priorities for the business and our financial goals for 2019. So today we're keeping our prepared comments short, just touching on the highlights for the quarter and then we will leave enough time to get to all your questions. I will start by simply saying that we're very pleased with our results for the first quarter. Our rate of organic revenue growth accelerated to 5.2%, our highest rate of quarterly growth in more than three years. This topline performance was broad based with particularly strong organic revenue growth at Frito-Lay North America, which grew 6%; and our international divisions, while negatively affecting our reported basis by ForEx and re-franchising, delivered organic revenue growth of 8% in ESSA and 10% in both Latin America and AMENA. We also had solid growth and continued progress at PepsiCo Beverages North America where organic revenue was up 2% -- 2.5% in the quarter.

We invested as planned across our businesses and this included a double-digit increase in advertising and marketing. And our productivity and restructuring actions were implemented according to plan. Our strong performance in the quarter is emblematic of a number of key strengths in the business. Amongst them, the health and resilience of our categories, our leading brands, a broad-based portfolio