Thank you, Kevin. And good morning, everyone. I hope everyone has had a chance this morning to review our press release and prepared remarks, both of which are available on our website. Before we begin, please take note of our cautionary statement. We may make forward-looking statements on today's call, including about our business plans and updated 2024 guidance. Forward-looking statements inherently involve risks and uncertainties and only reflect our view as of today, October 8, 2024, and we are under no obligation to update. When discussing our results, we refer to non-GAAP measures, which exclude certain items from reported results. Please refer to our third quarter 2024 earnings release and third quarter 2024 form 10-Q available on pepsico.com for definitions and reconciliations of non-GAAP measures and additional information regarding our results, including a discussion of factors that could cause actual results to materially differ from forward-looking statements. Joining me today are PepsiCo's Chairman and CEO, Ramon Laguarta, and PepsiCo's Executive Vice President and CFO, Jamie Caulfield. We ask that you please limit yourself to one question. And with that, I will turn it over to the operator for the first question.

Thank you. Our first question comes from Lauren Lieberman with Barclays. Your line is open.

Thanks. Good morning, everyone. So in the release, it's clear that Frito volumes trended in the right direction in the third quarter, category backdrop is still tough, and you offered a lot of detail in the prepared remarks and kind of the strategy from here. I wanted to maybe think about the building blocks to a return to volume growth for that business? And if we isolate it between, let's say, core Lays and some of the promotional work that you started this summer, the expansion efforts where you focus on kind of multicultural offerings and value offerings, and then the positive choice, more premium end of the spectrum. As we think about the path forward, what do you think about the growth rates for those three, if you will, segments or initiatives? Do we think that long-term Lays get back to, and that kind of core part of the business to be a positive volume contributor or is it more of a kind of hold the line and avoid losses there, but the other two are really what drives the turnaround as we move forward? Thanks.

Good morning, Lauren. Thank you. Let me step back for a minute. If we think about the long-term growth potential of the food business in the U.S., we are very positive about the long-term trends. We've seen Gen Z snacking patterns and food patterns being in a way that favors the growth of our category. They are snacking more. They are eating mini meals versus large meals. And that favors our brands and the number of occasions that they carry will grow. So long term, we feel very good about it. After three years of outsized growth for Frito, if you think about the double-digit growth, we knew this year was going to be a year of normalization and that's what's happening. The consumer is reassessing patterns and with mobility and some of the financial situations. Now going forward, we think that the category will continue to grow at the pace of the past because of the long-term trends that I referred to. Now the way we're thinking about our brands playing in that space, potato chips will continue to be a big driver of the growth. And we're looking at potato chips, to your question on Lays, as a multi-tier opportunity. And the same theme for all the other segments. So we have Lays clearly as the main part of the category. And within Lays, we will have unsalted and we'll have flavors where we know we can create a lot of loyalty and higher value for consumers. We'll have subsegments like lightly salted or baked that provide even more permissible options for consumer-sustained potatoes. And then we'll have, at the upper end of the category brands like Miss Vickie's that provide a more premium experience. So we're thinking about each one of those categories as multi-tier where we offer value to some consumers, and more specific choices for other consumers that want to stay within our brands. But the overarching way we're thinking about the category is to continue to create growth, continue to ensure that the long-term category creates occasions and brings consumers into the category with our brand programs, our innovation, to keep the category growing very healthily in the future for us and for our customers. And that's how you should think about the long-term value that we can create with the Frito-Lay business.

Thank you. One moment for our next question. Our next question comes from Bryan Spillane with BofA. Your line is open.

Thanks, operator. Good morning, everyone. So, my question is just how we're approaching planning for, I guess, 2025 and maybe just the medium term. And Ramon, I guess underneath my question is, given that this is sort of in some ways uncharted waters in terms of what we're dealing with the consumer and finding ways to get them to respond, how is it affecting the way you're thinking about the balance, right, between investment, spending to stimulate demand, returns, and how it affects the bottom line? And I guess, really what I'm asking is, how do you gauge or guard against cutting too much cost in order to preserve the bottom line while trying to re-accelerate top-line growth?

Yes, that's a great question, Bryan. We've been focused on productivity and cost transformation for a while now. We anticipated that this would be a year of normalization after three years of significant growth. We are approaching productivity in a structured and systematic manner across the company. We've begun deploying substantial platforms, including automation across our supply chain, which encompasses warehouses, manufacturing, and distribution centers. We've invested heavily in data management, allowing us to implement digitalization on a large scale throughout the value chain. This means we are enhancing everything from our procurement processes to factory operations, transportation, and market strategies. All of this digitalization is set to drive growth and efficiency. About two years ago, we established our global business services, now referred to as Global Capability Centers. They have now reached a level of maturity that allows us to optimize labor across the company and better serve our organization. We are also improving demand generation budgets. There are multiple productivity initiatives that we plan to roll out over the next few years in both the U.S. and internationally. These efforts will provide us with the flexibility to invest as needed to foster growth in a responsible manner and meet the financial returns expected by our investors, which we are currently delivering. We're feeling optimistic about this year, as we have managed to achieve results at the high end of our long-term EPS target, despite a challenging consumer environment. This is encouraging and reinforces our belief that the productivity and cost transformation initiatives we've kicked off with appropriate investments will yield results. We are focused on the long-term, even in a challenging year for top-line growth. We continue to invest in advertising and marketing, the long-term transformation of the company, and sustainability to ensure that we use fewer resources in the future. We're not losing sight of our long-term goals while also delivering on short-term performance for our investors. We believe we have a strong productivity program in place that we will keep implementing in the years ahead.

Thank you. One moment for our next question. Our next question comes from Kaumil Gajrawala with Jefferies. Your line is open.

Good morning, everyone. I would like to follow up on that. If organic revenue growth remains in the low single digit or 1% range, are you still able to achieve 8% growth in EPS when considering everything together? Do you have the flexibility to accomplish that in the upcoming year?

Kaumil, as I said earlier, I think we have a very large productivity set of tools that we will keep deploying systematically. At the same time, we don't think our category will grow at 1% long term. We think our category with investments that we are putting back into the business and the health of our brands and the innovation that we have in place for this year and next year will deliver much more than 1%. So we're not considering that scenario in our kind of planning. But I would say, what we want to do is control what we can control, which is clearly focus on productivity, focusing on the long-term health of our category, continue to keep our consumers in our brand, continue to keep our consumers in our categories, building winning plans with our partners that generate profitable growth for both of us. That's where we're putting the focus. Long-term, as I said earlier, we believe in the long-term growth of both our snacks category and our beverage category. Both of them are trillion-dollar type of categories with global relevance, growing very healthily in many markets around the world and with long-term trends that give us a lot of confidence that these will be sizable growth categories for the long term.

Thank you. One moment for our next question. Our next question comes from Dara Mohsenian with Morgan Stanley. Your line is open.

Hey, good morning.

Hey, Dara. Good morning.

So, Ramon, you touched on earlier in the prepared remarks some of the actions you've taken so far in Frito-Lay. Just can you take a step back and give us your view in terms of the initial payback you're seeing? But the thrust of the question is really more about going forward is it sort of tweaking those actions in place already to drive greater payoff going forward? Are there additional actions you're going to lean heavier on? And just how do you think about sort of changing the magnitude of investment behind some of those? And maybe specifically you can dial down on providing value to consumers that you mentioned. What does that sort of mean? Is that more of a promotional focus? Is it taking less pricing? Give us a little more tangible detail on that front. Thanks.

Great, Dara. Thank you. Listen, I think it's a multi-pronged strategy and that we'll continue with that. So giving more value on the core is super relevant. We feel good about the investments that we put this summer, mostly behind the potato chips category and Lays. That drove growth in the potato chips business. Lays gained 3 points of household penetration, and we feel good about that return. Now we're going to apply that sequentially to other categories. We will use the fall and winter season to put more investments behind Doritos and Tostitos. It’s the football season, there's a lot of gatherings, and those brands belong very well in those gatherings. And it will be a combination of value in the form of bonus packs and more product too. Obviously, these are normally large group gatherings, so bonus packs make a lot of sense. We're giving 20% more product in Tostitos and Ruffles, some of the brands that belong in those locations. We're also investing in brand events. So, you will see Tostitos and Doritos, big brand events around NFL. We'll see Lays playing some of the classic Do Us a Flavor event. So the brands will have a combination of value and big brand events. At the same time, we're working on the long-term evolution of the portfolio. That is something that we've been working for many, many years. We'll continue. I think the success of our business long-term is based on evolving the portfolio at the speed that the consumer wants to go. So we'll continue to invest in our permissible portfolio. This is growing very fast, and we continue to put more legs to that business. Now we have SunChip, Simply, PopCorners, we have SmartFood, we have multiple brands. You guys saw the announcement of Siete, hopefully that will go through legal approval and we will have another leg to that portfolio of solutions to keep growing the permissible portfolio. The same with multicultural. We see that with the Hispanic population growing in the United States, we have brands like Sabritas, Santitas, Gamesa that can work very well for that group of consumers. We have those brands in Mexico, we're scaling them up in the U.S. And the other lever we're playing there is, we're entering new channels. We're trying to expand beyond retail, in a way from home, in other channels where we can create occasions for our brands that right now are under-penetrated. So that's the multi-pronged approach. We're probably going to lean a bit more on value in the first quarters without taking the ball off the long-term investments that we're making consistently in building the portfolio for the future. So, you will see us making those options. But again, I refer back to what I was saying earlier, the optionality that we can create for ourselves with our productivity programs gives us a lot of flexibility. And we will be making those adjustments as we see the returns of the different actions and the tactics taking place over the next few months.

Thank you. One moment for our next question. Our next question comes from Filippo Falorni with Citi. Your line is open.

Hey, good morning, everyone. I wanted to ask about the international business. So Ramon, you mentioned in the prepared remarks geopolitical tensions and some weaker consumer across certain markets. So maybe you can talk about those markets that had a negative impact and quantify any impact in the quarter. And then kind of like looking at the two pieces of the international business, it seems like the deceleration has been more in the convenience food side versus the beverage business continues to do well. So what are the drivers in the international slowdown in snacks and convenient foods? Is it similar to the US or are there other drivers? Thank you.

Thank you, Filippo. There are areas of growth in international markets, particularly in Southeast Asia and India, along with some parts of Eastern Europe and Brazil. However, we are experiencing a slowdown in other regions. In China, consumers are feeling more constrained, leading to a decrease in growth in our food business from double digits to single digits, although we are gaining market share. Mexico is also seeing a slowdown, likely related to elections and fluctuations in social spending. We hope this will stabilize soon. Western Europe is facing challenges as well, influenced by weather and other factors. The situation in the Middle East presents its own challenges due to geopolitical issues, which we anticipate will persist in the near future. Nevertheless, our local teams are effectively managing these conditions to remain relevant to consumers and continue driving the business forward. As for the comparative performance, the beverage sector is experiencing slightly faster growth than the food sector globally.

Thank you. One moment for our next question. Our next question comes from Peter Grom with UBS. Your line is open.

Thanks, operator. Good morning, everyone. Maybe just a bit more of a housekeeping question, but the full year organic revenue guidance still implies a relatively wide range for the fourth quarter. So just any thoughts on where you would expect to fall within that range? And then, within that, any comments on the underlying assumptions embedded, clearly things have been more challenged from an external perspective. So just would be curious if you were assuming kind of the current environment holds, or would you anticipate the category trying to show some improvement here as we exit 2024? Thanks.

Hey, it's Jamie. I'd say that we really don't expect a huge inflection up or down from the conditions that existed in Q3.

Thank you. One moment for our next question. Our next question comes from Robert Moskow with TD Cowen. Your line is open.

Hi. Thank you. Ramon, you have a very thoughtful strategic approach to investing in Frito-Lay. In some areas you're investing in different ways. I have two questions. I thought the plan was to also invest in Tostitos and promote it more, similar to what you did with Lays. Did you launch that in the market? Because we haven't seen much for Tostitos yet. Secondly, regarding the positive choice brands, I would have expected them to be less affected by value-seeking consumer behavior since they tend to attract higher-income customers, but they've been weak. Can you share what progress you've made in improving their distribution and where you stand on turning them around? Thanks.

That's great. Those are two excellent questions. Regarding Tostitos, we've made some summer investments, but the brand is highly relevant this fall with gatherings, TV watching, and tailgating in the U.S. We'll be increasing our investment in Tostitos, focusing on brand and consumer initiatives, along with adding value through bonus packs and other incentives that should increase the brand’s penetration and hopefully its growth. We're applying the same strategy to Doritos, offering more sequential investment. We started with Lays and are now focusing on Doritos, which responds well to marketing activity. We're already seeing positive results in September and October, and we expect ongoing improvements. On the other hand, the multi-packs and variety pack segment, which was once a significant growth area, is facing some challenges, partly due to affordability. We're now offering 10-count multi-packs which are gaining traction, compared to previous offerings of 18 and 24-count packs. Consumers are leaning towards smaller purchases, and those options are performing well. We're also adding bonus packs to our multi-packs to create added value, which we believe will positively impact the business in the next few months. We've been focused on improving our core products for many years to make them more permissible. We're reducing sodium and fat levels, creating a positive impact for all our brands. Our portfolio includes products that are becoming more accessible to consumers, such as SunChips, the Simply range, SmartFoods, and PopCorners, with new additions like Siete. We're seeing an increase in penetration and positive development in these brands, although affordability still affects various consumer segments. We don't view this as a long-term obstacle. Instead, we see it as an opportunity to strengthen our portfolio, expand distribution, and enhance visibility to encourage trial. We're being strategic with our investments in these brands to drive trial and, thanks to digital advertising and the insights we gather, we're able to be more accurate and thoughtful, achieving higher returns. These platforms are already significant, generating $2 billion, and we expect continued growth in the long term.

Thank you. One moment for our next question. Our next question comes from Steve Powers of Deutsche Bank. Your line is open.

Good morning, everyone. Thank you. To clarify, Ramon, could you elaborate on what caused the decline from 4% organic sales growth for the year to now low single digits? I'm curious about the influence of changes in international markets versus less improvement than anticipated in some of the domestic businesses. I'm not entirely clear on the incremental changes. Also, regarding Frito-Lay, you mentioned investments in brand building and in refining price points and value. From that, I gather we might expect segment pricing to become negative as we implement those investments. I'd like to confirm if that assumption is accurate.

Hey, Steve. It's Jamie. On the revision from the 4% to low single digits, the combination of recovery of the consumer in the U.S., frankly, has been slower than we had anticipated. And then to a lesser degree, the geopolitics have impacted international. That's probably a half point drag on total PepsiCo revenue growth in the quarter. As far as pricing goes, it's a bit complex. We're investing in affordability where it makes sense, but we're investing in a number of levers to stimulate demand, and I think too soon to call on what the pricing outlook is going forward.

Thank you. One moment for our next question. Our next question comes from Andrea Teixeira with JPMorgan. Your line is open.

Thank you. Good morning. I wanted to revisit the need for increased marketing investment in international convenience food to support volume growth in key regions like Latin America, while also maintaining momentum in Europe. Ramon, I know you have significant experience in negotiating with retailers in that area. My question stems from the affordability we observed in the US. Should we expect a similar focus on affordability in regions like Latin America, specifically in Mexico? I recognize the challenging comparisons, but I am interested in exploring strategies for adjusting pricing in Latin America. Additionally, regarding Frito-Lay North America, I would like to follow up on the reinvestment you mentioned. Should we anticipate continued pressure on margins until next summer? We recently experienced a notable 200 basis points decline in operating margin for Frito-Lay, and I would appreciate your insights on this. Thank you.

Thank you, Andrea. Listen, I think your question on international is very valid. I think we've always been very good at the affordability and the revenue management in LatAm for our food business. And I think we manage well the price ladder and the entry points and the price packs and how we execute that in the point of sale in our racks and in our front facing to the consumer. So we'll continue to dial that up. The truth is that in LatAm as well, we have great brands and we continue to invest in those brands, make sure that we carry to the consumer and to our brands versus strong competitors that we have in the area. So you'll see a balance between both, but it's not a new capability. It's something that we've been executing for a long time. We're perfecting that as we leverage the data and the information that we have. And we have more precise executional tools versus more broad-based execution that we might have had in the past. So I think it's a capability that we keep optimizing, but it will be critical in us driving the business performance in the coming years. Now when it comes to the margin, maybe Jamie, you want to cover that one? We put Frito margin in the context of overall PepsiCo, so maybe Jamie, you want to talk about how we approach the margin.

Yes. So Andrea, we are managing the margin at a total portfolio level at this time. Our current focus with Frito is on stimulating consumer demand in a responsible and disciplined manner. Overall, we are concentrated on the total PepsiCo margin. I believe that as consumer health improves and the business accelerates, we can emphasize margin management more. For now, however, our priority is really on the consumer and driving demand.

Yes, this year is a good example of how we're able to invest in Frito, whilst expanding PepsiCo margin, meaningfully and substantially. And I think that's the way you should think about the way we will run the business in the near future.

One moment for our next question. Our next question comes from Chris Carey with Wells Fargo. Your line is open.

Hi, good morning. Thank you for the question. I wanted to start with a broader question and then follow up on Andrea's line of inquiry. Ramon, as you start making pricing investments in this portfolio and other strategic investments for Frito-Lay, you will be able to see the traction these efforts are generating. I'm curious if you view the slowdown we are experiencing as strictly cyclical, or if there are any changes in consumer behavior that might indicate a more lasting shift away from the business. I wonder if the Siete acquisition reflects your perspective on the future direction of this business. Additionally, I'd like to ask about total company margins, specifically regarding productivity. Are there any divisions where you believe your productivity initiatives are yielding better results? It's clear that Frito's profit was under pressure this quarter, despite plans for program expansion. So, do you have good visibility regarding the productivity programs in international markets and PBNA? I’m interested in your insights on cost offsets related to the investments coming in Frito. Thank you for considering both questions.

Yes, those are great questions. I'll begin with the margins and then address the long-term growth of the food business. We’ve clearly stated that one of our strategic goals is to continue improving the margins of our U.S. beverage business, and I believe we’re on track. Ram and the team have done an excellent job enhancing business efficiency and focusing the portfolio on high-margin segments. The business significantly improved its margin last year and is set to do so again this year, with a clear path toward achieving mid-teens margins in PBNA within a couple of years. This is progressing well. Similarly, we are witnessing margin improvements internationally, driven by scale and the productivity efforts of our teams across key markets, and we expect this trend to continue. These two areas present significant margin expansion opportunities for PepsiCo, and we are committed to focusing on and delivering this while adopting a balanced approach to the company's overall margins. We believe we can expand our margins while investing in the company's future and providing value to consumers. Now, regarding the food business and your question about the strategic transformation of our portfolio, we have been evolving our offerings for many years to align with market trends. These trends vary across different regions, but it's clear that consumers in some markets are increasingly seeking more permissible snacks or unstructured meals. Both present substantial growth opportunities for us in the long term. We are committed to offering better options for consumers whether they are looking for a treat or something for social gatherings, and we are optimistic about improvements in our R&D and our portfolio’s ability to provide permissible options. We see positive signs in category penetration and frequency, which we expect to remain consistent over the long term. A significant opportunity lies in the trend of consumers changing their eating habits by consuming more calories in smaller portions throughout the day. The idea of mini meals is gaining traction, such as pairing Sabra hummus with Tostitos and a banana. These meals are increasingly popular, especially among Gen Z, who are more inclined to use mini meals compared to previous generations. We are aware of the positive trends in this category and will continue innovating in this space. Our brands will be positioned to meet consumer needs across various occasions. We're already moving our portfolio to cater to health and wellness, unstructured meals, and mini meals. Your observations are correct. The acquisition of Siete is expected to enhance our ability to capture both permissible snack opportunities and enter the meal space sustainably. Additionally, there are numerous other brands in our portfolio that can also thrive in these areas.

Thank you. One moment for our next question. Our next question comes from Robert Ottenstein with Evercore ISI. Your line is open.

Great. Thank you very much. First off, I was wondering if you can give us a report card on the Gatorade transition? And then related to that, perhaps if you could discuss the DSD system in general in PBNA, and whether through all the great work that you guys have been doing for the last couple of years, have you been able to re-engineer the system so that perhaps it's less volume dependent than it was in the past, and that is part of your path to the mid-teen margins in a few years. Thank you.

Great question. So on Gatorade, we feel good about Gatorade. Clearly, we learned last year and we've executed better this year. I'm sure that if you ask our customers, they would still think that we have way to improve, and I would agree. So our service levels have improved meaningfully, but still opportunities will get better as we go. The output of that improvement, we've seen shares of market of Gatorade in the sports category going up and within is a sustainable share performance. So that on one side. Along with Gatorade, the one brand that is performing beautifully for us is Propel, and Propel is part of also this transformation. Propel is growing double-digit, it's fulfilling some great spaces for consumers complementary to Gatorade and it is benefiting as well from the execution that we are putting in place. So we feel good about that. It is improving somehow the economics of our DSD system in some states where we had lower scale with our soft drinks and other parts of the portfolio. That's a good move overall. With regards to the productivity journey on PBNA, go-to-market is clearly an opportunity and we're optimizing a lot of variables both in our warehousing, our transportation, our delivery models that will be sources of productivity going forward. But not only, right? We're seeing that we can also be more efficient in many other parts in how we procure. We can be more efficient in how we invest in demand. We can be more efficient in many areas in the PB&A business. And that's why I said earlier, we feel good about the trajectory of the business. We feel good about profitable growth. We feel good about how this business can get to this platform of mid-teens operating margin that would be great for PepsiCo and it would be great for obviously our beverage business in North America as well.

Thank you. One moment for our next question. Our last question comes from Kevin Grundy with BNP Paribas. Your line is open.

Great. Thanks. Good morning, everyone. Thanks for the question. So Ramon, just sticking with North America beverages, maybe we can pivot and get an update on the energy drink category, where you brought in the portfolio strategy here in recent years, not lost on your course, like salty snacks in the US, the category remains surprisingly weak. So a couple of questions please. One, maybe just some updated thoughts on the energy drinks category and what the recovery there may look like? And then two, perhaps just comment on the sharp slowdowns that we've seen with Celsius market share and your ability for that brand to regain its lost momentum in the Pepsi system? Thank you.

Thank you, Kevin. Listen, I think the energy needs stayed by consumers in the U.S. and everyone in the world will continue for the foreseeable future. I think everybody needs a bit of an energy boost throughout the day, and so that needs stayed will remain and I think it's going to be up to manufacturers or brand owners like us to satisfy those needs, whether it's through soft drinks, through coffee, through tea, or through energy drinks. I think that opportunity remains and that opportunity will continue to be an opportunity for innovation and brand investment. So on the short term and how different segments of the category play out, I think the energy category in the U.S. is clearly being impacted by the traffic in convenience stores, and traffic in convenience stores has gone down. It's been going down. I think it's part of the economic cycle that we're in. And that will reverse itself in the future once consumers feel better. So I wouldn't overplay the long-term of the energy category. With regards to Celsius, I'll say the same as I said in the past. We like the partnership. We are delivering on our part of the partnership, our distribution points are going up, our service levels keep going up, so we're executing our part of the partnership with discipline and high standards, and we remain optimistic on the partnership. So thank you very much, everybody, for the questions and the dialogue. And obviously, thank you for the confidence that you've placed with PepsiCo with your investment. We hope that you all stay safe and healthy and look forward to seeing you around. Thank you.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.