Simplify to Grow計劃的主要目標是降低我們供應鏈和總部開支的運營成本結構。該計劃涵蓋了解聘費用、資產處置以及其他製造和採購相關的一次性費用。自實施以來，我們已經支出了總的重組和執行費用$5.4 億美元，與Simplify to Grow計劃相關。我們預計將在2024年年底之前支出該計劃剩餘的費用。
截至2024年10月，我們打算終止Mondelēz Global LLC養老金計劃（「MDLZ Global Plan」），等待適用監管批准的完成。MDLZ Global Plan是美國薪酬員工的養老金計劃，終止過程是養老金買斷交易的一部分，預計將在2025年完成。參與者已被告知公司打算終止MDLZ Global Plan。
在2022年，我們宣佈了剝離我們發達市場的口香糖和全球 Halls 業務和在2022年第四季度，我們公佈了出售發達市場口香糖業務的協議。2023年10月1日，我們完成了將我們的發達市場口香糖業務出售給Perfetti Van Melle集團的交易，但排除了我們保留待監管批准的葡萄牙業務。我們於2023年10月23日完成了將葡萄牙業務出售給Perfetti Van Melle集團的交易。請參閱註釋2， 收購和剝離，獲取更多細節。
–2024年前9個月攤薄後每股收益下降，受到2024年對我們JDEP權益法投資的減值損失推動，主要是由於前一年可交易證券和權益法投資交易的淨收益、與我們前KDP投資相關的主要發達市場口香糖業務在2023年分拆時刻的年度變動均價和貨幣衍生工具的按市價計算影響的不利年度變化，較高的無形資產減值費用，爲ERP系統實施計劃和我們的Simplify to Grow計劃所產生的更高成本等。 這些不利因素在一定程度上被調整後的每股收益增加、有利的併購整合成本和有條件考慮調整的年度變化、較低的剝離相關成本、淨貨幣頭寸重估減值損失較低和較低的權益法投資方項目抵消。
2023年前九個月，總銷售、總務和管理費用減少28400萬美元，淨利潤受益於表格中提及的多個因素，包括部分與 Clif Bar 收購相關的有利條件調整以及更低的收購整合成本，2023年出售發達市場口香糖業務所帶來的成本減少，較低的脫售相關成本，淨貨幣頭寸重新計量損失減少以及與費用相關的有利貨幣折算影響，微弱抵消了爲ERP系統實施項目和爲簡化增長項目所支出的較高實施成本。除去這些因素，2023年前九個月，銷售、總務和管理費用增加27000萬美元。增加主要來源於更高的廣告和消費者促銷成本，以及部分由於加大對市場渠道投資而導致的更高間接成本。
Net revenues increased $60 million (3.4%), due to higher net pricing (5.1 pp) and favorable volume/mix (0.7 pp), partially offset by unfavorable currency translation rate changes (2.4 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Favorable volume/mix was driven by gains in biscuits & baked snacks and gum, partially offset by declines in refreshment beverages, cheese & grocery, candy and chocolate. Unfavorable currency translation impacts were due to the strength of the U.S. dollar relative to several currencies in the region, including the Nigerian naira, Egyptian pound and Indian rupee, partially offset by the strength of several currencies relative to the U.S. dollar, primarily the Australian dollar, Chinese yuan and South African rand.
Segment operating income increased $33 million (10.9%), primarily due to higher net pricing and lower manufacturing costs driven by productivity. These favorable items were partially offset by higher advertising and consumer promotion costs, higher raw material costs, higher other selling, general and administrative expenses, unfavorable currency translation rate changes, unfavorable volume/mix, an intangible asset impairment charge incurred in 2024 and costs incurred for the ERP Systems Implementation program.
Nine Months Ended September 30:
Net revenues increased $49 million (0.9%), due to higher net pricing (5.8 pp), mostly offset by unfavorable currency translation rate changes (4.5 pp) and unfavorable volume/mix (0.4 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories. Unfavorable currency translation impacts were due to the strength of the U.S. dollar relative to most currencies in the region, including the Nigerian naira, Egyptian pound, Chinese yuan, Indian rupee and Japanese yen. Overall, unfavorable volume/mix was impacted by geopolitical events in the Middle East and Southeast Asia. Unfavorable volume/mix was driven by declines in refreshment beverages, cheese & grocery, biscuits & baked snacks, chocolate and candy, partially offset by a gain in gum.
Segment operating income increased $167 million (19.2%), primarily due to higher net pricing and lower manufacturing costs driven by productivity. These favorable items were partially offset by higher raw material costs, higher advertising and consumer promotion costs, unfavorable currency translation rate changes, unfavorable volume/mix, higher other selling, general and administrative expenses, an intangible asset impairment charge incurred in 2024 and costs incurred for the ERP Systems Implementation program.
Net revenues increased $237 million (7.7%), due to higher net pricing (7.6 pp), favorable currency translation rate changes (1.7 pp) and favorable volume/mix (0.5 pp), partially offset by the impact of divestitures (2.1 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories except cheese & grocery. Favorable currency translation rate changes reflected the strength of several currencies relative to the U.S. dollar, including the British pound sterling, euro, Russian ruble and Polish zloty, partially offset by the strength of the U.S. dollar relative to a few currencies across the region, primarily the Turkish lira and Ukrainian hryvnya. Overall, favorable volume/mix reflected improved product mix as volume trends rebounded from last quarter's customer price negotiation disruptions. Favorable volume/mix was driven by gains in cheese & grocery and gum, partially offset by declines in refreshment beverages, candy, chocolate and biscuits & baked snacks. The impact of our 2023 divestiture of the developed market gum business resulted in a year-over-year reduction in net revenues of $60 million.
Segment operating income increased $111 million (22.5%), primarily due to higher net pricing, favorable volume/mix, favorable currency translation rate changes, lower other selling, general and administrative expenses, lower divestiture-related costs and lower costs incurred for the Simplify to Grow Program. These favorable items were partially offset by intangible asset impairment charges in 2024, higher manufacturing costs, lapping prior-year operating results from the developed market gum business divested in 2023, costs incurred for the ERP Systems Implementation program and higher fixed asset impairment charges.
Nine Months Ended September 30:
Net revenues increased $246 million (2.6%), due to higher net pricing (7.2 pp) and the impact from short-term distributor agreements (0.3 pp), partially offset by unfavorable volume/mix (2.1 pp), the impact of divestitures (2.0 pp) and unfavorable currency translation rate changes (0.8 pp). Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories except cheese & grocery. The short-term distributor agreement related to the October 1, 2023 sale of our developed market gum business added incremental net revenues of $25 million. Overall, unfavorable volume/mix reflected volume declines due to the impact from customer price negotiation disruptions in the second quarter, partially offset by favorable product mix. Unfavorable volume/mix was driven by declines in biscuits & baked snacks, chocolate, candy, refreshment beverages and gum, partially offset by a gain in cheese & grocery. The impact of our 2023 divestiture of the developed market gum business resulted in a year-over-year reduction in net revenues of $174 million. Unfavorable currency translation rate changes reflected the strength of the U.S. dollar relative to several currencies across the region, including the Turkish lira and Russian ruble, partially offset by the strength of a few currencies relative to the U.S. dollar, including the British pound sterling, Polish zloty and euro.
Segment operating income increased $296 million (20.4%), primarily due to higher net pricing, lower divestiture-related costs, lower remeasurement loss on net monetary position and lower acquisition integration costs. These favorable items were partially offset by intangible asset impairment charges in 2024, higher other selling, general
and administrative expenses, lapping prior-year operating results from the developed market gum business divested in 2023, higher advertising and consumer promotion costs, unfavorable volume/mix, higher manufacturing costs, higher costs incurred for the Simplify to Grow Program, higher fixed asset impairment costs, unfavorable currency translation rate changes, costs incurred for the ERP Systems Implementation program and higher raw material costs.
North America
For the Three Months Ended September 30,
2024
2023
$ Change
% Change
(in millions)
Net revenues
$
2,826
$
2,847
$
(21)
(0.7)
%
Segment operating income
918
532
386
72.6
%
For the Nine Months Ended September 30,
2024
2023
$ Change
% Change
(in millions)
Net revenues
$
8,129
$
8,300
$
(171)
(2.1)
%
Segment operating income
2,012
1,678
334
19.9
%
Three Months Ended September 30:
Net revenues decreased $21 million (0.7%), due to the impact of divestitures (4.3 pp) and unfavorable currency translation rate changes (0.1 pp), partially offset by higher net pricing (2.0 pp) and favorable volume/mix (1.7 pp). The impact of our 2023 divestiture of the developed market gum business resulted in a year-over-year reduction in net revenues of $119 million. Overall, favorable volume/mix reflected improved volume trends due to increased consumer demand in the U.S. Favorable volume/mix was driven by gains in biscuits & baked snacks, candy and chocolate. Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories.
Segment operating income increased $386 million (72.6%), primarily due to a favorable contingent consideration adjustment related to Clif Bar as well as lower acquisition integration costs, higher net pricing, lapping prior-year intangible asset impairment charges, lower manufacturing costs due to productivity and favorable volume/mix. These favorable items were partially offset by lapping prior-year operating results from the developed market gum business divested in 2023, higher raw material costs and costs incurred for the ERP Systems Implementation program.
Nine Months Ended September 30:
Net revenues decreased $171 million (2.1%), due to the impact of divestitures (3.8 pp), unfavorable volume/mix (0.5 pp) and unfavorable currency translation rate changes (0.1 pp), partially offset by higher net pricing (2.3 pp). The impact of our 2023 divestiture of the developed market gum business resulted in a year-over-year reduction in net revenues of $309 million. Overall, unfavorable volume/mix reflected consumer softness in the U.S in the first half of 2024 though volume trends have improved in the third quarter of the year. Unfavorable volume/mix was driven by declines in biscuits & baked snacks and candy, partially offset by a gain in chocolate. Unfavorable currency translation rate changes were due to the strength of the U.S. dollar relative to the Canadian dollar. Higher net pricing, driven by input cost-driven pricing actions, was reflected across all categories.
Segment operating income increased $334 million (19.9%), primarily due to a favorable contingent consideration adjustment related to Clif Bar as well as lower acquisition integration costs, higher net pricing, lower manufacturing costs due to productivity, lapping prior-year intangible asset impairment charges, lower other selling, general and administrative expenses, lower divestiture-related costs and lower fixed asset impairment charges. These favorable items were partially offset by lapping prior-year operating results from the developed market gum business divested in 2023, higher raw material costs, higher advertising and consumer promotion costs, unfavorable volume/mix and costs incurred for the ERP Systems Implementation program.
We believe that cash from operations, our revolving credit facilities, short-term borrowings and our authorized long-term financing will continue to provide sufficient liquidity for our working capital needs, planned capital expenditures and future payments of our contractual, tax and benefit plan obligations and payments for acquisitions, share repurchases and quarterly dividends. We expect to continue to utilize our commercial paper program and international credit lines as needed. We continually evaluate long-term debt issuances to meet our short- and longer-term funding requirements. We also use intercompany loans with our international subsidiaries to improve financial flexibility. Our investment in JDE Peet's provides us additional flexibility. Overall, we do not expect negative effects to our funding sources that would have a material effect on our liquidity, and we continue to monitor our global operations including the impact of ongoing or new developments in Ukraine and the Middle East. To date, we have been successful in generating cash and raising financing as needed. However, if a serious economic or credit market crisis ensues or other adverse developments arise, it could have a material adverse effect on our liquidity, results of operations and financial condition.
Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, tax liabilities, benefit plan obligations and lease expenses) as well as periodic expenditures for acquisitions, shareholder returns (such as dividend payments and share repurchases), property, plant and equipment and any significant one-time non-operating items.
Long-term cash requirements primarily relate to funding long-term debt repayments (refer to Note 8, Debt and Borrowing Arrangements), our U.S. tax reform transition tax liability and deferred taxes (refer to Note 16, Income Taxes, in our Annual Report on Form 10-K for the year ended December 31, 2023), our long-term benefit plan obligations (refer to Note 10, Benefit Plans, andNote 11, Benefit Plans, in our Annual report on Form 10-K for the year ended December 31, 2023) and commodity-related purchase commitments and derivative contracts (refer to Note 9, Financial Instruments).
We generally fund short- and long-term cash requirements with cash from operating activities as well as cash proceeds from short- and long-term debt financing (refer to Debt below). We generally do not use equity to fund our ongoing obligations.
Cash Flow
We believe our ability to generate substantial cash from operating activities and readily access capital markets and secure financing at competitive rates are key strengths and give us significant flexibility to meet our short- and long-term financial commitments. Our cash flow activity is noted below:
For the Nine Months Ended September 30,
2024
2023
(in millions)
Net cash provided by/(used in):
Operating activities
$
3,451
$
3,150
Investing activities
(1,170)
1,786
Financing activities
(2,558)
(5,074)
Net Cash Provided by Operating Activities
The increase in net cash provided by operating activities was primarily due to an increase in cash-basis net earnings, largely due to operating gains, partially offset by unfavorable year-over-year working capital movements, including the payment of the European Commission matter. Refer to Note 12, Commitments and Contingencies for additional information.
Net Cash (Used in)/Provided by Investing Activities
The reduction in net cash used in/provided by investing activities was largely driven by lapping prior year proceeds from the KDP and JDEP share sales (refer to Note 6, Investments) combined with higher capital expenditures. We continue to make capital expenditures primarily to modernize manufacturing facilities, implement new product manufacturing and support productivity initiatives. We expect 2024 capital expenditures to be up to $1.5 billion,
including capital expenditures in connection with our Simplify to Grow Program and for funding our strategic priorities. We expect to continue to fund these expenditures with cash from operations.
Net Cash Used in Financing Activities
The decrease in cash used in financing activities was primarily due to higher debt proceeds combined with lower debt repayments, partially offset by higher share repurchases and higher dividends paid in the first nine months of 2024 compared to the same prior year period.
Dividends
We paid dividends of $1,722 million in the first nine months of 2024 and $1,581 million in the first nine months of 2023. The third quarter 2024 dividend of $0.470 per share, declared on July 30, 2024 for shareholders of record as of September 30, 2024, was paid on October 14, 2024. The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net earnings, financial condition, cash requirements, future prospects and other factors that our Board of Directors deems relevant to its analysis and decision making.
We anticipate that the 2024 distributions will be characterized as dividends under U.S. federal income tax rules. The final determination will be made on an IRS Form 1099–DIV issued in early 2025.
Guarantees
As discussed in Note 12, Commitments and Contingencies, we enter into third-party guarantees primarily to cover the long-term obligations of our vendors. As part of these transactions, we guarantee that third parties will make contractual payments or achieve performance measures. As of September 30, 2024 and December 31, 2023, we had no material third-party guarantees recorded on our condensed consolidated balance sheet. Guarantees do not have, and we do not expect them to have, a material effect on our liquidity.
Debt
The nature and amount of our long-term and short-term debt and the proportionate amount of each varies as a result of current and expected business requirements, market conditions and other factors. As such, we may issue commercial paper or secure other forms of financing throughout the year to meet our short-term working capital or other financing needs.
At its July 2024 meeting, our Board of Directors approved a new $2 billion long-term financing authorization that replaced the prior long-term financing authorization of $2 billion. As of September 30, 2024, $1.5 billion of the long-term financing authorization remained available.
Our total debt was $19.8 billion as of September 30, 2024 and $19.4 billion as of December 31, 2023. Our debt-to-capitalization ratio was 0.42 at September 30, 2024 and 0.41 at December 31, 2023. At September 30, 2024, the weighted-average term of our outstanding long-term debt was 7.9 years. Our average daily commercial paper borrowings outstanding were $1.0 billion in the first nine months of 2024 and $2.7 billion in the first nine months of 2023.
One of our subsidiaries, Mondelez International Holdings Netherlands B.V. (“MIHN”), has outstanding debt. The operations held by MIHN generated approximately 72.8% (or $19.5 billion) of the $26.8 billion of consolidated net revenue for the nine months ended September 30, 2024. The operations held by MIHN represented approximately 82.8% (or $23.1 billion) of the $27.9 billion of net assets as of September 30, 2024.
Refer to Note 8, Debt and Borrowing Arrangements, for additional information on our debt and debt covenants.
Commodity Trends
We regularly monitor worldwide supply, commodity cost and currency trends so we can cost-effectively secure ingredients, packaging and fuel required for production. During the first nine months of 2024, the primary drivers of the increase in our aggregate commodity costs were higher cocoa, sugar, nuts, and other ingredient costs, as well as unfavorable year-over-year currency exchange transaction costs on imported materials, partially offset by lower energy, dairy, edible oils, grains and packaging costs. While the costs of our principal raw materials fluctuate, generally we believe there will continue to be an adequate supply of the raw materials we use and that they will broadly remain available.
A number of external factors such as the current macroeconomic environment, including global inflation, effects of geopolitical uncertainty, climate and weather conditions, commodity, transportation and labor market conditions, exchange rate volatility and the effects of local and global regulations, governmental agricultural or other programs affect the availability and cost of raw materials and agricultural materials used in our products. In particular, the supply of cocoa is exposed to many of these factors, including climate change and weather events, local regulations in cocoa-producing countries, and global regulations such as the EU Deforestation Regulation (which requires companies to ensure that the products they place on the EU market or export from it are not associated with deforestation). These factors could impact the supply of cocoa, which could potentially limit our ability to produce our products and significantly impact profitability.
During the first nine months of 2024, price volatility and the higher aggregate cost environment increased due to international supply chain and labor market disruptions and generally higher commodity, transportation and labor costs. We expect these conditions to continue to impact our aggregate commodity costs. In particular, we expect to face higher cocoa costs in the near- and medium-term due to these factors. For example, the market price for cocoa beans on the Intercontinental Exchange in London was 79% higher on the last trading day of the third quarter of 2024 compared to the same day in the third quarter of 2023 and it is likely that prices will remain elevated for some time. It is possible that we may not be able to increase prices sufficiently to fully cover the incremental costs of cocoa prices in this environment and/or our hedging strategies may not protect us from increases in cocoa costs, which could result in a significant impact on our profitability.
We address higher commodity costs and currency impacts primarily through hedging, higher pricing and manufacturing and overhead cost control. We use hedging techniques to limit the impact of fluctuations in the cost of our principal raw materials; however, we may not be able to fully hedge against commodity cost changes, such as dairy, where there is a limited ability to hedge, and our hedging strategies may not protect us from increases in specific raw material costs. Our commodity procurement practices are intended to mitigate price volatility and provide visibility to future costs, but also may potentially limit our ability to benefit from possible future price decreases. Additionally, our costs for major raw materials will not necessarily reflect market price fluctuations because of our forward purchasing and hedging practices. Due to competitive or market conditions, planned trade or promotional incentives, fluctuations in currency exchange rates or other factors, our pricing actions may also lag commodity cost changes temporarily.
Significant Accounting Estimates
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. Our significant accounting policies and estimates are described in Note 1 to our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2023. Also refer to Note 1, Basis of Presentation, in this report.
Forward-Looking Statements
This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words, and variations of words, “will,” “may,” “expect,” “would,” “could,” “might,” “intend,” “plan,” “believe,” “likely,” “estimate,” “anticipate,” “objective,” “predict,” “project,” “drive,” “seek,” “aim,” “target,” “potential,” “commitment,” “outlook,” “continue” or any other similar words.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are
subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results or performance to differ materially from those contained in or implied by our forward-looking statements include, but are not limited to, the following:
•weakness in macroeconomic conditions in our markets, including as a result of inflation (and related monetary policy actions by governments in response to inflation) and the instability of certain financial institutions;
•volatility of commodity and other input costs and availability of commodities, including but not limited to cocoa;
•geopolitical uncertainty, including the impact of ongoing or new developments in Ukraine and the Middle East, related current and future sanctions imposed by governments and other authorities and related impacts, including on our business operations, employees, reputation, brands, financial condition and results of operations;
•competition and our response to channel shifts and pricing and other competitive pressures;
•pricing actions and customer and consumer responses to such actions;
•promotion and protection of our reputation and brand image;
•weakness in consumer spending and/or changes in consumer preferences and demand and our ability to predict, identify, interpret and meet these changes;
•risks from operating globally, including in emerging markets, such as political, economic and regulatory risks;
•the outcome and effects on us of legal and tax proceedings and government investigations;
•use of information technology and third party service providers;
•unanticipated disruptions to our business, such as malware incidents, cyberattacks or other security breaches, and supply, commodity, labor and transportation constraints;
•our ability to identify, complete, implement, manage and realize the full extent of the benefits, cost savings, efficiencies and/or synergies presented by strategic transactions and initiatives, such as our ERP System Implementation program;
•our investments and our ownership interests in those investments, including JDE Peet's;
•the restructuring program and our other transformation initiatives not yielding the anticipated benefits;
•changes in the assumptions on which the restructuring program is based;
•the impact of climate change on our supply chain and operations;
•global or regional health pandemics or epidemics;
•consolidation of retail customers and competition with retailer and other economy brands;
•changes in our relationships with customers, suppliers or distributors;
•management of our workforce and shifts in labor availability or labor costs;
•compliance with legal, regulatory, tax and benefit laws and related changes, claims or actions;
•perceived or actual product quality issues or product recalls;
•failure to maintain effective internal control over financial reporting or disclosure controls and procedures;
•our ability to protect our intellectual property and intangible assets;
•tax matters including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes;
•changes in currency exchange rates, controls and restrictions;
•volatility of and access to capital or other markets, rising interest rates, the effectiveness of our cash management programs and our liquidity;
•pension costs;
•significant changes in valuation factors that may adversely affect our impairment testing of goodwill and intangible assets; and
•the risks and uncertainties, as they may be amended from time to time, set forth in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent Quarterly Reports on Form 10-Q.
There may be other factors not presently known to us or which we currently consider to be immaterial that could cause our actual results to differ materially from those projected in any forward-looking statements we make. We disclaim and do not undertake any obligation to update or revise any forward-looking statement in this report except as required by applicable law or regulation. In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
We use non-GAAP financial information and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We use non-GAAP financial measures to budget, make operating and strategic decisions and evaluate our performance. We have detailed the non-GAAP adjustments that we make in our non-GAAP definitions below. The adjustments generally fall within the following categories: acquisition and divestiture activities, gains and losses on intangible asset sales and non-cash impairments, major program restructuring activities, constant currency and related adjustments, major program financing and hedging activities and other major items affecting comparability of operating results. We believe the non-GAAP measures should always be considered along with the related U.S. GAAP financial measures. We have provided the reconciliations between the GAAP and non-GAAP financial measures along with a discussion of our underlying GAAP results throughout our Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q.
Our primary non-GAAP financial measures are listed below and reflect how we evaluate our current and prior-year operating results. As new events or circumstances arise, these definitions could change. When our definitions change, we provide the updated definitions and present the related non-GAAP historical results on a comparable basis (1).
•“Organic Net Revenue” is defined as net revenues (the most comparable U.S. GAAP financial measure) excluding the impacts of acquisitions, divestitures (2), short-term distributor agreements related to the sale of business (3) and currency rate fluctuations (4). We believe that Organic Net Revenue reflects the underlying growth from the ongoing activities of our business and provides improved comparability of results. We also evaluate Organic Net Revenue growth from emerging markets and developed markets, and these underlying measures are also reconciled to U.S. GAAP above.
•Our emerging markets include our Latin America region in its entirety; the AMEA region, excluding Australia, New Zealand and Japan; and the following countries from the Europe region: Russia, Ukraine, Türkiye, Kazakhstan, Georgia, Poland, Czech Republic, Slovak Republic, Hungary, Bulgaria, Romania, the Baltics and the East Adriatic countries.
•Our developed markets include the entire North America region, the Europe region excluding the countries included in the emerging markets definition, and Australia, New Zealand and Japan from the AMEA region.
•“Adjusted Operating Income” is defined as operating income (the most comparable U.S. GAAP financial measure) excluding the impacts of the Simplify to Grow Program (5); gains or losses (including non-cash impairment charges) on goodwill and intangible assets; divestiture (2) or acquisition gains or losses, divestiture-related costs (6), acquisition-related costs (7), and acquisition integration costs and contingent consideration adjustments (8); inventory step-up charges (9); the operating results of divestitures (2); operating results from short-term distributor agreements related to the sale of a business (3); remeasurement of net monetary position (10); mark-to-market impacts from commodity, forecasted currency and equity method investment transaction derivative contracts (11); impact from resolution of tax matters (12); 2017 malware incident net recoveries; incremental costs due to the war in Ukraine (13);impact from the European Commission legal matter (14); the impact from pension participation changes (15); and operating costs from the ERP System Implementation program (16). We also present “Adjusted Operating Income margin,” which is subject to the same adjustments as Adjusted Operating Income. We also evaluate growth in our Adjusted Operating Income on a constant currency basis (4). We believe these measures provide improved comparability of underlying operating results.
•“Adjusted EPS” is defined as diluted EPS attributable to Mondelēz International (the most comparable U.S. GAAP financial measure) from continuing operations excluding the impacts of the items listed in the Adjusted Operating Income definition as well as losses on debt extinguishment and related expenses; gains or losses on interest rate swaps no longer designated as accounting cash flow hedges due to changed financing and hedging plans; mark-to-market unrealized gains or losses and realized gains or losses from marketable securities (17); initial impacts from enacted tax law changes (18); and gains or losses on equity method investment transactions including impairments. Similarly, within Adjusted EPS, our equity method
investment net earnings exclude our proportionate share of our investee's significant operating and non-operating items (19). We also evaluate growth in our Adjusted EPS on a constant currency basis (4). We believe Adjusted EPS provides improved comparability of underlying operating results.
(1)When items no longer impact our current or future presentation of non-GAAP operating results, we remove these items from our non-GAAP definitions. Beginning in Q1 2024, due to a significant devaluation of the Argentinean peso that occurred in December 2023 and the resulting distortion it would cause on our non-GAAP constant currency growth rate measures, we now exclude the impact of pricing in excess of 26% year-over-year ("extreme pricing") in Argentina, which is the level at which hyperinflation generally occurs cumulatively over a 3-year period. We have excluded the impact of extreme pricing in Argentina from our calculation of Organic Net Revenue, Organic Net Revenue growth and other non-GAAP financial constant currency growth measures with a corresponding adjustment to changes in currency exchange rates. We made this change on a prospective basis due to the distorting effect expected in the current period and future periods following the Argentinian peso devaluation that occurred in December 2023 and did not revise our historical non-GAAP constant currency growth measures. Beginning in Q2 2024, we added to the non-GAAP definitions the exclusion of operating expenses associated with the ERP System Implementation program as they represent incremental transformational costs above the normal ongoing level of spending on information technology to support operations (see footnote (16) below).
(2)Divestitures include completed sales of businesses, exits of major product lines upon completion of a sale or licensing agreement, the partial or full sale of an equity method investment and changes from equity method investment accounting to accounting for marketable securities. As we record our share of JDE Peet’s ongoing earnings on a one-quarter lag basis, any JDE Peet’s ownership reductions are reflected as divestitures within our non-GAAP results the following quarter.
(3)In the fourth quarter of 2023, we began to exclude the operating results from short-term distributor agreements that have been executed in conjunction with the sale of a business. We exclude this item to better facilitate comparisons of our underlying operating performance across periods.
(4)Constant currency operating results are calculated by dividing or multiplying, as appropriate, the current-period local currency operating results by the currency exchange rates used to translate the financial statements in the comparable prior-year period to determine what the current-period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior-year period. Beginning in the first quarter of 2024, we also now include within our currency-related impacts a corresponding adjustment associated with the impact of extreme pricing in Argentina.
(5)Non-GAAP adjustments related to the Simplify to Grow Program reflect costs incurred that relate to the objectives of our program to transform our supply chain network and organizational structure. Costs that do not meet the program objectives are not reflected in the non-GAAP adjustments.
(6)Divestiture-related costs, which includes costs incurred in relation to the preparation and completion (including one-time costs such as severance related to elimination of stranded costs) of our divestitures as defined in footnote (2), also includes costs incurred associated with our publicly announced processes to sell businesses. We exclude these items to better facilitate comparisons of our underlying operating performance across periods.
(7)Acquisition-related costs, which includes transaction costs such as third party advisor, investment banking and legal fees, also includes one-time compensation expense related to the buyout of non-vested ESOP shares and realized gains or losses from hedging activities associated with acquisition funds. We exclude these items to better facilitate comparisons of our underlying operating performance across periods.
(8)Acquisition integration costs and contingent consideration adjustments include one-time costs related to the integration of acquisitions as well as any adjustments made to the fair market value of contingent compensation liabilities that have been previously booked for earn-outs related to acquisitions that do not relate to recurring employee compensation expense. We exclude these items to better facilitate comparisons of our underlying operating performance across periods.
(9)In the third quarter of 2022, we began to exclude the one-time inventory step-up charges associated with acquired companies related to the fair market valuation of the acquired inventory. We exclude this item to better facilitate comparisons of our underlying operating performance across periods.
(10)In connection with our applying highly inflationary accounting (refer to Note 1, Basis of Presentation) for Argentina (beginning in the third quarter of 2018) and Türkiye (beginning in the second quarter of 2022), we exclude the related remeasurement gains or losses related to remeasuring net monetary assets or liabilities denominated in the local currency to the U.S. dollar during the periods presented and the realized gains and losses from derivatives that mitigate the foreign currency volatility related to the remeasurement of the respective net monetary assets or liabilities during the periods presented.
(11)We exclude unrealized gains and losses (mark-to-market impacts) from outstanding commodity and forecasted currency and equity method investment transaction derivatives from our non-GAAP earnings measures. The mark-to-market impacts of commodity and forecasted currency transaction derivatives are excluded until such time that the related exposures impact our operating results. Since we purchase commodity and forecasted currency transaction contracts to mitigate price volatility primarily for inventory requirements in future periods, we make this adjustment to remove the volatility of these future inventory purchases on current operating results to facilitate comparisons of our underlying operating performance across periods. We exclude equity method investment transaction derivative contract settlements as they represent protection of value for future divestitures.
(12)See Note 12, Commitments and Contingencies, in this report,and Note 14, Commitments and Contingencies, in our Annual Report on Form 10-K for the year ended December 31, 2023.
(13)In February 2022, Russia began a military invasion of Ukraine and we stopped our production and closed our facilities in Ukraine for a period of time due to damage incurred to our facilities during the invasion. We began to incur incremental costs directly related to the war including asset impairments, such as property and inventory losses, higher expected allowances for uncollectible accounts receivable and committed compensation. We have isolated and exclude these costs and related impacts as well as subsequent recoveries from our operating results to facilitate evaluation and comparisons of our ongoing results. Incremental costs related to increasing operations in other primarily European facilities are not included with these costs.
(14)In the fourth quarter of 2022, we began to exclude the impact from the European Commission legal matter. In November 2019, the European Commission informed us that it initiated an investigation into our alleged infringement of European Union competition law through certain practices allegedly restricting cross-border trade within the European Economic Area. On January 28, 2021, the European Commission announced it had taken the next procedural step in its investigation and opened formal proceedings. As of December 31. 2022, we recorded an estimate of the possible cost to resolve this matter. We have cooperated with the investigation and have reached a negotiated resolution to this matter. We subsequently adjusted our accrual accordingly and fulfilled our payment obligation in August 2024. Due to the unique nature of this matter, we believe it to be infrequent and
unusual and therefore exclude it to better facilitate comparisons of our underlying operating performance across periods. Refer to Note 12, Commitments and Contingencies, for additional information.
(15)The impact from pension participation changes represents the charges incurred when employee groups are withdrawn from multiemployer pension plans and other changes in employee group pension plan participation. We exclude these charges from our non-GAAP results because those amounts do not reflect our ongoing pension obligations. See Note 10, Benefit Plans, for additional information on the multiemployer pension plan withdrawal.
(16)In July 2024, our Board of Directors approved funding of $1.2 billion for a multi-year systems transformation program to upgrade our global ERP and supply chain systems (the “ERP System Implementation”), which is comprised of both capital expenditures and operating expenses, of which a majority is expected to be operating expenses. The ERP System Implementation program will be implemented in several phases with spending occurring over the next five years, with expected completion by year-end 2028. The operating expenses associated with the ERP System Implementation represent incremental transformational costs above the normal ongoing level of spending on information technology to support operations. These expenses include third-party consulting fees, direct labor costs associated with the program, accelerated depreciation of our existing SAP financial systems and various other expenses, all associated with the implementation of our information technology upgrades. These operating expenses will be excluded from our non-GAAP financial measures as they are nonrecurring and excluding those costs will better facilitate comparisons of our underlying operating performance across periods.
(17)In the first quarter of 2023, we began to exclude mark-to-market unrealized gains or losses, as well as realized gains or losses, associated with our marketable securities from our non-GAAP earnings measures. These marketable securities gains or losses are not indicative of underlying operations and are excluded to better facilitate comparisons of our underlying operating performance across periods.
(18)We have excluded the initial impacts from enacted tax law changes. Initial impacts include items such as the remeasurement of deferred tax balances and the transition tax from the 2017 U.S. tax reform. We exclude initial impacts from enacted tax law changes from our Adjusted EPS as they do not reflect our ongoing tax obligations under the enacted tax law changes.
(19)We have excluded our proportionate share of our equity method investees’ significant operating and non-operating items such as acquisition and divestiture-related costs, restructuring program costs and initial impacts from enacted tax law changes, in order to provide investors with a comparable view of our performance across periods. Although we have shareholder rights and board representation commensurate with our ownership interests in our equity method investees and review the underlying operating results and significant operating and non-operating items each reporting period, we do not have direct control over their operations or resulting revenue and expenses. Our use of equity method investment net earnings on an adjusted basis is not intended to imply that we have any such control. Our GAAP “diluted EPS attributable to Mondelēz International from continuing operations” includes all of the investees’ significant operating and non-operating items.
We believe that the presentation of these non-GAAP financial measures, when considered together with our U.S. GAAP financial measures and the reconciliations to the corresponding U.S. GAAP financial measures, provides a more complete understanding of the factors and trends affecting our business than could be obtained absent these disclosures. Because non-GAAP financial measures vary among companies, the non-GAAP financial measures presented in this report may not be comparable to similarly titled measures used by other companies. Our use of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for any U.S. GAAP financial measures. A limitation of these non-GAAP financial measures is they exclude items that have an impact on our U.S. GAAP reported results. The best way this limitation can be addressed is by evaluating our non-GAAP financial measures in combination with our U.S. GAAP reported results and carefully evaluating the tables that reconcile U.S. GAAP reported figures to the non-GAAP financial measures in this Form 10-Q, which can be found above under Consolidated Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As we operate globally, we are primarily exposed to currency exchange rate, commodity price and interest rate market risks. We monitor and manage these exposures as part of our overall risk management program. Our risk management program focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on our operating results.
We principally utilize derivative instruments to reduce significant, unanticipated earnings fluctuations that may arise from volatility in currency exchange rates, commodity prices and interest rates. Additionally, we periodically use interest rate swaps and forward interest rate contracts to achieve a desired proportion of variable versus fixed rate debt based on current and projected market conditions. For additional information on our derivative activity and the types of derivative instruments we use to hedge our currency exchange, commodity price and interest rate exposures, see Note 9, Financial Instruments andfor additional information on our debt activity, see Note 8, Debt and Borrowing Arrangements.
For additional information on our strategies, policies and practices on an ongoing basis, refer to our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2024. Based on this evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2024.
Changes in Internal Control Over Financial Reporting
Management, together with our CEO and CFO, evaluated the changes in our internal control over financial reporting during the quarter ended September 30, 2024. There were no material changes in our internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Information regarding legal proceedings is available in Note 12, Commitments and Contingencies, to the condensed consolidated financial statements in this report.
Item 1A. Risk Factors.
There were no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Our stock repurchase activity for each of the three months in the quarter ended September 30, 2024 was:
Issuer Purchases of Equity Securities
Period
Total
Number
of Shares
Purchased (1)
Average
Price Paid
per Share (1)
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2) (3)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
July 1-31, 2024
1,633,585
$
66.12
1,626,064
$
3,266
August 1-31, 2024
3,537
66.19
600
3,266
September 1-30, 2024
694
72.05
—
3,266
For the Quarter Ended September 30, 2024
1,637,816
$
66.12
1,626,664
(1)The total number of shares purchased (and the average price paid per share) reflects: (i) shares purchased pursuant to the repurchase program described in (2) below; and (ii) shares tendered to us by employees who used shares to exercise options and to pay the related taxes for grants of deferred stock that vested, totaling 7,521 shares, 2,937 shares and 694 shares for the fiscal months of July, August and September 2024, respectively.
(2)Dollar values stated in millions. Effective January 1, 2023, our Board of Directors authorized a program for the repurchase of $6.0 billion of our Common Stock through December 31, 2025, excluding excise tax. During the year ended December 31, 2023, we repurchased approximately $1.6 billion of Common Stock pursuant to this authorization. During the nine months ended September 30, 2024, we repurchased $1.2 billion, and as of September 30, 2024, we had approximately $3.2 billion share repurchase authorization remaining. See related information in Note 11, Stock Plans.
(3)Our share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the consolidated statements of equity.
Item 5. Other Information.
(c) Insider Trading Arrangements
Our directors and executive officers may from time to time enter into plans or other arrangements for the purchase or sale of our shares that are intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) or may represent a non-Rule 10b5-1 trading arrangement under the Exchange Act. During the quarter ended September 30, 2024, no such plans or other arrangements were adopted or terminated.
The Registrant agrees to furnish to the SEC upon request copies of any instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries that does not exceed 10 percent of the total assets of the Registrant and its consolidated subsidiaries.
The following materials from Mondelēz International’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Equity, (v) the Condensed Consolidated Statements of Cash Flows, (vi) Notes to Condensed Consolidated Financial Statements and (vii) Part II, Item 5.
104
The cover page from Mondelēz International’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (included as Exhibit 101).
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
