Provides Full Year 2024 Outlook for Organic
Net Sales(1)(2), Adjusted Operating Income(1)(2), and
Adjusted EPS(1)(2)
Full Year Highlights
- Net sales increased 0.6%, including a negative 1.8pp impact
from a 53rd week in the prior year; Organic Net Sales(1) increased
3.4%
- Gross profit margin increased 280 basis points to 33.5%;
Adjusted Gross Profit Margin(1) increased 240 basis points to
33.7%
- Net income increased 20.2%; Adjusted EBITDA(1) increased 5.1%,
including a negative 2.1pp impact from a 53rd week in the prior
year
- Diluted EPS was $2.31, up 20.9%; Adjusted EPS(1) was $2.98, up
7.2%, including a negative 2.4pp impact from a 53rd week in the
prior year
- Ended 2023 at target Net Leverage(1) ratio of approximately
3.0x
Fourth Quarter Highlights
- Net sales decreased 7.1%, including a negative 6.1pp impact
from a 53rd week in the prior year; Organic Net Sales decreased
0.7%
- Gross profit margin increased 180 basis points to 33.8%;
Adjusted Gross Profit Margin increased 260 basis points to
34.8%
- Net income decreased 14.6%; Adjusted EBITDA decreased 5.3%,
including a negative 6.9pp impact from a 53rd week in the prior
year
- Diluted EPS was $0.61, down 15.3%; Adjusted EPS was $0.78, down
8.2%, including a negative 6.9pp impact from a 53rd week in the
prior year
- The Company announced a $3.0 billion share repurchase program
on Nov. 27, 2023
The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz” or the
“Company”) today reported financial results for the fourth quarter
and full year 2023.
“I’m proud of the results we delivered in 2023 and the progress
we’ve made as a Company throughout the year,” said Kraft Heinz CEO
Carlos Abrams-Rivera. “We delivered net sales growth across each of
our key pillars, Global Foodservice, Emerging Markets, and U.S.
Retail GROW Platforms. We laid out action plans early in 2023 to
drive market share and volume improvement – and they worked. We
also executed well against our efficiency program, unlocking and
powering it in large part with our tech-enabled Agile@Scale
methodology. Thanks to these digital advancements and new ways of
working, we were able to reinvest dollars across the business to
drive future growth. We also strengthened our balance sheet, ending
the year at our target Net Leverage of approximately 3.0x, while
executing against our new share repurchase program and maintaining
a competitive dividend.”
Abrams-Rivera continued, “In the fourth quarter, the industry
faced headwinds that were driven by ongoing consumer pressure.
Looking ahead, we expect some of these pressures to dissipate,
particularly as the reduction in SNAP benefits is lapped.
“For 2024, we expect continued growth for Kraft Heinz. We’ll
keep a strong focus on execution against our strategy, supported by
investments we’re making in our brands and our people. We’re
confident we have the right strategy in place to deliver profitable
growth and create value for our stockholders.”
Net Sales
In millions
Net Sales
Organic Net Sales(1)
December 30, 2023
December 31, 2022
% Chg vs PY
YoY Growth Rate
Price
Volume/ Mix
For the Three Months Ended
North America
$
5,167
$
5,684
(9.1)%
(3.0)%
2.5 pp
(5.5) pp
International
1,693
1,697
(0.2)%
7.1%
7.7 pp
(0.6) pp
Kraft Heinz
$
6,860
$
7,381
(7.1)%
(0.7)%
3.7 pp
(4.4) pp
For the Year Ended
North America
$
20,126
$
20,340
(1.0)%
1.0%
7.5 pp
(6.5) pp
International
6,514
6,145
6.0%
11.5%
13.6 pp
(2.1) pp
Kraft Heinz
$
26,640
$
26,485
0.6%
3.4%
8.9 pp
(5.5) pp
Net Income/(Loss) and Diluted
EPS
In millions, except per share
data
For the Three Months
Ended
For the Year Ended
December 30, 2023
December 31, 2022
% Chg vs PY
December 30, 2023
December 31, 2022
% Chg vs PY
Gross profit
$
2,317
$
2,364
(2.0)%
$
8,926
$
8,122
9.9%
Operating income/(loss)
1,300
1,226
6.0%
4,572
3,634
25.8%
Net income/(loss)
757
887
(14.6)%
2,846
2,368
20.2%
Net income/(loss) attributable to common
shareholders
757
890
(14.9)%
2,855
2,363
20.8%
Diluted EPS
$
0.61
$
0.72
(15.3)%
$
2.31
$
1.91
20.9%
Adjusted EPS(1)
0.78
0.85
(8.2)%
2.98
2.78
7.2%
Adjusted EBITDA(1)
$
1,650
$
1,743
(5.3)%
$
6,307
$
6,003
5.1%
FY 2023 Financial Summary
- Net Sales increased 0.6 percent versus the year-ago
period to $26.6 billion, including a negative 1.8 percentage point
impact from a 53rd week in the prior year period, a negative 0.9
percentage point impact from foreign currency, and a negative 0.1
percentage point impact from divestitures. Organic Net Sales
increased 3.4 percent versus the prior year period. Price increased
8.9 percentage points versus the prior year period, with increases
in both reportable segments primarily driven by price increases to
mitigate rising input costs. Volume/mix declined 5.5 percentage
points versus the prior year period, with declines in both
reportable segments, primarily driven by elasticity impacts from
pricing actions and industry headwinds, particularly the reduction
of Supplemental Nutrition Assistance Program (“SNAP”) benefits in
the United States.
- Net income/(loss) increased 20.2 percent versus the
year-ago period to $2.8 billion, driven by higher Adjusted EBITDA
versus the prior year period, lower non-cash impairment losses in
the current year period, an expense related to the securities class
action lawsuit in the prior year period, and unrealized losses on
commodity hedges in the prior year period. These factors more than
offset higher tax expense and unfavorable changes in other
expense/(income) driven by non-cash charges related to the $162
million settlement of one of our U.K. defined benefit pension plans
in the current year period. Adjusted EBITDA increased 5.1
percent versus the year-ago period to $6.3 billion, primarily
driven by higher pricing and efficiency gains. These factors more
than offset higher commodity costs, higher supply chain costs
(reflecting inflationary pressure in manufacturing, procurement,
and logistics), unfavorable volume/mix, increased SG&A
(including investments in marketing, technology, and research and
development), a negative 2.1 percentage point impact from a 53rd
week in the prior year period, and a negative 0.9 percentage point
impact from foreign currency.
- Diluted EPS was $2.31, up 20.9 percent versus the prior
year period, primarily driven by the net income/(loss) factors
discussed above. Adjusted EPS was $2.98, up 7.2 percent
versus the prior year period, primarily driven by higher results of
ongoing operations and lower interest expense. These factors were
partially offset by a 53rd week in the prior year period,
unfavorable changes in other expense/(income), and higher taxes on
adjusted earnings.
- Net cash provided by/(used for) operating activities was
$4.0 billion, up 61.0 percent versus the year-ago period, primarily
driven by lower cash outflows in the current year for inventories,
primarily related to stock rebuilding in the prior year, lower cash
outflows in the current year for tax payments driven by taxes paid
in 2022 related to the sale of certain assets in our global cheese
business and the licensing of certain trademarks, higher Adjusted
EBITDA in the current period, and lower interest payments in the
current period due to the reduction of long-term debt throughout
2022. These impacts were partially offset by cash payments
associated with the settlement of the consolidated securities class
action lawsuit. Year-to date Free Cash Flow(1) was $3.0
billion, up 90.7 percent versus the comparable prior year period
due to the same drivers of net cash provided by/(used for)
operating activities. This more than offset an increase of $97.0
million in capital expenditures in the current year.
- Capital Return: In fiscal year 2023, the Company paid
$1,965 million in cash dividends and repurchased $455 million of
common stock. On Nov. 27, 2023, the Company announced that the
Board of Directors approved a share repurchase program authorizing
the Company to repurchase up to $3.0 billion of the Company’s
common stock through Dec. 26, 2026. Of the $455 million shares
repurchased in 2023, $300 million were repurchased under the
Company’s publicly announced share repurchase program and $155
million were purchased to offset the dilutive effect of
equity-based compensation. As of Dec. 30, 2023, the Company had
remaining authorization to repurchase $2.7 billion of common stock
under the publicly announced share repurchase program.
Q4 2023 Financial Summary
- Net sales decreased 7.1 percent versus the year-ago
period to $6.9 billion, including a negative 6.1 percentage point
impact from a 53rd week in the prior year period, a negative 0.2
percentage point impact from foreign currency, and a negative 0.1
percentage point impact from divestitures and acquisitions.
Organic Net Sales decreased 0.7 percent versus the prior
year period. Price increased 3.7 percentage points versus the prior
year period, with increases in both reportable segments primarily
driven by list price increases taken to mitigate higher input
costs. Volume/mix declined 4.4 percentage points versus the prior
year period, with declines in both reportable segments that were
primarily driven by elasticity impacts from pricing actions and
industry headwinds, particularly the reduction of SNAP benefits in
the United States.
- Net income/(loss) declined 14.6 percent versus the
year-ago period to $757 million, primarily driven by non-cash
charges related to the $162 million settlement of a U.K. defined
benefit pension plan in the current year period, lower Adjusted
EBITDA versus the prior year period, and unrealized losses on
commodity hedges in the current year period. These factors were
partially offset by an expense related to the securities class
action lawsuit in the prior year period. Adjusted EBITDA
decreased 5.3 percent versus the year-ago period to $1.7 billion,
primarily driven by a negative 6.9 percentage point impact from a
53rd week in the prior year period, higher supply chain costs
(reflecting inflationary pressure in manufacturing and procurement
costs), investments in SG&A (including in marketing, research
and development, and technology), unfavorable volume/mix, increased
commodity costs, and a negative 0.3 percentage point impact from
foreign currency. These factors were partially offset by higher
pricing and efficiency gains.
- Diluted EPS was $0.61, down 15.3 percent versus the
prior year period, driven by the net income/(loss) factors
discussed above. Adjusted EPS(1) was $0.78, down 8.2 percent
versus the prior year period, primarily driven by a 53rd week in
the prior year and a higher effective tax rate in the current year.
These factors were partially offset by results of ongoing
operations and lower interest expense versus the prior year
period.
Outlook
For fiscal year 2024, the Company expects:
- Organic Net Sales(2) growth of 0 to 2 percent versus the
prior year. The Company expects a positive contribution from price
throughout the year, with volumes inflecting positive in the second
half of the year.
- Adjusted Operating Income(1)(2) growth of 2 to 4 percent
versus the prior year. Adjusted Gross Profit Margin(1)(2) is
expected to expand modestly, in the range of 25 to 75 basis points
versus the prior year.
- Adjusted EPS(2) growth of 1 to 3 percent, or in the
range of $3.01 to $3.07. The Company expects an effective tax rate
on Adjusted EPS to be in the range of 20 to 22 percent.
Additionally, the Company expects an unfavorable impact of
approximately $45 million within interest and other
expense/(income) versus the prior year. This is primarily driven by
foreign currency headwinds and debt refinancing that will come at a
higher rate. The outlook does not include the possibility of
additional share buyback in 2024.
End Notes
(1)
Organic Net Sales, Adjusted Gross Profit, Adjusted Gross Profit
Margin, Adjusted Operating Income, Adjusted EBITDA, Constant
Currency Adjusted EBITDA, Adjusted EPS, Free Cash Flow and Net
Leverage are non-GAAP financial measures. Please see discussion of
non-GAAP financial measures and the reconciliations at the end of
this press release for more information.
(2)
Guidance for Organic Net Sales, Adjusted Gross Profit Margin,
Adjusted Operating Income, and Adjusted EPS is provided on a
non-GAAP basis only because certain information necessary to
calculate the most comparable GAAP measure is unavailable due to
the uncertainty and inherent difficulty of predicting the
occurrence and the future financial statement impact of such items
impacting comparability, including, but not limited to, the impact
of currency, acquisitions and divestitures, divestiture-related
license income, restructuring activities, deal costs, unrealized
losses/(gains) on commodity hedges, impairment losses, certain
non-ordinary course legal and regulatory matters, equity award
compensation expense, nonmonetary currency devaluation, and debt
prepayment and extinguishment (benefit)/costs, among other items.
Therefore, as a result of the uncertainty and variability of the
nature and amount of future adjustments, which could be
significant, the Company is unable to provide a reconciliation of
these measures without unreasonable effort.
Earnings Discussion and Webcast Information
A pre-recorded management discussion of The Kraft Heinz
Company's fourth quarter and full year 2023 earnings is available
at ir.kraftheinzcompany.com. The
Company will host a live question and answer session beginning
today at 9:00 a.m. Eastern Standard Time. A webcast of the session
will be accessible at ir.kraftheinzcompany.com.
ABOUT THE KRAFT HEINZ COMPANY
We are driving transformation at The Kraft Heinz Company
(Nasdaq: KHC), inspired by our Purpose, Let’s Make Life Delicious.
Consumers are at the center of everything we do. With 2023 net
sales of approximately $27 billion, we are committed to growing our
iconic and emerging food and beverage brands on a global scale. We
leverage our scale and agility to unleash the full power of Kraft
Heinz across a portfolio of six consumer-driven product platforms.
As global citizens, we’re dedicated to making a sustainable,
ethical impact while helping feed the world in healthy, responsible
ways. Learn more about our journey by visiting
www.kraftheinzcompany.com or following us on LinkedIn.
Forward-Looking Statements
This press release contains a number of forward-looking
statements. Words such as “accelerate,” “anticipate,” “believe,”
“build,” “commit,” “continue,” “expect,” “execute,” “invest,”
“maintain,” “reflect,” “will,” “guidance,” and “outlook,” and
variations of such words and similar future or conditional
expressions are intended to identify forward-looking statements.
Examples of forward-looking statements include, but are not limited
to, statements regarding the Company's plans, impacts of accounting
standards and guidance, growth, legal matters, taxes, costs and
cost savings, impairments, dividends, expectations, investments,
innovations, opportunities, capabilities, execution, initiatives,
and pipeline. These forward-looking statements reflect management's
current expectations and are not guarantees of future performance
and are subject to a number of risks and uncertainties, many of
which are difficult to predict and beyond the Company's
control.
Important factors that may affect the Company's business and
operations and that may cause actual results to differ materially
from those in the forward-looking statements include, but are not
limited to, operating in a highly competitive industry; the
Company’s ability to correctly predict, identify, and interpret
changes in consumer preferences and demand, to offer new products
to meet those changes, and to respond to competitive innovation;
changes in the retail landscape or the loss of key retail
customers; changes in the Company's relationships with significant
customers or suppliers, or in other business relationships; the
Company’s ability to maintain, extend, and expand its reputation
and brand image; the Company’s ability to leverage its brand value
to compete against private label products; the Company’s ability to
drive revenue growth in its key product categories or platforms,
increase its market share, or add products that are in
faster-growing and more profitable categories; product recalls or
other product liability claims; climate change and legal or
regulatory responses; the Company’s ability to identify, complete,
or realize the benefits from strategic acquisitions, divestitures,
alliances, joint ventures, or investments; the Company's ability to
successfully execute its strategic initiatives; the impacts of the
Company's international operations; the Company's ability to
protect intellectual property rights; the Company’s ability to
realize the anticipated benefits from prior or future streamlining
actions to reduce fixed costs, simplify or improve processes, and
improve its competitiveness; the influence of the Company’s largest
stockholder; the Company's level of indebtedness, as well as our
ability to comply with covenants under our debt instruments;
additional impairments of the carrying amounts of goodwill or other
indefinite-lived intangible assets; foreign exchange rate
fluctuations; volatility in commodity, energy, and other input
costs; volatility in the market value of all or a portion of the
commodity derivatives we use; compliance with laws and regulations
and related legal claims or regulatory enforcement actions; failure
to maintain an effective system of internal controls; a downgrade
in the Company's credit rating; the impact of sales of the
Company's common stock in the public market; the Company’s ability
to continue to pay a regular dividend and the amounts of any such
dividends; disruptions in the global economy caused by geopolitical
conflicts, including the ongoing conflict between Russia and
Ukraine; unanticipated business disruptions and natural events in
the locations in which the Company or the Company's customers,
suppliers, distributors, or regulators operate; economic and
political conditions in the United States and various other nations
where the Company does business (including inflationary pressures,
instability in financial institutions, general economic slowdown,
recession, or a potential U.S. federal government shutdown);
changes in the Company’s management team or other key personnel and
the Company’s ability to hire or retain key personnel or a highly
skilled and diverse global workforce; our dependence on information
technology and systems, including service interruptions,
misappropriation of data, or breaches of security; increased
pension, labor, and people-related expenses; changes in tax laws
and interpretations and the final determination of tax audits,
including transfer pricing matters, and any related litigation;
volatility of capital markets and other macroeconomic factors; and
other factors. For additional information on these and other
factors that could affect the Company’s forward-looking statements,
see the Company’s risk factors, as they may be amended from time to
time, set forth in its filings with the Securities and Exchange
Commission. The Company disclaims and does not undertake any
obligation to update, revise, or withdraw any forward-looking
statement in this press release, except as required by applicable
law or regulation.
Non-GAAP Financial Measures
The non-GAAP financial measures provided in this press release
should be viewed in addition to, and not as an alternative for,
results prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
To supplement the financial information provided, the Company
has presented Organic Net Sales, Adjusted Gross Profit, Adjusted
Gross Profit Margin, Adjusted Operating Income, Adjusted EBITDA,
Constant Currency Adjusted EBITDA, Adjusted EPS, Adjusted Net
Income/(Loss), Free Cash Flow, and Net Leverage which are
considered non-GAAP financial measures. The non-GAAP financial
measures presented may differ from similarly titled non-GAAP
financial measures presented by other companies, and other
companies may not define these non-GAAP financial measures in the
same way. These measures are not substitutes for their comparable
GAAP financial measures, such as net sales, net income/(loss),
gross profit, diluted earnings per share (“EPS”), net cash provided
by/(used for) operating activities, or other measures prescribed by
GAAP, and there are limitations to using non-GAAP financial
measures.
Management uses these non-GAAP financial measures to assist in
comparing the Company’s performance on a consistent basis for
purposes of business decision making by removing the impact of
certain items that management believes do not directly reflect the
Company’s underlying operations. The Company believes:
- Organic Net Sales, Adjusted Gross Profit, Adjusted Gross Profit
Margin, Adjusted Operating Income, Adjusted EBITDA, Constant
Currency Adjusted EBITDA, Adjusted Net Income/(Loss), and Adjusted
EPS provide important comparability of underlying operating
results, allowing investors and management to assess the Company’s
operating performance on a consistent basis; and
- Free Cash Flow and Net Leverage provide a measure of the
Company’s core operating performance, the cash-generating
capabilities of the Company’s business operations, and are factors
used in determining the Company’s borrowing capacity and the amount
of cash available for debt repayments, dividends, acquisitions,
share repurchases, and other corporate purposes.
Management believes that presenting the Company’s non-GAAP
financial measures is useful to investors because it (i) provides
investors with meaningful supplemental information regarding
financial performance by excluding certain items, (ii) permits
investors to view performance using the same tools that management
uses to budget, make operating and strategic decisions, and
evaluate historical performance, and (iii) otherwise provides
supplemental information that may be useful to investors in
evaluating the Company’s results. The Company believes that the
presentation of these non-GAAP financial measures, when considered
together with the corresponding GAAP financial measures and the
reconciliations to those measures, provides investors with
additional understanding of the factors and trends affecting the
Company’s business than could be obtained absent these
disclosures.
Definitions
Organic Net Sales is defined as net sales excluding, when
they occur, the impact of currency, acquisitions and divestitures,
and a 53rd week of shipments. The Company calculates the impact of
currency on net sales by holding exchange rates constant at the
previous year's exchange rate, with the exception of highly
inflationary subsidiaries, for which the Company calculates the
previous year's results using the current year's exchange rate.
Adjusted Operating Income is defined as net income/(loss)
from continuing operations before interest expense, other
expense/(income), and provision for/(benefit from) income taxes; in
addition to these adjustments, the Company excludes, when they
occur, the impacts of restructuring activities, deal costs,
unrealized losses/(gains) on commodity hedges, impairment losses,
and certain non-ordinary course legal and regulatory matters.
Adjusted EBITDA is defined as net income/(loss) from
continuing operations before interest expense, other
expense/(income), provision for/(benefit from) income taxes, and
depreciation and amortization (excluding restructuring activities);
in addition to these adjustments, the Company excludes, when they
occur, the impacts of divestiture-related license income,
restructuring activities, deal costs, unrealized losses/(gains) on
commodity hedges, impairment losses, certain non-ordinary course
legal and regulatory matters, and equity award compensation expense
(excluding restructuring activities). The Company also presents
Adjusted EBITDA on a constant currency basis (Constant Currency
Adjusted EBITDA). The Company calculates the impact of currency
on Adjusted EBITDA by holding exchange rates constant at the
previous year's exchange rate, with the exception of highly
inflationary subsidiaries, for which it calculates the previous
year's results using the current year's exchange rate.
Adjusted Gross Profit, Adjusted Net Income/(Loss), and
Adjusted EPS are defined as gross profit, net income/(loss),
and diluted earnings per share, respectively, excluding, when they
occur, the impacts of restructuring activities, deal costs,
unrealized losses/(gains) on commodity hedges, impairment losses,
certain non-ordinary course legal and regulatory matters,
losses/(gains) on the sale of a business, other losses/(gains)
related to acquisitions and divestitures (e.g., tax and hedging
impacts), nonmonetary currency devaluation (e.g., remeasurement
gains and losses), debt prepayment and extinguishment
(benefit)/costs, and certain significant discrete income tax items
(e.g., U.S. and non-U.S. tax reform), and including when they
occur, adjustments to reflect preferred stock dividend payments on
an accrual basis. Adjusted Gross Profit Margin is defined as
Adjusted Gross Profit divided by net sales.
Net Leverage is defined as debt less cash, cash
equivalents and short-term investments divided by Adjusted
EBITDA.
Free Cash Flow is defined as net cash provided by/(used
for) operating activities less capital expenditures. The use of
this non-GAAP measure does not imply or represent the residual cash
flow for discretionary expenditures since the Company has certain
non-discretionary obligations such as debt service that are not
deducted from the measure.
Schedule
1
The Kraft Heinz Company
Consolidated Statements of Income (in millions, except per share
data) (Unaudited)
For the Three Months
Ended
For the Year Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Net sales
$
6,860
$
7,381
$
26,640
$
26,485
Cost of products sold
4,543
5,017
17,714
18,363
Gross profit
2,317
2,364
8,926
8,122
Selling, general and administrative
expenses, excluding impairment losses
1,017
1,138
3,692
3,575
Goodwill impairment losses
—
—
510
444
Intangible asset impairment losses
—
—
152
469
Selling, general and administrative
expenses
1,017
1,138
4,354
4,488
Operating income/(loss)
1,300
1,226
4,572
3,634
Interest expense
229
217
912
921
Other expense/(income)
121
(42)
27
(253)
Income/(loss) before income taxes
950
1,051
3,633
2,966
Provision for/(benefit from) income
taxes
193
164
787
598
Net income/(loss)
757
887
2,846
2,368
Net income/(loss) attributable to
noncontrolling interest
—
(3)
(9)
5
Net income/(loss) attributable to common
shareholders
$
757
$
890
$
2,855
$
2,363
Basic shares outstanding
1,225
1,226
1,227
1,226
Diluted shares outstanding
1,232
1,233
1,235
1,235
Per share data applicable to common
shareholders:
Basic earnings/(loss) per share
$
0.62
$
0.73
$
2.33
$
1.93
Diluted earnings/(loss) per share
0.61
0.72
2.31
1.91
Schedule
2
The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales For the Three
Months Ended (dollars in millions) (Unaudited)
Net Sales
Currency
Acquisitions and
Divestitures
53rd Week
Organic Net Sales
Price
Volume/Mix
December 30, 2023
North America
$
5,167
$
(1)
$
—
$
—
$
5,168
International
1,693
13
—
—
1,680
Kraft Heinz
$
6,860
$
12
$
—
$
—
$
6,848
December 31, 2022
North America
$
5,684
$
—
$
—
$
357
$
5,327
International
1,697
25
7
97
1,568
Kraft Heinz
$
7,381
$
25
$
7
$
454
$
6,895
Year-over-year growth rates
North America
(9.1)%
0.0 pp
0.0 pp
(6.1) pp
(3.0)%
2.5 pp
(5.5) pp
International
(0.2)%
(0.7) pp
(0.4) pp
(6.2) pp
7.1%
7.7 pp
(0.6) pp
Kraft Heinz
(7.1)%
(0.2) pp
(0.1) pp
(6.1) pp
(0.7)%
3.7 pp
(4.4) pp
Schedule
3
The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales For the Year Ended
(dollars in millions) (Unaudited)
Net Sales
Currency
Acquisitions and
Divestitures
53rd Week
Organic Net Sales
Price
Volume/Mix
December 30, 2023
North America
$
20,126
$
(65)
$
—
$
—
$
20,191
International
6,514
(103)
34
—
6,583
Kraft Heinz
$
26,640
$
(168)
$
34
$
—
$
26,774
December 31, 2022
North America
$
20,340
$
—
$
—
$
357
$
19,983
International
6,145
82
60
97
5,906
Kraft Heinz
$
26,485
$
82
$
60
$
454
$
25,889
Year-over-year growth rates
North America
(1.0)%
(0.3) pp
0.0 pp
(1.7) pp
1.0%
7.5 pp
(6.5) pp
International
6.0%
(3.2) pp
(0.5) pp
(1.8) pp
11.5%
13.6 pp
(2.1) pp
Kraft Heinz
0.6%
(0.9) pp
(0.1) pp
(1.8) pp
3.4%
8.9 pp
(5.5) pp
Schedule
4
The Kraft Heinz Company
Reconciliation of Net Income/(Loss) to Adjusted EBITDA (dollars in
millions) (Unaudited)
For the Three Months
Ended
For the Year Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Net income/(loss)
$
757
$
887
$
2,846
$
2,368
Interest expense
229
217
912
921
Other expense/(income)
121
(42)
27
(253)
Provision for/(benefit from) income
taxes
193
164
787
598
Operating income/(loss)
1,300
1,226
4,572
3,634
Depreciation and amortization (excluding
restructuring activities)
243
246
923
922
Divestiture-related license income
(14)
(15)
(54)
(56)
Restructuring activities
35
36
60
74
Deal costs
—
1
—
9
Unrealized losses/(gains) on commodity
hedges
54
(2)
1
63
Impairment losses
—
—
662
999
Certain non-ordinary course legal and
regulatory matters
—
210
2
210
Equity award compensation expense
32
41
141
148
Adjusted EBITDA
$
1,650
$
1,743
$
6,307
$
6,003
Segment Adjusted EBITDA:
North America
$
1,495
$
1,550
$
5,603
$
5,284
International
290
284
1,094
1,017
General corporate expenses
(135)
(91)
(390)
(298)
Adjusted EBITDA
$
1,650
$
1,743
$
6,307
$
6,003
Schedule
5
The Kraft Heinz Company
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted
EBITDA For the Three Months Ended (dollars in millions)
(Unaudited)
Adjusted EBITDA
Currency
Constant Currency Adjusted
EBITDA
December 30, 2023
North America
$
1,495
$
(1)
$
1,496
International
290
3
287
General corporate expenses
(135)
(2)
(133)
Kraft Heinz
$
1,650
$
—
$
1,650
December 31, 2022
North America
$
1,550
$
—
$
1,550
International
284
6
278
General corporate expenses
(91)
—
(91)
Kraft Heinz
$
1,743
$
6
$
1,737
Year-over-year growth rates
North America
(3.5)%
0.0 pp
(3.5)%
International
2.0%
(1.4) pp
3.4%
General corporate expenses
48.4%
1.6 pp
46.8%
Kraft Heinz
(5.3)%
(0.3) pp
(5.0)%
Schedule
6
The Kraft Heinz Company
Reconciliation of Adjusted EBITDA
to Constant Currency Adjusted EBITDA
For the Year Ended
(dollars in millions)
(Unaudited)
Adjusted EBITDA
Currency
Constant Currency Adjusted
EBITDA
December 30, 2023
North America
$
5,603
$
(14)
$
5,617
International
1,094
(25)
1,119
General corporate expenses
(390)
(2)
(388)
Kraft Heinz
$
6,307
$
(41)
$
6,348
December 31, 2022
North America
$
5,284
$
—
$
5,284
International
1,017
17
1,000
General corporate expenses
(298)
—
(298)
Kraft Heinz
$
6,003
$
17
$
5,986
Year-over-year growth rates
North America
6.0%
(0.3) pp
6.3%
International
7.6%
(4.3) pp
11.9%
General corporate expenses
31.0%
0.6 pp
30.4%
Kraft Heinz
5.1%
(0.9) pp
6.0%
Schedule
7
The Kraft Heinz Company
Reconciliation of GAAP Results to Non-GAAP Results (dollars in
millions) (Unaudited)
For the Three Months
Ended
December 30, 2023
Gross profit
Selling, general and
administrative expenses
Operating
income/(loss)
Interest expense
Other expense/(income)
Income/(loss) before income
taxes
Provision for/(benefit from)
income taxes
Net income/(loss)
Net income/(loss) attributable
to noncontrolling interest
Net income/(loss) attributable
to common shareholders
Diluted EPS
GAAP Results
$
2,317
$
1,017
$
1,300
$
229
$
121
$
950
$
193
$
757
$
—
$
757
$
0.61
Items Affecting Comparability
Restructuring activities
13
(22)
35
—
(163)
198
29
169
—
169
0.14
Unrealized losses/(gains) on commodity
hedges
54
—
54
—
—
54
13
41
—
41
0.03
Losses/(gains) on sale of business
—
—
—
—
5
(5)
(1)
(4)
—
(4)
—
Nonmonetary currency devaluation
—
—
—
—
(1)
1
—
1
—
1
—
Adjusted Non-GAAP Results
$
2,384
$
1,389
$
964
$
0.78
Schedule
8
The Kraft Heinz Company
Reconciliation of GAAP Results to Non-GAAP Results (dollars in
millions) (Unaudited)
For the Three Months
Ended
December 31, 2022
Gross profit
Selling, general and
administrative expenses
Operating
income/(loss)
Interest expense
Other expense/(income)
Income/(loss) before income
taxes
Provision for/(benefit from)
income taxes
Net income/(loss)
Net income/(loss) attributable
to noncontrolling interest
Net income/(loss) attributable
to common shareholders
Diluted EPS
GAAP Results
$
2,364
$
1,138
$
1,226
$
217
$
(42)
$
1,051
$
164
$
887
$
(3)
$
890
$
0.72
Items Affecting Comparability
Restructuring activities
12
(24)
36
—
(1)
37
9
28
—
28
0.02
Deal Costs
—
(1)
1
—
—
1
1
—
—
—
—
Unrealized losses/(gains) on commodity
hedges
(2)
—
(2)
—
—
(2)
(1)
(1)
—
(1)
—
Certain non-ordinary course legal and
regulatory matters
—
(210)
210
—
—
210
49
161
—
161
0.13
Losses/(gains) on sale of business
—
—
—
—
24
(24)
(15)
(9)
—
(9)
(0.01)
Nonmonetary currency devaluation
—
—
—
—
(1)
1
—
1
—
1
—
Debt prepayment and extinguishment
(benefit)/costs
—
—
—
26
—
(26)
(7)
(19)
—
(19)
(0.01)
Adjusted Non-GAAP Results
$
2,374
$
1,471
$
1,048
$
0.85
Schedule
9
The Kraft Heinz Company
Reconciliation of GAAP Results to Non-GAAP Results (dollars in
millions) (Unaudited)
For the Year Ended
December 30, 2023
Gross profit
Selling, general and
administrative expenses
Operating
income/(loss)
Interest expense
Other expense/(income)
Income/(loss) before income
taxes
Provision for/(benefit from)
income taxes
Net income/(loss)
Net income/(loss) attributable
to noncontrolling interest
Net income/(loss) attributable
to common shareholders
Diluted EPS
GAAP Results
$
8,926
$
4,354
$
4,572
$
912
$
27
$
3,633
$
787
$
2,846
$
(9)
$
2,855
$
2.31
Items Affecting Comparability
Restructuring activities
57
(3)
60
—
(165)
225
32
193
—
193
0.16
Unrealized losses/(gains) on commodity
hedges
1
—
1
—
—
1
—
1
—
1
—
Impairment losses
—
(662)
662
—
—
662
36
626
6
620
0.50
Certain non-ordinary course legal and
regulatory matters
—
(2)
2
—
—
2
—
2
—
2
—
Losses/(gains) on sale of business
—
—
—
—
4
(4)
(1)
(3)
—
(3)
—
Nonmonetary currency devaluation
—
—
—
—
(28)
28
—
28
—
28
0.02
Certain significant discrete income tax
items
—
—
—
—
—
—
17
(17)
—
(17)
(0.01)
Adjusted Non-GAAP Results
$
8,984
$
5,297
$
3,676
$
2.98
Schedule
10
The Kraft Heinz Company
Reconciliation of GAAP Results to Non-GAAP Results (dollars in
millions) (Unaudited)
For the Year Ended
December 31, 2022
Gross profit
Selling, general and
administrative expenses
Operating
income/(loss)
Interest expense
Other expense/(income)
Income/(loss) before income
taxes
Provision for/(benefit from)
income taxes
Net income/(loss)
Net income/(loss) attributable
to noncontrolling interest
Net income/(loss) attributable
to common shareholders
Diluted EPS
GAAP Results
$
8,122
$
4,488
$
3,634
$
921
$
(253)
$
2,966
$
598
$
2,368
$
5
$
2,363
$
1.91
Items Affecting Comparability
Restructuring activities
27
(47)
74
—
—
74
18
56
—
56
0.05
Deal Costs
—
(9)
9
—
—
9
4
5
—
5
—
Unrealized losses/(gains) on commodity
hedges
63
—
63
—
—
63
15
48
—
48
0.04
Impairment losses
86
(913)
999
—
—
999
132
867
—
867
0.70
Certain non-ordinary course legal and
regulatory matters
—
(210)
210
—
—
210
49
161
—
161
0.13
Losses/(gains) on sale of business
—
—
—
—
25
(25)
(8)
(17)
—
(17)
(0.01)
Other losses/(gains) related to
acquisitions and divestitures
—
—
—
—
38
(38)
(9)
(29)
—
(29)
(0.02)
Nonmonetary currency devaluation
—
—
—
—
(17)
17
—
17
—
17
0.01
Debt prepayment and extinguishment
(benefit)/costs
—
—
—
38
—
(38)
(3)
(35)
—
(35)
(0.03)
Adjusted Non-GAAP Results
$
8,298
$
4,989
$
3,441
$
2.78
Schedule
11
The Kraft Heinz Company Adjusted
Gross Profit Margin (dollars in millions) (Unaudited)
For the Three Months
Ended
For the Year Ended
December 30, 2023
December 31, 2022
December 30, 2023
December 31, 2022
Adjusted Gross Profit
$
2,384
$
2,374
$
8,984
$
8,298
Net sales
6,860
$
7,381
26,640
26,485
Adjusted Gross Profit Margin
34.8%
32.2%
33.7%
31.3%
Schedule
12
The Kraft Heinz Company Key
Drivers of Change in Adjusted EPS (Unaudited)
For the Three Months
Ended
December 30, 2023
December 31, 2022
$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)(b)
$
0.95
$
0.94
$
0.01
53rd week
—
0.06
(0.06)
Interest expense
(0.16)
(0.17)
0.01
Other expense/(income)
0.02
0.02
—
Effective tax rate
(0.03)
—
(0.03)
Adjusted EPS
$
0.78
$
0.85
$
(0.07)
(a)
Includes non-cash amortization of
definite-lived intangible assets, which accounted for a negative
impact to Adjusted EPS from results of operations of $0.04 for the
three months ended December 30, 2023 and $0.05 for the three months
ended December 31, 2022.
(b)
Includes divestiture-related license
income, which accounted for a benefit to Adjusted EPS from results
of operations of $0.01 for the three months ended December 30, 2023
and December 31, 2022.
Schedule
13
The Kraft Heinz Company Key
Drivers of Change in Adjusted EPS (Unaudited)
For the Year Ended
December 30, 2023
December 31, 2022
$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)(b)
$
3.48
$
3.21
$
0.27
53rd week
—
0.06
(0.06)
Interest expense
(0.60)
(0.63)
0.03
Other expense/(income)(c)
0.11
0.14
(0.03)
Effective tax rate
(0.01)
—
(0.01)
Adjusted EPS
$
2.98
$
2.78
$
0.20
(a)
Includes non-cash amortization of
definite-lived intangible assets, which accounted for a negative
impact to Adjusted EPS from results of operations of $0.16 in 2023
and $0.17 in 2022.
(b)
Includes divestiture-related license
income, which accounted for a benefit to Adjusted EPS from results
of operations of $0.04 in 2023 and 2022.
(c)
Includes non-cash amortization of prior
service credits, which accounted for a benefit to Adjusted EPS from
other expense/(income) of $0.01 in 2023 and 2022.
Schedule
14
The Kraft Heinz Company
Consolidated Balance Sheets (in millions, except per share data)
(Unaudited)
December 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
1,400
$
1,040
Trade receivables, net
2,112
2,120
Inventories
3,614
3,651
Prepaid expenses
234
240
Other current assets
566
842
Assets held for sale
3
4
Total current assets
7,929
7,897
Property, plant and equipment, net
7,122
6,740
Goodwill
30,459
30,833
Intangible assets, net
42,448
42,649
Other non-current assets
2,381
2,394
TOTAL ASSETS
$
90,339
$
90,513
LIABILITIES AND EQUITY
Commercial paper and other short-term
debt
$
—
$
6
Current portion of long-term debt
638
831
Trade payables
4,627
4,848
Accrued marketing
733
749
Interest payable
258
264
Income taxes payable
Other current liabilities
1,781
2,330
Total current liabilities
8,037
9,028
Long-term debt
19,394
19,233
Deferred income taxes
10,201
10,152
Accrued postemployment costs
143
144
Long-term deferred income
1,424
1,477
Other non-current liabilities
1,418
1,609
TOTAL LIABILITIES
40,617
41,643
Redeemable noncontrolling interest
34
40
Equity:
Common stock, $0.01 par value
12
12
Additional paid-in capital
52,037
51,834
Retained earnings/(deficit)
1,367
489
Accumulated other comprehensive
income/(losses)
(2,604)
(2,810)
Treasury stock, at cost
(1,286)
(847)
Total shareholders' equity
49,526
48,678
Noncontrolling interest
162
152
TOTAL EQUITY
49,688
48,830
TOTAL LIABILITIES AND EQUITY
$
90,339
$
90,513
Schedule
15
The Kraft Heinz Company
Consolidated Statements of Cash Flows (in millions) (Unaudited)
For the Year Ended
December 30, 2023
December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)
$
2,846
$
2,368
Adjustments to reconcile net income/(loss)
to operating cash flows:
Depreciation and amortization
961
933
Amortization of postemployment benefit
plans prior service costs/(credits)
(14)
(14)
Divestiture-related license income
(54)
(56)
Equity award compensation expense
141
148
Deferred income tax
provision/(benefit)
17
(278)
Postemployment benefit plan
contributions
(22)
(23)
Goodwill and intangible asset impairment
losses
662
913
Nonmonetary currency devaluation
28
17
Loss/(gain) on sale of business
(4)
(25)
Loss/(gain) on extinguishment of debt
—
(38)
Other items, net
221
7
Changes in current assets and
liabilities:
Trade receivables
18
(228)
Inventories
(106)
(1,121)
Accounts payable
(295)
152
Other current assets
139
(314)
Other current liabilities
(562)
28
Net cash provided by/(used for) operating
activities
3,976
2,469
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(1,013)
(916)
Payments to acquire business, net of cash
acquired
—
(481)
Settlement of net investment hedges
31
208
Proceeds from sale of business, net of
cash disposed and working capital adjustments
—
88
Other investing activities, net
66
10
Net cash provided by/(used for) investing
activities
(916)
(1,091)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt
(848)
(1,465)
Proceeds from issuance of long-term
debt
657
—
Debt prepayment and extinguishment
benefit/(costs)
—
10
Proceeds from issuance of commercial
paper
150
228
Repayments of commercial paper
(150)
(228)
Dividends paid
(1,965)
(1,960)
Repurchases of common stock
(455)
(280)
Other financing activities, net
(67)
(19)
Net cash provided by/(used for) financing
activities
(2,678)
(3,714)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(19)
(69)
Cash, cash equivalents, and restricted
cash
Net increase/(decrease)
363
(2,405)
Balance at beginning of period
1,041
3,446
Balance at end of period
$
1,404
$
1,041
Schedule
16
The Kraft Heinz Company
Reconciliation of Net Cash Provided By/(Used for) Operating
Activities to Free Cash Flow (in millions) (Unaudited)
For the Year Ended
December 30, 2023
December 31, 2022
Net cash provided by/(used for) operating
activities
$
3,976
$
2,469
Capital expenditures
(1,013)
(916)
Free Cash Flow
$
2,963
$
1,553
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240214297961/en/
Alex Abraham (media) Alex.Abraham@kraftheinz.com
Anne-Marie Megela (investors)
Anne-Marie.Megela@kraftheinz.com
Kraft Heinz (NASDAQ:KHC)
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