Reaffirms Full Year Outlook
First Quarter Highlights
- Net sales decreased 1.2%; Organic Net Sales(1) decreased
0.5%
- Gross profit margin increased 240 basis points to 35.0%;
Adjusted Gross Profit Margin(1) increased 170 basis points to
34.5%
- Operating Income increased 4.7%; Adjusted Operating Income(1)
increased 1.7%
- Diluted EPS was $0.66, down 2.9%; Adjusted EPS(1) was $0.69, up
1.5%
The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz” or the
“Company”) today reported financial results for the first quarter
of 2024.
“I’m pleased that our strategic focus on unlocking end-to-end
efficiencies and reinvesting in the business to drive sales growth
continues to pay off,” said Kraft Heinz CEO Carlos Abrams-Rivera.
“Our first quarter results were in line with our expectations, with
growth across each of our three strategic pillars – Global Away
From Home, Emerging Markets, and North America Retail ACCELERATE
Platforms – and continued sequential volume recovery. At the same
time, we increased year-over-year operating income in the
quarter.”
“Our Agile@Scale methodology continues to fuel reinvestment in
the business, helping to deliver against our gross efficiency
target. These reinvestments are powering innovation, brand
superiority, disruptive marketing, sales excellence, and further
productivity to drive growth.”
Abrams-Rivera continued, “As a result, we are reiterating our
outlook for 2024 and remain confident in our ability to drive
profitable growth.”
Net Sales
In millions
Net Sales
Organic Net Sales(1)
March 30, 2024
April 1, 2023
% Chg vs PY
YoY Growth Rate
Price
Volume/ Mix
For the Three Months Ended
North America
$
4,828
$
4,885
(1.2)%
(1.2)%
2.5 pp
(3.7) pp
International Developed Markets
855
860
(0.6)%
(1.3)%
2.5 pp
(3.8) pp
Emerging Markets(a)
728
744
(2.1)%
5.5%
4.1 pp
1.4 pp
Kraft Heinz
$
6,411
$
6,489
(1.2)%
(0.5)%
2.7 pp
(3.2) pp
(a)
Emerging Markets represents the
aggregation of our West and East Emerging Markets (“WEEM”) and Asia
Emerging Markets (“AEM”) operating segments.
Net Income/(Loss) and Diluted
EPS
In millions, except per share
data
For the Three Months
Ended
March 30, 2024
April 1, 2023
% Chg vs PY
Gross profit
$
2,243
$
2,113
6.2%
Operating income/(loss)
1,302
1,243
4.7%
Net income/(loss)
804
837
(3.9)%
Net income/(loss) attributable to common
shareholders
801
836
(4.2)%
Diluted EPS
$
0.66
$
0.68
(2.9)%
Adjusted EPS(1)
0.69
0.68
1.5%
Adjusted Operating Income(1)
$
1,265
$
1,245
1.7%
Q1 2024 Financial Summary
- Net sales decreased 1.2 percent versus the year-ago
period to $6.4 billion, including a negative 0.6 percentage point
impact from foreign currency and a negative 0.1 percentage point
impact from divestitures. Organic Net Sales(1) decreased 0.5
percent versus the prior year period. Price increased 2.7
percentage points versus the prior year period, with increases in
each segment that were primarily driven by list price increases
taken to mitigate higher input costs. Volume/mix declined 3.2
percentage points versus the prior year period, with declines in
the North America and International Developed Markets segments that
were primarily driven by elasticity impacts from pricing actions
and the reduction of Supplemental Nutrition Assistance Program
(“SNAP”) benefits in the United States, partially offset by
volume/mix growth in the Emerging Markets segment.
- Operating Income increased 4.7 percent versus the
year-ago period to $1.3 billion, primarily driven by unrealized
gains on commodity hedges in the current year compared to
unrealized losses on commodity hedges in the prior year and higher
Adjusted Operating Income. Adjusted Operating Income(1)
increased 1.7 percent versus the year-ago period to $1.3 billion,
primarily driven by higher pricing. This more than offset
unfavorable volume/mix, investments in marketing, technology, and
research and development, and an unfavorable impact from foreign
currency (0.5 pp).
- Diluted EPS was $0.66, down 2.9 percent versus the prior
year period, primarily driven by a net loss on the sale of
businesses in the first quarter of 2024 and higher tax expense.
This was partially offset by higher operating income and fewer
shares outstanding. Adjusted EPS(1) was $0.69, up 1.5
percent versus the prior year period, primarily driven by higher
Adjusted Operating Income and fewer shares outstanding. These
factors more than offset higher taxes on adjusted earnings.
- Net cash provided by/(used for) operating activities was
$771 million, up 58.6 percent versus the year-ago period. This
increase was driven by lower cash outflows in the current year
period for inventories, primarily related to stock rebuilding in
the prior year, partially offset by higher cash outflows for
variable compensation in the current year period compared to the
prior year period. Free Cash Flow(1) was $477 million, up
116.8 percent versus the prior year period, driven by the same net
cash provided by/(used for) operating activities discussed above.
These factors more than offset an increase of $28 million in
capital expenditures in the current year.
- Capital Return: The Company paid $486 million in cash
dividends and repurchased $329 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 $329 million shares repurchased in 2024, $150 million
were repurchased under the Company’s publicly announced share
repurchase program and $179 million were purchased to offset the
dilutive effect of equity-based compensation. As of March 30, 2024,
the Company had remaining authorization to repurchase $2.6 billion
of common stock under the publicly announced share repurchase
program.
Outlook
For fiscal year 2024, the Company is reaffirming its outlook for
Organic Net Sales(2), Adjusted Operating Income(2), and Adjusted
EPS(2). The Company continues to expect:
- Organic Net Sales 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 growth of 2 to 4 percent
versus the prior year. This is in part driven by expected Adjusted
Gross Profit Margin(1)(2) expansion in the range of 50 to 100 basis
points versus the prior year, compared to the previous expectation
of 25 to 75 basis points versus the prior year.
- Adjusted EPS 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 expense and other expense/(income) versus
the prior year. This is primarily driven by foreign currency
headwinds and debt refinancing at a higher rate. The outlook does
not contemplate any potential additional share repurchases in
2024.
End Notes
(1)
Organic Net Sales, Adjusted Gross Profit,
Adjusted Gross Profit Margin, Adjusted Operating Income, Adjusted
EPS, and Free Cash Flow 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 first quarter 2024 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 Daylight 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 eight 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,”
“commit,” “continue,” “expect,” “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 impact of the
Company’s share repurchases or any change in the Company’s share
repurchase activity; 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,
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 in 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 Operating Income,
Constant Currency Adjusted Operating Income, Adjusted Gross Profit,
Adjusted Gross Profit Margin, Adjusted Net Income/(Loss), Adjusted
EPS, 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 Operating Income, Constant Currency
Adjusted Operating Income, Adjusted Gross Profit, Adjusted Gross
Profit Margin, 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 measures 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 operating
income/(loss) excluding, when they occur, the impacts of
restructuring activities, deal costs, unrealized gains/(losses) on
commodity hedges (the unrealized gains and losses are recorded in
general corporate expenses until realized; once realized, the gains
and losses are recorded in the applicable segment’s operating
results), impairment losses, and certain non-ordinary course legal
and regulatory matters. The Company also presents Adjusted
Operating Income on a constant currency basis (Constant Currency
Adjusted Operating Income). The Company calculates the impact
of currency on Adjusted Operating Income 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.
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).
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
Condensed Consolidated Statements
of Income
(in millions, except per share
data)
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
Net sales
$
6,411
$
6,489
Cost of products sold
4,168
4,376
Gross profit
2,243
2,113
Selling, general and administrative
expenses, excluding impairment losses
941
870
Operating income/(loss)
1,302
1,243
Interest expense
226
227
Other expense/(income)
47
(35)
Income/(loss) before income taxes
1,029
1,051
Provision for/(benefit from) income
taxes
225
214
Net income/(loss)
804
837
Net income/(loss) attributable to
noncontrolling interest
3
1
Net income/(loss) attributable to common
shareholders
$
801
$
836
Basic shares outstanding
1,214
1,226
Diluted shares outstanding
1,223
1,234
Per share data applicable to common
shareholders:
Basic earnings/(loss) per share
$
0.66
$
0.68
Diluted earnings/(loss) per share
0.66
0.68
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
Organic Net Sales
Price
Volume/Mix
March 30, 2024
North America
$
4,828
$
2
$
—
$
4,826
International Developed Markets
855
5
—
850
Emerging Markets
728
(15)
9
734
Kraft Heinz
$
6,411
$
(8)
$
9
$
6,410
April 1, 2023
North America
$
4,885
$
—
$
—
$
4,885
International Developed Markets
860
—
—
860
Emerging Markets
744
30
18
696
Kraft Heinz
$
6,489
$
30
$
18
$
6,441
Year-over-year growth rates
North America
(1.2)%
0.0 pp
0.0 pp
(1.2)%
2.5 pp
(3.7) pp
International Developed Markets
(0.6)%
0.7 pp
0.0 pp
(1.3)%
2.5 pp
(3.8) pp
Emerging Markets
(2.1)%
(6.3) pp
(1.3) pp
5.5%
4.1 pp
1.4 pp
Kraft Heinz
(1.2)%
(0.6) pp
(0.1) pp
(0.5)%
2.7 pp
(3.2) pp
Schedule
3
The Kraft Heinz Company
Reconciliation of Operating
Income/(Loss) to Adjusted Operating Income
(dollars in millions)
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
Operating income/(loss)
$
1,302
$
1,243
Restructuring activities
(3)
(10)
Unrealized losses/(gains) on commodity
hedges
(34)
11
Certain non-ordinary course legal and
regulatory matters
—
1
Adjusted Operating Income
$
1,265
$
1,245
Segment Adjusted Operating Income:
North America
$
1,215
$
1,209
International Developed Markets
136
107
Total Segment Adjusted Operating
Income
1,351
1,316
Emerging Markets Segment Adjusted
Operating Income(a)
82
101
General corporate expenses
(168)
(172)
Adjusted Operating Income
$
1,265
$
1,245
(a)
Emerging Markets represents the
aggregation of our WEEM and AEM operating segments.
Schedule
4
The Kraft Heinz Company
Reconciliation of Adjusted
Operating Income to Constant Currency Adjusted Operating Income
For the Three Months Ended
(dollars in millions)
(Unaudited)
Adjusted Operating
Income
Currency
Constant Currency Adjusted
Operating Income
March 30, 2024
North America
$
1,215
$
1
$
1,214
International Developed Markets
136
4
132
Emerging Markets
82
(5)
87
General corporate expenses
(168)
(1)
(167)
Kraft Heinz
$
1,265
$
(1)
$
1,266
April 1, 2023
North America
$
1,209
$
—
$
1,209
International Developed Markets
107
—
107
Emerging Markets
101
6
95
General corporate expenses
(172)
—
(172)
Kraft Heinz
$
1,245
$
6
$
1,239
Year-over-year growth rates
North America
0.4%
0.0 pp
0.4%
International Developed Markets
27.7%
3.8 pp
23.9%
Emerging Markets
(18.4)%
(9.0) pp
(9.4)%
General corporate expenses
(2.7)%
0.7 pp
(3.4)%
Kraft Heinz
1.7%
(0.5) pp
2.2%
Schedule
5
The Kraft Heinz Company
Reconciliation of GAAP Results to
Non-GAAP Results
(dollars in millions)
(Unaudited)
For the Three Months
Ended
March 30, 2024
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
$
2,243
$
941
$
1,302
$
226
$
47
$
1,029
$
225
$
804
$
3
$
801
$
0.66
Items Affecting Comparability
Restructuring activities
1
4
(3)
—
—
(3)
(1)
(2)
—
(2)
—
Unrealized losses/(gains) on commodity
hedges
(34)
—
(34)
—
—
(34)
(8)
(26)
—
(26)
(0.02)
Losses/(gains) on sale of business
—
—
—
—
(80)
80
12
68
—
68
0.05
Nonmonetary currency devaluation
—
—
—
—
(3)
3
—
3
—
3
—
Adjusted Non-GAAP Results
$
2,210
$
1,265
$
847
$
0.69
Schedule
6
The Kraft Heinz Company
Reconciliation of GAAP Results to
Non-GAAP Results
(dollars in millions)
(Unaudited)
For the Three Months
Ended
April 1, 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
$
2,113
$
870
$
1,243
$
227
$
(35)
$
1,051
$
214
$
837
$
1
$
836
$
0.68
Items Affecting Comparability
Restructuring activities
6
16
(10)
—
(2)
(8)
(1)
(7)
—
(7)
(0.01)
Unrealized losses/(gains) on commodity
hedges
11
—
11
—
—
11
2
9
—
9
0.01
Certain non-ordinary course legal and
regulatory matters
—
(1)
1
—
—
1
—
1
—
1
—
Losses/(gains) on sale of business
—
—
—
—
(1)
1
—
1
—
1
—
Nonmonetary currency devaluation
—
—
—
—
(3)
3
—
3
—
3
—
Adjusted Non-GAAP Results
$
2,130
$
1,245
$
844
$
0.68
Schedule
7
The Kraft Heinz Company
Adjusted Gross Profit Margin
(dollars in millions)
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
Adjusted Gross Profit
$
2,210
$
2,130
Net sales
6,411
6,489
Adjusted Gross Profit Margin
34.5%
32.8%
Schedule
8
The Kraft Heinz Company
Key Drivers of Change in Adjusted
EPS
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)(b)
$
0.82
$
0.81
$
0.01
Interest expense
(0.15)
(0.15)
—
Other expense/(income)
0.02
0.02
—
Effective tax rate
(0.01)
—
(0.01)
Effect of share repurchases
0.01
—
0.01
Adjusted EPS
$
0.69
$
0.68
$
0.01
(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 March 30, 2024 and $0.04 for three months ended
April 1, 2023.
(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 March 30, 2024
and $0.01 for three months ended April 1, 2023.
Schedule
9
The Kraft Heinz Company
Condensed Consolidated Balance
Sheets
(in millions, except per share
data)
(Unaudited)
March 30, 2024
December 30, 2023
ASSETS
Cash and cash equivalents
$
1,626
$
1,400
Trade receivables, net
2,216
2,112
Inventories
3,578
3,614
Prepaid expenses
292
234
Other current assets
521
566
Assets held for sale
—
3
Total current assets
8,233
7,929
Property, plant and equipment, net
7,036
7,122
Goodwill
30,390
30,459
Intangible assets, net
42,296
42,448
Other non-current assets
2,354
2,381
TOTAL ASSETS
$
90,309
$
90,339
LIABILITIES AND EQUITY
Commercial paper and other short-term
debt
$
—
$
—
Current portion of long-term debt
622
638
Trade payables
4,421
4,627
Accrued marketing
749
733
Interest payable
304
258
Other current liabilities
1,475
1,781
Total current liabilities
7,571
8,037
Long-term debt
19,923
19,394
Deferred income taxes
10,220
10,201
Accrued postemployment costs
140
143
Long-term deferred income
1,414
1,424
Other non-current liabilities
1,353
1,418
TOTAL LIABILITIES
40,621
40,617
Redeemable noncontrolling interest
35
34
Equity:
Common stock, $0.01 par value
12
12
Additional paid-in capital
52,050
52,037
Retained earnings/(deficit)
1,680
1,367
Accumulated other comprehensive
income/(losses)
(2,669)
(2,604)
Treasury stock, at cost
(1,551)
(1,286)
Total shareholders' equity
49,522
49,526
Noncontrolling interest
131
162
TOTAL EQUITY
49,653
49,688
TOTAL LIABILITIES AND EQUITY
$
90,309
$
90,339
Schedule
10
The Kraft Heinz Company
Condensed Consolidated Statements
of Cash Flows
(in millions)
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)
$
804
$
837
Adjustments to reconcile net income/(loss)
to operating cash flows:
Depreciation and amortization
230
220
Amortization of postemployment benefit
plans prior service costs/(credits)
(3)
(3)
Divestiture-related license income
(14)
(13)
Equity award compensation expense
31
31
Deferred income tax
provision/(benefit)
1
(3)
Postemployment benefit plan
contributions
(5)
(6)
Goodwill and intangible asset impairment
losses
—
—
Nonmonetary currency devaluation
3
3
Loss/(gain) on sale of business
80
1
Loss/(gain) on extinguishment of debt
—
—
Other items, net
(14)
29
Changes in current assets and
liabilities:
Trade receivables
(145)
(151)
Inventories
(56)
(406)
Accounts payable
(49)
(32)
Other current assets
(32)
(53)
Other current liabilities
(60)
32
Net cash provided by/(used for) operating
activities
771
486
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(294)
(266)
Payments to acquire business, net of cash
acquired
—
—
Proceeds from sale of business, net of
cash disposed and working capital adjustments
(3)
—
Other investing activities, net
10
2
Net cash provided by/(used for) investing
activities
(287)
(264)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt
(1)
(1)
Proceeds from issuance of long-term
debt
593
—
Dividends paid
(486)
(491)
Repurchases of common stock
(329)
(22)
Other financing activities, net
(16)
75
Net cash provided by/(used for) financing
activities
(239)
(439)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(21)
4
Cash, cash equivalents, and restricted
cash
Net increase/(decrease)
224
(213)
Balance at beginning of period
1,404
1,041
Balance at end of period
$
1,628
$
828
Schedule
11
The Kraft Heinz Company
Reconciliation of Net Cash
Provided By/(Used For) Operating Activities to Free Cash Flow
(in millions)
(Unaudited)
For the Three Months
Ended
March 30, 2024
April 1, 2023
Net cash provided by/(used for) operating
activities
$
771
$
486
Capital expenditures
(294)
(266)
Free Cash Flow
$
477
$
220
Adjusted Net Income/(Loss)
$
847
$
844
Free Cash Flow Conversion
56%
26%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240501108978/en/
Alex Abraham (media) Alex.Abraham@kraftheinz.com
Anne-Marie Megela (investors)
anne-marie.megela@kraftheinz.com
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