Kraft Heinz : Second Quarter 2022 Pre-Recorded Management Discussion

Second Quarter 2022 Earnings Pre-Recorded Management Discussion | July 27, 2022

Second Quarter 2022 Earnings Pre-Recorded Management Discussion

July 27, 2022

Please view these remarks in conjunction with our Q2 2022 earnings release, which is filed on Form 8-K, and available on our website at ir.kraftheinzcompany.comunder Filings

• SEC Filings or directly atir.kraftheinzcompany.com/sec-filings,as well as additional information regarding our non-GAAP financial measures, including GAAP to non-GAAP reconciliations, available on our website at ir.kraftheinzcompany.comunder News & Events > Events & Webcasts, or directly at ir.kraftheinzcompany.com/events-and-webcasts.

We also invite you to listen to our live question-and-answer webcast with Kraft Heinz management which will begin today at 9:00 a.m. Eastern Time and will be available on ir.kraftheinzcompany.comunder News & Events > Events & Webcasts, or directly at ir.kraftheinzcompany.com/events-and-webcasts.

Second Quarter 2022 Earnings Pre-Recorded Management Discussion | July 27, 2022

Q2 2022 Earnings Pre-Recorded Management Discussion

Slide 1

ANNE-MARIE MEGELA, HEAD OF GLOBAL INVESTOR RELATIONS

Hello. This is Anne-Marie Megela, Head of Global Investor Relations at The Kraft Heinz Company. I'd like to welcome you to our second quarter 2022 business update.

Slide 2

During our review, we will make some forward-looking statements that are based on how we see things today.

Actual results may differ due to risks and uncertainties, and these are discussed in our earnings release and our filings with the SEC.

We will also discuss some non-GAAP financial measures during these remarks. These non- GAAP financial measures should not be considered a replacement for, and should be read together with, GAAP results. And you can find the GAAP to non-GAAP reconciliations within our earnings release and the supplemental materials posted at ir.kraftheinzcompany.com.

Slide 3

Today, our Chief Executive Officer, Miguel Patricio, will provide an update on our overall business performance. And Andre Maciel, our Global Chief Financial Officer, will provide a financial review of the second quarter and will discuss our 2022 outlook.

We have also scheduled a separate, live question-and-answer session with analysts.

Second Quarter 2022 Earnings Pre-Recorded Management Discussion | July 27, 2022

You can access our earnings release, supplemental materials, and audio of our question-and- answer session at ir.kraftheinzcompany.com. A replay of the question-and-answer session will be available following the event through the same website.

With that, I will turn it over to Miguel.

Slide 4

MIGUEL PATRICO, CHIEF EXECUTIVE OFFICER

Thank you, Anne-Marie.

And thank you everyone for joining us today. We delivered yet another quarter of strong results as we continue to successfully navigate a dynamic environment. This has been enabled by further advancements of our long-term strategy.

We are growing and strengthening our competitive position in the face of these turbulent times. We are better anticipating market conditions, adapting to an environment that is constantly changing and we have continued to demonstrate our resiliency to these waves of challenges.

Slide 5

So, let's take a deeper look into our results.

Slide 6

In the second quarter, we generated double-digit Organic Net Sales growth versus the second quarter of 2021 as a result of continued solid consumer demand for our brands. This growth was higher than expected and is a 5.2 percent compound annual growth rate compared to the second quarter of 2019.

All three pillars of growth, that is: Our GROW platforms, Foodservice, and Emerging Markets contributed to these results. They're hitting on all cylinders!

Second Quarter 2022 Earnings Pre-Recorded Management Discussion | July 27, 2022

We see strong consumption in North America continuing with lower elasticity and improving market share trends. And we have delivered accelerated growth in Emerging Markets and Foodservice. In developed markets, particularly Europe, we delivered solid top line results even though this region has been more affected by higher inflation and constrained resource availability.

Looking to our Adjusted EBITDA results, we generated $1.5 billion dollars in the second quarter of 2022, slightly above our expectations. Compared to the second quarter of 2019, the compounded annual growth rate was a positive 1.9 percent on our ongoing business.

Importantly, we are offsetting record-level inflation through price realization and supply chain gross efficiencies.

In the second quarter, our Free Cash Flow reflects both a tax payment on our Natural Cheese divestiture, as well as a rebuild of inventory which is critical to improving our service levels and fully capturing market share improvement.

Slide 7

As I mentioned, our top line acceleration is fueled by our three pillars of growth:

Demand across our GROW platforms, particularly, Taste Elevation, remained very strong; Our Foodservice business is growing faster than the industry; and

Emerging Markets accelerated their pace of Organic Nets Sales growth.

Let's take a look at each one.

Slide 8

We have generated solid growth across the portfolio, with exceptional growth in our GROW platforms. They make up more than 60 percent of our North American business and have grown at about an 8 percent CAGR versus the second quarter of 2019, with the majority of the categories improving market share year-over-year, including our iconic brands such as Heinz, Kraft Mac and Cheese, Philadelphia Cream Cheese and Kraft Singles. As you can see, our consumer-centric strategy is working and the pricing power of our brands are taking hold!

Second Quarter 2022 Earnings Pre-Recorded Management Discussion | July 27, 2022

Slide 9

Take a look, for example, at the relatively limited elasticity we are seeing in our North America business, where we grew Organic Net Sales 9.8 percent, with pricing contributing approximately 13 percentage points and a volume/mix decline of approximately 3 percentage points in the second quarter. On a sequential basis, we saw roughly 4 percentage points of incremental pricing with only one percentage point of incremental impact to volume/mix. This is encouraging by historical standards and reflective of a much stronger portfolio that we have today.

Consumption in the U.S. specifically, continues to increase, up to 6.9 percent in the second quarter compared to 2.9 percent in the first quarter.

Earlier this year, Carlos shared our strategies to improve market share performance. And we continue to see consistent progress! Our year-over-year market share performance, on a mix adjusted basis, improved sequentially by approximately 10 basis points versus the first quarter of this year. On a non-mix adjusted basis, our share rebound is even more pronounced, with a 50 basis point improvement versus the first quarter, resulting in nearly flat market share in the second quarter.

For the one-time challenges that we addressed in the first quarter, we are seeing improvements. For example, in cream cheese, our service levels have recovered, and we have been gaining market share.

For constraints that we have been addressing through the first half of the year, such as in Lunchables, production levels are improving, and we expect these improvements to flow through into the third quarter.

And for the longer-term solutions, we have been making progress as well. With the contract we signed with Simplot, which will not only boost production capacity, but will give us additional capabilities as we strengthen our Ore-Ida business.

As a result of the great work our supply chain team has done, as well as what we are doing to more strongly connect with consumers, we expect to see market share results continue to rebound in the second half of the year.