KRAFT HEINZ THE KRAFT HEINZ COMPANY
APPENDIX TO PRESENTATION TO CONSUMER ANALYST GROUP OF NEW YORK (CAGNY)
FEBRUARY 22, 2022
Non-GAAP Financial Measures
The non-GAAP financial measures provided in this presentation 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 Kraft Heinz Company (the "Company") has presented Organic Net Sales, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow, 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), 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. Management believes that presenting the Company's non-GAAP financial measures (i.e., Organic Net Sales, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow) 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.
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. Organic Net Sales is a tool that can assist management and investors in comparing the Company's performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company's underlying operations.
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 (e.g., income related to the sale of licenses in connection with the Cheese Transaction), restructuring activities, deal costs, unrealized losses/(gains) on
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commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities). Adjusted EBITDA is a tool that can assist management and investors in comparing the Company's performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company's underlying operations.
Adjusted EPS is defined as diluted earnings per share 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 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. The Company believes Adjusted EPS provides important comparability of underlying operating results, allowing investors and management to assess operating performance on a consistent basis.
Free Cash Flow is defined as net cash provided by/(used for) operating activities less capital expenditures. The Company believes Free Cash Flow provides a measure of the Company's core operating performance, the cash-generating capabilities of the Company's business operations, and is one factor used in determining the amount of cash available for debt repayments, dividends, acquisitions, share repurchases, and other corporate purposes. 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.
We provide guidance for Organic Net Sales, Adjusted EBITDA, Adjusted EPS, and Free Cash Flow 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, 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 costs, and certain significant discrete income tax items (e.g., U.S. and non-U.S. tax reform), 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.
See the following schedules for reconciliations of non-GAAP financial measures to the comparable GAAP financial measures.
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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 25, | December 26, | December 25, | December 26, | ||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
Net sales | $ | 6,709 | $ | 6,939 | $ | 26,042 | $ | 26,185 | |||||
Cost of products sold | 4,547 | 4,416 | 17,360 | 17,008 | |||||||||
Gross profit | 2,162 | 2,523 | 8,682 | 9,177 | |||||||||
Selling, general and administrative expenses, | 891 | 973 | 3,588 | 3,650 | |||||||||
excluding impairment losses | |||||||||||||
Goodwill impairment losses | 53 | - | 318 | 2,343 | |||||||||
Intangible asset impairment losses | 1,238 | - | 1,316 | 1,056 | |||||||||
Selling, general and administrative expenses | 2,182 | 973 | 5,222 | 7,049 | |||||||||
Operating income/(loss) | (20) | 1,550 | 3,460 | 2,128 | |||||||||
Interest expense | 604 | 328 | 2,047 | 1,394 | |||||||||
Other expense/(income) | (104) | (64) | (295) | (296) | |||||||||
Income/(loss) before income taxes | (520) | 1,286 | 1,708 | 1,030 | |||||||||
Provision for/(benefit from) income taxes | (265) | 252 | 684 | 669 | |||||||||
Net income/(loss) | (255) | 1,034 | 1,024 | 361 | |||||||||
Net income/(loss) attributable to noncontrolling | 2 | 2 | 12 | 5 | |||||||||
interest | |||||||||||||
Net income/(loss) attributable to common | $ | (257) | $ | 1,032 | $ | 1,012 | $ | 356 | |||||
shareholders | |||||||||||||
Basic shares outstanding | 1,225 | 1,223 | 1,224 | 1,223 | |||||||||
Diluted shares outstanding | 1,225 | 1,230 | 1,236 | 1,228 | |||||||||
Per share data applicable to common shareholders: | |||||||||||||
Basic earnings/(loss) per share | $ | (0.21) | $ | 0.84 | $ | 0.83 | $ | 0.29 | |||||
Diluted earnings/(loss) per share | (0.21) | 0.84 | 0.82 | 0.29 |
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The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales
For the Year Ended (dollars in millions)
(Unaudited)
Acquisitions | Organic Net | ||||||||||||||||||
and | |||||||||||||||||||
Net Sales | Currency | Sales | Price | Volume/Mix | |||||||||||||||
Divestitures | |||||||||||||||||||
December 25, 2021 | |||||||||||||||||||
United States | $ | 18,604 | $ | - | $ | 1,937 | $ | 16,667 | |||||||||||
International | 5,691 | 205 | 23 | 5,463 | |||||||||||||||
Canada | 1,747 | 114 | 49 | 1,584 | |||||||||||||||
Kraft Heinz | $ | 26,042 | $ | 319 | $ | 2,009 | $ | 23,714 | |||||||||||
December 26, 2020 | |||||||||||||||||||
United States | $ | 19,204 | $ | - | $ | 2,801 | $ | 16,403 | |||||||||||
International | 5,341 | 22 | 20 | 5,299 | |||||||||||||||
Canada | 1,640 | - | 49 | 1,591 | |||||||||||||||
Kraft Heinz | $ | 26,185 | $ | 22 | $ | 2,870 | $ | 23,293 | |||||||||||
Year-over-year growth rates | |||||||||||||||||||
United States | (3.1)% | 0.0 pp | (4.7) pp | 1.6 % | 2.1 pp | (0.5) pp | |||||||||||||
International | 6.5 % | 3.4 pp | 0.0 pp | 3.1 % | 2.6 pp | 0.5 pp | |||||||||||||
Canada | 6.5 % | 7.0 pp | (0.1) pp | (0.4)% | 2.9 pp | (3.3) pp | |||||||||||||
Kraft Heinz | (0.5)% | 1.2 pp | (3.5) pp | 1.8 % | 2.3 pp | (0.5) pp |
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The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales
For the Year Ended (dollars in millions)
(Unaudited)
Acquisitions | Organic Net | ||||||||||||
and | |||||||||||||
Net Sales | Currency | Sales | |||||||||||
Divestitures | |||||||||||||
December 25, 2021 | |||||||||||||
United States | $ | 18,604 | $ | - | $ | 1,937 | $ | 16,667 | |||||
International | 5,691 | 84 | 23 | 5,584 | |||||||||
Canada | 1,747 | 98 | 49 | 1,600 | |||||||||
Kraft Heinz | $ | 26,042 | $ | 182 | $ | 2,009 | $ | 23,851 | |||||
December 28, 2019 | |||||||||||||
United States | $ | 17,844 | $ | - | $ | 2,590 | $ | 15,254 | |||||
International | 5,251 | 28 | 37 | 5,186 | |||||||||
Canada | 1,882 | - | 255 | 1,627 | |||||||||
Kraft Heinz | $ | 24,977 | $ | 28 | $ | 2,882 | $ | 22,067 | |||||
Year-over-year growth rates | |||||||||||||
United States | 4.3 % | 0.0 pp | (5.0) pp | 9.3 % | |||||||||
International | 8.4 % | 1.0 pp | (0.3) pp | 7.7 % | |||||||||
Canada | (7.2)% | 5.1 pp | (10.6) pp | (1.7)% | |||||||||
Kraft Heinz | 4.3 % | 0.6 pp | (4.4) pp | 8.1 % |
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The Kraft Heinz Company published this content on 22 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 February 2022 16:51:02 UTC.
