Kraft Heinz : Q2 2021 GAAP to Non-GAAP Reconciliation

Schedule 1

Schedule 2

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
June 26, 2021
United States	$ 4,738	$ -	$ 197	$ 4,541
International	1,413	108	5	1,300
Canada	464	53	1	410
Kraft Heinz	$ 6,615	$ 161	$ 203	$ 6,251
June 27, 2020
United States	$ 4,917	$ -	$ 251	$ 4,666
International	1,305	5	5	1,295
Canada	426	-	1	425
Kraft Heinz	$ 6,648	$ 5	$ 257	$ 6,386
Year-over-year growth rates
United States	(3.6)%	0.0 pp	(0.9) pp	(2.7)%	1.3 pp	(4.0) pp
International	8.3 %	7.9 pp	0.0 pp	0.4 %	1.9 pp	(1.5) pp
Canada	8.8 %	12.4 pp	0.0 pp	(3.6)%	1.9 pp	(5.5) pp
Kraft Heinz	(0.5)%	2.3 pp	(0.7) pp	(2.1)%	1.5 pp	(3.6) pp

Schedule 3

Schedule 3
The Kraft Heinz Company Reconciliation of Net Sales to Organic Net Sales For the Six Months Ended (dollars in millions) (Unaudited)
Net Sales	Currency	Acquisitions and Divestitures	Organic Net Sales	Price	Volume/Mix
June 26, 2021
United States	$ 9,346	$ -	$ 446	$ 8,900
International	2,807	172	9	2,626
Canada	856	75	1	780
Kraft Heinz	$ 13,009	$ 247	$ 456	$ 12,306
June 27, 2020
United States	$ 9,412	$ -	$ 499	$ 8,913
International	2,606	11	9	2,586
Canada	787	-	2	785
Kraft Heinz	$ 12,805	$ 11	$ 510	$ 12,284
Year-over-year growth rates
United States	(0.7)%	0.0 pp	(0.6) pp	(0.1)%	1.4 pp	(1.5) pp
International	7.7 %	6.1 pp	0.0 pp	1.6 %	2.1 pp	(0.5) pp
Canada	8.8 %	9.6 pp	0.0 pp	(0.8)%	3.2 pp	(4.0) pp
Kraft Heinz	1.6 %	1.8 pp	(0.4) pp	0.2 %	1.6 pp	(1.4) pp

Schedule 4

Schedule 4
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
June 26, 2021
United States	$ 4,738	$ -	$ 197	$ 4,541
International	1,413	29	5	1,379
Canada	464	38	1	425
Kraft Heinz	$ 6,615	$ 67	$ 203	$ 6,345
June 29, 2019
United States	$ 4,533	$ -	$ 224	$ 4,309
International	1,313	7	6	1,300
Canada	560	-	128	432
Kraft Heinz	$ 6,406	$ 7	$ 358	$ 6,041
Year-over-year growth rates
United States	4.5 %	0.0 pp	(0.9) pp	5.4 %
International	7.5 %	1.6 pp	(0.2) pp	6.1 %
Canada	(17.2)%	6.8 pp	(22.3) pp	(1.7)%
Kraft Heinz	3.2 %	0.9 pp	(2.7) pp	5.0 %

Schedule 5

Schedule 5
The Kraft Heinz Company Reconciliation of Net Sales to Organic Net Sales For the Six Months Ended (dollars in millions) (Unaudited)
Net Sales	Currency	Acquisitions and Divestitures	Organic Net Sales
June 26, 2021
United States	$ 9,346	$ -	$ 446	$ 8,900
International	2,807	48	9	2,750
Canada	856	57	1	798
Kraft Heinz	$ 13,009	$ 105	$ 456	$ 12,448
June 29, 2019
United States	$ 8,757	$ -	$ 450	$ 8,307
International	2,598	14	25	2,559
Canada	1,010	-	219	791
Kraft Heinz	$ 12,365	$ 14	$ 694	$ 11,657
Year-over-year growth rates
United States	6.7 %	0.0 pp	(0.4) pp	7.1 %
International	8.0 %	1.2 pp	(0.7) pp	7.5 %
Canada	(15.2)%	5.6 pp	(21.7) pp	0.9 %
Kraft Heinz	5.2 %	0.7 pp	(2.3) pp	6.8 %

Schedule 6

Schedule 6
The Kraft Heinz Company Reconciliation of Net Income/(Loss) to Adjusted EBITDA (dollars in millions) (Unaudited)
For the Three Months Ended
June 26, 2021	June 27, 2020	June 29, 2019
Net income/(loss)	$ (25)	$ (1,652)	$ 448
Interest expense	613	442	316
Other expense/(income)	(23)	(78)	(133)
Provision for/(benefit from) income taxes	670	(51)	103
Operating income/(loss)	1,235	(1,339)	734
Depreciation and amortization (excluding restructuring activities)	227	247	253
Restructuring activities	19	4	14
Deal costs	(1)	-	5
Unrealized losses/(gains) on commodity hedges	(2)	(26)	(10)
Impairment losses	113	2,873	598
Certain non-ordinary course legal and regulatory matters	62	-	-
Equity award compensation expense (excluding restructuring activities)	53	40	6
Adjusted EBITDA	$ 1,706	$ 1,799	$ 1,600
Segment Adjusted EBITDA:
United States	$ 1,374	$ 1,478	$ 1,257
International	286	275	267
Canada	117	110	143
General corporate expenses	(71)	(64)	(67)
Adjusted EBITDA	$ 1,706	$ 1,799	$ 1,600

Schedule 7

Schedule 7
The Kraft Heinz Company Reconciliation of Net Income/(Loss) to Adjusted EBITDA (dollars in millions) (Unaudited)
For the Six Months Ended
June 26, 2021	June 27, 2020	June 29, 2019
Net income/(loss)	$ 543	$ (1,271)	$ 852
Interest expense	1,028	752	637
Other expense/(income)	(53)	(159)	(513)
Provision for/(benefit from) income taxes	806	109	320
Operating income/(loss)	2,324	(569)	1,296
Depreciation and amortization (excluding restructuring activities)	449	490	487
Restructuring activities	37	4	41
Deal costs	6	-	13
Unrealized losses/(gains) on commodity hedges	(39)	117	(39)
Impairment losses	343	3,099	1,218
Certain non-ordinary course legal and regulatory matters	62	-	-
Equity award compensation expense (excluding restructuring activities)	104	73	15
Adjusted EBITDA	$ 3,286	$ 3,214	$ 3,031
Segment Adjusted EBITDA:
United States	$ 2,654	$ 2,687	$ 2,396
International	569	520	505
Canada	204	165	264
General corporate expenses	(141)	(158)	(134)
Adjusted EBITDA	$ 3,286	$ 3,214	$ 3,031

Schedule 8

Schedule 8
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
June 26, 2021
United States	$ 1,374	$ -	$ 1,374
International	286	23	263
Canada	117	14	103
General corporate expenses	(71)	(1)	(70)
Kraft Heinz	$ 1,706	$ 36	$ 1,670
June 27, 2020
United States	$ 1,478	$ -	$ 1,478
International	275	2	273
Canada	110	-	110
General corporate expenses	(64)	-	(64)
Kraft Heinz	$ 1,799	$ 2	$ 1,797
Year-over-year growth rates
United States	(7.0)%	0.0 pp	(7.0)%
International	4.1 %	7.5 pp	(3.4)%
Canada	5.6 %	12.1 pp	(6.5)%
General corporate expenses	10.9 %	2.2 pp	8.7 %
Kraft Heinz	(5.2)%	1.8 pp	(7.0)%

Schedule 9

Schedule 9
The Kraft Heinz Company Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA For the Six Months Ended (dollars in millions) (Unaudited)
Adjusted EBITDA	Currency	Constant Currency Adjusted EBITDA
June 26, 2021
United States	$ 2,654	$ -	$ 2,654
International	569	39	530
Canada	204	19	185
General corporate expenses	(141)	(2)	(139)
Kraft Heinz	$ 3,286	$ 56	$ 3,230
June 27, 2020
United States	$ 2,687	$ -	$ 2,687
International	520	5	515
Canada	165	-	165
General corporate expenses	(158)	-	(158)
Kraft Heinz	$ 3,214	$ 5	$ 3,209
Year-over-year growth rates
United States	(1.2)%	0.0 pp	(1.2)%
International	9.4 %	6.4 pp	3.0 %
Canada	23.0 %	11.3 pp	11.7 %
General corporate expenses	(11.0)%	1.7 pp	(12.7)%
Kraft Heinz	2.2 %	1.5 pp	0.7 %

Schedule 10

Schedule 10
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
June 26, 2021
United States	$ 1,374	$ -	$ 1,374
International	286	11	275
Canada	117	10	107
General corporate expenses	(71)	-	(71)
Kraft Heinz	$ 1,706	$ 21	$ 1,685
June 29, 2019
United States	$ 1,257	$ -	$ 1,257
International	267	3	264
Canada	143	-	143
General corporate expenses	(67)	-	(67)
Kraft Heinz	$ 1,600	$ 3	$ 1,597
Year-over-year growth rates
United States	9.3 %	0.0 pp	9.3 %
International	7.4 %	3.4 pp	4.0 %
Canada	(18.9)%	6.6 pp	(25.5)%
General corporate expenses	6.3 %	1.1 pp	5.2 %
Kraft Heinz	6.6 %	1.1 pp	5.5 %

Schedule 11

Schedule 11
The Kraft Heinz Company Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA For the Six Months Ended (dollars in millions) (Unaudited)
Adjusted EBITDA	Currency	Constant Currency Adjusted EBITDA
June 26, 2021
United States	$ 2,654	$ -	$ 2,654
International	569	22	547
Canada	204	14	190
General corporate expenses	(141)	(1)	(140)
Kraft Heinz	$ 3,286	$ 35	$ 3,251
June 29, 2019
United States	$ 2,396	$ -	$ 2,396
International	505	7	498
Canada	264	-	264
General corporate expenses	(134)	-	(134)
Kraft Heinz	$ 3,031	$ 7	$ 3,024
Year-over-year growth rates
United States	10.8 %	0.0 pp	10.8 %
International	12.6 %	3.0 pp	9.6 %
Canada	(22.8)%	5.3 pp	(28.1)%
General corporate expenses	5.0 %	1.2 pp	3.8 %
Kraft Heinz	8.4 %	0.9 pp	7.5 %

Schedule 12

Schedule 12
The Kraft Heinz Company Reconciliation of Diluted EPS to Adjusted EPS (Unaudited)
For the Three Months Ended	For the Six Months Ended
June 26, 2021	June 27, 2020	June 26, 2021	June 27, 2020
Diluted EPS	$ (0.02)	$ (1.35)	$ 0.43	$ (1.04)
Restructuring activities(a)	0.01	- 0	0.02	- 0
Unrealized losses/(gains) on commodity hedges(b)	- 0	(0.02)	(0.02)	0.07
Impairment losses(c)	0.07	2.16	0.26	2.35
Certain non-ordinary course legal and regulatory matters(d)	0.05	- 0	0.05	- 0
Losses/(gains) on sale of business(e)	0.27	- 0	0.29	- 0
Debt prepayment and extinguishment costs(f)	0.21	0.07	0.28	0.07
Certain significant discrete income tax items(g)	0.19	(0.06)	0.19	(0.06)
Adjusted EPS	$ 0.78	$ 0.80	$ 1.50	$ 1.39
(a) Gross expenses included in restructuring activities were $19 million ($15 million after-tax) for the three months and $37 million ($28 million after-tax) for the six months ended June 26, 2021 and $4 million ($3 million after tax) for the three and six months ended June 27, 2020 and were recorded in the following income statement line items:
• Cost of products sold included expenses of $1 million for the three months and $4 million for the six months ended June 26, 2021 and income of $2 million for the three months and $1 million for the six months ended June 27, 2020; and
• SG&A included expenses of $18 million for the three months and $33 million for the six months ended June 26, 2021 and $6 million for the three months and $5 million for the six months ended June 27, 2020.
(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $2 million ($2 million after-tax) for the three months and $39 million ($29 million after-tax) for the six months ended June 26, 2021 and income of $26 million ($19 million after-tax) for the three months and expenses of $117 million ($89 million after-tax) for the six months ended June 27, 2020 and were recorded in cost of products sold.
(c) Gross impairment losses, which were recorded in SG&A, included the following:
• Goodwill impairment losses of $35 million ($35 million after-tax) for the three months and $265 million ($265 million after-tax) for the six months ended June 26, 2021 and $1.8 billion ($1.8 billion after-tax) for the three months and $2.0 billion ($2.0 billion after-tax) for the six months ended June 27, 2020; and
• Intangible asset impairment losses of $78 million ($59 million after-tax) for the three and six months ended June 26, 2021 and $1.1 billion ($829 million after-tax) for the three and six months ended June 27, 2020.
(d) Gross expenses included in certain non-ordinary course legal and regulatory matters were $62 million ($62 million after-tax) for the three and six months ended June 26, 2021 and were recorded in SG&A.
(e) Gross expenses included in losses/(gains) on sale of business were $46 million ($333 million after-tax) for the three months and $65 million ($352 million after-tax) for the six months ended June 26, 2021 and $2 million ($2 million after-tax) for the six months ended June 27, 2020 and were recorded in other expense/(income).
(f) Gross expenses included in debt prepayment and extinguishment costs were $318 million ($255 million after-tax) for the three months and $424 million ($335 million after-tax) for the six months ended June 26, 2021 and $109 million ($82 million after-tax) for the three and six months ended June 27, 2020 and were recorded in interest expense.
(g) Certain significant discrete income tax items were an expense of $236 million for the three and six months ended June 26, 2021 and a benefit of $81 million for the three and six months ended June 27, 2020. The expense in 2021 relates to the revaluation of our deferred tax balances due to an increase in U.K. tax rates. The benefit in 2020 relates to the revaluation of our deferred tax balances due to changes in state tax laws following U.S. tax reform and subsequent clarification or interpretation of state tax laws.

Schedule 13

Schedule 13
The Kraft Heinz Company Key Drivers of Change in Adjusted EPS (Unaudited)
For the Three Months Ended
June 26, 2021	June 27, 2020	$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)	$ 0.88	$ 0.92	$ (0.04)
Results of divested operations	0.03	0.04	(0.01)
Interest expense	(0.19)	(0.21)	0.02
Other expense/(income)(b)	0.04	0.05	(0.01)
Effective tax rate	0.02	- 0	0.02
Adjusted EPS	$ 0.78	$ 0.80	$ (0.02)
(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 June 26, 2021 and June 27, 2020.
(b) Includes non-cash amortization of prior service credits, which accounted for a benefit to Adjusted EPS from other expense/(income) of $0.02 for the three months ended June 27, 2020.

Schedule 14

Schedule 14
The Kraft Heinz Company Key Drivers of Change in Adjusted EPS (Unaudited)
For the Six Months Ended
June 26, 2021	June 27, 2020	$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)	$ 1.69	$ 1.64	$ 0.05
Results of divested operations	0.06	0.06	- 0
Interest expense	(0.39)	(0.42)	0.03
Other expense/(income)(b)	0.08	0.11	(0.03)
Effective tax rate	0.08	- 0	0.08
Effect of dilutive equity awards(c)	(0.02)	- 0	(0.02)
Adjusted EPS	$ 1.50	$ 1.39	$ 0.11
(a) Includes non-cash amortization of definite-lived intangible assets, which accounted for a negative impact to Adjusted EPS from results of operations of $0.08 for the six months ended June 26, 2021 and $0.09 for the six months ended June 27, 2020.
(b) Includes non-cash amortization of prior service credits, which accounted for a benefit to Adjusted EPS from other expense/(income) of $0.04 for the six months ended June 27, 2020.
(c) Represents the impact of excluding the dilutive effects of equity awards for the six months ended June 27, 2020 as their inclusion would have had an anti-dilutive effect on EPS due to net losses attributable to common shareholders for the same period.

Schedule 15

Schedule 15
The Kraft Heinz Company Condensed Consolidated Balance Sheets (in millions, except per share data) (Unaudited)
	June 26, 2021	December 26, 2020
ASSETS
Cash and cash equivalents	$ 3,941	$ 3,417
Trade receivables, net	2,008	2,063
Inventories	2,820	2,773
Prepaid expenses	149	132
Other current assets	624	574
Assets held for sale	1,843	1,863
Total current assets	11,385	10,822
Property, plant and equipment, net	6,611	6,876
Goodwill	31,477	33,089
Intangible assets, net	44,941	46,667
Other non-current assets	2,624	2,376
TOTAL ASSETS	$ 97,038	$ 99,830
LIABILITIES AND EQUITY
Commercial paper and other short-term debt	$ 6	$ 6
Current portion of long-term debt	1,604	230
Trade payables	4,391	4,304
Accrued marketing	968	946
Interest payable	322	358
Other current liabilities	2,577	2,200
Liabilities held for sale	11	17
Total current liabilities	9,879	8,061
Long-term debt	23,545	28,070
Deferred income taxes	11,377	11,462
Accrued postemployment costs	248	243
Other non-current liabilities	1,847	1,751
TOTAL LIABILITIES	46,896	49,587
Equity:
Common stock, $0.01 par value	12	12
Additional paid-in capital	54,255	55,096
Retained earnings/(deficit)	(2,158)	(2,694)
Accumulated other comprehensive income/(losses)	(1,720)	(1,967)
Treasury stock, at cost	(392)	(344)
Total shareholders' equity	49,997	50,103
Noncontrolling interest	145	140
TOTAL EQUITY	50,142	50,243
TOTAL LIABILITIES AND EQUITY	$ 97,038	$ 99,830

Schedule 16

Schedule 16
The Kraft Heinz Company Condensed Consolidated Statement of Cash Flows (in millions) (Unaudited)
For the Six Months Ended
	June 26, 2021	June 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$ 543	$ (1,271)
Adjustments to reconcile net income/(loss) to operating cash flows:
Depreciation and amortization	449	490
Amortization of postemployment benefit plans prior service costs/(credits)	(3)	(61)
Equity award compensation expense	104	73
Deferred income tax provision/(benefit)	(114)	(489)
Postemployment benefit plan contributions	(14)	(15)
Goodwill and intangible asset impairment losses	343	3,099
Nonmonetary currency devaluation	4	4
Loss/(gain) on sale of business	65	2
Other items, net	278	204
Changes in current assets and liabilities:
Trade receivables	62	(60)
Inventories	(227)	(202)
Accounts payable	220	(54)
Other current assets	(67)	(138)
Other current liabilities	386	634
Net cash provided by/(used for) operating activities	2,029	2,216
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(431)	(258)
Proceeds from sale of business, net of cash disposed	3,435	-
Other investing activities, net	23	21
Net cash provided by/(used for) investing activities	3,027	(237)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt	(3,090)	(3,824)
Proceeds from issuance of long-term debt	-	3,500
Debt prepayment and extinguishment costs	(433)	(101)
Proceeds from revolving credit facility	-	4,000
Repayments of revolving credit facility	-	(4,000)
Dividends paid	(979)	(977)
Other financing activities, net	(53)	(35)
Net cash provided by/(used for) financing activities	(4,555)	(1,437)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	23	(9)
Cash, cash equivalents, and restricted cash
Net increase/(decrease)	524	533
Balance at beginning of period	3,418	2,280
Balance at end of period	$ 3,942	$ 2,813

Schedule 17

Schedule 17
The Kraft Heinz Company Reconciliation of Net Cash Provided By/(Used for) Operating Activities to Free Cash Flow (in millions) (Unaudited)
For the Six Months Ended
	June 26, 2021	June 27, 2020
Net cash provided by/(used for) operating activities	$ 2,029	$ 2,216
Capital expenditures	(431)	(258)
Free Cash Flow	$ 1,598	$ 1,958