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THE KRAFT HEINZ COMPANY

(KHC)
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Kraft Heinz : First Quarter 2021 Pre-Recorded Management Discussion

04/29/2021 | 07:30am EDT

First Quarter Earnings Prepared Management Remarks | 04/29/21

First Quarter 2021 Earnings Prepared Management Remarks

April 29, 2021

Please view these remarks in conjunction with our Q1 2021 earnings release, Q1 2021 Form 10-Q and GAAP/non-GAAP reconciliations that can be found on our website at https://ir.kraftheinzcompany.com/under SEC Filings, or via the following link: https://ir.kraftheinzcompany.com/sec-filings

We also invite you to listen to our live question and answer webcast with Miguel Patricio (Chief Executive Officer), Paulo Basilio (Global Chief Financial Officer), Carlos Abrams-Rivera (U.S. Zone President), and Rafa Oliveira (International Zone President), which will begin today at 9:00 a.m. Eastern Daylight Time and will also be available on https://ir.kraftheinzcompany.com/.

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First Quarter Earnings Prepared Management Remarks | 04/29/21

CHRIS JAKUBIK, HEAD OF GLOBAL INVESTOR RELATIONS, THE KRAFT HEINZ COMPANY

Hello. This is Chris Jakubik, Head of Global Investor Relations at The Kraft Heinz Company, and welcome to our first quarter 2021 business update.

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 at ir.kraftheinzcompany.com.

Today, our Chief Executive Officer, Miguel Patricio, will update our overall business performance. Carlos Abrams-Rivera will review business performance in the U.S. segment. Rafa Oliveira will discuss business performance in our International segment. And then Paulo Basilio, our Global Chief Financial Officer, will provide an overall financial review and our near-term outlook.

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

You can access our earnings release and supplemental materials 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.

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First Quarter Earnings Prepared Management Remarks | 04/29/21

MIGUEL PATRICIO, CHIEF EXECTIVE OFFICER, THE KRAFT HEINZ COMPANY

Well, thank you, Chris.

As recently as February, I said we would begin 2021 with momentum across our brands and business. As it turns out, we are showing even stronger momentum than anticipated.

Our team delivered solid first-quarter growth at both top and bottom line, on top of extraordinary growth that we had in the first quarter last year.

Even though we expect to be operating in a very unpredictable environment for some time, we have had a number of early wins in our Consumer Platforms, in operations, in bolstering our talent, and with our partners. And this should enable us to accelerate our advantage in the future quarters.

We also continue to strengthen our portfolio, while building additional financial flexibility. And this will position us to come out of this period much stronger, operationally and financially.

From a financial perspective, our first-quarter results were strong and better than expected.

Q1 Organic Net Sales grew 2.5% versus 2020. And that is on top of the 6.2% Organic Net Sales growth we posted in the first quarter of 2020.

We also delivered strong Adjusted EBITDA growth versus last year. If you recall, last year we estimated that our additional COVID-related demand resulted in approximately 9 to 10 percentage points of Adjusted EBITDA growth versus Q1 2019. So, building on that is very encouraging.

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First Quarter Earnings Prepared Management Remarks | 04/29/21

In a nutshell, our first-quarter results were characterized by retail consumption in developed markets remaining elevated, emerging market growth accelerating, while the broader benefits of our strategy continue to take hold.

Slide 6 is a view of our platform-based,consumer-led model.

As you can see, our Grow platforms and emerging markets continued to be the major growth engines for the company.

Our Grow platforms, excluding foodservice, continue to be our strongest contributor to top-line growth, up 8% versus Q1 2020. The growth is led by Taste Elevation, which, excluding foodservice, was up 15% versus Q1 2020 and 23% versus Q1 2019.

In fact, across all our business segments, we continue to leverage our competitive advantages and scale in Taste Elevation.

In emerging markets, specifically, we are now seeing the results of our localized, go-to-market models as we begin to capture the tremendous whitespace opportunities in front of us.

In both Grow platforms and emerging markets, our strategy is clear, our people are motivated, and we are excited about the growth ahead.

Earlier this year, we outlined our renovation, innovation, and marketing agenda. And Carlos and Rafa will outline the very solid start we have had in our two biggest business segments.

A key ingredient to driving this agenda and a personal passion of mine since day one is building a culture of creativity at Kraft Heinz.

Last year, we launched the ACE Program, to Accelerate Creative Excellence. We are still early in this journey, but we are seeing very good results. In March, we

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First Quarter Earnings Prepared Management Remarks | 04/29/21

took another step in that journey, gathering to celebrate best-in-class creative marketing from all around the world of Kraft Heinz with our first-ever ACE Awards.

Here, we recognized and shared the 2020 achievements of our incredibly talented Kraft Heinz marketers and agency partners. We brought in external advisors, world-class marketers, who have won or served as judges at Cannes. The event celebrated our best creative work in 2020, but also served as an inspiration for our future.

Our Canada team, in particular, had a very strong showing this year. They worked hard to enhance their portfolio with inventive campaigns like Heinz Pour Perfectly, the Hazelnut Spread U-bear campaign, and the Draw Ketchup campaign. They are also creatively backing innovations like our Lactose-freePhiladelphia Cream Cheese. In fact, their creativity is a key reason that our Canada business is now gaining share in roughly 60% of its categories.

Our U.K. Heinz Beanz team recently had a lot of fun on Twitter with Weetabix, creating a national conversation. It quickly became the No. 1 trending story on Twitter in the U.K., with more than 2 billion media impressions, and driving our brand equity scores 6 points higher.

Our goal is to become global leaders in marketing and brand management. That begins by shifting our culture to being bolder and more creative. And this creativity should allow us to accelerate our advantage in future quarters.

In addition to the agility our brand and marketing teams are building, we are seeing our Ops Center act with agility, making progress in a very challenging environment.

Similar to industry peers, our cost pressures have accelerated since the start of the year.

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This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

The Kraft Heinz Company published this content on 29 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2021 11:29:00 UTC.


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Sales 2021 25 261 M - -
Net income 2021 3 200 M - -
Net Debt 2021 19 306 M - -
P/E ratio 2021 17,6x
Yield 2021 3,70%
Capitalization 53 109 M 53 109 M -
EV / Sales 2021 2,87x
EV / Sales 2022 2,93x
Nbr of Employees 38 000
Free-Float 53,8%
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Mean consensus HOLD
Number of Analysts 21
Average target price 43,04 $
Last Close Price 43,42 $
Spread / Highest target 15,2%
Spread / Average Target -0,88%
Spread / Lowest Target -24,0%
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Managers and Directors
NameTitle
Miguel Patricio Chief Executive Officer & Director
Carlos Arturo Abrams-Rivera President
Paulo Basilio Chief Financial Officer
Alexandre Behring da Costa Chairman
Flavio Torres Head-Global Operations
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