Company Delivers Solid Second Quarter
Results, Continues to Successfully Navigate Current Environment and
Advance Long-Term Strategy
Raises Full Year Outlook for Organic Net
Sales(1)(2) While Holding to Previous Adjusted EBITDA(1)(2)
Expectations
The Kraft Heinz Company (Nasdaq: KHC) (“Kraft Heinz” or the
“Company”) today reported financial results for the second quarter
of 2022 that reflected strong price realization and resilient
demand.
"We delivered yet another quarter of strong results as we
continue to successfully navigate near-term headwinds, enabled by
further advancements of our long-term strategy," said Kraft Heinz
CEO and Chair of the Board Miguel Patricio. "Though the environment
remains fluid, we are better able to anticipate dynamic conditions,
adapt to this constantly changing environment, and demonstrate our
resiliency against new challenges. We are anticipating and adapting
to changing market conditions while managing inflation through
pricing realization and gross efficiencies. I am very proud of the
Kraft Heinz team because, despite all of the challenges, employees
across the organization continue to do a tremendous job."
Net Sales
In millions
Net Sales
Organic Net Sales(1)
Growth
June 25, 2022
June 26, 2021
% Chg vs PY
YoY Growth Rate
Price
Volume/Mix
For the Three Months Ended
North America
$
5,039
$
5,202
(3.1)%
9.8%
13.1 pp
(3.3) pp
International
1,515
1,413
7.2%
11.0%
10.3 pp
0.7 pp
Kraft Heinz
$
6,554
$
6,615
(0.9)%
10.1%
12.4 pp
(2.3) pp
For the Six Months Ended
North America
$
9,640
$
10,202
(5.5)%
8.4%
11.2 pp
(2.8) pp
International
2,959
2,807
5.4%
8.8%
9.3 pp
(0.5) pp
Kraft Heinz
$
12,599
$
13,009
(3.2)%
8.5%
10.8 pp
(2.3) pp
Net Income/(Loss) and Diluted
EPS
In millions, except per share
data
For the Three Months
Ended
For the Six Months
Ended
June 25, 2022
June 26, 2021
% Chg vs PY
June 25, 2022
June 26, 2021
% Chg vs PY
Gross profit
$
1,984
$
2,291
(13.4)%
$
3,915
$
4,492
(12.8)%
Operating income/(loss)
542
1,235
(56.2)%
1,657
2,324
(28.7)%
Net income/(loss)
265
(25)
1,136.4%
1,046
543
92.7%
Net income/(loss) attributable to common
shareholders
265
(27)
1,051.7%
1,041
536
94.3%
Diluted EPS
$
0.21
$
(0.02)
1,150.0%
$
0.84
$
0.43
95.3%
Adjusted EPS(1)
0.70
0.78
(10.3)%
1.30
1.50
(13.3)%
Adjusted EBITDA(1)
$
1,520
$
1,706
(10.9)%
$
2,862
$
3,286
(12.9)%
Q2 2022 Financial Summary
- Net sales decreased 0.9 percent versus the year-ago
period to $6.6 billion, including a negative 9.3 percentage point
impact from divestitures net of acquisitions and a negative 1.7
percentage point impact from currency. Organic Net Sales(1)
increased 10.1 percent versus the prior year period. Pricing was up
12.4 percentage points versus the prior year period with growth in
both reportable segments that was primarily driven by price
increases to mitigate rising input costs. Volume/mix declined 2.3
percentage points versus the year-ago period reflecting continued
strong demand in retail and foodservice channels that was offset by
supply constraints and elasticity impacts from pricing actions. On
a segment level, unfavorable volume/mix in the North America
segment more than offset favorable volume/mix in the International
segment.
- Net income/(loss) increased 1,136.4 percent versus the
year-ago period to $265 million primarily driven by lower tax
expenses in the current year period, lower interest expense
primarily due to debt extinguishment costs in the prior year
period, and favorable changes in other expense/(income). These
factors were partially offset by higher non-cash impairment losses
and lower Adjusted EBITDA versus the prior year period. Adjusted
EBITDA(1) decreased 10.9 percent versus the year-ago period to
$1.5 billion with performance including an unfavorable impact from
divestitures of 5.9 percentage points and an unfavorable 1.1
percentage point impact from currency. The remaining year-over-year
decrease in Adjusted EBITDA is a result of higher pricing and
efficiency gains that were offset by higher commodity costs
(primarily in dairy, packaging materials, soybean and vegetable
oils, and meat) and supply chain costs (reflecting inflationary
pressure in procurement, logistics and manufacturing costs), as
well as unfavorable volume/mix. Results continue to reflect the
difference in timing between inflationary pressures and the
mitigating actions we have taken.
- Diluted EPS was $0.21, up 1,150.0 percent versus the
prior year period, driven by the net income/(loss) factors
discussed above. Adjusted EPS(1) was $0.70, down 10.3
percent versus the prior year period, primarily driven by lower
Adjusted EBITDA, including a negative $0.07 impact from
divestitures, and higher taxes on adjusted earnings. These factors
more than offset lower interest expense and favorable changes in
other expense/(income) versus the prior year period.
- Year-to-date net cash provided by operating activities
was $788 million, down 61.2 percent versus the year-ago period,
primarily driven by higher cash tax payments on divestitures in
2022 related to the Cheese Transaction, higher cash outflows for
inventories primarily related to stock rebuilding and increased
input costs, and lower Adjusted EBITDA. These impacts were
partially offset by lower cash outflows for interest primarily due
to prior year reduction of long-term debt, and lower cash outflows
for variable compensation in 2022 compared to 2021. Year-to date
Free Cash Flow(1) was $353 million, down 78.0 percent versus
the comparable prior year period due to the same drivers of net
cash provided by operating activities.
Outlook
The Company continues to expect strong financial performance in
2022. The Company is raising expectations for 2022 Organic Net
Sales(2) to a high-single-digit percentage increase versus the
prior year period, as compared to previous expectations of a
mid-single-digit percentage increase, reflecting strong performance
to date and ongoing business momentum. The Company continues to
expect 2022 Adjusted EBITDA(2) to be in the range of $5.8 billion
to $6.0 billion, with a 45 percent to 55 percent third quarter to
fourth quarter split. This full year Adjusted EBITDA outlook
reflects a 53rd week in 2022, an increase in foreign currency
headwinds based on current exchange rates, the impact of
divestitures versus the prior year, strong Organic Net Sales, as
well as the Company's ongoing efforts to manage inflationary
pressures, including unlocking gross efficiencies, as it continues
to invest in long-term growth.
End Notes
(1)
Organic Net Sales, Adjusted EBITDA,
Adjusted EPS, Constant Currency Adjusted EBITDA, 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)
Full year 2022 guidance for Organic Net
Sales and Adjusted EBITDA 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, and equity award compensation expense, 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 second quarter 2022 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 2021 net
sales of approximately $26 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 six 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 and
Twitter.
Forward-Looking Statements
This press release contains a number of forward-looking
statements. Words such as “adapt,” "advance," “anticipate,”
“believe,” "continue,” “drive,” “expand,” “expect,” “grow,”
“improve,” “invest,” “leverage,” “manage,” "navigate," “plan,”
“reflect,” “transform,” "unlock," “will,” 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, the impacts of COVID-19 and government and consumer
responses; 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, alliances,
divestitures, joint ventures, or other 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
ownership structure; 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 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 future sales of the
Company's common stock in the public market; the Company’s ability
to continue to pay a regular dividend and the amounts of any such
dividends; 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, general economic slowdown, or recession and the Russia
and Ukraine conflict and its regional and global ramifications);
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; risks associated with
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; 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 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”) that are presented in this press
release.
To supplement the financial information provided, the Company
has presented Organic Net Sales, Adjusted EBITDA, Constant Currency
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, Constant Currency 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
commodity hedges, impairment losses, certain non-ordinary course
legal and regulatory matters, and equity award compensation expense
(excluding restructuring activities). The Company also presents
Adjusted EBITDA on a constant currency basis. The Company
calculates the impact of currency on Adjusted EBITDA 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 EBITDA and Constant Currency Adjusted
EBITDA are tools 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.
See the attached schedules for supplemental financial data,
which includes the financial information, the non-GAAP financial
measures and corresponding reconciliations to the comparable GAAP
financial measures for the relevant periods.
Schedule
1
The Kraft Heinz Company
Condensed Consolidated Statements
of Income
(in millions, except per share
data)
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Net sales
$
6,554
$
6,615
$
12,599
$
13,009
Cost of products sold
4,570
4,324
8,684
8,517
Gross profit
1,984
2,291
3,915
4,492
Selling, general and administrative
expenses, excluding impairment losses
812
943
1,639
1,825
Goodwill impairment losses
235
35
224
265
Intangible asset impairment losses
395
78
395
78
Selling, general and administrative
expenses
1,442
1,056
2,258
2,168
Operating income/(loss)
542
1,235
1,657
2,324
Interest expense
234
613
476
1,028
Other expense/(income)
(91)
(23)
(189)
(53)
Income/(loss) before income taxes
399
645
1,370
1,349
Provision for/(benefit from) income
taxes
134
670
324
806
Net income/(loss)
265
(25)
1,046
543
Net income/(loss) attributable to
noncontrolling interest
—
2
5
7
Net income/(loss) attributable to common
shareholders
$
265
$
(27)
$
1,041
$
536
Basic shares outstanding
1,225
1,224
1,225
1,223
Diluted shares outstanding
1,235
1,224
1,235
1,235
Per share data applicable to common
shareholders:
Basic earnings/(loss) per share
$
0.22
$
(0.02)
$
0.85
$
0.44
Diluted earnings/(loss) per share
0.21
(0.02)
0.84
0.43
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 25, 2022
North America
$
5,039
$
(17)
$
—
$
5,056
International
1,515
(91)
59
1,547
Kraft Heinz
$
6,554
$
(108)
$
59
$
6,603
June 26, 2021
North America
$
5,202
$
—
$
597
$
4,605
International
1,413
5
13
1,395
Kraft Heinz
$
6,615
$
5
$
610
$
6,000
Year-over-year growth rates
North America
(3.1)%
(0.3) pp
(12.6) pp
9.8%
13.1 pp
(3.3) pp
International
7.2%
(7.0) pp
3.2 pp
11.0%
10.3 pp
0.7 pp
Kraft Heinz
(0.9)%
(1.7) pp
(9.3) pp
10.1%
12.4 pp
(2.3) pp
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 25, 2022
North America
$
9,640
$
(18)
$
—
$
9,658
International
2,959
(156)
99
3,016
Kraft Heinz
$
12,599
$
(174)
$
99
$
12,674
June 26, 2021
North America
$
10,202
$
—
$
1,289
$
8,913
International
2,807
8
27
2,772
Kraft Heinz
$
13,009
$
8
$
1,316
$
11,685
Year-over-year growth rates
North America
(5.5)%
(0.2) pp
(13.7) pp
8.4%
11.2 pp
(2.8) pp
International
5.4%
(5.9) pp
2.5 pp
8.8%
9.3 pp
(0.5) pp
Kraft Heinz
(3.2)%
(1.5) pp
(10.2) pp
8.5%
10.8 pp
(2.3) pp
Schedule
4
The Kraft Heinz Company
Reconciliation of Net
Income/(Loss) to Adjusted EBITDA
(dollars in millions)
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Net income/(loss)
$
265
$
(25)
$
1,046
$
543
Interest expense
234
613
476
1,028
Other expense/(income)
(91)
(23)
(189)
(53)
Provision for/(benefit from) income
taxes
134
670
324
806
Operating income/(loss)
542
1,235
1,657
2,324
Depreciation and amortization (excluding
restructuring activities)
232
227
449
449
Divestiture-related license income
(13)
—
(27)
—
Restructuring activities
11
19
30
37
Deal costs
—
(1)
8
6
Unrealized losses/(gains) on commodity
hedges
73
(2)
(19)
(39)
Impairment losses
630
113
685
343
Certain non-ordinary course legal and
regulatory matters
—
62
—
62
Equity award compensation expense
(excluding restructuring activities)
45
53
79
104
Adjusted EBITDA
$
1,520
$
1,706
$
2,862
$
3,286
Segment Adjusted EBITDA:
North America
$
1,348
$
1,491
$
2,521
$
2,858
International
248
286
490
569
General corporate expenses
(76)
(71)
(149)
(141)
Adjusted EBITDA
$
1,520
$
1,706
$
2,862
$
3,286
Schedule
5
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 25, 2022
North America
$
1,348
$
(4)
$
1,352
International
248
(15)
263
General corporate expenses
(76)
3
(79)
Kraft Heinz
$
1,520
$
(16)
$
1,536
June 26, 2021
North America
$
1,491
$
—
$
1,491
International
286
2
284
General corporate expenses
(71)
—
(71)
Kraft Heinz
$
1,706
$
2
$
1,704
Year-over-year growth rates
North America
(9.5)%
(0.2) pp
(9.3)%
International
(13.4)%
(5.7) pp
(7.7)%
General corporate expenses
7.2%
(3.1) pp
10.3%
Kraft Heinz
(10.9)%
(1.1) pp
(9.8)%
Schedule
6
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 25, 2022
North America
$
2,521
$
(4)
$
2,525
International
490
(24)
514
General corporate expenses
(149)
4
(153)
Kraft Heinz
$
2,862
$
(24)
$
2,886
June 26, 2021
North America
$
2,858
$
—
$
2,858
International
569
3
566
General corporate expenses
(141)
—
(141)
Kraft Heinz
$
3,286
$
3
$
3,283
Year-over-year growth rates
North America
(11.8)%
(0.2) pp
(11.6)%
International
(13.9)%
(4.7) pp
(9.2)%
General corporate expenses
5.9%
(2.5) pp
8.4%
Kraft Heinz
(12.9)%
(0.8) pp
(12.1)%
Schedule
7
The Kraft Heinz Company
Reconciliation of Diluted EPS to
Adjusted EPS
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 25, 2022
June 26, 2021
June 25, 2022
June 26, 2021
Diluted EPS
$
0.21
$
(0.02)
$
0.84
$
0.43
Restructuring activities(a)
0.01
0.01
0.02
0.02
Unrealized losses/(gains) on commodity
hedges(b)
0.04
—
(0.01)
(0.02)
Impairment losses(c)
0.44
0.07
0.47
0.26
Certain non-ordinary course legal and
regulatory matters(d)
—
0.05
—
0.05
Losses/(gains) on sale of business(e)
—
0.27
—
0.29
Other losses/(gains) related to
acquisitions and divestitures(f)
—
—
(0.02)
—
Nonmonetary currency devaluation(g)
0.01
—
0.01
—
Debt prepayment and extinguishment
costs(h)
(0.01)
0.21
(0.01)
0.28
Certain significant discrete income tax
items(i)
—
0.19
—
0.19
Adjusted EPS
$
0.70
$
0.78
$
1.30
$
1.50
(a)
Gross expenses included in restructuring activities were $11
million ($8 million after-tax) for the three months and $30 million
($22 million after-tax) for the six months ended June 25, 2022 and
$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 were recorded in the following income statement line
items:
•
Cost of products sold included expenses of
$6 million for the three months and $10 million for the six months
ended June 25, 2022 and $1 million for the three months and $4
million for the six months ended June 26, 2021; and
•
SG&A included expenses of $5 million
for the three months and $20 million for the six months ended June
25, 2022 and $18 million for the three months and $33 million for
the six months ended June 26, 2021.
(b)
Gross expenses/(income) included in unrealized losses/(gains) on
commodity hedges were expenses of $73 million ($55 million
after-tax) for the three months and income of $19 million ($14
million after-tax) for the six months ended June 25, 2022 and
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 were recorded in cost of products sold.
(c)
Gross impairment losses included the following:
•
Goodwill impairment losses of $235 million
($235 million after-tax) for the three months and $224 million
($224 million after-tax) for the six months ended June 25, 2022 and
$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, which were recorded in SG&A;
•
Intangible asset impairment losses of $395
million ($303 million after-tax) for the three and six months ended
June 25, 2022 and $78 million ($59 million after-tax) for the three
and six months ended June 26, 2021, which were recorded in
SG&A; and
•
Property, plant and equipment, net asset
impairment losses of $66 million ($50 million after-tax) for the
six months ended June 25, 2022, which were recorded in cost of
products sold.
(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. These expenses related to an accrual in connection with
the previously disclosed SEC investigation.
(e)
Gross expenses/(income) included in losses/(gains) on sale of
business were income of $2 million ($2 million after-tax) for the
three months and $1 million ($1 million after-tax) for the six
months ended June 25, 2022 and expenses of $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 were
recorded in other expense/(income).
(f)
Gross expenses/(income) included in other losses/(gains) related to
acquisitions and divestitures were income of $38 million ($29
million after-tax) for the six months ended June 25, 2022 and were
recorded in other expense/(income).
(g)
Gross expenses included in nonmonetary currency devaluation were $6
million ($6 million after-tax) for the three months and $10 million
($10 million after-tax) for the six months ended June 25, 2022 and
$4 million ($4 million after-tax) for the six months ended June 26,
2021 and were recorded in other expense/(income).
(h)
Gross expenses/(income) included in debt prepayment and
extinguishment costs were income of $9 million ($7 million
after-tax) for the three and six months ended June 25, 2022 and
expenses of $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 were recorded in interest expense.
(i)
Certain significant discrete income tax items were an expense of
$236 million for the three and six months ended June 26, 2021. This
expense related to the revaluation of our deferred tax balances due
to an increase in U.K. tax rates.
Schedule
8
The Kraft Heinz Company
Key Drivers of Change in Adjusted
EPS
(Unaudited)
For the Three Months
Ended
June 25, 2022
June 26, 2021
$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)(b)
$
0.82
$
0.86
$
(0.04)
Results of divested operations
—
0.07
(0.07)
Interest expense
(0.16)
(0.19)
0.03
Other expense/(income)
0.06
0.04
0.02
Effective tax rate
(0.02)
—
(0.02)
Adjusted EPS
$
0.70
$
0.78
$
(0.08)
(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 25, 2022 and June 26, 2021.
(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 June 25,
2022.
Schedule
9
The Kraft Heinz Company
Key Drivers of Change in Adjusted
EPS
(Unaudited)
For the Six Months
Ended
June 25, 2022
June 26, 2021
$ Change
Key drivers of change in Adjusted EPS:
Results of operations(a)(b)
$
1.57
$
1.67
$
(0.10)
Results of divested operations
—
0.15
(0.15)
Interest expense
(0.32)
(0.40)
0.08
Other expense/(income)
0.10
0.08
0.02
Effective tax rate
(0.05)
—
(0.05)
Adjusted EPS
$
1.30
$
1.50
$
(0.20)
(a)
Includes non-cash amortization of
definite-lived intangible assets, which accounted for a negative
impact to Adjusted EPS from results of operations of $0.09 for the
six months ended June 25, 2022 and $0.08 for the six months ended
June 26, 2021.
(b)
Includes divestiture-related license
income, which accounted for a benefit to Adjusted EPS from results
of operations of $0.02 for the six months ended June 25, 2022.
Schedule
10
The Kraft Heinz Company
Condensed Consolidated Balance
Sheets
(in millions, except per share
data)
(Unaudited)
June 25, 2022
December 25, 2021
ASSETS
Cash and cash equivalents
$
1,518
$
3,445
Trade receivables, net
2,145
1,957
Inventories
3,433
2,729
Prepaid expenses
191
136
Other current assets
760
716
Assets held for sale
91
11
Total current assets
8,138
8,994
Property, plant and equipment, net
6,568
6,806
Goodwill
31,176
31,296
Intangible assets, net
42,960
43,542
Other non-current assets
2,834
2,756
TOTAL ASSETS
$
91,676
$
93,394
LIABILITIES AND EQUITY
Commercial paper and other short-term
debt
$
47
$
14
Current portion of long-term debt
1,147
740
Trade payables
4,778
4,753
Accrued marketing
892
804
Interest payable
265
268
Other current liabilities
1,990
2,485
Total current liabilities
9,119
9,064
Long-term debt
19,724
21,061
Deferred income taxes
10,465
10,536
Accrued postemployment costs
203
205
Long-term deferred income
1,505
1,534
Other non-current liabilities
1,658
1,542
TOTAL LIABILITIES
42,674
43,942
Redeemable noncontrolling interest
40
4
Equity:
Common stock, $0.01 par value
12
12
Additional paid-in capital
52,520
53,379
Retained earnings/(deficit)
(640)
(1,682)
Accumulated other comprehensive
income/(losses)
(2,410)
(1,824)
Treasury stock, at cost
(686)
(587)
Total shareholders' equity
48,796
49,298
Noncontrolling interest
166
150
TOTAL EQUITY
48,962
49,448
TOTAL LIABILITIES AND EQUITY
$
91,676
$
93,394
Schedule
11
The Kraft Heinz Company
Condensed Consolidated Statements
of Cash Flow
(in millions)
(Unaudited)
For the Six Months
Ended
June 25, 2022
June 26, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)
$
1,046
$
543
Adjustments to reconcile net income/(loss)
to operating cash flows:
Depreciation and amortization
456
449
Amortization of postemployment benefit
plans prior service costs/(credits)
(7)
(3)
Divestiture-related license income
(27)
—
Equity award compensation expense
79
104
Deferred income tax
provision/(benefit)
(107)
(114)
Postemployment benefit plan
contributions
(11)
(14)
Goodwill and intangible asset impairment
losses
619
343
Nonmonetary currency devaluation
10
4
Loss/(gain) on sale of business
(1)
65
Other items, net
(86)
278
Changes in current assets and
liabilities:
Trade receivables
(222)
62
Inventories
(768)
(227)
Accounts payable
202
220
Other current assets
(70)
(67)
Other current liabilities
(325)
386
Net cash provided by/(used for) operating
activities
788
2,029
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures
(435)
(431)
Payments to acquire business, net of cash
acquired
(481)
—
Proceeds from sale of business, net of
cash disposed and working capital adjustments
(20)
3,435
Other investing activities, net
15
23
Net cash provided by/(used for) investing
activities
(921)
3,027
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt
(660)
(3,090)
Debt prepayment and extinguishment
costs
(16)
(433)
Dividends paid
(980)
(979)
Other financing activities, net
(66)
(53)
Net cash provided by/(used for) financing
activities
(1,722)
(4,555)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(72)
23
Cash, cash equivalents, and restricted
cash
Net increase/(decrease)
(1,927)
524
Balance at beginning of period
3,446
3,418
Balance at end of period
$
1,519
$
3,942
Schedule
12
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 25, 2022
June 26, 2021
Net cash provided by/(used for) operating
activities
$
788
$
2,029
Capital expenditures
(435)
(431)
Free Cash Flow
$
353
$
1,598
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220727005235/en/
Alex Abraham (media) Alex.Abraham@kraftheinz.com
Anne-Marie Megela (investors) ir@kraftheinz.com
Kraft Heinz (NASDAQ:KHC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Kraft Heinz (NASDAQ:KHC)
Historical Stock Chart
From Apr 2023 to Apr 2024