The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q2 2022 Earnings Presentation
56 slides from The Kraft Heinz's earnings presentation, Jul 27, 2022
Slide 1: Q2 2022 Business Update
Q2 2022 BUSINESS UPDATE JULY 27, 2022
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS JULY 27, 2022 This presentation contains a number of forward-looking statements. Words such as “accelerate,” “adapt,” “advance,” “allow,” “anticipate,” “believe,” “deliver,” ”enable,” “execute,” “expand,” “expect,” “grow,” “improve,” “invest,” “maintain,” “manage,” “mini
Slide 3: Business Update
Q2 2022 BUSINESS UPDATE Miguel Patricio Chief Executive Officer
Slide 4: Delivered Another Quarter of Strong Results
4 Delivered While Enabled by Another Successfully Continuing Quarter of Navigating a Advancement Strong Results Dynamic of Long-term Environment Strategy Q2 2022 Business Update
Slide 5: Delivered Another Quarter of Strong Results
5 Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q2 2022 Business Update
Slide 6: Delivered Strong Q2 Results
6 Delivered Strong Q2 Results Q2 Organic Net Sales1 Q2 Adjusted EBITDA1 Pricing and efficiencies closing inflation gap All three strategic pillars of growth fueled topline (1.7%) momentum +10.1% $1.5B CAGR vs. Q2 20192 vs. Q2 2021 Q2 2022 +1.9% CAGR vs. Q2 20192 +5.2% on Ongoing Business3 CAGR vs. Q
Slide 7: Three Pillars of Growth Fueling Organic Net Sales Growth
7 Delivered Strong Q2 Results Three Pillars of Growth Fueling Organic Net Sales1 Growth GROW Platforms Foodservice Emerging in Retail Markets 1| Non-GAAP financial measure. See Appendix to this presentation for more information, including GAAP to non-GAAP reconciliations. Q2 2022 Business Update
Slide 8: Delivered Strong Results: GROW Platforms
8 Delivered Strong Results: GROW Platforms Resilient and Elevated Growth versus Pre-Pandemic Period Majority of U.S. Business in GROW is gaining market share 3% GROW 8% 64% North America Zone CAGR(2) ENERGIZE Organic Net Sales 1 vs Q2 2019 4 13% CAGR(2) vs Q2 2019 4 +5.1% STABILIZE CAGR (2)(3) 23% 4
Slide 9: GROW Platforms: Improving Consumption and Share Recovery in the U.S.
9 Delivered Strong Results: GROW Platforms Improving Consumption and Share Recovery In The U.S. North America Organic Net Sales1 U.S. Retail Consumption2 U.S. Market Share2 13.1pp Q4 2021 Q1 2022 Q2 2022 6.9% 20% 16% 9.2pp 37% (0.1pp) 3.7pp 2.9% (0.4pp) (0.7pp) (0.5pp) (2.4pp) (0.6pp) (3.3pp) (0.7pp
Slide 10: Delivered Strong Results: Foodservice
10 Delivered Strong Results: Foodservice Foodservice Growing and Gaining Market Share, Contributing to Organic Net Sales1 Growth Foodservice Q2 2022 Growth2 Strategic Channel with ongoing distribution opportunities North Platform for Innovation America testing and driving trial for Taste +22% +9pp E
Slide 11: Delivered Strong Results: Emerging Markets
11 Delivered Strong Results: Emerging Markets Emerging Markets Growing Through Sustainable and Repeatable Go-to-Market Model Organic Net Sales1 Growth Aggressive Investment in Q2 2022 vs Q2 2021 Go-To-Market Expansion 11% International Zone Emerging Markets leveraging Go-To- Market Model: 16% Emergi
Slide 12: Navigating a Dynamic Environment
12 Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q2 2022 Business Update
Slide 13: Navigating Dynamic Environment: Anticipate and Adapt
13 Navigating Dynamic Environment Demonstrated Ability to Anticipate and Adapt Insert Icon Insert / image image Consumer Supply Chain Consumer Solutions Solutions Solutions Q2 2022 Business Update
Slide 14: Navigating Through Supply Chain Solutions
14 Navigating Dynamic Environment Through Supply Chain Solutions Our Evolving Supply Chain Allows Us to Adapt to Constantly Changing Conditions and Prepare for What’s to Come Improving Service and Unlocking Efficiencies Improved Production Better Service Delivering Efficiency Plan Quarterly Producti
Slide 15: Navigating Through Consumer Solutions: Lower Private Label Exposure
15 Navigating Dynamic Environment Through Consumer Solutions We are not Immune to Trade-downs, but are Insulated Given our Broad Portfolio and Consumer Base Balanced Portfolio with Lower Private Label Exposure YTD Share by Income Level1 Lower Private Label Exposure2 20% 20% 17% 2 11% Total Food & Be
Slide 16: Consumer Solutions: Providing Additional Value as Inflation Persists
16 Navigating Dynamic Environment Through Consumer Solutions Uniquely Positioned to Provide Consumers Additional Value as Inflation Persists WIN WIN WIN Consumer Solutions Product Assortment & Innovation/ Promotions Renovation Channel Mix Omni-Channel Optimization Communication Q2 2022 Business Upda
Slide 17: Consumer Solutions: Assortment & Promotions
17 Navigating Dynamic Environment Through Consumer Solutions Uniquely Positioned to Provide Consumers Additional Value as Inflation Persists Assortment & Promotions Q2 2022 Business Update
Slide 18: Consumer Solutions: Omni-Channel Communication
18 Navigating Dynamic Environment Through Consumer Solutions Uniquely Positioned to Provide Consumers Additional Value as Inflation Persists Omni-Channel Communication eCommerce Retail Sales Growth 18% vs Q2 2021 Q2 2022 Business Update
Slide 19: Consumer Solutions: Channel Mix Optimization
19 Navigating Dynamic Environment Through Consumer Solutions Uniquely Positioned to Provide Consumers Additional Value as Inflation Persists Channel Mix Optimization Price Pack Architecture Share Gains in Club and Dollar Q2 2022 Business Update
Slide 20: Consumer Solutions: Product Innovation/Renovation
20 Navigating Dynamic Environment Through Consumer Solutions Uniquely Positioned to Provide Consumers Additional Value as Inflation Persists Product Innovation/Renovation Capri Sun Lower Sugar Reformulation Improved Nutritional Profile Reducing Sugar by an average 40% per serving Adding Natural Monk
Slide 21: Advancing Long-term Strategy
21 Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q2 2022 Business Update
Slide 22: Advancing Long Term Strategy: Cutting-Edge Marketing
22 Advancing Long Term Strategy Culture of Creativity and Agile Execution Continuing to be Recognized Cutting-Edge Marketing Process Proprietary First A.I.-Enabled In-House Party Data Insights Creative Agency Driving social activity On track to executing of 16 brands in our portfolio including Heinz
Slide 23: Advancing Long Term Strategy: Acquisitions and Partnerships
23 Advancing Long Term Strategy Our Scale Enables Us to Unlock Value of Acquisitions and Partnerships Proven Track Record of Success Improving Long-Term Trajectory… ~2X Net sales since Expanding Heinz Volume Footprint acquisition1 Growth in Turkey Q2 ‘22 vs Q2 ‘19 59% vs Q2 ‘21 Expanding Capabilitie
Slide 24: Financial Performance and Outlook
Q2 2022 FINANCIAL PERFORMANCE AND OUTLOOK Andre Maciel Global CFO
Slide 25: Total Kraft Heinz: Organic Net Sales Growth
25 Total Kraft Heinz All Three Pillars of Growth Driving Organic Net Sales1 ORGANIC NET SALES1 GROWTH Q2 2022 VS Q2 2021 Organic Net Sales1 Growth Across Consumer Platforms 12.4pp 10.1% Foodservice Strength Across Markets -2.3pp -0.9% -1.7pp Emerging Markets Growing -9.3pp Double-Digits Accelerating
Slide 26: Total Kraft Heinz: Adjusted EBITDA
26 Total Kraft Heinz Pricing Power and Strong Efficiency Gains Mitigating Inflationary Pressure Adjusted EBITDA1 Q2 2022 vs Q2 2021 (in millions) + - $1,706 - - - + + - $1,520 1 1 1| Non-GAAP financial measure. See Appendix to this presentation for more information, including GAAP to non-GAAP reconc
Slide 27: Total Kraft Heinz: Gross Margin, Adjusted EPS, Free Cash Flow
27 Total Kraft Heinz Pricing and Efficiencies Protecting Margin Dollars Gross Margin % Adjusted EPS1 YTD Free Cash Flow1 Conversion 36.9% $0.80 34.6% $0.78 $0.78 32.5% 115% 30.3% $0.70 86% 50% 22% Q2 '19 Q2 '20 Q2 '21 Q2 '22 Q2 '19 Q2 '20 Q2 '21 Q2 '22 Q2 '19 Q2 '20 Q2 '21 Q2 '22 vs Q2 2021 vs Q2 20
Slide 28: Total Kraft Heinz: Pricing to Protect Adjusted EBITDA Dollars
28 Total Kraft Heinz Pricing to Protect Managing Price Gaps for the Long Term Adjusted EBITDA1 Dollars U.S. Only % of Category Private Label Total KHC Sales 2 Exposure 2 * Kraft Mac & Cheese Q2 Price Realization * Ready to Drink Juices (in Organic Net Sales1) Mayonnaise +12% Price Gap Less * Frozen
Slide 29: Total Kraft Heinz: Mitigating Inflationary Pressures
29 Total Kraft Heinz Mitigating Inflationary Pressures Reduced Commodity Exposure, On Track to Advantaged Position in H2 Deliver Efficiency Plan ~70% % Costs of Goods Sold % Costs of Goods Sold (FY 20191) (FY 2021 Ongoing Business) $2 $2B 6% 10% of 15% 39% 15% 33% 2H22 COGS 2022E >$1.2B 12% >$0.4B 1
Slide 30: Financial Flexibility Continues to Improve
30 Total Kraft Heinz Financial Flexibility Continues to Improve Net Leverage1 Capital Allocation Priorities 4.7x Impact from LTM divested Adjusted EBITDA2 Invest for Profitable Growth 4.2x 0.2x Ongoing commitment to current 3.1x 3.3x dividend Maintain Net Leverage to Increase Flexibility, Optionalit
Slide 31: 2022 Outlook
31 Total Kraft Heinz 2022 Outlook Reflects Strong Organic Net Sales1 Growth and Efficiencies Offsetting Inflation Net Sales Adjusted EBITDA1 High Single-Digit Organic Net Sales1 Growth Between $5.8B to $6.0B, including 53rd week • Foodservice channel share gains • Protect margin dollars from inflati
Slide 32: Closing Commentary
CLOSING COMMENTARY Miguel Patricio Chief Executive Officer
Slide 33: Delivered Another Quarter of Strong Results
33 Delivered Another Successfully Enabled by Quarter of Continuing Navigating a Strong Results Advancement Dynamic Environment of Long-term Strategy Q2 2022 Business Update
Slide 34: Appendix
APPENDIX 34 APPENDIX Q2 2022 Business Update
Slide 35: Non-GAAP Financial Measures
35 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 financ
Slide 36: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 36 Q2 2022 Business Update
Slide 37: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 37 Q2 2022 Business Update
Slide 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 38 Q2 2022 Business Update
Slide 39: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 39 Q2 2022 Business Update
Slide 40: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 40 Q2 2022 Business Update
Slide 41: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 41 Q2 2022 Business Update
Slide 42: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 42 Q2 2022 Business Update
Slide 43: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 43 Q2 2022 Business Update
Slide 44: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 44 Q2 2022 Business Update
Slide 45: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 45 Q2 2022 Business Update
Slide 46: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 46 Q2 2022 Business Update
Slide 47: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 47 Q2 2022 Business Update
Slide 48: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 48 Q2 2022 Business Update
Slide 49: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 49 Q2 2022 Business Update
Slide 50: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 50 Q2 2022 Business Update
Slide 51: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 51 Q2 2022 Business Update
Slide 52: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 52 Q2 2022 Business Update
Slide 53: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 53 Q2 2022 Business Update
Slide 54: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 54 Q2 2022 Business Update
Slide 55: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 55 Q2 2022 Business Update
Slide 56: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 56 Q2 2022 Business Update
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