The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q4 2023 Earnings Presentation
28 slides from The Kraft Heinz's earnings presentation, Feb 14, 2024
Slide 1: Q4 2023 Business Update
Q4 2023 BUSINESS UPDATE FEBRUARY 14, 2024
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS February 14, 2024 This presentation contains a number of forward-looking statements as defined under U.S. federal securities laws, including, but not limited to, statements, estimates, and projections relating to our business and long-term strategy; our ambitions, goals, t
Slide 3: Business Update
Q4 2023 BUSINESS UPDATE Carlos Abrams- Rivera Chief Executive Officer
Slide 4: Key Takeaways
1 Delivered results above our Long-Term Algorithm Unlocked nearly $700M in gross efficiencies, driving 2 2023 gross margin expansion and enabling reinvestment Key Takeaways Strengthened balance sheet, ending 2023 at target Net 3 Leverage1 of ~3.0x Well positioned for 2024, expecting continued growth
Slide 5: Generated Accelerated Profitable Growth in 2023
Generated Accelerated Profitable Growth in 2023… FY 23 Results vs FY ‘22 Organic Net Constant Currency Adjusted Sales1 Adjusted EBITDA1,2 EPS1 9.6% 8.1% 2.4pp 2.1pp 3.4% 7.2% 6.0% Q4 2023 Impact from 53rd week in 2022 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Infor
Slide 6: Rightsizing Investments in the Business for Future Growth
While Rightsizing Investments in the Business for Future Growth … Increased FY investments in SG&A and CapEx by +$424 million vs PY SG&A Capital Expenditures Driven by Marketing, Technology, Driven by Technology and and Research & Development Maintenance 1 FY Spend FY Spend +$327M vs 2022 +$97M vs 2
Slide 7: Providing Shareholders with Higher Returns: Total Shareholder Return
And Providing Shareholders with Higher Returns. 1-Year 3-Year 20% Total Shareholder 8% Return 1 (5%) (13%) Peer Group Kraft Heinz Peer Group Kraft Heinz Q4 2023 Business Update 1| Peer set includes CPB, CAG, GIS, HRL, HSY, K, KDP, KO, MDLZ, MKC, PEP, SJM, and TSN; Average TSR for peer group is calcu
Slide 8: All Three Pillars contributed to 2023 Organic Net Sales Growth
All Three Pillars contributed to 2023 Organic Net Sales Growth GROW Platforms in Foodservice Emerging Markets U.S. Retail Global International Zone North America Zone Organic Net Sales1 Organic Net Sales1,2 Organic Net Sales1 ~+7% ~+14% +12% +14% (2%) +2% vs Q4 2022 vs FY 2022 vs Q4 2022 vs FY 2022
Slide 9: Foodservice Growing Faster than the Industry
Foodservice Growing Faster than the Industry, with 2024 Expected to be on Algorithm Foodservice Q4 2023 Growth1 vs PY 10% 0% Total KHC Industry 2 KHC Industry 2 KHC (U.S. only) North America (Dev Mkts. only) International Q4 2023 1| Based on internal sales data, which holds the impact of currency co
Slide 10: Emerging Markets Grew Double Digits, Driven by Volume/Mix
Emerging Markets Grew Double Digits, Driven by Volume/Mix Q4 2023 Organic Net Sales1 vs PY ▪ Emerging Markets growth in Q4 was driven primarily by +8.0% volume/mix International Zone +7.1% ▪ Exited 2023 with ~90% of Emerging Markets leveraging the Go-To-Market Model3 Emerging Markets2 +12.3% ▪ Expec
Slide 11: North America Dynamics
North America Dynamics What Worked Well Performance Headwinds • Action plans drove share recovery and • A more challenging industry than sequential volume improvement anticipated, particularly driven by the reduction in SNAP benefits • Within U.S. GROW Platforms, Q4 Organic Net Sales1 grew in Taste
Slide 12: Share Trend Improvement Throughout 2023
Share Trend Improvement Throughout 2023 2023 U.S. Dollar Share1 vs PY U.S. Retail Taste Elevation and Easy Meals 0.4pp 0.3pp 0.2pp 0.1pp 0.0pp 0.0pp (0.1pp) (0.2pp) (0.3pp) (0.4pp) (0.5pp) (0.6pp) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Pricing SNAP Student Loan Action Reduction Repayment Su
Slide 13: Share and Volume Trends Improved as Action Plans Implemented
Share and Volume Trends Improved as Action Plans Implemented Increased Joint Business 4 4Supply Marketing Innovation Plan Execution Recovery Investment Increased Shelf Space Focused on Priority Ramped up Solved Remaining and Merchandising GROW Platforms Throughout 2023 Supply Constraints +1.5pp +15%
Slide 14: Investing in Marketing and R&D to Drive Future Growth
Investing in Marketing and R&D to Drive Future Growth Marketing R&D Launched First Ever Global Heinz Campaign Expanded Plant-Based offering with NotCo GOLD BRONZE 3X 13X 5X 83X SILVER SHORTLISTS Q4 2023 Most Awarded Food Company at Cannes Lions Launched 360CRISPTM Platform Business Update 14
Slide 15: Culture has Become a Competitive Advantage
Culture has Become a Competitive Advantage Driven by Investments in our People Highest Employee Engagement1 Receiving External Recognition Highest score since 2017, when we began measuring for Kraft Heinz Above external benchmark2 for overall engagement # of Countries Certified by Great Place to Wor
Slide 16: Financial Performance and Outlook
Q4 2023 FINANCIAL PERFORMANCE AND OUTLOOK Andre Maciel Global Chief Financial Officer
Slide 17: Organic Net Sales declined 0.7% in the Fourth Quarter
Organic Net Sales declined 0.7% in the Fourth Quarter Kraft Heinz North America International Q4 vs ‘22 Q4 vs ‘22 Q4 vs ‘22 Organic Net Sales 1 (0.7%) (3.0%) +7.1% Price 3.7pp 2.5pp 7.7pp Vol/Mix (4.4pp) (5.5pp) (0.6pp) Kraft Heinz North America International • Sequential improvement • Trade timing,
Slide 18: North America Results Impacted by Trade Timing, Inventory De-load and SNAP
North America Results Impacted by Trade Timing, Inventory De-load and SNAP Headwind North America U.S. Retail GROW Platforms Q4 2023 vs PY Q4 2023 vs PY Organic U.S. Retail U.S. Retail Organic U.S. Retail U.S. Retail Net Sales1 Consumption2 Consumption Net Sales1 Consumption2 Consumption Excluding S
Slide 19: Strong Adjusted EBITDA Margin Generation
Strong Adjusted EBITDA Margin Generation Kraft Heinz North America International Q4 vs ‘22 Q4 vs ‘22 Q4 vs ‘22 • Adjusted EBITDA1 impacted by a 53rd week in the prior Adjusted EBITDA 1 (5.3%) (3.5%) +2.0% year (7.0pp) Currency (0.3pp) 0.0pp (1.4pp) Constant Currency • Experienced non-recurring Adjus
Slide 20: Efficiencies, Rational Promotions and Moderating Inflation Contributing to Expanded Margins
Efficiencies, Rational Promotions and Moderating Inflation Contributing to Expanded Margins Supply Chain Efficiencies Inflation Promotions Adjusted Gross Profit Margin1 On track to reach goal Inflation continues Environment Year-over-Year of $2.5B by 2027 to moderate remains rational expansion 750 +
Slide 21: Full Year Adjusted EPS Driven by Strong Adjusted EBITDA Growth
Full Year Adjusted EPS Driven by Strong Adjusted EBITDA1 Growth Q4 Adjusted EPS1 FY23 Adjusted EPS1 Decline driven primarily by 53rd week in 2022 Increase driven primarily by and higher effective tax rate in 2023 results of operations $0.85 $0.78 $2.98 $2.78 (8.2%) +7.2% $0.79 $2.72 Q4 '22 Q4 '23 FY
Slide 22: Strengthened Balance Sheet while Continuing to Invest in the Business
Strengthened Balance Sheet while Continuing to Invest in the Business Free Cash Flow Conversion1 Capital Expenditures ($M) Net Leverage1 Improvement driven by Inventory, with Increased investments in CapEx by Ended 2023 at targeted leverage of ~3.0x, working capital back to 2019 levels +$97M to 3.8%
Slide 23: Prioritizing Shareholder Returns through Disciplined Capital Deployment
Prioritizing Shareholder Returns through Disciplined Capital Deployment Capital Allocation Strategy 4 Return Maintain Invest in Actively Incremental Net Leverage1 Organic Manage Capital to Target of Growth Portfolio Stockholders ~3.0x Dividends $1,965M • Competitive Annual Dividend • ~4% Dividend Yi
Slide 24: Expect Operating Environment to Remain Dynamic in 2024
Expect Operating Environment to Remain Dynamic in 2024 2024 Anticipated Industry Change in Profitability Metric Dynamics for Outlook • Moderating, but still inflationary, input • We will now be providing guidance for costs Adjusted Operating Income1 (vs prior Adjusted EBITDA1) • Consumer remains pre
Slide 25: Outlook Reflects Continued Growth in 2024 Across Key Metrics
Outlook Reflects Continued Growth in 2024 Across Key Metrics 2024 FYE Outlook 2024 Considerations • Positive contribution from price throughout the year Organic Net Sales1 +0-2% • Volume inflection to positive growth expected in H2 • Expect performance in Q1 2024 to be a similar profile to Q4 2023,
Slide 26: Closing Commentary
CLOSING COMMENTARY Carlos Abrams-Rivera Chief Executive Officer
Slide 27: Key Takeaways
1 Delivered results above our Long-Term Algorithm Unlocked nearly $700M in gross efficiencies, driving 2 2023 gross margin expansion and enabling reinvestment Key Takeaways Strengthened balance sheet, ending 2023 at target Net 3 Leverage1 of ~3.0x Well positioned for 2024, expecting continued growth
Slide 28: Meet members of the KHC team
See You at CAGNY … and create the CAGNY 2024 Meet members of the KHC team Sauce of the Year! Carlos Abrams-Rivera Andre Maciel Diana Frost Cory Onell Pedro Navio CEO EVP & Global CFO Global Chief EVP & Chief Omnichannel EVP & President, Growth Officer Sales & Asia Emerging North America Markets Offi
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