The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q2 2021 Earnings Presentation
50 slides from The Kraft Heinz's earnings presentation, Aug 4, 2021
Slide 1: Q2 2021 Business Update
Q2 2021 BUSINESS UPDATE AUGUST 4, 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Q2 2021 BUSINESS UPDATE 2 This presentation contains a number of forward-looking statements. Words such as “plan,” "believe," "anticipate," "reflect," "invest," "see," "make," "expect," "deliver," "drive," “improve,” “intend,” "assess," "remain," "evaluate," “establish,” “
Slide 3: Q2 2021 Business Update
Q2 2021 4, AUGUST BUSINESS 2021 UPDATE Q2 2021 BUSINESS UPDATE
Slide 4: Building power of scale + agility
Q2 2021 BUSINESS UPDATE 4 Building power of Delivering sustainable top-line and bottom- SCALE + AGILITY 1 line gains versus pre-pandemic levels in the face of broad-based industry Driving our transformation while headwinds 2 maintaining industry-leading profitability Strengthening portfolio and impr
Slide 5: Delivering sustainable top-line and bottom-line gains versus pre-pandemic levels
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 5 McCafé exit McCafé exit Q2 2021 Delivering Q2 2021 (pp impact) Constant Currency (pp impact) Canada sustainable Organic Net Sales1 Adjusted EBITDA1 Natural Cheese Divestiture top-line and (pp impact) bottom-line +2.3pp +1.3pp gains versus vs. +1.5pp 5.5% p
Slide 6: Driving robust mix improvement from strong 2-year performance in priority spaces
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 6 Driving robust mix Taste Emerging ↑ Grow1 improvement Elevation Markets from strong 2-year performance in priority spaces +11% +13% +16% Q2 Q2 Q2 Organic Net Sales Net Sales Net Sales2 vs. 20193 vs. 20193 vs. 20193 1| Grow businesses include the Taste Elev
Slide 7: Modernizing consumer connections through greater, more creative marketing
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 7 Modernizing Receiving external recognition consumer for recent campaigns connections through 6 greater, more Awards Won creative Increasing marketing support marketing Launching new, creative breakthrough initiatives +10% Marketing Spend 1H 2021 vs. 2019 1
Slide 8: On track to achieve $400M of gross efficiencies in 2021
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 8 On track to achieve Cumulative % of $400M Source Efficiency Focus Gross Efficiencies Realized Through 1H 2021 of gross eAuction efficiencies in 2021 Procurement Global Sourcing ~50% Design to Value Waste Reduction Manufacturing Project Acceleration ~80% SK
Slide 9: Managing inflation while maintaining industry-leading profitability
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 9 Managing inflation Gross Cost Inflation while %COGS vs. 2020 • Actively managing promotional maintaining depth and frequency versus industry- initial plans leading Mid-Single- profitability Digit % • Protecting dollar profitability Mid-Single- Digit % from
Slide 10: Deploying capital to fuel future growth
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 10 Deploying capital to Adding capacity in priority platforms and geographies fuel future $ growth Increasing Capital Expenditures +30% FY 2021 vs. 20191 Priority Emerging Markets Fuel Our Growth 1| The Company views comparison to the 2019 period to be more
Slide 11: Strengthening portfolio, improving financial flexibility, accelerating transformation
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 11 Strengthening portfolio, improving financial Divestitures Acquisitions flexibility, accelerating Nuts transformation United States1 Istanbul, Turkey Natural Cheese United States1 Fuel Our Growth 1| Nuts and Natural Cheese divestitures also include approxi
Slide 12: Business Highlights
Q2 2021 BUSINESS UPDATE 12 BUSINESS HIGHLIGHTS
Slide 13: United States: delivering strong, profitable growth
UNITED STATES Q2 2021 BUSINESS UPDATE 13 McCafé exit McCafé exit Q2 2021 Delivering Q2 2021 (pp impact) Constant Currency (pp impact) strong, Organic Net Sales1 Adjusted EBITDA1 profitable growth +1.4pp 9.3% vs. 2019 as vs. +1.6pp strategy 20192 5.4% continues to take hold McCafé exit McCafé exit (p
Slide 14: Restoring retail activations to win key holidays and consumer occasions
UNITED STATES Q2 2021 BUSINESS UPDATE 14 Restoring retail Focused on need states where we can leverage our scale activations to and insights for differentiated consumer solutions win key holidays and Omnichannel consumer Activations occasions… Leveraging Scale of Our Consumer Platforms High ROI Init
Slide 15: ...while managing inflation through revenue management initiatives
UNITED STATES Q2 2021 BUSINESS UPDATE 15 …while Brand strength, improved agility enabling cost management managing inflation through U.S. Pricing, 1H 2021 Optimizing frequency and depth broad-based of promotion while revenue 1.4pp restoring key retail activations management initiatives Announced bro
Slide 16: Ramping up equity-driven investment agenda
UNITED STATES Q2 2021 BUSINESS UPDATE 16 Renovating portfolio via product, Innovating to better meet Ramping up packaging, and brand repositioning consumer needs equity-driven investment agenda Supported by increased quantity and quality of marketing Marketing Digital Spend Mix +12% ~70% ~55% Consum
Slide 17: Building good momentum through impactful investments in priority brands
UNITED STATES Q2 2021 BUSINESS UPDATE 17 Q2 Household Building good Penetration momentum Growth1 through impactful investments 2.6% % of U.S. Business Gaining Share3 in priority brands vs. 2019 2 58% 46% 41% Q2 Repeat Growth1 Q2 2019 Q1 2021 Q2 2021 8.3% 2 vs. 2019 1| Shows household penetration and
Slide 18: International: delivering strong gains vs. 2019
INTERNATIONAL Q2 2021 BUSINESS UPDATE 18 Q2 2021 Delivering Q2 2021 Constant Currency strong gains Organic Net Sales1 Adjusted EBITDA1 vs. 2019 as investments in long-term vs. 6.1% growth begin 20192 4.0% to ramp 0.4% vs. 2020 (3.4%) 1| Non-GAAP financial measure. See Appendix to this presentation f
Slide 19: Strong growth, gaining share in priority platform and geographies
INTERNATIONAL Q2 2021 BUSINESS UPDATE 19 Strong growth, TASTE ELEVATION EMERGING MARKETS gaining share in Q2 Net Sales Q2 Market Q2 Organic Q2 Market our priority Share Change1 Net Sales2 Share Change1 platform and 16% 16% geographies +2.0pp +0.3pp vs. 2019 3 vs. 2019 3 vs. 2019 3 vs. 2019 3 Countri
Slide 20: Focus on distribution gains in Emerging Markets to grow Taste Elevation
INTERNATIONAL Q2 2021 BUSINESS UPDATE 20 Focus on Beginning to capture whitespace opportunity in Russia distribution gains in Emerging Optimize +4pp merchandiser Merchandiser Markets to allocation Coverage1 vs. PY grow Taste Elevation +19% 1H 2021 net sales Improve distributor +25% vs. 20194 profita
Slide 21: Financial Performance & Outlook
Q2 2021 BUSINESS UPDATE 21 FINANCIAL PERFORMANCE & OUTLOOK
Slide 22: United States: retaining sustainable gains versus 2019
UNITED STATES Q2 2021 BUSINESS UPDATE 22 McCafé exit Organic Net Sales1 Q2 vs. 2020| Highlights Retaining (pp impact) sustainable +1.6pp Price: 1.3pp • Organic Net Sales decrease due to: gains 5.4% Vol/Mix: (4.0)pp - Lapping exceptional COVID-19-related retail demand in prior year period versus 2019
Slide 23: Canada: delivering performance in line with expectations
CANADA Q2 2021 BUSINESS UPDATE 23 McCafé exit Organic Net Sales1 Q2 vs. 2020| Highlights Delivering (pp impact) performance • Lower Organic Net Sales due to: in line with +4.3pp Price: 1.9pp - Retail consumption compared to strong prior year COVID-19-related demand expectations Vol/Mix: (5.5)pp - On
Slide 24: International: building on 2020 gains as investments begin to increase
INTERNATIONAL Q2 2021 BUSINESS UPDATE 24 Organic Net Sales1 Q2 vs. 2020| Highlights Building on 2020 gains as • Organic Net Sales growth driven by: investments in + Pricing growth across markets long-term 6.1% Price: 1.9pp Vol/Mix: (1.5)pp + Emerging market growth - Extraordinary COVID-19-related re
Slide 25: Delivering sustainable top-line and bottom-line gains versus pre-pandemic levels
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 25 McCafé exit McCafé exit Q2 2021 Delivering Q2 2021 (pp impact) Constant Currency (pp impact) Canada sustainable Organic Net Sales1 Adjusted EBITDA1 Natural Cheese divestiture top-line and (pp impact) bottom-line +2.3pp +1.3pp gains versus vs. +1.5pp 5.5%
Slide 26: Sustaining strong bottom-line and cash flow performance
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 26 Sustaining strong Free Cash Flow1 Adjusted EPS1 (in millions) bottom-line and cash flow performance $1,958 $0.80 $0.78 $1,598 $877 2 Q2 2020 Q2 2021 H1 2019 H1 2020 H1 2021 1| Non-GAAP financial measure. See Appendix to this presentation for more informat
Slide 27: Sharpening our focus and improving our mix through Agile Portfolio Management
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 27 Sharpening our Nuts Natural Cheese Closed Q2 2021 Expected to close H2 20217 focus and improving our Annualized Impact ~($1.1B) Expected Annualized Impact Net Sales1 mix through ~51% Impact FY21; ~49% 1H 2022 Net Sales1 ~($1.8B) Agile Portfolio Adjusted E
Slide 28: Improving financial flexibility to enable reinvestment and accelerate our strategy
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 28 Improving financial flexibility to Kraft Heinz Net Leverage1 enable • Reducing net leverage without reinvestment 4.4x Impact from sacrificing speed of turnaround or and accelerate 3.7x + 0.2x LTM divested Adjusted potential long-term value creation our st
Slide 29: Expect continued underlying gains versus pre-pandemic levels
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE Expect Q3 2021 Outlook continued vs. 20192 vs. 2020 underlying Mid-Single-Digit Low-Single-Digit gains versus Q3 Organic Net Sales1 % Increase % Decline pre-pandemic Outlook would improve by excluding impact from: levels McCafé exit +1.4pp +0.1pp Q3 Constant
Slide 30: Expect 2021 financial performance ahead of initial expectations
TOTAL KRAFT HEINZ Q2 2021 BUSINESS UPDATE 30 Expect 2021 financial 2020 2021 Reset Fully Deploy performance Foundation New Operating ahead of initial Model expectations, with ongoing $6.7B business $6.1B Stronger-than-Plan ahead of 2019 3 Performance despite impact of Nuts divestiture Strategic Plan
Slide 31: Building power of scale + agility
Q2 2021 BUSINESS UPDATE 31 Building power of Delivering sustainable top-line and bottom- SCALE + AGILITY 1 line gains versus pre-pandemic levels in the face of broad-based industry Driving our transformation while headwinds 2 maintaining industry-leading profitability Strengthening portfolio and imp
Slide 32: Appendix
APPENDIX AUGUST 4, 2021 Kraft Heinz:
Slide 33: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES Q2 2021 BUSINESS UPDATE 33 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”).
Slide 34: Appendix
APPENDIX Q2 2021 BUSINESS UPDATE 34
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APPENDIX Q2 2021 BUSINESS UPDATE 39
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APPENDIX Q2 2021 BUSINESS UPDATE 41
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APPENDIX Q2 2021 BUSINESS UPDATE 42
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APPENDIX Q2 2021 BUSINESS UPDATE 43
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APPENDIX Q2 2021 BUSINESS UPDATE 44
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APPENDIX Q2 2021 BUSINESS UPDATE 45
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APPENDIX Q2 2021 BUSINESS UPDATE 46
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APPENDIX Q2 2021 BUSINESS UPDATE 47
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APPENDIX Q2 2021 BUSINESS UPDATE 48
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APPENDIX Q2 2021 BUSINESS UPDATE 49
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APPENDIX Q2 2021 BUSINESS UPDATE 50
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