The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q3 2022 Earnings Presentation
45 slides from The Kraft Heinz's earnings presentation, Oct 26, 2022
Slide 1: Q3 2022 Business Update
Q3 2022 BUSINESS UPDATE OCTOBER 26, 2022 Q3 2022 Business Update
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS OCTOBER 26, 2022 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 ESG strategy; our
Slide 3: Business Update
Q3 2022 BUSINESS UPDATE Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 4: Delivered Another Quarter of Strong Results
Delivered While Enabled by Another Successfully Continuing Quarter of Navigating a Advancement Strong Results Dynamic of Long-term Environment Strategy Q3 2022 Business Update
Slide 5: Delivered Strong Results
Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q3 2022 Business Update
Slide 6: Delivered Strong Results
6 Delivered Strong Results Q3 Organic Net Sales1 Q3 Adjusted EBITDA1 All three strategic pillars of growth fueled Pricing and efficiencies closing inflation gap topline momentum (5.5%) vs Q3 2021 +11.6% $1.4B +0.5% Q3 2022 vs Q3 2021 Ongoing Business3 +6.4% YTD Free Cash Flow1 Includes impact of inv
Slide 7: Three Pillars of Growth Fueling Organic Net Sales Growth
Delivered Strong Results 7 Three Pillars of Growth Fueling Organic Net Sales1 Growth GROW Platforms Foodservice Emerging in Retail Markets Retail North America Zone Global International Zone Q3 2022 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconcil
Slide 8: Strongest Q3 Growth in GROW Platforms
Delivered Strong Results: GROW Platforms 8 Strongest Q3 Growth in GROW Platforms, Consistent with Strategy North America Zone Q3 Organic Net Sales1 vs Q3 2021 by Platform Role2 2% vs Q3 2021 North America Zone Organic Net Sales1 16% GROW +10.9% ENERGIZE 64% 12% vs Q3 2021 vs Q3 2021 20%2 STABILIZE 1
Slide 9: Sustained Gains and Continued Momentum Versus Pre-Pandemic Levels
Delivered Strong Results: GROW Platforms 9 Sustained Gains and Continued Momentum Versus Pre-Pandemic Levels North America Zone Q3 Organic Net Sales1 CAGR vs Q3 20192 by Platform Role3 4% CAGR vs Q3 2019 2 North America Zone Organic Net Sales1 16% GROW +6.3% ENERGIZE 64% 8% CAGR CAGR 20%3 vs Q3 2019
Slide 10: Sustained Consumer Demand in the U.S. – Investing to Drive Growth
Delivered Strong Results 10 Sustained Consumer Demand in the U.S. – Investing to Drive Growth Q3 U.S. Retail Q3 U.S. Market Consumption2 Share2 vs PY North America Organic Net Sales1 U.S. Retail Consumption2 vs 2021 vs 2021 Kids Meal Combos Q1 2022 Q2 2022 Q3 2022 9.2% +23% 15.3% 6.9% 13.1% Kids Sin
Slide 11: Share Recovery in Unconstrained Categories in the U.S.
Delivered Strong Results 11 Share Recovery in Unconstrained Categories in the U.S. Majority of U.S. Business in GROW is Gaining Market Share1 YTD No Supply Resolved Supply Ongoing Supply U.S. Market Share1 vs PY Constraints Constraints Constraints 1.8pp Q1 2022 Q2 2022 Q3 2022 0.8pp 0.9pp 0.9pp Q3 O
Slide 12: Sustained Demand Across Income Levels
Delivered Strong Results 12 Sustained Demand Across Income Levels Balanced Portfolio with Sustained Strong Consumption Growth Improving YOY Market Share Demand Across Income Levels Across Income Levels Across All Income Levels % of KHC Q3 U.S. YOY Q3 U.S. Retail Market Share1 Consumption1 relative t
Slide 13: Foodservice Growing and Gaining Market Share
Delivered Strong Results: Foodservice 13 Foodservice Growing and Gaining Market Share, Contributing to Organic Net Sales1 Growth Foodservice Q3 2022 Growth2 vs PY Strategic Channel consistently outpacing the retail industry by 30% 1.5 times, with significant ongoing distribution opportunities Platfo
Slide 14: Growing Through Sustainable and Repeatable Go-to-Market Model
Delivered Strong Results: Emerging Markets 14 Growing Through Sustainable and Repeatable Go-to-Market Model Q3 2022 Organic Net Sales1 vs PY Aggressive Investment in Go-To-Market Expansion in Existing Markets Emerging Markets Leveraging Go-To-Market Model3: ~60% Planned Increase by Year End: ~75% 14
Slide 15: Navigating a Dynamic Environment
Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q3 2022 Business Update
Slide 16: Navigating Dynamic Environment
16 Navigating Dynamic Environment Supply Chain Consumer Solutions Solutions Insert Icon Insert / image image Consumer Solutions Q3 2022 Business Update
Slide 17: Improving Service and Unlocking Efficiencies in 2022
Navigating Dynamic Environment Through Supply Chain Solutions 17 Improving Service and Unlocking Efficiencies in 2022 Production Service Efficiency YOY Production Lbs. Increase in U.S. Gross Efficiency Plan (Retail Recovering Categories1) U.S. Case Fill Rate $2 $2B Hi 90s 6.1% Low 90s Hi 80s Low 80s
Slide 18: Evolving Supply Chain Enables Us to Anticipate, Adapt and Optimize
Navigating Dynamic Environment Through Supply Chain Solutions 18 Evolving Supply Chain Enables Us to Anticipate, Adapt and Optimize Securing European energy supply ANTICIPATE continuity for Q4 and 2023 Solving ingredient/packaging supply ADAPT shortages on an ongoing basis Investing in factory OPTIM
Slide 19: Kraft Heinz Uniquely Positioned to Provide Solutions to Today's Consumer
Navigating Dynamic Environment Through Consumer Solutions 19 Kraft Heinz Uniquely Positioned to Provide Solutions to Today’s Consumer Consumer Trends Consumer Need Solutions Taking food from On the Go home to work Time pressure for Easy Prep dinner Dinners at home, Filling Food filling and simple Sh
Slide 20: YOY Market Share Improving; Private Label Sourcing from Branded Competitors
Navigating Dynamic Environment Through Consumer Solutions 20 YOY Market Share1 Improving; Private Label Sourcing from Branded Competitors Lower U.S. Private 2022 U.S. Market Share1 vs PY Label Exposure2 Kraft Heinz Branded Competitors Private Label Kraft Heinz Branded Competitors Private Label 20% 2
Slide 21: Advancing Long-Term Strategy
Delivered While Enabled by Another Successfully Continuing Quarter of Advancement Navigating a Strong Results of Long-term Dynamic Environment Strategy Q3 2022 Business Update
Slide 22: 2022 ESG Report Reflects Progress Toward ESG Goals
Advancing Long-Term Strategy 22 2022 ESG Report Reflects Progress Toward ESG Goals and DI&B Aspirations Energy and Water Diversity, Inclusion Consumption & Belonging Aspirations Greenhouse Gas Reduce energy use Emissions 50% global management intensity by 15% by 20251 positions filled by women by 20
Slide 23: Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media
Advancing Long-Term Strategy 23 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media Strategy Enablers Results Broke the Internet with 6 Elevate Proprietary First Party Data activations earning more than Marketing 1B impressions this year A.I.-Enabled Insights 100% of
Slide 24: Partnered with Social Media Influencer: Toby the Veggie Vampire
Advancing Long-Term Strategy 24 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media Partnered with Social Media Influencer: Toby The VEGGIE VAMPIRE 500K Followers Taken over Heinz Instagram, TikTok and Twitter accounts in the US and Canada Q3 2022 Business Update
Slide 25: Limited Time Halloween Offering Live in 13 Markets
Advancing Long-Term Strategy 25 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media Limited Time Halloween offering live in 13 Markets Sold out in less than 7 days in Australia #1 NPD SKU in Mayo category in last 3 years at major UK retailer 160M Impressions in 1st We
Slide 26: Cold Dog: 1.4B Impressions
Advancing Long-Term Strategy 26 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media Some dumb ideas are just so genius they need to be made and brought to the world to spark smiles. The COLD DOG is that idea. 1.4B Impressions Q3 2022 Business Update
Slide 27: Ketchup-Stained Clothing Collection: 1.7B Impressions
Advancing Long-Term Strategy 27 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media It’s not a Stain, it’s a Statement Heinz is launching its first fashion collection of ketchup-stained clothing to celebrate the marks the brand has left on clothes for years. 1.7B Impr
Slide 28: VELVEETA Veltini: 2.2B Impressions
Advancing Long-Term Strategy 28 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media VELVEETA® Veltini Partnership with BLT Restaurant Group to an exclusive, limited-time only menu offering, the VELVEETA® Veltini 2.2B Impressions Q3 2022 Business Update
Slide 29: Heinz Pasta Sauces Launch in the UK
Advancing Long-Term Strategy 29 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media RIDICULOUSLY LATE. RIDICULOUSLY GOOD. Heinz launched its first pasta sauces in the UK! 8K distribution points 6% share in top 3 UK retailers Q3 2022 Business Update
Slide 30: Unbeanlievable: Beanz Liberation in the UK
Advancing Long-Term Strategy 30 Culture of Creativity Driving Increased Quality of Creative & Focus on Earned Media UNBEANLIEVABLE Heinz is finally taking its beans out of the can! 7x distribution growth on Beanz Liberation platform in the U.K. Q3 2022 Business Update
Slide 31: Partnerships Accelerating Transformation, Unlocking Further Growth Potential
Advancing Long-Term Strategy 31 Partnerships Accelerating Transformation, Unlocking Further Growth Potential Creating Superior Consumer Offerings with Speed and Agility Plant-based “cheese” slices launching in test market Approach to innovation powered by Agile@Scale More to come soon! Q3 2022 Busin
Slide 32: Financial Performance and Outlook
Q3 2022 FINANCIAL PERFORMANCE AND OUTLOOK Andre Maciel Global CFO
Slide 33: Strong Results across North America and International
Financial Performance: Segment Results 33 Strong Results across North America and International Kraft Heinz North America International Q3 vs ‘21 Q3 vs ‘21 Q3 vs ‘21 Organic Net Sales1 11.6% 10.9% 13.9% Price 15.4pp 15.3pp 15.7pp Vol/Mix (3.8pp) (4.4pp) (1.8pp) Adjusted EBITDA1 (5.5%) (4.8%) (3.7%)
Slide 34: All Three Pillars of Growth Driving Organic Net Sales
Financial Performance: Organic Net Sales1 34 All Three Pillars of Growth Driving Organic Net Sales1 Organic Net Sales1 Growth Q3 2022 vs Q3 2021 Organic Net Sales1 Growth Across Consumer Platforms Foodservice Strength 15.4% Across Markets 11.6% 2.9% Emerging Markets Growing Double-Digits -3.8% -6.4%
Slide 35: Pricing Power and Strong Efficiency Gains Mitigating Inflationary Pressure
Financial Performance: Adjusted EBITDA1 35 Pricing Power and Strong Efficiency Gains Mitigating Inflationary Pressure Adjusted EBITDA1 Q3 2022 vs Q3 2021 (in millions) + - $1,479 - + - $1,398 - - + 1 2 1 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconciliations at
Slide 36: Margins Pressured by Pricing Actions; Recovery Expected in Q4
Financial Performance: Key Metrics 36 Margins Pressured by Pricing Actions; Recovery Expected in Q4 Adjusted Gross Profit Margin1 35.3% Pricing and Margin Trajectory 32.4% 32.5% 100% of pricing actions for 2022 in 30.0% market and/or announced Pricing to offset dollar inflation creates short-term pr
Slide 37: Price Gaps to Private Label Holding Steady
Financial Performance: Price Gaps 37 Price Gaps to Private Label Holding Steady U.S. Price Gaps vs Private Label (% of retail sales)1 1 1 Price Gap Status Q2 vs Q1 Q3 vs Q2 Category Examples Managing U.S. Price Gaps Mac & Cheese for the Long Term Lunchables Price Gap Less Cream Cheese Sensitive vs P
Slide 38: Base Volume Healthy; Promotion Optimization Under Way
Financial Performance: Volume 38 Base Volume Healthy; Promotion Optimization Under Way Despite Price Increases, Base Volumes are Healthy, with Rational Approach to SKU Rationalization Driving a Portion of Volume Loss Promotional Investment Kraft Heinz Volume1 Q3 22 vs Q3 192 % Volume Sold on Promoti
Slide 39: Divested Businesses Impacting YOY Adjusted EPS and Free Cash Flow Conversion
Financial Performance: Key Metrics 39 Divested Businesses Impacting YOY Adjusted EPS1 and Free Cash Flow Conversion1 Adjusted EPS1 YTD Free Cash Flow Conversion1 $0.69 $0.70 114% $0.65 $0.63 67% 54% 37% Q3 '19 Q3 '20 Q3 '21 Q3 '22 Q3 '19 Q3 '20 Q3 '21 Q3 '22 vs Q3 2021 vs Q3 2021 Divested Businesses
Slide 40: 2022 Outlook Reflects Strong Organic Net Sales Growth and Efficiencies
Financial Performance: 2022 Outlook 40 2022 Outlook Reflects Strong Organic Net Sales1 Growth and Efficiencies Offsetting Inflation Net Sales Adjusted EBITDA1 High Single-Digit Organic Net Sales1 Growth $5.9B to $6.0B, including 53rd week • Foodservice channel share gains • Protect margin dollars fr
Slide 41: Industry will Continue to Face Challenges, Kraft Heinz is Well-Positioned
Financial Performance: Beyond 2022 41 Industry will Continue to Face Challenges, Kraft Heinz is Well-Positioned • Stronger Balance Sheet provides financial flexibility • 100% Fixed Debt caps cost of capital, and we expect to see declining interest expense as additional debt is paid down • Overfunded
Slide 42: Closing Commentary
CLOSING COMMENTARY Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 43: Delivered Another Quarter of Strong Results
Delivered Another Successfully Enabled by Quarter of Continuing Navigating a Strong Results Dynamic Advancement Environment of Long-term Strategy Q3 2022 Business Update
Slide 44: Appendix
APPENDIX Q3 2022 Business Update
Slide 45: Private Label Reconciliation
Private Label Reconciliation Private Label Reconciliation: Scanner Data1 Kraft Heinz PL exposure, including Nat Cheese (syndicated view) 18.3% Remove natural cheese (1.7pp) Kraft Heinz PL exposure, excluding Nat Cheese (syndicated view) 16.6% Negligible business2 (<$1M FY dollars) (2.1pp) KHC custom
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