The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q3 2023 Earnings Presentation
39 slides from The Kraft Heinz's earnings presentation, Nov 1, 2023
Slide 1: Q3 2023 Business Update
Q3 2023 BUSINESS UPDATE NOVEMBER 1, 2023
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS November 1, 2023 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, ta
Slide 3: Business Update: Miguel Patricio
Q3 2023 BUSINESS UPDATE Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 4: Q3 Key Takeaways
We are generating accelerated profitable growth 1 fueled by our 3 pillars and improved productivity. Q3 Our share and volume trends continue to improve as 2 Key Takeaways we re-invest across marketing, R&D, and technology. We continue to strengthen our balance sheet, hitting 3 our targeted Net Lever
Slide 5: Business Update: Carlos Abrams-Rivera
Q3 2023 BUSINESS UPDATE Carlos Abrams- Rivera President of Kraft Heinz
Slide 6: Grew Topline, Profits, and Profitability
Grew Topline, Profits, and Profitability Q3 Results Organic Net Sales1 Constant Currency Adjusted EBITDA1,2 Adjusted EPS1 14.3% 12.9% 1.7% vs Q3 '22 vs Q3 '22 vs Q3 '22 Q3 2023 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconciliations at ir.krafthei
Slide 7: Reinvesting Unlocked Efficiencies Back into the Business to Grow Organically
Reinvesting Unlocked Efficiencies Back into the Business to Grow Organically Increasing YTD investments in SG&A and CapEx by +$385 million vs PY SG&A1 Capital Expenditures Driven by Marketing, Driven by Technology, Technology, and Research Maintenance, and Capacity & Development Expansion YTD Spend
Slide 8: All Three Pillars of Growth Fueling Organic Net Sales
All Three Pillars of Growth Fueling Organic Net Sales1 Foodservice Emerging Markets GROW Platforms in U.S. Retail Global International Zone North America Zone ~+9% +10% +3% Organic Net Sales1 Organic Net Sales1,2 Organic Net Sales1 vs Q3 2022 vs Q3 2022 vs Q3 2022 Q3 2023 Business Update 1| Non-GAAP
Slide 9: Foodservice Growing and Gaining Market Share
Foodservice Growing and Gaining Market Share Foodservice Q3 2023 Growth1 vs PY 20% 10% 0% Total KHC Industry 2 KHC Industry 2 KHC (U.S. only) North America (Dev Mkts. only) International Q3 2023 1| Based on internal sales data, which holds the impact of currency constant and excludes the impact of d
Slide 10: Foodservice Growth Strategy Driving Strong Results
Foodservice Growth Strategy Driving Strong Results Chef-Led Model Attractive Channels Innovation Non-Commercial Channels Predict Culinary Behavior Expertise Education Healthcare Shifts & Trends Entertainment Brand Consumer Activation Insights Travel & Workplace Leisure Food Services Creating Tailor-
Slide 11: All Three Pillars of Growth: Emerging Markets
All Three Pillars of Growth Fueling Organic Net Sales1 Foodservice Emerging Markets GROW Platforms in U.S. Retail Global International Zone North America Zone Q3 2023 Business Update 11 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconciliations at ir.kraftheinzcompa
Slide 12: Emerging Markets Growing Double Digits
Emerging Markets Growing Double Digits Q3 2023 Organic Net Sales1 vs PY ▪ Continued double-digit +8% International Zone growth in Emerging Markets ▪ Solid growth in LATAM and East regions, with softness in Emerging Markets2 +10% Asia Q3 2023 Business Update 1| Non-GAAP financial measure. See the acc
Slide 13: Three Consistent Levers Supporting Emerging Markets Growth
Three Consistent Levers Supporting our Emerging Markets Growth Go To Market Brand Equity Foodservice1 Data-Driven, Repeatable Model Led by the Power Attacking Underpenetrated of Heinz, well Foodservice Channel beyond Ketchup; Supported Emerging Market by Local Jewels Foodservice Industry Reached ~$1
Slide 14: All Three Pillars of Growth: GROW Platforms
All Three Pillars of Growth Fueling Organic Net Sales1 Foodservice Emerging Markets GROW Platforms in U.S. Retail Global International Zone North America Zone Q3 2023 Business Update 14 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconciliations at ir.kraftheinzcompa
Slide 15: Focused on U.S. Retail GROW Platforms
Focused on U.S. Retail GROW Platforms Q3 Organic Net Sales1 Total North America North America U.S. Retail GROW Platforms ~15% ENERGIZE +3.3% GROW ~65% ~20% STABILIZE 2 (0.1%) vs Q3 '22 vs Q3 '22 Q3 2023 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reco
Slide 16: Taste Elevation and Easy Meals Led Growth
Within U.S. Retail GROW Platforms, Taste Elevation and Easy Meals Led Growth Taste Elevation Easy Meals U.S. Retail U.S. Retail Organic Organic Net Sales1 Net Sales1 vs Q3 2022 vs Q3 2022 +7% +5% Q3 Organic Net Sales growth driven by Q3 Organic Net Sales growth driven Ketchup, Mayonnaise, and Mexica
Slide 17: Share and Volume Trends Improving as Action Plans Implemented
Share and Volume Trends Improving as Action Plans Implemented Our Action Plans are Driving Improvements in Share and Volume 1 Joint Business Plan Execution Improving Shelf Space 2 Increasing Marketing Investment With a Focus on Priority 3 4 Innovation Continuing to Ramp 4 4Supply Recovery Solve Rema
Slide 18: Share Trend Improving as Action Plans Implemented
Share Trend Improving as Action Plans Implemented 2023 U.S. Dollar Share1 vs PY U.S. Retail Taste Elevation and Easy Meals October Month-to-Date2 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 L
Slide 19: Targeted Categories for Share Recovery
Targeted Categories for Share Recovery Cream Cheese Cold Cuts Kids Single Serve Beverages2 Dollar Share1 vs PY Dollar Share1 vs PY Dollar Share1 vs PY YTD Q3 Sep YTD Q3 Sep YTD Q3 Sep (0.2pp) (1.9pp) (1.5pp) (2.3pp) (2.3pp) (2.5pp) (2.9pp) (3.6pp) (3.1pp) Share improving as expected, driven by Share
Slide 20: Investing in Marketing, R&D, and Technology
Investing in Marketing, R&D, and Technology to Drive Future Growth Marketing1 R&D Technology 2 +25% +8% ~+24% vs Q3 2022 vs Q3 2022 vs Q3 2022 Q3 2023 Business Update 1| Marketing includes advertising expense and market research costs. 2| Technology spend reflects the costs included in SG&A, it does
Slide 21: Marketing Investment Up 25% in Q3
Investing in Marketing, R&D, and Technology to Drive Future Growth • 25% increase in Q3 Marketing1 spend vs PY • Leveraging the power of iconic brands, like Heinz • Embracing a holistic and sustainable approach to marketing, inserting ourselves into culture Q3 2023 Business Update 1| Marketing inclu
Slide 22: Heinz, Fourth Most Awarded Brand at Cannes Lions 2023
Heinz, The Fourth Most Awarded Brand at Cannes Lions Festival of Creativity 2023 Heinz was the Most Awarded Food Brand and the Fourth Most Awarded Brand at Cannes 1 2 3 4 APPLE 5 DOVE 6 HEINEKEN 7 8 MASTERCARD 9 PEDIDOSYA 10 NIKE MCDONALD’S MICHELOB ULTRA MICROSOFT Q3 2023 Business Update 22
Slide 23: Powered by Creativity, Moving at the Speed of Culture
Powered by Creativity, Moving at the Speed of Culture Introducing Limited-Edition Ketchup and Seemingly Ranch >4B impressions From idea to concept in less than 24 hours! Q3 2023 Business Update 23
Slide 24: Investing in Marketing, R&D, and Technology to Drive Future Growth
Investing in Marketing, R&D, and Technology to Drive Future Growth Intellectual Technology New Aisles & Occasions Utilizing intellectual technology to create disruptive platforms. Expanding into new aisles, across various occasions and host foods. Priority Growth Spaces Unique Flavors Leveraging our
Slide 25: Heinz Remix and 360Crisp Named to TIME Best Inventions
HEINZ REMIX and 360CRISP Named to TIME ’s Best Inventions of 2023 List Kraft Heinz is the only large food company to make TIME’s 2023 List … v … and we are the only company to have more than one invention featured in the Food & Drink category. Q3 2023 Business Update 25
Slide 26: Agile@Scale Roadmap
Investing in Marketing, R&D, and Technology to Drive Future Growth Agile@Scale and strategic partnerships help us generate efficiencies to fund investments. Disruptive Innovation First Products Launch at Scale One Innovation Digital Factory Platforms Engine Adoption KPIs Product Agile@Scale Roadmap
Slide 27: Technology Investments Enriching Customer and Supplier Relationships
Investing in Marketing, R&D, and Technology to Drive Future Growth Investments in Technology are Enriching Customer and Supplier Relationships Customers Suppliers U.S. Net Favorable Score +24pts vs 2020 31 18 7 9 2020 2021 2022 2023 Supplier Collaboration & Innovation Award Q3 2023 Business Update 2
Slide 28: 2023 ESG Report Reflects Progress Towards Three ESG Pillars
2023 ESG Report Reflects Progress Towards our Three ESG Pillars1 HEALTHY LIVING & ENVIRONMENTAL RESPONSIBLE COMMUNITY SUPPORT STEWARDSHIP SOURCING Improve product health & nutrition by Reduce water use intensity by 20% in Source 100% of eggs globally from cage- achieving 85% compliance with Kraft hi
Slide 29: Recognized for Our Commitment to Our Employees
Recognized for our Commitment to our Employees Great Place to Work® Certifications 100 Most Loved Workplaces in America® # of Countries Certified by Great Place to Work® 16 12 6 1 0 2019 2020 2021 2022 2023 From 0 in 2019 to 16 countries receiving Kraft Heinz named to Newsweek’s 100 Most Great Place
Slide 30: Financial Performance and Outlook
Q3 2023 FINANCIAL PERFORMANCE AND OUTLOOK Andre Maciel Global CFO
Slide 31: Grew Topline, Profits, and Profitability
Grew Topline, Profits, and Profitability Kraft Heinz North America International Q3 vs ‘22 Q3 vs ‘22 Q3 vs ‘22 Organic Net Sales 1 +1.7% (0.1%) +8.0% Price 7.1pp 5.8pp 11.6pp Vol/Mix (5.4pp) (5.9pp) (3.6pp) Adjusted EBITDA 1 +11.9% +14.6% +6.8% Currency (1.0pp) (0.3pp) (3.4pp) Constant Currency +12.
Slide 32: Margins Returning to Pre-Pandemic Levels
Margins Returning to Pre-Pandemic Levels Adjusted Gross Profit Margin1 Adjusted EPS1 34.0% $0.72 Q3 ‘19 Reported $0.63 30.0% Q3 '22 Q3 '23 Q3 '22 Q3 '23 Returning to 2019 levels for ongoing business vs Q3 2022 Results of Operations: $0.11 Effective Tax Rate: ($0.03) Other Inc./(Exp.): $0.01 Q3 2023
Slide 33: Continued Disciplined Approach to Promotions with Improving ROIs
Continued Disciplined Approach to Promotions with Improving ROIs Fewer Promotions. Better ROIs. % U.S. Q3 Volume Sold on U.S. ROI Improvement ▪ The promotional environment Promotion1 Q3 ‘23 vs Q3 ‘192 Q3 ‘23 vs Q3 ‘192 remains rational Branded Kraft Heinz ▪ Branded selling more on ~15pp promotion -4
Slide 34: Generating Higher Efficiencies to Reinvest in the Business
Generating Higher Efficiencies to Reinvest in the Business Supply Chain Efficiencies Inflation Gross Efficiency Plan on Track Improvement in Cost Goal: 750 $2.5 Billion by 2027 ▪ Inflation moderating as a whole ▪ Persistent inflation in certain pockets Q4E Annual Target 500 $500M Q3 YTD 2023 FYE 250
Slide 35: Strengthening Balance Sheet while Investing in Longevity
Strengthening Balance Sheet while Investing in Longevity of the Business Free Cash Flow Conversion1 Capital Expenditures ($M) Net Leverage1 68% (779) 3.3x (632) 2.9x 37% 2 YTD '22 YTD '23 YTD '22 YTD '23 Q3 '22 Q3 '23 Improvement driven by lapping taxes Increasing investments in CapEx by Reached tar
Slide 36: Outlook Reflects Above Algorithm Organic Net Sales and EBITDA Growth
Outlook Reflects Above Algorithm Organic Net Sales1 & Constant Currency Adjusted EBITDA1 Growth 2023 FYE Outlook 2023 Considerations Organic Net Sales1 Above Long-Term Algorithm Growth +4-6% • Narrowing to low end of the 4-6% range, at approximately 4% ~+4% +2-3% LTA Prior Revised Constant Currency
Slide 37: Closing Commentary
CLOSING COMMENTARY Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 38: Q3 Key Takeaways
We are generating accelerated profitable growth 1 fueled by our 3 pillars and improved productivity. Q3 Our share and volume trends continue to improve as 2 Key Takeaways we re-invest across marketing, R&D, and technology. We continue to strengthen our balance sheet, hitting 3 our targeted Net Lever
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The Kraft Heinz Company — Q3 2023 Earnings Presentation on 6ix