The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q1 2020 Earnings Presentation
29 slides from The Kraft Heinz's earnings presentation, Apr 30, 2020
Slide 1: 1Q 2020 Update
KraftHeinz 1Q 2020 UPDATE APRIL 30, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement This webcast presentation contains a number of forward-looking statements. Words such as “commit,” “plan,” "believe," "anticipate," "reflect," "invest," "make," "expect," "deliver," “develop,” "drive," "assess," "evaluate," “establish,” “focus,” “build,” “turn,” “expand,” “leve
Slide 3: Agenda for Today
Agenda for Today 1 2 3 4 COVID-19 1Q’20 2020 Investor Day Response Results Outlook Preview Our Rise to Better Our Progress Provide the Challenge… than Expected… is On Track… Access Into… Showing Our Underlying Business Good Execution Key Findings, New Strength Improvements & Momentum Paradigm Shift
Slide 4: COVID-19 Response
KraftHeinz 7 COVID-19 Response
Slide 5: COVID-19 Response: Our Rise to the Challenge
COVID-19 Response Our Rise to the Challenge… Our Our Our People Business Opportunity • Keeping Our People Safe • Focused to Help Feed the World • Accelerate our transformation - Leveraging industry-leading health - Transformation Plan is working and - Supply chain de-complexity and safety and hygien
Slide 6: Estimated Impact from COVID-19 Surge
COVID-19 Response Estimated Impact from COVID-19 Surge… Organic Net Sales1 Adjusted EBITDA1 Estimated % Impact Estimated % Impact Canada +9 – 10 Canada pp +6 – 7 U.S. Int’l U.S. pp Int’l Total Total KHC KHC • Greater retail demand, mainly in developed markets • Adjusted EBITDA contribution from addi
Slide 7: 1Q'20 Results
KraftHeinz 2 10’20 Results
Slide 8: U.S. First Impressions
1Q’20 Results U.S. First Impressions … Observations Takeaways • People, brands, and scale set Kraft Heinz apart • Significant opportunity ahead of us o simplify manufacturing to maximize throughput • Company is in a unique position to serve families with trusted brands o re-evaluate merchandising st
Slide 9: In the United States
1Q’20 Results In the United States… Net Sales Adjusted EBITDA1 +6.4% +6.2% Organic1 Growth Growth $4,495 $4,224 $1,139 $1,209 Price: 2.4% Vol/Mix: 4.0% Q1 2019 Q1 2020 Q1 2019 Q1 2020 • Growth fueled by accelerated retail takeaway across all • Pricing growth, volume leverage drove growth categories
Slide 10: In International
1Q’20 Results In International… Net Sales Adjusted EBITDA1 +6.9% +7.3% Organic1 Constant Growth Currency Growth $1,285 $1,301 $238 $245 Price: 1.7% Vol/Mix: 5.2% Q1 2019 Q1 2020 Q1 2019 Q1 2020 • Growth driven by increased retail takeaway mainly in • Growth reflected Organic Net Sales1 gains develop
Slide 11: In Canada
1Q’20 Results In Canada… Net Sales Adjusted EBITDA1 +2.2% (42.4)% Organic1 Constant Growth Currency Ex Divestiture $450 $121 $361 Price: (6.4)% $55 Vol/Mix: 8.6% Q1 2019 Q1 2020 Q1 2019 Q1 2020 • Organic Net Sales growth driven by March consumption • Decline excluding impacts of divestiture and curr
Slide 12: 1Q'20 Consolidated Summary
1Q’20 Consolidated Summary Net Sales Adjusted EBITDA1 Organic Net Sales $(13) U.S. & International growth driven by $(3) growth more than $365 strong retail offset EBITDA $(104) $1,431 $6,157 momentum and $1,415 declines in Canada $(63) $(63) $5,959 growth in at-home and higher general consumption c
Slide 13: 2020 Outlook
KraftHeinz 3 2020 Outlook 13
Slide 14: Our Progress is On Track
2020 Outlook Our Progress is On Track… Operations Growth Profitability Capital • Brand Investments on Track • Expect H1 to Benefit Full Year • Headwinds Hold • Strengthening Balance Sheet - No pause in initiatives: - Cautiously optimistic on - Divestitures, business - Maintain conservative business
Slide 15: Investor Day Preview
KraftHeinz 4 Investor Day Preview 15
Slide 16: Investor Day Preview: Provide Access Into
Investor Day Preview Provide Access Into… Management Insights Hear from new leadership, interact directly on key topics, and engage in expansive Q&A dialogue 1 New Operating Model Unique Assets & Advantages Walk through the new Company Discuss the strengths, weaknesses and model and structure we are
Slide 17: Unique Assets & Advantages
Unique Assets & Advantages Walk Through Our Analysis… Review Assessment • 7-Month Bottom-Up Review • Evaluated Our Core Strengths & Weaknesses • Future Consumer Trend Projections • Focus on Unique Assets & Advantages - Analyzed KHC & market trends Advantaged Cost Structure across 70+ categories Inve
Slide 18: Key Findings & Paradigm Shift
Key Findings & Paradigm Shift Present and Discuss… Our Our Our Findings Reorientation New Paradigm • New Synergies Identified • A New Approach - Operating Efficiencies 55 Product Categories 3 Temperature States • Leveraging Our Strengths to: - Reallocation of Resources ✓ Derive Proprietary Consumer
Slide 19: New Operating Model
New Operating Model A Blueprint for the Future… New Vision, Purpose & Values ? New Model & Strategy Details ? A New New Operating Structure ? Investor Day KHC Model 2020 New Key Platforms ? New Marketing Plan? New Savings Opportunities ? See You at the KHC Investor Day 2020! 19
Slide 20: Thank You
KraftHeinz THANK YOU APRIL 30, 2020
Slide 21: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures The non-GAAP financial measures provided 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”) that are presented in this press release
Slide 22: Condensed Consolidated Statements of Income
Appendix Schedule 1 The Kraft Heinz Company Condensed Consolidated Statements of Income (in millions, except per share data) (Unaudited) For the Three Months Ended March 28, 2020 March 30, 2019 Net sales $ 6,157 $ 5,959 Cost of products sold 4,299 3,948 Gross profit 1,858 2,011 Selling, general and
Slide 23: Reconciliation of Net Sales to Organic Net Sales
Appendix Schedule 2 The Kraft Heinz Company Reconciliation of Net Sales to Organic Net Sales For the Three Months Ended (dollars in millions) (Unaudited) Acquisitions Organic Net Net Sales Currency and Divestitures Sales Price Volum e/Mix March 28, 2020 United States $ 4,495 $ - $ - $ 4,495 Internat
Slide 24: Reconciliation of Net Income to Adjusted EBITDA
Appendix Schedule 3 The Kraft Heinz Company Reconciliation of Net Income/(loss) to Adjusted EBITDA (dollars in millions) (Unaudited) For the Three Months Ended March 28, 2020 March 30, 2019 Net income/(loss) $ 381 $ 404 Interest expense 310 321 Other expense/(income) (81) (380) Provision for/(benefi
Slide 25: Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA
Appendix Schedule 4 The Kraft Heinz Company Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA For the Three Months Ended (dollars in millions) (Unaudited) Constant Currency Adjusted EBITDA Currency Adjusted EBITDA March 28, 2020 United States $ 1,209 $ - $ 1,209 International 24
Slide 26: Reconciliation of Diluted EPS to Adjusted EPS
Appendix Schedule 5 The Kraft Heinz Company Reconciliation of Diluted EPS to Adjusted EPS (Unaudited) For the Three Months Ended March 28, 2020 March 30, 2019 Diluted EPS $ 0.31 $ 0.33 Integration and restructuring expenses (a) - 0.02 Unrealized losses/(gains) on commodity hedges (b) 0.09 (0.02) Imp
Slide 27: Condensed Consolidated Balance Sheets
Appendix Schedule 6 The Kraft Heinz Company Condensed Consolidated Balance Sheets (in millions, except per share data) (Unaudited) March 28, 2020 Decem ber 28, 2019 ASSETS Cash and cash equivalents $ 5,403 $ 2,279 Trade receivables, net 2,321 1,973 Inventories 2,831 2,721 Prepaid expenses 485 384 Ot
Slide 28: Condensed Consolidated Statement of Cash Flows
Appendix Schedule 7 The Kraft Heinz Company Condensed Consolidated Statement of Cash Flows (in millions) (Unaudited) For the Three Months Ended March 28, 2020 March 30, 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net income/(loss) $ 381 $ 404 Adjustments to reconcile net income/(loss) to operating ca
Slide 29: Reconciliation of Operating Cash Flow to Free Cash Flow
Appendix Schedule 8 The Kraft Heinz Company Reconciliation of Net Cash Provided By/(Used for) Operating Activities to Free Cash Flow (in millions) (Unaudited) For the Three Months Ended March 28, 2020 March 30, 2019 Net cash provided by/(used for) operating activities $ 212 $ 304 Capital expenditure
The Kraft Heinz Company — Q1 2020 Earnings Presentation on 6ix