The Kraft Heinz Company · NASDAQ:KHC
The Kraft Heinz — Q4 2022 Earnings Presentation
40 slides from The Kraft Heinz's earnings presentation, Feb 15, 2023
Slide 1: Q4 2022 Business Update
Q4 2022 BUSINESS UPDATE FEBRUARY 15, 2023 Q4 2022 Business Update
Slide 2: Forward-Looking Statements
2 FORWARD-LOOKING STATEMENTS FEBRUARY 15, 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,
Slide 3: Q4 2022 Business Update
Q4 2022 BUSINESS UPDATE Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 4: Delivered Strong Results, Navigated Dynamic Environment, Advanced Long-term Strategy
4 Delivered Navigated Advanced Strong Results a Dynamic Long-term Environment Strategy Q4 2022 Business Update
Slide 5: Delivered Strong Results
5 Double Digit Organic Net Sales1 Growth with Adjusted Gross Profit Margin1 Recovery Solid Momentum Across Each of Our Three Pillars of Growth Strong Consumption with Holding Elasticities Delivered Improved Market Share Trends Strong Results Foodservice Growth Outpacing the Industry Strong Emerging
Slide 6: Delivered Strong Full Year Results, with Solid Momentum in Q4
Delivered Strong Results 6 Delivered Strong Full Year Results, with Solid Momentum in Q4 Organic Net Sales1 Adjusted EBITDA1 All three strategic pillars of growth fueled Pricing and efficiencies closing inflation gap topline momentum FY $6.0B -1.3pp -2.1pp FX Impact FX Impact +10.4% -5.8% -1.8% +8.6
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 U.S. Retail Markets Retail North America Zone Global International Zone Q4 2022 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Rec
Slide 8: Strongest Q4 Growth in GROW Platforms, Consistent with Strategy
Delivered Strong Results: GROW Platforms 8 Strongest Q4 Growth in GROW Platforms, Consistent with Strategy Total North America Energize Q4 Organic Net Sales1 Stabilize Grow Total Kraft Heinz North America U.S. Retail GROW Platforms U.S. Retail GROW Platforms +15% Organic Net Sales 1 +15% vs Q4 2021
Slide 9: Lapping Pricing Actions with Elasticities Holding Steady
9 Delivered Strong Results Lapping Pricing Actions From Prior Year with Elasticities Holding Steady North America Organic Net Sales1 vs PY U.S. Retail Consumption2 vs PY 2.9% 6.9% 9.2% 10.5% Implied 0.73 0.54 0.48 0.36 Elasticity 10.9% 9.8% 9.2% 17.8% 16.3% 15.0% 6.8% 10.7% -5.8% -7.8% -8.1% -8.6% Q
Slide 10: Continued Market Share Recovery; Private Label Sourcing from Branded Competitors
Delivered Strong Results 10 Continued Market Share Recovery; Private Label Sourcing from Branded Competitors U.S. Market Share1 vs PY 2022 U.S. Market Share1 vs PY Q1 2022 Q2 2022 Q3 2022 Q4 2022 Kraft Heinz Branded Private Label Branded Competitors (0.1pp) Kraft Heinz Competitors Private Label (0.1
Slide 11: Sustained Demand Across Income Levels
Delivered Strong Results 11 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 Q4 U.S. YOY Q4 U.S. Retail Market Share1 15.3% 15.1% 15.2% Consu
Slide 12: Foodservice Growing and Gaining Market Share
Delivered Strong Results: Foodservice 12 Foodservice Growing and Gaining Market Share, Contributing to Organic Net Sales1 Growth Foodservice FY 2022 Growth2 vs PY 30% Outpacing Retail by 1.5 times Driving Trial 20% for Taste Elevation Innovation Leveraging Partnerships with QSRs 10% Chef Program Gen
Slide 13: Growing Through Sustainable and Repeatable Go-to-Market Model
Delivered Strong Results: Emerging Markets 13 Growing Through Sustainable and Repeatable Go-to-Market Model FY 2022 Organic Net Sales1 vs PY Finished 2022 with >70% of Emerging Markets Leveraging the Go-To- Market Model4 12% 15% 25% Target to End 2023 at International Emerging Go-To-Market Model3 Em
Slide 14: Navigated a Dynamic Environment
Providing Consumer Solutions Improving Service Levels Navigated a Dynamic Delivering on Efficiencies Environment Q4 2022 Business Update
Slide 15: Consumers are Favoring Our Solutions Addressing Their Needs
Navigated Dynamic Environment Through Consumer Solutions 15 Consumers are Favoring Our Solutions that are Addressing their Needs… Consumer Taking Food Time Pressure Dinners at Home, Shifting Cash Flow Trends from Home to Work for Dinner Filling and Simple Priorities Consumer Price Point On the Go Ea
Slide 16: Improved Service and Unlocked Efficiencies in 2022
Navigated Dynamic Environment Through Supply Chain Solutions 16 Improved Service and Unlocked Efficiencies in 2022 Service Efficiency Improving U.S. Case Fill Rate Overdelivering Gross Efficiency Plan Goal: $2 Billion by 2024 100% Goal: High 90s 90% 400 Annual Target $400M 80% 70% 60% 0 Q3 YTD Octob
Slide 17: Advanced Long-term Strategy
Strengthened our Portfolio Renovated Iconic Brands Expanded Agile@Scale Elevated Disruptive Marketing Built Strategic Partnerships Advanced Unlocked the Value of Acquisitions Long-term Created $450M+ in Efficiencies Strategy Strengthened Our Balance Sheet Improved Employee Engagement Q4 2022 Busines
Slide 18: We've Made Huge Advancements in 2022: Strengthened our Portfolio
18 We’ve Made Huge Advancements in 2022 Strengthened our Portfolio … … to Unleash the Power of our GROW Platforms Q4 2022 Business Update
Slide 19: We've Made Huge Advancements in 2022: Renovated Brands
19 We’ve Made Huge Advancements in 2022 Renovated Brands Applying our Design-to-Value Framework Packaging & Quality Sensory Marketing Packaging & Quality #1 Kid Desired Brand Ambition Improvements Improvements … to Better Serve Consumers Q4 2022 Business Update
Slide 20: We've Made Huge Advancements in 2022: Agile@Scale
20 We’ve Made Huge Advancements in 2022 28 Key Focus Areas Agile Teams • Revenue Management 12 • Planning and Logistics Proprietary Digital Products • Procurement 80% • Sales of the Organization Trained in Agile ways of Working • Marketing …Poised to Drive More Value in 2023 and Beyond Q4 2022 Busin
Slide 21: We've Made Huge Advancements in 2022: Disruptive Marketing
21 We’ve Made Huge Advancements in 2022 Elevated Disruptive Marketing Capabilities … … and Earned Media at the Speed of Culture Q4 2022 Business Update
Slide 22: We've Made Huge Advancements in 2022: Strategic Partnerships
22 We’ve Made Huge Advancements in 2022 Built Strategic Partnerships … ... to Drive Speed, Quality and Capabilities Across the Value Chain Q4 2022 Business Update
Slide 23: We've Made Huge Advancements in 2022: Value of Acquisitions
23 We’ve Made Huge Advancements in 2022 Unlocked the Value of Acquisitions in Taste Elevation and Emerging Markets … Heinz Volume Growth in Turkey ~2X Net Sales Since Acquisition1 2022 vs. 2019 +31% 2022 vs. 2021 ... to Expand our Footprint, Capabilities and Channels Q4 2022 Business Update 1| The C
Slide 24: We've Made Huge Advancements in 2022: Efficiencies and Balance Sheet
24 We’ve Made Huge Advancements in 2022 Created Efficiencies … $450M+ Back to Investment Grade in Variable Cost Savings In record time, just over 2 years! … And Strengthened our Balance Sheet Q4 2022 Business Update
Slide 25: We've Made Huge Advancements in 2022: Talented Team
25 We’ve Made Huge Advancements in 2022 Made Possible by an Incredibly Talented Team … … with Significantly Improved Employee Engagement Q4 2022 Business Update
Slide 26: Financial Performance and Outlook
Q4 2022 FINANCIAL PERFORMANCE AND OUTLOOK Andre Maciel Global CFO
Slide 27: Financial Highlights
Strong Results in Q4, Well Positioned for 2023 Organic Net Sales1 and Constant Currency Adjusted EBITDA1 Ending the Year with Strong Momentum with Double-Digit Growth Financial Highest Adjusted Gross Profit Margin1 in the Year and In-line with 20192 Highlights Base Volumes Growing versus 20192 Level
Slide 28: Strong Results across North America and International
Financial Performance: Segment Results 28 Strong Results across North America and International Kraft Heinz North America International Q4 vs ‘21 Q4 vs ‘21 Q4 vs ‘21 Organic Net Sales 1 10.4% 9.2% 14.3% Price 15.2pp 14.2pp 18.5pp Vol/Mix (4.8pp) (5.0pp) (4.2pp) Adjusted EBITDA 1 8.6% 7.3% 16.0% Curr
Slide 29: Price Realization Driving Net Sales Growth
Financial Performance: Organic Net Sales1 29 Price Realization Driving Net Sales Growth Organic Net Sales1 Growth Q4 2022 vs Q4 2021 Organic Net Sales1 +10.4% Strong Price Realization 15.2% despite lapping the first round of price at the end of 2021 10.0% 7.1% Elasticities below historical levels He
Slide 30: Pricing Power and Efficiency Gains Mitigating Inflationary Pressure
Financial Performance: Adjusted EBITDA1 30 Pricing Power and Efficiency Gains Mitigating Inflationary Pressure Adjusted EBITDA1 Q4 2022 vs Q4 2021 (in millions) $1,743 $1,606 +8.6% 2 1 1 2 Q4 2022 Business Update 1| Non-GAAP financial measure. See the accompanying Non-GAAP Information and Reconcilia
Slide 31: Sequential Adjusted Gross Profit Margin Improvement
Financial Performance: Key Metrics 31 Sequential Adjusted Gross Profit Margin1 Improvement, Progress on Closing Gap vs PY Adjusted Gross Profit Margin1 32.2% Sequential Margin Improvement 31.6% 31.5% versus prior quarter 30.0% Q4 2022 Margin In-Line with 2019 levels Progress on Closing Gap versus PY
Slide 32: Reduced Exposure and Price Gaps to Private Label Holding Steady
Financial Performance: Private Label Exposure and Price Gaps 32 Reduced Exposure and Price Gaps to Private Label Holding Steady U.S. Price Gaps vs Private Label (% of retail sales1 by status) 1Lower U.S. Private 1 Q4 vs Q3 Label Exposure2 Price Gap Status Q3 vs Q2 Q4 vs Q3 Category Examples Mac & Ch
Slide 33: Base Volumes are Healthy and Growing versus 2019
Financial Performance: Volume 33 Base Volumes are Healthy and Growing versus 20193 Base Volumes Contributing +8% to Overall Volume Rational Approach to Promotional Investment Kraft Heinz U.S. Consumption Volume1 % U.S. Consumption Volume Sold on Promotion2 Q4 2022 vs Q4 20193 Q4 2022 vs Q4 20193 Bra
Slide 34: Divested Businesses Impacting Year-Over-Year Adjusted EPS
Financial Performance: Key Metrics 34 Divested Businesses Impacting Year-Over-Year Adjusted EPS1 Q4 Adjusted EPS1 FY Adjusted EPS1 $0.80 $0.79 $0.85 $0.72 $2.84 $2.88 $2.93 $2.78 Q4 '19 Q4 '20 Q4 '21 Q4 '22 FY '19 FY '20 FY '21 FY '22 Q4 2022 vs Q4 2021 2022 vs 2021 Divested Businesses: ($0.05) Dive
Slide 35: Divested Businesses and Inventory Rebuild Impacting Free Cash Flow Conversion
Financial Performance: Key Metrics 35 Divested Businesses and Inventory Rebuild Impacting Free Cash Flow Conversion1 Free Cash Flow Conversion1 Net Leverage1 122% 123% 80% Impact from LTM divested Adjusted EBITDA3 45% 0.3x 4.4x 3.7x 2.9x 3.2x 2019 2020 2021 2022 FY 2022 FCF Conversion1 Impacted by:
Slide 36: 2023 Outlook
Financial Performance: 2023 Outlook 36 2023 Outlook Reflects Organic Net Sales1 and Constant Currency Adjusted EBITDA Growth1 2023 Outlook 2023 Considerations Above Long-term Algorithm Growth +4-6% • Increasing price elasticity impact on volume/mix Organic Net Sales1 • ~95% of 2023 pricing is accept
Slide 37: Closing Commentary
CLOSING COMMENTARY Miguel Patricio Chief Executive Officer and Chair of the Board
Slide 38: And We're Not Done
38 And We’re Not Done Clear Path Forward on Our Journey … Accelerate Strong Adjusted EBITDA1 Top-Tier Profitable Growth and Cash Generation Returns … to Accelerate Profitable Growth and Drive Top Tier Shareholder Return More to come at Q4 2022 Business Update 1| Non-GAAP financial measure. See the a
Slide 39: Appendix
APPENDIX Q4 2022 Business Update
Slide 40: Private Label Reconciliation
Private Label Reconciliation Private Label Reconciliation: Scanner Data1 Kraft Heinz PL exposure, including Nat Cheese (syndicated view) 17.8% Remove natural cheese (1.6pp) Kraft Heinz PL exposure, excluding Nat Cheese (syndicated view) 16.1% Negligible business2 (<$1M FY dollars) (2.0pp) KHC custom
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