Kraft Heinz Reports First Quarter 2018 Results |
-
Q1 net sales decreased 0.3%; Organic Net Sales(1)
decreased 1.5%
-
Q1 diluted EPS increased to $0.81; Adjusted EPS(1)
increased to $0.89 from $0.84 the prior year
PITTSBURGH & CHICAGO--(BUSINESS WIRE)--May 2, 2018--
The Kraft Heinz Company (NASDAQ: KHC) (“Kraft Heinz” or the “Company”)
today reported first quarter 2018 financial results that reflected
higher input costs, lower net sales in the United States, and
investments to enhance capabilities, as well as lower taxes versus the
prior year period.
“Our first-quarter results were consistent with, if not slightly better
than, the expectations we expressed in February,” said Kraft Heinz CEO
Bernardo Hees. “The initial successes we’re seeing in the marketplace,
together with the strong investments we’re making in marketing, new
product innovation, and capability-building, give us increased
confidence in delivering the top- and bottom-line growth we expect in
2018.”
Q1 2018 Financial Summary
|
|
For the Quarter Ended
|
|
Year-over-year Change
|
|
|
March 31,
|
|
April 1,
|
|
|
|
Impact of
|
|
|
|
|
2018
|
|
2017
|
|
Actual
|
|
Currency
|
|
Organic
|
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
Net sales
|
|
$
|
6,304
|
|
|
$
|
6,324
|
|
|
(0.3
|
)%
|
|
1.2 pp
|
|
(1.5
|
)%
|
Operating income
|
|
1,481
|
|
|
1,433
|
|
|
3.4
|
%
|
|
|
|
|
Net income/(loss) attributable to common shareholders
|
|
993
|
|
|
893
|
|
|
11.1
|
%
|
|
|
|
|
Diluted EPS
|
|
$
|
0.81
|
|
|
$
|
0.73
|
|
|
11.0
|
%
|
|
|
|
|
Adjusted EBITDA(1)
|
|
1,795
|
|
|
1,844
|
|
|
(2.6
|
)%
|
|
0.9 pp
|
|
|
Adjusted EPS(1)
|
|
$
|
0.89
|
|
|
$
|
0.84
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales were $6.3 billion, down 0.3 percent versus the year-ago
period, including a 1.2 percentage point benefit from currency. Organic
Net Sales decreased 1.5 percent versus the year-ago period. Pricing
increased 1.0 percentage points, driven by price increases in the United
States and Rest of World markets. Volume/mix decreased 2.5 percentage
points, primarily driven by lower shipments in the United States and
Rest of World markets that more than offset solid retail growth in
Canada and EMEA(3) as well as foodservice gains in the United
States and EMEA.
Net income attributable to common shareholders increased to $1.0 billion
and diluted EPS increased to $0.81, primarily reflecting benefits from
U.S. Tax Reform. Adjusted EBITDA decreased 2.6 percent versus the
year-ago period to $1.8 billion, including a favorable 0.9 percentage
point impact from currency. Excluding the impact of currency, the
decline in Adjusted EBITDA reflected higher input costs, lower
volume/mix and investments in strategic initiatives. Adjusted EPS
increased 6.0 percent to $0.89, mainly reflecting lower taxes versus the
prior year period.
Q1 2018 Business Segment Highlights
United States
|
|
|
For the Quarter Ended
|
|
Year-over-year Change
|
|
|
March 31,
|
|
April 1,
|
|
|
|
Impact of
|
|
|
|
|
2018
|
|
2017
|
|
Actual
|
|
Currency
|
|
Organic
|
|
|
(in millions)
|
|
|
|
|
|
|
Net sales
|
|
$
|
4,368
|
|
|
$
|
4,518
|
|
|
(3.3
|
)%
|
|
0.0 pp
|
|
(3.3
|
)%
|
Segment Adjusted EBITDA
|
|
1,382
|
|
|
1,464
|
|
|
(5.6
|
)%
|
|
0.0 pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States net sales were $4.4 billion, down 3.3 percent versus the
year-ago period. Pricing increased 0.8 percentage points as higher
pricing was partially offset by the timing of trade spending versus the
prior year period. Volume/mix decreased 4.1 percentage points as solid
gains in foodservice and a favorable shift in Easter-related sales was
more than offset by lower shipments of nuts, cold cuts, frozen
potatoes and parts of the cheese business.
United States Segment Adjusted EBITDA decreased 5.6 percent versus the
year-ago period to $1.4 billion, primarily reflecting lower volume/mix,
non-key commodity(2) inflation and investments to enhance
capabilities that were partially offset by gains from productivity and
pricing.
Canada
|
|
|
For the Quarter Ended
|
|
Year-over-year Change
|
|
|
March 31,
|
|
April 1,
|
|
|
|
Impact of
|
|
|
|
|
2018
|
|
2017
|
|
Actual
|
|
Currency
|
|
Organic
|
|
|
(in millions)
|
|
|
|
|
|
|
Net sales
|
|
$
|
484
|
|
|
$
|
440
|
|
|
9.8
|
%
|
|
4.8 pp
|
|
5.0
|
%
|
Segment Adjusted EBITDA
|
|
134
|
|
|
125
|
|
|
7.1
|
%
|
|
4.4 pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada net sales were $484 million, up 9.8 percent versus the year-ago
period, including a favorable 4.8 percentage point impact from currency.
Organic Net Sales increased 5.0 percent versus the year-ago period.
Pricing was neutral with the prior year period as higher pricing in
several categories was offset by lower pricing in cheese. Volume/mix
increased 5.0 percentage points reflecting earlier implementation of
go-to-market agreements with key retailers that primarily benefited
cheese and coffee sales.
Canada Segment Adjusted EBITDA increased 7.1 percent versus the year-ago
period to $134 million, including a favorable 4.4 percentage point
impact from currency. Excluding the impact of currency, Segment Adjusted
EBITDA increased 2.7 percent, primarily driven by volume/mix growth that
was partially offset by higher input costs.
EMEA(3)
|
|
|
For the Quarter Ended
|
|
Year-over-year Change
|
|
|
March 31,
|
|
April 1,
|
|
|
|
Impact of
|
|
|
|
|
2018
|
|
2017
|
|
Actual
|
|
Currency
|
|
Organic
|
|
|
(in millions)
|
|
|
|
|
|
|
Net sales
|
|
$
|
685
|
|
|
$
|
597
|
|
|
14.7
|
%
|
|
12.4 pp
|
|
2.3
|
%
|
Segment Adjusted EBITDA
|
|
182
|
|
|
140
|
|
|
30.4
|
%
|
|
14.7 pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EMEA net sales were $685 million, up 14.7 percent versus the year-ago
period, including a 12.4 percentage point benefit from currency. Organic
Net Sales increased 2.3 percent versus the year-ago period. Pricing
declined 0.5 percentage points, driven by increased promotional activity
in infant nutrition, primarily in Italy. Volume/mix increased 2.8
percentage points, reflecting a strong soup season in the UK and growth
in condiments and sauces, as well as gains in foodservice.
EMEA Segment Adjusted EBITDA increased 30.4 percent versus the year-ago
period to $182 million, including a positive 14.7 percentage point
impact from currency. Excluding currency impacts, the increase in
Segment Adjusted EBITDA reflected gains from productivity, pension and
postretirement cost favorability versus the prior year period, as well
as volume/mix growth that was partially offset by lower pricing.
Rest of World(3)(4)
|
|
|
For the Quarter Ended
|
|
Year-over-year Change
|
|
|
March 31,
|
|
April 1,
|
|
|
|
Impact of
|
|
|
|
|
2018
|
|
2017
|
|
Actual
|
|
Currency
|
|
Organic
|
|
|
(in millions)
|
|
|
|
|
|
|
Net sales
|
|
$
|
767
|
|
|
$
|
769
|
|
|
(0.2
|
)%
|
|
(3.2) pp
|
|
3.0
|
%
|
Segment Adjusted EBITDA
|
|
143
|
|
|
144
|
|
|
(0.7
|
)%
|
|
(5.6) pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rest of World net sales were $767 million, 0.2 percent lower than the
year-ago period, including a negative 3.2 percentage point impact from
currency. Organic Net Sales increased 3.0 percent versus the year-ago
period. Pricing was up 4.3 percentage points, primarily driven by
actions to offset higher input costs in local currency, particularly in
Latin America. Volume/mix decreased 1.3 percentage points, driven by a
combination of unfavorable impacts from distributor network realignment
in select markets and lower shipments in Indonesia and Brazil that was
partially offset by growth in Australia.
Rest of World Segment Adjusted EBITDA decreased 0.7 percent versus the
year-ago period to $143 million, including an unfavorable 5.6 percentage
point impact from currency. Excluding the impact of currency, Segment
Adjusted EBITDA increased 4.9 percentage points as Organic Net Sales
gains were partially offset by higher input costs in local currency.
End Notes
(1)
|
|
Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted
EBITDA and Adjusted EPS are non-GAAP financial measures. Please see
discussion of non-GAAP financial measures and the reconciliations at
the end of this press release for more information.
|
|
|
|
(2)
|
|
The Company's key commodities in the United States and Canada are
dairy, meat, coffee and nuts.
|
|
|
|
(3)
|
|
In the first quarter of our fiscal year 2018, we reorganized certain
of our international businesses to better align our global
geographies. As a result, we moved our Middle East and Africa
businesses from the historical Asia Pacific, Middle East, and Africa
(“AMEA”) operating segment into the historical Europe reportable
segment, forming the new Europe, Middle East, and Africa (“EMEA”)
reportable segment. The remaining businesses from the AMEA operating
segment became the Asia Pacific (“APAC”) operating segment. We have
reflected this change in all historical periods presented.
|
|
|
|
(4)
|
|
Rest of World is comprised of two operating segments: Latin America
and APAC.
|
|
|
|
Webcast and Conference Call Information
A webcast of The Kraft Heinz Company's first quarter 2018 earnings
conference call will be available at ir.kraftheinzcompany.com.
The call begins today at 5:00 p.m. Eastern Time.
ABOUT THE KRAFT HEINZ COMPANY
The Kraft Heinz Company (NASDAQ: KHC) is the fifth-largest food and
beverage company in the world. A globally trusted producer of delicious
foods, The Kraft Heinz Company provides high quality, great taste and
nutrition for all eating occasions whether at home, in restaurants, or
on the go. The Company’s iconic brands include Kraft, Heinz,
ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell
House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero,
Smart Ones and Velveeta. The Kraft Heinz Company is dedicated
to the sustainable health of our people, our planet and our Company. For
more information, visit www.kraftheinzcompany.com.
Forward-Looking Statements
This press release contains a number of forward-looking statements.
Words such as "reflect," "invest," "see," "make," "expect," "give,"
"deliver," "drive," "believe," "will," and variations of such words and
similar expressions are intended to identify forward-looking statements.
Examples of forward-looking statements include, but are not limited to,
statements regarding the Company's plans, expectations, investments,
innovations, opportunities, capabilities, execution and growth. These
forward-looking statements are not guarantees of future performance and
are subject to a number of risks and uncertainties, many of which are
difficult to predict and beyond the Company's control.
Important factors that may affect the Company's business and operations
and that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, operating in
a highly competitive industry; changes in the retail landscape or the
loss of key retail customers; the Company’s ability to maintain, extend
and expand its reputation and brand image; the impacts of the Company’s
international operations; the Company’s ability to leverage its brand
value; the Company’s ability to predict, identify and interpret changes
in consumer preferences and demand; the Company’s ability to drive
revenue growth in its key product categories, increase its market share,
or add products; an impairment of the carrying value of goodwill or
other indefinite-lived intangible assets; volatility in commodity,
energy and other input costs; changes in the Company’s management team
or other key personnel; the Company’s ability to realize the anticipated
benefits from its cost savings initiatives; changes in relationships
with significant customers and suppliers; the execution of the Company’s
international expansion strategy; tax law changes or interpretations;
legal claims or other regulatory enforcement actions; product recalls or
product liability claims; unanticipated business disruptions; the
Company’s ability to complete or realize the benefits from potential and
completed acquisitions, alliances, divestitures or joint ventures;
economic and political conditions in the United States and in various
other nations in which we operate; the volatility of capital markets;
increased pension, labor and people-related expenses; volatility in the
market value of all or a portion of the derivatives we use; exchange
rate fluctuations; risks associated with information technology and
systems, including service interruptions, misappropriation of data or
breaches of security; the Company’s ability to protect intellectual
property rights; impacts of natural events in the locations in which we
or the Company’s customers, suppliers or regulators operate; the
Company’s indebtedness and ability to pay such indebtedness; the
Company’s ownership structure; the impact of future sales of its common
stock in the public markets; the Company’s ability to continue to pay a
regular dividend; changes in laws and regulations; restatements of the
Company’s consolidated financial statements; and other factors. For
additional information on these and other factors that could affect the
Company's forward-looking statements, see the Company's risk factors, as
they may be amended from time to time, set forth in its filings with the
Securities and Exchange Commission (the “SEC”). The Company disclaims
and does not undertake any obligation to update or revise any
forward-looking statement in this press release, except as required by
applicable law or regulation.
Non-GAAP Financial Measures
To supplement the financial information, the Company has presented
Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA,
and Adjusted EPS, which are considered 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. The non-GAAP
financial measures presented may differ from similarly titled non-GAAP
financial measures presented by other companies, and other companies may
not define these non-GAAP financial measures in the same way. These
measures are not substitutes for their comparable GAAP financial
measures, such as net sales, net income/(loss), diluted earnings per
share, or other measures prescribed by GAAP, and there are limitations
to using non-GAAP financial measures.
Management uses these non-GAAP financial measures to assist in comparing
the Company's performance on a consistent basis for purposes of business
decision making by removing the impact of certain items that management
believes do not directly reflect the Company's underlying operations.
Management believes that presenting the Company's non-GAAP financial
measures is useful to investors because it (i) provides investors with
meaningful supplemental information regarding financial performance by
excluding certain items, (ii) permits investors to view performance
using the same tools that management uses to budget, make operating and
strategic decisions, and evaluate historical performance, and (iii)
otherwise provides supplemental information that may be useful to
investors in evaluating the Company's results. The Company believes that
the presentation of these non-GAAP financial measures, when considered
together with the corresponding GAAP financial measures and the
reconciliations to those measures, provides investors with additional
understanding of the factors and trends affecting the Company's business
than could be obtained absent these disclosures.
Organic Net Sales is defined as net sales excluding, when they occur,
the impact of acquisitions, currency, divestitures and a 53rd week of
shipments. The Company calculates the impact of currency on net sales by
holding exchange rates constant at the previous year's exchange rate,
with the exception of Venezuela following the Company's June 28, 2015
currency devaluation, for which the Company calculates the previous
year's results using the current year's exchange rate. Organic Net Sales
is a tool that can assist management and investors in comparing the
Company's performance on a consistent basis by removing the impact of
certain items that management believes do not directly reflect the
Company's underlying operations.
Adjusted EBITDA is defined as net income/(loss) from continuing
operations before interest expense, other expense/(income), net,
provision for/(benefit from) income taxes, and depreciation and
amortization (excluding integration and restructuring expenses); in
addition to these adjustments, the Company excludes, when they occur,
the impacts of integration and restructuring expenses, merger costs,
unrealized losses/(gains) on commodity hedges, impairment losses,
losses/(gains) on the sale of a business, nonmonetary currency
devaluation (e.g., remeasurement gains and losses), and equity award
compensation expense (excluding integration and restructuring expenses).
The Company also presents Adjusted EBITDA on a constant currency basis.
The Company calculates the impact of currency on Adjusted EBITDA by
holding exchange rates constant at the previous year's exchange rate,
with the exception of Venezuela following the Company's June 28, 2015
devaluation of the Venezuelan bolivar and remeasurement of assets and
liabilities of its Venezuelan subsidiary, for which it calculates the
previous year's results using the current year's exchange rate. Adjusted
EBITDA and Constant Currency Adjusted EBITDA are tools that can assist
management and investors in comparing the Company's performance on a
consistent basis by removing the impact of certain items that management
believes do not directly reflect the Company's underlying operations.
Adjusted EPS is defined as diluted earnings per share excluding, when
they occur, the impacts of integration and restructuring expenses,
merger costs, unrealized losses/(gains) on commodity hedges, impairment
losses, losses/(gains) on the sale of a business, nonmonetary currency
devaluation (e.g., remeasurement gains and losses), and U.S. Tax Reform,
and including when they occur, adjustments to reflect preferred stock
dividend payments on an accrual basis. The Company believes Adjusted EPS
provides important comparability of underlying operating results,
allowing investors and management to assess operating performance on a
consistent basis.
See the attached schedules for supplemental financial data, which
includes the financial information, the non-GAAP financial measures and
corresponding reconciliations to the comparable GAAP financial measures
for the relevant periods.
|
|
|
|
|
Schedule 1
|
The Kraft Heinz Company
|
Condensed Consolidated Statements of Income
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
For the Quarter Ended
|
|
|
March 31,
|
|
April 1,
|
|
|
2018
|
|
2017
|
Net sales
|
|
$
|
6,304
|
|
|
$
|
6,324
|
|
Cost of products sold(a)
|
|
4,059
|
|
|
4,125
|
|
Gross profit
|
|
2,245
|
|
|
2,199
|
|
Selling, general and administrative expenses(b)
|
|
764
|
|
|
766
|
|
Operating income
|
|
1,481
|
|
|
1,433
|
|
Interest expense
|
|
317
|
|
|
313
|
|
Other expense/(income), net(c)
|
|
(90
|
)
|
|
(130
|
)
|
Income/(loss) before income taxes
|
|
1,254
|
|
|
1,250
|
|
Provision for/(benefit from) income taxes
|
|
261
|
|
|
359
|
|
Net income/(loss)
|
|
993
|
|
|
891
|
|
Net income/(loss) attributable to noncontrolling interest
|
|
—
|
|
|
(2
|
)
|
Net income/(loss) attributable to common shareholders
|
|
$
|
993
|
|
|
$
|
893
|
|
|
|
|
|
|
Basic shares outstanding
|
|
1,219
|
|
|
1,217
|
|
Diluted shares outstanding
|
|
1,228
|
|
|
1,229
|
|
|
|
|
|
|
Per share data applicable to common shareholders:
|
|
|
|
|
Basic earnings/(loss) per share
|
|
$
|
0.81
|
|
|
$
|
0.73
|
|
Diluted earnings/(loss) per share
|
|
0.81
|
|
|
0.73
|
|
(a)
|
|
Integration and restructuring expenses recorded in cost of products
sold were $76 million for the quarter ended March 31, 2018 ($61
million after-tax) and $96 million for the quarter ended April 1,
2017 ($66 million after-tax).
|
|
|
|
(b)
|
|
Integration and restructuring expenses recorded in selling, general
and administrative expenses (“SG&A”) were $14 million for the
quarter ended March 31, 2018 ($10 million after-tax) and $39 million
for the quarter ended April 1, 2017 ($26 million after-tax).
|
|
|
|
(c)
|
|
Integration and restructuring expenses recorded in other
expense/(income), net were $13 million for the quarter ended April
1, 2017 ($9 million after-tax). There were no such expenses for the
quarter ended March 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 2
|
The Kraft Heinz Company
|
Reconciliation of Net Sales to Organic Net Sales
|
For the Quarter Ended
|
(dollars in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
|
|
Organic Net
|
|
|
|
|
|
|
Net Sales
|
|
Currency
|
|
Sales
|
|
Price
|
|
Volume/Mix
|
March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
4,368
|
|
|
$
|
—
|
|
$
|
4,368
|
|
|
|
|
|
Canada
|
|
484
|
|
|
22
|
|
462
|
|
|
|
|
|
EMEA
|
|
685
|
|
|
74
|
|
611
|
|
|
|
|
|
Rest of World
|
|
767
|
|
|
17
|
|
750
|
|
|
|
|
|
|
|
$
|
6,304
|
|
|
$
|
113
|
|
$
|
6,191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
4,518
|
|
|
$
|
—
|
|
$
|
4,518
|
|
|
|
|
|
Canada
|
|
440
|
|
|
—
|
|
440
|
|
|
|
|
|
EMEA
|
|
597
|
|
|
—
|
|
597
|
|
|
|
|
|
Rest of World
|
|
769
|
|
|
40
|
|
729
|
|
|
|
|
|
|
|
$
|
6,324
|
|
|
$
|
40
|
|
$
|
6,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-over-year growth rates
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
(3.3
|
)%
|
|
0.0 pp
|
|
(3.3
|
)%
|
|
0.8 pp
|
|
(4.1) pp
|
Canada
|
|
9.8
|
%
|
|
4.8 pp
|
|
5.0
|
%
|
|
0.0 pp
|
|
5.0 pp
|
EMEA
|
|
14.7
|
%
|
|
12.4 pp
|
|
2.3
|
%
|
|
(0.5) pp
|
|
2.8 pp
|
Rest of World
|
|
(0.2
|
)%
|
|
(3.2) pp
|
|
3.0
|
%
|
|
4.3 pp
|
|
(1.3) pp
|
Kraft Heinz
|
|
(0.3
|
)%
|
|
1.2 pp
|
|
(1.5
|
)%
|
|
1.0 pp
|
|
(2.5) pp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 3
|
The Kraft Heinz Company
|
Reconciliation of Net Income/(Loss) to Adjusted EBITDA
|
(dollars in millions)
|
(Unaudited)
|
|
|
For the Quarter Ended
|
|
|
March 31,
|
|
April 1,
|
|
|
2018
|
|
2017
|
Net income/(loss)
|
|
$
|
993
|
|
|
$
|
891
|
|
Interest expense
|
|
317
|
|
|
313
|
|
Other expense/(income), net
|
|
(90
|
)
|
|
(130
|
)
|
Provision for/(benefit from) income taxes
|
|
261
|
|
|
359
|
|
Operating income
|
|
1,481
|
|
|
1,433
|
|
Depreciation and amortization (excluding integration and
restructuring expenses)
|
|
206
|
|
|
222
|
|
Integration and restructuring expenses
|
|
90
|
|
|
135
|
|
Merger costs
|
|
9
|
|
|
—
|
|
Unrealized losses/(gains) on commodity hedges
|
|
2
|
|
|
42
|
|
Equity award compensation expense (excluding integration and
restructuring expenses)
|
|
7
|
|
|
12
|
|
Adjusted EBITDA
|
|
$
|
1,795
|
|
|
$
|
1,844
|
|
|
|
|
|
|
Segment Adjusted EBITDA:
|
|
|
|
|
United States
|
|
$
|
1,382
|
|
|
$
|
1,464
|
|
Canada
|
|
134
|
|
|
125
|
|
EMEA
|
|
182
|
|
|
140
|
|
Rest of World
|
|
143
|
|
|
144
|
|
General corporate expenses
|
|
(46
|
)
|
|
(29
|
)
|
Adjusted EBITDA
|
|
$
|
1,795
|
|
|
$
|
1,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4
|
The Kraft Heinz Company
|
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted
EBITDA
|
For the Quarter Ended
|
(dollars in millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of
|
|
Constant Currency
|
|
|
Adjusted EBITDA
|
|
Currency
|
|
Adjusted EBITDA
|
March 31, 2018
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,382
|
|
|
$
|
—
|
|
|
$
|
1,382
|
|
Canada
|
|
134
|
|
|
6
|
|
|
128
|
|
EMEA
|
|
182
|
|
|
20
|
|
|
162
|
|
Rest of World
|
|
143
|
|
|
3
|
|
|
140
|
|
General corporate expenses
|
|
(46
|
)
|
|
(2
|
)
|
|
(44
|
)
|
|
|
$
|
1,795
|
|
|
$
|
27
|
|
|
$
|
1,768
|
|
|
|
|
|
|
|
|
|
April 1, 2017
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,464
|
|
|
$
|
—
|
|
|
$
|
1,464
|
|
Canada
|
|
125
|
|
|
—
|
|
|
125
|
|
EMEA
|
|
140
|
|
|
—
|
|
|
140
|
|
Rest of World
|
|
144
|
|
|
11
|
|
|
133
|
|
General corporate expenses
|
|
(29
|
)
|
|
—
|
|
|
(29
|
)
|
|
|
$
|
1,844
|
|
|
$
|
11
|
|
|
$
|
1,833
|
|
|
|
|
|
|
|
|
|
Year-over-year growth rates
|
|
|
|
|
|
|
|
United States
|
|
(5.6
|
)%
|
|
0.0 pp
|
|
|
(5.6
|
)%
|
Canada
|
|
7.1
|
%
|
|
4.4 pp
|
|
|
2.7
|
%
|
EMEA
|
|
30.4
|
%
|
|
14.7 pp
|
|
|
15.7
|
%
|
Rest of World
|
|
(0.7
|
)%
|
|
(5.6) pp
|
|
|
4.9
|
%
|
General corporate expenses
|
|
55.1
|
%
|
|
5.0 pp
|
|
|
50.1
|
%
|
Kraft Heinz
|
|
(2.6
|
)%
|
|
0.9 pp
|
|
|
(3.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 5
|
The Kraft Heinz Company
|
Reconciliation of Diluted EPS to Adjusted EPS
|
(Unaudited)
|
|
|
For the Quarter Ended
|
|
|
March 31,
|
|
April 1,
|
|
|
2018
|
|
2017
|
Diluted EPS
|
|
$
|
0.81
|
|
|
$
|
0.73
|
Integration and restructuring expenses(a)(c)
|
|
0.05
|
|
|
0.08
|
Merger costs(a)(b)
|
|
0.01
|
|
|
—
|
Unrealized losses/(gains) on commodity hedges(a)(b)
|
|
—
|
|
|
0.02
|
Nonmonetary currency devaluation(a)(d)
|
|
0.04
|
|
|
0.01
|
U.S. Tax Reform(e)
|
|
(0.02
|
)
|
|
—
|
Adjusted EPS
|
|
$
|
0.89
|
|
|
$
|
0.84
|
(a)
|
|
Income tax expense associated with these items is based on
applicable jurisdictional tax rates and deductibility assessments of
individual items.
|
|
|
|
(b)
|
|
Refer to the reconciliation of net income/(loss) to Adjusted EBITDA
for the related gross expenses.
|
|
|
|
(c)
|
|
Integration and restructuring included the following gross expenses:
|
|
|
• Expenses recorded in cost of products sold were $76 million for
the three months ended March 31, 2018 and $96 million for the
three months ended April 1, 2017.
|
|
|
• Expenses recorded in SG&A were $14 million for the three months
ended March 31, 2018 and $39 million for the three months ended
April 1, 2017; and
|
|
|
• Expenses recorded in other expense/(income), net, were $13
million for the three months ended April 1, 2017 (there were no
such expenses for the three months ended March 31, 2018).
|
|
|
|
(d)
|
|
Nonmonetary currency devaluation included the following gross
expenses:
|
|
|
• Expenses recorded in other expense/(income), net, were $47
million for the three months ended March 31, 2018 and $8 million
for the three months ended April 1, 2017.
|
|
|
|
(e)
|
|
U.S. Tax Reform included a benefit from income taxes of $20 million
for the three months ended March 31, 2018 (there were no such
expenses for the three months ended April 1, 2017).
|
|
|
|
|
|
|
|
|
|
|
Schedule 6
|
The Kraft Heinz Company
|
Condensed Consolidated Balance Sheets
|
(in millions, except per share data)
|
(Unaudited)
|
|
|
March 31, 2018
|
|
December 30, 2017
|
ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,794
|
|
|
$
|
1,629
|
|
Trade receivables, net
|
|
1,044
|
|
|
921
|
|
Sold receivables
|
|
530
|
|
|
353
|
|
Income taxes receivable
|
|
150
|
|
|
582
|
|
Inventories
|
|
3,144
|
|
|
2,815
|
|
Other current assets
|
|
775
|
|
|
966
|
|
Total current assets
|
|
7,437
|
|
|
7,266
|
|
Property, plant and equipment, net
|
|
7,267
|
|
|
7,120
|
|
Goodwill
|
|
44,843
|
|
|
44,824
|
|
Intangible assets, net
|
|
59,600
|
|
|
59,449
|
|
Other assets
|
|
1,640
|
|
|
1,573
|
|
TOTAL ASSETS
|
|
$
|
120,787
|
|
|
$
|
120,232
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Commercial paper and other short-term debt
|
|
$
|
1,001
|
|
|
$
|
460
|
|
Current portion of long-term debt
|
|
2,742
|
|
|
2,743
|
|
Trade payables
|
|
4,241
|
|
|
4,449
|
|
Accrued marketing
|
|
567
|
|
|
680
|
|
Income taxes payable
|
|
291
|
|
|
152
|
|
Interest payable
|
|
345
|
|
|
419
|
|
Other current liabilities
|
|
1,142
|
|
|
1,229
|
|
Total current liabilities
|
|
10,329
|
|
|
10,132
|
|
Long-term debt
|
|
28,561
|
|
|
28,333
|
|
Deferred income taxes
|
|
14,085
|
|
|
14,076
|
|
Accrued postemployment costs
|
|
400
|
|
|
427
|
|
Other liabilities
|
|
949
|
|
|
1,017
|
|
TOTAL LIABILITIES
|
|
54,324
|
|
|
53,985
|
|
Redeemable noncontrolling interest
|
|
8
|
|
|
6
|
|
Equity:
|
|
|
|
|
Common stock, $0.01 par value
|
|
12
|
|
|
12
|
|
Additional paid-in capital
|
|
58,733
|
|
|
58,711
|
|
Retained earnings/(deficit)
|
|
8,718
|
|
|
8,589
|
|
Accumulated other comprehensive income/(losses)
|
|
(975
|
)
|
|
(1,054
|
)
|
Treasury stock, at cost
|
|
(240
|
)
|
|
(224
|
)
|
Total shareholders' equity
|
|
66,248
|
|
|
66,034
|
|
Noncontrolling interest
|
|
207
|
|
|
207
|
|
TOTAL EQUITY
|
|
66,455
|
|
|
66,241
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
120,787
|
|
|
$
|
120,232
|
|

View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006454/en/
Source: The Kraft Heinz Company
The Kraft Heinz Company Michael Mullen (media) Michael.Mullen@kraftheinz.com or Christopher
Jakubik, CFA (investors) ir@kraftheinzcompany.com
|
 |
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding The Kraft Heinz Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |
|