At the 2023 CAGNY Conference, Kraft Heinz discusses the transformation’s momentum and its approach to leading the future of food.
CHICAGO & PITTSBURGH—(BUSINESS WIRE)— At the 2023 Consumer Analyst Group of New York (CAGNY) Conference, The Kraft Heinz Corporation (Nasdaq: KHC) (“Kraft Heinz” or the “Company”) will talk about the progress the Company is making in relation to its strategic transformation plan and long-term growth algorithm.
Rafa Oliveira, EVP & President, International Markets; Andre Maciel, EVP & Global CFO; Miguel Patricio, CEO and Board Chair; Carlos Abrams-Rivera, EVP & President, North America; and Rafa Oliveira, EVP & President, International Markets, will speak about how the company is fostering innovation and accelerating profitable growth to create long-term value for stockholders.
In 2022, Patricio stated, “We entered the final stage of our transition, with a focus on strengthening our Agile@Scale skills through partnerships with technological heavyweights and cutting-edge innovators.” I am more confident than ever in our capacity to create sustainable growth and, eventually, to lead the future of food because of our refreshed product range and greater financial flexibility. “We’ve made incredible progress in creating best-in-class systems across the Business,” I said.
In addition to focusing on GROW platforms, particularly Taste Elevation and Easy Meals Made Better, the company will discuss how it expects to increase Organic Net Sales growth, with roughly one third of that growth coming from each of the three pillars of U.S. Retail in the North America Zone, Global Foodservice, and Emerging Markets in the International Zone.
Components of Growth
The Company will give numerous examples of how it is modernising its venerable brands, bringing out innovation, setting the bar for disruptive marketing, and enhancing sales execution.
According to Abrams-Rivera, “U.S. Retail is a must-win for us.” “We have given our brands new life through restoration, and now we must innovate to satisfy the expectations of consumers in the future. With a new internal/external collaboration ecosystem to promote speed, capability, and scale, we are approaching product innovation fundamentally differently. We envision the potential for $2 billion in additional net sales from innovation in North American retail from 2023 to 2027 as we work at the nexus of food and technology.
The company will also discuss how it expects the foodservice industry to be a major driver of growth worldwide. A compound annual growth rate of about 5% is anticipated to assist Foodservice increase sales and take market share in North America through new quick-service restaurant (QSR) wins and incremental sales from new channels like schools. Over the next four years, it is anticipated that the Chef-Led Foodservice Sales Model and international QSR alliances would propel a 10% net sales compounded annual growth rate in the international zone.
The Corporation will describe considerable growth potential it sees in the Developing Markets in the International Zone as it strives to increase net sales at a 13% compounded annual growth rate. Also, Kraft Heinz will give updates on its Go-to-Market Model, a custom service model created to aid the Company in entering new markets that has been shown to increase growth in the areas where it has been used.
We think that concentrating on Developing Markets and Taste Elevation will help us expand and take market share in the International Zone. To strengthen our presence in the markets that are expanding the fastest and to propel innovation for the Heinz brand beyond ketchup in order to accelerate worldwide growth, we intend to extend and expand our go-to-market model.
Financial Long-Term Profile
Kraft Heinz declared in 2022 that it was expanding its long-term growth algorithm. The Company will offer more details at CAGNY on how it intends to meet its long-term growth goals, which are reaffirmed at:
growth in organic net sales(1) of 2% to 3%
Growth in Adjusted EBITDA(1) of 4% to 6%
6% to 8% rise in adjusted EPS(1) with a free cash flow conversion ratio of about 100%.
“We intend to deliver significant stockholder returns,” said Maciel. “This will be supported by both an attractive dividend and superior operational performance.” “We think we can benefit from multiple expansions as long as we keep delivering consistently,” the statement reads.
The company will revise and raise its $2.5 billion gross efficiency target.
Forecast for 2023
The company will confirm its estimate to produce 2023 Organic Net Sales(1)(2) growth of 4% to 6% against 2022, as stated in the fourth quarter and full year 2022 earnings. From 2022 to 2023, constant currency adjusted EBITDA(1)(2) growth is still anticipated to be in the range of 2% to 4%, or 4% to 6% when the impact of the 53rd week in 2022 is taken into account.
Pricing and gross efficiency will help the Adjusted Gross Profit Margin(1)(2) improve, although the company still expects high single-digit inflation for the year. An increase in adjusted gross profit margin is still anticipated to finance new expenditures in marketing, technology, and human resources.
A $0.04 negative impact from anticipated adverse adjustments in non-cash pension and post-retirement benefits, as well as a $0.04 headwind from currency at current exchange rates, are likely to reduce adjusted EPS(1)(2) to $2.67 to $2.75. Lapping the 53rd week in 2022 had a negative $0.06 impact on the anticipated Adjusted EPS performance in 2023.
The company currently anticipates that in 2023, the free cash flow conversion(1)(2) would be over 80%.
Non-GAAP financial measures include organic net sales, adjusted ebitda, adjusted ebitda in constant currency, adjusted EPS, adjusted gross profit margin, free cash flow, and free cash flow conversion. For additional information, please refer to the discussion of non-GAAP financial measures and the reconciliations at the conclusion of this press release.
Guidance for Organic Net Sales, Constant Currency Adjusted EBITDA, Adjusted EPS, Adjusted Gross Margin, and Free Cash Flow Conversion is only provided on a non-GAAP basis due to the lack of certain data required to calculate the most comparable GAAP measure due to the uncertainty and inherent difficulty of predicting the occurrence and the future financial statement impact of such items impacting comparability, including, but not limited to, the impact of current and future currency exchange rates. The Company is therefore unable to provide a reconciliation of these measures without excessive effort due to the unpredictability and variability of the type and amount of future adjustments, which could be material.
Information from Webcasts
Today at 11 a.m. Eastern Standard Time, a planned presentation at the CAGNY conference will start. It will be accessible at ir.kraftheinzcompany.com. After the event, a replay will be available at ir.kraftheinzcompany.com.
KRAFT HEINZ COMPANY INFORMATION
At The Kraft Heinz Company (Nasdaq: KHC), we are leading a transformation motivated by our purpose, Let’s Make Life Tasty. Everything we do is centred on the needs of the consumer. With net sales projected to reach $26 billion in 2022, we are dedicated to expanding our venerable and up-and-coming food and beverage brands on a worldwide scale. To unleash the full potential of Kraft Heinz across a portfolio of six consumer-driven product platforms, we make use of our scale and agility. As global citizens, we’re committed to having a long-lasting, moral influence and providing nutritious food for everyone. Visit www.kraftheinzcompany.com to learn more about our journey, or follow us on LinkedIn and Twitter.
There are some forward-looking statements in this press release. Forward-looking statements are denoted by terms like “accelerate,” “believe,” “develop,” “deliver,” “drive,” “expect,” “focus,” “grow,” “fund,” “guide,” “implement,” “improve,” “increase,” “make,” “outlook,” “plan,” “provide,” “transform,” and similar future or conditional expressions. The company’s plans, the effects of accounting standards and guidance, growth, legal issues, taxes, costs and cost savings, impairments, dividends, expectations, investments, innovations, opportunities, capabilities, execution, initiatives, and pipeline are just a few examples of forward-looking statements. These projections are based on current predictions from management and are not assurances of future performance. They involve risks and uncertainties, many of which are difficult to forecast and outside of the company’s control.
Operating in a highly competitive industry, the Company’s ability to accurately predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation are just a few important factors that may have an impact on the Company’s business and operations and cause actual results to differ materially from those in the forward-looking statements. geopolitical conflicts, such as the ongoing conflict between Russia and Ukraine, that cause economic disruptions on a global scale; unexpected business interruptions and natural disasters in the places where the company operates or that affect its clients, suppliers, distributors, or regulators; and economic and political conditions in the United States and other countries where the company conducts business (such as inflationary pressures, a general economic slowdown, or See the Company’s risk factors, as they may be updated from time to time, listed in its filings with the Securities and Exchange Commission (“SEC”) for more details on these and other elements that may have an impact on the Company’s forward-looking statements. Except as required by applicable law or regulation, the Company disclaims any commitment to update, revise, or remove any forward-looking statement contained in this press release.
Non-GAAP Financial Metrics
The results prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) that are presented in the Company’s filings with the Securities and Exchange Commission (“SEC”) should be considered in addition to, and not as a substitute for, the non-GAAP financial measures provided in this press release.
The Company has provided non-GAAP financial measurements such as Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, Adjusted EPS, Free Cash Flow, Adjusted Gross Profit, and Adjusted Net Income/(Loss). The non-GAAP financial metrics shown here might not be the same as similarly titled non-GAAP financial measures presented by other businesses, and these non-GAAP financial measures might not be defined in the same way by other businesses. There are restrictions on using non-GAAP financial measures, and they cannot be used as a substitute for comparable GAAP financial measures like net sales, net income/(loss), gross profit, diluted earnings per share (“EPS”), net cash provided by/(used for) operating activities, or other measures outlined by GAAP.
By excluding the effects of some elements that management feels do not accurately reflect the Company’s fundamental operations, management can use these non-GAAP financial measurements to help in comparing the Company’s performance on a consistent basis for business decision-making. According to the Corporation
Constant currency, organic net sales, and adjusted EBITDA Adjusted EBITDA, Adjusted Gross Profit, Adjusted Net Income/(Loss), and Adjusted EPS offer crucial comparability of underlying operational results, making it possible for investors and management to evaluate the Company’s financial performance consistently;
The ability of the company’s business operations to generate cash is measured by free cash flow, which is also one of the factors used to calculate the amount of cash available for debt repayment, dividends, purchases, share repurchases, and other corporate purposes.
Because they I allow investors to view performance using the same tools that management uses to view performance, make operating and strategic decisions, and evaluate historical performance, (ii) provide investors with meaningful supplemental information about financial performance by excluding certain items, and (iii) provide additional information that may be useful to investors, management believes that disclosing the Company’s non-GAAP financial measures is useful to investors. The Company believes that by presenting these non-GAAP financial measures alongside the corresponding GAAP financial measures and the reconciliations to those measures, more information about the trends and factors affecting the Company’s business is available to investors than would otherwise be the case.
Organic Net Sales are defined as net sales that do not include the effects of currency fluctuations, acquisitions, divestitures, and a 53rd week of shipments when those events do occur. With the exception of highly inflationary subsidiaries, for which the company calculates the previous year’s results using the current year’s exchange rate, the company measures the impact of currency on net sales by maintaining exchange rates constant at the previous year’s exchange rate.
The term “Adjusted EBITDA” refers to net income or loss from continuing operations before interest expense, other expense or income, provision for income taxes, and depreciation and amortisation (exclusive of restructuring activities). In addition to these adjustments, the Company excludes, when applicable, the effects of divestiture-related licence income (for example, income related to the sale of licences in connection with the Cheese Transaction), restructuring activity, and other items (excluding restructuring activities). Also, the business provides adjusted earnings on a constant currency basis (Constant Currency Adjusted EBITDA). With the exception of subsidiaries that experience significant inflation, the Company uses the current year’s exchange rate to determine the impact of currency on Adjusted EBITDA while holding exchange rates constant at the prior year’s exchange rate.
The terms “Adjusted Gross Profit,” “Adjusted Net Income/(Loss),” and “Adjusted EPS” refer to gross profit, “Net Income/(Loss),” and diluted earnings per share, respectively, excluding, when they occur, the effects of restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, losses/(gains) on the
Net cash provided by/(used for) operating activities less capital outlays is known as free cash flow. Because the company has certain non-discretionary commitments, such as debt service, that are not subtracted from the metric, the use of this non-GAAP measure does not suggest or represent the residual cash flow for discretionary expenditures.
Media contact: Alex Abraham firstname.lastname@example.org
investors: Anne-Marie Megela, email@example.com
The Kraft Heinz Corporation is the source.