Business Wire | Aug 4, 2021 07:00AM EDT

Kraft Heinz Reports Second Quarter 2021 Results

Aug. 04, 2021

PITTSBURGH & CHICAGO--(BUSINESS WIRE)--Aug. 04, 2021--The Kraft Heinz Company (Nasdaq: KHC) ("Kraft Heinz" or the "Company") today reported financial results for the second quarter of 2021.

"Our second quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered," said Kraft Heinz CEO Miguel Patricio. "We continue to drive our transformation program forward, modernizing our brands and better connecting with our consumers. And while industry challenges, like cost inflation, certainly remain, the investments we are making in our people, brands, and capabilities are enabling us to leverage our tremendous scale through greater agility and build our advantage in the markets we serve around the world."

Net Sales

In millions

Net Sales Organic Net Sales^(1) Growth

June 26, June 27, % Chg YoY vs Growth Price Volume/ 2021 2020 Mix PY Rate

For the Three Months Ended

United States $ 4,738 $ 4,917 (3.6) (2.7)% 1.3 pp (4.0) % pp

International 1,413 1,305 8.3% 0.4% 1.9 pp (1.5) pp

Canada 464 426 8.8% (3.6)% 1.9 pp (5.5) pp

Kraft Heinz $ 6,615 $ 6,648 (0.5) (2.1)% 1.5 pp (3.6) % pp



For the Six Months Ended

United States $ 9,346 $ 9,412 (0.7) (0.1)% 1.4 pp (1.5) % pp

International 2,807 2,606 7.7% 1.6% 2.1 pp (0.5) pp

Canada 856 787 8.8% (0.8)% 3.2 pp (4.0) pp

Kraft Heinz $ 13,009 $ 12,805 1.6% 0.2% 1.6 pp (1.4) pp

Net Income/(Loss) and Diluted EPS

In millions, except per share data

For the Three Months Ended

For the Six Months Ended

June 26,

2021

June 27,

2020

% Chg vs

PY

June 26,

2021

June 27,

2020

% Chg vs

PY

Gross profit

$

2,291

$

2,452

(6.6)%

$

4,492

$

4,310

4.2%

Operating income/(loss)

1,235

(1,339)

192.2%

2,324

(569)

508.5%

Net income/(loss)

(25)

(1,652)

98.5%

543

(1,271)

142.7%

Net income/(loss) attributable to common shareholders

(27)

(1,651)

98.3%

536

(1,273)

142.1%

Diluted EPS

$

(0.02)

$

(1.35)

98.5%

$

0.43

$

(1.04)

141.3%

Adjusted EPS(1)

0.78

0.80

(2.5)%

1.50

1.39

7.9%

Adjusted EBITDA(1)

$

1,706

$

1,799

(5.2)%

$

3,286

$

3,214

2.2%

Q2 2021 Financial Summary

* Net sales decreased 0.5 percent versus the year-ago period to $6.6 billion, including a favorable 2.3 percentage point impact from currency and a negative 0.7 percentage point impact from the divestiture of the Company's nuts business, which closed in the second quarter of 2021. Net sales versus the comparable 2019 period increased 3.2 percent, including a favorable 0.9 percentage point impact from currency and a negative 2.7 percentage point impact from divestitures. Organic Net Sales decreased 2.1 percent versus the prior year period, but increased 5.0 percent versus the comparable 2019 period with both comparisons negatively impacted by exiting the McCaf licensing agreement. Pricing was up 1.5 percentage points versus the prior year period with growth across each reporting segment that reflected favorable trade expense timing in the United States as well as higher, inflation-justified pricing in foodservice and retail channels. These gains more than offset the negative impact from restoring more normalized promotional activities versus the year-ago period. Volume/mix declined 3.6 percentage points versus the year-ago period from a combination of extraordinary COVID-19-related retail demand in 2020 and a negative 1.1 percentage point impact from exiting the McCaf licensing agreement. This decline was offset, in part, by a partial recovery in foodservice channels and retail consumption trends that remained well ahead of 2019 levels across all reporting segments. * Net income/(loss) increased 98.5 percent versus the year-ago period to a loss of $25 million primarily driven by favorable changes in non-cash impairment charges versus the year-ago period. This was partially offset by a higher effective tax rate versus the prior year period as well as unfavorable changes in interest expense due to one-time debt extinguishment costs. Net income/(loss) decreased 105.7 percent versus the comparable 2019 period. Adjusted EBITDA decreased 5.2 percent versus the year-ago period to $1.7 billion and increased 6.6 percent versus the comparable 2019 period. Excluding a favorable 1.8 percentage point impact from currency, year-over-year Adjusted EBITDA benefited from higher pricing, efficiency gains, and favorable overhead costs versus the prior year period. These benefits, however, were more than offset by higher cost inflation, lower shipments, and unfavorable mix versus an exceptionally strong 2020 period. * Diluted EPS increased to a loss of $0.02, up 98.5 percent versus the prior year, driven by the net income/(loss) factors discussed above. Adjusted EPS was $0.78, down 2.5 percent versus the prior year, primarily driven by lower Adjusted EBITDA that more than offset lower interest expense and a lower effective tax rate versus the prior year period. * Year-to-date net cash provided by operating activities was $2.0 billion, down 8.4 percent versus the year-ago period reflecting a combination of higher cash outflows related to variable compensation, taxes, and promotional activity versus the prior year period. These impacts were partially offset by favorable changes in accounts payable, largely due to purchase timing and favorable payment terms, favorable changes in cash related to commodity margin requirements, and higher year-to-date Adjusted EBITDA versus the year-ago period. Free Cash Flow(1) in the first six months of 2021 was $1.6 billion, down 18.4 percent versus the comparable prior year period due to lower net cash provided by operating activities and higher capital expenditures versus the prior year period.

Outlook

Based on performance to date, while the Company continues to expect it will deliver 2021 Adjusted EBITDA ahead of its strategic plan, it now expects Adjusted EBITDA to be ahead of 2019 as well. The Company views comparison to the 2019 period to be more meaningful than the comparable 2020 period given the exceptional, COVID-19-related consumer demand changes experienced in the 2020 period.

For the third quarter of 2021, the Company currently expects a mid-single-digit percentage increase in Organic Net Sales(2) and a low-single-digit percentage decline in Constant Currency Adjusted EBITDA(1)(2) versus the third quarter of 2019. This outlook corresponds to a low-single-digit percentage decline in Organic Net Sales(2) and a low-teens percentage decline in Constant Currency Adjusted EBITDA(2) versus the comparable 2020 period.

End Notes

Net Income/(Loss) and Diluted EPS

In millions, except per share data

For the Three Months Ended For the Six Months Ended

June 26, June 27, % Chg June June 27, % Chg vs 26, vs 2021 2020 2020 PY 2021 PY

Gross profit $ 2,291 $ 2,452 (6.6)% $ 4,492 $ 4,310 4.2%

Operating income/ 1,235 (1,339) 192.2% 2,324 (569) 508.5%(loss)

Net income/(loss) (25) (1,652) 98.5% 543 (1,271) 142.7%

Net income/(loss)attributable to (27) (1,651) 98.3% 536 (1,273) 142.1%commonshareholders

Diluted EPS $ (0.02) $ (1.35) 98.5% $ 0.43 $ (1.04) 141.3%



Adjusted EPS^(1) 0.78 0.80 (2.5)% 1.50 1.39 7.9%

Adjusted EBITDA^ $ 1,706 $ 1,799 (5.2)% $ 3,286 $ 3,214 2.2%(1)

Q2 2021 Financial Summary

* Net sales decreased 0.5 percent versus the year-ago period to $6.6 billion, including a favorable 2.3 percentage point impact from currency and a negative 0.7 percentage point impact from the divestiture of the Company's nuts business, which closed in the second quarter of 2021. Net sales versus the comparable 2019 period increased 3.2 percent, including a favorable 0.9 percentage point impact from currency and a negative 2.7 percentage point impact from divestitures. Organic Net Sales decreased 2.1 percent versus the prior year period, but increased 5.0 percent versus the comparable 2019 period with both comparisons negatively impacted by exiting the McCaf licensing agreement. Pricing was up 1.5 percentage points versus the prior year period with growth across each reporting segment that reflected favorable trade expense timing in the United States as well as higher, inflation-justified pricing in foodservice and retail channels. These gains more than offset the negative impact from restoring more normalized promotional activities versus the year-ago period. Volume/mix declined 3.6 percentage points versus the year-ago period from a combination of extraordinary COVID-19-related retail demand in 2020 and a negative 1.1 percentage point impact from exiting the McCaf licensing agreement. This decline was offset, in part, by a partial recovery in foodservice channels and retail consumption trends that remained well ahead of 2019 levels across all reporting segments. * Net income/(loss) increased 98.5 percent versus the year-ago period to a loss of $25 million primarily driven by favorable changes in non-cash impairment charges versus the year-ago period. This was partially offset by a higher effective tax rate versus the prior year period as well as unfavorable changes in interest expense due to one-time debt extinguishment costs. Net income/(loss) decreased 105.7 percent versus the comparable 2019 period. Adjusted EBITDA decreased 5.2 percent versus the year-ago period to $1.7 billion and increased 6.6 percent versus the comparable 2019 period. Excluding a favorable 1.8 percentage point impact from currency, year-over-year Adjusted EBITDA benefited from higher pricing, efficiency gains, and favorable overhead costs versus the prior year period. These benefits, however, were more than offset by higher cost inflation, lower shipments, and unfavorable mix versus an exceptionally strong 2020 period. * Diluted EPS increased to a loss of $0.02, up 98.5 percent versus the prior year, driven by the net income/(loss) factors discussed above. Adjusted EPS was $0.78, down 2.5 percent versus the prior year, primarily driven by lower Adjusted EBITDA that more than offset lower interest expense and a lower effective tax rate versus the prior year period. * Year-to-date net cash provided by operating activities was $2.0 billion, down 8.4 percent versus the year-ago period reflecting a combination of higher cash outflows related to variable compensation, taxes, and promotional activity versus the prior year period. These impacts were partially offset by favorable changes in accounts payable, largely due to purchase timing and favorable payment terms, favorable changes in cash related to commodity margin requirements, and higher year-to-date Adjusted EBITDA versus the year-ago period. Free Cash Flow(1) in the first six months of 2021 was $1.6 billion, down 18.4 percent versus the comparable prior year period due to lower net cash provided by operating activities and higher capital expenditures versus the prior year period.

Outlook

Based on performance to date, while the Company continues to expect it will deliver 2021 Adjusted EBITDA ahead of its strategic plan, it now expects Adjusted EBITDA to be ahead of 2019 as well. The Company views comparison to the 2019 period to be more meaningful than the comparable 2020 period given the exceptional, COVID-19-related consumer demand changes experienced in the 2020 period.

For the third quarter of 2021, the Company currently expects a mid-single-digit percentage increase in Organic Net Sales(2) and a low-single-digit percentage decline in Constant Currency Adjusted EBITDA(1)(2) versus the third quarter of 2019. This outlook corresponds to a low-single-digit percentage decline in Organic Net Sales(2) and a low-teens percentage decline in Constant Currency Adjusted EBITDA(2) versus the comparable 2020 period.

End Notes

Organic Net Sales, Adjusted EBITDA, Adjusted EPS, Constant Currency(1) Adjusted EBITDA, and Free Cash Flow 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.

Third quarter 2021 guidance for Organic Net Sales and Constant Currency Adjusted EBITDA is provided on a non-GAAP basis only because certain information necessary to calculate the most comparable GAAP measure is unavailable 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(2) currency, acquisitions and divestitures, restructuring expenses, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense, among other items. Therefore, as a result of the uncertainty and variability of the nature and amount of future adjustments, which could be significant, the Company is unable to provide a reconciliation of these measures without unreasonable effort.

Earnings Discussion and Webcast Information

A pre-recorded management discussion of The Kraft Heinz Company's second quarter 2021 earnings is available at ir.kraftheinzcompany.com. The Company will host a live question and answer session beginning today at 9:00 a.m. Eastern Daylight Time. A webcast of the session will be accessible at ir.kraftheinzcompany.com.

ABOUT THE KRAFT HEINZ COMPANY

We are driving transformation at The Kraft Heinz Company (Nasdaq: KHC), inspired by our Purpose, Let's Make Life Delicious. Consumers are at the center of everything we do. With 2020 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of six consumer-driven product platforms. As global citizens, we're dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways. Learn more about our journey by visiting www.kraftheinzcompany.com or following us on LinkedIn and Twitter.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words such as "plan," "believe," "anticipate," "reflect," "invest," "see," "make," "expect," "deliver," "drive," "improve," "intend," "assess," "remain," "evaluate," "establish," "focus," "build," "turn," "expand," "leverage," "grow," "will," and variations of such words and similar future or conditional 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, impacts of accounting standards and guidance, growth, legal matters, taxes, costs and cost savings, impairments, dividends, expectations, investments, innovations, opportunities, capabilities, execution, initiatives, and pipeline. These forward-looking statements reflect management's current expectations and 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, the impacts of COVID-19 and government and consumer responses; operating in a highly competitive industry; the Company's ability to correctly predict, identify, and interpret changes in consumer preferences and demand, to offer new products to meet those changes, and to respond to competitive innovation; changes in the retail landscape or the loss of key retail customers; changes in the Company's relationships with significant customers or suppliers, or in other business relationships; the Company's ability to maintain, extend, and expand its reputation and brand image; the Company's ability to leverage its brand value to compete against private label products; the Company's ability to drive revenue growth in its key product categories or platforms, increase its market share, or add products that are in faster-growing and more profitable categories; product recalls or other product liability claims; the Company's ability to identify, complete, or realize the benefits from strategic acquisitions, alliances, divestitures, joint ventures, or other investments; the Company's ability to successfully execute its strategic initiatives; the impacts of the Company's international operations; the Company's ability to protect intellectual property rights; the Company's ownership structure; the Company's ability to realize the anticipated benefits from prior or future streamlining actions to reduce fixed costs, simplify or improve processes, and improve its competitiveness; the Company's level of indebtedness, as well as our ability to comply with covenants under our debt instruments; additional impairments of the carrying amounts of goodwill or other indefinite-lived intangible assets; foreign exchange rate fluctuations; volatility in commodity, energy, and other input costs; volatility in the market value of all or a portion of the commodity derivatives we use; compliance with laws, regulations, and related interpretations and related legal claims or other regulatory enforcement actions, including additional risks and uncertainties related to any potential actions resulting from the Securities and Exchange Commission's ("SEC") ongoing investigation, as well as potential additional subpoenas, litigation, and regulatory proceedings; failure to maintain an effective system of internal controls; a downgrade in the Company's credit rating; the impact of future sales of the Company's common stock in the public market; the Company's ability to continue to pay a regular dividend and the amounts of any such dividends; unanticipated business disruptions and natural events in the locations in which the Company or the Company's customers, suppliers, distributors, or regulators operate; economic and political conditions in the United States and in various other nations where the Company does business; changes in the Company's management team or other key personnel and the Company's ability to hire or retain key personnel or a highly skilled and diverse global workforce; risks associated with information technology and systems, including service interruptions, misappropriation of data, or breaches of security; increased pension, labor, and people-related expenses; changes in tax laws and interpretations; volatility of capital markets and other macroeconomic factors; 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 SEC. The Company disclaims and does not undertake any obligation to update, revise, or withdraw any forward-looking statement in this press release, except as required by applicable law or regulation.

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.

To supplement the financial information provided, the Company has presented Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, Adjusted EPS, and Free Cash Flow, which are considered non-GAAP financial measures. 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 ("EPS"), net cash provided by/(used for) operating activities, 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 (i.e., Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, Adjusted EPS, and Free Cash Flow) 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 currency, acquisitions and 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 highly inflationary subsidiaries, 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), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities); in addition to these adjustments, the Company excludes, when they occur, the impacts of restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities). 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 highly inflationary subsidiaries, 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. The Company has revised the definition of Adjusted EBITDA to adjust for the impact of certain legal and regulatory matters arising outside the ordinary course of its business, as management believes such matters, when they occur, 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 restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, losses/(gains) on the sale of a business, other losses/(gains) related to acquisitions and divestitures (e.g., tax and hedging impacts), nonmonetary currency devaluation (e.g., remeasurement gains and losses), debt prepayment and extinguishment costs, and certain significant discrete income tax items (e.g., U.S. and non-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. The Company has revised the definition of Adjusted EPS to adjust for the impact of certain legal and regulatory matters arising outside the ordinary course of its business and certain significant discrete income tax items beyond U.S. tax reform, as management believes such matters, when they occur, do not directly reflect the Company's underlying operations.

Free Cash Flow is defined as net cash provided by/(used for) operating activities less capital expenditures. The Company believes Free Cash Flow provides a measure of the Company's core operating performance, the cash-generating capabilities of the Company's business operations, and is one factor used in determining the amount of cash available for debt repayments, dividends, acquisitions, share repurchases, and other corporate purposes. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure.

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 Three Months For the Six Months Ended Ended

June 26, June 27, June 26, June 27, 2021 2020 2021 2020

Net sales $ 6,615 $ 6,648 $ 13,009 $ 12,805

Cost of products sold 4,324 4,196 8,517 8,495

Gross profit 2,291 2,452 4,492 4,310

Selling, general and administrativeexpenses, excluding impairment 943 918 1,825 1,780losses

Goodwill impairment losses 35 1,817 265 2,043

Intangible asset impairment losses 78 1,056 78 1,056

Selling, general and administrative 1,056 3,791 2,168 4,879expenses

Operating income/(loss) 1,235 (1,339) 2,324 (569)

Interest expense 613 442 1,028 752

Other expense/(income) (23) (78) (53) (159)

Income/(loss) before income taxes 645 (1,703) 1,349 (1,162)

Provision for/(benefit from) income 670 (51) 806 109taxes

Net income/(loss) (25) (1,652) 543 (1,271)

Net income/(loss) attributable to 2 (1) 7 2noncontrolling interest

Net income/(loss) attributable to $ (27) $ (1,651) $ 536 $ (1,273)common shareholders



Basic shares outstanding 1,224 1,223 1,223 1,222

Diluted shares outstanding 1,224 1,223 1,235 1,222



Per share data applicable to common shareholders:

Basic earnings/(loss) per share $ (0.02) $ (1.35) $ 0.44 $ (1.04)

Diluted earnings/(loss) per share (0.02) (1.35) 0.43 (1.04)

Schedule 2

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Three Months Ended

(dollars in millions)

(Unaudited)

Net Sales

Currency

Acquisitions

and

Divestitures

Organic Net

Sales

Price

Volume/Mix

June 26, 2021

United States

$

4,738

$

-

$

197

$

4,541

International

1,413

108

5

1,300

Canada

464

53

1

410

Kraft Heinz

$

6,615

$

161

$

203

$

6,251

June 27, 2020

United States

$

4,917

$

-

$

251

$

4,666

International

1,305

5

5

1,295

Canada

426

-

1

425

Kraft Heinz

$

6,648

$

5

$

257

$

6,386

Year-over-year growth rates

United States

(3.6)%

0.0 pp

(0.9) pp

(2.7)%

1.3 pp

(4.0) pp

International

8.3%

7.9 pp

0.0 pp

0.4%

1.9 pp

(1.5) pp

Canada

8.8%

12.4 pp

0.0 pp

(3.6)%

1.9 pp

(5.5) pp

Kraft Heinz

(0.5)%

2.3 pp

(0.7) pp

(2.1)%

1.5 pp

(3.6) pp



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 Volume Sales Currency and Price /Mix Sales Divestitures

June 26, 2021

United States $ 4,738 $ - $ 197 $ 4,541

International 1,413 108 5 1,300

Canada 464 53 1 410

Kraft Heinz $ 6,615 $ 161 $ 203 $ 6,251



June 27, 2020

United States $ 4,917 $ - $ 251 $ 4,666

International 1,305 5 5 1,295

Canada 426 - 1 425

Kraft Heinz $ 6,648 $ 5 $ 257 $ 6,386

Year-over-year growth rates

United States (3.6) 0.0 pp (0.9) pp (2.7) 1.3 pp (4.0) % % pp

International 8.3% 7.9 pp 0.0 pp 0.4% 1.9 pp (1.5) pp

Canada 8.8% 12.4 pp 0.0 pp (3.6) 1.9 pp (5.5) % pp

Kraft Heinz (0.5) 2.3 pp (0.7) pp (2.1) 1.5 pp (3.6) % % pp

Schedule 3

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Six Months Ended

(dollars in millions)

(Unaudited)

Net Sales

Currency

Acquisitions

and

Divestitures

Organic Net

Sales

Price

Volume/Mix

June 26, 2021

United States

$

9,346

$

-

$

446

$

8,900

International

2,807

172

9

2,626

Canada

856

75

1

780

Kraft Heinz

$

13,009

$

247

$

456

$

12,306

June 27, 2020

United States

$

9,412

$

-

$

499

$

8,913

International

2,606

11

9

2,586

Canada

787

-

2

785

Kraft Heinz

$

12,805

$

11

$

510

$

12,284

Year-over-year growth rates

United States

(0.7)%

0.0 pp

(0.6) pp

(0.1)%

1.4 pp

(1.5) pp

International

7.7%

6.1 pp

0.0 pp

1.6%

2.1 pp

(0.5) pp

Canada

8.8%

9.6 pp

0.0 pp

(0.8)%

3.2 pp

(4.0) pp

Kraft Heinz

1.6%

1.8 pp

(0.4) pp

0.2%

1.6 pp

(1.4) pp



Schedule 3

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Six Months Ended

(dollars in millions)

(Unaudited)

Acquisitions Organic Net Net Volume Sales Currency and Price /Mix Sales Divestitures

June 26, 2021

United States $ 9,346 $ - $ 446 $ 8,900

International 2,807 172 9 2,626

Canada 856 75 1 780

Kraft Heinz $ 13,009 $ 247 $ 456 $ 12,306



June 27, 2020

United States $ 9,412 $ - $ 499 $ 8,913

International 2,606 11 9 2,586

Canada 787 - 2 785

Kraft Heinz $ 12,805 $ 11 $ 510 $ 12,284

Year-over-year growth rates

United States (0.7)% 0.0 pp (0.6) pp (0.1)% 1.4 pp (1.5) pp

International 7.7% 6.1 pp 0.0 pp 1.6% 2.1 pp (0.5) pp

Canada 8.8% 9.6 pp 0.0 pp (0.8)% 3.2 pp (4.0) pp

Kraft Heinz 1.6% 1.8 pp (0.4) pp 0.2% 1.6 pp (1.4) pp

Schedule 4

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Three Months Ended

(dollars in millions)

(Unaudited)

Net Sales

Currency

Acquisitions

and

Divestitures

Organic Net

Sales

June 26, 2021

United States

$

4,738

$

-

$

197

$

4,541

International

1,413

29

5

1,379

Canada

464

38

1

425

Kraft Heinz

$

6,615

$

67

$

203

$

6,345

June 29, 2019

United States

$

4,533

$

-

$

224

$

4,309

International

1,313

7

6

1,300

Canada

560

-

128

432

Kraft Heinz

$

6,406

$

7

$

358

$

6,041

Year-over-year growth rates

United States

4.5%

0.0 pp

(0.9) pp

5.4%

International

7.5%

1.6 pp

(0.2) pp

6.1%

Canada

(17.2)%

6.8 pp

(22.3) pp

(1.7)%

Kraft Heinz

3.2%

0.9 pp

(2.7) pp

5.0%



Schedule 4

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 Sales Divestitures

June 26, 2021

United States $ 4,738 $ - $ 197 $ 4,541

International 1,413 29 5 1,379

Canada 464 38 1 425

Kraft Heinz $ 6,615 $ 67 $ 203 $ 6,345



June 29, 2019

United States $ 4,533 $ - $ 224 $ 4,309

International 1,313 7 6 1,300

Canada 560 - 128 432

Kraft Heinz $ 6,406 $ 7 $ 358 $ 6,041



Year-over-year growth rates

United States 4.5% 0.0 pp (0.9) pp 5.4%

International 7.5% 1.6 pp (0.2) pp 6.1%

Canada (17.2)% 6.8 pp (22.3) pp (1.7)%

Kraft Heinz 3.2% 0.9 pp (2.7) pp 5.0%

Schedule 5

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Six Months Ended

(dollars in millions)

(Unaudited)

Net Sales

Currency

Acquisitions

and

Divestitures

Organic Net

Sales

June 26, 2021

United States

$

9,346

$

-

$

446

$

8,900

International

2,807

48

9

2,750

Canada

856

57

1

798

Kraft Heinz

$

13,009

$

105

$

456

$

12,448

June 29, 2019

United States

$

8,757

$

-

$

450

$

8,307

International

2,598

14

25

2,559

Canada

1,010

-

219

791

Kraft Heinz

$

12,365

$

14

$

694

$

11,657

Year-over-year growth rates

United States

6.7%

0.0 pp

(0.4) pp

7.1%

International

8.0%

1.2 pp

(0.7) pp

7.5%

Canada

(15.2)%

5.6 pp

(21.7) pp

0.9%

Kraft Heinz

5.2%

0.7 pp

(2.3) pp

6.8%



Schedule 5

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Six Months Ended

(dollars in millions)

(Unaudited)

Acquisitions Organic Net Net Sales Currency and Sales Divestitures

June 26, 2021

United States $ 9,346 $ - $ 446 $ 8,900

International 2,807 48 9 2,750

Canada 856 57 1 798

Kraft Heinz $ 13,009 $ 105 $ 456 $ 12,448



June 29, 2019

United States $ 8,757 $ - $ 450 $ 8,307

International 2,598 14 25 2,559

Canada 1,010 - 219 791

Kraft Heinz $ 12,365 $ 14 $ 694 $ 11,657



Year-over-year growth rates

United States 6.7% 0.0 pp (0.4) pp 7.1%

International 8.0% 1.2 pp (0.7) pp 7.5%

Canada (15.2)% 5.6 pp (21.7) pp 0.9%

Kraft Heinz 5.2% 0.7 pp (2.3) pp 6.8%

Schedule 6

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

(dollars in millions)

(Unaudited)

For the Three Months Ended

June 26, 2021

June 27, 2020

June 29, 2019

Net income/(loss)

$

(25)

$

(1,652)

$

448

Interest expense

613

442

316

Other expense/(income)

(23)

(78)

(133)

Provision for/(benefit from) income taxes

670

(51)

103

Operating income/(loss)

1,235

(1,339)

734

Depreciation and amortization (excluding restructuring activities)

227

247

253

Restructuring activities

19

4

14

Deal costs

(1)

-

5

Unrealized losses/(gains) on commodity hedges

(2)

(26)

(10)

Impairment losses

113

2,873

598

Certain non-ordinary course legal and regulatory matters

62

-

-

Equity award compensation expense (excluding restructuring activities)

53

40

6

Adjusted EBITDA

$

1,706

$

1,799

$

1,600

Segment Adjusted EBITDA:

United States

$

1,374

$

1,478

$

1,257

International

286

275

267

Canada

117

110

143

General corporate expenses

(71)

(64)

(67)

Adjusted EBITDA

$

1,706

$

1,799

$

1,600



Schedule 6

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

(dollars in millions)

(Unaudited)

For the Three Months Ended

June 26, June 27, June 29, 2021 2020 2019

Net income/(loss) $ (25) $ (1,652) $ 448

Interest expense 613 442 316

Other expense/(income) (23) (78) (133)

Provision for/(benefit from) income taxes 670 (51) 103

Operating income/(loss) 1,235 (1,339) 734

Depreciation and amortization (excluding 227 247 253restructuring activities)

Restructuring activities 19 4 14

Deal costs (1) - 5

Unrealized losses/(gains) on commodity hedges (2) (26) (10)

Impairment losses 113 2,873 598

Certain non-ordinary course legal and 62 - -regulatory matters

Equity award compensation expense (excluding 53 40 6restructuring activities)

Adjusted EBITDA $ 1,706 $ 1,799 $ 1,600



Segment Adjusted EBITDA:

United States $ 1,374 $ 1,478 $ 1,257

International 286 275 267

Canada 117 110 143

General corporate expenses (71) (64) (67)

Adjusted EBITDA $ 1,706 $ 1,799 $ 1,600

Schedule 7

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

(dollars in millions)

(Unaudited)

For the Six Months Ended

June 26, 2021

June 27, 2020

June 29, 2019

Net income/(loss)

$

543

$

(1,271)

$

852

Interest expense

1,028

752

637

Other expense/(income)

(53)

(159)

(513)

Provision for/(benefit from) income taxes

806

109

320

Operating income/(loss)

2,324

(569)

1,296

Depreciation and amortization (excluding restructuring activities)

449

490

487

Restructuring activities

37

4

41

Deal costs

6

-

13

Unrealized losses/(gains) on commodity hedges

(39)

117

(39)

Impairment losses

343

3,099

1,218

Certain non-ordinary course legal and regulatory matters

62

-

-

Equity award compensation expense (excluding restructuring activities)

104

73

15

Adjusted EBITDA

$

3,286

$

3,214

$

3,031

Segment Adjusted EBITDA:

United States

$

2,654

$

2,687

$

2,396

International

569

520

505

Canada

204

165

264

General corporate expenses

(141)

(158)

(134)

Adjusted EBITDA

$

3,286

$

3,214

$

3,031



Schedule 7

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

(dollars in millions)

(Unaudited)

For the Six Months Ended

June 26, June 27, June 29, 2021 2020 2019

Net income/(loss) $ 543 $ (1,271) $ 852

Interest expense 1,028 752 637

Other expense/(income) (53) (159) (513)

Provision for/(benefit from) income taxes 806 109 320

Operating income/(loss) 2,324 (569) 1,296

Depreciation and amortization (excluding 449 490 487restructuring activities)

Restructuring activities 37 4 41

Deal costs 6 - 13

Unrealized losses/(gains) on commodity hedges (39) 117 (39)

Impairment losses 343 3,099 1,218

Certain non-ordinary course legal and 62 - -regulatory matters

Equity award compensation expense (excluding 104 73 15restructuring activities)

Adjusted EBITDA $ 3,286 $ 3,214 $ 3,031



Segment Adjusted EBITDA:

United States $ 2,654 $ 2,687 $ 2,396

International 569 520 505

Canada 204 165 264

General corporate expenses (141) (158) (134)

Adjusted EBITDA $ 3,286 $ 3,214 $ 3,031

Schedule 8

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Three Months Ended

(dollars in millions)

(Unaudited)

Adjusted EBITDA

Currency

Constant Currency

Adjusted EBITDA

June 26, 2021

United States

$

1,374

$

-

$

1,374

International

286

23

263

Canada

117

14

103

General corporate expenses

(71)

(1)

(70)

Kraft Heinz

$

1,706

$

36

$

1,670

June 27, 2020

United States

$

1,478

$

-

$

1,478

International

275

2

273

Canada

110

-

110

General corporate expenses

(64)

-

(64)

Kraft Heinz

$

1,799

$

2

$

1,797

Year-over-year growth rates

United States

(7.0)%

0.0 pp

(7.0)%

International

4.1%

7.5 pp

(3.4)%

Canada

5.6%

12.1 pp

(6.5)%

General corporate expenses

10.9%

2.2 pp

8.7%

Kraft Heinz

(5.2)%

1.8 pp

(7.0)%



Schedule 8

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Three Months Ended

(dollars in millions)

(Unaudited)

Constant Adjusted Currency Currency EBITDA Adjusted EBITDA

June 26, 2021

United States $ 1,374 $ - $ 1,374

International 286 23 263

Canada 117 14 103

General corporate expenses (71) (1) (70)

Kraft Heinz $ 1,706 $ 36 $ 1,670



June 27, 2020

United States $ 1,478 $ - $ 1,478

International 275 2 273

Canada 110 - 110

General corporate expenses (64) - (64)

Kraft Heinz $ 1,799 $ 2 $ 1,797



Year-over-year growth rates

United States (7.0)% 0.0 pp (7.0)%

International 4.1% 7.5 pp (3.4)%

Canada 5.6% 12.1 pp (6.5)%

General corporate expenses 10.9% 2.2 pp 8.7%

Kraft Heinz (5.2)% 1.8 pp (7.0)%

Schedule 9

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Six Months Ended

(dollars in millions)

(Unaudited)

Adjusted EBITDA

Currency

Constant Currency

Adjusted EBITDA

June 26, 2021

United States

$

2,654

$

-

$

2,654

International

569

39

530

Canada

204

19

185

General corporate expenses

(141)

(2)

(139)

Kraft Heinz

$

3,286

$

56

$

3,230

June 27, 2020

United States

$

2,687

$

-

$

2,687

International

520

5

515

Canada

165

-

165

General corporate expenses

(158)

-

(158)

Kraft Heinz

$

3,214

$

5

$

3,209

Year-over-year growth rates

United States

(1.2)%

0.0 pp

(1.2)%

International

9.4%

6.4 pp

3.0%

Canada

23.0%

11.3 pp

11.7%

General corporate expenses

(11.0)%

1.7 pp

(12.7)%

Kraft Heinz

2.2%

1.5 pp

0.7%



Schedule 9

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Six Months Ended

(dollars in millions)

(Unaudited)

Constant Currency Adjusted EBITDA Currency Adjusted EBITDA

June 26, 2021

United States $ 2,654 $ - $ 2,654

International 569 39 530

Canada 204 19 185

General corporate expenses (141) (2) (139)

Kraft Heinz $ 3,286 $ 56 $ 3,230



June 27, 2020

United States $ 2,687 $ - $ 2,687

International 520 5 515

Canada 165 - 165

General corporate expenses (158) - (158)

Kraft Heinz $ 3,214 $ 5 $ 3,209



Year-over-year growth rates

United States (1.2)% 0.0 pp (1.2)%

International 9.4% 6.4 pp 3.0%

Canada 23.0% 11.3 pp 11.7%

General corporate expenses (11.0)% 1.7 pp (12.7)%

Kraft Heinz 2.2% 1.5 pp 0.7%

Schedule 10

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Three Months Ended

(dollars in millions)

(Unaudited)

Adjusted EBITDA

Currency

Constant Currency

Adjusted EBITDA

June 26, 2021

United States

$

1,374

$

-

$

1,374

International

286

11

275

Canada

117

10

107

General corporate expenses

(71)

-

(71)

Kraft Heinz

$

1,706

$

21

$

1,685

June 29, 2019

United States

$

1,257

$

-

$

1,257

International

267

3

264

Canada

143

-

143

General corporate expenses

(67)

-

(67)

Kraft Heinz

$

1,600

$

3

$

1,597

Year-over-year growth rates

United States

9.3%

0.0 pp

9.3%

International

7.4%

3.4 pp

4.0%

Canada

(18.9)%

6.6 pp

(25.5)%

General corporate expenses

6.3%

1.1 pp

5.2%

Kraft Heinz

6.6%

1.1 pp

5.5%



Schedule 10

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

June 26, 2021

United States $ 1,374 $ - $ 1,374

International 286 11 275

Canada 117 10 107

General corporate expenses (71) - (71)

Kraft Heinz $ 1,706 $ 21 $ 1,685



June 29, 2019

United States $ 1,257 $ - $ 1,257

International 267 3 264

Canada 143 - 143

General corporate expenses (67) - (67)

Kraft Heinz $ 1,600 $ 3 $ 1,597

Year-over-year growth rates

United States 9.3% 0.0 pp 9.3%

International 7.4% 3.4 pp 4.0%

Canada (18.9)% 6.6 pp (25.5)%

General corporate expenses 6.3% 1.1 pp 5.2%

Kraft Heinz 6.6% 1.1 pp 5.5%

Schedule 11

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Six Months Ended

(dollars in millions)

(Unaudited)

Adjusted EBITDA

Currency

Constant Currency

Adjusted EBITDA

June 26, 2021

United States

$

2,654

$

-

$

2,654

International

569

22

547

Canada

204

14

190

General corporate expenses

(141)

(1)

(140)

Kraft Heinz

$

3,286

$

35

$

3,251

June 29, 2019

United States

$

2,396

$

-

$

2,396

International

505

7

498

Canada

264

-

264

General corporate expenses

(134)

-

(134)

Kraft Heinz

$

3,031

$

7

$

3,024

Year-over-year growth rates

United States

10.8%

0.0 pp

10.8%

International

12.6%

3.0 pp

9.6%

Canada

(22.8)%

5.3 pp

(28.1)%

General corporate expenses

5.0%

1.2 pp

3.8%

Kraft Heinz

8.4%

0.9 pp

7.5%



Schedule 11

The Kraft Heinz Company

Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA

For the Six Months Ended

(dollars in millions)

(Unaudited)

Constant Currency Adjusted EBITDA Currency Adjusted EBITDA

June 26, 2021

United States $ 2,654 $ - $ 2,654

International 569 22 547

Canada 204 14 190

General corporate expenses (141) (1) (140)

Kraft Heinz $ 3,286 $ 35 $ 3,251



June 29, 2019

United States $ 2,396 $ - $ 2,396

International 505 7 498

Canada 264 - 264

General corporate expenses (134) - (134)

Kraft Heinz $ 3,031 $ 7 $ 3,024



Year-over-year growth rates

United States 10.8% 0.0 pp 10.8%

International 12.6% 3.0 pp 9.6%

Canada (22.8)% 5.3 pp (28.1)%

General corporate expenses 5.0% 1.2 pp 3.8%

Kraft Heinz 8.4% 0.9 pp 7.5%

Schedule 12

The Kraft Heinz Company

Reconciliation of Diluted EPS to Adjusted EPS

(Unaudited)

For the Three Months Ended

For the Six Months Ended

June 26, 2021

June 27, 2020

June 26, 2021

June 27, 2020

Diluted EPS

$

(0.02)

$

(1.35)

$

0.43

$

(1.04)

Restructuring activities(a)

0.01

-

0.02

-

Unrealized losses/(gains) on commodity hedges(b)

-

(0.02)

(0.02)

0.07

Impairment losses(c)

0.07

2.16

0.26

2.35

Certain non-ordinary course legal and regulatory matters(d)

0.05

-

0.05

-

Losses/(gains) on sale of business(e)

0.27

-

0.29

-

Debt prepayment and extinguishment costs(f)

0.21

0.07

0.28

0.07

Certain significant discrete income tax items(g)

0.19

(0.06)

0.19

(0.06)

Adjusted EPS

$

0.78

$

0.80

$

1.50

$

1.39



Schedule 12

The Kraft Heinz Company

Reconciliation of Diluted EPS to Adjusted EPS

(Unaudited)

For the Three For the Six Months Months Ended Ended

June 26, June 27, June June 27, 2021 2020 26, 2020 2021

Diluted EPS $ (0.02) $ (1.35) $ 0.43 $ (1.04)

Restructuring activities^(a) 0.01 - 0.02 -

Unrealized losses/(gains) on commodity - (0.02) (0.02) 0.07hedges^(b)

Impairment losses^(c) 0.07 2.16 0.26 2.35

Certain non-ordinary course legal and 0.05 - 0.05 -regulatory matters^(d)

Losses/(gains) on sale of business^(e) 0.27 - 0.29 -

Debt prepayment and extinguishment 0.21 0.07 0.28 0.07costs^(f)

Certain significant discrete income 0.19 (0.06) 0.19 (0.06)tax items^(g)

Adjusted EPS $ 0.78 $ 0.80 $ 1.50 $ 1.39

(a)

Gross expenses included in restructuring activities were $19 million ($15 million after-tax) for the three months and $37 million ($28 million after-tax) for the six months ended June 26, 2021 and $4 million ($3 million after tax) for the three and six months ended June 27, 2020 and were recorded in the following income statement line items:

?

Cost of products sold included expenses of $1 million for the three months and $4 million for the six months ended June 26, 2021 and income of $2 million for the three months and $1 million for the six months ended June 27, 2020; and

?

SG&A included expenses of $18 million for the three months and $33 million for the six months ended June 26, 2021 and $6 million for the three months and $5 million for the six months ended June 27, 2020.

(b)

Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $2 million ($2 million after-tax) for the three months and $39 million ($29 million after-tax) for the six months ended June 26, 2021 and income of $26 million ($19 million after-tax) for the three months and expenses of $117 million ($89 million after-tax) for the six months ended June 27, 2020 and were recorded in cost of products sold.

(c)

Gross impairment losses, which were recorded in SG&A, included the following:

?

Goodwill impairment losses of $35 million ($35 million after-tax) for the three months and $265 million ($265 million after-tax) for the six months ended June 26, 2021 and $1.8 billion ($1.8 billion after-tax) for the three months and $2.0 billion ($2.0 billion after-tax) for the six months ended June 27, 2020; and

?

Intangible asset impairment losses of $78 million ($59 million after-tax) for the three and six months ended June 26, 2021 and $1.1 billion ($829 million after-tax) for the three and six months ended June 27, 2020.

(d)

Gross expenses included in certain non-ordinary course legal and regulatory matters were $62 million ($62 million after-tax) for the three and six months ended June 26, 2021 and were recorded in SG&A.

(e)

Gross expenses included in losses/(gains) on sale of business were $46 million ($333 million after-tax) for the three months and $65 million ($352 million after-tax) for the six months ended June 26, 2021 and $2 million ($2 million after-tax) for the six months ended June 27, 2020 and were recorded in other expense/(income).

(f)

Gross expenses included in debt prepayment and extinguishment costs were $318 million ($255 million after-tax) for the three months and $424 million ($335 million after-tax) for the six months ended June 26, 2021 and $109 million ($82 million after-tax) for the three and six months ended June 27, 2020 and were recorded in interest expense.

(g)

Certain significant discrete income tax items were an expense of $236 million for the three and six months ended June 26, 2021 and a benefit of $81 million for the three and six months ended June 27, 2020. The expense in 2021 relates to the revaluation of our deferred tax balances due to an increase in U.K. tax rates. The benefit in 2020 relates to the revaluation of our deferred tax balances due to changes in state tax laws following U.S. tax reform and subsequent clarification or interpretation of state tax laws.

Gross expenses included in restructuring activities were $19 million ($15 million after-tax) for the three months and $37 million ($28 million(a) after-tax) for the six months ended June 26, 2021 and $4 million ($3 million after tax) for the three and six months ended June 27, 2020 and were recorded in the following income statement line items:

Cost of products sold included expenses of $1 million for the three ? months and $4 million for the six months ended June 26, 2021 and income of $2 million for the three months and $1 million for the six months ended June 27, 2020; and

SG&A included expenses of $18 million for the three months and $33 ? million for the six months ended June 26, 2021 and $6 million for the three months and $5 million for the six months ended June 27, 2020.

Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $2 million ($2 million after-tax) for the three months and $39 million ($29 million after-tax) for the six months(b) ended June 26, 2021 and income of $26 million ($19 million after-tax) for the three months and expenses of $117 million ($89 million after-tax) for the six months ended June 27, 2020 and were recorded in cost of products sold.

(c) Gross impairment losses, which were recorded in SG&A, included the following:

Goodwill impairment losses of $35 million ($35 million after-tax) for the three months and $265 million ($265 million after-tax) for the six ? months ended June 26, 2021 and $1.8 billion ($1.8 billion after-tax) for the three months and $2.0 billion ($2.0 billion after-tax) for the six months ended June 27, 2020; and

Intangible asset impairment losses of $78 million ($59 million ? after-tax) for the three and six months ended June 26, 2021 and $1.1 billion ($829 million after-tax) for the three and six months ended June 27, 2020.

Gross expenses included in certain non-ordinary course legal and(d) regulatory matters were $62 million ($62 million after-tax) for the three and six months ended June 26, 2021 and were recorded in SG&A.

Gross expenses included in losses/(gains) on sale of business were $46 million ($333 million after-tax) for the three months and $65 million(e) ($352 million after-tax) for the six months ended June 26, 2021 and $2 million ($2 million after-tax) for the six months ended June 27, 2020 and were recorded in other expense/(income).

Gross expenses included in debt prepayment and extinguishment costs were $318 million ($255 million after-tax) for the three months and $424(f) million ($335 million after-tax) for the six months ended June 26, 2021 and $109 million ($82 million after-tax) for the three and six months ended June 27, 2020 and were recorded in interest expense.

Certain significant discrete income tax items were an expense of $236 million for the three and six months ended June 26, 2021 and a benefit of $81 million for the three and six months ended June 27, 2020. The expense(g) in 2021 relates to the revaluation of our deferred tax balances due to an increase in U.K. tax rates. The benefit in 2020 relates to the revaluation of our deferred tax balances due to changes in state tax laws following U.S. tax reform and subsequent clarification or interpretation of state tax laws.

Schedule 13

The Kraft Heinz Company

Key Drivers of Change in Adjusted EPS

(Unaudited)

For the Three Months Ended

June 26, 2021

June 27, 2020

$ Change

Key drivers of change in Adjusted EPS:

Results of operations(a)

$

0.88

$

0.92

$

(0.04)

Results of divested operations

0.03

0.04

(0.01)

Interest expense

(0.19)

(0.21)

0.02

Other expense/(income)(b)

0.04

0.05

(0.01)

Effective tax rate

0.02

-

0.02

Adjusted EPS

$

0.78

$

0.80

$

(0.02)



Schedule 13

The Kraft Heinz Company

Key Drivers of Change in Adjusted EPS

(Unaudited)

For the Three Months Ended

June 26, 2021 June 27, 2020 $ Change

Key drivers of change in Adjusted EPS:

Results of operations^(a) $ 0.88 $ 0.92 $ (0.04)

Results of divested operations 0.03 0.04 (0.01)

Interest expense (0.19) (0.21) 0.02

Other expense/(income)^(b) 0.04 0.05 (0.01)

Effective tax rate 0.02 - 0.02

Adjusted EPS $ 0.78 $ 0.80 $ (0.02)

(a)

Includes non-cash amortization of definite-lived intangible assets, which accounted for a negative impact to Adjusted EPS from results of operations of $0.04 for the three months ended June 26, 2021 and June 27, 2020.

(b)

Includes non-cash amortization of prior service credits, which accounted for a benefit to Adjusted EPS from other expense/(income) of $0.02 for the three months ended June 27, 2020.

Includes non-cash amortization of definite-lived intangible assets, which(a) accounted for a negative impact to Adjusted EPS from results of operations of $0.04 for the three months ended June 26, 2021 and June 27, 2020.

Includes non-cash amortization of prior service credits, which accounted(b) for a benefit to Adjusted EPS from other expense/(income) of $0.02 for the three months ended June 27, 2020.



Schedule 14

The Kraft Heinz Company

Key Drivers of Change in Adjusted EPS

(Unaudited)

For the Six Months Ended

June 26, 2021

June 27, 2020

$ Change

Key drivers of change in Adjusted EPS:

Results of operations(a)

$

1.69

$

1.64

$

0.05

Results of divested operations

0.06

0.06

-

Interest expense

(0.39)

(0.42)

0.03

Other expense/(income)(b)

0.08

0.11

(0.03)

Effective tax rate

0.08

-

0.08

Effect of dilutive equity awards(c)

(0.02)

-

(0.02)

Adjusted EPS

$

1.50

$

1.39

$

0.11



Schedule 14

The Kraft Heinz Company

Key Drivers of Change in Adjusted EPS

(Unaudited)

For the Six Months Ended

June 26, June 27, $ Change 2021 2020

Key drivers of change in Adjusted EPS:

Results of operations^(a) $ 1.69 $ 1.64 $ 0.05

Results of divested operations 0.06 0.06 -

Interest expense (0.39) (0.42) 0.03

Other expense/(income)^(b) 0.08 0.11 (0.03)

Effective tax rate 0.08 - 0.08

Effect of dilutive equity awards^(c) (0.02) - (0.02)

Adjusted EPS $ 1.50 $ 1.39 $ 0.11

(a)

Includes non-cash amortization of definite-lived intangible assets, which accounted for a negative impact to Adjusted EPS from results of operations of $0.08 for the six months ended June 26, 2021 and $0.09 for the six months ended June 27, 2020.

(b)

Includes non-cash amortization of prior service credits, which accounted for a benefit to Adjusted EPS from other expense/(income) of $0.04 for the six months ended June 27, 2020.

(c)

Represents the impact of excluding the dilutive effects of equity awards for the six months ended June 27, 2020 as their inclusion would have had an anti-dilutive effect on EPS due to net losses attributable to common shareholders for the same period.

Includes non-cash amortization of definite-lived intangible assets, which(a) accounted for a negative impact to Adjusted EPS from results of operations of $0.08 for the six months ended June 26, 2021 and $0.09 for the six months ended June 27, 2020.

Includes non-cash amortization of prior service credits, which accounted(b) for a benefit to Adjusted EPS from other expense/(income) of $0.04 for the six months ended June 27, 2020.

Represents the impact of excluding the dilutive effects of equity awards(c) for the six months ended June 27, 2020 as their inclusion would have had an anti-dilutive effect on EPS due to net losses attributable to common shareholders for the same period.

Schedule 15

The Kraft Heinz Company

Condensed Consolidated Balance Sheets

(in millions, except per share data)

(Unaudited)

June 26, 2021

December 26, 2020

ASSETS

Cash and cash equivalents

$

3,941

$

3,417

Trade receivables, net

2,008

2,063

Inventories

2,820

2,773

Prepaid expenses

149

132

Other current assets

624

574

Assets held for sale

1,843

1,863

Total current assets

11,385

10,822

Property, plant and equipment, net

6,611

6,876

Goodwill

31,477

33,089

Intangible assets, net

44,941

46,667

Other non-current assets

2,624

2,376

TOTAL ASSETS

$

97,038

$

99,830

LIABILITIES AND EQUITY

Commercial paper and other short-term debt

$

6

$

6

Current portion of long-term debt

1,604

230

Trade payables

4,391

4,304

Accrued marketing

968

946

Interest payable

322

358

Other current liabilities

2,577

2,200

Liabilities held for sale

11

17

Total current liabilities

9,879

8,061

Long-term debt

23,545

28,070

Deferred income taxes

11,377

11,462

Accrued postemployment costs

248

243

Other non-current liabilities

1,847

1,751

TOTAL LIABILITIES

46,896

49,587

Equity:

Common stock, $0.01 par value

12

12

Additional paid-in capital

54,255

55,096

Retained earnings/(deficit)

(2,158)

(2,694)

Accumulated other comprehensive income/(losses)

(1,720)

(1,967)

Treasury stock, at cost

(392)

(344)

Total shareholders' equity

49,997

50,103

Noncontrolling interest

145

140

TOTAL EQUITY

50,142

50,243

TOTAL LIABILITIES AND EQUITY

$

97,038

$

99,830



Schedule 15

The Kraft Heinz Company

Condensed Consolidated Balance Sheets

(in millions, except per share data)

(Unaudited)

June 26, December 26, 2020 2021

ASSETS

Cash and cash equivalents $ 3,941 $ 3,417

Trade receivables, net 2,008 2,063

Inventories 2,820 2,773

Prepaid expenses 149 132

Other current assets 624 574

Assets held for sale 1,843 1,863

Total current assets 11,385 10,822

Property, plant and equipment, net 6,611 6,876

Goodwill 31,477 33,089

Intangible assets, net 44,941 46,667

Other non-current assets 2,624 2,376

TOTAL ASSETS $ 97,038 $ 99,830

LIABILITIES AND EQUITY

Commercial paper and other short-term debt $ 6 $ 6

Current portion of long-term debt 1,604 230

Trade payables 4,391 4,304

Accrued marketing 968 946

Interest payable 322 358

Other current liabilities 2,577 2,200

Liabilities held for sale 11 17

Total current liabilities 9,879 8,061

Long-term debt 23,545 28,070

Deferred income taxes 11,377 11,462

Accrued postemployment costs 248 243

Other non-current liabilities 1,847 1,751

TOTAL LIABILITIES 46,896 49,587

Equity:

Common stock, $0.01 par value 12 12

Additional paid-in capital 54,255 55,096

Retained earnings/(deficit) (2,158) (2,694)

Accumulated other comprehensive income/ (1,720) (1,967)(losses)

Treasury stock, at cost (392) (344)

Total shareholders' equity 49,997 50,103

Noncontrolling interest 145 140

TOTAL EQUITY 50,142 50,243

TOTAL LIABILITIES AND EQUITY $ 97,038 $ 99,830

Schedule 16

The Kraft Heinz Company

Condensed Consolidated Statements of Cash Flow

(in millions)

(Unaudited)

For the Six Months Ended

June 26, 2021

June 27, 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/(loss)

$

543

$

(1,271)

Adjustments to reconcile net income/(loss) to operating cash flows:

Depreciation and amortization

449

490

Amortization of postemployment benefit plans prior service costs/(credits)

(3)

(61)

Equity award compensation expense

104

73

Deferred income tax provision/(benefit)

(114)

(489)

Postemployment benefit plan contributions

(14)

(15)

Goodwill and intangible asset impairment losses

343

3,099

Nonmonetary currency devaluation

4

4

Loss/(gain) on sale of business

65

2

Other items, net

278

204

Changes in current assets and liabilities:

Trade receivables

62

(60)

Inventories

(227)

(202)

Accounts payable

220

(54)

Other current assets

(67)

(138)

Other current liabilities

386

634

Net cash provided by/(used for) operating activities

2,029

2,216

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(431)

(258)

Proceeds from sale of business, net of cash disposed

3,435

-

Other investing activities, net

23

21

Net cash provided by/(used for) investing activities

3,027

(237)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of long-term debt

(3,090)

(3,824)

Proceeds from issuance of long-term debt

-

3,500

Debt prepayment and extinguishment costs

(433)

(101)

Proceeds from revolving credit facility

-

4,000

Repayments of revolving credit facility

-

(4,000)

Dividends paid

(979)

(977)

Other financing activities, net

(53)

(35)

Net cash provided by/(used for) financing activities

(4,555)

(1,437)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

23

(9)

Cash, cash equivalents, and restricted cash

Net increase/(decrease)

524

533

Balance at beginning of period

3,418

2,280

Balance at end of period

$

3,942

$

2,813



Schedule 16

The Kraft Heinz Company

Condensed Consolidated Statements of Cash Flow

(in millions)

(Unaudited)

For the Six Months Ended

June 26, June 27, 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/(loss) $ 543 $ (1,271)

Adjustments to reconcile net income/(loss) to operating cash flows:

Depreciation and amortization 449 490

Amortization of postemployment benefit plans prior (3) (61)service costs/(credits)

Equity award compensation expense 104 73

Deferred income tax provision/(benefit) (114) (489)

Postemployment benefit plan contributions (14) (15)

Goodwill and intangible asset impairment losses 343 3,099

Nonmonetary currency devaluation 4 4

Loss/(gain) on sale of business 65 2

Other items, net 278 204

Changes in current assets and liabilities:

Trade receivables 62 (60)

Inventories (227) (202)

Accounts payable 220 (54)

Other current assets (67) (138)

Other current liabilities 386 634

Net cash provided by/(used for) operating activities 2,029 2,216

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures (431) (258)

Proceeds from sale of business, net of cash disposed 3,435 -

Other investing activities, net 23 21

Net cash provided by/(used for) investing activities 3,027 (237)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayments of long-term debt (3,090) (3,824)

Proceeds from issuance of long-term debt - 3,500

Debt prepayment and extinguishment costs (433) (101)

Proceeds from revolving credit facility - 4,000

Repayments of revolving credit facility - (4,000)

Dividends paid (979) (977)

Other financing activities, net (53) (35)

Net cash provided by/(used for) financing activities (4,555) (1,437)

Effect of exchange rate changes on cash, cash 23 (9)equivalents, and restricted cash

Cash, cash equivalents, and restricted cash

Net increase/(decrease) 524 533

Balance at beginning of period 3,418 2,280

Balance at end of period $ 3,942 $ 2,813

Schedule 17

The Kraft Heinz Company

Reconciliation of Net Cash Provided By/(Used For) Operating Activities to Free Cash Flow

(in millions)

(Unaudited)

For the Six Months Ended

June 26, 2021

June 27, 2020

Net cash provided by/(used for) operating activities

$

2,029

$

2,216

Capital expenditures

(431)

(258)

Free Cash Flow

$

1,598

$

1,958

View source version on businesswire.com: https://www.businesswire.com/news/home/20210804005216/en/

CONTACT: Michael Mullen (media) Michael.Mullen@kraftheinz.com

CONTACT: Christopher Jakubik, CFA (investors) ir@kraftheinz.com