Kraft Heinz Outlines Transformation Momentum and Path to Lead the Future of Food at the 2023 CAGNY Conference
“We entered the final stage of our transformation in 2022, with a focus on enhancing our Agile@Scale capabilities through partnerships with technology giants and cutting-edge innovators,” said Patricio. “We’ve made incredible progress in developing best-in-class systems across the Company, and through our refreshed product portfolio and improved financial flexibility, I am more confident than ever in our ability to drive sustainable growth and, ultimately, to lead the future of food.”
The Company will detail how it expects to increase Organic
Pillars of Growth
The Company will provide several examples of how it is renovating its iconic brands, delivering innovation, leading with disruptive marketing, and optimizing sales execution.
“U.S. Retail is a must-win for us,” said Abrams-Rivera. “We’ve breathed new life into our brands through renovation, and we must now innovate to meet future needs of consumers. We’re approaching product innovation in an entirely new way, including a new internal/external partnership ecosystem to drive speed, capability, and scale. As we play at the intersection of food and technology, we see the opportunity for
The Company will also share how it expects Foodservice to be a global engine for growth. New quick-service restaurant (QSR) wins and incremental sales from new channels like schools are expected to help Foodservice grow sales and capture market share in
Within Emerging Markets in the
“We believe our focus on Taste Elevation and Emerging Markets will allow us to grow and gain market share in the
Long Term Financial Profile
Net Sales(1) growth of 2% to 3%
- Adjusted EBITDA(1) growth of 4% to 6%
- Adjusted EPS(1) growth of 6% to 8%
- with Free Cash Flow Conversion(1) at approximately 100%.
“We aim to deliver strong stockholder returns, driven by better operational performance as well as an attractive dividend,” said Maciel. “As we continue to deliver with consistency, we believe we can benefit from multiple expansion.”
The Company will update and increase its gross efficiency target to
As announced in the fourth quarter and full year 2022 earnings, the Company will reiterate its expectation to deliver 2023 Organic
The Company continues to anticipate high single-digit inflation for the year, with pricing and gross efficiencies contributing to Adjusted Gross Profit Margin(1)(2) recovery. Adjusted Gross Profit Margin expansion is still expected to fund incremental investments across technology, marketing, and people.
Adjusted EPS(1)(2) is still expected to be
The Company now expects Free Cash Flow Conversion(1)(2) to be approximately 80% in 2023.
Guidance for Organic
A prepared presentation at the CAGNY conference will begin at
We are driving transformation at
This press release contains a number of forward-looking statements. Words such as “accelerate,” “believe,” “develop”, “deliver,” “drive,” “expect,” “focus,” “fund,” “grow,” “guidance,” “implement,” “improve,” “increase,” “make,” “outlook,” “plan,” “provide,” “transform,” and “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, 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; climate change and legal or regulatory responses; the Company’s ability to identify, complete, or realize the benefits from strategic acquisitions, divestitures, alliances, joint ventures, or 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 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 influence of the Company’s largest stockholder; 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 and regulations and related legal claims or regulatory enforcement actions; failure to maintain an effective system of internal controls; a downgrade in the Company's credit rating; the impact of 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; disruptions in the global economy caused by geopolitical conflicts, including the ongoing conflict between
Non-GAAP Financial Measures
The non-GAAP financial measures provided in this press release should be viewed in addition to, and not as an alternative for, results prepared in accordance with accounting principles generally accepted in
The Company has presented Organic
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. The Company believes:
Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, Adjusted Gross Profit, Adjusted Net Income/(Loss), and Adjusted EPS provide important comparability of underlying operating results, allowing investors and management to assess the Company’s operating performance on a consistent basis; and
- 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.
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.
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 divestiture-related license income (e.g., income related to the sale of licenses in connection with the Cheese Transaction), 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 (Constant Currency Adjusted EBITDA). 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 Gross Profit, Adjusted Net Income/(Loss), and Adjusted EPS are defined as gross profit, net income/(loss), and diluted earnings per share, respectively, 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 (benefit)/costs, and certain significant discrete income tax items (e.g.,
Free Cash Flow is defined as net cash provided by/(used for) operating activities less capital expenditures. 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.
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