Kraft Heinz Reports Fourth Quarter and Full Year 2016 Results
-
Q4 net sales decreased 3.7%; Organic
Net Sales (1) increased 1.6% -
Q4 operating income increased 22.8% and net income attributable to
common shareholders increased to
$944 million - Q4 Adjusted EBITDA(1) increased 4.8% on a constant currency basis, despite an approximate 4.5 percentage point negative impact from a 53rd week of shipments in 2015
-
Q4 diluted EPS increased to
$0.77 ; Adjusted EPS(1) increased to$0.91 , up from$0.62 the prior year, despite an approximate$0.03 negative impact from a 53rd week of shipments in 2015
"We finished 2016 consistent with our expectations and with good
momentum heading into 2017," said
The Company now expects its multi-year Integration Program to deliver
Q4 2016 Financial Summary
For the Quarter Ended | Year-over-year Change | ||||||||||||||||||||||
|
|
Actual |
Impact of |
Impact of |
Impact of |
Organic | |||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
Net sales | $ | 6,857 | $ | 7,124 | (3.7 | )% | (0.7 | ) pp | 0.0 | pp | (4.6 | ) pp | 1.6 | % | |||||||||
Operating income | 1,580 | 1,287 | 22.8 | % | |||||||||||||||||||
Net income/(loss) attributable to common shareholders | 944 | 285 | 231.2 | % | |||||||||||||||||||
Diluted EPS | $ | 0.77 | $ | 0.23 | 234.8 | % | |||||||||||||||||
Adjusted EBITDA(1) | 1,937 | 1,875 | 3.3 | % | |||||||||||||||||||
Adjusted EPS(1) | $ | 0.91 | $ | 0.62 | 46.8 | % | |||||||||||||||||
Net sales were
Net income attributable to common shareholders increased to
Q4 2016 Business Segment Highlights
For the Quarter Ended | Year-over-year Change | ||||||||||||||||||||
|
|
Actual |
Impact of |
Impact of |
Impact of |
Organic | |||||||||||||||
(in millions) | |||||||||||||||||||||
Net sales(4) | $ | 4,839 | $ | 4,993 | (3.1 | )% | 0.0 pp | 0.0 pp | (4.8 | ) pp | 1.7 | % | |||||||||
Segment Adjusted EBITDA(1,4) | 1,502 | 1,326 | 13.3 | % | |||||||||||||||||
United States Segment Adjusted EBITDA increased 13.3 percent versus the
year-ago period to
For the Quarter Ended | Year-over-year Change | ||||||||||||||||||||
|
|
Actual |
Impact of |
Impact of |
Impact of |
Organic | |||||||||||||||
(in millions) | |||||||||||||||||||||
Net sales | $ | 617 | $ | 632 | (2.4 | )% | 0.8 pp | 0.0 pp | (4.4 | ) pp | 1.2 | % | |||||||||
Segment Adjusted EBITDA(1) | 151 | 167 | (9.6 | )% | |||||||||||||||||
Canada Segment Adjusted EBITDA decreased 9.6 percent versus the year-ago
period to
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||||
|
|
Actual |
Impact of |
Impact of |
Impact of |
Organic | ||||||||||||||||
(in millions) | ||||||||||||||||||||||
Net sales(5) | $ | 600 | $ | 692 | (13.3 | )% | (8.1 | ) pp | 0.1 pp | (3.8 | ) pp | (1.5 | )% | |||||||||
Segment Adjusted EBITDA(1,5,6) | 189 | 260 | (27.3 | )% | ||||||||||||||||||
Europe Segment Adjusted EBITDA decreased 27.3 percent versus the
year-ago period to
Rest of World(7)
For the Quarter Ended | Year-over-year Change | |||||||||||||||||||||
|
|
Actual |
Impact of |
Impact of |
Impact of |
Organic | ||||||||||||||||
(in millions) | ||||||||||||||||||||||
Net sales(4,5) | $ | 801 | $ | 807 | (0.7 | )% | (0.1 | ) pp | 0.0 pp | (5.1 | ) pp | 4.5 | % | |||||||||
Segment Adjusted EBITDA(1,4,5) | 144 | 182 | (20.9 | )% | ||||||||||||||||||
Rest of World net sales were
Rest of World Segment Adjusted EBITDA decreased 20.9 percent versus the
year-ago period to
End Notes
(1) |
Organic |
|
(2) |
The Company's key commodities in |
|
(3) | Cost savings initiatives include the Company's integration, restructuring and ongoing productivity efforts. | |
(4) |
In the first quarter of 2016, the Company moved certain of the
historical Kraft export businesses from the Company's |
|
(5) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
|
(6) |
In the fourth quarter of 2016, the Company determined that its
Global Procurement Office ("GPO"), formerly managed by a subsidiary
within the |
|
(7) |
Rest of World is comprised of two operating segments: |
|
Webcast and Conference Call Information
A webcast of
ABOUT
Forward-Looking Statements
This press release contains a number of forward-looking statements. Words such as "expect," "momentum," "execute," "improve," "believe," "will," "focus," 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, objectives, initiatives, opportunities, capabilities, investments, execution, growth and integration. 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, increased
competition; the Company's ability to maintain, extend and expand its
reputation and brand image; the Company's ability to differentiate its
products from other brands; the consolidation of retail customers; 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 inability to realize the anticipated benefits
from the Company's cost savings initiatives; changes in relationships
with significant customers and suppliers; execution of the Company's
international expansion strategy; changes in laws and regulations; legal
claims or other regulatory enforcement actions; product recalls or
product liability claims; unanticipated business disruptions; failure to
successfully integrate the business and operations of the Company in the
expected time frame; 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
nations in which the Company operates; 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
that the Company uses; exchange rate fluctuations; disruptions in
information technology networks and systems; the Company's inability to
protect intellectual property rights; impacts of natural events in the
locations in which the Company or its customers, suppliers or regulators
operate; the Company's indebtedness and ability to pay such
indebtedness; tax law changes or interpretations; 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
Unaudited Pro Forma Condensed Combined Financial Information
In the Schedules to this release, the Company presents unaudited pro
forma condensed combined financial information (the "pro forma financial
information"), which is intended to illustrate the estimated effects of
the merger (the "2015 Merger"), consummated on
The pro forma financial information was prepared using the acquisition
method of accounting, which requires, among other things, that assets
acquired and liabilities assumed in a business combination be recognized
at their fair values as of the completion of the acquisition. The
Company utilized estimated fair values at the 2015 Merger Date to
allocate the total consideration exchanged to the net tangible and
intangible assets acquired and liabilities assumed. Such allocation was
final as of
The historical consolidated financial statements have been adjusted in the accompanying pro forma financial information to give effect to unaudited pro forma events that are (1) directly attributable to the 2015 Merger, (2) factually supportable and (3) expected to have a continuing impact on the results of operations of the combined company.
This pro forma financial information is not necessarily indicative of
what the Company's results of operations actually would have been had
the 2015 Merger been completed as of
This pro forma financial information should be read in conjunction with
historical financial statements and accompanying notes filed with the
Non-GAAP Financial Measures
To supplement the financial information, 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. 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
Adjusted EBITDA is defined as net income/(loss) from continuing
operations before interest expense, other expense/(income), net,
provision for/(benefit from) income taxes; in addition to these
adjustments, the Company excludes, when they occur, the impacts of
depreciation and amortization (excluding integration and restructuring
expenses) (including amortization of postretirement benefit plans prior
service credits), 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).
Adjusted EBITDA for any period prior to the 2015 Merger Date includes
the operating results of Kraft on a pro forma basis, as if Kraft had
been acquired as of
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, and nonmonetary
currency devaluation (e.g., remeasurement gains and losses), and
including when they occur, adjustments to reflect preferred stock
dividend payments on an accrual basis. Adjusted EPS for any period prior
to the 2015 Merger Date includes the operating results of Kraft on a pro
forma basis, as if Kraft had been acquired as of
See the attached schedules for supplemental financial data, which includes the financial information, the non-GAAP financial measures and corresponding reconciliations for the relevant periods.
Schedule 1 |
||||||||||||||||
Consolidated Statements of Income (in millions, except per share data) (Unaudited) |
||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
|
|
|
|
|||||||||||||
Net sales | $ | 6,857 | $ | 7,124 | $ | 26,487 | $ | 18,338 | ||||||||
Cost of products sold | 4,398 | 4,720 | 16,901 | 12,577 | ||||||||||||
Gross profit | 2,459 | 2,404 | 9,586 | 5,761 | ||||||||||||
Selling, general and administrative expenses | 879 | 1,117 | 3,444 | 3,122 | ||||||||||||
Operating income | 1,580 | 1,287 | 6,142 | 2,639 | ||||||||||||
Interest expense | 310 | 266 | 1,134 | 1,321 | ||||||||||||
Other expense/(income), net | (10 | ) | (9 | ) | (15 | ) | 305 | |||||||||
Income/(loss) before income taxes | 1,280 | 1,030 | 5,023 | 1,013 | ||||||||||||
Provision for/(benefit from) income taxes | 336 | 382 | 1,381 | 366 | ||||||||||||
Net income/(loss) | 944 | 648 | 3,642 | 647 | ||||||||||||
Net income/(loss) attributable to noncontrolling interest | — | 3 | 10 | 13 | ||||||||||||
Net income/(loss) attributable to |
944 | 645 | 3,632 | 634 | ||||||||||||
Preferred dividends(a) | — | 360 | 180 | 900 | ||||||||||||
Net income/(loss) attributable to common shareholders | $ | 944 | $ | 285 | $ | 3,452 | $ | (266 | ) | |||||||
Basic shares outstanding | 1,217 | 1,214 | 1,217 | 786 | ||||||||||||
Diluted shares outstanding | 1,226 | 1,225 | 1,226 | 786 | ||||||||||||
Per share data applicable to common shareholders: | ||||||||||||||||
Basic earnings/(loss) per share | $ | 0.78 | $ | 0.23 | $ | 2.84 | $ | (0.34 | ) | |||||||
Diluted earnings/(loss) per share | 0.77 | 0.23 | 2.81 | (0.34 | ) | |||||||||||
*The consolidated statements of income for the year ended |
||
(a) |
Cash distributions for Series A Preferred Stock totaled |
Schedule 2 |
|||
Pro Forma Condensed Combined Statements of Income
(in millions, except per share data) |
|||
For the Year Ended | |||
(53 weeks) |
|||
Net sales | $ | 27,447 | |
Cost of products sold(a) | 18,299 | ||
Gross profit | 9,148 | ||
Selling, general and administrative expenses(b) | 4,613 | ||
Operating income | 4,535 | ||
Interest expense | 1,528 | ||
Other expense/(income), net | 289 | ||
Income/(loss) before income taxes | 2,718 | ||
Provision for/(benefit from) income taxes | 944 | ||
Net income/(loss) | 1,774 | ||
Net income/(loss) attributable to noncontrolling interest | 13 | ||
Net income/(loss) attributable to |
1,761 | ||
Preferred dividends(c) | 900 | ||
Net income/(loss) attributable to common shareholders | $ | 861 | |
Basic common shares outstanding | 1,202 | ||
Diluted common shares outstanding | 1,222 | ||
Per share data applicable to common shareholders: | |||
Basic earnings per share | $ | 0.72 | |
Diluted earnings per share | 0.70 | ||
Note: There are no pro forma adjustments in 2016 as Kraft and Heinz were a combined company for the entire period. Refer to Schedule 10 for additional information on the pro forma adjustments for 2015. | ||
(a) |
Integration and restructuring expenses in cost of products sold
were |
|
(b) |
Integration and restructuring expenses in selling, general and
administrative expenses were |
|
(c) |
Cash distributions for Series A Preferred Stock totaled |
|
|||||||||||||||||||||||||
Schedule 3 |
|||||||||||||||||||||||||
Reconciliation of For the Quarter Ended (dollars in millions) (Unaudited) |
|||||||||||||||||||||||||
|
Impact of |
Impact of |
Impact of |
Organic Net |
Price | Volume/Mix | |||||||||||||||||||
|
|||||||||||||||||||||||||
|
$ | 4,839 | $ | — | $ | — | $ | — | $ | 4,839 | |||||||||||||||
|
617 | 5 | — | — | 612 | ||||||||||||||||||||
|
600 | (56 | ) | — | — | 656 | |||||||||||||||||||
Rest of World | 801 | 4 | — | — | 797 | ||||||||||||||||||||
$ | 6,857 | $ | (47 | ) | $ | — | $ | — | $ | 6,904 | |||||||||||||||
|
|||||||||||||||||||||||||
|
$ | 4,993 | $ | — | $ | — | $ | 233 | $ | 4,760 | |||||||||||||||
|
632 | — | — | 27 | 605 | ||||||||||||||||||||
|
692 | — | (1 | ) | 27 | 666 | |||||||||||||||||||
Rest of World(a,b) | 807 | 5 | — | 39 | 763 | ||||||||||||||||||||
$ | 7,124 | $ | 5 | $ | (1 | ) | $ | 326 | $ | 6,794 | |||||||||||||||
Year-over-year growth rates | |||||||||||||||||||||||||
|
(3.1)% | 0.0 pp | 0.0 pp | (4.8) pp | 1.7 |
% |
0.3 pp | 1.4 pp | |||||||||||||||||
|
(2.4)% | 0.8 pp | 0.0 pp | (4.4) pp | 1.2 |
% |
(3.1) pp | 4.3 pp | |||||||||||||||||
|
(13.3)% | (8.1) pp | 0.1 pp | (3.8) pp | (1.5 | )% | (2.5) pp | 1.0 pp | |||||||||||||||||
Rest of World(a,b) | (0.7)% | (0.1) pp | 0.0 pp | (5.1) pp | 4.5 |
% |
2.8 pp | 1.7 pp | |||||||||||||||||
|
(3.7)% | (0.7) pp | 0.0 pp | (4.6) pp | 1.6 |
% |
(0.1) pp | 1.7 pp | |||||||||||||||||
(a) |
In the first quarter of 2016, the Company moved certain of the
historical Kraft export businesses from the Company's |
|
(b) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
|
||||||||||||||||||||||||||
Schedule 4 |
||||||||||||||||||||||||||
Reconciliation of Pro For the Year Ended (dollars in millions) (Unaudited) |
||||||||||||||||||||||||||
Pro Forma |
Impact of |
Impact of |
Impact of |
Organic Net |
Price | Volume/Mix | ||||||||||||||||||||
|
||||||||||||||||||||||||||
|
$ | 18,641 | $ | — | $ | — | $ | — | $ | 18,641 | ||||||||||||||||
|
2,309 | (84 | ) | — | — | 2,393 | ||||||||||||||||||||
|
2,366 | (154 | ) | — | — | 2,520 | ||||||||||||||||||||
Rest of World | 3,171 | (92 | ) | — | — | 3,263 | ||||||||||||||||||||
$ | 26,487 | $ | (330 | ) | $ | — | $ | — | $ | 26,817 | ||||||||||||||||
|
||||||||||||||||||||||||||
|
$ | 18,932 | $ | — | $ | — | $ | 233 | $ | 18,699 | ||||||||||||||||
|
2,386 | — | — | 27 | 2,359 | |||||||||||||||||||||
|
2,657 | — | 42 | 27 | 2,588 | |||||||||||||||||||||
Rest of World(b,c) | 3,472 | 351 | — | 39 | 3,082 | |||||||||||||||||||||
$ | 27,447 | $ | 351 | $ | 42 | $ | 326 | $ | 26,728 | |||||||||||||||||
Year-over-year growth rates | ||||||||||||||||||||||||||
|
(1.5 | )% | 0.0 pp | 0.0 pp | (1.2) pp | (0.3 | )% | 0.2 pp | (0.5) pp | |||||||||||||||||
|
(3.2 | )% | (3.5) pp | 0.0 pp | (1.1) pp | 1.4 |
% |
0.6 pp | 0.8 pp | |||||||||||||||||
|
(11.0 | )% | (5.8) pp | (1.6) pp | (1.0) pp | (2.6 | )% | (2.5) pp | (0.1) pp | |||||||||||||||||
Rest of World(b,c) | (8.7 | )% | (13.2) pp | 0.0 pp | (1.4) pp | 5.9 |
% |
3.2 pp | 2.7 pp | |||||||||||||||||
|
(3.5 | )% | (2.5) pp | (0.1) pp | (1.2) pp | 0.3 |
% |
0.3 pp | 0.0 pp | |||||||||||||||||
(a) | There are no pro forma adjustments in 2016 as Kraft and Heinz were a combined company for the entire period. | |
(b) |
In the first quarter of 2016, the Company moved certain of the
historical Kraft export businesses from the Company's |
|
(c) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
Schedule 5 |
||||||||||||||||
Reconciliation of Pro (in millions) (Unaudited) |
||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
|
|
|
|
|||||||||||||
Pro forma net income/(loss)(a) | $ | 944 | $ | 648 | $ | 3,642 | $ | 1,774 | ||||||||
Interest expense | 310 | 266 | 1,134 | 1,528 | ||||||||||||
Other expense/(income), net | (10 | ) | (9 | ) | (15 | ) | 289 | |||||||||
Provision for/(benefit from) income taxes | 336 | 382 | 1,381 | 944 | ||||||||||||
Operating income | 1,580 | 1,287 | 6,142 | 4,535 | ||||||||||||
Depreciation and amortization (excluding integration and restructuring expenses) | 135 | 160 | 536 | 779 | ||||||||||||
Integration and restructuring expenses | 231 | 436 | 1,012 | 1,117 | ||||||||||||
Merger costs | (3 | ) | 1 | 30 | 194 | |||||||||||
Unrealized losses/(gains) on commodity hedges | (15 | ) | (18 | ) | (38 | ) | (41 | ) | ||||||||
Impairment losses | — | — | 53 | 58 | ||||||||||||
Losses/(gains) on sale of business | — | — | — | (21 | ) | |||||||||||
Nonmonetary currency devaluation | — | 8 | 4 | 57 | ||||||||||||
Equity award compensation expense (excluding integration and restructuring expenses) | 9 | 1 | 39 | 61 | ||||||||||||
Adjusted EBITDA | $ | 1,937 | $ | 1,875 | $ | 7,778 | $ | 6,739 | ||||||||
Segment Adjusted EBITDA: | ||||||||||||||||
|
$ | 1,502 | $ | 1,326 | $ | 5,862 | $ | 4,690 | ||||||||
|
151 | 167 | 642 | 541 | ||||||||||||
|
189 | 260 | 781 | 938 | ||||||||||||
Rest of World(b,c) | 144 | 182 | 657 | 742 | ||||||||||||
General corporate expenses(d) | (49 | ) | (60 | ) | (164 | ) | (172 | ) | ||||||||
Adjusted EBITDA | $ | 1,937 | $ | 1,875 | $ | 7,778 | $ | 6,739 | ||||||||
(a) | There are no pro forma adjustments in 2016 as Kraft and Heinz were a combined company for the entire period. | |
(b) |
In the first quarter of 2016, the Company moved certain historical
Kraft export businesses from the Company's |
|
(c) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
|
(d) |
In the fourth quarter of 2016, the Company determined that its GPO,
formerly managed by a subsidiary within the |
|
||||||||||||
Schedule 6 |
||||||||||||
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA For the Quarter Ended (dollars in millions) (Unaudited) |
||||||||||||
Adjusted EBITDA | Impact of Currency |
Constant Currency |
||||||||||
|
||||||||||||
|
$ | 1,502 | $ | — | $ | 1,502 | ||||||
|
151 | 1 | 150 | |||||||||
|
189 | (26 | ) | 215 | ||||||||
Rest of World | 144 | — | 144 | |||||||||
General corporate expenses | (49 | ) | 1 | (50 | ) | |||||||
$ | 1,937 | $ | (24 | ) | $ | 1,961 | ||||||
|
||||||||||||
|
$ | 1,326 | $ | — | $ | 1,326 | ||||||
|
167 | — | 167 | |||||||||
|
260 | — | 260 | |||||||||
Rest of World(a,b) | 182 | 3 | 179 | |||||||||
General corporate expenses(c) | (60 | ) | — | (60 | ) | |||||||
$ | 1,875 | $ | 3 | $ | 1,872 | |||||||
Year-over-year growth rates | ||||||||||||
|
13.3 % |
0.0 pp |
13.3 % |
|||||||||
|
(9.6)% | 0.6 pp | (10.2)% | |||||||||
|
(27.3)% | (10.0) pp | (17.3)% | |||||||||
Rest of World(a,b) | (20.9)% | (1.3) pp | (19.6)% | |||||||||
General corporate expenses(c) | (18.3)% | (1.6) pp | (16.7)% | |||||||||
|
3.3 % |
(1.5) pp |
4.8 % |
|||||||||
(a) |
In the first quarter of 2016, the Company moved certain historical
Kraft export businesses from the Company's |
|
(b) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
|
(c) |
In the fourth quarter of 2016, the Company determined that its GPO,
formerly managed by a subsidiary within the |
|
||||||||||||
Schedule 7 |
||||||||||||
Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA For the Year Ended (dollars in millions) (Unaudited) |
||||||||||||
Adjusted EBITDA(a) | Impact of Currency |
Constant Currency |
||||||||||
|
||||||||||||
|
$ | 5,862 | $ | — | $ | 5,862 | ||||||
|
642 | (24 | ) | 666 | ||||||||
|
781 | (61 | ) | 842 | ||||||||
Rest of World | 657 | (21 | ) | 678 | ||||||||
General corporate expenses | (164 | ) | 1 | (165 | ) | |||||||
$ | 7,778 | $ | (105 | ) | $ | 7,883 | ||||||
|
||||||||||||
|
$ | 4,690 | $ | — | $ | 4,690 | ||||||
|
541 | — | 541 | |||||||||
|
938 | — | 938 | |||||||||
Rest of World(b,c) | 742 | 102 | 640 | |||||||||
General corporate expenses(d) | (172 | ) | — | (172 | ) | |||||||
$ | 6,739 | $ | 102 | $ | 6,637 | |||||||
Year-over-year growth rates | ||||||||||||
|
25.0 % |
0.0 pp |
25.0 % |
|||||||||
|
18.7 % |
(4.4) pp |
23.1 % |
|||||||||
|
(16.7)% | (6.5) pp | (10.2)% | |||||||||
Rest of World(b,c) | (11.5)% | (17.4) pp |
5.9 % |
|||||||||
General corporate expenses(d) | (4.7)% | (0.6) pp | (4.1)% | |||||||||
|
15.4 % |
(3.4) pp |
18.8 % |
|||||||||
(a) | There are no pro forma adjustments in 2016 as Kraft and Heinz were a combined company for the entire period. | |
(b) |
In the first quarter of 2016, the Company moved certain historical
Kraft export businesses from the Company's |
|
(c) |
In the fourth quarter of 2016, the Company reorganized its segments
to reflect a change in the Company's organizational structure. As a
result, the |
|
(d) |
In the fourth quarter of 2016, the Company determined that its GPO,
formerly managed by a subsidiary within the |
Schedule 8 |
||||||||||||||||
Reconciliation of Pro Forma Diluted EPS to Adjusted EPS (Unaudited) |
||||||||||||||||
For the Quarter Ended | For the Year Ended | |||||||||||||||
|
|
|
|
|||||||||||||
Pro forma diluted EPS(a) | $ | 0.77 | $ | 0.23 | $ | 2.81 | $ | 0.70 | ||||||||
Integration and restructuring expenses(b)(c) | 0.13 | 0.24 | 0.57 | 0.61 | ||||||||||||
Merger costs(b)(d) | — | — | 0.02 | 0.49 | ||||||||||||
Unrealized losses/(gains) on commodity hedges(b)(e) | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | ||||||||
Impairment losses(b)(e) | — | — | 0.03 | 0.03 | ||||||||||||
Losses/(gains) on sale of business(b)(e) | — | — | — | (0.01 | ) | |||||||||||
Nonmonetary currency devaluation(b)(f) | 0.02 | 0.01 | 0.02 | 0.24 | ||||||||||||
Preferred dividend adjustment(g) | — | 0.15 | (0.10 | ) | 0.15 | |||||||||||
Adjusted EPS | $ | 0.91 | $ | 0.62 | $ | 3.33 | $ | 2.19 | ||||||||
(a) | There are no pro forma adjustments in 2016, as Kraft and Heinz were a combined company for the entire period. | ||
(b) | Income tax expense associated with these items is based on applicable jurisdictional tax rates and deductibility assessment of individual items. | ||
(c) | Integration and restructuring expenses include the following gross expenses: | ||
• |
Expenses recorded in cost of products sold were |
||
• |
Expenses recorded in SG&A were |
||
• |
Expenses recorded in other expense/(income), net, were income of |
||
(d) | Merger costs include the following gross expenses: | ||
• |
Expenses recorded in cost of products sold were |
||
• |
Expenses recorded in SG&A were a benefit of |
||
• |
Expenses recorded in interest expense were |
||
• |
Expenses recorded in other expense/(income), net, were |
||
(e) | Refer to the reconciliation of pro forma net income/(loss) to Adjusted EBITDA for the related gross expenses. | ||
(f) | Nonmonetary currency devaluation includes the following gross expenses/(income): | ||
• |
Expenses recorded in cost of products sold of |
||
• |
Expenses recorded in other expense/(income), net, of |
||
(g) |
For Adjusted EPS, we present the impact of the Series A Preferred
Stock dividend payments on an accrual basis. Accordingly, we
included adjustments to EPS to exclude |
Schedule 9 |
||||||||
Consolidated Balance Sheets (in millions) (Unaudited) |
||||||||
|
|
|||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 4,204 | $ | 4,837 | ||||
Trade receivables | 769 | 871 | ||||||
Sold receivables | 129 | 583 | ||||||
Inventories | 2,684 | 2,618 | ||||||
Other current assets | 967 | 871 | ||||||
Total current assets | 8,753 | 9,780 | ||||||
Property, plant and equipment, net | 6,688 | 6,524 | ||||||
|
44,125 | 43,051 | ||||||
Intangible assets, net | 59,297 | 62,120 | ||||||
Other assets | 1,617 | 1,498 | ||||||
TOTAL ASSETS | $ | 120,480 | $ | 122,973 | ||||
LIABILITIES AND EQUITY | ||||||||
Commercial paper and other short-term debt | $ | 645 | $ | 4 | ||||
Current portion of long-term debt | 2,046 | 79 | ||||||
Trade payables | 3,996 | 2,844 | ||||||
Accrued marketing | 749 | 856 | ||||||
Accrued postemployment costs | 157 | 328 | ||||||
Income taxes payable | 255 | 417 | ||||||
Interest payable | 415 | 401 | ||||||
Dividends payable | 39 | 762 | ||||||
Other current liabilities | 1,199 | 1,241 | ||||||
Total current liabilities | 9,501 | 6,932 | ||||||
Long-term debt | 29,713 | 25,151 | ||||||
Deferred income taxes | 20,848 | 21,497 | ||||||
Accrued postemployment costs | 2,038 | 2,405 | ||||||
Other liabilities | 806 | 752 | ||||||
TOTAL LIABILITIES | 62,906 | 56,737 | ||||||
Redeemable noncontrolling interest | — | 23 | ||||||
9.00% cumulative compounding preferred stock, Series A | — | 8,320 | ||||||
Equity: | ||||||||
Common stock, |
12 | 12 | ||||||
Additional paid-in capital | 58,593 | 58,375 | ||||||
Retained earnings/(deficit) | 588 | — | ||||||
Accumulated other comprehensive income/(losses) | (1,628 | ) | (671 | ) | ||||
|
(207 | ) | (31 | ) | ||||
Total shareholders' equity | 57,358 | 57,685 | ||||||
Noncontrolling interest | 216 | 208 | ||||||
TOTAL EQUITY | 57,574 | 57,893 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 120,480 | $ | 122,973 | ||||
Schedule 10 |
|||||||||||||||||
Pro Forma Condensed Combined Statement of Income For the Year Ended
(in millions, except per share data) |
|||||||||||||||||
|
Historical |
Pro Forma |
Pro Forma | ||||||||||||||
Net sales | $ | 18,338 | $ | 9,109 | $ | — | $ | 27,447 | |||||||||
Cost of products sold | 12,577 | 6,103 | (381 | ) | (b) | 18,299 | |||||||||||
Gross profit | 5,761 | 3,006 | 381 | 9,148 | |||||||||||||
Selling, general and administrative expenses | 3,122 | 1,532 | (41 | ) | (c) | 4,613 | |||||||||||
Operating income | 2,639 | 1,474 | 422 | 4,535 | |||||||||||||
Interest expense | 1,321 | 247 | (40 | ) | (d) | 1,528 | |||||||||||
Other expense/(income), net | 305 | (16 | ) | — | 289 | ||||||||||||
Income/(loss) before income taxes | 1,013 | 1,243 | 462 | 2,718 | |||||||||||||
Provision for/(benefit from) income taxes | 366 | 400 | 178 | (e) | 944 | ||||||||||||
Net income/(loss) | 647 | 843 | 284 | 1,774 | |||||||||||||
Net income/(loss) attributable to noncontrolling interest | 13 | — | — | 13 | |||||||||||||
Net income/(loss) attributable to |
634 | 843 | 284 | 1,761 | |||||||||||||
Preferred dividends(f) | 900 | — | — | 900 | |||||||||||||
Net income/(loss) attributable to common shareholders | $ | (266 | ) | $ | 843 | $ | 284 | $ | 861 | ||||||||
Basic common shares outstanding | 1,202 | ||||||||||||||||
Diluted common shares outstanding | 1,222 | ||||||||||||||||
Per share data applicable to common shareholders: | |||||||||||||||||
Basic earnings per share | $ | 0.72 | |||||||||||||||
Diluted earnings per share | 0.70 | ||||||||||||||||
(a) |
Historical Kraft activity reflects activity for the period from |
|
(b) |
Represents the change to align Kraft to |
|
(c) |
Reflects 2015 Merger-related adjustments including the change to
align Kraft to |
|
(d) | Represents the incremental change in interest expense resulting from the fair value adjustment of Kraft's long-term debt in connection with the 2015 Merger, including the elimination of the historical amortization of deferred financing fees and amortization of original issuance discount. | |
(e) | Represents the income tax effect of pro forma adjustments utilizing a 38.5% weighted average statutory tax rate. | |
(f) |
Cash distributions for Series A Preferred Stock totaled |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170215006176/en/
Michael.Mullen@kraftheinzcompany.com
or
ir@kraftheinzcompany.com
Source:
News Provided by Acquire Media