PITTSBURGH & CHICAGO--(BUSINESS WIRE)--The Kraft Heinz Company (Nasdaq: KHC) today reported financial results for the fourth quarter and full year 2020.
“Our people’s unwavering commitment during this pandemic has been remarkable, and through it, our organization has rediscovered its agility. This has accelerated our transformation and led to the strong performance we are reporting today,” said Kraft Heinz CEO Miguel Patricio. “We set our multi-year transformation plan this time last year. We exceeded that plan in 2020. We are increasingly confident that we will again exceed that plan in 2021. We have started the new year with our new operating model fully in place. We have momentum at our back. We are well-prepared to meet the uncertainties of this dynamic environment, as well as the challenges facing the consumers we serve.”
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Net Sales |
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In millions |
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Net Sales |
Organic Net Sales(1) Growth |
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|
December 26, 2020 |
December 28, 2019 |
% Chg vs PY |
YoY Growth Rate |
Price |
Volume/Mix |
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For the Three Months Ended |
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|
United States(3) |
$ |
5,082 |
$ |
4,702 |
8.0% |
8.0% |
5.2 pp |
2.8 pp |
||||||
|
International(3) |
1,410 |
1,377 |
2.4% |
1.9% |
2.0 pp |
(0.1) pp |
||||||||
|
Canada |
447 |
457 |
(2.0)% |
(3.1)% |
7.9 pp |
(11.0) pp |
||||||||
|
Kraft Heinz |
$ |
6,939 |
$ |
6,536 |
6.2% |
6.0% |
4.8 pp |
1.2 pp |
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|
For the Year Ended |
||||||||||||||
|
United States(3) |
$ |
19,204 |
$ |
17,844 |
7.6% |
7.6% |
3.5 pp |
4.1 pp |
||||||
|
International(3) |
5,341 |
5,251 |
1.7% |
4.7% |
2.1 pp |
2.6 pp |
||||||||
|
Canada |
1,640 |
1,882 |
(12.8)% |
(0.1)% |
2.2 pp |
(2.3) pp |
||||||||
|
Kraft Heinz |
$ |
26,185 |
$ |
24,977 |
4.8% |
6.5% |
3.1 pp |
3.4 pp |
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Net Income/(Loss) Attributable to Common Shareholders and Diluted EPS |
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In millions, except per share data |
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For the Three Months Ended |
For the Year Ended |
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|
December 26, 2020 |
December 28, 2019 |
% Chg vs PY |
December 26, 2020 |
December 28, 2019 |
% Chg vs PY |
|||||||||||
|
Gross Profit |
$ |
2,523 |
$ |
2,107 |
19.7% |
$ |
9,177 |
$ |
8,147 |
12.6% |
||||||
|
Operating income/(loss) |
1,550 |
594 |
160.7% |
2,128 |
3,070 |
(30.7)% |
||||||||||
|
Net income/(loss) attributable to common shareholders |
1,032 |
182 |
467.5% |
356 |
1,935 |
(81.6)% |
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|
Diluted EPS |
$ |
0.84 |
$ |
0.15 |
460.0% |
$ |
0.29 |
$ |
1.58 |
(81.6)% |
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|
Adjusted EPS(1) |
0.80 |
0.72 |
11.1% |
2.88 |
2.85 |
1.1% |
||||||||||
|
Adjusted EBITDA(1) |
$ |
1,788 |
$ |
1,564 |
14.3% |
$ |
6,669 |
$ |
6,064 |
10.0% |
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Q4 2020 Financial Summary
- Net sales increased 6.2 percent versus the year-ago period to $6.9 billion, including a favorable 0.2 percentage point impact from currency. Organic Net Sales increased 6.0 percent driven by sustained growth momentum in retail, partially offset by ongoing weakness in foodservice and a negative 1.4 percentage point impact from exiting the McCafé licensing agreement. Pricing increased 4.8 percentage points reflecting favorable trade expense timing versus the year-ago period, lower sales on promotion during holiday event periods relative to comparable prior year, primarily in the United States, as well as reduced promotional activity in capacity-constrained areas to better safeguard customer service. Volume/mix was up 1.2 percentage points versus the year-ago period from continued at-home consumption growth due, in part, to the COVID-19 pandemic. This growth was partially offset by foodservice declines, the negative impact from exiting the McCafé licensing agreement, and unfavorable changes in retail inventory levels.
- Net income attributable to common shareholders increased 467.5 percent versus the year-ago period to $1.0 billion and Diluted EPS increased to $0.84, up 460.0 percent versus the prior year primarily due to non-cash impairment charges in the prior year period that did not repeat and, to a lesser extent, gross profit growth versus the year-ago period.
- Adjusted EPS increased to $0.80, up 11.1 percent versus the prior year, primarily driven by Adjusted EBITDA growth that more than offset an unfavorable, non-cash impact from lower amortization of prior service credits within other expense/(income) and higher stock-based compensation expenses versus the year-ago period, as well as higher taxes on adjusted earnings in the current period.
- Adjusted EBITDA increased 14.3 percent versus the year-ago period to $1.8 billion, including a favorable 0.2 percentage point impact from currency. Excluding the impact of currency, Adjusted EBITDA growth was driven by pricing gains, productivity efficiencies, favorable mix, and volume growth relative to the prior year period. This growth was partially offset by higher supply chain costs, including COVID-19-related expenses, as well as increased incentive compensation and significant investments in marketing and sales.
- Net cash provided by operating activities increased to $4.9 billion in 2020, up 38.7 percent versus the prior year reflecting Adjusted EBITDA growth, as well as favorable changes in current liabilities, primarily due to the timing of payments. These factors, together with lower capital expenditures versus the prior year period, resulted in Free Cash Flow(1) of $4.3 billion in 2020, up 55.5 percent versus the prior year.
Outlook
The Company continues to expect it will deliver 2021 financial performance ahead of its strategic plan.
Based on performance to date, the Company believes flat-to-positive growth in Organic Net Sales(2) and low-single-digit Constant Currency Adjusted EBITDA(2) growth versus the prior year period are reasonable expectations for first-quarter 2021 performance. The Company also notes that this performance takes into consideration comparisons with a strong first-quarter 2020 period that included an approximate 6 to 7 percentage point contribution to Organic Net Sales(2) growth and an approximate 9 to 10 percentage point contribution to Constant Currency Adjusted EBITDA(2) growth versus the first quarter of 2019 due to increased consumer demand related to the COVID-19 pandemic.
End Notes
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(1) |
Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, Adjusted EPS, 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. |
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(2) |
First 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 currency, acquisitions and divestitures, integration and restructuring expenses, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, 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. |
|
(3) |
In the first quarter of 2020, the Company’s internal reporting and reportable segments changed. The Puerto Rico business was moved from the Latin America zone to the United States zone to consolidate and streamline the management of the Company's product categories and supply chain. The Company also combined its Europe, Middle East, and Africa (EMEA), Latin America, and Asia Pacific (APAC) zones to form the International zone. Therefore, effective in the first quarter of 2020, the Company manages and reports its operating results through three reportable segments defined by geographic region: United States, International, and Canada. The Company has reflected these changes in all historical periods presented. |
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.
