Core Insights - The Kraft Heinz Company (KHC) reported first-quarter 2025 results with net sales of $5,999 million, down 6.4% year over year, and adjusted earnings of 62 cents per share, beating the Zacks Consensus Estimate of 60 cents, but reflecting a 10.1% decline year over year [1][3][11] Financial Performance - Adjusted gross profit was $2,061 million, down from $2,210 million in the prior year, with an adjusted gross margin of 34.4%, a contraction of 10 basis points [5] - Adjusted operating income decreased by 5.2% to $1,199 million, impacted by unfavorable volume/mix and higher procurement costs, partially offset by efficiency initiatives [6] - Cash and cash equivalents stood at $2,113 million, with long-term debt of $20,925 million and total shareholders' equity of $49,460 million [9] Segment Performance - North America: Net sales of $4,488 million, down 7% year over year, with organic sales falling 6.5% [7] - International Developed Markets: Net sales of $817 million, down 4.4% year over year, with organic sales declining 1.7% [8] - Emerging Markets: Net sales of $694 million, down 4.7% year over year, but organic sales grew by 3.9% [8] Outlook - For fiscal 2025, Kraft Heinz expects organic net sales to decline by 1.5% to 3.5%, revised from a previous outlook of flat to down 2.5% [11] - Adjusted EPS is now projected to be between $2.51 and $2.67, down from prior guidance of $2.63 to $2.74 [12]

Financial Data and Key Metrics Changes - Organic net sales declined by 4.7% year-over-year, with price up 0.9 percentage points and volume mix down 5.6 percentage points [42] - Adjusted operating income decreased by 5.2%, while adjusted operating income margin increased by 30 basis points due to strong performance in emerging markets [44] - Free cash flow conversion improved by 9 percentage points year-over-year, reaching 65% [49] - Adjusted EPS declined by 10.1% to $0.62, impacted by a higher effective tax rate [49][57] Business Line Data and Key Metrics Changes - North America organic net sales declined by 6.5%, with growth in Canada offset by lower sales in U.S. retail and away from home [42] - International developed markets saw a 1.7% decline in organic net sales, primarily due to a slowdown in the UK [43] - Emerging markets experienced a 3.9% increase in organic net sales, driven by recovery in Brazil [43][32] Market Data and Key Metrics Changes - The U.S. away from home market faced challenges due to declining traffic, impacting total U.S. away from home business [14][31] - Emerging markets showed strong growth, with Heinz brand sales in these markets reaching over $1 billion [32] Company Strategy and Development Direction - The company is focused on unlocking efficiencies and reinvesting in the business to drive brand and product growth [9][11] - A commitment to continuous improvement is emphasized, with a goal to unlock $2.5 billion in gross efficiencies by 2027 [10] - The brand growth system is being expanded to cover 40% of sales by year-end, up from 10% in 2024 [11][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged pressures from inflation and tariffs, leading to a revised outlook for organic net sales and operating income [7][54] - The company expects organic net sales to decline between 1.5% to 3.5% for the full year, reflecting worsening consumer sentiment [54][55] - Management remains optimistic about emerging markets, anticipating double-digit growth by the end of 2025 [43][54] Other Important Information - The company returned nearly $900 million to shareholders year-to-date, maintaining a net leverage target of approximately 3x [52] - Significant marketing investments are planned for 2025, with a focus on optimizing media spend and driving better returns [47] Q&A Session Summary Question: What are the expectations for organic net sales in 2025? - The company has lowered its expectations for organic net sales to a range of down 1.5% to down 3.5% due to macroeconomic challenges [54] Question: How is the company addressing inflation and cost pressures? - The company is increasing investments in pricing and optimizing marketing spend to support brands and mitigate inflation impacts [46][55] Question: What is the outlook for emerging markets? - Emerging markets are expected to continue growing, with a target of reaching double-digit growth by the fourth quarter of 2025 [43][54]

April 29, 2025 Q1 2025 BUSINESS UPDATE TO ACCOMPANY MANAGEMENT COMMENTARY FORWARD-LOOKING STATEMENTS APRIL 29, 2025 This presentation contains a number of forward-looking statements as defined under U.S. federal securities laws, including, but not limited to, statements, estimates, and projections relating to our business and long-term strategy; our ambitions, goals, targets, and commitments; our activities, efforts, initiatives, plans, and programs, and our investments in such activities, efforts, initiati ...

Financial Data and Key Metrics Changes - The company reported top line results in line with expectations despite market pressures, indicating strong cash flow performance and a healthy balance sheet [4] - The revised guidance reflects a larger cut than previous ones, suggesting a cautious approach to investments in a dynamic consumer environment [7][9] Business Line Data and Key Metrics Changes - The company is prioritizing investments in marketing, R&D, and technology, focusing on increasing returns from marketing dollars and optimizing brand and media types [10][12] - The brand growth system is being scaled up to cover 40% of the business by the end of the year, indicating a strategic shift in how investments are made [12] Market Data and Key Metrics Changes - The second quarter is expected to see a top line improvement due to the timing of Easter, with an estimated positive impact of approximately 90 to 100 basis points [22] - Emerging markets are anticipated to accelerate, contributing positively to overall performance [23] Company Strategy and Development Direction - The company is committed to making necessary investments to deliver quality and value offerings, while closely monitoring market tensions [5] - The strategy includes a disciplined approach to marketing and product renovation, aiming for sustainable and profitable growth in the long term [44][59] Management's Comments on Operating Environment and Future Outlook - Management acknowledges macroeconomic uncertainties but remains confident in the strategy, choosing to invest in growth rather than adopting a defensive posture [9] - The company expects gross margin pressure in the second quarter due to increased promotional activity and commodity inflation, but anticipates recovery in the third quarter [55][56] Other Important Information - The company is facing inflationary pressures, with COGS expected to rise by 5%, influenced by commodity price increases and potential tariff impacts [33][34] - The guidance reflects a wider range to accommodate various scenarios in the changing policy landscape [63][65] Q&A Session Summary Question: Clarification on revised outlook and investment strategy - Management emphasized continued investment in the business despite macroeconomic uncertainties, focusing on marketing, R&D, and technology to drive growth [9][10] Question: Impact of Easter timing and other factors on sales - The second quarter is expected to benefit from the Easter timing shift, with improvements in specific product categories anticipated [22][23] Question: Breakdown of COGS inflation drivers - COGS inflation is expected to rise due to commodity price increases, with tariffs potentially adding 50 to 200 basis points impact [33][34] Question: Pricing strategy in response to inflation - Management is exploring various strategies to minimize price increases while maintaining profitability, including alternative sourcing and product reformulation [46][47] Question: Gross margin expectations and market share performance - Gross margin pressure is anticipated due to promotional activities and commodity inflation, but management is optimistic about growth in certain product categories [55][58]

Financial Performance - Net sales decreased 6.4% year-over-year to $6.0 billion, with Organic Net Sales down 4.7%[5] - Gross profit margin decreased by 60 basis points to 34.4%, while Adjusted Gross Profit Margin also decreased by 10 basis points to 34.4%[5] - Operating income decreased 8.1% to $1.2 billion, with Adjusted Operating Income down 5.2% to $1.2 billion[8] - Diluted EPS was $0.59, down 10.6%, and Adjusted EPS was $0.62, down 10.1%[5] - Net income attributable to common shareholders for the three months ended March 29, 2025, was $712 million, compared to $801 million for the same period in 2024, representing a decrease of 11.1%[31] - Adjusted Operating Income for the same period was $1,199 million, down from $1,265 million year-over-year, reflecting a decline of 5.2%[36] - The adjusted EPS for the three months ended March 29, 2025, was $0.62, down from $0.69 in the same period last year, a decrease of 10.1%[48] - Adjusted Net Income for Q1 2025 was $743 million, a decline from $847 million in Q1 2024[55] Cash Flow and Capital Expenditures - Year-to-date net cash provided by operating activities was $0.7 billion, down 6.6%, while Free Cash Flow was $0.5 billion, up 1.0%[9] - Cash and cash equivalents increased to $2,113 million as of March 29, 2025, compared to $1,334 million at the end of the previous year[52] - The company reported a net cash provided by operating activities of $720 million for the three months ended March 29, 2025, compared to $771 million in the prior year[54] - Capital expenditures for Q1 2025 were $238 million, down from $294 million in Q1 2024[55] - Free Cash Flow for Q1 2025 increased to $482 million, compared to $477 million in Q1 2024[55] - Free Cash Flow Conversion improved to 65% in Q1 2025, up from 56% in Q1 2024[55] Future Guidance - The company expects Organic Net Sales to decline between 1.5% and 3.5% for the fiscal year 2025[9] - Adjusted EPS guidance for the fiscal year 2025 is projected to be in the range of $2.51 to $2.67[9] - The company anticipates a decrease in Constant Currency Adjusted Operating Income by 5% to 10% compared to the prior year[9] - The effective tax rate on Adjusted EPS is expected to be approximately 26%, reflecting a $0.23 cent headwind year-over-year[9] Segment Performance - The North America segment reported Adjusted Operating Income of $1,101 million for the three months ended March 29, 2025, down from $1,215 million in the prior year, reflecting a decline of 9.4%[36] - Emerging Markets segment Adjusted Operating Income increased by 20.3% year-over-year, reaching $99 million for the three months ended March 29, 2025[38] Non-GAAP Measures - The company emphasizes the importance of non-GAAP financial measures to provide investors with a clearer view of operational performance, excluding certain items that do not reflect underlying operations[22]

Financial Data and Key Metrics Changes - Organic net sales declined by 4.7% year-over-year, with price up 0.9 percentage points and volume mix down 5.6 percentage points [42] - Adjusted operating income decreased by 5.2%, while adjusted operating income margin increased by 30 basis points due to strong performance in emerging markets [44] - Free cash flow conversion improved by 9 percentage points year-over-year, reaching 65% [49] Business Line Data and Key Metrics Changes - North America organic net sales declined by 6.5%, impacted by lower sales in U.S. retail and away from home [42] - Emerging markets saw organic net sales growth of 3.9%, an improvement from 2.2% in the previous quarter [43] - Adjusted operating income in North America decreased by 9.4%, while in emerging markets, it increased by 20.3% [44][45] Market Data and Key Metrics Changes - The U.S. away from home market faced a downturn due to economic uncertainty, with traffic declining across the sector [29][31] - International developed markets experienced a 1.7% decline in organic net sales, primarily due to weakening consumer sentiment in the UK [43] - Emerging markets are expected to reach double-digit growth by the fourth quarter of 2025 [43] Company Strategy and Development Direction - The company is focused on unlocking efficiencies and reinvesting in the business to drive brand and product growth [9][11] - A commitment to continuous improvement is emphasized, with a goal to unlock $2.5 billion in gross efficiencies by 2027 [10] - The brand growth system is being expanded to cover 40% of sales by year-end, up from 10% in 2024 [11][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged pressures from inflation and tariffs, impacting consumer sentiment and business operations [6][60] - The company has lowered its organic net sales expectations for 2025, now anticipating a decline of 1.5% to 3.5% [53][54] - Future guidance reflects increased costs and a wider range of uncertainty due to macroeconomic dynamics [55] Other Important Information - The company returned nearly $900 million to shareholders year-to-date, maintaining a net leverage target of approximately 3x [52] - Adjusted EPS is expected to be in the range of $2.51 to $2.67, reflecting changes in organic net sales and operating income estimates [56] - The company is investing in strategic areas, including marketing efficiency and brand support, to drive growth [47] Q&A Session Summary Question: What are the expectations for organic net sales in 2025? - The company now expects organic net sales to decline by 1.5% to 3.5%, a revision from previous expectations of flat to down 2.5% [53][54] Question: How is the company addressing inflation and consumer sentiment challenges? - The company is focusing on unlocking efficiencies, optimizing marketing spend, and increasing investments in pricing to support brands [46][60] Question: What is the outlook for emerging markets? - Emerging markets are expected to continue growing, with a target of reaching double-digit growth by the fourth quarter of 2025 [43]

Core Viewpoint - The market anticipates a year-over-year decline in Kraft Heinz's earnings due to lower revenues, with a focus on how actual results will compare to estimates [1][2]. Earnings Expectations - Kraft Heinz is expected to report quarterly earnings of $0.60 per share, reflecting a 13% decrease year-over-year, with revenues projected at $6 billion, down 6.5% from the previous year [3]. - The consensus EPS estimate has been revised 0.38% lower in the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, leading to an Earnings ESP of -0.94%, which indicates a bearish outlook on earnings prospects [10][11]. - Historically, Kraft Heinz has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +7.69% in the last reported quarter [12][13]. Stock Movement Factors - The potential for stock movement hinges on whether the earnings report exceeds or falls short of expectations, with management's commentary on business conditions being crucial [2][14]. - Despite the negative Earnings ESP, other factors may influence stock performance, making it essential to consider a broader range of indicators [14][16].

Core Viewpoint - The Kraft Heinz Company (KHC) is expected to report a decline in both revenue and earnings for the first quarter of 2025, with projected revenues of $6 billion, reflecting a 6.5% decrease year-over-year, and earnings per share estimated at 60 cents, indicating a 13% decline from the previous year [1][2]. Group 1: Revenue and Earnings Projections - The Zacks Consensus Estimate for KHC's revenues is $6 billion, which represents a 6.5% decline from the same quarter last year [1]. - The consensus estimate for quarterly earnings remains at 60 cents per share, projecting a 13% decrease compared to the year-ago quarter [1]. - KHC has a trailing four-quarter earnings surprise average of 4.3% [1]. Group 2: Volume and Sales Challenges - KHC is experiencing headwinds in volume performance, which is negatively impacting top-line growth due to changing consumer behavior amid economic uncertainty and weakness in the U.S. Away from Home segment [2]. - A model suggests a 4.6 percentage point year-over-year decline in volume/mix for the first quarter of 2025, leading to a projected 4.1 percentage point drop in organic net sales [3]. Group 3: Margin Pressures - The company is facing margin pressure attributed to unfavorable volume/mix shifts, rising manufacturing and procurement costs, and adverse foreign currency impacts [4]. - The adjusted gross margin is expected to contract by 30 basis points year-over-year, reaching 34.2% in the first quarter of fiscal 2025 [4]. Group 4: Earnings Prediction Model - The current model does not predict an earnings beat for KHC, as it has a Zacks Rank of 3 (Hold) and an Earnings ESP of -0.04% [5].

Core Viewpoint - Kraft Heinz has experienced significant stock underperformance since its 2015 merger, with a 60% decline compared to the S&P 500's 155% return, despite being a strong consumer staple with consistent cash flows and dividends [1][2] Financial Performance - Kraft Heinz's 2024 organic net sales fell by 2.1% to $25.9 billion, but adjusted earnings per share slightly increased to $3.06, indicating maintained margins [3] - The company's free cash flow for 2024 increased by 7% to $3.2 billion, funding $1.9 billion in dividends and $1.0 billion in share repurchases, resulting in Berkshire Hathaway earning $521 million in annual dividend income from its stake [7] Investment Considerations - The stock is trading at less than 10 times 2024 adjusted earnings, suggesting it may be undervalued, which could explain Warren Buffett's continued holding [3][4] - Despite the attractive dividend yield over 5%, concerns arise regarding the erosion of Kraft Heinz's brand value amid changing consumer preferences and inflation [4][5] Strategic Partnerships and Management - Berkshire Hathaway's partnership with 3G Capital, known for aggressive cost-cutting, has not yielded expected financial results, with annual sales down 2% since 2016 [5] - The presence of former Berkshire subsidiaries on Kraft's board may influence management decisions, potentially leading to a more patient investment approach from Buffett [6] Market Opportunities - Kraft Heinz is experiencing growth in emerging markets, with sales up 4% last year, and its Heinz ketchup brand has seen over $600 million in sales growth in the last two years [9] - Management identifies a $4 billion opportunity to further increase sales through enhanced brand awareness [9] Future Outlook - Management's guidance indicates a potential adjusted sales decline of up to 2.5% in 2025, raising concerns about further stock price declines [11] - There are alternative dividend stocks within Berkshire's portfolio, such as Coca-Cola, that are showing stronger growth prospects for 2025 and beyond [11]

Core Insights - Heinz is launching the "Heinz Trade-Up" campaign in Dubai, allowing residents to exchange unwanted ketchup sachets for bottles of Heinz ketchup, addressing the common issue of excess sachets in households [1][2][3] Group 1: Campaign Details - The Heinz Trade-Up campaign runs from April 16 to April 20, 2025, in specific locations across Dubai, where residents can trade five sachets for one bottle of Heinz ketchup [3][4] - A survey indicated that 70% of UAE residents have unwanted ketchup sachets, with 48% having 5-10 sachets at home, highlighting a significant consumer pain point [1][2] Group 2: Consumer Engagement - The campaign aims to enhance consumer engagement by providing a fun and practical solution for the surplus of ketchup sachets, reinforcing brand loyalty among Heinz fans [4] - Marketing Director Passant El Ghannam emphasized the strong consumer attachment to Heinz ketchup, which often leads to an accumulation of sachets [4] Group 3: Company Overview - The Kraft Heinz Company reported net sales of approximately $26 billion in 2024, focusing on growth across its food and beverage brands globally [5] - The company is committed to sustainability and ethical practices while aiming to make a positive impact on global food consumption [5]