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Consumer Discretionary : Diversified Consumer Services |
Based in China
Company profile

Youdao, Inc. is an intelligent learning company that develops and uses technologies to provide learning content, applications and solutions for users of all ages. The Company operates two business segments. The Learning Services and Products segment offers online courses, including the Youdao Premium Courses, NetEase Cloud Classroom and China University MOOC, as well as learning products such as the Youdao Dictionary and Youdao Cloudnote, sales Youdao Dictionary Pen and Youdao Pocket Translator, and provides learning services to customers. The Online Marketing Services segment is engaged in providing different forms of advertising for marketing.

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209,615

Kraft Heinz Reports Fourth Quarter and Full Year 2019 Results

7:01 am ET February 13, 2020 (BusinessWire) Print

The Kraft Heinz Company (Nasdaq: KHC) ("Kraft Heinz" or the "Company") today reported fourth quarter and full year 2019 financial results.

"While our 2019 results were disappointing, we closed the year with performance consistent with our expectations, and driven by factors we anticipated," said Kraft Heinz CEO Miguel Patricio. "We have taken critical actions over the past six months to re-establish visibility and control over the business. And we remain convinced Kraft Heinz has the potential to achieve best-in-class financial performance as we begin transforming our capabilities and making necessary investments in our brands based on deep consumer insights. Our turnaround will take time, but we expect to make significant progress in 2020, laying a strong foundation for future growth."

Q4 2019 Financial Summary

                                        For the Three Months Ended                   For the Three Months Ended                                                                               Year-over-year Change
                                                      ------------------------------------ ------------------------------------------------                          --------------------------------------------------------------------------------------------------------------------------------------------
                                               December 28,               December 28,      December 29,           Actual                Currency             Acquisitions              Organic
                                                                      2019                       2019                                 2018                                                                                                                        and
                                                                                                                                                                                                                                                             Divestitures
                                                      ------------------------------------ --------------                       --------------                       --------------------                      --------------------                      --------------------                      --------------------
                                   (in millions, except per share data)         (in millions, except per share data)                        
Net sales                                                                                $       $   6,536         $   6,891                 (5.1)%               (0.6) pp               (2.3) pp                 (2.2)%
Operating income/(loss)                                                                594             594          (14,136)                     nm            
Net income/(loss) attributable to common shareholders                                  182             182          (12,568)                     nm            
Diluted EPS                                                                              $       $    0.15         $ (10.30)                     nm            
Adjusted EBITDA(1)                                                                   1,564           1,564             1,674                 (6.6)%               (1.3) pp               (1.5) pp    
Adjusted EPS(1)                                                                          $       $    0.72         $    0.84                (14.3)%            

Net sales were $6.5 billion, down 5.1 percent versus the year-ago period, including a negative 2.3 percentage point impact from divestitures and an unfavorable 0.6 percentage point impact from currency. Organic Net Sales(1) decreased 2.2 percent versus the year-ago period. Pricing increased 2.0 percentage points versus the prior year period, with higher pricing in all business segments except Canada. Volume/mix decreased 4.2 percentage points, primarily driven by volume/mix declines in the United States and, to a lesser extent, Rest of World markets that more than offset growth in Canada and EMEA.

Net income attributable to common shareholders increased to $182 million and diluted EPS increased to $0.15, primarily reflecting lower non-cash impairment charges recognized in the current year period. The current period included approximately $453 million of non-cash impairment charges to lower the carrying amount of goodwill in the Company's Australia & New Zealand, as well as Latin America Exports businesses, as well as non-cash impairment charges of approximately $213 million to lower the carrying amount of the Maxwell House trademark. Adjusted EBITDA decreased 6.6 percent versus the year-ago period to $1.6 billion, including an unfavorable 1.3 percentage point impact from currency and a negative 1.5 percentage point impact from divestitures. Excluding these factors, growth in the United States and EMEA was more than offset by higher supply chain costs in Rest of World markets, higher general corporate expenses, and lower pricing versus the prior year period in Canada. Adjusted EPS decreased 14.3 percent to $0.72, reflecting lower Adjusted EBITDA, a higher effective tax rate, and higher stock-based compensation versus the prior year period.

Q4 2019 Business Segment Highlights

United States

             For the Three Months Ended                                                                             Year-over-year Change
                     --------------------------------------------                          --------------------------------------------------------------------------------------------------------------------------------------------
   December 28,    December 29,          Actual                Currency             Acquisitions              Organic
                          2019                               2018                                                                                                                       and
                                                                                                                                                                                   Divestitures
                     ------------                       ------------                       --------------------                      --------------------                      --------------------                      --------------------
                    (in millions)                                 
Net sales                 $  4,682        $  4,810                 (2.7)%                 0.0 pp                 0.0 pp                 (2.7)%

United States net sales were $4.7 billion, down 2.7 percent versus the year-ago period. Pricing increased 3.1 percentage points, reflecting a combination of higher list prices in several categories, including price increases to reflect higher key commodity(2) costs for dairy and meats, as well as a favorable impact from promotional timing versus the prior year, and reduced promotional intensity compared to the year-ago period. Volume/mix decreased 5.8 percentage points, primarily due to lower shipments of cheese, coffee, cold cuts, and bacon that more than offset growth in condiments and sauces as well as foodservice. The decreases reflect volume declines in response to higher prices, including prior year promotional activities that were not repeated, as well as lower distribution in cold cuts and frozen categories at select retailers.

United States Segment Adjusted EBITDA increased 1.6 percent versus the year-ago period to $1.3 billion, driven by higher pricing, lower procurement and logistics costs, as well as lower variable compensation versus the prior year. This more than offset unfavorable impacts from volume/mix and key commodity cost inflation, specifically in dairy and meats, as well as higher manufacturing costs.

Canada

             For the Three Months Ended                                                                             Year-over-year Change
                     --------------------------------------------                          --------------------------------------------------------------------------------------------------------------------------------------------
   December 28,    December 29,          Actual                Currency             Acquisitions              Organic
                          2019                               2018                                                                                                                       and
                                                                                                                                                                                   Divestitures
                     ------------                       ------------                       --------------------                      --------------------                      --------------------                      --------------------
                    (in millions)                                 
Net sales                 $    457        $    600                (23.8)%                 0.1 pp              (21.4) pp                 (2.5)%

Canada net sales were $457 million, 23.8 percent lower than the year-ago period, including a negative 21.4 percentage point impact from the Canadian natural cheese divestiture and a favorable 0.1 percentage point impact from currency. Organic Net Sales decreased 2.5 percent versus the year-ago period. Pricing declined 5.0 percentage points, reflecting unfavorable trade expense versus the prior year and increased holiday-related promotional activity across several categories. Volume/mix increased 2.5 percent, driven by consumption-led growth in peanut butter and pasta sauce that more than offset lower shipments for cheese and ongoing weakness in coffee.

Canada Segment Adjusted EBITDA decreased 26.1 percent versus the year-ago period to $116 million, including a negative 14.8 percentage point impact from a divestiture and a 0.2 percentage point favorable impact from currency. Excluding the impact of these factors, the decrease versus prior year was due to lower pricing, as well as unfavorable dairy and procurement costs versus the prior year period.

EMEA

             For the Three Months Ended                                                                             Year-over-year Change
                     --------------------------------------------                          --------------------------------------------------------------------------------------------------------------------------------------------
   December 28,    December 29,          Actual                Currency             Acquisitions              Organic
                          2019                               2018                                                                                                                       and
                                                                                                                                                                                   Divestitures
                     ------------                       ------------                       --------------------                      --------------------                      --------------------                      --------------------
                    (in millions)                                 
Net sales                 $    689        $    692                 (0.5)%               (0.8) pp                 0.0 pp                   0.3%

EMEA net sales were $689 million, down 0.5 percent versus the year-ago period, due to a negative 0.8 percentage point impact from currency. Organic Net Sales increased 0.3 percent versus the year-ago period. Pricing was slightly favorable as gains from pricing initiatives, particularly in the UK, more than offset lower pricing versus the prior year in Russia. Volume/mix increased 0.2 percentage points, reflecting condiments and sauces growth in Russia, as well as foodservice growth across most regions that more than offset ongoing weakness in infant nutrition and the impact of reduced promotional activity versus the year-ago period in the UK.

EMEA Segment Adjusted EBITDA increased 6.3 percent versus the year-ago period to $182 million, despite a negative 1.4 percentage point impact from currency. Excluding currency, Segment Adjusted EBITDA increased 7.7 percent, from a combination of Organic Net Sales growth and lower variable compensation versus the prior year period.

Rest of World(3)

             For the Three Months Ended                                                                             Year-over-year Change
                     --------------------------------------------                          --------------------------------------------------------------------------------------------------------------------------------------------
   December 28,    December 29,          Actual                Currency             Acquisitions              Organic
                          2019                               2018                                                                                                                       and
                                                                                                                                                                                   Divestitures
                     ------------                       ------------                       --------------------                      --------------------                      --------------------                      --------------------
                    (in millions)                                 
Net sales                 $    708        $    789                (10.1)%               (5.2) pp               (3.3) pp                 (1.6)%

Rest of World net sales of $708 million decreased 10.1 percent versus the year-ago period, including a negative 5.2 percentage point impact from currency and a negative 3.3 percentage point impact from the India nutritional beverages divestiture. Organic Net Sales decreased 1.6 percent versus the year-ago period. Pricing increased 0.7 percentage points, due to higher pricing in Latin America and China that more than offset lower pricing in Australia. Volume/mix decreased 2.3 percentage points, as growth in Indonesia and Brazil was more than offset by lower shipments across several categories in Australia and New Zealand as well as lower shipments in Latin American exports, including Colombia and Puerto Rico.

Rest of World Segment Adjusted EBITDA decreased 53.9 percent versus the year-ago period to $60 million, including an 8.0 percentage point unfavorable impact from currency and a 0.3 percentage point unfavorable impact from divestiture. Results also included approximately $35 million of costs not expected to repeat, due to $15 million of higher labor-related expenses associated with the Holidays Act in New Zealand as well as $20 million of asset- and inventory-related write-offs in Australia, New Zealand, and Latin America. Excluding these factors, the decline in Segment Adjusted EBITDA was driven by ongoing supply chain cost inflation and lower volume/mix.

End Notes

(1) Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Adjusted EPS 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. Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA and Adjusted EPS 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.
(2) The Company's key commodities in the United States and Canada are dairy, meat, coffee and nuts.                                                                                                                                                             The Company's key commodities in the United States and Canada are dairy, meat, coffee and nuts.

Webcast, Conference Call, and Filing Information

A webcast of The Kraft Heinz Company's fourth quarter and full year 2019 earnings conference call will be available at ir.kraftheinzcompany.com. The call begins today at 8:30 a.m. Eastern Standard Time.

ABOUT THE KRAFT HEINZ COMPANY

For 150 years, we have produced some of the world's most beloved products at The Kraft Heinz Company (Nasdaq: KHC). Our Vision is To Be the Best Food Company, Growing a Better World. We are one of the largest global food and beverage companies, with 2019 net sales of approximately $25 billion. Our portfolio is a diverse mix of iconic and emerging brands. As the guardians of these brands and the creators of innovative new products, we are dedicated to the sustainable health of our people and our planet. To learn more, visit www.kraftheinzcompany.com or follow us on LinkedIn and Twitter.

Forward-Looking Statements

This press release contains a number of forward-looking statements. Words such as "commit," "plan," "believe," "anticipate," "reflect," "invest," "make," "expect," "deliver," "develop," "drive," "assess," "evaluate," "establish," "focus," "build," "turn," "expand," "leverage," "grow," "remain," "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, costs and cost savings, legal matters, taxes, expectations, investments, innovations, opportunities, capabilities, execution, initiatives, pipeline, and growth. 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, 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, suppliers and 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, increase its market share, or add products that are in faster-growing and more profitable categories; product recalls or product liability claims; unanticipated business disruptions; 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 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 ability to successfully execute its strategic initiatives; the impacts of the Company's international operations; 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; impacts of natural events in the locations in which we or the Company's customers, suppliers, distributors, or regulators operate; the Company's ownership structure; the Company's indebtedness and ability to pay such indebtedness, as well as its ability to comply with covenants under 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; increased pension, labor and people-related expenses; 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; an inability to remediate the material weaknesses in the Company's internal control over financial reporting or additional material weaknesses or other deficiencies in the future or the failure to maintain an effective system of internal controls; the Company's failure to prepare and timely file its periodic reports; the restatement of certain of the Company's previously issued consolidated financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues; the Company's ability to protect intellectual property rights; tax law changes or interpretations; the impact of future sales of the Company's common stock in the public markets; the Company's ability to continue to pay a regular dividend and the amounts of any such dividends; 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 or revise 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, the Company has presented Organic Net Sales, Adjusted EBITDA, Constant Currency Adjusted EBITDA, and Adjusted EPS, 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, 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, and Adjusted EPS) 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 integration and restructuring expenses); in addition to these adjustments, the Company excludes, when they occur, the impacts of integration and restructuring expenses, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, and equity award compensation expense (excluding integration and restructuring expenses). 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.

Adjusted EPS is defined as diluted earnings per share excluding, when they occur, the impacts of integration and restructuring expenses, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, 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 U.S. Tax Reform discrete income tax expense/(benefit), 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.

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
                                                                                                              Consolidated Statements of Income
                                                                                                            (in millions, except per share data)
                                                                                                                         (Unaudited)
                                                                               
                                                       For the Three Months Ended                    For the Three Months Ended                                             For the Year Ended
                                                                          -------------------------- ------------------------------------------------------------                          ------------------------------------------------------------
                                                              December 28,             December 28,            December 29,            December 28,            December 29,
                                                                                     2019                     2019                                       2018                                       2019                                       2018
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
Net sales                                                                                          $          $      6,536            $      6,891            $     24,977            $     26,268
Cost of products sold                                                                          4,429                 4,429                   4,675                  16,830                  17,347
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                               2,107                 2,107                   2,216                   8,147                   8,921
    Gross profit
Selling, general and administrative expenses, excluding impairment losses                        837                   837                     867                   3,178                   3,190
Goodwill impairment losses                                                                       453                   453                   6,875                   1,197                   7,008
Intangible asset impairment losses                                                               223                   223                   8,610                     702                   8,928
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                               1,513                 1,513                  16,352                   5,077                  19,126
  Selling, general and administrative expenses
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                                 594                   594                (14,136)                   3,070                (10,205)
    Operating income/(loss)
Interest expense                                                                                 326                   326                     325                   1,361                   1,284
Other expense/(income)                                                                          (59)                  (59)                      13                   (952)                   (168)
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                                 327                   327                (14,474)                   2,661                (11,321)
    Income/(loss) before income taxes
Provision for/(benefit from) income taxes                                                        144                   144                 (1,846)                     728                 (1,067)
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                                 183                   183                (12,628)                   1,933                (10,254)
    Net income/(loss)
Net income/(loss) attributable to noncontrolling interest                                          1                     1                    (60)                     (2)                    (62)
                                                                          -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                                   $          $        182            $   (12,568)            $      1,935            $   (10,192)
    Net income/(loss) attributable to common shareholders
                                                                          ========================== ========== ==========                      ========== ==========                      ========== ==========                      ========== ==========
                                                                               
Basic shares outstanding                                                                       1,221                 1,221                   1,220                   1,221                   1,219
Diluted shares outstanding                                                                     1,225                 1,225                   1,220                   1,224                   1,219
                                                                               
Per share data applicable to common shareholders:                                                 
                                                                                                   $          $       0.15            $    (10.30)            $       1.59            $     (8.36)
    Basic earnings/(loss) per share
                                            
                                                                                                                                                                                                                                     Schedule 2
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 The Kraft Heinz Company
                                                                                                                    Reconciliation of Net Sales to Organic Net Sales
                                                                                                                               For the Three Months Ended
                                                                                                                                  (dollars in millions)
                                                                                                                                       (Unaudited)
                                                    
                        Net                         Currency                  Acquisitions                 Organic                 Price                 Volume/
                                          Sales                                                                                             and                                          Net                                                                                 Mix
                                                                                                                                       Divestitures                                     Sales
                            ------------------------------  -------------------- ------------------------                       ------------------------  -------------------- --------------------  -------------------- --------------------                      --------------------
December 28, 2019                                                      
United States                                  $      4,682            $ --            $ --            $      4,682        
Canada                               457                           1              --                     456        
EMEA                                 689                         (6)              --                     695        
Rest of World                        708                        (11)              --                     719        
                            -------------------- ----------                      ------------------------                       ------------------------                       --------------------
                            $      6,536            $           (16)            $ --            $      6,552        
                            ==================== ==========                      ========== ==============                      ========== ==============                      ========== ==========
                                                    
December 29, 2018                                                      
United States                                  $      4,810            $ --            $ --            $      4,810        
Canada                               600              --                         133                     467        
EMEA                                 692              --              --                     692        
Rest of World                        789                          32                          26                     731        
                            -------------------- ----------                      ------------------------                       ------------------------                       --------------------
                            $      6,891            $             32            $            159            $      6,700        
                            ==================== ==========                      ========== ==============                      ========== ==============                      ========== ==========
Year-over-year growth rates                                            
United States                     (2.7)%               0.0 pp                    0.0 pp                      0.0 pp               (2.7)%                (2.7)%               3.1 pp               3.1 pp               (5.8) pp
Canada                           (23.8)%               0.1 pp                    0.1 pp                   (21.4) pp               (2.5)%                (2.5)%             (5.0) pp             (5.0) pp                 2.5 pp
EMEA                              (0.5)%             (0.8) pp                  (0.8) pp                      0.0 pp                 0.3%                  0.3%               0.1 pp               0.1 pp                 0.2 pp
Rest of World                    (10.1)%             (5.2) pp                  (5.2) pp                    (3.3) pp               (1.6)%                (1.6)%               0.7 pp               0.7 pp               (2.3) pp
                                                                                                                                                                
                                                                                                                                                                                                                                     Schedule 3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                           The Kraft Heinz Company
                                                                                                                                              Reconciliation of Net Sales to Organic Net Sales
                                                                                                                                                             For the Year Ended
                                                                                                                                                            (dollars in millions)
                                                                                                                                                                 (Unaudited)
                                                                                    
                  Net                        Net                              Currency                            Acquisitions                           Organic                      Price                 Volume/
                                    Sales                      Sales                                                                                                            and                                                    Net                                                                                      Mix
                                                                                                                                                                           Divestitures                                               Sales
                            -------------------- ------------------------------                       ----------------------------------                       ----------------------------------                       ------------------------------                       --------------------                      --------------------
December 28, 2019                                                                                      
United States                                  $                    $     17,756                      $ --                      $ --                      $     17,756        
Canada                               1,882               (45)                227          1,700        
EMEA                                 2,551              (115)                        --          2,666        
Rest of World                        2,788              (102)                 51          2,839        
                            -------------------- -------------------- ----------                      -------------------- --------------                      -------------------- --------------                      -------------------- ----------
                            $                    $     24,977                      $          (262)                      $            278                      $     24,961        
                            ==================== ==================== ==========                      ==================== ==============                      ==================== ==============                      ==================== ==========
                                                                                    
December 29, 2018                                                                                      
United States                                  $                    $     18,122                      $ --                      $ --                      $     18,122        
Canada                               2,173                        --                441          1,732        
EMEA                                 2,718                        --                 21          2,697        
Rest of World                        3,255                243                170          2,842        
                            -------------------- -------------------- ----------                      -------------------- --------------                      -------------------- --------------                      -------------------- ----------
                            $                    $     26,268                      $            243                      $            632                      $     25,393        
                            ==================== ==================== ==========                      ==================== ==============                      ==================== ==============                      ==================== ==========
Year-over-year growth rates                                                                            
United States                             (2.0)%                          (2.0)%                                0.0 pp                                0.0 pp         (2.0)%                 0.4 pp               (2.4) pp
Canada                                   (13.4)%                         (13.4)%                              (2.1) pp                              (9.4) pp         (1.9)%               (3.4) pp                 1.5 pp
EMEA                                      (6.2)%                          (6.2)%                              (4.3) pp                              (0.7) pp         (1.2)%                 0.0 pp               (1.2) pp
Rest of World                            (14.3)%                         (14.3)%                             (10.3) pp                              (3.9) pp         (0.1)%                 1.2 pp               (1.3) pp
                                                                                                                                                                                                               
                                                                                                                                                                                                                                     Schedule 4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         The Kraft Heinz Company
                                                                                                         Reconciliation of Net Income/(Loss) to Adjusted EBITDA
                                                                                                                          (dollars in millions)
                                                                                                                               (Unaudited)
                                                                    For the Three Months Ended                    For the Three Months Ended                                             For the Year Ended
                                                                                       -------------------------- ------------------------------------------------------------                          ------------------------------------------------------------
                                                                           December 28,             December 28,            December 29,            December 28,            December 29,
                                                                                                  2019                     2019                                       2018                                       2019                                       2018
                                                                                       -------------------------- --------------------                       --------------------                       --------------------                       --------------------
Net income/(loss)                                                                                               $          $        183            $   (12,628)            $      1,933            $   (10,254)
                                                                                                              326                   326                     325                   1,361                   1,284
  Interest expense
                                                                                                             (59)                  (59)                      13                   (952)                   (168)
  Other expense/(income)
                                                                                                              144                   144                 (1,846)                     728                 (1,067)
  Provision for/(benefit from) income taxes
                                                                                       -------------------------- --------------------                       --------------------                       --------------------                       --------------------
Operating income/(loss)                                                                                       594                   594                (14,136)                   3,070                (10,205)
                                                                                                              255                   255                     240                     985                     919
  Depreciation and amortization (excluding integration and restructuring expenses)
                                                                                                               46                    46                      82                     102                     297
  Integration and restructuring expenses
                                                                                                   --        --                       4                      19                      23
  Deal costs
                                                                                                             (27)                  (27)                      10                    (57)                      21
  Unrealized losses/(gains) on commodity hedges
                                                                                                              676                   676                  15,485                   1,899                  15,936
  Impairment losses
                                                                                                               20                    20                    (11)                      46                      33
  Equity award compensation expense (excluding integration and restructuring expenses)
                                                                                       -------------------------- --------------------                       --------------------                       --------------------                       --------------------
Adjusted EBITDA                                                                                                 $          $      1,564            $      1,674            $      6,064            $      7,024
                                                                                       ========================== ========== ==========                      ========== ==========                      ========== ==========                      ========== ==========
                                                                                            
Segment Adjusted EBITDA:                                                                                       
                                                                                                                $          $      1,270            $      1,249            $      4,809            $      5,218
  United States
                                                                                                              116                   116                     157                     487                     608
  Canada
                                                                                                              182                   182                     171                     661                     724
  EMEA
                                                                                                               60                    60                     130                     363                     635
  Rest of World
                                                                                                             (64)                  (64)                    (33)                   (256)                   (161)
  General corporate expenses
                                                                                       -------------------------- --------------------                       --------------------                       --------------------                       --------------------
                                                                                                                                   
                                                                                                                                                               Schedule 5
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          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
                            ------------------------------                       ----------------------------------                       ------------------------------
December 28, 2019                                              
United States                                  $      1,270                      $ --                      $      1,270
Canada                               116                        --            116
EMEA                                 182                (2)            184
Rest of World                         60                  3             57
General corporate expenses          (64)                        --           (64)
                            -------------------- ----------                      ----------------------------------                       -------------------- ----------
                            $      1,564                      $              1                      $      1,563
                            ==================== ==========                      ==================== ==============                      ==================== ==========
                                            
December 29, 2018                                              
United States                                  $      1,249                      $ --                      $      1,249
Canada                               157                        --            157
EMEA                                 171                        --            171
Rest of World                        130                 23            107
General corporate expenses          (33)                        --           (33)
                            -------------------- ----------                      ----------------------------------                       -------------------- ----------
                            $      1,674                      $             23                      $      1,651
                            ==================== ==========                      ==================== ==============                      ==================== ==========
Year-over-year growth rates                                    
United States                       1.6%                                0.0 pp           1.6%
Canada                           (26.1)%                                0.2 pp        (26.3)%
EMEA                                6.3%                              (1.4) pp           7.7%
Rest of World                    (53.9)%                              (8.0) pp        (45.9)%
General corporate expenses         92.2%                              (2.2) pp          94.4%
                                                                                                                                   
                                                                                                                                                               Schedule 6
-----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          The Kraft Heinz Company
                                                  Reconciliation of Adjusted EBITDA to Constant Currency Adjusted EBITDA
                                                                            For the Year Ended
                                                                           (dollars in millions)
                                                                                (Unaudited)
                  Adjusted EBITDA                        Currency                        Constant Currency
                                                                                                                                                   Adjusted EBITDA
                            ------------------------------                       ----------------------------------                       ------------------------------
December 28, 2019                                              
United States                                  $      4,809                      $ --                      $      4,809
Canada                               487               (12)            499
EMEA                                 661               (30)            691
Rest of World                        363                (8)            371
General corporate expenses         (256)                  4          (260)
                            -------------------- ----------                      -------------------- --------------                      -------------------- ----------
                            $      6,064                      $           (46)                      $      6,110
                            ==================== ==========                      ==================== ==============                      ==================== ==========
                                            
December 29, 2018                                              
United States                                  $      5,218                      $ --                      $      5,218
Canada                               608                        --            608
EMEA                                 724                        --            724
Rest of World                        635                170            465
General corporate expenses         (161)                        --          (161)
                            -------------------- ----------                      ----------------------------------                       -------------------- ----------
                            $      7,024                      $            170                      $      6,854
                            ==================== ==========                      ==================== ==============                      ==================== ==========
Year-over-year growth rates                                    
United States                     (7.8)%                                0.0 pp         (7.8)%
Canada                           (19.9)%                              (1.9) pp        (18.0)%
EMEA                              (8.7)%                              (4.2) pp         (4.5)%
Rest of World                    (42.8)%                             (22.6) pp        (20.2)%
General corporate expenses         58.6%                              (2.5) pp          61.1%
                                                                                         
                                                                                                                                        Schedule 7
--------------------------------------------------------------------------------------------------------------------------------------------
                                                              The Kraft Heinz Company
                                                   Reconciliation of Diluted EPS to Adjusted EPS
                                                                    (Unaudited)
                                                For the Three Months Ended              For the Three Months Ended
                                                                   -------------------------- ------------------------------------------------
                                                       December 28,          December 28,      December 29,
                                                                              2019                  2019                                 2018
                                                                   -------------------------- --------------                       --------------
Diluted EPS                                                                                 $       $    0.15         $ (10.30)
                                                                                         0.03            0.03              0.13
  Integration and restructuring expenses(a)
                                                                                       (0.02)          (0.02)              0.01
  Unrealized losses/(gains) on commodity hedges(b)
                                                                                         0.49            0.49             10.97
  Impairment losses(c)
                                                                                         0.06            0.06    --
  Losses/(gains) on sale of business(d)
                                                                               --  --              0.02
  Other losses/(gains) related to acquisitions and divestitures(e)
                                                                               --  --              0.01
  Nonmonetary currency devaluation(f)
                                                                                         0.01            0.01    --
  Debt prepayment and extinguishment costs(g)
                                                                   -------------------------- --------------                       --------------
(a)                  Gross expenses included in integration and restructuring expenses were $52 million ($39 million after-tax) for the three months ended December 28, 2019 and $182 million ($159 million after-tax) for the three months ended December 29, 2018 and were recorded in the following income statement line items:
  •                                                                                                                                                 Cost of products sold included $21 million for the three months ended December 28, 2019 and $19 million for the three months ended December 29, 2018;
  •                                                                                                                                                 SG&A included $25 million for the three months ended December 28, 2019 and $63 million for the three months ended December 29, 2018; and
  •                                                                                                                                                 Other expense/(income) included expenses of $6 million for the three months ended December 28, 2019 and expenses of $100 million for the three months ended December 29, 2018.
(b)                  Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $27 million ($21 million after-tax) for the three months ended December 28, 2019 and expenses of $10 million ($6 million after-tax) for the three months ended December 29, 2018 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 $453 million ($439 million after-tax) for the three months ended December 28, 2019 and $6.9 billion ($6.9 billion after-tax) for the three months ended December 29, 2018; and
  •                                                                                                                                                 Intangible asset impairment losses of $223 million ($156 million after-tax) for the three months ended December 28, 2019 and $8.6 billion ($6.5 billion after-tax) for the three months ended December 29, 2018.
(d)                  Gross expenses included in losses/(gains) on sale of business were expenses of $70 million ($73 million after-tax) for the three months ended December 28, 2019 and were included in other expense/(income).
(e)                  Gross expenses included in other losses/(gains) related to acquisitions and divestitures were $27 million ($15 million after-tax) for the three months ended December 29, 2018 and were recorded in the following income statement line items:
  •                                                                                                                                                 Interest expense included $3 million for the three months ended December 29, 2018;
  •                                                                                                                                                 Other expense/(income) included $17 million for the three months ended December 29, 2018; and
  •                                                                                                                                                 Provision for/(benefit from) income taxes included $7 million for the three months ended December 29, 2018.
(f)                  Gross expenses included in nonmonetary currency devaluation were $15 million ($15 million after-tax) for the three months ended December 29, 2018 and were recorded in other expense/(income).
(g)                  Gross expenses included in debt prepayment and extinguishment costs were $10 million ($11 million after-tax) for the three months ended December 28, 2019 and were recorded in interest expense.
                                                                                    
                                                                                                                                   Schedule 8
---------------------------------------------------------------------------------------------------------------------------------------
                                                            The Kraft Heinz Company
                                                 Reconciliation of Diluted EPS to Adjusted EPS
                                                                  (Unaudited)
                                                  For the Year Ended                   For the Year Ended
                                                                    -------------------- ------------------------------------------------
                                                     December 28,       December 28,      December 29,
                                                                            2019               2019                                 2018
                                                                    -------------------- --------------                       --------------
Diluted EPS                                                                            $       $    1.58         $  (8.36)
                                                                                    0.07            0.07              0.32
   Integration and restructuring expenses(a)
                                                                                    0.02            0.02              0.02
   Deal costs(b)
                                                                                  (0.04)          (0.04)              0.01
   Unrealized losses/(gains) on commodity hedges(c)
                                                                                    1.38            1.38             11.28
   Impairment losses(d)
                                                                                  (0.23)          (0.23)              0.01
   Losses/(gains) on sale of business(e)
                                                                          --  --              0.02
   Other losses/(gains) related to acquisitions and divestitures(f)
                                                                                    0.01            0.01              0.12
   Nonmonetary currency devaluation(g)
                                                                                    0.06            0.06    --
   Debt prepayment and extinguishment costs(h)
                                                                          --  --              0.09
   U.S. Tax Reform discrete income tax expense/(benefit)(i)
                                                                    -------------------- --------------                       --------------
(a)                  Gross expenses included in integration and restructuring expenses were $108 million in 2019 ($83 million after-tax) and $460 million in 2018 ($396 million after-tax) and were recorded in the following income statement line items:
  •                                                                                                                              Cost of products sold included $48 million in 2019 and $194 million in 2018;
  •                                                                                                                              SG&A included $54 million in 2019 and $103 million in 2018; and
  •                                                                                                                              Other expense/(income) included expenses of $6 million in 2019 and expenses of $163 million in 2018.
(b)                  Gross expenses included in deal costs were $19 million in 2019 ($18 million after-tax) and $23 million in 2018 ($19 million after-tax) and were recorded in the following income statement line items:
  •                                                                                                                              Cost of products sold included $4 million in 2018; and
  •                                                                                                                              SG&A included $19 million in 2019 and $19 million in 2018.
(c)                  Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $57 million in 2019 ($43 million after-tax) and expenses of $21 million in 2018 ($16 million after-tax) and were recorded in cost of products sold.
(d)                  Gross impairment losses, which were recorded in SG&A, included the following:
  •                                                                                                                              Goodwill impairment losses of $1.2 billion in 2019 ($1.2 billion after-tax) and $7.0 billion in 2018 ($7.0 billion after-tax); and
  •                                                                                                                              Intangible asset impairment losses of $702 million in 2019 ($537 million after-tax) and $8.9 billion in 2018 ($6.8 billion after-tax).
(e)                  Gross expenses/(income) included in losses/(gains) on sale of business were income of $420 million in 2019 ($275 million after-tax) and expenses of $15 million in 2018 ($15 million after-tax) and were recorded in other expense/(income).
(f)                  Gross expenses/(income) included in other losses/(gains) related to acquisitions and divestitures were income of $5 million in 2019 ($5 million after-tax) and expenses of $27 million in 2018 ($15 million after-tax) and were recorded in the following income statement line items:
  •                                                                                                                              Interest expense included $1 million in 2019 and $3 million in 2018;
  •                                                                                                                              Other expense/(income) included income of $6 million in 2019 and expenses of $17 million in 2018; and
  •                                                                                                                              Provision for/(benefit from) income taxes included $7 million in 2018.
(g)                  Gross expenses included in nonmonetary currency devaluation were $10 million in 2019 ($10 million after-tax) and $146 million in 2018 ($146 million after-tax) and were recorded in other expense/(income).
(h)                  Gross expenses included in debt prepayment and extinguishment costs were $98 million in 2019 ($73 million after-tax) and were recorded in interest expense.
                                         
                                                                                                            Schedule 9
-----------------------------------------------------------------------------------------------------------------
                                                The Kraft Heinz Company
                                              Consolidated Balance Sheets
                                         (in millions, except per share data)
                                                      (Unaudited)
                                      December 28, 2019       December 29, 2018
                                                      --------------------                       --------------------
ASSETS                                                      
                                                               $      2,279            $      1,130
   Cash and cash equivalents
                                                                      1,973                   2,129
   Trade receivables, net
                                                                        173                     152
   Income taxes receivable
                                                                      2,721                   2,667
   Inventories
                                                                        384                     400
   Prepaid expenses
                                                                        445                   1,221
   Other current assets
                                                                        122                   1,376
   Assets held for sale
                                                      --------------------                       --------------------
                                                                      8,097                   9,075
         Total current assets
                                                                      7,055                   7,078
   Property, plant and equipment, net
                                                                     35,546                  36,503
   Goodwill
                                                                     48,652                  49,468
   Intangible assets, net
                                                                      2,100                   1,337
   Other non-current assets
                                                      --------------------                       --------------------
                                                               $    101,450            $    103,461
         TOTAL ASSETS
                                                      ========== ==========                      ========== ==========
LIABILITIES AND EQUITY                                      
                                                               $          6            $         21
   Commercial paper and other short-term debt
                                                                      1,022                     377
   Current portion of long-term debt
                                                                      4,003                   4,153
   Trade payables
                                                                        647                     722
   Accrued marketing
                                                                        384                     408
   Interest payable
                                                                      1,804                   1,767
   Other current liabilities
                                                                          9                      55
   Liabilities held for sale
                                                      --------------------                       --------------------
                                                                      7,875                   7,503
         Total current liabilities
                                                                     28,216                  30,770
   Long-term debt
                                                                     11,878                  12,202
   Deferred income taxes
                                                                        273                     306
   Accrued postemployment costs
                                                                      1,459                     902
   Other non-current liabilities
                                                      --------------------                       --------------------
                                                                     49,701                  51,683
         TOTAL LIABILITIES
                                                             --                       3
   Redeemable noncontrolling interest
                                                            
   Equity:
                                                                         12                      12
      Common stock, $0.01 par value
                                                                     56,828                  58,723
      Additional paid-in capital
                                                                    (3,060)                 (4,853)
      Retained earnings/(deficit)
                                                                    (1,886)                 (1,943)
      Accumulated other comprehensive income/(losses)
                                                                      (271)                   (282)
      Treasury stock, at cost
                                                      --------------------                       --------------------
                                                                     51,623                  51,657
         Total shareholders' equity
                                                                        126                     118
   Noncontrolling interest
                                                      --------------------                       --------------------
                                                                     51,749                  51,775
         TOTAL EQUITY
                                                      --------------------                       --------------------
                                                                  
                                                                                                                                    Schedule 10
------------------------------------------------------------------------------------------------------------------------------------------
                                                             The Kraft Heinz Company
                                                      Consolidated Statement of Cash Flows
                                                                  (in millions)
                                                                   (Unaudited)
                                                                                   For the Year Ended
                                                                               ------------------------------------------------------------
                                                               December 28, 2019       December 29, 2018
                                                                               --------------------                       --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                
Net income/(loss)                                                                       $      1,933            $   (10,254)
Adjustments to reconcile net income/(loss) to operating cash flows:                  
                                                                                                 994                     983
   Depreciation and amortization
                                                                                               (306)                   (339)
   Amortization of postretirement benefit plans prior service costs/(credits)
                                                                                                  46                      33
   Equity award compensation expense
                                                                                               (293)                 (1,967)
   Deferred income tax provision/(benefit)
                                                                                                (32)                    (76)
   Postemployment benefit plan contributions
                                                                                               1,899                  15,936
   Goodwill and intangible asset impairment losses
                                                                                                  10                     146
   Nonmonetary currency devaluation
                                                                                               (420)                      15
   Loss/(gain) on sale of business
                                                                                                (46)                     160
   Other items, net
                                                                                     
   Changes in current assets and liabilities:
                                                                                                 140                 (2,280)
      Trade receivables
                                                                                               (277)                   (251)
      Inventories
                                                                                                (58)                    (23)
      Accounts payable
                                                                                                  52                   (146)
      Other current assets
                                                                                                (90)                     637
      Other current liabilities
                                                                               --------------------                       --------------------
                                                                                               3,552                   2,574
         Net cash provided by/(used for) operating activities
                                                                               --------------------                       --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                                
                                                                                      --                   1,296
   Cash receipts on sold receivables
                                                                                               (768)                   (826)
   Capital expenditures
                                                                                               (199)                   (248)
   Payments to acquire business, net of cash acquired
                                                                                                 590                      24
   Proceeds from net investment hedges
                                                                                               1,875                      18
   Proceeds from sale of business, net of cash disposed
                                                                                                  13                      24
   Other investing activities, net
                                                                               --------------------                       --------------------
                                                                                               1,511                     288
      Net cash provided by/(used for) investing activities
                                                                               --------------------                       --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:                                                
                                                                                             (4,795)                 (2,713)
   Repayments of long-term debt
                                                                                               2,967                   2,990
   Proceeds from issuance of long-term debt
                                                                                                (99)          --
   Debt prepayment and extinguishment costs
                                                                                                 557                   2,784
   Proceeds from issuance of commercial paper
                                                                                               (557)                 (3,213)
   Repayments of commercial paper
                                                                                             (1,953)                 (3,183)
   Dividends paid
                                                                                                (33)                    (28)
   Other financing activities, net
                                                                               --------------------                       --------------------
                                                                                             (3,913)                 (3,363)
      Net cash provided by/(used for) financing activities
                                                                               --------------------                       --------------------
Effect of exchange rate changes on cash, cash equivalents, and restricted cash                   (6)                   (132)
                                                                               --------------------                       --------------------
Cash, cash equivalents, and restricted cash                                          
                                                                                               1,144                   (633)
   Net increase/(decrease)
                                                                                               1,136                   1,769
   Balance at beginning of period
                                                                               --------------------                       --------------------

View source version on businesswire.com: https://www.businesswire.com/news/home/20200213005226/en/

SOURCE: The Kraft Heinz Company

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


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

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