The Kraft Heinz Company (KHC) Q3 2024 Prepared Remarks earnings summary

Executive summary

• Global Away From Home and Emerging Markets delivered growth, offsetting ongoing pressure and elongated recovery in U.S. retail categories.

• Profitability and strong cash flow were achieved, with increased investments in marketing, R&D, and technology to support future growth.

• Adjusted Operating Income rose 1.4% to $1.3B in Q3 2024, driven by higher pricing and efficiency gains.

• Adjusted EPS increased 4.2% to $0.75 in Q3 2024, despite a GAAP diluted EPS loss of $0.24 due to $1.4B in non-cash impairment losses.

• Strategy remains focused on flagship brand growth, innovation, and disciplined business management.

Financial highlights

• Q3 2024 organic net sales declined 2.2% year-over-year to $6.4B; reported net sales down 2.8%.

• Adjusted gross profit margin expanded by 30 basis points to 34.3%; adjusted operating income margin was 20.8%.

• Year-to-date free cash flow increased 9.7% to $2.0B; free cash flow conversion reached 75%.

• Adjusted EPS rose 4.2% year-over-year, driven by resilient operations, share repurchases, and effective tax rate.

• Q3 2024 reported a net loss of $290M, driven by $1.4B in non-cash impairment charges.

Outlook and guidance

• Fiscal 2024 organic net sales, adjusted operating income, and adjusted EPS expected at the low end of prior guidance (organic net sales down 2% to flat, adjusted operating income and EPS up 1–3%).

• Adjusted gross profit margin expansion now at the lower end of the 75–125 basis points range due to incremental inflation and trade.

• Full-year inflation forecast increased to 4% due to higher commodity costs.

• Effective tax rate on adjusted EPS expected at 21%, a year-over-year headwind.

• 2025 not expected to reach long-term algorithm pace, but positive momentum anticipated in Emerging Markets and Global Away From Home.