The Kraft Heinz Company (KHC) Q4 2024 Prepared Remarks earnings summary

Executive summary

• Delivered industry-leading gross margins and strong free cash flow despite a challenging macroeconomic environment in 2024, with a focus on building for the future and increasing sustainable cash flow.

• Returned $2.7 billion to stockholders through dividends and share buybacks, offering the highest yield in food.

• Focused on brand superiority via efficiencies, product innovation, and enhanced marketing, with confidence in the 2025 strategy for steady top-line improvement and profitability.

Financial highlights

• Organic net sales declined 2.1% year-over-year to $25.9B, with emerging markets growth offset by declines in North America and Away From Home.

• Adjusted gross profit margin expanded by 100 basis points to 34.7% versus 2023.

• Adjusted operating income grew 1.2% year-over-year to $5.4B, aided by lower variable incentive compensation.

• Adjusted EPS increased 2.7% to $3.06; free cash flow rose 6.6% to $3.2B.

• Fourth quarter organic net sales declined 3.1%; adjusted EPS up 7.7% versus Q4 2023.

Outlook and guidance

• 2025 organic net sales expected flat to down 2.5%, with sequential improvement each quarter and growth in emerging markets and Away From Home.

• Adjusted operating income projected to be down 1% to 4% year-over-year.

• Adjusted EPS guidance: $2.63 to $2.74, with a 7% headwind from lower variable compensation and a 23% headwind from a higher effective tax rate.

• Free cash flow for 2025 expected to be flat, with conversion improving to approximately 95%.

• Adjusted gross profit margin expected flat to slightly positive year-over-year; inflation ~3%.