Kraft Heinz Outlines the Next Phase of Its Transformation at the 2022 CAGNY Conference
Increases Long Term Growth Algorithm
The Company will describe how it has reset its foundation and fully deployed its Operating Model in the past two years, a mainly internally focused process to get established best practices in place and bring it to industry standards.
"Our transformation to date has been successful in unleashing the full power of
The Company will also highlight that, as a result of successful portfolio management, almost two-thirds of its business now resides in consumer platforms that have relatively attractive growth profiles that it expects will carry higher-than-average profit margins into the future.
“AGILE@SCALE creates a continuous improvement cycle for how we run and transform our business, leveraging our scale to maximize the impact of our current and future initiatives,” said Abrams-Rivera.
Patricio added, “As we transition to accelerate profitable growth, our improved portfolio and Operating Model will continue to drive us forward through the power of AGILE@SCALE. This combination is already generating early wins. As a result, we have increased our long-term algorithm.”
Over the past 18 months, the Company has identified and prioritized critical initiatives, utilizing agile disciplines and digital solutions, across its entire value chain. With a focus on building a tech ecosystem comprised of proprietary systems, the Company is developing in-house digital capabilities in partnership with leading-edge tech companies.
“AGILE@SCALE will build on the efficiency and effectiveness of our transformation to date. We are creating a cycle between how we run and transform the business to fundamentally shift how we work, collaborate and go to market going forward,” said Abrams-Rivera. “To scale our new solutions, we have flattened the organization to reduce layers and increase the span of control of our managers, empowering them to remove roadblocks and focus on driving results.”
The Company will also provide several examples of how it is creating the structure required to implement agility throughout the organization today and how it will leverage proven solutions to maximize value creation tomorrow.
Long Term Financial Profile
Taking into account the reorientation of the business to date and confidence in its next phase,
Net Sales(1) growth from 1% – 2% to 2% – 3%
- Adjusted EBITDA(1) growth from 2% – 3% to 4% – 6%
- Adjusted EPS(1) growth from 4% – 6% to 6% – 8%
- with greater than or equal to 100% Free Cash Flow(1) conversion.
Maciel added, “With AGILE@SCALE energizing each aspect of our Operating Model, we expect to open new growth opportunities and unlock greater efficiencies that will generate meaningful Free Cash Flow and fund further investments in our brands. We also plan to utilize our capital to plant seeds that can improve our trajectory even further over time, while maintaining both a strong payout to stockholders and a net leverage below four times."
The Company expects to deliver at least
The Company will reiterate its expectation to deliver 2022 Adjusted EBITDA in the range of
A prepared presentation at the CAGNY conference will begin at
We are driving transformation at
This press release contains a number of forward-looking statements. Words such as “accelerate,” “aim,” “believe,” “create,” “deliver,” “drive,” “expect,” “focus,” “fund,” “generate,” “grow,” “implement,” “improve,” “invest,” “leverage,” “make,” “maintain,” “maximize,” “plan,” “provide,” “see,” “transform,” "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, impacts of accounting standards and guidance, growth, legal matters, taxes, costs and cost savings, impairments, dividends, expectations, investments, innovations, opportunities, capabilities, execution, initiatives, and pipeline. These forward-looking statements reflect management's current expectations and 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, the impacts of COVID-19 and government and consumer responses; 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 or suppliers, or in 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 or platforms, increase its market share, or add products that are in faster-growing and more profitable categories; product recalls or other product liability claims; climate change and legal or regulatory responses; 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 successfully execute its strategic initiatives; the impacts of the Company's international operations; the Company's ability to protect intellectual property rights; the Company's ownership structure; 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 level of indebtedness, as well as our ability to comply with covenants under our 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; compliance with laws and regulations and related legal claims or regulatory enforcement actions; failure to maintain an effective system of internal controls; a downgrade in the Company's credit rating; the impact of future sales of the Company's common stock in the public market; the Company’s ability to continue to pay a regular dividend and the amounts of any such dividends; unanticipated business disruptions and natural events in the locations in which the Company or its customers, suppliers, distributors, or regulators operate; economic and political conditions in
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
To supplement the financial information, the Company has presented Organic
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
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 restructuring activities); in addition to these adjustments, the Company excludes, when they occur, the impacts of divestiture-related license income (e.g., income related to the sale of licenses in connection with the Cheese Transaction), restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities). Adjusted EBITDA 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 EPS is defined as diluted earnings per share excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, 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 certain significant discrete income tax items (e.g.,
Free Cash Flow is defined as net cash provided by/(used for) operating activities less capital expenditures. The Company believes Free Cash Flow provides a measure of the Company's core operating performance, the cash-generating capabilities of the Company's business operations, and is one factor used in determining the amount of cash available for debt repayments, dividends, acquisitions, share repurchases, and other corporate purposes. The use of this non-GAAP measure does not imply or represent the residual cash flow for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure
View source version on businesswire.com: https://www.businesswire.com/news/home/20220222005495/en/