Kraft Heinz Stock Portfolio

Kraft Heinz Earnings Show Strong Gains in Q1

The Kraft Heinz Company has announced that its Q1 2022 results had a 37.5 percent increase in net income versus the year-ago period to $781 million.

The results were primarily driven by lower non-cash impairment losses in the current year period, lower interest expense primarily due to debt extinguishment costs in the prior year period, and favorable changes in other expense/(income).

Details for Q1:

Diluted EPS was $0.63, up 37.0 percent versus the prior year, driven by the net income/(loss) factors discussed above.

Adjusted EPS was $0.60, down 16.7 percent versus the prior year, primarily driven by lower Adjusted EBITDA, including a negative $0.08 impact from divestitures, and higher taxes on adjusted earnings that more than offset lower interest expense versus the prior year period.

Net sales decreased 5.5 percent versus the year-ago period to $6.0 billion, including a negative 11.2 percentage point impact from divestitures net of acquisitions and a negative 1.1 percentage point impact from currency.

Organic net sales increased 6.8 percent versus the prior year period. Pricing was up 9.0 percentage points versus the prior year period with growth across each reporting segment that was primarily driven by increases to mitigate rising input costs in retail and foodservice channels. Volume/mix declined 2.2 percentage points versus the year-ago period reflecting supply constraints that were partially offset by strong demand for products in retail and a continued recovery in foodservice channels.

Net cash provided by operating activities was $486 million, down 40.0 percent versus the year-ago period, primarily driven by lower Adjusted EBITDA and higher cash outflows for inventories primarily related to stock rebuilding and increased input costs. These impacts were partially offset by lower cash outflows for interest primarily due to prior year reduction of long-term debt and lower cash outflows for variable compensation in 2022 compared to 2021.

Free Cash Flow was $272 million, down 53.4 percent versus the comparable prior year period due to the lower net cash provided by operating activities that was partially offset by lower capital expenditures versus the prior year period.

© 2022 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.