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Kraft Heinz (KHC) Q4 Earnings Top Estimates: Pricing a Driver
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The Kraft Heinz Company (KHC - Free Report) posted robust fourth-quarter 2021 results as the top and bottom lines cruised past the Zacks Consensus Estimate and the former increased year over year. The company is benefiting from its efficiency gains, which along with pricing, is helping it battle inflation. Management remains confident of building on its momentum in 2022.
Quarter in Detail
Kraft Heinz posted adjusted earnings of 79 cents a share, which easily beat the Zacks Consensus Estimate of 62 cents. Quarterly earnings declined 1.3% year over year mainly due to reduced adjusted EBITDA somewhat compensated by favorable changes in other expenses/(income), reduced interest expenses and lower taxes.
The Kraft Heinz Company Price, Consensus and EPS Surprise
The company generated net sales of $6,709 million that dropped 3.3% year over year. Net sales included an adverse impact of 7.3 percentage points from buyouts and divestitures and a positive currency impact of 0.1 percentage points. Net sales beat the Zacks Consensus Estimate of $6,621 million. Net sales increased 2.6% from fourth-quarter 2019 levels.
Organic net sales increased 1.3% year over year. The metric rose 9.4% from fourth-quarter 2019 numbers. KHC stated that pricing rose 3.8% year over year with growth in all reporting segments, reflecting inflation-justified price increases across foodservice and retail channels. The volume/mix remained flat year over year as the continued rebound in the foodservice channel was countered by temporary supply-chain hurdles and comparisons with significant pandemic-led retail demand in 2020.
Gross profit of $2,162 million declined 14.3% from $2,523 million reported in the year-ago quarter. Adjusted EBITDA fell 10.2% to $1,606 million. Excluding a positive 0.2 percentage point impact from currency, the metric benefited from efficiency gains and increased organic net sales. These were more than offset by escalated commodity costs, including core commodity and packaging costs, along with procurement, logistics and manufacturing cost inflation.
Image Source: Zacks Investment Research
Segment Discussion
United States: Net sales of $4,737 million declined 6.8% year over year. During the quarter, pricing moved up 3.6 percentage points but the volume/mix fell 0.6 percentage points.
International: Net sales of $1,501 million were up 6.5% year over year. Pricing moved up 4 percentage points and the volume/mix rose 2.8 percentage points.
Canada: Net sales of $471 million rose 5.2% year over year. Pricing moved up 5.2 percentage points but the volume/mix declined 1.8 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $3,445 million, long-term debt of $21,061 million and total shareholders’ equity of $49,448 million. Net cash provided by operating activities was $5,364 million for the 12 months ended Dec 25, 2021. The company generated free cash flow of $4.5 billion during this time.
In a separate press release, Kraft Heinz declared a quarterly dividend of 40 cents per share payable on Mar 25, 2022, to shareholders of record as of Mar 11.
Guidance
Kraft Heinz expects to deliver robust financial results in 2022. It presently anticipates organic net sales to rise in the low-single digits due to the continued strength in consumption compared with pre-pandemic levels. Adjusted EBITDA is likely to be in the $5.8-$6 billion range, including the impact of an extra week in 2022. This view also reflects the impact of solid organic sales, divestitures and efforts to counter inflation.
This Zacks Rank #3 (Hold) stock has decreased 8.8% in the past six months compared with the industry’s drop of 0.7%.
Looking for Solid Consumer Staple Stocks? Check These
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have dipped 10.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and earnings per share (EPS) suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 14.3% in the past six months.
The Zacks Consensus Estimate for Flowers Foods' current financial-year sales and EPS suggests growth of 7.2% and 2.2%, respectively, from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 9%, on average.
Medifast, the manufacturer and distributor of weight loss, weight management, healthy living products, and other consumable health and nutritional products, currently carries a Zacks Rank #2. Shares of Medifast have dropped 18.1% in the past six months.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of about 63% and 49.3%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 17.3%, on average.
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Kraft Heinz (KHC) Q4 Earnings Top Estimates: Pricing a Driver
The Kraft Heinz Company (KHC - Free Report) posted robust fourth-quarter 2021 results as the top and bottom lines cruised past the Zacks Consensus Estimate and the former increased year over year. The company is benefiting from its efficiency gains, which along with pricing, is helping it battle inflation. Management remains confident of building on its momentum in 2022.
Quarter in Detail
Kraft Heinz posted adjusted earnings of 79 cents a share, which easily beat the Zacks Consensus Estimate of 62 cents. Quarterly earnings declined 1.3% year over year mainly due to reduced adjusted EBITDA somewhat compensated by favorable changes in other expenses/(income), reduced interest expenses and lower taxes.
The Kraft Heinz Company Price, Consensus and EPS Surprise
The Kraft Heinz Company price-consensus-eps-surprise-chart | The Kraft Heinz Company Quote
The company generated net sales of $6,709 million that dropped 3.3% year over year. Net sales included an adverse impact of 7.3 percentage points from buyouts and divestitures and a positive currency impact of 0.1 percentage points. Net sales beat the Zacks Consensus Estimate of $6,621 million. Net sales increased 2.6% from fourth-quarter 2019 levels.
Organic net sales increased 1.3% year over year. The metric rose 9.4% from fourth-quarter 2019 numbers. KHC stated that pricing rose 3.8% year over year with growth in all reporting segments, reflecting inflation-justified price increases across foodservice and retail channels. The volume/mix remained flat year over year as the continued rebound in the foodservice channel was countered by temporary supply-chain hurdles and comparisons with significant pandemic-led retail demand in 2020.
Gross profit of $2,162 million declined 14.3% from $2,523 million reported in the year-ago quarter. Adjusted EBITDA fell 10.2% to $1,606 million. Excluding a positive 0.2 percentage point impact from currency, the metric benefited from efficiency gains and increased organic net sales. These were more than offset by escalated commodity costs, including core commodity and packaging costs, along with procurement, logistics and manufacturing cost inflation.
Image Source: Zacks Investment Research
Segment Discussion
United States: Net sales of $4,737 million declined 6.8% year over year. During the quarter, pricing moved up 3.6 percentage points but the volume/mix fell 0.6 percentage points.
International: Net sales of $1,501 million were up 6.5% year over year. Pricing moved up 4 percentage points and the volume/mix rose 2.8 percentage points.
Canada: Net sales of $471 million rose 5.2% year over year. Pricing moved up 5.2 percentage points but the volume/mix declined 1.8 percentage points.
Other Financial Aspects
Kraft Heinz ended the quarter with cash and cash equivalents of $3,445 million, long-term debt of $21,061 million and total shareholders’ equity of $49,448 million. Net cash provided by operating activities was $5,364 million for the 12 months ended Dec 25, 2021. The company generated free cash flow of $4.5 billion during this time.
In a separate press release, Kraft Heinz declared a quarterly dividend of 40 cents per share payable on Mar 25, 2022, to shareholders of record as of Mar 11.
Guidance
Kraft Heinz expects to deliver robust financial results in 2022. It presently anticipates organic net sales to rise in the low-single digits due to the continued strength in consumption compared with pre-pandemic levels. Adjusted EBITDA is likely to be in the $5.8-$6 billion range, including the impact of an extra week in 2022. This view also reflects the impact of solid organic sales, divestitures and efforts to counter inflation.
This Zacks Rank #3 (Hold) stock has decreased 8.8% in the past six months compared with the industry’s drop of 0.7%.
Looking for Solid Consumer Staple Stocks? Check These
Some top-ranked stocks are Helen of Troy (HELE - Free Report) , Flowers Foods (FLO - Free Report) and Medifast, Inc. (MED - Free Report)
Helen of Troy, a designer, developer, marketer, importer and distributor, carries a Zacks Rank #1 (Strong Buy) at present. Shares of Helen of Troy have dipped 10.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Helen of Troy’s current financial-year sales and earnings per share (EPS) suggests growth of 0.8% and 0.6%, respectively, from the year-ago reported number. HELE has a trailing four-quarter earnings surprise of 19.1%, on average.
Flowers Foods, which produces and markets packaged bakery products, carries a Zacks Rank #2 (Buy). Shares of Flowers Foods have moved up 14.3% in the past six months.
The Zacks Consensus Estimate for Flowers Foods' current financial-year sales and EPS suggests growth of 7.2% and 2.2%, respectively, from the year-ago reported number. FLO has a trailing four-quarter earnings surprise of 9%, on average.
Medifast, the manufacturer and distributor of weight loss, weight management, healthy living products, and other consumable health and nutritional products, currently carries a Zacks Rank #2. Shares of Medifast have dropped 18.1% in the past six months.
The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of about 63% and 49.3%, respectively, from the year-ago reported figure. MED has a trailing four-quarter earnings surprise of 17.3%, on average.