Kraft Heinz — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales decreased 2.0% year-over-year to $6.1 billion for the three months ended September 26, 2026, and decreased 0.9% to $18.4 billion for the nine months ended September 26, 2026.
• Organic Net Sales decreased 1.1% for the three months and 0.9% for the nine months ended September 26, 2026.
• Gross profit margin increased 60 basis points to 32.5% for the quarter; Adjusted Gross Profit Margin decreased 40 basis points to 31.9%.
• Operating income decreased 14.6% to $0.9 billion for the quarter and improved to a loss of $4.4 billion for the nine months (compared to a $5.8 billion loss prior year).
• Adjusted Operating Income decreased 15.2% to $0.9 billion for the quarter and 15.2% to $3.0 billion for the nine months.
• Diluted EPS was $0.46 for the quarter (down 11.5%) and $(3.47) for the nine months (up 36.6% from prior year loss).
• Adjusted EPS was $0.53 for the quarter (down 13.1%) and $1.67 for the nine months (down 13.0%).
• Year-to-date net cash provided by operating activities was $3.0 billion, down 4.1%.
• Free Cash Flow was $2.4 billion for the nine months, down 5.2%, with Free Cash Flow Conversion at 120%.
• Year-to-date return of capital to stockholders was $1.4 billion in cash dividends; no share repurchases were made.

Guidance and Future Outlook:

• Updated 2026 Organic Net Sales outlook to a decrease of 0.5% to 1.25% (previously 0.5% to 2.0% decrease).
• Updated 2026 Constant Currency Adjusted Operating Income outlook to a decrease of 16% to 18% (unchanged from prior range).
• Updated 2026 Adjusted EPS outlook to a range of $2.07 to $2.13 (previously $2.03 to $2.09).
• Updated 2026 Effective Tax Rate on Adjusted EPS to approximately 23.5% (previously ~24.5%).
• Updated 2026 Adjusted Gross Profit Margin outlook to the low end of the previously provided range (down 10 to 50 basis points).
• Full-year outlook includes an approximate 100 basis point impact from incremental SNAP headwinds and 500 basis points from lapping lower incentive compensation.
• Full-year outlook contemplates incremental investments of approximately $700 million compared to 2025.
• Updated 2026 Free Cash Flow Conversion outlook to approximately 110%.

Business Segments and Product Lines:

• North America: Net sales decreased 3.4% for the quarter and 2.3% for the nine months; Organic Net Sales decreased 3.2% for the quarter and 2.4% for the nine months.
• Europe and Pacific Developed Markets: Net sales decreased 5.6% for the quarter and 2.0% for the nine months; Organic Net Sales decreased 1.3% for the quarter and 0.9% for the nine months.
• Emerging Markets: Net sales increased 13.8% for the quarter and 11.1% for the nine months; Organic Net Sales increased 15.6% for the quarter and 10.0% for the nine months.
• Volume/mix declined 1.1 percentage points for the quarter, driven by declines in North America (meats, sauces, refreshment beverages) and a 80 basis point headwind from inventory pull forward into Q2.
• Price was flat for the quarter, with positive price in Emerging Markets offsetting negative price in North America and Europe/Pacific Developed Markets.

Market and Competitive Landscape:

• Management stated that market share, sales, and volume trends are improving in every region relative to the prior year.
• The company is increasingly meeting consumers where they are and providing more reasons to choose their brands.
• The company noted unfavorable volume/mix impacts were partially offset by efficiency initiatives.

Risks and Challenges:

• Operating income and Adjusted Operating Income were negatively impacted by increased inflationary pressures in procurement and logistics costs.
• Higher variable compensation expense and increased advertising expenses contributed to lower profitability.
• Non-cash impairment losses were $37 million higher in the current quarter period compared to the prior year.
• The outlook includes headwinds from incremental SNAP (Supplemental Nutrition Assistance Program) impacts.
• The company noted a pause on work related to the previously announced separation of Kraft Heinz into two independent companies.

Management Commentary and Tone:

• CEO Steve Cahillane stated the 2026 operating plan to turn around the U.S. business and accelerate international growth is "on track."
• Management expressed confidence in the strong balance sheet providing flexibility to invest in brands and people.
• The company raised the low end of its Organic Net Sales outlook for the full year, reflecting built momentum.

Other Key Points:

• The company did not repurchase any shares under its publicly announced share repurchase program during the period.
• Significant non-cash impairment losses were recorded in the nine-month period ($7.4 billion GAAP vs. $7.4 billion Adjusted Operating Income add-back).
• The company reported a $1.4 billion return of capital to stockholders via dividends year-to-date.
• The press release includes detailed reconciliations of GAAP to Non-GAAP measures, including Adjusted Gross Profit, Adjusted Operating Income, and Free Cash Flow.