The Kraft Heinz Company

05/06/2026 | Press release | Distributed by Public on 05/06/2026 07:32

Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Objective:
The following discussion provides an analysis of our financial condition and results of operations from management's perspective and should be read in conjunction with the condensed consolidated financial statements and related notes included in Item 1, Financial Statements, of this Quarterly Report on Form 10-Q. Our objective is to also provide discussion of material events and uncertainties known to management that are reasonably likely to cause reported financial information not to be indicative of future operating results or of future financial condition and to offer information that provides an understanding of our financial condition, results of operations, and cash flows.
Description of the Company:
We manufacture and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee, and other grocery products throughout the world.
We manage our operating results through four operating segments: North America, Europe and Pacific Developed Markets ("EPDM" or "International Developed Markets"), West and East Emerging Markets ("WEEM"), and Asia Emerging Markets ("AEM"). We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
See Note 16, Segment Reporting, in Item 1, Financial Statements, for our financial information by segment.
Acquisitions and Divestitures:
On December 31, 2025, which was in the first quarter of our fiscal year 2026, we closed the sale of our infant and specialty food business in Italy within our International Developed Markets segment for cash consideration of approximately $146 million. See Note 4, Acquisitions and Divestitures, in Item 1, Financial Statements, for additional information on divestiture activities.
Business Trends and Items Affecting Comparability of Financial Results
Inflation and Tariff Impacts:
During the three months ended March 28, 2026, we experienced inflationary pressures in our supply chain costs at rates lower than those we experienced in the prior year period. However, we expect inflationary pressures to increase throughout 2026 due, in part, to the Iran Conflict, although there continues to be significant uncertainty. We continue to take measures to mitigate the impact of this inflation through efficiency initiatives, pricing actions, alternative sourcing, and hedging strategies. However, there has been, and we expect that there could continue to be, a difference between the timing of when these beneficial, mitigative actions impact our results of operations and when the cost inflation is incurred. Additionally, the pricing actions we have taken have, in some instances, negatively impacted, and could continue to negatively impact, our market share.
Throughout 2025, we experienced increased inflationary pressures in our supply chain costs due to the tariff and trade policy actions taken by the United States. On February 20, 2026, the U.S. Supreme Court invalidated those tariffs imposed by the Trump Administration under the International Emergency Economic Power Act ("IEEPA"). In response to the Supreme Court's decision, the Trump Administration announced a new 10% global tariff under a different statutory authority, however, there remains uncertainty regarding the duration, scope, and likelihood of further legal challenges of the newly initiated tariffs.
Further, on March 4, 2026, the Court of International Trade ordered the Trump Administration to begin refunding all tariffs imposed under IEEPA. Kraft Heinz is not the Importer of Record for the majority of the raw materials we source from outside of the U.S. As a result, any recovery is dependent on the actions of our suppliers and the contractually negotiated outcomes with these suppliers. Therefore, the timing and the amount of recovery, if any, are uncertain at this time.
Iran Conflict
On February 28, 2026, the United States and Israel launched a joint military operation against Iran targeting the country's leadership, nuclear facilities, missile sites, and security forces. In response, Iran launched retaliatory strikes against Israel, Saudi Arabia, United Arab Emirates, and other countries in the Persian Gulf region. As of March 28, 2026, less than 1% of consolidated total assets were located in the impacted countries, and less than 1% of consolidated net sales were generated by our businesses in the region. While the Iran conflict did not have a material impact on our results of operations through the first quarter of 2026, the ongoing geopolitical tensions involving Iran have increased, and could continue to increase, the risk of supply-chain disruption and inflationary pressures, particularly related to procurement and logistics costs. As the situation is rapidly changing, we will continue to evaluate the potential impact that this conflict has on our business.
Regulatory Landscape:
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law in the United States. The OBBBA includes a broad range of changes to U.S. tax law, which did not have a material impact on our total tax provision as of March 28, 2026, and we do not expect the elective provisions of the law to have a material impact on our effective tax rate in future periods. Further, certain provision of the OBBBA impact the timing of cash tax payments, which resulted in a reduction of our cash tax payments in 2025, and is expected to reduce cash tax payments in 2026; however we do not expect these provisions to have a material impact on our cash flows in future periods.
The OBBBA also enacted modifications to the Supplemental Nutrition Assistance Program ("SNAP"). As of the first quarter of 2026, the modifications have resulted in a reduction of the number of SNAP participants and the average benefits received by the eligible participants, which has, and may continue to have, a negative impact on consumers' demand for our products. While we have taken measures to attempt to mitigate these negative impacts, these modifications to the SNAP program may continue to have a negative impact on our results of operations, cash flows, and market share.
Previously Announced Separation Transaction:
On September 2, 2025, we announced a plan to separate the Company into two independent, publicly traded companies through a tax-free spin-off (the "Separation"). On February 11, 2026, we announced that the Kraft Heinz Board of Directors (the "Board") has decided to pause work related to the Separation. If work related to the Separation is resumed, the Separation would be subject to the satisfaction of customary conditions, including final approval by the Board, receipt of favorable tax opinions of our U.S. tax advisors with respect to the tax-free nature of the Separation, and the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission. The timing of the Separation and whether it will be completed is uncertain and we cannot assure that the Separation will be completed on the anticipated timeline or at all or that the terms of the Separation will not change. We incurred $56 million of separation costs for the three months ended March 28, 2026, primarily related to consulting, advisory and employee-related costs. These costs were recognized in SG&A on our consolidated statements of income.
Results of Operations
We disclose in this report certain non-GAAP financial measures. These non-GAAP financial measures assist management in comparing our 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 our underlying operations. For additional information and reconciliations to the most closely comparable financial measures presented in our condensed consolidated financial statements, which are calculated in accordance with U.S. GAAP see Non-GAAP Financial Measures.
Consolidated Results of Operations
Summary of Results:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions, except per share data)
Net sales $ 6,047 $ 5,999 0.8 %
Operating income/(loss) 1,145 1,196 (4.3) %
Net income/(loss) 799 714 11.9 %
Net income/(loss) attributable to common shareholders 798 712 12.1 %
Diluted EPS 0.67 0.59 13.6 %
Net Sales:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions)
Net sales $ 6,047 $ 5,999 0.8 %
Organic Net Sales(a)
5,919 5,944 (0.4) %
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 0.8% to $6.0 billion for the three months ended March 28, 2026 compared to $6.0 billion for the three months ended March 29, 2025, including the favorable impact of foreign currency (1.9 pp) and unfavorable impact of acquisitions and divestitures (0.7 pp). Organic Net Sales decreased 0.4% to $5.9 billion for the three months ended March 28, 2026 compared to $5.9 billion for the three months ended March 29, 2025, primarily due to the unfavorable volume/mix (1.2 pp), which more than offset higher pricing (0.8 pp). Pricing was higher in each segment. Volume/mix was unfavorable in each segment.
Net Income/(Loss):
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions)
Operating income/(loss) $ 1,145 $ 1,196 (4.3) %
Net income/(loss) 799 714 11.9 %
Net income/(loss) attributable to common shareholders 798 712 12.1 %
Adjusted Operating Income(a)
1,058 1,199 (11.8) %
(a) Adjusted Operating Income is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Operating income/(loss) decreased 4.3% to income of $1.1 billion for the three months ended March 28, 2026 compared to income of $1.2 billion for the three months ended March 29, 2025, primarily due to increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, separation costs incurred in the current year period, and increased restructuring costs. These unfavorable impacts to operating income/(loss) were partially offset by favorable changes in unrealized losses/(gains) on commodity hedges, higher pricing, and certain nonrecurring procurement cost recoveries.
Net income/(loss) increased 11.9% to income of $799 million for the three months ended March 28, 2026 compared to income of $714 million for the three months ended March 29, 2025. This increase was primarily driven by lower income tax expense and favorable changes in other expense/(income), partially offset by the unfavorable changes in operating income/(loss) factors discussed above and higher interest expense.
•Our effective tax rate for the three months ended March 28, 2026 was an expense of 20.9% on pre-tax income, compared to an expense of 29.9% for the three months ended March 29, 2025. The year-over-year change in the effective tax rate for the three-month period was primarily driven by certain favorable discrete income tax items, including the tax benefit on the Italy Infant Transaction, the revaluation of deferred tax balances due to changes in U.S. state tax rates, and the reversal of uncertain tax position reserves in certain U.S. states and non-U.S. jurisdictions.
•Other expense/(income) was $101 million of income for the three months ended March 28, 2026 compared to $51 million of income for the three months ended March 29, 2025. This change was primarily driven by a $41 million favorable change in net pension and postretirement non-service benefits related to the settlement of our U.S. Retiree Life Insurance Plan in the first quarter of 2026 and a $19 million increase in interest income.
Adjusted Operating Income decreased 11.8% to $1.1 billion for the three months ended March 28, 2026 compared to $1.2 billion for the three months ended March 29, 2025, primarily due to increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and unfavorable volume/mix. These unfavorable impacts more than offset higher pricing, certain nonrecurring procurement cost recoveries, and the favorable impact of foreign currency (0.7 pp).
Diluted EPS:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
Diluted EPS $ 0.67 $ 0.59 13.6 %
Adjusted EPS(a)
0.58 0.62 (6.5) %
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Diluted EPS increased 13.6% to $0.67 for the three months ended March 28, 2026 compared to $0.59 for the three months ended March 29, 2025, primarily due to the net income/(loss) factors discussed above.
For the Three Months Ended
March 28, 2026 March 29, 2025 $ Change % Change
Diluted EPS $ 0.67 $ 0.59 $ 0.08 13.6 %
Restructuring activities (0.02) 0.01 (0.03)
Unrealized losses/(gains) on commodity hedges (0.11) - (0.11)
Impairment losses 0.01 - 0.01
Separation costs 0.04 - 0.04
Losses/(gains) on sale of business (0.02) - (0.02)
Nonmonetary currency devaluation 0.01 0.01 -
Certain significant discrete income tax items - 0.01 (0.01)
Adjusted EPS(a)
$ 0.58 $ 0.62 $ (0.04) (6.5) %
Key drivers of change in Adjusted EPS(a):
Results of operations $ (0.09)
Effective tax rate 0.05
$ (0.04)
(a) Adjusted EPS is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Adjusted EPS decreased 6.5% to $0.58 for the three months ended March 28, 2026 compared to $0.62 for the three months ended March 29, 2025. This decrease was primarily due to lower Adjusted Operating Income, which more than offset lower taxes on adjusted earnings.
Results of Operations by Segment
We manage our operating results through four operating segments. We have two reportable segments defined by geographic region: North America and International Developed Markets. Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.
Management evaluates segment performance based on several factors, including net sales, Organic Net Sales, and Segment Adjusted Operating Income. Segment Adjusted Operating Income is defined as operating income/(loss) excluding, when they occur, the impacts of restructuring activities, deal costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment's operating results), impairment losses, separation costs, and certain non-ordinary course legal and regulatory matters. Segment Adjusted Operating Income for Emerging Markets, which represents the aggregation of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments - North America and International Developed Markets. Segment Adjusted Operating Income is a financial measure that can assist management and investors in comparing our performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our underlying operations. Management also uses Segment Adjusted Operating Income to allocate resources.
Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S. dollars) based on the legally available exchange rate at which we expect to settle the underlying transactions. Exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in other expense/(income) on our condensed consolidated statements of income, as nonmonetary currency devaluation, rather than accumulated other comprehensive income/(losses) on our condensed consolidated balance sheets, until such time as the economy is no longer considered highly inflationary. See Note 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025, for additional information. We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Turkey, and Egypt, which are all in Emerging Markets.
Net Sales:
For the Three Months Ended
March 28, 2026 March 29, 2025
(in millions)
Net sales:
North America $ 4,458 $ 4,488
International Developed Markets 843 817
Emerging Markets
746 694
Total net sales $ 6,047 $ 5,999
Organic Net Sales:
For the Three Months Ended
March 28, 2026 March 29, 2025
(in millions)
Organic Net Sales(a):
North America $ 4,438 $ 4,488
International Developed Markets 779 780
Emerging Markets
702 676
Total Organic Net Sales $ 5,919 $ 5,944
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Drivers of the changes in net sales and Organic Net Sales for the three months ended March 28, 2026 compared to the three months ended March 29, 2025 were:
Net Sales Currency Acquisitions and Divestitures Organic Net Sales Price Volume/Mix
For the Three Months Ended
North America (0.7) % 0.4 pp 0.0 pp (1.1) % 0.4 pp (1.5) pp
International Developed Markets 3.2 % 7.9 pp (4.6) pp (0.1) % 0.2 pp (0.3) pp
Emerging Markets
7.6 % 3.8 pp 0.0 pp 3.8 % 4.4 pp (0.6) pp
Kraft Heinz 0.8 % 1.9 pp (0.7) pp (0.4) % 0.8 pp (1.2) pp
Adjusted Operating Income:
For the Three Months Ended
March 28, 2026 March 29, 2025
(in millions)
Segment Adjusted Operating Income:
North America $ 974 $ 1,101
International Developed Markets 133 127
Total Segment Adjusted Operating Income 1,107 1,228
Emerging Markets
95 99
General corporate expenses (144) (128)
Restructuring activities (22) (4)
Unrealized gains/(losses) on commodity hedges 178 1
Impairment losses (13) -
Separation costs (56) -
Operating income/(loss) 1,145 1,196
Interest expense 236 229
Other expense/(income) (101) (51)
Income/(loss) before income taxes $ 1,010 $ 1,018
North America:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions)
Net sales $ 4,458 $ 4,488 (0.7) %
Organic Net Sales(a)
4,438 4,488 (1.1) %
Segment Adjusted Operating Income
974 1,101 (11.6) %
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales decreased 0.7% to $4.5 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025. Organic Net Sales decreased 1.1% to $4.4 billion for the three months ended March 28, 2026 compared to $4.5 billion for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (1.5 pp), which more than offset higher pricing (0.4 pp). Unfavorable volume/mix was primarily due to declines in coffee, cold cuts, powdered beverages, and frozen snacks, which more than offset the favorable impact to certain categories as a result of the shift in Easter timing. Higher pricing was taken in certain categories to mitigate higher input costs, primarily in coffee.
Segment Adjusted Operating Income decreased 11.6% to $1.0 billion for the three months ended March 28, 2026 compared to $1.1 billion for the three months ended March 29, 2025, primarily due to inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, increased advertising expenses, and unfavorable volume/mix. These unfavorable impacts to Segment Adjusted Operating Income more than offset certain nonrecurring procurement cost recoveries, higher pricing, and the favorable impact of foreign currency (0.3 pp).
International Developed Markets:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions)
Net sales $ 843 $ 817 3.2 %
Organic Net Sales(a)
779 780 (0.1) %
Segment Adjusted Operating Income
133 127 4.9 %
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 3.2% to $843 million for the three months ended March 28, 2026 compared to $817 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (7.9 pp) and unfavorable impact of acquisitions and divestitures (4.6 pp). Organic Net Sales decreased 0.1% to $779 million for the three months ended March 28, 2026 compared to $780 million for the three months ended March 29, 2025, primarily due to unfavorable volume/mix (0.3 pp), which more than offset higher pricing (0.2 pp). Unfavorable volume/mix was primarily due to a temporary pause in shipments due to negotiations with certain customers within our Western Europe and Australia regions, which more than offset favorable volume/mix in the United Kingdom.
Segment Adjusted Operating Income increased 4.9% to $133 million for the three months ended March 28, 2026 compared to $127 million for the three months ended March 29, 2025, primarily driven by the favorable impact of foreign currency (7.0 pp) and decreased procurement costs, which more than offset the decrease in Segment Adjusted Operating Income resulting from the Italy Infant Transaction and increased advertising expenses.
Emerging Markets:
For the Three Months Ended
March 28, 2026 March 29, 2025 % Change
(in millions)
Net sales $ 746 $ 694 7.6 %
Organic Net Sales(a)
702 676 3.8 %
Segment Adjusted Operating Income(b)
95 99 (4.0) %
(a) Organic Net Sales is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.
(b) Segment Adjusted Operating Income for Emerging Markets, which represents the combination of our WEEM and AEM operating segments, is defined and presented consistently with the Segment Adjusted Operating Income of our reportable segments - North America and International Developed Markets.
Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net sales increased 7.6% to $746 million for the three months ended March 28, 2026 compared to $694 million for the three months ended March 29, 2025, including the favorable impacts of foreign currency (3.8 pp). Organic Net Sales increased 3.8% to $702 million for the three months ended March 28, 2026 compared to $676 million for the three months ended March 29, 2025, primarily driven by higher pricing (4.4 pp), which more than offset unfavorable volume/mix (0.6 pp). Higher pricing was taken primarily in certain countries within WEEM to address inflationary pressures. Unfavorable volume/mix was primarily driven by Indonesia.
Segment Adjusted Operating Income decreased 4.0% to $95 million for the three months ended March 28, 2026 compared to $99 million for the three months ended March 29, 2025, primarily due to inflationary pressures in procurement and manufacturing costs that outpaced our efficiency initiatives, increased SG&A due, in part, to increased headcount in our sales and marketing teams, and increased advertising expenses. These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing.
Liquidity and Capital Resources
We believe that cash generated from our operating activities, as well as our access to other potential sources of liquidity including our available-for-sale debt securities, commercial paper programs, and our senior unsecured revolving credit facility (the "Senior Credit Facility") will provide sufficient liquidity to meet our working capital needs, repayments of long-term debt, future contractual obligations, payment of our anticipated quarterly dividends, planned capital expenditures, restructuring expenditures, and contributions to our postemployment benefit plans for the next 12 months. An additional potential source of liquidity is access to capital markets. We intend to use our cash on hand and commercial paper programs for daily funding requirements.
Cash Flow Activity for the Three Months Ended March 28, 2026 Compared to the Three Months Ended March 29, 2025:
Net Cash Provided by/Used for Operating Activities:
Net cash provided by operating activities was $1.0 billion for the three months ended March 28, 2026 compared to $720 million for the three months ended March 29, 2025. This increase was primarily driven by favorable changes in working capital, due, in part, to inventory optimization efforts and improved supplier payment terms, as well as favorable changes in collateral receipts related to our commodity derivative margin requirements. These impacts were partially offset by lower Adjusted Operating Income.
Net Cash Provided by/Used for Investing Activities:
Net cash provided by investing activities was $185 million for the three months ended March 28, 2026 compared to net cash used for investing activities of $878 million for the three months ended March 29, 2025. This change was primarily driven by higher purchases of marketable securities in the prior year period, proceeds received on the sale of marketable securities in 2026, and proceeds received in connection with the close of the Italy Infant Transaction. We expect 2026 capital expenditures to be approximately $900 million compared to the 2025 capital expenditures of $801 million. Our 2026 capital expenditures are expected to be primarily driven by maintenance projects, capital investments focused on generating growth, and investments in technology.
Net Cash Provided by/Used for Financing Activities:
Net cash used for financing activities was $512 million for the three months ended March 28, 2026 compared to net cash provided by financing activities of $900 million for the three months ended March 29, 2025. This change was primarily driven by debt proceeds received from the issuance of the 2025 Notes in the prior year period, partially offset by decreased repurchases of common stock compared to the prior year period.
Cash Held by International Subsidiaries:
Of the $3.3 billion cash and cash equivalents on our condensed consolidated balance sheet at March 28, 2026, $935 million was held by international subsidiaries.
Subsequent to January 1, 2018, we consider the unremitted earnings of certain international subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. For those undistributed earnings considered to be indefinitely reinvested, our intent is to reinvest these funds in our international operations, and our current plans do not demonstrate a need to repatriate the accumulated earnings to fund our U.S. cash requirements. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed, if repatriated, related to our 2018 through 2025 accumulated earnings of certain international subsidiaries is approximately $70 million.
Trade Payables Programs:
In order to manage our cash flow and related liquidity, we work with our suppliers to optimize our terms and conditions, which
include the extension of payment terms. We maintain agreements with third-party administrators that allow participating suppliers to track payment obligations from us, and, at the sole discretion of the supplier, sell one or more of those payment obligations to participating financial institutions. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from 0 to 250 days. All amounts due to participating suppliers are paid to the third party on the original invoice due dates, regardless of whether a particular invoice was sold. The amounts confirmed outstanding under these programs were $756 million at March 28, 2026 and $755 million at December 27, 2025. The amounts were included in accounts payable on our consolidated balance sheets. See Note 13, Financing Arrangements, in Item 1, Financial Statements, for additional information on our trade payables programs.
Borrowing Arrangements:
As of the date of this filing, our long-term debt is rated BBB with a negative outlook from S&P Global Ratings and Fitch Ratings, and Baa2 with ratings under review for downgrade from Moody's Investor Services, Inc.
From time to time, we obtain funding through our commercial paper programs. We had no commercial paper outstanding at March 28, 2026, at December 27, 2025, or during the three months ended March 28, 2026 or March 29, 2025.
Our Senior Credit Facility provides for a revolving commitment of $4.0 billion through July 8, 2030. Subject to certain conditions, we may increase the amount of revolving commitments and/or add tranches of term loans in a combined aggregate amount of up to $1.0 billion.
No amounts were drawn on our Senior Credit Facility at March 28, 2026 or December 27, 2025, or during the three months ended March 28, 2026 or March 29, 2025.
Our credit agreement contains customary representations, warranties, and covenants that are typical for these types of facilities and could, upon the occurrence of certain events of default, restrict our ability to access our Senior Credit Facility. We were in compliance with all financial covenants as of March 28, 2026.
Long-Term Debt:
Our long-term debt, including the current portion, was $21.1 billion at March 28, 2026 and $21.2 billion at December 27, 2025. This decrease was primarily due to the changes in foreign currency exchange rates on our foreign-denominated debt.
In the first quarter of 2025, KHFC, our 100% owned operating subsidiary, issued 600 million euro aggregate principal amount of 3.250% senior notes due March 2033, $500 million aggregate principal amount of 5.200% senior notes due March 2032, and $500 million aggregate principal amount of 5.400% senior notes due March 2035 (collectively, the "2025 Notes"). We used a portion of the net proceeds from the 2025 Notes to fund the 600 million euro senior notes that matured in May 2025 and for general corporate purposes, including our investment in certain marketable fixed-income debt securities that are classified as available-for-sale.
We have aggregate principal amounts of senior notes of approximately $1.9 billion maturing in June 2026. We intend to utilize the proceeds from the sale of a significant portion of our available-for-sale debt securities to fund the repayment of these notes.
We may from time to time seek to retire or purchase our outstanding debt through redemptions, tender offers, cash purchases, prepayments, refinancing, exchange offers, open market or privately negotiated transactions, Rule 10b5-1 plans, or otherwise.
Our long-term debt contains customary representations, covenants, and events of default. We were in compliance with all financial covenants as of March 28, 2026.
See Note 14, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, for additional information on our long-term debt activity, Note 11, Financial Instruments, in Item 1, Financial Statements, for additional information on our available-for-sale securities, and Note 17, Debt, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025 for additional information on our borrowing arrangements and long-term debt.
Equity and Dividends:
We paid dividends on our common stock of $474 million for the three months ended March 28, 2026. Additionally, in the second quarter of 2026, our Board of Directors declared a cash dividend of $0.40 per share of common stock, which is payable on June 26, 2026 to stockholders of record on June 5, 2026.
The declaration of dividends is subject to the discretion of our Board of Directors and depends on various factors, including our net income, financial condition, cash requirements, future prospects, and other factors that our Board of Directors deems relevant to its analysis and decision making.
On November 27, 2023, we announced that the Board of Directors approved a share repurchase program authorizing the Company to purchase up to $3.0 billion, exclusive of fees, of the Company's common stock through December 26, 2026. We are not obligated to repurchase any specific number of shares and the program may be modified, suspended, or discontinued at any time. Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), privately negotiated transactions, transactions structured through investment banking institutions, or other means. We purchased no shares during the three months ended March 28, 2026 and had approximately $1.5 billion remaining authorization under the share repurchase program as of March 28, 2026. The share repurchase program is in addition to our share repurchases to offset the dilutive effect of equity-based compensation.
Aggregate Contractual Obligations:
There were no material changes to our aggregate contractual obligations from those disclosed in our Annual Report on Form 10-K for the year ended December 27, 2025.
Supplemental Guarantor Information:
The Kraft Heinz Company (as the "Parent Guarantor") fully and unconditionally guarantees all the senior unsecured registered notes (collectively, the "KHFC Senior Notes") issued by KHFC, our 100% owned operating subsidiary (the "Guarantee"). See Note 14, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, and Note 17, Debt, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025 for additional descriptions of these guarantees.
The payment of the principal, interest and premium, when applicable, on the KHFC Senior Notes is fully and unconditionally guaranteed on a senior unsecured basis by the Parent Guarantor, pursuant to the terms and conditions of the applicable indenture. None of the Parent Guarantor's subsidiaries guarantee the KHFC Senior Notes.
The Guarantee is the Parent Guarantor's senior unsecured obligation and is: (i) pari passu in right of payment with all of the Parent Guarantor's existing and future senior indebtedness; (ii) senior in right of payment to all of the Parent Guarantor's future subordinated indebtedness; (iii) effectively subordinated to all of the Parent Guarantor's existing and future secured indebtedness to the extent of the value of the assets secured by that indebtedness; and (iv) effectively subordinated to all existing and future indebtedness and other liabilities of the Parent Guarantor's subsidiaries.
The KHFC Senior Notes are obligations exclusively of KHFC and the Parent Guarantor and not of any of the Parent Guarantor's other subsidiaries. Substantially all of the Parent Guarantor's operations are conducted through its subsidiaries. The Parent Guarantor's other subsidiaries are separate legal entities that have no obligation to pay any amounts due under the KHFC Senior Notes or to make any funds available therefor, whether by dividends, loans, or other payments. Except to the extent the Parent Guarantor is a creditor with recognized claims against its subsidiaries, all claims of creditors (including trade creditors) and holders of preferred stock, if any, of its subsidiaries will have priority with respect to the assets of such subsidiaries over its claims (and therefore the claims of its creditors, including holders of the KHFC Senior Notes). Consequently, the KHFC Senior Notes are structurally subordinated to all liabilities of the Parent Guarantor's subsidiaries and any subsidiaries that it may in the future acquire or establish. The obligations of the Parent Guarantor will terminate and be of no further force or effect in the following circumstances: (i) (a) KHFC's exercise of its legal defeasance option or, except in the case of a guarantee of any direct or indirect parent of KHFC, covenant defeasance option in accordance with the applicable indenture, or KHFC's obligations under the applicable indenture have been discharged in accordance with the terms of the applicable indenture or (b) as specified in a supplemental indenture to the applicable indenture; and (ii) the Parent Guarantor has delivered to the trustee an officer's certificate and an opinion of counsel, each stating that all conditions precedent provided for in the applicable indenture have been complied with. The Guarantee is limited by its terms to an amount not to exceed the maximum amount that can be guaranteed by the Parent Guarantor without rendering the Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.
The following tables present summarized financial information for the Parent Guarantor and KHFC (as subsidiary issuer of the KHFC Senior Notes) (together, the "Obligor Group"), on a combined basis after the elimination of all intercompany balances and transactions between the Parent Guarantor and subsidiary issuer and investments in any subsidiary that is a non-guarantor.
Summarized Statement of Income
For the Three Months Ended
March 28, 2026
Net sales $ 3,807
Gross profit(a)
1,588
Intercompany service fees and other recharges 1,199
Operating income/(loss) 229
Equity in earnings/(losses) of subsidiaries 749
Net income/(loss) 798
Net income/(loss) attributable to common shareholders 798
(a) For the three months ended March 28, 2026, the Obligor Group recorded $120 million of net sales to the non-guarantor subsidiaries and $16 million of purchases from the non-guarantor subsidiaries.
Summarized Balance Sheets
March 28, 2026 December 27, 2025
ASSETS
Current assets $ 6,867 $ 6,336
Current assets due from affiliates(a)
159 269
Non-current assets 5,612 5,648
Goodwill 8,823 8,823
Intangible assets, net 1,740 1,768
Non-current assets due from affiliates(b)
28 28
LIABILITIES
Current liabilities $ 5,302 $ 5,211
Current liabilities due to affiliates(a)
1,270 1,122
Non-current liabilities 21,165 21,260
Non-current liabilities due to affiliates(b)
204 208
(a) Represents receivables and short-term lending due from and payables and short-term lending due to non-guarantor subsidiaries.
(b) Represents long-term lending due from and long-term borrowings due to non-guarantor subsidiaries.
Commodity Trends
We purchase and use large quantities of commodities, including dairy products, meats, sugar and other sweeteners, coffee beans, edible oils, tomatoes, wheat products, fruits and vegetables, and eggs to manufacture our products. In addition, we purchase and use significant quantities of plastics, resins, cardboard, glass, paper, and metal to package our products, and we use electricity, diesel fuel, and natural gas in the manufacturing and distribution of our products. We continuously monitor global supply and cost trends of these commodities.
During the three months ended March 28, 2026, we experienced decreased commodity costs for cheese and dairy products, while commodity costs for meats, coffee, edible oils, and fruits and vegetables increased. We manage commodity cost volatility primarily through pricing and risk management strategies including utilizing a range of commodity hedging techniques in an effort to limit the impact of price fluctuations on many of our principal raw materials. However, we do not fully hedge against changes in commodity prices, and our hedging strategies may not protect us from increases in specific raw material costs. As a result of these risk management strategies, our commodity costs may not immediately correlate with market price trends.
See our Annual Report on Form 10-K for the year ended December 27, 2025 for additional information on how we manage commodity costs.
Critical Accounting Estimates
Our significant accounting policies are described in Note 2, Significant Accounting Policies, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 27, 2025.
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires the use of estimates, judgments, and assumptions. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 27, 2025 for a discussion of our critical accounting estimates and assumptions.
New Accounting Pronouncements
See Note 3, New Accounting Standards, in Item 1, Financial Statements, for a discussion of new accounting pronouncements.
Contingencies
See Note 14, Commitments, Contingencies, and Debt, in Item 1, Financial Statements, for a discussion of our contingencies.
Non-GAAP Financial Measures
The non-GAAP financial measures we provide in this report should be viewed in addition to, and not as an alternative for, results prepared in accordance with U.S. GAAP.
To supplement the condensed consolidated financial statements prepared in accordance with U.S. GAAP, we have presented Organic Net Sales, Adjusted Operating Income, and Adjusted EPS, which are considered non-GAAP financial measures. The non-GAAP financial measures presented may differ from similarly titled non-GAAP financial measures presented by other companies, and other companies may not define these non-GAAP financial measures in the same way. These measures are not substitutes for their comparable U.S. GAAP financial measures, such as net sales, net income/(loss), operating income(loss), diluted EPS, or other measures prescribed by U.S. GAAP, and there are limitations to using non-GAAP financial measures.
Management uses these non-GAAP financial measures to assist in comparing our 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 our underlying operations. We believe that Organic Net Sales, Adjusted Operating Income, and Adjusted EPS provide important comparability of underlying operating results, allowing investors and management to assess the Company's operating performance on a consistent basis.
Management believes that presenting our non-GAAP financial measures is useful to investors because it (i) provides investors with meaningful supplemental information regarding financial performance by excluding certain items, (ii) permits investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate historical performance, and (iii) otherwise provides supplemental information that may be useful to investors in evaluating our results. We believe that the presentation of these non-GAAP financial measures, when considered together with the corresponding U.S. GAAP financial measures and the reconciliations to those measures, provides investors with additional understanding of the factors and trends affecting our business than could be obtained absent these disclosures.
Organic Net Sales is defined as net sales excluding, when they occur, the impact of currency, acquisitions and divestitures, and a 53rd week of shipments. We calculate the impact of currency on net sales by holding exchange rates constant at the previous year's exchange rate, with the exception of highly inflationary subsidiaries, for which we calculate the previous year's results using the current year's exchange rate.
Adjusted Operating Income is defined as operating income excluding, when they occur, the impacts restructuring activities, deal costs, separation costs, unrealized gains/(losses) on commodity hedges (the unrealized gains and losses are recorded in general corporate expenses until realized; once realized, the gains and losses are recorded in the applicable segment's operating results), impairment losses, and certain non-ordinary course legal and regulatory matters.
Adjusted EPS is defined as diluted EPS excluding, when they occur, the impacts of restructuring activities, deal costs, separation 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 (benefit)/costs, and certain significant discrete income tax items, and including, when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis.
The Kraft Heinz Company
Reconciliation of Net Sales to Organic Net Sales
(dollars in millions)
(Unaudited)
Net Sales Currency Acquisitions and Divestitures Organic Net Sales Price Volume/Mix
Three Months Ended March 28, 2026
North America $ 4,458 $ 20 $ - $ 4,438
International Developed Markets 843 64 - 779
Emerging Markets 746 44 - 702
Kraft Heinz $ 6,047 $ 128 $ - $ 5,919
Three Months Ended March 29, 2025
North America $ 4,488 $ - $ - $ 4,488
International Developed Markets 817 - 37 780
Emerging Markets 694 18 - 676
Kraft Heinz $ 5,999 $ 18 $ 37 $ 5,944
Year-over-year growth rates
North America (0.7) % 0.4 pp 0.0 pp (1.1) % 0.4 pp (1.5) pp
International Developed Markets 3.2 % 7.9 pp (4.6) pp (0.1) % 0.2 pp (0.3) pp
Emerging Markets 7.6 % 3.8 pp 0.0 pp 3.8 % 4.4 pp (0.6) pp
Kraft Heinz 0.8 % 1.9 pp (0.7) pp (0.4) % 0.8 pp (1.2) pp
The Kraft Heinz Company
Reconciliation of Operating Income/(Loss) to Adjusted Operating Income
(dollars in millions)
(Unaudited)
For the Three Months Ended
March 28, 2026 March 29, 2025
Operating income/(loss) $ 1,145 $ 1,196
Restructuring activities 22 4
Unrealized losses/(gains) on commodity hedges (178) (1)
Impairment losses 13 -
Separation costs 56 -
Adjusted Operating Income $ 1,058 $ 1,199
The Kraft Heinz Company
Reconciliation of Diluted EPS to Adjusted EPS
(Unaudited)
For the Three Months Ended
March 28, 2026 March 29, 2025
Diluted EPS $ 0.67 $ 0.59
Restructuring activities(a)
(0.02) 0.01
Unrealized losses/(gains) on commodity hedges(b)
(0.11) -
Impairment losses(c)
0.01 -
Separation costs(d)
0.04 -
Losses/(gains) on sale of business(e)
(0.02) -
Nonmonetary currency devaluation(f)
0.01 0.01
Certain significant discrete income tax items(g)
- 0.01
Adjusted EPS $ 0.58 $ 0.62
(a) Gross expenses/(income) included in restructuring activities were income of $23 million ($18 million after-tax) for the three months ended March 28, 2026 and expenses of $4 million ($3 million after-tax) for the three months ended March 29, 2025 and were recorded in the following income statement line items:
•Cost of products sold included expenses of $23 million for the three months ended March 28, 2026 and income of $2 million for the three months ended March 29, 2025; and
•SG&A included income of $1 million for the three months ended March 28, 2026 and expenses of $6 million for the three months ended March 29, 2025; and
•Other expense/(income) included income of $45 million for the three months ended March 28, 2026.
(b) Gross income included in unrealized losses/(gains) on commodity hedges was $178 million ($134 million after-tax) for the three months ended March 28, 2026 and $1 million ($1 million after-tax) for the three months ended March 29, 2025, and were recorded in cost of products sold.
(c) Gross impairment losses included the following:
•Intangible asset impairment losses of $13 million ($13 million after-tax) for the three months ended March 28, 2026, which were recorded in SG&A.
(d) Gross expenses included in separation costs were $56 million ($45 million after-tax) for the three months ended March 28, 2026 and were recorded in SG&A.
(e) Gross expenses/(income) included in losses/(gains) on sale of business was income of $3 million ($29 million after-tax) for the three months ended March 28, 2026 and were recorded in other expense/(income).
(f) Gross expenses included in nonmonetary currency devaluation were $12 million ($12 million after-tax) for the three months ended March 28, 2026 and $14 million ($14 million after-tax) for the three months ended March 29, 2025 and were recorded in other expense/(income).
(g) Certain significant discrete income tax items were an expense of $13 million for the three months ended March 29, 2025. The expense represents movement in the valuation allowance against deferred tax assets in our subsidiary in Brazil and adjustments recorded to the deferred tax asset and valuation allowance related to the transfer of business operations to a wholly-owned subsidiary in the Netherlands in December 2024.
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