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Kraft Heinz boosts Q2 2021 income on revenue dip

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August 4, 2021

Kraft Heinz net sales decreased 0.5% from $6.65 billion in Q2, 2020 to $6.615 billion for the quarter ending June 26, 2021, including a favorable 2.3% impact from currency and a negative 0.7% impact from the divestiture of the company's nuts business, which closed in the second quarter of 2021, according to a press release.

Organic net sales decreased 2.1% versus the prior year period, but increased 5% versus the comparable 2019 period with both comparisons negatively impacted by exiting the McCafé licensing agreement.

Net income improved 98.5% from a $1.65 billion loss in Q2, 2020 to a $25 million loss in Q2, 2021, primarily driven by favorable changes in non-cash impairment charges versus the year-ago period. This was partially offset by a higher effective tax rate versus the prior year period as well as unfavorable changes in interest expense due to one-time debt extinguishment costs.

Basic and diluted EPS improved 98.5% from a $1.35 loss in Q2, 2020 to a 2 cent loss in Q2, 2021.

Adjusted EPS fell 2.5% from 80 cents in Q2, 2020 to 78 cents in Q2, 2021, primarily driven by lower adjusted EBITDA that more than offset lower interest expense and a lower effective tax rate versus the prior year period.

The company declared a quarterly dividend of 40 cents per share of common stock payable on Sept. 24, 2021, to stockholders of record as of Sept. 1, 2021.

"Our second quarter results serve as a strong indicator that our Kraft Heinz team will not only deliver a stronger 2021 than we initially anticipated, but will come out of the global pandemic much stronger than we entered," Kraft Heinz CEO Miguel Patricio said in the press release.

The $6.62 billion in Q2, 2021 revenue beat analyst expectations by $70 million while the GAAP EPS of 2 cents missed expectations by 72 cents and the non-0GAAP EPS of 78 cents beat expectations by 6 cents, according to Seeking Alpha.

Shares traded at $37.53 today against a 52-week range of $28.56-$44.95.

Based on performance to date, while the company continues to expect it will deliver 2021 adjusted EBITDA ahead of its strategic plan, it now expects adjusted EBITDA to be ahead of 2019 as well. The company views comparison to the 2019 period to be more meaningful than the comparable 2020 period given the exceptional, COVID-19-related consumer demand changes experienced in the 2020 period.