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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-15 · 325 added, 174 removed, 446 unchanged (53% of the section changed)

2 unchanged sentences

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.

See below for discussion and analysis of our financial condition and results of operations for 2023 compared to 2022.

See Item 7, Management’s Discussions and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2022 for a detailed discussion of our financial condition and results of operations for 2022 compared to 2021.

See below for discussion and analysis of our financial condition and results of operations for 2024 compared to 2023 and for 2023 compared to 2022.

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 and report our operating results through two reportable segments defined by geographic region:

North America and International.

During the fourth quarter of 2023, certain organizational changes were announced that are expected to impact our future internal reporting and reportable segments.

We expect to divide our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — in order to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan.

As a result of these changes, we expect to have two reportable segments:

We manufacture and market food and beverage products around the world through our eight consumer-driven product platforms:

Taste Elevation, Easy Ready Meals, Hydration, Meats, Cheeses, Substantial Snacking, Desserts, Coffee, and other grocery products.

In the first quarter of 2024, we divided our International segment into three operating segments — Europe and Pacific Developed Markets (“EPDM” or “International Developed Markets”), West and East Emerging Markets (“WEEM”), and Asia Emerging Markets (“AEM”) — to enable enhanced focus on the different strategies required for each of these regions as part of our long-term strategic plan.

Subsequently, we manage our operating results through four operating segments.

We have two reportable segments defined by geographic region:

North America and International Developed Markets.

We anticipate that our remaining operating segments, consisting of WEEM and AEM, will be combined and disclosed as Emerging Markets.

We expect that the change to our reportable segments will be effective in the first quarter of 2024.

Our remaining operating segments, consisting of WEEM and AEM, are combined and disclosed as Emerging Markets.

See Note 20, Segment Reporting , in Item 8, Financial Statements and Supplementary Data , for our financial information by segment.

Conflict Between Russia and Ukraine:

For the years ended December 30, 2023 and December 31, 2022, approximately 1% of consolidated net sales, net income/(loss), and Adjusted EBITDA were generated from our business in Russia.

As of December 30, 2023, less than 1% of consolidated total assets were located in Russia and we had approximately 1,100 employees in Russia.

We have no operations or employees in Ukraine and insignificant net sales through distributors.

We will continue to monitor the impact that this conflict has on our business;

however, through 2023, the conflict between Russia and Ukraine did not have a material impact on our financial condition, results of operations, or cash flows.

Items Affecting Comparability of Financial Results

Impairment Losses:

Our results of operations reflect goodwill impairment losses of $510 million and intangible asset impairment losses of $152 million in 2023 compared to goodwill impairment losses of $444 million, intangible asset impairment losses of $469 million, and net property, plant, and equipment asset impairment losses of $86 million in 2022.

See Note 4, Acquisitions and Divestitures , and Note 8, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for additional information on these impairment losses.

Our results of operations reflect goodwill impairment losses of $1.6 billion and intangible asset impairment losses of $2.0 billion in 2024.

We recognized goodwill impairment losses of $510 million and intangible asset impairment losses of $152 million in 2023.

We recognized goodwill impairment losses of $444 million, intangible asset impairment losses of $469 million, and net property, and plant, and equipment asset impairment losses of $86 million in 2022.

See Note 8, Goodwill and Intangible Assets , in Item 8, Financial Statements and Supplementary Data , for additional information on our goodwill and intangible asset impairment losses.

We operate on a 52- or 53-week fiscal year ending on the last Saturday in December in each calendar year.

Our 2023 fiscal year was a 52-week period that ended on December 30, 2023.

Our 2022 fiscal year was a 53-week period that ended on December 31, 2022.

Our 2024 fiscal year was a 52-week period that ended on December 28, 2024, our 2023 fiscal year was a 52-week period that ended on December 30, 2023, and our 2022 fiscal year was a 53-week period that ended on December 31, 2022.

Acquisitions and Divestitures:

In 2024, we closed the sale of our infant nutrition business in Russia (the “Russia Infant Transaction”) and the sale of 100% of the equity interests in our Papua New Guinea subsidiary (the “Papua New Guinea Transaction”), both within Emerging Markets.

In 2022, we completed the Hemmer Acquisition within Emerging Markets, and the Just Spices Acquisition within our International Developed Markets segment.

See Note 4, Acquisitions and Divestitures, in Item 8, Financial Statements and Supplementary Data , for additional information on our acquisition and divestiture activities.

Inflation and Supply Chain Impacts:

During the year ended December 30, 2023, we experienced increased supply chain costs, including procurement, and manufacturing costs, largely due to inflationary pressures concentrated in the first half of the year, as compared to the prior year period.

While these costs have a negative impact on our results of operations, we have taken measures to mitigate the impact of this inflation through pricing actions, efficiency gains, and hedging strategies.

During the year ended December 28, 2024, we experienced moderate inflation in our supply chain costs compared to the prior year period, which we expect to continue through 2025.

While inflationary pressures within procurement, manufacturing, and logistics costs had a negative impact on our results of operations, we experienced increased stability of these costs as compared to the prior year period.

Further, we continue to take measures to mitigate the impact of this inflation through efficiency initiatives, pricing actions, 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 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.

Income Taxes:

The Organization for Economic Co-operation and Development (OECD), a global coalition of member countries, proposed a two-pillar plan that aims to ensure a fairer distribution of profits among countries and impose a floor on tax competition through the introduction of a global minimum tax of 15%.

Many countries have enacted, or begun the process of enacting, laws based on the two-pillar plan proposals.

As part of our planning for the changes in the international tax environment, as well as to achieve greater operational synergies, we have enacted changes to our corporate entity structure which included a transfer of, and will result in the movement of, certain business operations to a wholly-owned subsidiary in the Netherlands resulting in a tax benefit of $3.0 billion recorded as a non-U.S.

deferred tax asset in December 2024.

The deferred tax asset was recognized as a result of the book and tax basis difference on the business transferred to the Netherlands subsidiary with the tax basis determined by reference to the fair value of the business.

The determination of the estimated fair value of the transferred business is complex and requires the exercise of substantial judgment due to the use of subjective assumptions in the valuation method used by management.

The associated valuation allowance of $0.6 billion is related to uncertainty in the Pillar Two legislative interpretation and is based on our latest assessment of the total tax benefit that is more likely than not to be realized.

The recognition of our future tax benefits associated with this transaction is dependent upon the acceptance of the business valuation and tax basis step-up by the associated taxing authorities.

The legislative developments in conjunction with changes we made to our corporate entity structure are estimated to increase our cash tax rate by 2.0% to 3.0% and our effective tax rate by approximately 5.0%.

The estimated rates could be impacted by the outcome of examinations by taxing authorities and future legislative developments.

Results of Operations

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Summary of Results:

December 30, 2023 December 31, 2022 % Change

(in millions, except per share data)

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions, except per share data) (in millions, except per share data)

Net sales $ 25,846 $ 26,640 (3.0) % $ 26,640 $ 26,485 0.6 %

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Diluted EPS 2.26 2.31 (2.2) % 2.31 1.91 20.9 %

December 30, 2023 December 31, 2022 % Change

(in millions)

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions) (in millions)

Net sales $ 25,846 $ 26,640 (3.0) % $ 26,640 $ 26,485 0.6 %

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Fiscal Year 2024 Compared to Fiscal Year 2023:

Net sales decreased 3.0% to $25.8 billion in 2024 compared to $26.6 billion in 2023, including the unfavorable impacts of foreign currency (0.7 pp) and acquisitions and divestitures (0.2 pp).

Organic Net Sales decreased 2.1% to $25.9 billion in 2024 compared to $26.5 billion in 2023, primarily due to the unfavorable volume/mix (3.5 pp), which more than offset higher pricing (1.4 pp).

Pricing was higher in North America and Emerging Markets, and flat in International Developed Markets.

Volume/mix in North America and International Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable.

Fiscal Year 2023 Compared to Fiscal Year 2022 :

Net sales increased 0.6% to $26.6 billion in 2023 compared to $26.5 billion in 2022, including the unfavorable impacts of lapping a 53rd week of shipments in the prior period (1.8 pp), foreign currency (0.9 pp), and acquisitions and divestitures (0.1 pp).

Organic Net Sales increased 3.4% to $26.8 billion in 2023 compared to $25.9 billion in 2022, primarily driven by higher pricing (8.9 pp), which more than offset unfavorable volume/mix (5.5 pp).

Pricing was higher in both segments, while volume/mix was unfavorable in both segments.

Pricing was higher in all segments.

Volume/mix in North America and International Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable.

Net Income/(Loss):

December 30, 2023 December 31, 2022 % Change

(in millions)

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions) (in millions)

Operating income/(loss) $ 1,683 $ 4,572 (63.2) % $ 4,572 $ 3,634 25.8 %

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Net income/(loss) attributable to common shareholders 2,744 2,855 (3.9) % 2,855 2,363 20.8 %

Adjusted EBITDA (a)

Adjusted Operating Income (a)

5,360 5,297 1.2 % 5,297 4,989 6.2 %

(a) Adjusted EBITDA is a non-GAAP financial measure.

(a) Adjusted Operating Income is a non-GAAP financial measure.

See the Non-GAAP Financial Measures section at the end of this item.

Fiscal Year 2024 Compared to Fiscal Year 2023:

Operating income/(loss) increased 25.8% to $4.6 billion in 2023 compared to $3.6 billion in 2022, primarily driven by higher pricing, efficiency gains, lower non-cash impairment losses in the current year period, and the impact of the securities class action lawsuit in the prior year period.

These impacts more than offset higher commodity costs, including the impact of realized and unrealized gains and losses on commodity hedges;

higher supply chain costs, reflecting inflationary pressure in manufacturing and procurement costs;

unfavorable volume/mix;

increased selling, general and administrative expenses (“SG&A”), particularly advertising expenses;

and the decrease from lapping a 53rd week of shipments in the prior period.

Operating income/(loss) decreased 63.2% to $1.7 billion in 2024 compared to $4.6 billion in 2023, due to non-cash impairment losses that were $3.0 billion higher in the current year period.

The remaining change to operating income/(loss) was an increase of $118 million primarily driven by higher pricing, lower variable compensation expense, and lower procurement and logistics costs, due, in part, to the beneficial impact from our efficiency initiatives.

These favorable impacts to operating income/(loss) were partially offset by unfavorable volume/mix, increased manufacturing expenses due to increased labor costs, and increased selling, general and administrative expenses (“SG&A”) due, in part, to investments in technology.

Net income/(loss) decreased 3.5% to $2.7 billion in 2024 compared to $2.8 billion in 2023.

This decrease was due to unfavorable changes in operating income/(loss) factors discussed above, which more than offset a lower effective tax rate in the current period and the favorable changes in other expense/(income).

• Our effective tax rate was a benefit of 220.5% in 2024 compared to an expense of 21.7% in 2023.

The year-over-year change in the effective tax rate was primarily driven by the recognition of a $3.0 billion non-U.S.

deferred tax asset as a result of the movement of certain business operations to a wholly-owned subsidiary in the Netherlands and the geographic mix of pre-tax income in various non-U.S.

jurisdictions.

This benefit to our effective tax rate was partially offset by establishing a partial valuation allowance of $0.6 billion against the Netherlands deferred tax asset, establishing a full valuation allowance against Brazil net deferred tax assets, and non-deductible goodwill impairments.

• Other expense/(income) was $85 million of income in 2024 compared to $27 million of expense in 2023.

This change was primarily driven by $197 million of favorable changes in net pension and postretirement non-service cost/(benefit), partially offset by an $81 million net loss on the sale of businesses in 2024.

Adjusted Operating Income increased 1.2% to $5.4 billion in 2024 compared to $5.3 billion in 2023, primarily driven by higher pricing, lower variable compensation expense, and lower procurement and logistics costs, due, in part, to the beneficial impact from our efficiency initiatives.

These favorable impacts to Adjusted Operating Income were partially offset by unfavorable volume/mix, increased manufacturing expenses due to increased labor costs, increased SG&A due, in part, to investments in technology, and the unfavorable impact of foreign currency (0.4 pp).

Fiscal Year 2023 Compared to Fiscal Year 2022 :

Operating income/(loss) increased 25.8% to $4.6 billion in 2023 compared to $3.6 billion in 2022, primarily driven by higher pricing, the beneficial impact from our efficiency initiatives, lower non-cash impairment losses in the current year period ($251 million), and the impact of the securities class action lawsuit in the prior year period.

These favorable impacts to operating income/(loss) were partially offset by higher commodity costs, including the impact of realized and unrealized gains and losses on commodity hedges, higher supply chain costs, reflecting inflationary pressure in manufacturing and procurement costs, unfavorable volume/mix, increased SG&A primarily for advertising expenses, and the decrease from lapping a 53rd week of shipments in the prior period.

Net income/(loss) increased 20.2% to $2.8 billion in 2023 compared to $2.4 billion in 2022.

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• Our effective tax rate was 21.7% in 2023 compared to 20.2% in 2022.

Our 2023 effective tax rate was favorably impacted by the geographic mix of pre-tax income in various non-U.S.

jurisdictions.

These impacts were partially offset by the impact of certain unfavorable rate reconciling items, primarily non-deductible goodwill impairments and the impact of the federal tax on global intangible low-taxed income (“GILTI”).

Our 2022 effective tax rate was impacted by the favorable geographic mix of pre-tax income in various non-U.S.

jurisdictions and certain favorable items, primarily the decrease in deferred tax liabilities due to the merger of certain foreign entities, the revaluation of deferred tax balances due to changes in state tax laws, and changes in estimates of certain 2021 U.S.

income and deductions.

This impact was partially offset by the impact of certain unfavorable items, primarily non-deductible goodwill impairments, the impact of the federal tax on GILTI, and the establishment of uncertain tax positions and valuation allowance reserves.

The year-over-year increase in the effective tax rate was due primarily to the decrease in deferred tax liabilities due to the merger of certain foreign entities and the revaluation of deferred tax balances due to changes in state tax laws in the prior year versus the current year.

• Other expense/(income) was $27 million of expense in 2023 compared to $253 million of income in 2022.

This change was primarily driven by a $67 million net pension and postretirement non-service costs in 2023 compared to a $135 million net pension and postretirement non-service benefit in 2022 due in part to the settlement of one of our U.K.

defined benefit pension plans, which resulted in pre-tax losses of $162 million.

Further, additional changes in other expense/(income) were driven by a $73 million net foreign exchange loss in 2023 compared to a $106 million net foreign exchange gain in 2022, and a $21 million decrease in gain on sale of businesses.

These impacts were partially offset by a $59 million net gain on derivative activities in 2023 compared to an $50 million net loss on derivative activities in 2022, and a $13 million increase in interest income as compared to the prior year period.

Adjusted EBITDA increased 5.1% to $6.3 billion in 2023 compared to $6.0 billion in 2022, primarily due to higher pricing and efficiency gains, which more than offset higher commodity costs, including the impact of realized gains and losses on commodity hedges;

This change was primarily driven by $202 million of unfavorable changes in net pension and postretirement non-service cost/(benefit) due, in part, to the settlement of one of our U.K.

defined benefit pension plans, which resulted in pre-tax losses of $162 million in 2023.

Further, additional changes in other expense/(income) were driven by $179 million of unfavorable changes in foreign exchange losses/(gains).

These unfavorable impacts to other expense/(income) were partially offset by $109 million of favorable changes in derivative losses/(gains).

Adjusted Operating Income increased 6.2% to $5.3 billion in 2023 compared to $5.0 billion in 2022, primarily due to higher pricing and the beneficial impact from our efficiency initiatives, which more than offset higher commodity costs, including the impact of realized gains and losses on commodity hedges;

higher supply chain costs, reflecting inflationary pressure in manufacturing, procurement, and logistics;

unfavorable volume/mix;

increased SG&A, particularly in advertising expenses;

increased SG&A, primarily advertising expenses;

the decrease from lapping a 53rd week of shipments in the prior period (2.2 pp);

1 unchanged sentence

Diluted Earnings Per Share (“EPS”):

December 30, 2023 December 31, 2022 % Change

(in millions, except per share data)

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions, except per share data) (in millions, except per share data)

Diluted EPS $ 2.26 $ 2.31 (2.2) % $ 2.31 $ 1.91 20.9 %

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Fiscal Year 2024 Compared to Fiscal Year 2023:

Diluted EPS decreased 2.2% to $2.26 in 2024 compared to $2.31 in 2023, primarily driven by the net income/(loss) factors discussed above and the favorable impact of our common stock repurchases.

December 28, 2024 December 30, 2023 $ Change % Change

Diluted EPS $ 2.26 $ 2.31 $ (0.05) (2.2) %

Restructuring activities 0.01 0.16 (0.15)

Unrealized losses/(gains) on commodity hedges (0.01) — (0.01)

Impairment losses 2.58 0.50 2.08

Losses/(gains) on sale of business 0.05 — 0.05

Nonmonetary currency devaluation 0.01 0.02 (0.01)

Certain significant discrete income tax items (1.84) (0.01) (1.83)

Adjusted EPS (a)

$ 3.06 $ 2.98 $ 0.08 2.7 %

Key drivers of change in Adjusted EPS (a) :

Results of operations $ 0.04

Effect of common stock repurchases (b) :

Other expense/(income) 0.01

Effective tax rate (0.01)

(a) Adjusted EPS is a non-GAAP financial measure.

See the Non-GAAP Financial Measures section at the end of this item.

(b) Includes the impact of the change in the weighted average shares of common stock outstanding, including dilutive effect, which is primarily due to shares purchased pursuant to our publicly announced share repurchase program.

See Note 19, Earnings Per Share , in Item 8 , Financial Statements and Supplementary Data, for more information on our weighted average shares outstanding.

Adjusted EPS increased 2.7% to $3.06 in 2024 compared to $2.98 in 2023 primarily driven by higher Adjusted Operating Income, the favorable impact of our common stock repurchases, and favorable changes in other expense/(income), which more than offset higher taxes on adjusted earnings.

Fiscal Year 2023 Compared to Fiscal Year 2022:

Diluted EPS increased 20.9% to $2.31 in 2023 compared to $1.91 in 2022, primarily driven by the net income/(loss) factors discussed above.

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See the Non-GAAP Financial Measures section at the end of this item.

Adjusted EPS increased 7.2% to $2.98 in 2023 compared to $2.78 in 2022 primarily driven by higher Adjusted EBITDA and lower interest expense, which more than offset the decrease from lapping a 53rd week of shipments in the prior period, unfavorable changes in other expense/(income), and higher taxes on adjusted earnings.

Adjusted EPS increased 7.2% to $2.98 in 2023 compared to $2.78 in 2022, primarily driven by higher Adjusted Operating Income and lower interest expense, which more than offset the decrease from lapping a 53rd week of shipments in the prior period, unfavorable changes in other expense/(income), and higher taxes on adjusted earnings.

Results of Operations by Segment

Management evaluates segment performance based on several factors, including net sales, Organic Net Sales, and Segment Adjusted EBITDA.

Segment Adjusted EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities);

in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income, 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, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).

Segment Adjusted EBITDA is a tool 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 EBITDA to allocate resources.

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.

In the first quarter of 2024, certain measures utilized by management to evaluate segment performance changed, including a change from Segment Adjusted EBITDA to Segment Adjusted Operating Income in order to drive a stronger connection to our long-term strategic plan.

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, 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.

We have reflected this change from Segment Adjusted EBITDA to Segment Adjusted Operating Income in all historical periods presented.

Under highly inflationary accounting, the financial statements of a subsidiary are remeasured into our reporting currency (U.S.

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See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data , for additional information.

We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Argentina, and Turkey, which are all in our International segment.

December 30, 2023 December 31, 2022

We apply highly inflationary accounting to the results of our subsidiaries in Venezuela, Argentina, Turkey, Egypt, and Nigeria, which are all in Emerging Markets.

December 28, 2024 December 30, 2023 December 31, 2022

(in millions)

North America $ 19,543 $ 20,126 $ 20,340

International 6,514 6,145

International Developed Markets

3,535 3,623 3,401

Emerging Markets

2,768 2,891 2,744

Total net sales $ 25,846 $ 26,640 $ 26,485

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2024 Compared to 2023

December 30, 2023 December 31, 2022

(in millions)

2023 Compared to 2022

December 28, 2024 December 30, 2023 December 30, 2023 December 31, 2022

(in millions) (in millions)

Organic Net Sales (a) :

North America $ 19,570 $ 20,126 $ 20,191 $ 19,983

International 6,583 5,906

International Developed Markets 3,522 3,623 3,631 3,315

Emerging Markets 2,857 2,747 2,952 2,591

Total Organic Net Sales $ 25,949 $ 26,496 $ 26,774 $ 25,889

5 unchanged sentences

North America (2.9) % (0.1) pp 0.0 pp 0.0 pp (2.8) % 1.4 pp (4.2) pp

International 6.0 % (3.2) pp (0.5) pp (1.8) pp 11.5 % 13.6 pp (2.1) pp

International Developed Markets

(2.4) % 0.4 pp 0.0 pp 0.0 pp (2.8) % 0.0 pp (2.8) pp

Emerging Markets (4.3) % (6.2) pp (2.1) pp 0.0 pp 4.0 % 3.5 pp 0.5 pp

Kraft Heinz (3.0) % (0.7) pp (0.2) pp 0.0 pp (2.1) % 1.4 pp (3.5) pp

Adjusted EBITDA:

December 30, 2023 December 31, 2022

2023 Compared to 2022

North America (1.0) % (0.3) pp 0.0 pp (1.7) pp 1.0 % 7.5 pp (6.5) pp

International Developed Markets

6.5 % (0.5) pp (0.7) pp (1.8) pp 9.5 % 15.6 pp (6.1) pp

Emerging Markets 5.4 % (6.6) pp (0.2) pp (1.7) pp 13.9 % 10.9 pp 3.0 pp

Kraft Heinz 0.6 % (0.9) pp (0.1) pp (1.8) pp 3.4 % 8.9 pp (5.5) pp

Adjusted Operating Income:

December 28, 2024 December 30, 2023 December 31, 2022

(in millions)

Segment Adjusted EBITDA:

Segment Adjusted Operating Income:

North America $ 5,111 $ 5,050 $ 4,735

International 1,094 1,017

International Developed Markets 537 522 522

Emerging Markets 321 376 319

General corporate expenses (609) (651) (587)

Depreciation and amortization (excluding restructuring activities) (923) (922)

Divestiture-related license income 54 56

Restructuring activities (27) (60) (74)

3 unchanged sentences

Certain non-ordinary course legal and regulatory matters — (2) (210)

Equity award compensation expense (141) (148)

Operating income/(loss) 1,683 4,572 3,634

4 unchanged sentences

2024 Compared to 2023

December 30, 2023 December 31, 2022 % Change

(in millions)

2023 Compared to 2022

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions) (in millions)

Net sales $ 19,543 $ 20,126 (2.9) % $ 20,126 $ 20,340 (1.0) %

1 unchanged sentence

19,570 20,126 (2.8) % 20,191 19,983 1.0 %

Segment Adjusted EBITDA 5,603 5,284 6.0 %

Segment Adjusted Operating Income

5,111 5,050 1.2 % 5,050 4,735 6.7 %

(a) Organic Net Sales is a non-GAAP financial measure.

1 unchanged sentence

Fiscal Year 2024 Compared to Fiscal Year 2023:

Net sales decreased 2.9% to $19.5 billion in 2024 compared to $20.1 billion in 2023, including the unfavorable impacts of foreign currency (0.1 pp).

Organic Net Sales decreased 2.8% to $19.6 billion in 2024 compared to $20.1 billion in 2023, primarily due to unfavorable volume/mix (4.2 pp), which more than offset higher pricing (1.4 pp).

Higher pricing was primarily driven by increases to mitigate higher input costs.

Unfavorable volume/mix was primarily due to shifts in consumer behavior due to economic uncertainty, a decline in Lunchables , and a temporary plant closure.

Segment Adjusted Operating Income increased 1.2% to $5.1 billion in 2024 compared to $5.1 billion in 2023, primarily driven by higher pricing, lower procurement and logistics costs due, in part, to the beneficial impact from our efficiency initiatives, and lower variable compensation expense.

These favorable impacts to Segment Adjusted Operating Income were partially offset by unfavorable volume/mix, increased manufacturing expenses due to increased labor cost, increased SG&A due, in part, to investments in technology, increased depreciation expense, and the unfavorable impact of foreign currency (0.1 pp).

Fiscal Year 2023 Compared to Fiscal Year 2022 :

Net sales decreased 1.0% to $20.1 billion in 2023 compared to $20.3 billion in 2022, including the decrease from lapping a 53rd week of shipments in the prior period (1.7 pp) and the unfavorable impacts of foreign currency (0.3 pp).

2 unchanged sentences

Unfavorable volume/mix was primarily due to elasticity impacts from pricing actions and due, in part, to the reduction of Supplemental Nutrition Assistance Program (“SNAP”) benefits.

Segment Adjusted EBITDA increased 6.0% to $5.6 billion in 2023 compared to $5.3 billion in 2022, primarily due to higher pricing and efficiency gains, which more than offset higher commodity costs, including the impact of realized gains and losses on commodity hedges;

Segment Adjusted Operating Income increased 6.7% to $5.1 billion in 2023 compared to $4.7 billion in 2022, primarily due to higher pricing and the beneficial impact from our efficiency initiatives, which more than offset higher commodity costs, including the impact of realized gains and losses on commodity hedges;

unfavorable volume/mix;

higher supply chain costs, reflecting inflationary pressure in manufacturing costs;

increased SG&A, particularly advertising expenses;

increased manufacturing expenses;

increased SG&A, primarily due to advertising expense;

the decrease from lapping a 53rd week of shipments in the prior period (2.3 pp);

and the unfavorable impact of foreign currency (0.3 pp).

International:

International Developed Markets:

2024 Compared to 2023

December 30, 2023 December 31, 2022 % Change

(in millions)

2023 Compared to 2022

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions) (in millions)

Net sales $ 3,535 $ 3,623 (2.4) % $ 3,623 $ 3,401 6.5 %

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3,522 3,623 (2.8) % 3,631 3,315 9.5 %

Segment Adjusted EBITDA 1,094 1,017 7.6 %

Segment Adjusted Operating Income

537 522 3.0 % 522 522 — %

(a) Organic Net Sales is a non-GAAP financial measure.

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Fiscal Year 2024 Compared to Fiscal Year 2023:

Net sales increased 6.0% to $6.5 billion in 2023 compared to $6.1 billion in 2022, including the unfavorable impacts of foreign currency (3.2 pp), lapping a 53rd week of shipments in the prior period (1.8 pp), and acquisitions and divestitures (0.5 pp).

Net sales decreased 2.4% to $3.5 billion in 2024 compared to $3.6 billion in 2023, including the favorable impacts of foreign currency (0.4 pp).

Organic Net Sales decreased 2.8% to $3.5 billion in 2024 compared to $3.6 billion in 2023, primarily due to unfavorable volume/mix (2.8 pp) while pricing remained flat.

Unfavorable volume/mix was primarily due to a temporary pause in shipments as a result of a contract negotiation with certain customers in our Continental Europe region, and lower sales in New Zealand due to an inventory reduction by a regional customer.

Segment Adjusted Operating Income increased 3.0% to $0.5 billion in 2024 compared to $0.5 billion in 2023, primarily driven by lower procurement and logistics costs due, in part, to the beneficial impact from our efficiency initiatives, lapping the prior year business disruption caused by Cyclone Gabrielle in Australia and New Zealand, lower variable compensation expense, and the favorable impact of foreign currency (1.8 pp).

These favorable impacts to Segment Adjusted Operating Income were partially offset unfavorable volume/mix and increased inflationary pressures in manufacturing expenses.

Fiscal Year 2023 Compared to Fiscal Year 2022 :

Net sales increased 6.5% to $3.6 billion in 2023 compared to $3.4 billion in 2022, including the unfavorable impacts of lapping a 53rd week of shipments in the prior period (1.8 pp), acquisitions and divestitures (0.7 pp), and foreign currency (0.5 pp).

Organic Net Sales increased 9.5% to $3.6 billion in 2023 compared to $3.3 billion in 2022 driven by higher pricing (15.6 pp), which more than offset unfavorable volume/mix (6.1 pp).

Higher pricing included increases across markets primarily to mitigate higher input costs.

Unfavorable volume/mix was primarily due to the elasticity impacts from pricing actions, particularly in our Northern Europe region, which more than offset favorable volume/mix growth in emerging markets within our Eastern Europe and LATAM regions.

Segment Adjusted EBITDA increased 7.6% to $1.1 billion in 2023 compared to $1.0 billion in 2022, primarily due to higher pricing and efficiency gains, partially offset by higher supply chain costs, reflecting inflationary pressure in manufacturing and procurement costs;

increased SG&A, particularly advertising expenses;

higher commodity costs;

Unfavorable volume/mix was primarily due to the elasticity impacts from pricing actions, particularly in our Northern Europe region.

Segment Adjusted Operating Income was flat year over year, at $522 million in both 2023 and 2022.

Increases to Segment Adjusted Operating Income were primarily driven by higher pricing offset by higher supply chain costs, reflecting inflationary pressure in procurement, manufacturing, and logistics costs;

unfavorable volume/mix;

increased SG&A, primarily due to advertising expense;

the unfavorable impact from a business disruption in Australia and New Zealand caused by Cyclone Gabrielle;

the decrease from lapping a 53rd week of shipments in the prior period (1.5 pp);

and the unfavorable impact of foreign currency (0.1 pp).

Emerging Markets:

2024 Compared to 2023

2023 Compared to 2022

December 28, 2024 December 30, 2023 % Change December 30, 2023 December 31, 2022 % Change

(in millions) (in millions)

Net sales $ 2,768 $ 2,891 (4.3) % $ 2,891 $ 2,744 5.4 %

Organic Net Sales (a)

2,857 2,747 4.0 % 2,952 2,591 13.9 %

Segment Adjusted Operating Income

321 376 (14.7) % 376 319 17.6 %

(a) Organic Net Sales is a non-GAAP financial measure.

See the Non-GAAP Financial Measures section at the end of this item.

Fiscal Year 2024 Compared to Fiscal Year 2023:

Net sales decreased 4.3% to $2.8 billion in 2024 compared to $2.9 billion in 2023, including the unfavorable impacts of foreign currency (6.2 pp) and acquisitions and divestitures (2.1 pp).

Organic Net Sales increased 4.0% to $2.9 billion in 2024 compared to $2.7 billion in 2023, primarily driven by higher pricing (3.5 pp) and favorable volume/mix (0.5 pp).

Higher pricing was taken primarily in our Eastern Europe and Middle East and Africa (“MEA”) regions to address higher input costs, which more than offset lower pricing in Brazil as a result of maintaining price gaps to competition.

Favorable volume/mix within our Eastern Europe and MEA more than offset unfavorable volume/mix in Brazil and China.

Segment Adjusted Operating Income decreased 14.7% to $0.3 billion in 2024 compared to $0.4 billion in 2023, primarily due to higher supply chain costs reflecting inflationary pressures in our Eastern Europe and LATAM regions, the unfavorable impact of foreign currency (6.1 pp), and increased SG&A as a result of our investments in our go-to-market strategy, primarily in LATAM.

These unfavorable impacts to Segment Adjusted Operating Income more than offset higher pricing, favorable volume/mix, and lower variable compensation expense.

Fiscal Year 2023 Compared to Fiscal Year 2022 :

Net sales increased 5.4% to $2.9 billion in 2023 compared to $2.7 billion in 2022, including the unfavorable impacts of foreign currency (6.6 pp), lapping a 53rd week of shipments in the prior period (1.7 pp), and acquisitions and divestitures (0.2 pp).

Organic Net Sales increased 13.9% to $3.0 billion in 2023 compared to $2.6 billion in 2022, driven by higher pricing (10.9 pp) and favorable volume/mix (3.0 pp).

Higher pricing included increases across markets primarily to mitigate higher input costs.

Volume/mix was favorable in our Eastern European countries and LATAM region, partially offset by unfavorable volume/mix in our Asia region.

Segment Adjusted Operating Income increased 17.6% to $376 million in 2023 compared to $319 million in 2022, primarily driven by higher pricing and favorable volume/mix, partially offset by higher supply chain costs, reflecting inflationary pressure in LATAM and Eastern Europe regions;

increased SG&A due, in part, to investments in advertising and research and development;

the unfavorable impact of foreign currency (14.1 pp);

increased depreciation expense;

and the decrease from lapping a 53rd week of shipments in the prior period (2.7 pp).

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Acquisitions and Divestitures:

In the first quarter of 2022, we acquired 85% of the shares of Just Spices GmbH (“Just Spices”), a German-based company focused on direct-to-consumer sales of premium spice blends, from certain third-party shareholders (the “Just Spices Acquisition”) for cash consideration of approximately $243 million.

In the third quarter of 2023, we completed the redemption of an additional 5% of the outstanding shares and own 90% of the controlling interest in Just Spices as of December 30, 2023.

In the second quarter of 2022, we acquired a majority of the outstanding equity interests of Companhia Hemmer Indústria e Comércio (“Hemmer”), a Brazilian food and beverage manufacturing company focused on the condiments and sauces category, from certain third-party shareholders (the “Hemmer Acquisition”) for cash consideration of approximately $279 million.

In the first quarter of 2024, we consummated the Russia Infant Transaction for total cash consideration of approximately $25 million, and the Papua New Guinea Transaction for total cash consideration of approximately $22 million, which is to be paid incrementally over two years following the transaction closing date.

In the fourth quarter of 2022, we sold our business-to-business powdered cheese business to a third party, Kerry Group, for cash consideration of approximately $108 million (the “Powdered Cheese Transaction”).

In the fourth quarter of 2021, we closed on our transaction with a third party, an affiliate of Groupe Lactalis, to sell certain assets in our global cheese business, as well as to license certain trademarks (the “Cheese Transaction”).

In connection with the Cheese Transaction, we paid approximately $620 million of cash taxes in the second quarter of 2022, primarily to U.S.

federal and state tax authorities.

In the third quarter of 2023, we completed the redemption of an additional 5% of the outstanding shares and in the second quarter of 2024, we completed the redemption of the remaining outstanding shares and wholly own Just Spices as of December 28, 2024.

See Note 4, Acquisitions and Divestitures , in Item 8, Financial Statements and Supplementary Data , for additional information on our acquisitions and divestitures.

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Net cash provided by operating activities was $4.2 billion for the year ended December 28, 2024 compared to $4.0 billion for the year ended December 30, 2023.

This increase was primarily driven by lower cash outflows in the current year for inventories, primarily related to stock rebuilding in the prior year, lower cash outflows in the current year for cash tax payments driven by cash taxes paid in 2022 related to the Cheese Transaction, higher Adjusted EBITDA in 2023, and lower interest payments in the current period due to the reduction of long-term debt throughout 2022.

This increase was primarily due to lapping the prior year cash payments associated with the settlement of the consolidated securities class action lawsuit and the current year conversion of certain plan assets related to the U.S.

postretirement medical plan to cash, which were partially offset by higher cash outflows for variable compensation in the 2024 period compared to the 2023 period and increased cash taxes.

See Note 15, Commitments and Contingencies , in Item 8, Financial Statements and Supplementary Data , for additional information on our legal proceedings and See Note 11, Postemployment Benefits , in Item 8 for more additional information on our postemployment benefit plans activities.

Net Cash Provided by/Used for Investing Activities:

Net cash used for investing activities was $1.0 billion for the year ended December 28, 2024 compared to net cash used for investing activities of $916 million for the year ended December 30, 2023.

This change was primarily driven by our payments to acquire the TGI Friday License and increased capital expenditures.

This was offset by proceeds from net investment hedge settlements.

Our 2024 capital expenditures were primarily driven by maintenance projects, capital investments focused on generating growth, including capacity expansion, digital projects, and cost improvement projects, as well as capital investments in technology.

We expect 2025 capital expenditures to be approximately $1.0 billion.

Net Cash Provided by/Used for Financing Activities:

Net cash used for financing activities was $3.0 billion for the year ended December 28, 2024 compared to $2.7 billion for the year ended December 30, 2023.

This change was primarily due to increased common stock repurchases pursuant to our publicly announced share repurchase program, partially offset by reduced debt repayments in the current year period compared to the prior year.

Cash Flow Activity for 2023 Compared to 2022:

Net Cash Provided by/Used for Operating Activities:

Net cash provided by operating activities was $4.0 billion for the year ended December 30, 2023 compared to $2.5 billion for the year ended December 31, 2022.

This increase was primarily driven by lower cash outflows in the current year for inventories, primarily related to stock rebuilding in the prior year, lower cash outflows in the current year for cash tax payments driven by cash taxes paid in 2022 related to the Cheese Transaction, higher Adjusted Operating Income in 2023, and lower interest payments in the current period due to the reduction of long-term debt throughout 2022.

These impacts were partially offset by cash payments associated with the settlement of the consolidated securities class action lawsuit.

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We had 2023 capital expenditures of $1.0 billion compared to 2022 capital expenditures of $916 million.

We expect 2024 capital expenditures to be approximately $1.1 billion, primarily driven by capital investments focused on generating growth, including capacity expansion, cost improvement, digital, and automation projects, as well as capital investments in maintenance and technology.

Net Cash Provided by/Used for Financing Activities:

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Our undistributed historical earnings in foreign subsidiaries through December 31, 2017 are currently not considered to be indefinitely reinvested.

Our deferred tax liability associated with these undistributed historical earnings was insignificant at December 30, 2023 and December 31, 2022, and relates to local withholding taxes that will be owed when this cash is distributed.

Our deferred tax liability associated with these undistributed historical earnings was insignificant at December 28, 2024, December 30, 2023, and December 31, 2022, and relates to local withholding taxes that will be owed when this cash is distributed.

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.

Our current payment terms with our suppliers, which we deem to be commercially reasonable, generally range from zero to 220 days.

We also 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.

We have no economic interest in a supplier’s decision to enter into these agreements and no direct financial relationship with the financial institutions related to these programs.

We did not pledge any assets in connection with our trade payable 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.

Supplier participation in these agreements is voluntary.

We estimate that the amounts outstanding under these programs were $0.8 billion at December 30, 2023 and $1.1 billion at December 31, 2022.

The amounts outstanding under these programs were $745 million at December 28, 2024 and $819 million at December 30, 2023.

The amounts were included in trade payables on our consolidated balance sheets.

See Note 14, Financing Arrangements , in Item 8, Financial Statements and Supplementary Data , for additional information on our trade payables programs.

Borrowing Arrangements:

From time to time, we obtain funding through our commercial paper programs.

We had no commercial paper outstanding at December 30, 2023 or at December 31, 2022.

Under our U.S.

commercial paper program, the maximum amount of commercial paper outstanding was $150 million and $198 million during the years ended December 30, 2023 and December 31, 2022.

We had no commercial paper outstanding at December 28, 2024, December 30, 2023, and December 31, 2022.

We had no commercial paper outstanding during the year ended December 28, 2024, and the maximum amount of commercial paper outstanding was $150 million during the year ended December 30, 2023 and $198 million during the year ended December 31, 2022.

In July 2022, together with KHFC, our 100% owned operating subsidiary, we entered into a new credit agreement (the “Credit Agreement”), which provides for a five-year senior unsecured revolving credit facility in an aggregate amount of $4.0 billion (the “Senior Credit Facility”) and replaced our then-existing credit facility (the “Previous Senior Credit Facility”).

On July 21, 2023, we entered into an agreement to extend the maturity date of our Senior Credit Facility from July 8, 2027 to July 8, 2028.

No amounts were drawn on our Senior Credit Facility at December 30, 2023 or December 31, 2022.

No amounts were drawn on our Senior Credit Facility during the years ended December 30, 2023 or December 31, 2022, or on the Previous Senior Credit Facility during the year ended December 31, 2022.

On September 27, 2024, we entered into an agreement to extend the maturity date of our Senior Credit Facility from July 8, 2028 to July 8, 2029.

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 December 28, 2024, December 30, 2023, or December 31, 2022.

No amounts were drawn on our Senior Credit Facility during the years ended December 28, 2024, December 30, 2023 or December 31, 2022, or on the Previous Senior Credit Facility during the year ended December 31, 2022.

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.

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Long-Term Debt:

Our long-term debt, including the current portion, was $20.0 billion at December 30, 2023 and $20.1 billion at December 31, 2022.

This decrease was primarily due to the repayment of 750 million euro aggregate principal amount of senior notes due in June 2023, which more than offset the issuance of 600 million euro aggregate principal amount of floating rate senior notes issued in May 2023.

We have aggregate principal amounts of senior notes of approximately 550 million euros maturing in May 2024.

Our long-term debt, including the current portion, was $19.9 billion at December 28, 2024, $20.0 billion at December 30, 2023, and $20.1 billion at December 31, 2022.

The decrease of debt in 2024 was primarily due to changes in foreign currency exchange rates on our foreign-denominated debt, as well as the 550 million euro aggregate principle amount of senior notes that were repaid at maturity in May 2024, partially offset by the issuance of the 2024 Notes.

The decrease of debt in 2023 was primarily due to the repayment of 750 million euro aggregate principal amount of senior notes due in June 2023, which more than offset the issuance of 600 million euro aggregate principal amount of floating rate senior notes issued in May 2023.

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.

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Equity and Dividends:

We paid dividends on our common stock of $2.0 billion in 2023, 2022, and 2021.

We paid dividends on our common stock of $1.9 billion in 2024, and $2.0 billion in 2023 and 2022.

Additionally, in the first quarter of 2025, our Board declared a cash dividend of $0.40 per share of common stock, which is payable on March 28, 2025 to stockholders of record on March 7, 2025.

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Under the program, shares may be repurchased in open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, privately negotiated transactions, transactions structured through investment banking institutions, or other means.

As of December 30, 2023, we had remaining authorization under the share repurchase program of

approximately $2.7 billion.

As of December 28, 2024, we had remaining authorization under the share repurchase program of approximately $1.9 billion.

The share repurchase program is in addition to our share repurchases to offset the dilutive effect of equity-based compensation.

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We estimate that 2025 postretirement benefit plan contributions will be approximately $11 million.

During the fourth quarter of 2024, we amended our U.S.

postretirement medical plan to establish a sub-trust to permit the payment of certain postretirement benefit plan contributions for active union employees using $150 million of the retiree plan surplus.

See Note 11, Postemployment Benefits, in Item 8, Financial Statements and Supplementary Data , for additional information on our pension and postretirement plans.

Estimated future contributions take into consideration current economic conditions, which at this time are expected to have minimal impact on expected contributions for 2025.

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Commodity Trends

We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, soybean and vegetable oils, sugar and other sweeteners, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.

In addition, we purchase and use significant quantities of resins, fiberboard, metals, and cardboard to package our products, and we use electricity, diesel fuel, and natural gas in the manufacturing and distribution of our products.

We purchase and use large quantities of commodities, including dairy products, meat products, tomato products, sugar and other sweeteners, soybean and vegetable oils, coffee beans, wheat and processed grains, eggs, and other fruits and vegetables to manufacture our products.

In addition, we purchase and use significant quantities of plastics, cardboard, resin, glass, 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 worldwide supply and cost trends of these commodities.

During the year ended December 30, 2023, we experienced higher commodity costs for tomato products, sugar and other sweeteners, vegetables, and fruits, while costs for dairy products, meat products, vegetable oils, and coffee decreased.

During the year ended December 28, 2024, we experienced increases in certain commodity costs, particularly for tomato products, and soybean and vegetable oils, while costs for dairy products and coffee decreased.

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.

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Goodwill and Intangible Assets:

As of December 30, 2023, we maintain 11 reporting units, seven of which comprise our goodwill balance.

These seven reporting units had an aggregate goodwill carrying amount of $30.5 billion at December 30, 2023.

As of December 28, 2024, we maintain 12 reporting units, eight of which comprise our goodwill balance.

These eight reporting units had an aggregate goodwill carrying amount of $28.7 billion at December 28, 2024.

Our indefinite-lived intangible asset balance primarily consists of a number of individual brands, which had an aggregate carrying amount of $36.5 billion as of December 28, 2024.

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Estimating the fair value of individual reporting units and brands requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions.

These assumptions and estimates include estimated future annual net cash flows, income tax considerations, discount rates, growth rates, royalty rates, contributory asset charges, and other market factors.

Our current expectations also include certain assumptions that could be negatively impacted if we are unable to meet our pricing expectations in relation to inflation.

These assumptions and estimates include estimated future annual net cash flows (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax considerations, discount rates, long-term growth rates, royalty rates, contributory asset charges, and other market factors.

If current expectations of future growth rates and margins are not met, if market factors outside of our control, such as discount rates, market capitalization, income tax rates, foreign currency exchange rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to our long-term operating plans, then one or more of our reporting units or brands might become impaired in the future.

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Our reporting units and brands that were impaired in 2024, 2023, and 2022 were written down to their respective fair values resulting in zero excess fair value over carrying amount as of the applicable impairment test dates.

Accordingly, these and other reporting units and brands that have 20% or less excess fair value over carrying amount as of the 2023 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

Reporting units with 10% or less fair value over carrying amount had an aggregate goodwill carrying amount after impairment of $17.6 billion as of the 2023 annual impairment test and included Taste, Meals, and Away from Home, Northern Europe, Continental Europe, and Canada and North America Coffee.

Reporting units with 10-20% fair value over carrying amount had an aggregate goodwill carrying amount of $12.5 billion as of the 2023 annual impairment test and included Fresh, Beverages, and Desserts and LATAM.

Our Asia reporting unit had between 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $309 million as of the 2023 annual impairment test.

Our reporting units that have less than 5% excess fair value over carrying amount as of the 2023 annual impairment test are considered at a heightened risk of future impairments and include our TMA, Continental Europe, and CNAC reporting units, which had an aggregate goodwill carrying amount of $15.9 billion.

Accordingly, these and other reporting units and brands that had 20% or less excess fair value over carrying amount as of the 2024 annual impairment test have a heightened risk of future impairments if any assumptions, estimates, or market factors change in the future.

Reporting units with 10% or less fair value over carrying amount, including reporting units that were impaired as part of the 2024 annual impairment test, resulting in zero excess fair value over carrying value, had an aggregate goodwill carrying amount after impairment of $22.4 billion as of the 2024 annual impairment test and included Taste Elevation, Ready Meals and Snacking (“TMS”), Away from Home & Kraft Heinz Ingredients (“AFH”), Meat & Cheese (“MC”), Canada and North America Coffee (“CNAC”), and Continental Europe.

Our Northern Europe reporting unit had 10-20% fair value over carrying amount with an aggregate goodwill carrying amount of $1.7 billion as of the 2024 annual impairment test.

Our Hydration & Desserts (“HD”) and Asia reporting units had between 20-50% fair value over carrying amount with an aggregate goodwill carrying amount of $4.6 billion as of the 2024 annual impairment test.

Our reporting units that have less than 5% excess fair value over carrying amount as of the 2024 annual impairment test are considered at a heightened risk of future impairments and include our TMS, Continental Europe, and AFH reporting units, which had an aggregate goodwill carrying amount of $19.0 billion.

Our four remaining reporting units had no goodwill carrying amount at the time of the 2024 annual impairment test.

After the 2023 annual impairment test and after reclassifying two indefinite-lived intangible asset brands to definite-lived trademarks, our indefinite-lived brands with 10% or less fair value over carrying amount had an aggregate carrying amount of $16.2 billion as of the 2023 annual impairment test and included Kraft , Oscar Mayer , Velveeta , Maxwell House , Cool Whip , and Jet Puffed.

Brands with 10-20% fair value over carrying amount had an aggregate carrying amount of $2.4 billion as of the 2023 annual impairment test and included Miracle Whip and Ore-Ida .

The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $4.2 billion as of the 2023 annual impairment test.

Although the remaining brands, with a carrying amount of $15.7 billion, have more than 50% excess fair value over carrying amount as of the 2023 annual impairment test, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Our brands that have less than 5% excess fair value over carrying amount as of the 2023 annual impairment test are considered at a heightened risk of future impairments and include our Kraft , Velveeta , Maxwell House , Cool Whip , and Jet Puffed brands, which had an aggregate carrying amount of $13.5 billion.

Our indefinite-lived brands with 10% or less fair value over carrying amount, comprised entirely of brands that were impaired within 2024, resulting in zero excess fair value over carrying amount, had an aggregate carrying amount of $2.6 billion as of the latest test for each brand and included Oscar Mayer, Lunchables, Claussen , and Wattie’s.

Brands with 10-20% fair value over carrying amount had an aggregate carrying amount of $14.2 billion as of the latest test for each brand and included Kraft, Velveeta, A1, and Bagel Bites .

The aggregate carrying amount of brands with fair value over carrying amount between 20-50% was $2.8 billion as of the latest test for each brand.

Although the remaining brands, with a carrying amount of $16.9 billion, have more than 50% excess fair value over carrying amount as of the latest test for each brand, these amounts are also susceptible to impairments if any assumptions, estimates, or market factors significantly change in the future.

Our brands that have less than 5% excess fair value over carrying amount as of the latest test for each brand are considered at a heightened risk of future impairments and include our Oscar Mayer, Lunchables, Claussen, and Wattie’s brands, which had an aggregate carrying amount of $2.6 billion.

We generally utilize the discounted cash flow method under the income approach to estimate the fair value of our reporting units.

Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, a discount rate that appropriately reflects the risks inherent in each future cash flow stream, and other market factors.

Some of the more significant assumptions inherent in estimating the fair values include the estimated future annual net cash flows for each reporting unit (including net sales, cost of products sold, SG&A, depreciation and amortization, working capital, and capital expenditures), income tax rates, long-term growth rates, royalty rates, a discount rate that appropriately reflects the risks inherent in each future cash flow stream, and other market factors.

We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated product category growth rates, management’s plans, and guideline companies.

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The discount rates, long-term growth rates, and royalty rates used to estimate the fair values of our reporting units and our brands with 20% or less excess fair value over carrying amount, as well as the goodwill or brand carrying amounts, as of the 2023 annual impairment test for each reporting unit or brand, were as follows:

Goodwill or Brand Carrying Amount

(in billions) Discount Rate Long-Term Growth Rate Royalty Rate

The discount rates, long-term growth rates, and royalty rates (for our brands valued utilizing the relief from royalty method) used to estimate the fair values of our reporting units and our brands with 20% or less excess fair value over carrying amount, as well as the goodwill or brand carrying amounts, as of the latest test for each reporting unit and brand were as follows:

Goodwill or Brands Carrying Amount

(in billions)

Discount Rate Long-Term Growth Rate Royalty Rate

Minimum Maximum Minimum Maximum Minimum Maximum

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Additionally, these assumptions are generally interdependent and do not change in isolation.

However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates, long-term growth rates, and royalty rates on the fair values of our reporting units and brands with 20% or less excess fair value over carrying amount.

However, as it is reasonably possible that changes in assumptions could occur, as a sensitivity measure, we have presented the estimated effects of isolated changes in discount rates, long-term growth rates, and royalty rates (for our brands valued utilizing the relief from royalty method) on the fair values of our reporting units and brands with 20% or less excess fair value over carrying amount.

These estimated changes in fair value are not necessarily representative of the actual impairment that would be recorded in the event of a fair value decline.

If we had changed the assumptions used to estimate the fair value of our reporting units and brands with 20% or less excess fair value over carrying amount, as of the 2023 annual impairment test for each of these reporting units and brands, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of these reporting units and brands (in billions):

If we had changed the assumptions used to estimate the fair value of our reporting units and brands with 20% or less excess fair value over carrying amount, as a result of the latest test for each of these reporting units and brands, these isolated changes, which are reasonably possible to occur, would have led to the following increase/(decrease) in the aggregate fair value of these reporting units and brands (in billions):

Discount Rate Long-Term Growth Rate Royalty Rate

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The resolution of tax reserves and changes in valuation allowances could be material to our results of operations for any period but is not expected to be material to our financial position.

As part of our planning for the changes in the international tax environment, as well as to achieve greater operational synergies, we have enacted changes to our corporate entity structure which included a transfer of and will result in the movement of certain business operations to a wholly-owned subsidiary in the Netherlands resulting in a tax benefit of $3.0 billion recorded as a non-U.S.

deferred tax asset in December 2024.

In determining the fair value of the business transferred the Company utilized the discounted cash flow method under the income approach and in doing so, we made assumptions that have a significant impact on the fair value including, but not limited to, estimated future annual net cash flows (most significantly estimated future annual net sales), a discount rate that reflects the level of risk associated with the future cash flows of the business, long-term growth rates, income tax rates and other market factors.

The recognition of our future tax benefits associated with this transaction is dependent upon the acceptance of the business valuation and tax basis step-up by the associated taxing authorities.

New Accounting Pronouncements

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To supplement the consolidated financial statements prepared in accordance with U.S.

GAAP, we have presented Organic Net Sales, Adjusted EBITDA, and Adjusted EPS, which are considered non-GAAP financial measures.

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), diluted EPS, or other measures prescribed by 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 EBITDA, 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.

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.

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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 EBITDA is defined as net income/(loss) from continuing operations before interest expense, other expense/(income), provision for/(benefit from) income taxes, and depreciation and amortization (excluding restructuring activities);

in addition to these adjustments, we exclude, when they occur, the impacts of divestiture-related license income, restructuring activities, deal costs, unrealized losses/(gains) on commodity hedges, impairment losses, certain non-ordinary course legal and regulatory matters, and equity award compensation expense (excluding restructuring activities).

Adjusted EPS is defined as diluted EPS excluding, when they occur, the impacts of restructuring activities, deal 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 (e.g., U.S.

tax reform), and including, when they occur, adjustments to reflect preferred stock dividend payments on an accrual basis.

Adjusted Operating Income is defined as operating income excluding, when they occur, the impacts 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, and certain non-ordinary course legal and regulatory matters.

The Kraft Heinz Company

1 unchanged sentence

(dollars in millions)

Net Sales Currency Acquisitions and Divestitures 53rd Week Organic Net Sales Price Volume/Mix

Net Sales Currency Acquisitions and Divestitures Organic Net Sales Price Volume/Mix

North America $ 19,543 $ (27) $ — $ 19,570

International 6,514 (103) 34 — 6,583

International Developed Markets

3,535 13 — 3,522

Emerging Markets

2,768 (101) 12 2,857

Kraft Heinz $ 25,846 $ (115) $ 12 $ 25,949

North America $ 20,126 $ — $ — $ 20,126

International 6,145 82 60 97 5,906

International Developed Markets

3,623 — — 3,623

Emerging Markets

2,891 77 67 2,747

Kraft Heinz $ 26,640 $ 77 $ 67 $ 26,496

Year-over-year growth rates

North America (2.9) % (0.1) pp 0.0 pp (2.8) % 1.4 pp (4.2) pp

International Developed Markets

(2.4) % 0.4 pp 0.0 pp (2.8) % 0.0 pp (2.8) pp

Emerging Markets

(4.3) % (6.2) pp (2.1) pp 4.0 % 3.5 pp 0.5 pp

Kraft Heinz (3.0) % (0.7) pp (0.2) pp (2.1) % 1.4 pp (3.5) pp

Net Sales Impact of Currency Impact of Acquisitions and Divestitures

Impact of 53rd Week

Organic Net Sales Price Volume/Mix

North America 20,126 (65) — — 20,191

International Developed Markets

3,623 (15) 7 — 3,631

Emerging Markets 2,891 (88) 27 — 2,952

Kraft Heinz 26,640 (168) 34 — 26,774

North America 20,340 — — 357 19,983

International Developed Markets

3,401 — 30 56 3,315

Emerging Markets 2,744 82 30 41 2,591

Kraft Heinz 26,485 82 60 454 25,889

Year-over-year growth rates

North America (1.0) % (0.3) pp 0.0 pp (1.7) pp 1.0 % 7.5 pp (6.5) pp

International 6.0 % (3.2) pp (0.5) pp (1.8) pp 11.5 % 13.6 pp (2.1) pp

International Developed Markets

6.5 % (0.5) pp (0.7) pp (1.8) pp 9.5 % 15.6 pp (6.1) pp

Emerging Markets

5.4 % (6.6) pp (0.2) pp (1.7) pp 13.9 % 10.9 pp 3.0 pp

Kraft Heinz 0.6 % (0.9) pp (0.1) pp (1.8) pp 3.4 % 8.9 pp (5.5) pp

The Kraft Heinz Company

Reconciliation of Net Income/(Loss) to Adjusted EBITDA

Reconciliation of Operating Income/(Loss) to Adjusted Operating Income

(in millions)

December 30, 2023 December 31, 2022

Net income/(loss) $ 2,846 $ 2,368

Interest expense 912 921

Other expense/(income) 27 (253)

Provision for/(benefit from) income taxes 787 598

December 28, 2024 December 30, 2023 December 31, 2022

Operating income/(loss) 1,683 4,572 3,634

Depreciation and amortization (excluding restructuring activities) 923 922

Divestiture-related license income (54) (56)

Restructuring activities 27 60 74

3 unchanged sentences

Certain non-ordinary course legal and regulatory matters — 2 210

Equity award compensation expense 141 148

Adjusted EBITDA $ 6,307 $ 6,003

Adjusted Operating Income

$ 5,360 $ 5,297 $ 4,989

The Kraft Heinz Company

Reconciliation of Diluted EPS to Adjusted EPS

December 30, 2023 December 31, 2022

December 28, 2024 December 30, 2023 December 31, 2022

Diluted EPS $ 2.26 $ 2.31 $ 1.91

Restructuring activities (a)

0.01 0.16 0.05

Unrealized losses/(gains) on commodity hedges (b)

(0.01) — 0.04

Impairment losses (c)

2.58 0.50 0.70

Certain non-ordinary course legal and regulatory matters (d)

Losses/(gains) on sale of business (e)

0.05 — (0.01)

Other losses/(gains) related to acquisitions and divestitures (f)

Nonmonetary currency devaluation (g)

0.01 0.02 0.01

Debt prepayment and extinguishment (benefit)/costs (h)

Certain significant discrete income tax items (i)

(1.84) (0.01) —

Adjusted EPS $ 3.06 $ 2.98 $ 2.78

(a) Gross expenses/(income) included in restructuring activities were expenses of $225 million ($193 million after-tax) in 2023 and $74 million ($56 million after-tax) in 2022 and were recorded in the following income statement line items:

• Cost of products sold included expenses of $57 million in 2023 and $27 million in 2022;

• SG&A included expenses of $3 million in 2023 and $47 million in 2022;

• Other expense/(income) included expenses of $165 million in 2023.

The 2023 expenses primarily relate to the settlement of one of our U.K.

(a) Gross expenses/(income) included in restructuring activities were expenses of $20 million ($18 million after-tax) in 2024, $225 million ($193 million after-tax) in 2023 and $74 million ($56 million after-tax) in 2022 and were recorded in the following income statement line items:

• Cost of products sold included expenses of $8 million in 2024, $57 million in 2023 and $27 million in 2022;

• SG&A included expenses of $19 million in 2024, $3 million in 2023, and $47 million in 2022;

• Other expense/(income) included income of $7 million in 2024 and expenses of $165 million in 2023.

The 2024 income and 2023 expenses primarily relate to the settlement of one of our U.K.

defined benefit pension plans.

See Note 11, Postemployment Benefits , in Item 8, Financial Statements and Supplementary Data , for additional information.

(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were expenses of $1 million ($1 million after-tax) in 2023 and $63 million ($48 million after-tax) in 2022 and were recorded in cost of products sold.

(b) Gross expenses/(income) included in unrealized losses/(gains) on commodity hedges were income of $19 million ($15 million after-tax) in 2024, expenses of $1 million ($1 million after-tax) in 2023 and expenses of $63 million ($48 million after-tax) in 2022 and were recorded in cost of products sold.

• Goodwill impairment losses of $510 million ($510 million after-tax) in 2023 and $444 million ($444 million after-tax) in 2022, which were recorded in SG&A;

• Intangible asset impairment losses of $152 million ($116 million after-tax) in 2023 and $469 million ($358 million after-tax) in 2022, which were recorded in SG&A;

• Goodwill impairment losses of $1.6 billion ($1.6 billion after-tax) in 2024, $510 million ($510 million after-tax) in 2023, and $444 million ($444 million after-tax) in 2022, which were recorded in SG&A;

• Intangible asset impairment losses of $2.0 billion ($1.6 billion after-tax) in 2024, $152 million ($116 million after-tax) in 2023, and $469 million ($358 million after-tax) in 2022, which were recorded in SG&A;

• Property, plant and equipment asset impairment losses of $86 million ($65 million after-tax) in 2022, which were recorded in cost of products sold.

(d) Gross expenses included in certain non-ordinary course legal and regulatory matters were $2 million ($2 million after-tax) in 2023, and $210 million ($161 million after-tax) in 2022 and were recorded in SG&A.

The 2022 expenses related to an accrual in connection with the previously disclosed securities class action lawsuit.

See Note 15, Commitments and Contingencies , in Item 8, Financial Statements and Supplementary Data , for additional information.

(e) Gross expenses/(income) included in losses/(gains) on sale of business were income of $4 million ($3 million after-tax) in 2023 and income of $25 million (expenses of $17 million after-tax) in 2022 and were recorded in other expense/(income).

(e) Gross expenses/(income) included in losses/(gains) on sale of business were expenses of $81 million ($60 million after-tax) in 2024, income of $4 million (expenses of $3 million after-tax) in 2023, and income of $25 million ($17 million after-tax) in 2022 and were recorded in other expense/(income).

(f) Gross expenses/(income) included in other losses/(gains) related to acquisitions and divestitures were income of $38 million ($29 million after-tax) in 2022 and were recorded in other expense/(income).

(g) Gross expenses included in nonmonetary currency devaluation were $28 million ($28 million after-tax) in 2023 and $17 million ($17 million after-tax) in 2022 and were recorded in other expense/(income).

(g) Gross expenses included in nonmonetary currency devaluation were $16 million ($16 million after-tax) in 2024, $28 million ($28 million after-tax) in 2023, and $17 million ($17 million after-tax) in 2022 and were recorded in other expense/(income).

(h) Gross expenses/(income) included in debt prepayment and extinguishment (benefit)/costs were income of $38 million ($35 million after-tax) in 2022 and were recorded in interest expense.

(i) Certain significant discrete income tax items were a benefit of $17 million in 2023.

The benefit represents the reversal of uncertain tax position reserves related to the U.S.

(i) Certain significant discrete income tax items were a benefit of $2.2 billion in 2024 and $17 million in 2023.

The benefit in 2024 represents the recognition of a foreign deferred tax asset ($3.0 billion) and an associated valuation allowance ($0.6 billion) related to the transfer of business operations to a wholly-owned subsidiary in the Netherlands, partially offset by establishing a valuation allowance against deferred tax assets in our subsidiary in Brazil.

The benefit in 2023 represents the reversal of uncertain tax position reserves related to the U.S.

Tax Cuts and Jobs Act resulting from a conclusion of the IRS’s income tax examination for the year 2017 and the lapsing of the statute of limitations for such year.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis