Kraft Heinz Co

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:

Net Sales:

Net sales decreased 1.4% to $6.3 billion for the three months ended June 27, 2026 compared to $6.4 billion for the three months ended June 28, 2025, including the favorable impact of foreign currency (0.5 pp) and unfavorable impact of acquisitions and divestitures (0.6 pp). Organic Net Sales decreased 1.3% to $6.2 billion for the three months ended June 27, 2026 compared to $6.3 billion for the three months ended June 28, 2025, primarily due to the unfavorable volume/mix (2.6 pp), which more than offset higher pricing (1.3 pp). Pricing was higher in each segment. Volume/mix in North America and International Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable.

Net sales decreased 0.3% to $12.3 billion for the six months ended June 27, 2026 compared to $12.4 billion for the six months ended June 28, 2025, including the favorable impacts of foreign currency (1.2 pp) and unfavorable acquisitions and divestitures (0.6 pp). Organic Net Sales decreased 0.9% to $12.1 billion for the six months ended June 27, 2026 compared to $12.2 billion for the six months ended June 28, 2025, primarily due to the unfavorable volume/mix (1.9 pp), which more than offset higher pricing (1.0 pp). Pricing was higher in each segment. Volume/mix in North America and International Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable.

Net Income/(Loss):

(a) Adjusted Operating Income is a non-GAAP financial measure. See the Non-GAAP Financial Measures section at the end of this item.

Operating income/(loss) decreased 19.4% to a loss of $6.4 billion for the three months ended June 27, 2026 compared to a loss of $8.0 billion for the three months ended June 28, 2025, primarily due to non-cash impairment losses that were $1.9 billion lower in the current year period. In addition to the impact of these non-cash impairment losses, operating income/(loss) decreased by $371 million driven by unfavorable changes in unrealized losses/(gains) on commodity hedges, increased advertising expenses, unfavorable volume/mix, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and higher variable compensation and related tax expense. These unfavorable impacts to operating income/(loss) were partially offset by higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

Net income/(loss) decreased 30.2% to a loss of $5.5 billion for the three months ended June 27, 2026 compared to a loss of $7.8 billion for the three months ended June 28, 2025. This decrease was due to the favorable changes in operating income/(loss) factors discussed above, lower income tax expense, and lower interest expense, partially offset by unfavorable changes in other expense/(income).

•Our effective tax rate for the three months ended June 27, 2026 was a benefit of 14.4% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 9.0%. Our effective tax rate for the three months ended June 28, 2025 was a benefit of 4.2% on pre-tax loss. The year-over-year change in the effective tax rate for the three-month period was primarily due to the impact of non-deductible goodwill impairments and a more favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.

•Interest expense/(income) was $31 million of income for the three months ended June 27, 2026 compared to $240 million of expense for the three months ended June 28, 2025. This change was primarily driven by a $265 million gain on extinguishment of debt in connection with the Tender Offer.

•Other expense/(income) was $24 million of income for the three months ended June 27, 2026 compared to $47 million of income for the three months ended June 28, 2025.

Adjusted Operating Income decreased 18.4% to $1.0 billion for the three months ended June 27, 2026 compared to $1.3 billion for the three months ended June 28, 2025, primarily due to increased advertising expenses, unfavorable volume/mix, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and higher variable compensation and related tax expenses. These unfavorable impacts more than offset higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

Operating income/(loss) decreased 22.0% to a loss of $5.3 billion for the six months ended June 27, 2026 compared to a loss of $6.8 billion for the six months ended June 28, 2025, primarily due to non-cash impairment losses that were $1.9 billion lower in the current year period. In addition to the impact of these non-cash impairment losses, operating income/(loss) decreased by $409 million driven by increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, unfavorable volume/mix, higher variable compensation and related tax expenses, and separation costs incurred in the current year. These unfavorable impacts to operating income/(loss) were partially offset by higher pricing, favorable changes in unrealized losses/(gains) on commodity hedges, and efficiency initiatives in procurement that outpaced inflationary pressures.

Net income/(loss) decreased 34.4% to a loss of $4.7 billion for the six months ended June 27, 2026 compared to a loss of $7.1 billion for the six months ended June 28, 2025. This decrease was due to the favorable changes in operating income/(loss) factors discussed above, lower income tax expense, lower interest expense, and favorable changes in other expense/(income).

•Our effective tax rate for the six months ended June 27, 2026 was a benefit of 13.1% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 10.8%. Our effective tax rate for the six months ended June 28, 2025 was a benefit of 0.6% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill and intangible asset impairment losses of 24.7%. The year-over-year change in the effective tax rate for the six month period was primarily due to the impact of non-deductible goodwill impairments, and a more favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.

•Interest expense/(income) was $205 million of expenses for the six months ended June 27, 2026 compared to $469 million of expense for the six months ended June 28, 2025. This change was primarily driven by a $265 million gain on extinguishment of debt in connection with the Tender Offer.

•Other expense/(income) was $125 million of income for the six months ended June 27, 2026 compared to $98 million of income for the six months ended June 28, 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.

Adjusted Operating Income decreased 15.2% to $2.1 billion for the six months ended June 27, 2026 compared to $2.5 billion for the six months ended June 28, 2025, primarily driven by increased advertising expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, unfavorable volume/mix, and higher variable compensation and related tax expenses. These unfavorable impacts were partially offset by higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

Diluted EPS:

Diluted EPS increased 30.3% to $(4.60) for the three months ended June 27, 2026 compared to $(6.60) for the three months ended June 28, 2025, primarily due to the net income/(loss) factors discussed above.

Adjusted EPS decreased 18.8% to $0.56 for the three months ended June 27, 2026 compared to $0.69 for the three months ended June 28, 2025. This decrease was primarily due to lower Adjusted Operating Income, which more than offset lower taxes on adjusted earnings.

Diluted EPSincreased 34.3% to $(3.93) for the six months ended June 27, 2026 compared to $(5.98) for the six months ended June 28, 2025, primarily due to the net income/(loss) factors discussed above.

Adjusted EPS decreased 13.0% to $1.14 for the six months ended June 27, 2026 compared to $1.31 for the six months ended June 28, 2025. This decrease was primarily due to lower Adjusted Operating Income, which more than offset lower taxes on adjusted earnings.