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 2.0% to $6.1 billion for the three months ended September 26, 2026 compared to $6.2 billion for the three months ended September 27, 2025, including the unfavorable impact of acquisitions and divestitures (0.6 pp), and the unfavorable impact of foreign currency (0.3 pp). Organic Net Sales decreased 1.1% to $6.1 billion for the three months ended September 26, 2026 compared to $6.2 billion for the three months ended September 27, 2025, primarily due to unfavorable volume/mix (1.1 pp). Volume/mix in North America and Europe and Pacific Developed Markets was unfavorable, while volume/mix in Emerging Markets was favorable. Pricing was lower in North America and Europe and Pacific Developed Markets, offset by higher pricing in Emerging Markets.

Net sales decreased 0.9% to $18.4 billion for the nine months ended September 26, 2026 compared to $18.6 billion for the nine months ended September 27, 2025, including the favorable impacts of foreign currency (0.7 pp) and unfavorable acquisitions and divestitures (0.7 pp). Organic Net Sales decreased 0.9% to $18.2 billion for the nine months ended September 26, 2026 compared to $18.4 billion for the nine months ended September 27, 2025, primarily due to unfavorable volume/mix (1.7 pp), which more than offset higher pricing (0.8 pp). Pricing was higher in North America and Emerging Markets, while pricing in Europe and Pacific Developed Markets was flat. Volume/mix in North America and Europe and Pacific 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 14.6% to income of $875 million for the three months ended September 26, 2026 compared to income of $1.0 billion for the three months ended September 27, 2025, primarily due to higher variable compensation and related tax expense, non-cash impairment losses that were $37 million higher in the current year period, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, unfavorable volume/mix, and increased people costs. These unfavorable impacts to operating income/(loss) were partially offset by favorable changes in unrealized losses/(gains) on commodity hedges and efficiency initiatives in procurement that outpaced inflationary pressures.

Net income/(loss) decreased 12.6% to income of $536 million for the three months ended September 26, 2026 compared to income of $613 million for the three months ended September 27, 2025. This decrease was due to the unfavorable changes in operating income/(loss) factors discussed above, partially offset by lower interest expense, lower income tax expense, and favorable changes in other expense/(income).

•Our effective tax rate for the three months ended September 26, 2026 was an expense of 23.8% on pre-tax income, which included the net unfavorable effective tax rate impact of goodwill impairment losses of 2.0%. Our effective tax rate for the three months ended September 27, 2025 was an expense of 24.0% on pre-tax income. The year-over-year change in the effective tax rate for the three-month period was primarily due to the impact of certain discrete deferred tax adjustments and a more favorable geographic mix of pre-tax income in various non-U.S. jurisdictions.

•Interest expense/(income) was $210 million of expense for the three months ended September 26, 2026 compared to $240 million of expense for the three months ended September 27, 2025. Interest expense decreased due to lower debt balances and lower interest rates, reflecting debt prepayments and tender offers executed in the second and third quarters of 2026, as well as the refinancing of maturing higher-rate debt at lower interest rates.

•Other expense/(income) was $39 million of income for the three months ended September 26, 2026 compared to $22 million of income for the three months ended September 27, 2025. This change was primarily driven by a $2 million net loss on the sale of a business recognized in 2026 compared to a $44 million net loss on the sale of a business recognized in 2025, partially offset by a $10 million unfavorable change in interest income.

Adjusted Operating Income decreased 15.2% to $939 million for the three months ended September 26, 2026 compared to $1.1 billion for the three months ended September 27, 2025, primarily due to higher variable compensation and related tax expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, unfavorable volume/mix, increased people costs, and increased research and development costs. These unfavorable impacts more than offset efficiency initiatives in procurement that outpaced inflationary pressures.

Operating income/(loss) decreased 23.3% to a loss of $4.4 billion for the nine months ended September 26, 2026 compared to a loss of $5.8 billion for the nine months ended September 27, 2025, primarily driven by 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 $522 million due to increased advertising expense, higher variable compensation and related tax expense, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, separation costs, and unfavorable volume/mix. 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 36.5% to a loss of $4.1 billion for the nine months ended September 26, 2026 compared to a loss of $6.5 billion for the nine months ended September 27, 2025. This decrease was driven by 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 nine months ended September 26, 2026 was a benefit of 11.5% on pre-tax loss, which included the net unfavorable effective tax rate impact of goodwill impairment losses of 12.7%. Our effective tax rate for the nine months ended September 27, 2025 was an expense of 2.4% on pre-tax loss, which included the net unfavorable effective tax rate impact of non-deductible goodwill impairments of 24.8%. The year-over-year change in the effective tax rate for the nine 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 $415 million of expense for the nine months ended September 26, 2026 compared to $709 million of expense for the nine months ended September 27, 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 $164 million of income for the nine months ended September 26, 2026 compared to $120 million of income for the nine months ended September 27, 2025. This change was primarily driven by a $45 million favorable change in net pension and postretirement non-service benefits related to the settlement of our U.S. Retiree Life Insurance Plan in the first quarter of 2026 and a $1 million net gain on the sale of a business recognized in 2026 compared to a $44 million net loss on the sale of a business recognized in 2025, partially offset by a loss from an interest rate hedge of $37 million.

Adjusted Operating Income decreased 15.2% to $3.0 billion for the nine months ended September 26, 2026 compared to $3.6 billion for the nine months ended September 27, 2025, primarily due to increased advertising expenses, higher variable compensation and related tax expenses, inflationary pressures in manufacturing and logistics costs that outpaced our efficiency initiatives, and unfavorable volume/mix. These unfavorable impacts were partially offset by higher pricing and efficiency initiatives in procurement that outpaced inflationary pressures.

Diluted EPS:

Diluted EPS decreased 11.5% to $0.46 for the three months ended September 26, 2026 compared to $0.52 for the three months ended September 27, 2025, primarily due to the net income/(loss) factors discussed above.

Adjusted EPS decreased 13.1% to $0.53 for the three months ended September 26, 2026 compared to $0.61 for the three months ended September 27, 2025. This decrease was primarily due to lower Adjusted Operating Income and unfavorable changes in other expense/(income), which more than offset lower interest expense and lower taxes on adjusted earnings.

Diluted EPS increased 36.6% to $(3.47) for the nine months ended September 26, 2026 compared to $(5.47) for the nine months ended September 27, 2025, primarily due to the net income/(loss) factors discussed above.

Adjusted EPS decreased 13.0% to $1.67 for the nine months ended September 26, 2026 compared to $1.92 for the nine months ended September 27, 2025. This decrease was primarily due to lower Adjusted Operating Income, which more than offset lower taxes on adjusted earnings and lower interest expense.