01—Abstract
Summary
Summary of the 10-Q filed May 6, 2026. Cited figures are marked; the original filing is the authoritative source.
Kraft Heinz reported first-quarter 2026 results for the three months ended March 28, 2026.
Net sales rose 0.8% to $6.0 billiona, including a favorable 1.9 pp currency impact, while Organic Net Sales decreased 0.4% to $5.9 billion, as higher pricing (0.8 pp) was more than offset by unfavorable volume/mix (1.2 pp). Operating income decreased 4.3% to $1.1 billion, and Adjusted Operating Income decreased 11.8% to $1.1 billion, driven by higher advertising expenses, manufacturing and logistics inflation that outpaced efficiency initiatives, and unfavorable volume/mix. Reported diluted EPS rose 13.6% to $0.67, helped by a lower effective tax rate of 20.9% and a non-cash $45 million benefit from settling the U.S. Retiree Life Insurance Plan, while Adjusted EPS fell 6.5% to $0.58.
Cash generation improved, with operating cash flow of $1.0 billionb versus $720 million a year earlier, driven mainly by working capital changes. Cash and cash equivalents rose to $3.3 billion at March 28, 2026. Total long-term debt including the current portion was $21.1 billion.
The company expects to use proceeds from the sale of a significant portion of its available-for-sale debt securities to repay approximately $1.9 billionc of senior notes maturing in June 2026. Management also declared a $0.40 per share dividend payable June 26, 2026, and made no share repurchases in the quarter. The Board has paused work on the previously announced separation into two independent public companies, and the quarter included $56 million of separation costs.
The filing also discloses an unreserved IRS transfer pricing dispute with potential additional U.S. federal tax of roughly $200 million to $210 milliond per year for 2018 through 2022, plus penalties, and notes that Iran conflict-related inflation pressures are expected to increase through 2026. Goodwill and indefinite-lived intangible assets remain large at $22.2 billion and $34.1 billion respectively, with several reporting units and brands having limited headroom above carrying value.
02—Key points
Key Highlights
- Net sales rose 0.8% to $6,047 million; Organic Net Sales fell 0.4% to $5,919 million on unfavorable volume/mix (-1.2 pp) that offset higher pricing (+0.8 pp).
- Operating income fell 4.3% to $1,145 million; Adjusted Operating Income fell 11.8% to $1,058 million on higher advertising expenses and manufacturing and logistics cost inflation.
- Diluted EPS rose 13.6% to $0.67, while Adjusted EPS declined 6.5% to $0.58; the effective tax rate was 20.9% versus 29.9% a year earlier.
- Operating cash flow was $1,006 million versus $720 million, aided by inventory optimization, improved supplier payment terms, and collateral receipts.
- North America segment Adjusted Operating Income fell 11.6% to $974 million, while International Developed Markets rose 4.9% to $133 million and Emerging Markets fell 4.0% to $95 million.
- Separation work is paused; $56 million of separation costs were recognized in SG&A, and a $0.40 per share dividend was declared payable June 26, 2026.
- Approximately $1.9 billion of senior notes maturing in June 2026 are expected to be funded from sales of available-for-sale debt securities; a $13 million intangible impairment was recorded.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Kraft Heinz kept $0.13.
- Revenue$6.05B100.0%
- Cost of revenue−$3.83B63.3%
- Gross profit$2.22B36.7%
- Operating costs−$1.07B17.8%
- Operating income$1.15B18.9%
- Interest, other & tax−$347.0M5.7%
- Net income$798.0M13.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 6, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $6.05B$6.00B | +0.8% |
| Cost of Revenue | $3.83B$3.94B | −2.7% |
| Gross Profit | $2.22B$2.06B | +7.5% |
| SG&A Expenses | $1.07B$868.00M | +23.7% |
| Operating Income | $1.15B$1.20B | −4.3% |
| Interest Expense | $236.00M$229.00M | +3.1% |
| Net Income | $798.00M$712.00M | +12.1% |
| EPS (Basic) | $0.67$0.60 | +11.7% |
| EPS (Diluted) | $0.67$0.59 | +13.6% |
| Shares Outstanding (Basic) | 1.19B1.19B | −0.8% |
| Shares Outstanding (Diluted) | 1.19B1.20B | −0.8% |
05—Questions
Frequently Asked Questions
Why did Adjusted Operating Income decline despite higher pricing?
Management attributed the 11.8% decline to increased advertising expenses, manufacturing and logistics inflation that outpaced efficiency initiatives, and unfavorable volume/mix. These outweighed higher pricing, nonrecurring procurement cost recoveries, and a favorable 0.7 pp currency impact.
What drove the increase in reported net income and EPS?
Net income rose 11.9% to $799 million, primarily due to lower income tax expense and favorable changes in other expense/(income), including a $45 million non-cash benefit from settling the U.S. Retiree Life Insurance Plan and higher interest income. Reported diluted EPS rose to $0.67 from $0.59, though Adjusted EPS fell to $0.58.
How will the company address its upcoming debt maturities?
The company has approximately $1.9 billion of senior notes maturing in June 2026 and intends to use proceeds from the sale of a significant portion of its available-for-sale debt securities to fund repayment. It also has a $4.0 billion Senior Credit Facility, with no amounts drawn at March 28, 2026.
What is the status of the planned separation and the IRS tax dispute?
The Board paused work on the Separation into two public companies, which remains subject to customary conditions if resumed. The IRS has issued NOPAs for 2018 through 2022 proposing roughly $200 million to $210 million of additional U.S. federal tax per year, plus penalties of about $85 million for each year; the company disagrees, has recorded no reserve, and intends to contest the positions.
06—Continue