KHC - Earnings call 3 2023 | The Kraft Heinz Company

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Operator

Good day, and thank you for standing by. Welcome to The Kraft Heinz Company Third Quarter Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Anne-Marie Megela, Global Investor Relations.

Anne-Marie Megela

Thank you, and hello, everyone. session third Q&A update. XXXX our to for quarter our business Welcome

release, business strategy, today's forward-looking timing the on including we which the to X-K our have we cautionary materially and items regarding actual see and regarding to During statements this XX-K, may may how due risks in and uncertainties. today's Please recent for expected contained differ risks statements these impacts. well earnings and statements call, are filings as and and efforts see investments accompanies our These expectations risk call related things plans information related most as and factors results uncertainties. expectations, and for based our more and future, today, XX-Q

which non-GAAP refer items comparable under at on with non-financial the GAAP. ir.kraftheinzcompany.com, GAAP Additionally, to certain discussion of to financial reported earnings measures financial measures today's information Events News the to our and and financial non-GAAP release in reconciliations excludes results may and measures. available Please accordance for our a from website we our refer

opening Before going we it brief hand to CEO, begin, Miguel some for to our Patricio, over I'm remarks.

Miguel Patricio

some being and And again, would for I would with Anne-Marie, all aspects for just the quarter. this great positive Kraft highlight team about another to today. thank you, Heinz, opening you thank questions, And before Thank like quarter. us just for call I my to entire like

We are pillars. our X generating profitable by accelerated growth fueled

to with leverage invest we Xx. balance hitting of to share R&D. marketing, then in of we we technology a investments in implementing. the quarter our result volume and continue the action sheet, improving continue that are net are And of significant future as target Our plans another And our approximately and trends strengthen

that, have Andre Carlos. me here today, with Well, and with I

for the And the so Q&A. let's call open

Operator

first Barclays. Our Andrew from question Instructions] [Operator comes Lazar with

Andrew Lazar

still is call morning, of branded. activity branded Kraft activity is and slide below out deck promotional below XX the 'XX this Slide you levels, In

categories, So the the one Is branded players clarification. branded food Kraft categories? you within highlight or just all figure Heinz's

guess metrics the year I promo to based Or you you And these 'XX, and would anticipate shifting? then gap levels? And return your of to the plans branded to I branded? Do Heinz you remainder do versus guess looking you levels would expect those expect see historical the on how from how metrics here? into narrow for moving Kraft

Carlos Abrams-Rivera

Carlos. It's Andrew. Thanks,

Heinz. the first compete address it What do about me in players is see that with you Let Kraft your clarification. page, those branded point about

our do in The of how forward. promotions second part think go we terms about as we

First, may I that But back other XXXX comment is not that, companies I will tell or what may levels. not I'm tell on will to you to going one, we're not do. going you

business. into at the business. to forward our as go going we We investments we time, to support -- we are as as we're And the season, that earlier, know a to the now make same make QX, there going is our holiday sure right into go we said we to seasonality have

discipline forward. the our ROI level the right with have at to investment sure to same that time, say of going with we the that same I'll make that Now of we're as level continue now go until shown we

Operator

Next question comes Bank from Peter Galbo of America. with

Peter Galbo

on in forward. But you're and want then profitability some that kind expecting and sliced of this drag both piece, around in kind to a the gross discussed meats going service just a margins. being about volume bit quarter. to there's a prepared you I maximize how giving volume improvement remarks fair of of guess how them North you're you also discussed And amount you on the particularly America, in levels aren't maybe up where discussion be, meats,

taking comments? think volume? and away a there? that, focus about be I So should Are continuing scale should that on kind we maybe of you guess profitability margin North question the mix headwinds think from as Or with the particularly the about come to we volume what share those on volume we is to back some and just recovery America

Carlos Abrams-Rivera

of First that that me see into just America. think I North in all, the context of volume -- kind put question let you

-- First, I'm a what And from QX in I continue sorry, at for if I us look then, in working you would that holistically are as that in QX continue the things the see improve we to company us. drive say to is for we -- you'll saw sequentially that what you company, now to QX first, see QX.

to investing growing our that business, Foodservice we're how opportunity terms we believe in in continue specifically We now in have in and our grow we expand forward. year-over-year CFR in mix shelf, QX, it where are and have our And continuing made we drive improve actions. volume of as of in to investment overall to the continued we U.S. our continues in in our that investments go you see innovation Emerging to then that the improvement Markets share marketing, improving

are Now we're back to which the we think focused going places the as business. about remain we and into disciplined how invest total some portfolio, there on in

business, invest going not to that how we meat you following and unprofitable business disciplined overall need are the but we're rational to be think that to on to the same in not I we referred just sure going in of time, maintain. we want where in we the drive to order at businesses right make be the but that growth, profitability sacrificing our pull, those to us consumer for

Andre Maciel

I important algorithm, in to volume long-term will that is our us. just add

price it said, X% or Carlos a volume and volumes but comes there, growth, growth. as So X%, volumes balanced are in profitable contribution from seeking our we between

maximize We deliver are profitable, translating not EPS margin, sustainable percentage to growth. trying to growth, we trying to sustainable are ultimately gross

Operator

Baumgartner Our next John with Mizuho question comes from Securities.

John Baumgartner

the question. touch back I just Carlos, wanted on to coming business again, Peter's meats to

not but outset the during is during the category share, is business, seeing energized happening price that at label an COVID, home. private it's work out point competition, You was from gaining

It like declines. reinvest ambition a looks to rebuild that though given to with the just seems as what it's maintain profit, need hard square the or to more

how do resource to nuts continue better these you willingness point you to be relative owner the say, like business. in to assets So where may another your about happened hey, the suited allocation, business that just think with what reinvesting

your curious about tough category. very willingness it in Just to given the a with stick backdrop

Carlos Abrams-Rivera

I build. why start don't you and Andre, can here,

Andre Maciel

Sure.

in to portfolio, So they parts has innovate, so point, these a then in different to The continuing improve, roles XX% to as change at roles, we again. at in enrolled for this grow is the of the brands said brand profitability can X in role some while over before, way our have which the invest be now might have me rebuild right and time. last years position different profitable to a

to that's single this line, milking of the row, making And declined but for digits now. a this of the what but mid- and on the appropriate right quarter type that doing. by in the of bottom type we're In for single brand, on -- the type the part actions to line are right by not investment portfolio the of the portfolio, QX, top digits high second high mid- grew right

play. For this that's through game we us the unsustainable way, be promotion, with not in brand only that that want to this chasing to -- an volume this

Carlos Abrams-Rivera

for within you want of improve right about think thing is meat in -- have service our add that even still level we're business business, if is continued area CFR, not but we the The I would our at cut that the only one our cold that we to where the year.

have also see You'll progression. in we At that our our to service, began see improvement same share, time, too. as the have we improved

So beginning look if to that, cold fact, gain October, month are you well seeing cuts in business share. date we to at our through as are

Andre looking the So to said. sure category be just in disciplined a we at things, very are going right doing to make we're the way as

Operator

Deutsche Our comes Powers next from question with Stephen Bank.

Stephen Robert Powers

to if confidence you shift continue have could, perspective your momentum I we just and get momentum gears, talk that momentum in wanted how go your today and announced Markets on contribute you perhaps the that forward. might about Foodservice that organizational and changes the as and internationally Emerging both can to I

you has how now think forward. about cash starting how level could, just generation wondering also you're if could I and question, on think leverage just just thinking second of if below Xx, of been build will Because target a And cash going to that that the allocating dipped cash Andre, about presume prioritization that has about forward. good, you're I going tack cash

Carlos Abrams-Rivera

allocation, don't comment you you question, capital and the Foodservice I'll on Stephen. Emerging Thank talk then Markets. about Andre, the why for

Andre Maciel

Sure.

years. our during been growth capital That allocation, remain our investment the like grade priorities fund competitive maintain have So to very means doing continue consistently unchanged. X, and past prioritizing X organic dividend, we on

the expectation, on EBITDA is of shows is think this options now assess those. were puts we X that us that looking conversion, proud good this level in improvement organization important. situation remarkable a a but to that's cash and in get this That delivering I very side, the only strong ahead and very to cash, to on are at initial year which business also organization. are And the of deploy and leverage very not we to sustainable focused performance We is able of our that

Carlos Abrams-Rivera

Thanks, Andre.

we if a are feel comment future. I that's have me foundation investments models you we about we in our And the building really in performance very and basically our us. been for on Foodservice. thinking about about Foodservice. the building Let the business X make in think to first continue optimistic positive And way driving areas, plans on working chef-led our for

powerful more We us and to forefront, machines to how bring have our Remix that also then in in versus more HEINZ margin attractive that are and channels, noncommercial much for the we for that channels innovation ourselves we into are allows limited lever better we future. product like where is whether made an opportunity traditional to. lastly, investments And seeing we separate those things the are actually competing and like been making have and us sure creates things our the technology independent

grow our look year. zone. also low in that Foodservice X%, share sure is going to expected international it's the we North -- And me in expectation if that to let America Foodservice, will XXXX. to full versus just grow for year then make we're mid level Now that and in both And to at about if probably I be out we're our too, are point about algorithm, that the last you digits gaining we above well and somewhere think double long-term is clear the

of I Now the also of if build Markets, then the and model. we because drive is Markets kind in And been switch and our distribution, Emerging is us, the go-to-market go-to-market feel confident ones. in we discipline is Emerging then data-driven done existing reason we that have investing one locations. And there great markets so press to thing our new have over to a us behind we allows that that can enter several that -- model for

implement the truly fact, first of our take remind Emerging into the would the this are full on end in distribution, In -- you, model advantage then like in in the our XX% track Markets structure infrastructure, year. things in we we business. by to And to we and build go to emerging just of of phase building of order

spending I a think saw surrounding travel from a particularly that Ramadan as I we in we gifting around about is that from have we -- we where headwind the a season some in would just and in Markets, and saw in have away comment gifting, in shifting where most we travel, Emerging Indonesia. Asia, Indonesia business QX, business shifting think add temporary

that also right believe ahead, the we question. we'll levels the we So Thanks about get that to performance a for in temporary think as But was was our business. Indonesia that year of thing. back the

Operator

Ken JPMorgan. next comes Our from Goldman question with

Kenneth Goldman

positive Just in the you presentation, may you prior your XXXX. it, slides I one. or XQ, commentary? did any that a expecting of In in volume growth mentioned your slide either you have of that missed reiterate quick quarter from were today but the

Andre Maciel

Nothing case. did. we the changes. And that's Yes,

So of volume nothing Carlos terms as changed expectations said. in

QX it And in at to did. in it versus will we QX. positive. that XXXX, improve some It sequentially and improved turn QX said, QX, volume point So in the volumes happened and would

Carlos Abrams-Rivera

market, we about XXXX the just In I are in working. And as us our it think we're now confidence plans. actions fact, everything that our right think seeing gives more in

Kenneth Goldman

just positive. total end will year, the can your sense wanted interpreted volume XXXX I expect volume positive? I to in that XXXX, clarify turn I'm XXXX, positive. it aren't some think to -- commentary do just be the quickly guess made throughout Sorry, I get curious, people be I people the at you about of net the the was year. point will overmodeling a positive about just at that was as think I that? it But comment

Andre Maciel

in said been to going not along. have XXXX I'm all what give right just saying I you What guidance is now.

Operator

Our Sandler. next question comes from Michael Lavery with Piper

Michael Lavery

know I want little the on piece. and I to a maybe but think portfolio we've come specific just about volume side, back bit in one role its how to covered to the just

You've how about in those remarks being on and mean those you cuts, that exactly approach the in points. what cold hit that rational. too, you're a talked your and your said and go together bit little specifically prepared two disciplined maybe side? investing Can you the by just investments But and reconcile unpack also right price to price you

Carlos Abrams-Rivera

solutions which are throughout that What are would in to the we're clarify, to Yes. we'll that Good the make to for holiday moments going And question. looking be we we right I sure making need is whether for for say the into consumers the the Michael. it's we or points make as to QX, responding right the sure at investments. year. go all seasons example, that Happy

However, returns to sure that the discipline be make drive of on right we doing investment. right level with the will that we

is not the to volume, for idea management to be combines for be of and efficiency we a have chasing we going for our our is like to in way full -- to be to way order to investments in what to continue effectiveness stated are we just that simply revenue the drive So looking us in volume of right that the through businesses build drive investments. profitable earlier, right us tools our we're the able marketing array going ability and using the

Michael Lavery

what discipline to that price And that of the so the on investments depth and make of is it saying but not would interpretation? want right of to be be how you're part the too a promotion of you some depth the points, would push the hard, is

Carlos Abrams-Rivera

to think order of level I seen could But think of right think for years. improving last our other architecture, one you on be think the at the in array is about you full revenue to disposal that allows about tools, that price top say. profitability few us we -- things what deteriorate have investments that the would tools our management if I of us level the of the that actually of maintain pricing, over that,

Operator

Our next English from Goldman Jason with question Sachs. comes

Jason English

are of order. you've and good company. while So Miguel, Congrats, a in I upcoming and the run in responsibility. congrats guess the congrats, for the driven improvements at promotion helm Carlos, the And

that Or the So expecting bracing do this do that an on sort in architect different? strategic as usual? many I to shifts? the place, that what topic, you expect is, been we be and of Should guess given to of been any you've be plans have starting-off going business of question is

Carlos Abrams-Rivera

ahead the for company. you the opportunity the and humble and about thank very and Jason, me words, all, of First for much I'm excited certainly kind for

been say Emerging next in for for our continue also the X would we almost of we think for a U.S. -- us we platforms as And the and our I pointed And business. as X we continue then to am drive have growth Miguel have as going Foodservice you I've have I number do growth years do Markets, expansion growth that a to about we see that is how done I is within strategically, and to forward think think the together. certainly pillars great that how out, sitting done that, a to now. committed company, certainly things I last What

our time, of order some changes have help we structure actually we're accelerate done. in that read things the also same us of some the to probably At in those making you

the And the have that clarity to For our January, me, to transitioning one and sure this clarity. role been I have listening of we going of organization is as critical of to the follow the -- aspects when time in structure has coming strategy. and been our making new

a focused us to about differently well some additional how investments. in those structure. make in worked a that thinking way life on the has we're a being us Markets us structure to of breaking of but able us the strategy think, into as zone I past more you which we of in the new some going down be little Emerging of to things now international is see allows bit to go So that which us, we our terms for bring That, of growing, so have and part in

can going are that jobs done of the So the that can of lens our for what things company, arrange been the our with. that strategy I'm scale deploy the to with technology we much strategically that's things leverage is have maybe I places marketing the and of see, very X think capabilities of the the where truly the company, the and scale you're behind we that we to -- some investing that be to the aligned certain against pillars them

Jason English

expect into in fold balance And so the a your better sheet should we to inorganic little more bit situation? solutions now that is come a

Carlos Abrams-Rivera

As add? Andre ongoing do part I we continue that said at there's Andre, our else portfolio. view continue be about you of But but we would we that will would say that's earlier, is say to our opportunities, something that announcing. how active of nothing the see today anything would thoughts look to I

Andre Maciel

No, with before. we that's I what consistent said have think

be line, of strategy, for focusing consistent, top help what on and have elevation to accretive happens, sales us M&A. to [ are pre-opting If top less I our acquisitions. we think it accelerate to we it Emerging and That's done our ] organic bolt-on on. or fully essentially Markets business acquisitions like priority is has organic and our in be

Operator

Smith Matt question comes Our from Stifel. with next

Matthew Smith

a question. ask to wanted I

this investment target year innovation. after and already have strong expect R&D the can invest the business? we level year, year. to and into across return the an used sustain investment as look should to Or with XXXX? continue of incremental stepped-up have, million? And marketing, Those investment, level a you you to been this plan as in has productivity you But very of Or increased you for Your we of appropriate this savings have do part, $XXX of the do in savings a exiting behind you're to your level we forward, look rate up target elevated believe forward? stepped been

Carlos Abrams-Rivera

our if plans? you could to speak Maybe, efficiency Andre,

Andre Maciel

Sure.

at gettables today we're generated deliver from a inefficiency go-forward X% $XXX how that before. committed was that's confidence also you we point, very should pandemic, of superior our said of, that this But of a on look, really to delivering So we achieving call, X% in million this But this organization year. And us feel is still well, in are supply which year stable had level, levels lot service benchmark on at as we about have from let's keep the more gives the talked that as COGS lot before, basis. our which we is that operating thinking, we chain the being forward and with level X% completely have good helping. a mind

able is I But of solid future, want I which really reset we There the the of line for very to the have a year the really that this an lot been think think level good the happened. company more. this advantage places investments a bottom because has took year to think very also means to a invest has still that resetting been investment reset investment great level. while of I From standpoint, growth to from level deliver we we

Anne-Marie Megela

be will the last this Operator, question.

Operator

with last TD from comes Cowen. our And Moskow question Robert

Robert Moskow

about you hear that. Sorry me Can now?

to is decelerate what-if not a an the what-if and retail question, important this answer might growth you U.S., top of U.S. in kind So of But watching and maybe questions. ask is of part -- line we're all your want kind mix. the such

the be if growth in basis? sales on you of bottom a is, mid-single-digit would we're in just would an EBITDA to of target? slower savings a we're drive necessitate EBITDA top-line Or question to philosophy next what EBITDA? X% where slower of kind still to for your kind my a your line guess the hit year, scenario a I environment to Like environment drop categories, growth X% would kind So

Andre Maciel

to critical. that believe line good Good Okay. profitable back way Look, we Rob, top from is to morning, for hear a in and sustainable you. us grow

So where if go that's to promotions in doesn't what event Because to that X, we're If are your is get to you're game way. if to that industry share play. try sustainable market will know we in implying think change aggressive going and to game trying productive an that I play. the through that's don't a asking question, start I behind volume the not we're on you

continues the to change So direction be I'll in in that don't think right just I that's to the say it's same, feel direction. in a the we our working. because strategy want situations heading And We industry. temporary make of

Operator

you. to back the turn to remarks. Thank closing over now for Carlos call like I'd any Abrams-Rivera

Carlos Abrams-Rivera

you. Thank

Kraft back you been of company I'm have CEO thank Kraft where all his And us going. And a much and And So XXXX, as take transform it this for wanted for to the he acknowledge part that and I together as over a being Miguel before me as just his company and tell tremendous has for I on of done this thank Heinz. in Heinz because Miguel joining and to personally of thrilled we're work carried today. Patricio foundation. I for forever shown and and all next to is can I a about strong he grateful company proud has more we today, put even am company you that take trust to we everything moment as he stronger all for has forward. Heinz, leave built Kraft where a support we as the here, team

Operator

participating. This call. you for you. conference Thank Thank today's concludes

may You now disconnect.

The Kraft Heinz Company (KHC) 1 Nov 232023 Q3 Earnings call transcript