KHC - Earnings call transcript Q1 2024 | The Kraft Heinz Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and thank you for standing by. Welcome to the Kraft Heinz Company first 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 Head of Kraft Heinz Investor Relations.

Anne-Marie Megela

Thank you, and hello, everyone. session first 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 make 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 the under at on with non-GAAP to GAAP. ir.kraftheinzcompany.com comparable Additionally, to certain discussion of reconciliations financial reported earnings measures, GAAP financial today's information Events News the to our measures & financial non-GAAP release in and exclude results measures. may and financial available Please accordance for our a from website we our refer

begin Chief opening we Officer, to to over hand Abrams-Rivera, the our great it Q&A it me Before gives for Carlos. comments. pleasure Please, Carlos Executive session,

Carlos Abrams-Rivera

everyone, you, Anne-Marie, and joining Well, thank thank for today. you, us

and just to sentiment clear shows consumer is low earners we consumers. in and And our first and Heinz, to remain continuing So seen our our provide bifurcation. notable gap wide, it here the I'd uptick a before Kraft at top-up high quarter, like while Q&A, begin some continues session a between perspective on in a there we've

remaining are prices challenged gas dwindling. and So the elevated high, consumers interest savings with rates lower-income

for restaurants lower-earning spend as a pullback home. value instead and looking they clear are especially in So restaurant by more prepare at stores. These consumers meals convenience there's these of households,

evolving the growth driven of a higher there the bounce contrast, in been entertainment among sales, accordingly, back are has here Heinz, their here family delicious out they're at to by they all for adventures. hospitality Kraft increasing delights Kraft and and meet or Heinz. value trusted that consumers, and of in looking set iconic we meaningful brands needs taste the earners. the whether look can and meals travel And They So home culinary an to seeking on at in new serving

tomorrow; renovate that before; two, reasons: for because brands stop. primary are to core innovative food consumer brands we our accessible this than well the available three in I to So believe everyone. to for have continue it's because best today because about faster serve solutions one, all we are us, and positioned full we're of having ever we for industry, and the and and team three, bringing

net options plant-based $X it's incremental sales such offer of world's multipacks, expanded Cheese are of expanding We we to Heinz Ketchup. & Zero innovation, meet notice has goals were more the Top our track generating Innovative billion world Most to from we are But by named importantly, Fast taken one the Companies Company. XX we and as on as in don't such value have the as consumers choices Sugar they newly brands greater our iconic Mac sacrifice, that choices whether providing NotCo our our released so the through or recently

inspirational. say to dedication. ownership, they is world consumer so are I I've and want just thank collaboration Myself, you every to of them with employees, agility around Their been the and traveling our for of obsessed. one visiting their sense

both as for far from progress, focusing serving consumers We satisfied, of we are these continue everyone. on delicious and making our proud lives

call for so me, Q&A. that, I with let's And joining the have Andre open

Operator

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

Andrew Lazar

your to recently. platform? But this you platform. higher remarks share I at call percentage in a platform It holding specifically, would gaining this of more out losing Retail, America the North to expect still like pace in guess be or of looks this KHC the modest about given though ACCELERATE share is resources allocation XX% in disproportionate

on helpful. restaurants detail softening why more And And any benefit that within trends little mentioned a your not, Are to would for U.S. of on you be the share then ACCELERATE a starting eating you guess at-home flip if that side would I see be? bit. business?

Carlos Abrams-Rivera

Yes.

question. you, the Andrew, thank for So

far give the Before a I let ACCELERATE, I'm seeing least get how just at of you business into me the performance. view so

look X year-to-date, share U.S. actually versus Easter, pace weeks, last dollar we and noise at the at of just holding the the to same remove we're volume to If improvement in you continued share the see

So for that's U.S. company. at the the macro our level in

if at platforms. continue look the to ACCELERATE you other we actually outperform the Now platforms,

we to ACCELERATE. far, share are and other share now seeing growing So just dollar break back in then me And by the and let flat X.X points. I'll X, volume go

benefits. share the At platforms, options ]. part more losing of about continue excited portfolio, we our driven we as [ our into sense pretty I'm are losing PROTECT In decline ago because are we versus to seeing year-to-date, to primarily the by versus going we the coffee. of in but of are see the year BALANCE time, We consumer same preference go continuing in a share as be bring improving the year brands the we to renovations are SNAP these actually in impact

big your that more. ACCELERATE of There's in a brands a couple I question platforms. to Now little to like would there about unpack are that

lapping the we're beginning & and go more of flavors which & as that SKUs probably gluten-free we new, Cheese the of QX, some within plethora in with about some Cheese one for you're exciting think into see actually options of a impacted from a year. are you was the categories of well to bringing Mac our innovations is: continuing what And our & headwinds to in business be second by May, as SNAP. now ACCELERATE is lot Mac half to we the to as SNAP. the Mac going more that Cheese category were business, platform, one, see on new things new from the you'll If new going start

parts includes the condiments of ACCELERATE say our side, And our at other If you I our what would expanding. that platform, is is condiments. the actually category look

So are we're and volume actually growing share. growing, we

for So category this we of growth how within drive do right number to to continue into and has us, see year behind to continue the we innovations you'll us the that on go is And the tailwinds offers go. and it. expand

our be us didn't was understand also one a us The economics business got make the bulk vinegar, platform also that ACCELERATE some particular, terms sense. may we of out more to in the in is helpful nonstrategic Heinz which business, for in that also note

So we quarter that of in also first exited the the year.

total gives thinking how company. a that you comfort hopefully, we're the ACCELERATE within So of sense our about

of the the which restaurant think quarter, actual throughout mentioned now, part that $XX impacting exiting we businesses, the about choice question seeing P&L. was traffic to in also saw second I the some that's right business. of the rest us as is year. of first is making exit of the it are an in first we The about due let From be quarter on some was in the overall similar for of Home right Away that the million And I some of I in as think prepared your just say some of the but the me low-margin and U.S., we of going some the business think impact our remarks, the to slowing the business,

the focused remarks go of Now about the the into core growth, that I also because leisure. that's those of believe it for of opening seeing importance allows also us continuing terms to to believe the an as we travel it's expand we're Away forward, terms also that seeing And we drive as QX. in but great Home area areas. improvement channels. in because where go us are distribution in of our us, we teams -- opportunities our margins we new businesses we into into And actually From as in and only are mentioned of both

Away So again, very Home. From about I good feel

or improve. matter the our hotels, the time, are at to And continue we that there Andrew. have scale for think sure of distribution for where make we the us kind the opportunity where the restaurants to shopping same a us we service at are anywhere they're trends question, I home, have for that into they make that sure Kraft to going at Thanks no that to are. Heinz, consumers will

Operator

from comes Ken Goldman question with next Our JPMorgan.

Kenneth Goldman

few You I mentioned your comments questions inflation here. in in two guess a areas.

but forgive us, that's curious cost First, year. if I were it, still think you you me maybe X% updated talking last missed if number. I'm just about the inflation time I for reasonable think a I don't

your has inflation I'm right, been if there's historically, somewhat typically hear? paid guess, than and I well. willing even but then coffee as attention a as been you'll that guess, much to Or to as you be customers prices coffee a obviously, though think you lot I little broadly, just to you more, pushback competitors do able of fairly expect category, pass-through you And cocoa, of might do And second, even curious, is need, a maybe usual? raise notable more and

Carlos Abrams-Rivera

question. the Ken, you, Thank for

then me start, it. me let on to ask just and to okay, I'll build -- Andre Let continue

we committed are certainly us, families provide options. to For affordable with continue to

about a we that if So we seriously. XXXX, about -- something year take only the pass consumers. means X% and X% pricing but to with very we And inflation, think that you end did

So everything in that are make don't intentional it. to much doing we a that way things sure consumers us we to we can all very so do for offset see

you terms of to comment what today Now you little coffee terms Andre, want the in more cost see of in if inflation a category. in

Andre Maciel

Sure.

the still like be before. in territory, said we inflation expect yes, single-digit to So we low

from in of nothing big a more shoulder primarily than we quarters. has regard, with QX what QX cheese, QX we higher seeing bit in And and that's which in inflation because inflation very that lapping comps commodities: concentrated in the particularly are in call and changed So the meat coffee, of happened are QX, level we last X year. favorable as meat, cheese,

see very meaningful been been largest impact. a to don't that beyond don't suffering in to say continue price that part the likely been able And relevant we bit worth have any in we has believe would the surgical those the around those nothing at little always mentioning. to not cocoa of is there's I is change prices other our here. And like any And has but mean that, commodity see categories the not all. so yes, portfolio pass-through case. So point it Netherlands, a be at this we categories taken reason

So...

Kenneth Goldman

right. a if I And quick follow-up. could All ask

in expected. implies coupled a guidance, with bit increase previously Just SG&A higher gross margin other than the no you changes

maybe there a planned, the the plant about that higher think accurate, should expenses are So maybe here, obviously, key just to Or assuming than huge any not culprit are a so guess, we bit in is speak. operating I shutdown that's amount? primary, areas little

Just a trying to get could. little there, we if color

Carlos Abrams-Rivera

growth step on continue is a portfolio. to in think saw strengthen investment, have that for brand that we method see the the selected is where one growth great what deploy particular, to us components is our across a in starting we the side, the in continue of improve market system up I the our you on That's which And the top to investments our us. all. thinking sufficient the level CAGNY, brand marketing initially system, the started areas to on gradually planned of approving few And thing are As and of brands. allows which of term. we to to And ensure have been incremental marketing we've marketing we long need

Operator

question with of Bank next America. from Spillane Our Bryan comes

Bryan Spillane

past, with us how shared I much -- share you detail. has just you've I One, think impacted a had just, sales. the us in I the with issue SNAP two guess, Can questions. organic

for So the do have quarter? you that first

Carlos Abrams-Rivera

in it's Look, Retail model, hundred on but about range impact. few a precise. estimate the U.S. back of talking the the We're bps XXX% negative macroeconomic we never business

Bryan Spillane

sense the exiting of us a I'm decline and can sense plant But the just Okay. much related of give And of just the also you -- how the then the how Home you like the traffic quantified the of at the weighting closure, get the is a what's the sense the Just And a slowdown. to From of Away a much us restaurants? actually question customer. deceleration. you've sorry, the trying in can give driving on impact but impact of U.S. of again, to

of there's through the -- we're slower. as there's then restaurants going second in say lot look of a also, And an expecting just worse right, some the as be into of what that? gotten earnings season, half, you underpins recovery, you're And going or that expectation I have kind the where to context that incrementally

restaurant recovery a too back half guiding when lot for So it just like down? is there are the of into these expectation looks baked maybe optimism much companies

Carlos Abrams-Rivera

build question, if Let Andre, that, want me on and Bryan. thanks start then of and kind you to for the

First are of seeing overall slowing U.S. some strategy continue even the feel I here the very good we in are Away business improve the and of From globally that the as all, outside business we Again, it's of U.S. Home. to continue restaurant about about seeing a to

If about of there's I a U.S. the we'll as the I go into this think in half, second feel that few here. the better things year, rest think even we

into that's and all, the of about this mentioned that maintenance, impact that close of us be the us unplanned we second year. to in we will behind factor to go for as QX, and First had half we going affect

also clients be are going portfolio. find you're to we where to that going number is part is the second of expanding our The

that a actually number our today, in the QX, that see things I there's of we but as distribution cannot go expand speak which of So products. into we'll we

And the then us focus are is on channels. we the drive to into higher-margin third going attractive going to part continue that

in the of that those around because actually strongly. channel, hospitality type And we play that program of I allow like where hospitality that higher-income now, the Selection consumer programs bring have we industry until in experiences better an restaurants and are us really So Heinz very our and programs seeing us within that successful we in think to leisure, places performance differentiated into particular. and again, are travel, getting seeing in channels beyond

an seeing are drive taking through So BurgerFi, first it I are work continue REMIX, machine, is we then with where to we're partnership would Heinz our and we're we're restaurant area From -- and going in how Away lastly, Heinz our is what is go now this have Home. XXXX. into expanding I say in to already, and and REMIX that innovation as debut we going to to that actually you using we the planning that that which to see mean

is of bring in type idea the channel it's products And to the going those the anything be we're bring else you we're about? channels. only but to both So could also to we're present, Andre, to the going not and continue into fact that talk innovative going

Andre Maciel

I don't think so.

Operator

with comes Mizuho Securities. Our from next Baumgartner question John

John Baumgartner

you're are in the where also Cheese theme. wanted you & to And dynamic things all? bit. private historically, categories Andrew, different, detailed consumer where among now volumes seeing still at changing new like are stress highlighted pronounced, growing a new more Carlos, you the underpenetrated you these label it's as just Mac I catch-up These has ask or by retailers for in a price America North Are volume categories consumers and merchandising declines sensitivity but been anything that's in seeing whether juices.

expecting And duration in where business plans then benefits you're material this on So reinvestment specific the I'm Retail curious share growth. any of follow-up, joint are there for year? take categories or your of for label maybe the U.S. private pockets a from

Carlos Abrams-Rivera

you thank me the question. Let for

of be tomorrow. over that to that portfolio. have, is have the our and And for today continues private And that certainly that of fortunate renovate all, think and the it label. of overall the are significant that to really, first much years, have have benefit on such had And our iconic we XXX% us, energy U.S., beloved label, terms brands haven't we for our last an a you're versus the we in what relevant and make First a almost I today, of private spent change seen we our think portfolio. to sure I renovated amount is portfolio seeing in we gaps in we of X continue

that, along on think focused I with value delivering we that And also to great the that fact are very much consumers.

that as We value, point, also think it. it's just have the for worth make that sure about price is paying to we it's about about not

in consumer. products is giving affordable driving consumer for overall focus on that our So the that's choices, value also driving way why that is quality more a and equation

but what have been and more data So they other private share branded the from players. is they're share, you're stabilized in gaining really have label seeing taking

In you and comes to ours. distribution partnership out trust when continues that peers Because Whether allows holiday of our retailers key improve this be our other have well cannot promotions That that up our that through in we our to been about our and portfolio the things a performance of way of a as the unique the overall truly as value execution JBP, leverage portfolio that building it do. the us us create of innovation in do terms with allows both fact we that summer, we of strength other store that the drive with that's a have season the think and differentiating of partnership, scale frankly, cannot total to coming to in store. this probably us that range do. in people now can help

elevate something and partnership the as our build we with continue that we it's So strengthened to continue retailers. to we key and the have we portfolio on

Operator

next comes from Steve question Powers Bank. with Our Deutsche

Stephen Robert Powers

quarter. diagnostic? a Carlos, recovery issue is your little expect just plants. kind pretty you bit then and Any on across in of you've you half? that about you that But spread From be Or more resolved unplanned to XQ? bounce back the had the you that to take And going in quick on more do back a expect there. in be to root detail recovery what cause to transpired the be the prepared It maintenance remarks, seems one the isolated Home maybe impacts of that Away talked the just to second

Carlos Abrams-Rivera

temporary for maintenance. question, our I shared. than give shutdown listen, a Thank plant in more wouldn't not that unplanned It already that you much you information -- Yes. Yes, for it's was Steve. the

factory Now very business. Home that on From focused our particular was Away much

network so factories. places And outsource continents and from much places other those are our can within we that of

a bit And -- the for why, created to QX of what Andre, give in a in it the in a range impact So little little particular, on QX? portfolio we that's our only. details the more if the of you dissonance in want see

Andre Maciel

Yes.

remarks, resumed. to gradually the expect said the towards will range of but we on company top we and XXX the production prior has how total going expect -- to really fully I the XX has quarter. Not to is yet, track back resumed be said, fully there we be production impact fast why back as to level. is which in up then So And line, can function impact be to that's prepared speed. you the do the production in growth, production within as of And bps the a bring on

Operator

question next Our Evercore with David ISI. comes Palmer from

David Palmer

Two questions.

year? your level on Is globally and industry-wide going quarter that, you you mid-single-digit improving for planned or assumption first a Foodservice growth First, What follow-up Foodservice. forward underlines remain is trends that will the from that in expected current saw that the you basically that general that there? your organic have similar

Mayer or prospects digits talk the declining were improvement just so challenges in about plans of both for general quarter. for maybe secondly, mid-single then Could in And and business, first and each maybe the beverage Oscar measured those? the you and channels

Carlos Abrams-Rivera

and can comment Maybe, the can Away Andre, From I you Oscar Mayer and maybe beverage on if business. on build Home

Andre Maciel

Yes.

our we of phasing what second entire came we growth, And digit, you happen you shipment X on said, first, the QX with we think Emerging primarily said line pillars So mid-single throughout as first, about as algo in be half, on second in Markets, we to of because said, will half. think expect the our about if Brazil. if

very QX, the we in to long-term second head long-term now at algo, So do on into Emerging Markets close our as expect and fully half the we be algo.

roughly, comes a from a that's point maybe little So more. that

U.S. Retail to algo, so expect contributor function examples. second on the a head big business, volume as All On renovation, gradually, if do for least not to algo, mentioned a improving we a approaching Carlos improvement at will half. that the into be the We improve. the as of industry continues be, innovation, few

to Home, second and From be half, we're Away don't on we like finally, to deliver contemplating. the what need our on in algo then numbers not that's And fully

dynamics international gradual Home We of we back the So what we to algo. we I plus the a again, Home mean, deliver improvement recover. Even don't to to should and the think think bit need Away the there our where expect will expect From though a on second Away the a industry fully much be risk. back on to But for we're a the we is in of the U.S. on I business be be do U.S. the side, give improvement pause. pause guidance industry algo still see the on in From on fully don't industry how half. But us

Carlos Abrams-Rivera

Oscar beverage Mayer X And portfolio and then different deeper are say, CAGNY just would go that going David. question, you presentation, to in our if on But roles the businesses company. back I those our are within

those beverage resources our actually the the brands across to is our growth. PROTECT profitability allocating drive business which business, are renovation the we to So in protect in within through order

So if see concentrate think brands there, that renovated our the we design some of or which our you of liquid actually product. just kind entire in MiO key about you

the offer. marketing We have on campaign, a the new of focused campaign brand a can wellness

debuted first new and think our years, we just exciting we're If Crystal and XX major functional number in launching innovation benefits. about Light, of you a

and because differentiated, you long term. focus how is sense and then think particular well drive us they on they positioned do are we of for we we on continue -- the know If renovating that products are think to for those

are being our how a very are manage the In to going same to BALANCE making that business side again, of at investments the right order of making commodity in Oscar thoughtful the also are which, business, things. we're our time, we protect to about the Mayer distribution. we we sure And exposed are part

have for sure work Heinz make Kraft while sure being top in it protecting making within are portfolio. the right management the thoughtful also gross line, entire we are the margins of us we So order making at the to we time, same

Andre Maciel

remarks on gross in BALANCE prepared overall, but the dollars other profit saw a quarter, BALANCE whole, I'll portfolio you add the in the as X%. The that the declined thing X% grew

continue So not it's the there. of expect to coming as investments an business. a sustain growth to core But from don't sure make starve -- that said brands continue we have and their act, to average balancing should we before, those we you we

Operator

last comes with from Our question Robert Moskow Cowen. TD

Robert Moskow

I the Andre, you this, I Foodservice had a to might think for have XX but compared already think, mathematically, the point think now to, company the guidance answered overall I basis you last implies quarter. reduction high single-digit guidance

So offset a you does kind Is than it the rest Or you of are the to portfolio anything absorbed? better -- that? anything need to expecting little just of be expected? is

think investment trends do in And that being improvement the the what said that's investment despite slide ago, or assume from there secondly, then to U.S. that your Retail, marketing can be But increased just you're shares advertising I make a maybe you seeing market -- ago. to down versus different need in versus needs year made for any year a I price XXXX? any you that Is any plan big expected? that's adjustments retail to

Carlos Abrams-Rivera

want Home, with comment trends? you from I Away start the do on to can retail Andre, and

Andre Maciel

Yes.

the remarks XXX and second on focused of you as bps XX be to shutdown should in mentioned we the that the the linkage, quarter. is clear, First, is bps said, XX prepared expansion plant

impact that into go the So we not second do as half. expect we from

We Retail, improve expect to expect we Retail fully U.S. do before, So second on as as QX. into in North America algo. back the to Markets said Emerging continue be we improve, I do to like head the half,

QX like to contribution more expect then and as again, a lot and We more and improve of second from in of a innovation half, the in lapping renovation. function, SNAP

a the at as I rest improve and sources the get different achieve we But from on And expect From we to improvement half that to gradually are industry. of then if well. Away we And need in second for expect the world Home, question mid-single on be we gradual think becomes to guidance. algo. don't the digit our And close, then do seeing do at us not, the U.S. the

all that situation I done, general the the think a we're that that there have had past with second to going plant expectation and that wins the of we is think with in half. I the together be as we business

Carlos Abrams-Rivera

to into I go which improvements year-to-date. versus Andre. weeks on volume the trends, the are we Thank seeing you, last guess, point back is the in the And retail I'll beginning, at X share

our continue step mentioned, I like begin more brands, our margins now and QX is platforms whether now, the of of rest already. we to in the be which going in is which the drive up us are us, you'll it's happening we seeing year. as we for doing So you'll continue to focus investments. see you what And PROTECT go as we renovation ACCELERATE, those to driving is And the innovation, momentum year that can through and to these the then see is on go, are control, into marketing things are

mentioned maybe growth smart about sure haven't we dollars earlier spend being spending gross are sufficient us brand margin part some a to that about places business is how because system of allows and and we're taking levels. we do the deploying we're reason those investing the Andre now that in of make that at think where to we been back

continued So you are, the for to see on fact, the question, for right right retail dollars in going you to us focus not thank against growth. Rob. And the that the drive priorities driving

Anne-Marie Megela

And thank us. earnings you, call the Thank you. for quarter joining our everyone, first concludes 'XX. This for

Operator

This concludes you. participation. conference. the your for you Thank Thank

disconnect. now may You

The Kraft Heinz Company (KHC) 1 May 242024 Q1 Earnings call transcript