KHC - Earnings call transcript Q2 2024 | The Kraft Heinz Company

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Operator

Good day, and thank you for standing by. Welcome to The Kraft Heinz Company Second Quarter Results Conference Call. [Operator Instructions] Pleas be advised that the conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Anne-Marie Megela.

Anne-Marie Megela

Thank you, and hello, everyone. update. Head and Investor session welcome second XXXX Megela, Kraft at for Anne-Marie quarter Company, Heinz to business is of Relations Global The our This our Q&A

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

measures and release refer our today's GAAP. may earnings non-GAAP financial to at our non-GAAP ir.kraftheinzcompany.com under reported website we Please in results from News Additionally, measures excludes with and our Executive available it information to Carlos accordance over Carlos, financial certain Chief on items to or of opening the to measures. I for the refer which to now comments. non-GAAP Abrams-Rivera discussion over our GAAP financial you. hand Officer, Events, will comparable and financial reconciliations

Carlos Abrams-Rivera

been have mindset dividends see and leverage of are returned to same increased flow this we remains [ renovating for it repurchases, has in improvements. I been our $XXX X the off. We targeted to on driving to as continuing focused Heinz And last billion inflation of achieving been have and our relentless is reports team grit R&D. able that through capital since you, a and result paying together, for. year efficiencies Anne-Marie, together. to Kraft worth consumer have difficult new with paying a cash unlocking to to hold environment, functionality marketing a below share I so will million working benefits the and innovating committed far accessibility. At it it's or high-quality, months encouraged and am while with this us joining we productivity we in great journey prices how very continue stay I my improving our in that a free our time, year focus that finally, at are ownership thank Well, ratio. proud brand And And we Recognizing my and across ] on year. invest We're thank for efficiencies, approximately convenient improvements continuous innovation, X% stockholders, with greater our believe on and teams $X.X nearly you, maintain And on the and over and hard today. value, am came capital that solutions everyone, this our direct leadership all dream. company only organization. and compared providing

and stronger operating embracing we getting joining this have me. model new working, and of are that, stronger. With We and are ways only I all Andre

Q&A. the open let's So for call

Operator

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

Andrew Lazar

are saw the really understanding still right reset sort you or with a broad the more if are the of hotspots activity are I'm half better to that any spend that the portfolio percentage trying consumer. need get particular promotion actions curious aggressive talked XXXX. as second issue trade is now just below promotional dimensionalize in price there's about pricing a Carlos, you to sorts? Basically, more just you've how the the way maybe results a of to And sense for those of that, require sort the a mentioned of need some in volume adjustments. of sales and drive there I'm for selective across if for point value-seeking portion in

Carlos Abrams-Rivera

complement you I'll [ add Andre, and why start don't ].

Andre Maciel

Look, question. we our trade the as for thanks in we level. said contemplating -- Andrew, investment in a guidance, step-up we're

we this relying than We places our we last grow year. more market continue in had and levels. We what a QX, have forward, on You continue that's still to in long we we that term. rather we below have the makes saw branded that. saying doing, the think And had trade sticking been more it and sense -- investments. little versus not competitors we are to the our well price those for through and believe looking already where what that on focused been business we're and XXXX we invest to are behind our innovation, promotions I those to over in that's believe gaps that to we all want along, stick the way and is renovation where

of it close We to promotions going are sense the selected I'm does confident where to you your about term, investments the overly add where of that future. But the U.S. into those in to number seeing to we gaps an spots XX% in like the short incremental to portfolio not those give but XX% level the estimate make I price precise are question, require in gaps. some

Andrew Lazar

one. I by by Yes, I in out that, America volume that's And implied math, mean. back the do think see just North really range? anticipate second case to volume new then our and guess, really, playing the in half? you how still progress it's a specifically the inflecting quick you guidance It's in Do helpful. positive the Because half? I really even

Andre Maciel

In have improve we grow for We volume throughout to need the quarters. do don't -- midpoint our us guidance guidance. to achieve new our of don't we expect volume revenue and gradually to the

around price X% every the our [indiscernible] be -- in expected the portfolio. to total for So

declining that think you the see. and [ what's can if So sales half, X.X about the ] impacted so guidance you is second

positive the in good volumes continue so in for positive have the to expect are our The They going good. Brazil second go. emerging us will we in be to markets, in to we're a and -- some quarter. to be achieve continue it's volumes to turn They despite continue is And don't positive. Now U.S., volume improve. China, it. thing to to to year need Again, we midpoint, in headwinds the

Carlos Abrams-Rivera

I improving we much what about to say -- the on give driving second half as value focused in very very trajectory add way. that is that think are sustainable confidence also would in a me And is that much in we

in be the a So that marketing, of for cooking at value it for cannot are time way know more innovation, families value sustainable renovation home. delivering spending through with just value frankly, and sake we

where bringing in of business, home the is kind see the like and flavors, new and when new also see size bring new we're new seeing in they're we bring Cheese, to Mac of you continue price some we shapes, solutions our to to, together. we're new spending allows And ideas of at when ways part us bringing where see around So innovation that value time. at away-from-home of us business. that families with you different Bell momentum That for Delimex, can to on pack again, bringing consumers solutions families their which Mexican Taco us more things the & points. When time this particular improvements

improvements the QX. that seeing now into better are we servicing going We are

have profitability approach had that, the away-from-home disciplined continue used the a we and on but our RGM that of success spend Andre help customers in make a new said, balance make us smart tools past. And we to selective also sure that trade, in getting investments building been that we a as help on have sure make again, the we in we're the in business to in we're also in are to past, way. we've We we us the know that how committed

Andre Maciel

of part as Just [indiscernible].

we because adjusted down, this our our this but net I we sales largely kept philosophy EBIT see fully growth EPS think also our have capital you guidance dated we reflects and kept in approach growth. guidance

for. sticking are we what that's So

about We investments have do type very of very the that, are being of disciplined been continue and to thoughtful going and so. to what make long-term in we're implications we the

Operator

question Ken Goldman JPMorgan. comes Our from next with

Kenneth Goldman

of on sticking Just half. subject the back the

of provided a optimism. for number You reasons

marketing. and cited innovation, you've think I more renovation

certain of expanded the and promotions. You've course, distribution in those of about talked business targeted parts then,

Just to innovation note the have on which you about as your of meaningful to the your hitting plus a we the kind of are on think plant being and idea and with better Do absence counting work? a these important drivers, get Is outlook? the the striking about most as it of talking updated reliance maintenance really to about. consumer? I promos you're just visibility want factors headwind,

Carlos Abrams-Rivera

Ken. question, Thank for your you

a frankly, is it the a the of region think, depends little bit world. -- I on

about Andre volume. I markets, emerging think growing have if our we pointed been out, think you as

than we're of we ready. improvements we go We whole the as the much year better for a way continue June see the exited in and We second to had quarter. half into

have the year, we continue had distribution in winning is the seeing we, our second have that the on customers the build And and in we U.S. of are our those in and start we that away-from-home past. In emerging really us closure that qualify business, winning strategy plant we in service, outside U.S. half us to invested go-to-market in the case, So our that to had working. marketing continue our we've it improvements is gains drive in success the the that given and globally is QX, in both for that some in continue already and fact, to

in forward. And North driving brands, all, distribution gaps us home big to that our tools driven improvement tools terms in in the management for overall more as price being continuing we're ideas in make having well situation with gains in U.S. the progress the in thoughtful be branded our see But that we're do spend we revenue really not as our innovation, to are sure bringing is and products, creating about renovation across what on we're is the going order away are better a U.S. So America thoughtful to to intended right balance the the of -- for expect competitors. that us the market on are, we by that the and our how from expecting consumers between we this truly revenue fashion we spread the the this in in fact, management as better value we of initially go

you little about I thinking would of overall give don't to sense that how add? of we're a bit the anything you So know, Andre, want portfolio.

Andre Maciel

No, I [indiscernible] think

Operator

Steve from Deutsche Powers comes question next Bank. with Our

Stephen Robert Powers

improvement? You to different of Obviously, markets, a gaps lot you couple -- try of Brazil, work sequential demand on your and those markets. what on in in gaps overseas expectations guess dynamics could expand And specifically consumer the through China half sorry, the as softness in going what markets? U.K., price for more of and in are trade terms U.K. you kind just on those you're back color bit called in each seeing correct out maybe of any fight a China of But and Brazil. I or a the

Andre Maciel

Sure.

So in we place also lot mindful -- need last some particularly -- this we have markets. inflation, We U.K. investments, step the traction. of volume earnings, to of year there. to of have in protect and a the to market And significant the the utilization other some start a decided strong factories said to up maybe for a as protect brands be the particular suffer volume. that get that started do starting we amount year, in We developed label that about even those QX over with factories, the to U.K. probably than private more last has And in is of

year in that seen place the a we share side. ago, volume put have returns since on the and now almost happening We have

generated we're amount think the of were in direction. able -- of even efficiency mostly And with the have margin there. gross we that right I protect moving we because So to

moving expectations do the we soft. China, U.K., like So the [indiscernible] is right a have we the from mean have to to similar continues in industry I it country to about think, a heard China. I comes what others, direction. When be that

So we market share trade. gain to in continue modern

good just the that thing good a is for share. short market industry that's industry thing. we about set -- our we it gain continue forward the But growth. In to term moving Brazil, working. And we is not So the China is expectation I think

also I very about has showing consistent. world other good And similar demonstrating fatigue [indiscernible]. the feel Consumer So been been and to parts that's of been that. has

we down. gaps branded saw or price coming private some is also that players to So negligible, label

a the invest. But down. inventories So we customers adjusted situation to face ] [ where their we had

markets. that understand the retailers inventory markets, to the developed than more have emerging carry to You in tend in

level country days, a the inventories in at to days So you like see see compared you the XX XX Brazil, U.S., where days. XX XX,

should And consumer we So is that we Brazil inventories challenge the high now a year. We But the very first the a snapshot. honestly, that, right that [indiscernible] and created seen improve down. half us a interest-based in inventories the which believe now appropriate yes, us -- should we what situation. at bit for the situation are they level, a to we believe different. And tightness, expecting that allow of in that's have of little like is be are not

Operator

Baumgartner Our John next question with from Mizuho comes Securities.

John Baumgartner

I come America. to to back wanted North

product. seems Your categories, be a your based. like there gaps portfolio much your priced the very with into think highest And from to benefit in still should lot some equation is brands, other you're of the trade managing not focus on the it also price you brands. But down price

done been on. there's you the to ingredient portfolio can so feel compete non-price the do So redefine lot with think Because marketing, of feels where already work competition? factors? like you about better How you ability and nonprice how innovation, do on your a reformulations through it about

Carlos Abrams-Rivera

first Well, of have for our either in are the renovate. I brand brands the you have seeing we have pointed had seen across seen out, And where the America you've success you've great mean, Philadelphia that you those continued businesses thank series question. -- are North we portfolio of to we've already. a continued feel about. as we renovate to as you a where Yes. And all, iconic to brands from in we Jell-O, like that or growth

consumers they, for So be playbook today we brands sure renovate continue the with on continue to in and our make fact, future. to our we have how resonating a that to business,

they in we well, it's that like can the want flow business they be sure sure fit family. to different basket provide points That's we I role of they price think that that of as consumers them. cash a which Cheese, make accessible also different points it's seeing where trying to our part why have making we us entire and allow entire about manage we cash that price have come ] the able in Mac at family, consumers they to we being flow choices places are have also the We feed can consumers are enjoy the to to in be are -- size in available have can their of to so can products. And & to options aware be continue to certainly them places. new in make something the [ to

that the things number consumers which find we of increasing of now locations are actually trips the is One right in and they shop.

can to we distribution important particular So value our family. going and find in improvements looking making Oscar continue where dollar consumers whether consumers know also businesses we on focused for we that different of club, to they're also the sure our the driving which ways that that it's for product at us, we terms expanding are brands for venue. us our it's have that expand in places where and channel, But in looking the like our in have for Mayer much in try we distribution why so are with is been

us us, it's the the dollar renovating to time, that we a spaces for have sure the continue and things we So from second to playbook see forward families at access that as Those same continue and go have you'll as club there. they're from are we our to from making the they're innovating brands of going shopping all the be to store year. add grocery -- into providing in whether new to half applying and

Operator

Michael from comes with question Sandler. Piper next Lavery Our

Michael Lavery

things. was from in two away wondering Just maybe home,

unpack in the onetime plant was Obviously, rate maybe the remix what You And an of on and sense headwind? you much of the some discontinuations. foot things progressing maybe a past had what Can components decline test. there. the growth curious traffic the the launch BurgerFi give was and called that's -- how foot then kind how there X.X% you've globally. how traffic? And excluding slower update the was and the had from in closure just also, those slower that it out much you the Or a given

Carlos Abrams-Rivera

go? want then you start to Andre, I'll

Andre Maciel

Sure.

our plant bps. business So about quarter. in global is closure the impact XXX declined from the X.X% the And away-from-home

will [ bps. meaning QX, without similar in closure year, ] performance That that the the So that exits back effect. you be plant a that flat if put planned of had last at remove of the XXX we to will of roughly situation us effect. The they had quarter we end in

be will X.X%. So then growing

]. versus [ gapped long-term our algo still we're So

have Again, closure, We play industry QX than in share. in saw was remove we category that in I is QX, gaining the we QX that. in in the not from in if what think sustaining where worse the is you expecting been industry the were really we which that effects plant

the in in QX. So QX versus softer bps about U.S., XXX

performance think I the that QX. offset that happened our to So headwind side on helped in

Carlos Abrams-Rivera

then to And terms about solving and bringing we how Yes. from innovation, our for also operators away strategy think points pain comprehensive the is equipment your question of home. about but in pretty

Heinz the way I it So sure already we in making can we meaningful learning the is, a moment trial, a think in scale that so that XXXX. REMIX, really today, the it in that for that us have get we And to from way about is market. the do

and the in far, initially, a operators. most using actually see thought hearing from foods this burgers. we something them that about going as other too, how would great this be they QSRs. think well using of we further in from number XXXX. The improve be their different when We actually that interesting in how seeing would we're we are thing, as is to We're that people even so are we're that in fear deploy consumers, allows And collecting to seeing data us

focusing pipeline. for part the on into about dispensers, have the do tabs again, the comprehensive, new solve bending more Heinz and beyond And thinking how been REMIX, point bringing we of us Now we operators. also pain it's about

believe for the the So to involved example, beginning labor into much, we the the clean, continue And customers had us to that we get to of to of easier dispensers, the actually that make as now amount distribution that half in second improve sure to in for much are shipping operators QX reduce go it's our began changing dispensers, actually already much year. that and to they allows collecting of it and they we distribution expected. originally and going

you'll began in the some continue you'll globally the U.S. we to we bending the of well bring question. the learning So then continue tabs now of into that to and thanks drive ideas for see marketplace. And as as those more

Operator

Palmer next Evercore. Our from with question David comes

David Palmer

Just improve, and going -- areas the thanks in Sun areas But called in you're anticipating. How improve as half? commentary in you're and for portfolio what two about will how things but on of are are the are biggest the the ahead most, we're looking earlier Capri second and there, stabilize down, that turnaround that looking mean pricing. about out and the doesn't to Lunchables improvement You've -- which and retail brands ahead be certainly categories data? you to are the volume across situations, those are and that in those U.S. necessarily U.S. looking the the that might scanner improvement thinking which you thinking most seeing

Carlos Abrams-Rivera

down mean, the have Lunchables, from that point And the were forward. targeting making I renovating, it's I as for headwind because that the of, something And of for have and we value we our say, was and spend, go -- recovery in seen particular second the in improving of quarter. would we I we terms done would case equation And actually we the that increasing we're the What second teams think strategies the marketing that we meaningful what weeks the have the mix, plans in forward. sure there media consumers both ready, point out of is worst go called an getting job start. a includes that the to are improvement. improving a a as those building the I and amazing teams doubling saw us since then me meaningful say it quarter. Let innovation. And that steady in low XX%, point, the right innovating,

innovations we will the it not half already but of of also in that other year coming be have some of in Some we're you including included saw, that second for we they reasons, as the slides yet, competitive the well. but

second continue Monte year. to half expand For [indiscernible] partnership [ ] Del with Lunchables in us, the the we the with of in

we a driving for go renovated us Capri the have Sun as Sun twice because, in successful So really something preference, as on They from point program amount we're year. the teaming the come frankly, there with very XXXX. headwind in up tie-ins, taste was in again, to that is of with into we did of have been a consumer again, the begin we meaningful versus XXXX -- trajectory much half you focused the better it and that, when the into and our that past that we out we supporting the see to with Lunchables align into back-to-school have a of fruition doing teams have the -- in movie our that marketing been go is you quarter Heinz the original see meaningful invested Transformer movie, as second second as as done well brand. And the change Capri program

We secured back-to-school strong displays with customers. have

We we into promotional and have expanded right in invested with have events, the new club. channels

have year. [ meaningful parts momentum also now headwind some seen positive it Narita business sustained just some that both bps. ], we And the QX meaningful platform. through share almost of accelerated for we the in of ] I go that things [indiscernible] in first has XX also Mexican [ of gaining business, a growth gaining bp us. So entire is trajectory We improving which we're a forward. had the terms our mentioned in our do half have as as will places that with we working are where reaction other the continue again, have point

of that year. business to So gain go second we those the that momentum as half the continue into see we'll are

Andre Maciel

In in think the & second well. expect half. might Cheese we going Mac That lot be Mac should a on the in as There's & Cheese worth.

Carlos Abrams-Rivera

yes. Yes,

think [ like how in we are, in and two we ] have on probably in areas that to focused think gaps up which are round also platforms. right business our the I we we accelerated price which I if competitors. is we fact, I are. One do about sure items There's on, feel spoonable making brand the our that and against branded be having

investing new new on So slides, flavors renovating we in, the again, Mario Mac sure business. And we design are now in Super innovation, and saw making tie Brothers. making new from in sure we new spoonable Cheese, package in shapes, with us you you [ & ] as that have bring our flavors, a saw

to which business looking being the business know is families continue of product exciting to the idea about part bring care year us see entire value second the half Mac innovation that that they're a of and is go that we which & moments So of into improving family. their really for Cheese us we the in into able us of in the feed momentum to

David Palmer

I was it and about ask sauces, discussed you the you follow like up on. ] covered in area particular, condiments spoonables to and pass Great. I'll but it. it, and [ you And going

Anne-Marie Megela

question. for time have more one we Operator,

Operator

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

Robert Moskow

to the made you investments XX been gross the recovery because might on Carlos, Heinz progress pressure Kraft margin think Andre over under have great months and make come some concerns because one that stock on next weak. all has and volume you've I of price these of is this

talk plant maybe XQ of address more the even transitory? Could elements these maybe more So those, gross you been us XXXX? been of to what number? therefore, have that like that other kind excluding room higher closure there's some onetime confidence, -- would gross for an this that into in margin issues give are margin to expansion can the And would have and

Andre Maciel

in did I'd the And Rob, QX percentage gross Look, did quite events a both expand very but few that and impacted a margin nature. precise and despite points, we did few thanks negatively like to QX be we situations we you reluctant for in able onetime to we way have QX, that QX. a substantial are question. in that, the have give it.

As gross step-up last you the in a year, second margin half, had second in we half. into head big the

margin. to So of more we're beginning. impact -- see muted plan -- part gross since that's a the the so But year-over-year going from but

worried really about not that. we're So

As [indiscernible], in we but not at to we not 'XX, bps-ish. margin that in we levels now long-term very strong few I a a as I'm the expansion, we head you consequence fix now of do the were very continuous in efficiency now, years we But the the remember consecutive have, gross give for years think strong and we delivery chain supply seeing to going able but our X ago, have and from if coming team. XX XX, that contemplate right are algorithm, the

very that have. we We have about feel pipeline good we -- the

with to business. able X% invest should the been only year. margin were and in we expand see inflation X%, that have to this only still We're we gross -- to we pricing and efficiencies We not a remember, able had offset

expect into that future. the equation to continue work do we might So this

a So continuous more should gradual expect expansion. but we margin gross

Carlos Abrams-Rivera

Rob, has would growth fuel on is The drive idea to focused really of we been for profitable this because us the build, rewiring thing it's efficiency now was embedded the company. company, only driving changing I are across the where all the

go market procurement, improving more the with marketing on we you to how have us in return to that able in see of see see operation, being efficiencies investment. also You on but you

that we see investments profitable better we can how as actually trade AI apply how and ways into the our embed we trade have in in You tools on which marketplace. to have better on we go

of is long-term key the part the on that done. believe can So as something it be and strong is we algorithm healthy is cycle and so a for of It a that I a And strength virtuous company. company. having are is personally, a a component sustainable believers growth, we having of not margin for us gross a truly big that one believe why

Andre Maciel

operating And paying [ mentioned changes of chain, we really alignments in a we that in has we have X and margin off years before, company market done, model grow The in ] it's ago reintegrate profitably. share big think supply the want time. done commercial KPIs couple to to have I like because incentive people this that really and everyone [indiscernible], we gross which the

I think that that. also So contributes to

Anne-Marie Megela

your for you Thank everyone. in you, Kraft Heinz. Thank interest

Operator

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

You disconnect. may now

The Kraft Heinz Company (KHC) 31 Jul 242024 Q2 Earnings call transcript