KHC - Earnings call transcript Q3 2024 | 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. [Operator Instructions] I would now like to hand the conference over to your speaker today, Anne-Marie Megela, Global Head of 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 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 under at on with GAAP. and ir.kraftheinzcompany.com, Additionally, the to comparable certain discussion financial reported earnings News comments. to to it measures. I measures today's information for now the to financial will non-GAAP release Executive in excludes results Carlos and financial over may Abrams-Rivera and available Please accordance our you. of financial from website hand measures we our over Officer, Events, opening our our GAAP reconciliations Chief non-GAAP Carlos, a to for refer

Carlos Abrams-Rivera

entire seeking for Thank delicious people value. environment, We Kraft live the for In first Heinz you, increasingly continued report for to everyone, to consumers. Anne-Marie, making today. want team and joining today's our recognize are us thank you, results. I third quarter our dedication uncertain their

serving brands Our remains them commitment unwavering. iconic our to with

flow U.S. we're to cash are for approach while reinvesting long-term improvements to and disciplined in in perspective, flow. management generating emerging business. are momentum, we growth driving against executing from growing and navigate date our home and and For strong able volatility pillars, markets and our the stockholders, on away remains generating cash retail. By strong global our profitable near-term gaining addressing and a Both maintaining focus strategic areas

We have the right strategy.

long-term talent with that We I gives Andre culture. great have amazing profitable growth. And competitive and advantage It me consistent that, me. confidence have drive can we joining

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

Operator

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

Andrew Lazar

So in an part Kraft year. right, latter expected of sort pace initially, algorithm I Heinz to return the of this to Carlos, know is

comments remarks you reach an pace don't Your expect now in 'XX. prepared the suggest to algorithm during

their a yet of that sort to the sort simply elongated related year? And them having So to to of don't the year? nudge have of that expect at you first, not is execution on thought? fully hit algorithm initially has points might consumer totality just U.S. diagnose you your the clarify, comment recovery Or much or more as how the you bit is levels, than point to the of you any a this retail, adjusted in a reference during new along price then and

Carlos Abrams-Rivera

Thank you, Andrew.

us certainly, Let guess, to than the the to I'll give the been all, details think me say of of algorithm. I maybe long-term first of has see industry then start and I we in on Andre the pass impact this different it many very how year off expected.

and consumer, thought have circumstances about better that's number a we to are changed, think our algorithm. that the I seeing think we're was to in what long-term frankly when the particularly we what the be now, implication we what think versus exit of of to reality So I the going reacting U.S.,

the can question. and of and execution cover talk can Andre, just to about go your So then -- I if think, we can aspect I get you back that,

Andre Maciel

Sure.

So question, thanks for Andrew. the

elevated, going mostly said, and closer part see in in And expect throughout did down, the do to the next initially Carlos levels the continue dynamics what emerging not to in you [indiscernible] among globally in are pressure be to the long business. We though with to -- the the we we will closer we're industry strategy pointed moment as remain softer share. The algorithm. continue and very of go year. As thing markets year. continue entire year, put of deliver do levels reach has out, said not as be we in the we term. away-from-home if will confident and do And any rightly doing that we and way have retail to we're good to that we industry is to remarks, year, at the a improving expect at we position. we we to our year the on be And prepared currently, for to expect expect been than to on grow, pre-pandemic, pressure markets long-term volume higher on continue Emerging year, very expect similar, migrating concentrated this we this [indiscernible] growth continue U.S. the that exiting and anticipated, in part even not line do which next -- what

We very how disciplined want business. the grow we are being in to

growing innovation, concentrated X and categories. critical volume very prudent surgically being ] healthy higher focused way in surgical and renovation, [ not. And in as the a problem our make For is where or and marketing on it's be us, sense on to base very promotions innovation, better

of the that retail challenge. ] [ rest represents the majority see You vast of

as also longer we a earnings, prior have in take them, Some they recover. of to time said

did the where trial it have to that You've got the time [indiscernible], for do we happens. and said a generated takes example, innovation, gets repeat former as they

So to prudent. need be we

confident [indiscernible] to are is few we a trajectory what We words. are there. want doing, there but say on a longer Carlos, out

Carlos Abrams-Rivera

remarks, by out frankly, I -- we the right gaining the growth, momentum. working me in do have and I said as we if have strategy. strategic -- start pillars they're let prepared at look X And just like of our feel saying, for our Yes. you guess X

for how reality year half, the about now our gives well, the away you above quarters to of of have Markets, that the Emerging is you be a the distribution, levels fact again, growing execution drive consistent execute. and execute kind quite go in second that our able as we fact, think gaining So X storm the we're ability ability the we're to also into and area to me we COGS. from also of consecutive that in in we're the too. think momentum to X% home, of way to share, up our execute gain able to shows about began ability terms we're delivered again, I navigate way. And increasing as bit ability area. If in the volume, that that Again, about confidence best-in-class think productivity if our And

areas focus have to think confidence. U.S. give frankly, our company going are of And I that be So businesses. of number what well a things kind we made know we we that we we the that are their entire those to putting sure specific now are on diagnosing retail going address, on have we us in also turnaround making and the right

Operator

comes next Goldman with JPMorgan. from Our question Ken

Kenneth Goldman

about ask Lunchables. to wanted I

one direction. can efforts some the brand positive turn hand, you and, upcoming you're guess, a I in appreciate On the optimistic around. I your challenges of can the certainly

internal that guess did which is that take On today, an a back. brand belief to I large the fully if charge there's the can And Lunchables. doesn't related hand, pretty come happen really other you

path balance? once don't balance what certainly, charge that, not it brand the And have but can is say that's an your Lunchables ultimate it's I underlying today? want optimistic to may you're reflects it to So you tone, about to say kind I and with the you returned took guess how question through the the how of encouraged belief, was. that fair to for charge walk us that guess, here. that I to

Carlos Abrams-Rivera

Thank appreciate you, the question. Ken. I

Lunchables very is part business First a and defending our #X all, market stop. of of top is me a be let just share full priority, important a clear.

where part that, families interest Now And on also we focused same to from improvements, gradual right And publicity ] we be that the we we is are appears to is is and I expected brand negative lingering that but misleading time, kids. this at a group the are say, remember, received of would now. [ that see longer. recognize

So it for are and short-term again, -- particular the that this only a is takes in seeing supplier competitive particular and coming managing the we're are category seeing a some time, some focus we just we're building this ingredient we issue is time. At particular -- we that know quarter, trust, on. entry same into that

So more that let recover. I things importantly, what me guess -- let tell the to me we doing you are

changing this are category First in to expand of competitive penetration all, to environment. we continuing invest the

formats. is nationwide launched are we We ] nachos speak. flavors new that and expanding just spicy [ a We as introduced

of XXXX. half our and we the first We first of how campaign at value shelf. we same new entire the go we half line the year. to go -- launching a about as renovate for in are We're are the at into into we investing parents next think kids as reimagining both time, And actually

Now to beyond is are of forward just And right our that also make to brand that sure deploy brand Lunchables system, nomenclature. best essentially if process global a possible. way deliver products solve repeatable the a value model consumer points for Brand we making have this, superiority the against our to brands. future. growing have system now in pain growth superior recall, with we the for convenient we a It growth and you for pulling is at sure kind a

opportunity the brand us that we best drive for into So year. this we go are next to the developed agents using brand have system

this So this the more continue to challenge of hugely things our in now, a as of portfolio. continue a time take of but and Andre is we to be particular the brand part it's grow we've believe some important moment recognized challenged that continue said, quarter, will because right the to do being one some

Andre Maciel

add. Just to

of function that consequence and the charge. mostly allocated of regarding you're That's year So the the recovery. decline this a the facing

the at XX%. alone, do you Lunchables land because they of if cash is about just like down a spot look sell-out you when the remember, So different at flows, QX

longer So -- expect take the gradual. we -- recovery to and as we be

So that has an resulted has implication the in mostly. impairment that

Operator

with comes Bank from of America. Our Galbo next question Peter

Peter Galbo

it up relates to follow there Lunchables. to Maybe as

supplier right, on bit mean of appreciated. give in Oscar into Lunchables an there's sort I listeria as But [ And impact detail be that any of would there If category overhang the the impacting ] Oscar us outbreak you issue. know upstream that's could having from a Mayer is the probably any detail I Mayer, more in kind certainly just ingredient well? sales.

Carlos Abrams-Rivera

I actually What is to our but Lunchables, limit again, impacts would SKU to particular impact fulfill ingredient, important one an this No. of and then unable it's essentially to year. one suppliers be one And essentially was say one. of we it

back us creating us us need for opportunity the particular to into what particular ingredient, affecting QX. is this in go a short-term to mostly in of to of first kind very and and it's quarter in half this XXXX. see continue this But near future So we shortage get we as that we resolve

Peter Galbo

Got it.

Now materials pass-through just raw it were your that I that's was like quarters, challenges. I issue the thought helpful. some it that If kind one, was or could you've one there's the of you But addition on [ product the terms a in some in think second of now of the past problem about seems I of in on brand in maybe think issue. talked Andre, ], more sneak of a seeing. a of lingering competitors Spoonables

the can been you a headwinds? to quarter added Spoonables [ in of ], changed maybe expand of list again, kind bit that's the what So on

Andre Maciel

don't historical the we believe should as that sell work we That has think And the is still there but ] that linked and but that Spoonable several we mostly due do price not been I is way we they versus in said [ it's out soft where for are to everything be. levels, facing been executed -- market. to And we on gaps a certain Yes. gaps up has we have price that see months. -- front, before, anticipated, disadvantaged. now only,

Operator

next from with Palmer question Our Citi. comes Tom

Thomas Palmer

look said think I assuming wanted but you areas you're down. assume I When to some assumptions for at trade performance, your XXXX follow on category continued of better quickly of [indiscernible] portfolio, up 'XX, challenged you the

as do and innovation and versus extent address what trade a down price to you guess, this continued see I that? like So way adjustments to things packaging

Carlos Abrams-Rivera

our club value Listen, we marketing us, that for brands, superior we build to with products I have know better a for way think making the it's full that as omnichannel. sure right us formats drive continued well expanding all while products ] and driving for is have to both consumers, to continue in expand continue we in in we focus to which Dollar continue to our General on why [ innovation our distribution, channel, distribution as

So that's number one.

kind whether through will question there your might question are that us need we we need make What brand. terms base through it sense ultimately of behind right I of terms price. in moments think do the guess be does that we margin of that make what it for the what tell you to think location better the more. promote in we I which to -- anything let's of way I thinking do leads is kind that else growth us sure is, in for the to in consumer

so not need have right have sales that we intentional, so behavior brands. like that for [ that areas returned on to do that we we So investments those hunting avoid the incremental real the do ultimately promotions, [indiscernible] ]

to and positive places see fact, [ So that -- are but we for have to see where sense continue there same two ] time, makes at returns. promoted the it in more we us

which are right right gaps [indiscernible], growth we're making and also to -- attractive significant know of the future. where we kind better sure So in we in like areas driving the category. points now have Cheese Mac for base the cuts we can starting price growth the like Areas as & price lead

the the the growth and at those us makes way brand So of about on a for sure it same which is time, growth forward. marketing leveraging price base innovation, brand, again, better gaps, it focus the system, renovation, be a a to we going sense in manage to making grow that lead combination place in thoughtful

Andre Maciel

on confident the We algorithm proud efficiency we What gross side. what done long-term add continuous feel chain our will have very margin I supply is, about contemplates expansion. and

in We have sustain good us delivery the of to in ever levels years and is this continue now allow business. year, And coming there, productivity. that's in confident about We us. highest of X reinvest strong pipeline very critical from to to very this particular, to consecutive for feel productivity the the

trends it XX% of keep volume continue [indiscernible] priority people promotions on been look, sales bring and base that's that volume. you food about talking And want is said, base do, agnostic through and in to like really beverage Carlos what the base our improved is happens As on that That renovate promotions. to volume, do That's of focus their continue doing, consumers, we have portfolio do and to what innovate, great And the do. to marketing. we that's we news volume.

talk detail We're we're quarter. 'XX. priority to our next talk that is not a in there look, about lot -- So the going of so in guidance going to

picture. Nothing I we of think said a our our enough nothing to in we terms expectation expand 'XX of changes in give just strategy. prudent you about a margin flavor to how are to gross But changes seeing in way. big continue

Operator

Palmer comes question Evercore next from ISI. Our David with

David Palmer

the be improve platforms not cause think be marketing trends promotion. might in you're really fashion anything really to well of improvements content build here or what that see. you inching you can you has -- any might potentially as see as horizon, It upon sort spending protected having, there improved it retail the and U.S. pipeline which marketing significant from spending old be been talking from I'm of just just to of are shifts -- might I some that that do the want tactical -- promotion And the Really like see pretty of the could innovation -- one good activity make. profitability we could discussions up to you the sounds seeing tactics investments conversely, that level or you you've helpful. more base your spite wondering, upon other some you're is in promotional in data returns. But what that and in key doing you're saying in about open that improve, you if you're materially

Carlos Abrams-Rivera

you Let me for start question. -- thank the

kind exactly of First put business, our of U.S. have and X brands XXX Two have context, context, about now to the all, the you company. both bagged about just we ] I we X we give brands. put into dosed And in to them, pillars. you would have have think if effort over the growth we to again, momentum. gaining just say, [ and And of problem you if three are growing

us, is you've prepared innovated much hopefully, we sent on Capri we attack. for those areas those both to trends focused got already that renovated, seeing seeing improvements in and information of that in and brands. and And very how sales invested to the our we see Sun So went we in have we out, Mac Cheese, & are are as in

We are our into we And outside of even business, as we've seeing like go momentum as that the the of those places around and businesses turned significant Ore-Ida, Taco well. we seen have driving where places amount now U.S. year. Philadelphia Bell,

that and that. I we something So to understand -- to how quarter. investing for our billion, proven today, grew innovating globally is on we particular idea already continue actually is us of business Heinz focus a X% and look $X.X has that strengths been that of renovating, globally, for in play and us at model mean by and is if see evidence our brand frankly, you this us,

we of which make to So sure we for know only in marketing. of we continue investing Not replicable us will and have continue apply, have so, kind we but to level do the right the completely of that effect levels to is us to for continue [indiscernible] model see. support order drive we kind in innovation to marketing renovation want the terms of with them in R&D focus fully investments the and the the on or to then technology, right of also

to invest term drive lead in is priority. sure that has our you promotions, role. Thank brand making strengths that the to mentioned, is supports which that things locations the commitment we #X will the the long that in question. frankly, business over the actually I it but base as of for the terms It can in something So in the certain growth,

Operator

Our next TD comes Robert with from Cowen. question Moskow

Robert Moskow

guess of as lines drivers on said it's that lot as But Mac And showing lot well what I to I product & And share the of up it market like, is down & elements the I where would it of to that and of in? Mac Mac in drill a there's in like Carlos, really know for you're of innovator, making because part difficult of compete is Is being you quarter. shows is a want the entered see one working. one are the as Cheese. I really declines a the by competitors. your Cheese, struggling kind into data losses. but you products big & Cheese, more the Kraft the elements of that Kraft to premium market of investments,

Carlos Abrams-Rivera

of the of if thanks first & have see a we number Well, all, expand & for we Cups significant QX. you seen into gone remember, Mac formats. improvements of already Rob, that In a brand amount have Cheese, Like our as actually question. Cheese a Mac

now particular of well. At growing the launched attract flavors to that new gaining business Millennials. the part So and same just as time, is we momentum

So new to Brothers on of opportunity again, like of work product, Super terms us a us We're flavors. think those of into continue ships drive the Mario will the types be into and category. see bringing the idea in that to an Jalapeno to also category. for continue expect properties attractiveness product, bringing And Ranch I a to also new now

and making to those focus I'll Cheese, things of you time, we And we're of that and like are many, talk us on the continuing into can brand that built same ours, consumers, for right the a that sure to customer category. it we few. flavors we for the in are what a is the Mac are we tell a making at consumers at that formats way. What brand bring & think is the I that So sure not proud [indiscernible] One is that the that is in what do

affordable today's we we know we make can So approachable everybody solutions the families have that enjoy. sure wanted that which and provide role in we to that in

different with in, So there to live we're opening for that type that the flavors different points attract a new to formats at is of same consumers. new a price us at bringing continue role different time

progress see we're I feel year. So build Mac the again, already I very we're Cheese and about to good cups, in the go we seeing taking. into path & us next continue as on can this

Andre Maciel

that innovation, because Customers That's longer a example, it, if repeat. requires good items up. of to will, you try recovery, should you you Rob, need ramp

innovation, about in our not of good is take for we with great the they are and that. your that's examples example, we're there market, the be feel question. to that not the just we Thanks patient of have the need [indiscernible] feel doing. And [indiscernible] core specific time. changing to So something That's but we And about are one patient. But what we it. products we that been the

Anne-Marie Megela

for Operator time we question. have one more

Operator

Chris Wells Carey And Securities. with our last question comes Fargo from

Christopher Carey

Lunchables As the this think I a headwind. understand I what digest that this in call trying been I'm morning, concept the to is has think really conversation I

changed, you are whether way are We some the other. is of drivers, or have understand items And on I the bucket [indiscernible] perspective -- headwind. known that underlying to the those But when or core your ago about. see Capri on are perhaps focus months you I it how pushing rest things Sun one what to happening are bucket that if the and changed items. do and what think things the was has large appreciate to you take right? trying these forward? And if that specific I'm you of on a business, few step back relative a has think So the going have ex what feel that a the of a

items expand maybe would I on just helpful think understand the could be kind underlying to business that, of you of trajectory the If [indiscernible]

Carlos Abrams-Rivera

Sure.

like referring sounds that's it correct. U.S. mostly and retail to Yes, you're the -- business. think I

about over renovated you the is we this that products. Sun, a Capri If product summer, think the

the seeing improve. starting now are to momentum We is

that of into the new into into that are the the convenience, new seeing continue serving allows us part bending, build club, new bringing we multi a fact into brand. of single that format bottles, holistic the momentum channels, going whether to retail, are to going is We bottles that

focus it, helping to base the to typical a have And time, has part consumers the formula, seeing build long beyond time been just do our core continue that are Act the new that growing channel retail volume. actually Tampa we So of in tried that actually continues [ how same the we start for us be the ] it's brand at business.

the you in is we the back-to-school really per think longer challenging offset Lunchables, headwinds we Lunchables. recognize you of recovery Heinz. kind expected Now case us we that of of actually tell some -- it's the more to the to proved great across that I to had taking as think And this, the work that I'll be happening going have we're Kraft for about than of why and take do QX,

Now that committed change the that to it. fact are we doesn't completely

of kids if the both campaign of nationwide trust earlier, are we have new new that parents we I continue stores, kind spicy franchise. opportunity -- with of to making into already a bringing that parents an is bigger mentioned nachos, same We we're idea case, as that to as we're for at audience. we to this us that know expand In our better But our and products sure a go the this us our making new launching done. quality, build we relaunched a it half is be -- and talks in us kids, products, with the we has for to have part time, first new next -- and sure you recognized families, what renovating year, to of into job bringing

behind that sure that us more shape make So into But category. tremendous short-term is making we challenging the have in have is a it invest what you'll a QX. continue brand difficult over was supply we because overall Lunchables effect this the time, headwind a situation to ingredient see of to be this created that that

Christopher Carey

two the headwinds to materially do of excluding the business, -- about respect relative these about underlying of but things sorry, an feel another, to from here? rest have those just those changed? really it's the on business the trajectory think Or But being ask with should brands, outside just core how the brands -- we on you

Carlos Abrams-Rivera

I we superior through No. key of if our drive to to What areas. is do global to sure intended that than to away from I appreciate X question. back Again, go growth drive anyone do? is Making Thank you. else. it home, the company I what we the continue intend

momentum. We we're are doing gaining that, and

to continue drive emerging markets. We

future. the growth to And to We can gain of in us fact, act Mac a are couple really seeing whether -- the business, as through pillar. And those saw we us our us that in for are Cheese confidence we we our the that few continue already, believe business, we into we the know continue give whether beginning & go retail brands it's for drive quarter that is Capri that that quarter improvements that we those Sun already we U.S. in that is the in particular to are path right that to -- about seeing the brands can to on.

in good to system So also that deliver this our to margin. momentum can by is, the accelerate that we are, the situations is growth third continue us, great feel we actually last our a deliver very say that the that where for gross build growth into the helping we pillar is we of that would the feel about the good of underlined also businesses know I thing fact and we fuel to platforms growth productivity as by the XXXX, company. And the on in-house brand overall, we have those as address tools I leveraging that to have go overall expect

and your marketing, world for Thank level of our investing productivity. class also we're business long-term by continue We're to [ shareholders. R&D are are our thoughtful we the doing the ] in this as investing making that in you And the compromising So not delivering all and back question. of company. about for same sure great flow deliver [indiscernible] growth cash we at time, technology

Operator

would I any the over remarks. to Anne-Marie call Megela for turn to back like closing now

Anne-Marie Megela

Heinz. today. thank for much, Thank joining your and appreciate everyone, you us very Kraft in We you, interest

Operator

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

You may disconnect. now

The Kraft Heinz Company (KHC) 30 Oct 242024 Q3 Earnings call transcript