KHC - Earnings call transcript Q4 2024 | The Kraft Heinz Company

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Operator

Good morning, and welcome to The Kraft Heinz Company Quarter 4 2024 Earnings. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce Anne-Marie Megela. Thank you. begin. may you Anne,

Anne-Marie Megela

hello, and everyone. you, Thank

efforts we During things to These our business statements forward-looking related today, strategy, regarding uncertainties. are due based we actual make for today's plans and the see impacts. expectations, our and call, materially expectations to future, statements related results risks and differ how may and including expected investments and on and timing items may

which accompanies Please and in release, see information the today's our and as risk statements X-K risks uncertainties. more XX-Q call contained factors this most cautionary and for regarding XX-K, well these as earnings recent filings

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

will I comments. over Executive Chief for our Carlos to Abrams-Rivera Officer, opening hand now it

over you. to Carlos,

Carlos Abrams-Rivera

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

dividends, it share and for proud we cash I returned a free buybacks landscape stayed profit Heinz thank the economic the provide $X.X stockholders flow. food though We their yield year, do that in the for work tough we margins are through dedication the to the rough, but the know is industry. that building future to boosting billion this highest and our which year. focused while Even team on and we past want hard Kraft was improving

progress yet see preserving teams yield our and are are will and line the improving we that we I'm the to are confident driving the while aren't ahead XXXX, our key in shareholders. to strategy seeing financials Frankly, of year returns successes our top long-term throughout proud expecting to profitability. up Looking showing that

I have Andre joining that, me. with today, Now

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

Operator

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

Andrew Lazar

plan some Great. disciplined specifically and gross times how to mentioned for the approach despite plan of price you the be to 'XX a areas. remarks year, prepared in in Carlos, in in you some this your stated number margin expansion invest calling out price flat expectation in key the reinvestment

of what into room really investors most to sort gives an guess, if growth? I I'm from the volume the morning this this for So get is guess, that hearing sort is needed of year current what's provides share outlook confidence brands market is accounting question adequate my to back enough investment level do you of what this given key plan I they're that this wondering trends?

Carlos Abrams-Rivera

Thanks, Andrew.

of think, context all, let I guess, I of the me first into margin expansion. put

the it's you at If you bps. our margin way we XXXX, somewhere think about When to by flat bps. we're XX look seeing between XXXX, XXX increased

So while, in have had the than past. yes, an expansion certainly we is most reduced

me think And if our plan let now things. of I what me highlight just comfort, a gives and couple about

break me going growth already think From let Home, Away business. you a about XX% our pillars. in. In down new actually it a year have First, locked our if That's year-over-year of we each are this about wins Home growth head Away pillars, of start into the customer in incremental of growth XX% and From in

increase able to sure secure with where points making and be already XXXX mapped planned Markets, they're new Emerging that have XX,XXX on our teams additional we in are the we to in going those. Now are building distribution XX% that clear out

through is System the is that already of also our the leveraging XXXX. innovation And Growth what have on we that, pipeline XXXX that XX% And then America and in. in we business, frankly, proven of North did Brand rest locked Retail top are see pilots the of the in that you we

have versus new. So is pillars, going really into in XXXX us about on something that we completely things of each continuing our

in And we places, in know investing we having same question, at are are in We're brands, price, benefit in marketing. that can prioritizing the time, Growth System we and investing and sure investing we this product in Brand mentioned we certain those we're are the you your investing that making we are from insights.

in to We actually are improved efficiencies lead solutions technology-led the that that are margins. drive helping us investing

we dollars towards lastly, then into ship to continue And as go XXXX. consumer-facing we marketing more marketing

a as us the again, time, are kind at way I So is an expand coming built price, into same of of have in now in see XXXX modest benefits that can the year margins, those long we that's products XXXX but it to reaping with in specifically for marketing. way -- with in and the things investments gives we opportunity see still it that

Andre Maciel

add just I'll that, to Andrew.

to have from price. faced when will does Carlos the add we think line only not of year we come other been also that some year. lapping also comes enhancements challenges comes deploying second So since It the last top product I from of said, it and improvement, about we that last our as from half

price about than we commodity categories, an I the being efficiencies example, have inflation done think gross of the do we margin, expect higher inflation. And When are going coffee linked historically. we year another like to to

the into commodities some Emerging plan and embedded Markets. So price there is in

commodities ahead in makes most in sense. it efficiencies of combination more us investing of where to inflation, room the the price price or be in the Emerging So give some places trades Markets and

Operator

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

Peter Galbo

slightly maybe I different wanted to ask way. about and pillars the a top line the in

you organic protect are sales ACCELERATE, within balance the guidance? about each, guidance and for Andre, rates that how the 'XX, growth organic Just thinking within sales for

question, ago. balance, of of then market the market protect for those Carlos, year a to growth you to those 'XX I you each B that the a growth year part you And kind ACCELERATE, gave us us see and think how targets rates comparing for ago, gave

Andre Maciel

start. can I

building gradual think do So growth. double-digit Markets, in at we First, and to about from growth exit quarters Emerging all the of pillars I expect will the QX we improvements see

to to throughout year good flat mid-single-digit but the a the around probably And expect improvement XXXX. from we algo, we Home, and exiting the QX gradually building QX, Away target, slight From of rest that versus improvement base below so but in then do the still some

And inside have ACCELERATE. Retail the ACCELERATE from U.S. platforms in as before. in of most we we said the trends the U.S., expect comes recoveries, elongated And improvement in do

the So of are where of price. are we product lot investing investing enhancements. that's our where That's a we most

we're the improvement going to where as already the before. sharper year. should a throughout see I that's again So mentioned much Not -- see QX for reasons you in

more ACCELERATE there also QX. Easter the year, the of between the investments driving get most concentrated from the end should I see But effect the and Easter improvement the in one you being think at of is and QX U.S.

Carlos Abrams-Rivera

agree battle, what changed. Yes, strategy but wars. the strategies testing can is hasn't wins I all win And would we that I think add our

have to categories. but We drive live that platforms, also continue onto our sure year only not we of the continued later to prioritizing roles making resources a those particular and each ACCELERATE of

making they the our make kind categories renovation with that So to fact how sure we contributing sure of they're time, consumers. right making with at balanced margins, see the are same that role continues to innovation I bringing and sure great the relevant the into feel into portfolio they're about live of the

our strategies it's going again, haven't X change that. make to not us year any But and changed

the term. I our -- I long you, stand as here, long-term to think strategy this over that I'll confident that more we have algorithm feel we deliver right tell we us even for

Operator

And next Baumgartner, our Securities. question from comes John Mizuho

John Baumgartner

share I wanted the about in softness. the and ask to marketplace U.S. activities

the the on reduced unprofitable have to net more positive were bit marketing your volume getting margins, are The that of whether a are it's insufficient a you sort customed bit lifts for or to more for on a -- your drag. sense deals consumers buy elsewhere, you've just which As you or is display? that reinvesting trade, trained maybe become in counter

a I'm making had to the maybe is upfront you changes to more than just the painful with consumer? anticipated curious elasticity bit on promo these

Andre Maciel

the significant of our that observe. I used as believe base on promotions said are also size not working implication do throughout As year, lift We the that we we has volume they last a all the same think to.

much that paying volume the point should to, So the lift for product that to which help you're stronger an lot especially, base, of enhancements a up. should come attention again, too is give starting area us a

There are we are base simply changes where of instead places contemplating price a as well promotion.

other. So it in there some one sense make a the versus more is category, to might discussion

typically on deeper again, seen better, discounts. have necessarily not we higher frequencies And promotions, working

of head as reflected going that see You're year. into next to some we

Carlos Abrams-Rivera

they see the buy only that this what is I we number increasing locations I food. in of which we to consumers -- would Carlos. The add is or things the the thing continue

number So increase of per we trip, size seeing smaller but the trips. baskets an are of in

the it's that where too. So are well, just have we club for also not channels, growth in is have channels the channels right US. our dollar right us, we important in in actually price, that which distribution make , but we why different to expansion seeing as also sure

So that, to right they for shopping where at for attracting it. in the the point moment are we need price sure for the consumers that again, us, make purchases that us it's sure making consumers have are we on the combination

Operator

question with Ken from And our Goldman next comes JPMorgan.

Kenneth Goldman

from rate, I increase if bit little you're experience. quite of about number weeks. the into any I dig the multinational a companies beverage your them talked have that I We've on wanted think to really could, and in in companies don't 'XX. tax of a couple heard last to in in of increase about tax food the

in about how rate understanding anything and tax considered rate of going how had cash forth some I that's there's know tax you didn't the we that, up these your tax tax you you approach countries much. of anything should -- if think you slightly so there's or know with consider quite about different other that in if isn't as unique your the previously course, in way

So a get bit just wanted there. color of little to

little size it expected than we might -- seems what of announcement. the the have a unique bit more to Kraft Just just given

Andre Maciel

when companies strategies taxes. different comes it Look, to have I think

this can efforts a a business tax for comment December We in impact So rate to certain cash me on that's tax had a We countries to clearly. to that QX -- peers, was we it's more net very record not enacting part linked of you income reduce P&L minimum have operation. P&L in competitive tax transfer others benefit a that And what quarter, see in have. did to of did billion $X.X global the -- several the compared other in the the easy and regulation. in the

year. the XXX relevant tax have the consequence, in have a as in bps this So we a 'XX. did increase rate starting benefit will But P&L the this P&L

$X.X approximately billion which a side, ultimately P&L gain flip the impact the XX into next On cash for gains being bps, XXX will interested million rate, that per which XXX cash the in the our year one I'm at okay? translate most $XXX years, is tax about to makes

the conversion is So cash you the of why expected will 'XX. XX% to see is our into reasons, only, this one around also not be

Operator

Jordan And our from comes question Goldman Leah with next Sachs.

Leah Jordan

I ask Lunchables. wanted to about

in XQ, Just update provide a know an but you you be does on bit soft. data the a January to I that look business. had still if going it you resolved could seeing was It in seemed recovery issue in fourth quarter. like how the see supplier the

a Or the planning? we is the the it you're adjustments? So then brands? about on any in improvement Is label innovation category step-up here? how and from as of you're just And price from color competition private think in smaller just seeing more it more should leading

Carlos Abrams-Rivera

question. the for you Thank

that lingers still First, we is faced I in say ingredient through QX that issue the would QX. supplier

in terms will better will exit We in of that service. -- have we location QX a much

go So we again, see improve in see you that will that, data But I we that quarter, through the January. still significantly. think the as as

has be that in great our for can I'll a us of terms been to business we what growth invest do is the Now of source overall how continue say the category, believe in focus fact that at the looking looking the consumers. points our as System team in at And solve can have been I'm pain that Growth Brand actually for a different the company. of places proud using we

go and marketing continue and better better in of we So innovation half first different product ingredients with bring as you'll that Lunchables business. is our improved rest the the a much us to quality, through to see

that there's right is what as the of of So I think be, see going of effect but you that think how to sign don't a see you'll lingering now, QX. that a year still

Andre Maciel

average particular that are for a down as we the whole. these example, in than declining at more are X SKUs of If sellout supplier for linked Lunchables And to January, months. the last that that December upstream lot are quite twice and you issue Lunchables, look sellout in dragging the rate there are a mentioned the those few

that of February onwards. do from happen gradual to into February. to expect service month the and during we're point a We think issue recovery We going on the be that see fully will continue to the sellout resolved then

Operator

next comes Citi. question Palmer And our with from Tom

Thomas Palmer

to follow-up, a but bit just this growth as is year a ask on, wanted organic and I on little the progresses. inflection of sales the

the Easter I think from with the prepared downtime year. maybe lapping like remarks year plant second sounds a the the some the throughout and timing benefits the has ago. comment was improvement in It unusual also quarter sequential then shift

bigger kind quarter this inflection that? if are And the looking we are that just so, of kind inflection? trends, overcome an to key of in to So underlying sales of third what drivers starting understand, the trying for

Andre Maciel

Thanks for question. the

the So had temporary closure see quarter, But to we bps closure start that from quarter. because Lunchables report the this, that second relevant QX. also improvement in early in -- the yes, we was a in lap to lap should April. about start We shift factory you the trends. only issued But of on XXX

enhancements, So launch alone that, the improvement trends, relevant start one into things we price being as as product will things will Easter some pronounced we a and those these fact more to continue head of alone Lunchables have the in as plus beyond before, X them. mentioned and we investments X --

Operator

question our Lavery Michael from Sandler. And next Piper comes with

Michael Lavery

a the advertising spending. to promotional to similar wanted opposed as ask but question I Andrew's, with to

for more. the advertising You is excluding but even pointed out peers, does that or the X.X% market X% and level, level averages that, closer include -- research, to

at up, that figure right consumer your but does and enough? as level, dynamics And well? the need to some just competitive it's marketing not to know be come there spending Is I with is upside

Carlos Abrams-Rivera

I guess are not will question, -- Look, and countries all all the I start you equal. for saying brands in thank by created

of past of one marketing it kind and done means that that the things successful. countries have is think based the of also in see sure on I our be we years making analyses of in right different some in So is different to what have you that we that the categories we're and the needs levels

we is designated and we you especially protect The categories that to should thing second that also balance. ACCELERATE, know earlier, talked about have

that marketing dollars a making going follow to we to is of Our forward. invest are continue as that. those bigger we sure That part believe have us businesses the tailwind strategy in we go of

again, by different spending level of of type different So strategy. a

our we in And I years dollar say making has X last doing the been the of focus return is thing the one that things: sure of last would grow first, invest we X over that every marketing.

nonworking to So do that allow into more have us from to shift working. dollar tools analytical that. to continue we second, we the And

places you'll actually in as from, shifting So same see so may will spending, we that stay dollars, how shift are I actually those the of more as a that nonworking though at terms levels in of we consumers see there's away of terms overall can of much think efficient go marketing even be we brands. with the to beneficial into us being dramatic XXXX, dollars again,

Andre Maciel

now on be that returns to in Growth lot we are the before said gradually for benefits, Carlos' as quite opportunity X% is to the complement, we one the are going others, efficiency we're of light a to better market do a among we get have just around shedding of times, investments. believe our there. And to levels point, But of System deploying few the Brand and us

places to that from levers million to within be marketing, a in So we media you nonworking coming than brands. redeploy release quite going or which media $XX That's return, investment. is like million a media, about is to across see 'XX media certain there of And are efforts $XX marketing XX% more lot a dollars. overall media also provide it our higher more brand the increase, lot,

as the lot though which P&L you'll will be is on marketing more pressure, a basis, even percentage of see a year-over-year revenue So flat a important.

Operator

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

Christopher Carey

I wanted question. picture I bigger to ask, a guess,

categories in you I helpful. that there certainly, had issues of one things Not in with with that categories are have which line. some compete specific less will that think the more actually you in is struggle And are categories the those those running and less personally rates. more I be in line is growth just which And amazing, your you'll be but or historical underperforming lapping or business and compete.

it I potentially questions some of of bit broader needed of think a there's and the investments organic in what's coming these that's are sales from And does like underway. pricing feel a But acceleration dynamic around where growth.

you to some driving if execution, what underperformance is think is suppose, could getting guess seeing the whether affordability. I that's rethink a sitting a really I'm I of categories incremental that's is whether a And to take? advertising, the few in broader diagnose say action what level, we're on we're at, of you what this Is it here execution. and incremental not pickup, correct months pricing, relative

realize topic. or observations I'd thoughts this love question, I your that's a on So but big

Carlos Abrams-Rivera

things in I way Appreciate let question. perspective see bit in just of by me the guess, I it. a start putting terms the little

over about over Our portfolio XX brands is countries. in XXX

Retail and challenges, in If today brands they only the about you see concentrating think are U.S. business. in where our X we

number in large improvements a brands subset are make again, investments and bit a countries of are that our top to have we focused of there in the in participate. And line that, products we that in so on we it being particular for pricing to those us areas sure actually helps a drive quite order

doing we're of manage through don't we we're time, in we margins gross so go margins. our being also that, same the making conscious backwards that At sure our

the terms investment proven for point to think And making, easy that already. I it's the actually we're in to have just of things that us we

points dollar came to taste, give . win an of sales quarter. me becoming item. innovating, actually And product on in single-cell X convenient expanding Capri in bringing example us sure a already packaging, we've make bottles, we the into top seen the you multi-serve we're is improved that multi-serve quartile channel. Sun time, Let bringing the product renovating how to about at same We've in fourth actually the consumer, And new club

for is a to see in which that we it as experience us, of go to brands critical Brand we forward. we continuing have are already So System Growth that we order kind see applied blueprint results have to the our in

of know like order the it's our Brand through it's I Retail it's brands, can growth. again, which specific, and a to line the proven U.S. seem few places top So But are methodology leveraging we developed drive System that lot. Growth kind a now have we a sometimes attacking in it that for us, it's in in

Andre Maciel

The not will is is, there X super add a like look, bullet. I not answer, other thing there's

different categories in the you the approach given different think lot. dynamics, that I play differs a

which others. products or places increase and few are about to So that a continuing are price most, there like are gaps And the to There it's places, see Sun, Capri is in to there are to established. the ensure Lunchables in And product superiority. we invest invest where where that's the we maintain where, going places affordability. investments yes, are that's price the

that specific of about next to CAGNY, that a seeking good what lot given across see I answers presentation is will in you think platforms. there to the because you're themes there talking that we're week our be So in going growth, for time path for different are

detail there. I you're more think over what you're see going asking in So to

Operator

Alexia And Bernstein. question Howard our with comes last from

Alexia Howard

topic? seen lean Okay. to Can in loss other rising of North the into I GLP-X weight on the already hit uptake GLP-X protein-focused companies injectable America We've drugs. plans announcing these

impact Kraft patients over to there opportunities them? of these you are any But Heinz needs is of first And time? from do what all, meet unmet believe the seeing

Carlos Abrams-Rivera

we in Thank me question. not the your the you, seen business. any Alexia. impact have start part meaningful guess, And from with GLP-X let no, I last of

consumers for hydration GLP-Xs, we alternative. protein do know use Now what looking who they're do that and more more typically

Oscar choices portfolio is So here at consumer. we're every and actually continue And provide beans, deliver and PX, our in Heinz sure whether Mayer, in protein that way. we the accessible like quesadillas that in we to sure Kraft seeing making Heinz, amount that those products Delimex Lunchables, taste our for of consumer highlight even we're for that can making and and affordable

same portfolio we the sure also to importance elevating product us at the has that of protein. that drive any we're of then are And time, the making continuing

that sure elevate fact people that the platform this it us for. elevation what protein that we company we sure allows looking using that a So can have make at it matter to they're taste make product taste our delivers great no actually and within are home,

this every process So we as Alexia. lifestyle. I for we for Thank see emphasize a think that us us, you'll provide continue choices in to forward important consumer it's and because, go you, every

Anne-Marie Megela

questions. Thanks, questions CAGNY all everyone, And to you, you your seeing for We today. forward look week. everyone, for at thank next your

Carlos Abrams-Rivera

next week. you. you Thank See

Operator

conclude you. This We for your Thank participation. today's thank you teleconference. does

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The Kraft Heinz Company (KHC) 12 Feb 252024 Q4 Earnings call transcript