Kraft Heinz Co (NASDAQ:KHC) Annual Deutsche Bank Global Consumer Conference Call June 7, 2023 8:45 AM ET Company Participants Andre Maciel - EVP & Global CFO Rafael de Oliveira - EVP & Zone President, International Markets Carlos Abrams-Rivera - EVP & President, North America Conference Call Participants Steve Powers - Deutsche Bank Steve Powers All right, everybody. Welcome back. Thank you. And thanks, especially Kraft Heinz, for returning to the conference. We've got a full stage here today. So I want to ...

Summary of Kraft Heinz Company Conference Call Company Overview - **Company**: The Kraft Heinz Company (NASDAQ: KHC) - **Event**: Bernstein's 39th Annual Strategic Decisions Conference 2023 - **Date**: June 1, 2023 - **Participants**: Miguel Patricio (CEO), Alexia Howard (Bernstein) Key Points Company Resilience and Transformation - Kraft Heinz was in a challenging position prior to Miguel Patricio's leadership, but has shown resilience during crises such as the pandemic and inflation [2][3] - The company has implemented AGILE@SCALE initiatives to enhance responsiveness to market dynamics and collaborate with external partners like NotCo and Microsoft [2] Growth Strategy - The company aims for organic growth, shifting from a previous focus on inorganic growth, emphasizing marketing and innovation [5][6] - Kraft Heinz has set a target to generate $2 billion in incremental net sales from innovation over the next five years [8] - The growth strategy includes focusing on Emerging Markets, Foodservice, and specific growth platforms in the U.S. such as Taste Elevation and Convenience Meals [15][16] Financial Performance - In the first quarter, Kraft Heinz achieved a 120 basis points improvement in margins and reported strong growth in Foodservice (30%) and Emerging Markets (23%) [4][15] - The company expects to improve gross margins by 125 to 175 basis points this year, driven by better pricing, product mix, and cost reductions [39] Organizational Changes - Significant cultural changes have been made to prioritize organic growth, marketing, and R&D, with a focus on consumer needs [6][7] - Employee engagement has improved dramatically, with only 7% of employees now unwilling to recommend the company, down from 40% four years ago [10] - The company has centralized revenue management and created 32 multifunctional pods to address high-priority projects [22][24] Innovation and R&D - Kraft Heinz is focusing on disciplined innovation, avoiding the pitfalls of launching numerous unsuccessful products [28][30] - The company has adopted a more strategic approach to R&D, emphasizing incremental innovation and testing products in smaller markets before wider launches [30] Capital Allocation and Divestments - Dividends remain a top priority, alongside maintaining investment-grade status and increasing capital expenditures for innovation and automation [32][33] - The company has divested non-core assets and plans to continue reshaping its portfolio to align with evolving consumer preferences [36][37] ESG Initiatives - Kraft Heinz is committed to becoming carbon neutral by 2050 and aims to use only recyclable or compostable packaging by 2025 [47][48] - The company is actively working on reducing sugar and salt in its products, achieving a 40% reduction in sugar content in Capri Sun [49][50] Supply Chain and Operational Improvements - Service levels have improved significantly, with mid-90s service levels reported in Q1 [52] - Challenges remain in sourcing certain ingredients, such as potatoes, but overall supply chain issues are normalizing [52] Future Outlook - The company anticipates significant growth from its focus on Emerging Markets and Foodservice, projecting a transformative trajectory over the next decade [64][65] - Internal transformations, including improved collaboration and innovation culture, are expected to yield substantial long-term benefits [65] Additional Insights - The company is leveraging artificial intelligence in revenue management to optimize promotional strategies and improve ROI [42][25] - Kraft Heinz is exploring new product innovations, including customizable sauce machines for foodservice, indicating a commitment to enhancing customer experience [66][67]

The Kraft Heinz Company (KHC) Q1 2023 Earnings Conference Call May 3, 2023 9:00 AM ET Anne-Marie Megela - Head of Global Investor Relations Miguel Patricio - Chief Executive Officer Andre Maciel - Executive Vice President and Global Chief Financial Officer Carlos Abrams-Rivera - Executive Vice President and President, North America Zone Rafael Oliveira - International Zone President Bryan Spillane - Bank of America Andrew Lazar - Barclays Ken Goldman - JPMorgan Jason English - Goldman Sachs John Baumgartner ...

Summary of The Kraft Heinz Company 2023 CAGNY Conference Call Company Overview - **Company**: The Kraft Heinz Company (NASDAQ: KHC) - **Date**: February 21, 2023 - **Participants**: - Miguel Patricio - CEO - Carlos Abrams-Rivera - EVP and President, North America - Rafael de Oliveira - EVP and Zone President, International Markets - Andre Maciel - EVP and Global CFO Key Industry Insights - **Transformation Journey**: Kraft Heinz has been undergoing a transformation since 2019, focusing on combining scale and agility to improve efficiency and relevance in the market [3][4] - **Market Recognition**: Despite improvements in the company's PE multiple since 2019, it remains below the peer average, indicating a significant opportunity for growth [4] Core Business Strategies - **Growth Algorithm**: The company aims for a long-term adjusted EPS growth of 6% to 8% and a dividend yield of 4% [6] - **Brand Portfolio**: Kraft Heinz boasts a strong portfolio with six brands generating over $1 billion in net sales and a household penetration exceeding 97% in the U.S. [6] - **Sales Composition**: - **Grow Role**: 65% of global sales from large, growing brands with strong margins (e.g., Heinz, Philadelphia) [7] - **Energize Role**: 15% of sales from brands like Oscar Mayer, focusing on product renovation and marketing [7] - **Stabilize Role**: 20% of sales from brands like MiO and Kool-Aid, with selective investment to maintain cash flow [8] Growth Platforms - **Taste Elevation**: Largest platform with over $8 billion in net sales, expected to grow 25% over the next four years [9] - **Easy Meals**: Represents approximately 20% of the portfolio, with expected growth of 10% over the next four years [9] - **U.S. Retail**: Core business area, representing 35% of revenue, with a focus on gaining market share [13] - **Foodservice**: Expected to grow at a 7% CAGR, leveraging consumer insights for faster innovation [14] - **Emerging Markets**: Currently 10% of revenue, with a projected growth of 13% CAGR [15] Innovation and Marketing - **AGILE@SCALE**: A new approach to marketing and innovation, focusing on consumer needs and faster product development [16][18] - **Product Renovation**: Nearly all brands have been renovated to improve quality and consumer appeal, leading to significant unit growth [19][20] - **Consumer-Centric Innovations**: New product lines like Home Bake and collaborations with NotCo for plant-based products [25][26] Financial Performance and Projections - **Long-Term Financial Goals**: - Organic net sales growth of 2% to 3% expected, with 2023 guidance of 4% to 6% [52] - Adjusted EBITDA growth of 4% to 6% anticipated, with a focus on maintaining margins [53] - Free cash flow conversion expected to reach approximately 100% by 2025 [56] Capital Allocation and Efficiency - **Funding Growth**: Investments funded through revenue management and supply chain efficiencies, targeting $500 million in annual efficiencies by 2027 [48] - **Debt Management**: Commitment to maintaining a competitive dividend while managing debt to achieve a net leverage target of approximately 3x [56] Conclusion - Kraft Heinz is positioned for significant growth through its strategic focus on brand renovation, innovation, and market expansion, particularly in foodservice and emerging markets. The company aims to leverage its strong brand portfolio and operational efficiencies to enhance shareholder value and achieve long-term financial goals [57][58]

The Kraft Heinz Company (NASDAQ:KHC) Q4 2022 Earnings Conference Call February 15, 2023 9:00 AM ET Company Participants Anne-Marie Megela - Head of Global Investor Relations Miguel Patricio - Chief Executive Officer Andre Maciel - Executive Vice President and Global Chief Financial Officer Carlos Abrams-Rivera - Executive Vice President and President, North America Zone Rafael Oliveira - International Zone President Conference Call Participants Andrew Lazar - Barclays Bryan Spillane - Bank of America Chris ...

Financial Performance - The Kraft Heinz Company reported net sales of approximately $26 billion for the fiscal year 2022, marking a commitment to grow its food and beverage brands globally[14]. - Consolidated net sales for the year ended December 31, 2022, were $26.5 billion, a 1.7% increase from $26.0 billion in 2021[159]. - Organic net sales increased 9.8% to $26.2 billion in 2022, driven by higher pricing (13.2 pp) that offset unfavorable volume/mix (3.4 pp)[161]. - Net income for 2022 was $2.4 billion, a 131.3% increase compared to $1.0 billion in 2021, attributed to lower interest expense and improved operating income[164]. - Operating income rose 5.0% to $3.6 billion in 2022, supported by higher pricing and lower non-cash impairment losses[163]. - Adjusted EBITDA decreased 5.8% to $6.0 billion in 2022, impacted by higher supply chain costs and unfavorable volume/mix[166]. - Diluted EPS increased 132.9% to $1.91 in 2022, compared to $0.82 in 2021, primarily driven by the increase in net income[167]. Sales and Market Dynamics - In 2022, the five largest customers in the North America segment accounted for approximately 46% of net sales, with Walmart Inc. representing about 21% of total net sales[29]. - Net sales by platform for 2022 showed that "Taste Elevation" accounted for 31%, "Fast Fresh Meals" for 23%, and "Easy Meals Made Better" for 20% of consolidated net sales[31]. - The product category "Condiments and sauces" contributed 31% to consolidated net sales in 2022, while "Cheese and dairy" accounted for 15%[32]. - The company reported that retail consolidation may lead to fewer but larger customers, impacting pricing and promotional strategies[62]. - The company derives significant portions of its sales from key customers, and any changes in purchasing behavior could materially affect product sales and financial condition[65]. Cost and Supply Chain Challenges - The company experienced higher commodity and supply chain costs in 2022, largely due to inflationary pressures, and expects these costs to continue to rise through 2023[25]. - Inflationary pressures led to increased commodity and supply chain costs, which are expected to continue through 2023[156]. - The company utilized commodity futures, options, and swaps to hedge against fluctuations in input costs, which may cause volatility in gross profit and net income[104]. - The company has implemented foreign currency hedges to reduce exposure to changes in foreign currency exchange rates, but these strategies may not be fully effective[100]. - Commodity, energy, and other input prices are volatile, which could materially and adversely affect the company's cost of operations and financial condition[101]. Employee and Management Insights - The company has approximately 37,000 employees globally as of December 31, 2022, emphasizing a commitment to employee engagement and retention[42]. - As of December 31, 2022, 41% of employees in management positions globally identified as women, and 28% of salaried employees in the U.S. identified as people of color[50]. - The global women's accelerator program, The WE Network, won a Brandon Hall Gold Award for Best Advance in Leadership Development for Women in 2022[47]. - The company aims for 50% of global management positions to be filled by women and 30% of salaried U.S. employees to identify as people of color by 2025[46]. - The company's Total Rewards strategy includes flexible programs for compensation, healthcare, and employee recognition to promote a high-performance culture[48]. Innovation and Product Development - Kraft Heinz's research and development focuses on product innovation and sustainability to meet changing consumer needs and drive growth[28]. - The company’s growth depends on the successful development and marketing of innovative new products and line extensions[61]. - Maintaining and expanding brand image is essential for success, with investments in marketing and product innovation being crucial[68]. Regulatory and Compliance Risks - The company faces significant regulatory risks that could lead to increased compliance costs and potential legal claims[106]. - The company is currently under examination by the IRS for income taxes for the years 2018 and 2019, which may result in additional U.S. tax expense[128]. - Changes in tax laws and interpretations may adversely affect the company's business and effective tax rate[127]. - The company may face significant damages or injunctions related to third-party claims of intellectual property infringement, which could divert management's attention and resources[89]. Financial Position and Debt Management - The company has a substantial amount of indebtedness, which could adversely affect its business and financial condition if it cannot generate sufficient cash flow or refinance its debt on favorable terms[93][94]. - Long-term debt decreased from $21.8 billion at December 25, 2021, to $20.1 billion at December 31, 2022, primarily due to repayments totaling approximately $1.4 billion[202]. - The company paid dividends of $2.0 billion annually for 2020, 2021, and 2022, with a cash dividend of $0.40 per share declared for Q1 2023[205]. - The Senior Credit Facility has a revolving commitment of $4.0 billion, with the possibility to increase by up to $1.0 billion under certain conditions[199]. - The company was in compliance with all financial covenants as of December 31, 2022[201]. Global Operations and Market Exposure - Approximately 30% of the company's 2022 net sales were generated outside the United States, exposing it to global operational risks[85]. - The company derives a substantial portion of its net sales from international markets, exposing it to foreign exchange rate fluctuations that could significantly affect its results of operations[100]. - The company is exposed to risks related to political and economic instability in the countries where it operates, which could impact its operations and financial results[91]. - The company reported a net cash provided by operating activities of $2.5 billion for 2022, down from $5.4 billion in 2021, primarily due to higher cash outflows for inventories and lower adjusted EBITDA[189]. Acquisitions and Divestitures - In 2022, the company completed the acquisition of Companhia Hemmer Indústria e Comércio and Just Spices GmbH, both in the International segment[150]. - The company divested its business-to-business powdered cheese business in 2022, which is not considered a strategic shift[150].

The Kraft Heinz Company (NASDAQ:KHC) Q3 2022 Results Conference Call October 26, 2022 9:00 AM ET Company Participants Anne-Marie Megela - Head of Global Investor Relations Miguel Patricio - Chief Executive Officer Andre Maciel - Executive Vice President and Global Chief Financial Officer Carlos Abrams-Rivera - Executive Vice President and President, North America Zone Rafael Oliveira - International Zone President Conference Call Participants Andrew Lazar - Barclays Ken Goldman - JPMorgan Bryan Spillane - B ...

Summary of Kraft Heinz Company Conference Call Company Overview - **Company**: The Kraft Heinz Company (NASDAQ: KHC) - **Date**: September 7, 2022 - **Participants**: - Miguel Patricio – CEO & Chairman - Andre Maciel – Global CFO - Carlos Abrams-Rivera – EVP and President, North America Zone Key Points Company Strategy and Mindset - The company is undergoing a transformation with a focus on a growth mindset, which is seen as a significant driver of change and improvement in sales execution and market performance [2][4] - Engagement levels among employees remain high despite challenges such as resignations and burnout, indicating a positive internal culture [2][3] Financial Performance and Guidance - The company reiterated its full-year EBITDA guidance, indicating a more concentrated performance expected in Q4 due to cost-related issues [5][6] - Cost increases were noted in specific areas such as eggs, dairy, butter, and electricity, with expectations for these costs to stabilize over time [6][44] - The company has implemented incremental pricing on less than 20% of its portfolio to maintain guidance [6] Long-term Financial Algorithm - Kraft Heinz has established a long-term financial algorithm targeting: - 2% to 3% topline growth - 4% to 6% EBITDA growth - 6% to 8% EPS growth - 100% free cash flow conversion [7][8] - The algorithm is based on market share stabilization, growth in food service, and double-digit growth in emerging markets [9][10] Food Service Strategy - Food service is viewed as a strategic growth channel, with expectations for it to grow at 1.5 times the industry rate [15] - The company has seen significant growth in its food service segment, with a 22% increase in Q2 and a two-point share gain [16] - Efforts include redefining leadership, focusing on key growth areas, and improving product quality [20][17] Emerging Markets Growth - Kraft Heinz aims to expand its market presence in emerging markets, with plans to increase retail distribution points significantly [21][22] - The company has increased its points of sale in Brazil from 90,000 to 160,000, with ambitions to reach 300,000 [22] Capital Allocation and Financial Flexibility - The company is focused on maximizing total shareholder return, maintaining dividends, investing in organic growth, and considering accretive M&A opportunities [26][27] - Kraft Heinz has reduced its leverage to investment grade, allowing for greater financial flexibility [25] Promotional Strategy and Market Share - The company is cautious about returning to previous promotional strategies, focusing instead on smarter investments in promotions that drive long-term growth [29][30] - Kraft Heinz has improved its market share in key categories, with significant growth in products like Lunchables and ketchup [41] Supply Chain and Cost Management - The company is approximately 70% hedged on its costs, with expectations for stabilization in the overall cost base [44] - Challenges remain with unhedged commodities, which could lead to fluctuations in costs [44] Agile and Scale Program - Kraft Heinz has implemented an "Agile and Scale" program to enhance efficiency and responsiveness to market changes, utilizing digital solutions and AI [32][33] - The program has led to improved inventory management and reduced out-of-stock situations by 40% in collaboration with key retailers [36][37] Additional Insights - The company is leveraging partnerships with tech firms like Microsoft and Google to enhance its operational capabilities and consumer understanding [39] - The focus on a multifunctional approach aims to break down silos within the organization, fostering collaboration and innovation [38] This summary encapsulates the key insights and strategic directions discussed during the Kraft Heinz Company conference call, highlighting the company's focus on growth, financial stability, and market responsiveness.

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The Kraft Heinz Company (NASDAQ:KHC) Q2 2022 Earnings Conference Call July 27, 2022 9:00 AM ET Company Participants Anne-Marie Megela - Head of Global Investor Relations Miguel Patricio - Chief Executive Officer Andre Maciel - Executive Vice President and Global Chief Financial Officer Carlos Abrams-Rivera - Executive Vice President and President, North America Zone Rafael Oliveira - International Zone President Conference Call Participants Bryan Spillane - Bank of America Ken Goldman - JP Morgan Andrew Laz ...