The Kraft Heinz Company (KHC) Presents at 2023 CAGNY Conference (Transcript)

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$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]