Q4 2023 Kraft Heinz Co Earnings Call

February 14, 2024

Operator: Copyright 2020, New Thinking Allowed Foundation. Good day, and thank you for standing by. Welcome to the Kraft Heinz Company fourth quarter results conference call. At this time, all participants are in a listen only mode.

Good day, and thank you for standing by and welcome to the Kraft Heinz Company fourth quarter results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session. Please press star one on your telephone.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Anne-Marie Magella, head of global investor relations. During today's call, we may make forward-looking statements regarding our expectations for the future, including items related to our business plans and expectations, strategy, efforts, and investments, and related timing and expected impact. These statements are based on how we see things today, and actual results may differ materially due to risk and uncertainties. Please see the cautionary statements and risk factors contained in today's earnings release, which accompanies this call, as well as our most recent 10-K, 10-Q, and 8-K filings for more information regarding these risks and uncertainties. Additionally, we may refer to non-GAAP financial measures, which exclude certain items for our financial results reported in accordance with GAAP.

And wait for your name to be announced to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, and Marine Megillah head of global Investor Relations.

Speaker Change: Thank you and Hello, everyone. This is Anne Marie Madela head of Investor Relations at the Kraft Heinz Company and welcome to our Q&A session, our fourth quarter 2023 business update.

Speaker Change: During today's call we may make forward looking statements regarding our expectations for the future, including items related to our business plans and expectations strategy efforts and investment and related timing and expected impacts.

Speaker Change: These statements are based on how we see things today actual results may differ materially due to risks and uncertainties.

Speaker Change: D C. Please see the cautionary statements and risk factors contained in today's earnings release.

Speaker Change: Accompanying this call as well as our most recent 10-K.

Speaker Change: 10-Q, and 8-K filings for more information regarding these risks and uncertainties.

Speaker Change: Additionally, we may refer to non-GAAP financial measures.

Speaker Change: <unk> excludes certain items for our financial results reported in accordance with GAAP.

Anne-Marie Magella: Please refer to today's earnings release and the non-GAAP information available on our website at ir.kraftheinzcompany.com under news and events for discussion of our non-GAAP financial measures and reconciliation to the comparable GAAP financial measures. Before we begin the Q&A session, it gives me great pleasure to hand the microphone over to Carlos Abrams-Rivera for opening comments and to host his first earnings update as our Chief Executive Officer.

Speaker Change: Please refer to today's earnings release, and the non-GAAP information available on our website at IR Dot Kraft Heinz company Dot Com under news and events for a discussion of our non-GAAP financial measures and reconciliation to the comparable GAAP financial measures.

Speaker Change: Before we begin the Q&A session. It gives me great pleasure to hand, it over to Carlos Abrams Rivera for opening comments and to host its first earnings update is our chief Executive Officer Carlos over to you.

Carlos Abrams-Rivera: Well, thank you, Anne-Marie. And thank you, everyone, for joining us today. You know, before opening the call for questions, I just would like to say thank you to all my colleagues here at Kraft Heinz for delivering another solid 2023 result and, at the same time, making the strategic investment for the future, and frankly, all that while navigating some persistent industry pressure. I am very enthusiastic about our next chapter here at Kraft Heinz, and in 2024, we expect to drive top-line growth, return to positive volumes, expand growth Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: Thank you Anne Marie and thank you everyone for joining us today.

Speaker Change: Opening the call for questions I, just would like to say thank you to all my colleagues here at Kraft Heinz for.

Speaker Change: For delivery.

Speaker Change: Solid in 2022, 23 results and at the same time, making the strategic investments for the future.

Speaker Change: All of that while navigating some persistent industry pressures.

Speaker Change: I am very enthusiastic about our next chapter here at Kraft Heinz in 2024, we expect to drive topline growth.

Speaker Change: Turn to positive volumes expand gross margins and operating margins and continued to reinvest in the business and an iconic brands with that have Andrew joining me today, let's open the call for Q&A.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Operator: One moment per question. Our first question comes from Andrew Lazar with Barclays. He may proceed. Great. Thanks. Good morning, everybody.

Speaker Change: Our first question comes from Andrew Lazar with Barclays. You May proceed.

Andrew Lazar: Great. Thanks, good morning, everybody.

Andrew Lazar: Morning. Good morning. Carlos, I was hoping to start out maybe organic sales in the fourth quarter were impacted, as you talked about, by trade timing and a retail inventory deload. You're suggesting that you expect the first quarter organic sales to be similar to 4Q, which implies that underlying sales maybe could be a bit worse than 4Q. I don't think you expect the retailer deload to continue. So if I have that right, what would cause the sequential slowdown?

Andrew Lazar: Good morning.

Andrew Lazar: Carlos I was I was hoping to start out maybe.

Andrew Lazar: Organic sales in the fourth quarter were impacted as we talked about by trade timing and a retail inventory deload.

Andrew Lazar: Adjusting that you expect the first quarter organic sales to be similar to <unk>.

Carlos: Which implies an underlying sales maybe it could be a bit worse than <unk> is I don't think you expect the retailer deload to continue so if I have that right I guess, what would cause the sequential slowdown.

Carlos Abrams-Rivera: Yeah, good question, Andrew. Thank you for that. You know, the math on Q4 to Q1 may be similar, but the factors driving it are very, very different. I think, Andrew, if you could give a little more color to the effects of both the North American business versus the emerging market business and how that's shaping the kind of math behind the numbers. Sure. Good morning again, Andrew.

Carlos: Inorganic sales in <unk> and how do you see that playing out moving forward.

Speaker Change: Yes, good question, Andrew and thank you for that.

Speaker Change: The math on Q4 to Q1 may be similar but the factor driving at a very very different and I think maybe Andrew if you could give a little more color as to the effect of both in North America business versus the emerging market business and how that's shaping.

Speaker Change: Math behind the numbers sure. Good morning, again, Andrew So we as Carlos said, we do expect similar numbers from Q4, but coming from different drivers. So North America, we do expect better performance, because we should not repeat both the timing and England diluted load, we think we're going to be able to healthy level. Despite.

Carlos Abrams-Rivera: So we, as Carlos said, we do expect similar numbers from Q4, but coming from different drivers. So for North America, we do expect better performance because we should not repeat both the trade timing and the inventory load. We think we're going to be at a healthy level at this point. And sellout, if anything, maybe it will be in line with slightly better, getting to Q1.

Speaker Change: And sellouts, if anything maybe it would be in line with slightly better.

Speaker Change: For Q1.

Carlos Abrams-Rivera: Now when you talk about emerging markets, we do expect a shipment phasing that will affect Q1. So we do expect, instead of growing double-digit like we have been doing consistently, emerging markets should be growing in the mid single-digit territory. You might remember that last year we had a very strong performance in Latin America. Brazil grew by 40% in Q1, so we're going to let that happen, but there's nothing wrong with the underlying sell-out trends, both in North America and emerging markets. Great, really helpful. And then, Carlos, it seems like, if I have this right, most of the pressure on the GROW platform in the fourth quarter was on easy meals. If I have that right, can you talk a bit about what caused it?

Speaker Change: When you talk about the emerging markets, we do expect a shipment phasing.

Speaker Change: That will affect Q1, so we do expect instead of growing double digits like we have been doing consistently emerging market should be growing at mid single digit territory.

Speaker Change: You might remember that last year, we had a very strong performance in Latin America, Brazil grew 40% in Q1, so we're going to lap that suite, but nothing wrong with the underlying sell out trends, both in North America and emerging markets.

Speaker Change: Great really helpful. And then and then Carlos it seems like if I heard this right most of the pressure in the grow platform in the fourth quarter was an easy meals.

Carlos: Is that right can you talk a bit about what caused that and maybe how this plays out as you move into the first quarter because it sounds like you do expect North America to get better.

Carlos: Yeah, and frankly, Andrew if I think about Q4, let me start with some of the bucket, which is we also saw the return to growth of ore Ida business driving both growth and share performance as we continue to leverage to kind of the new partnership we have with our same pluck and really being able to service the business to a full <unk>.

Carlos: Tangible now on the on the headwind side I think we saw some challenges in our Mac and cheese business.

Carlos: Frankly, it's a business that is driven disproportionately by a snap exposure so that affected some of the business in Q4. However.

Carlos: About going forward.

Carlos Abrams-Rivera: And maybe how this plays out as you move into the first quarter? Because it sounds like you do expect North America to get better. Yeah, and, and frankly, Andrew, if I think about Q4, let me start with some of the parts. You know, we also saw the return to growth of our business, driving both growth and shared performance, as we continue to leverage kind of the new partnership we have with our same land and really being able to serve the business to its full potential. Now on the kind of headwind side, I think we saw some challenges in our mac and cheese business. Frankly, it's a business that is driven disproportionately by our SNAP exposure, so that affected some of the business in Q4.

Carlos: Key things, we're doing to make sure that we improve the trajectory.

Carlos: One we are also making sure we are investing further in our new campaign behind Mac and cheese and driving new innovation behind it as well so you'll see from us additional areas around bringing news can you flavors, we're bringing burn variety packs and we're bringing you may have seen our new plant based.

Carlos: Option with Mac and cheese in our partnership with <unk>. We're also making sure we continue to drive even better value with Mac and cheese by leveraging the fact that we have in our portfolio of partnerships that we can do with brands like Oscar Mayer to offer truly a complete meal solution for consumers plus offering multi packs.

Carlos: Around 12 packs four packs in different formats to different types of consumers who are looking for value and then finally, we're also making sure we're partnering with retailers, we actually improving the overall assortment to optimize that track we've done the Io. So I feel very good about the fact that the teams have been able to acknowledge what happened and taken up.

Carlos Abrams-Rivera: However, as I think about going forward, there are three key things we're doing to make sure we improve the trajectory. One thing we are also making; we are investing further in our new campaign behind mac and cheese and driving new innovation behind it as well. So you'll see from us additional areas around bringing new SKU flavors, we're bringing variety packs, and we're bringing, you may have seen, a new plan-based option with mac and cheese in a partnership with Norco. We're also making sure we continue to drive even better value with mac and cheese by leveraging the fact that we have in our portfolio partnerships that we can do with brands like Oscar Mayer to offer truly a complete meal solution for consumers, plus offering multi-packs of around 12 packs and four packs in different formats to different types of consumers who are looking for value.

Speaker Change: Great and a new plan for us into 2004 to improve the performance obviously meals.

Speaker Change: Alright, thank you so much and.

Speaker Change: See you all next week.

Speaker Change: So you've got.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Bryan Spillane with Bank of America, You May proceed.

Bryan D. Spillane: Thanks, operator, and good morning, everyone.

Bryan D. Spillane: Hi, Bonnie.

Bryan D. Spillane: I just had a question I have a question about foodservice and maybe if you can just drill in a little bit.

Bryan D. Spillane: North America <unk>.

Bryan D. Spillane: It decelerated relative to the previous quarters and I think even in your slides you've got I think underperformed relative to the industry and so I guess a couple questions. There. One is just is there a trade or inventory deload happening in foodservice.

Bryan D. Spillane: Maybe if you could talk a little bit about the respective channels.

Bryan D. Spillane: Within foodservice, what got better and maybe what got worse.

Bryan D. Spillane: And then.

Bryan D. Spillane: Sort of your expectations, both for North America, and global on Foodservice do you expect.

Bryan D. Spillane: Do you expect it to be kind of in line with your with your algorithm for foodservice this year or maybe even a touch better just want to unpack that foodservice a little bit more please.

Carlos Abrams-Rivera: And then finally, we're also making sure we're partnering with retailers, and we are actually improving the overall assortment to optimize the traffic down the aisle. So I feel very good about the fact that the team was able to acknowledge what happened and take and create a new plan for us in 2024 to improve the performance of each meal. Thank you. I'll see you again.

Speaker Change: Got you.

Speaker Change: Let me start by clarifying something you said in your question.

Speaker Change: Foodservice business, we are growing both ahead of the industry in North America and international.

We actually feel very good about our performance.

Speaker Change: Foodservice and we see that as we go forward into 2024, so we see service growing up grow in 2024.

Speaker Change: Appropriate with our long term guidance. So high single digits. So we think actually is going to be a continued driver of our performance as we go into 2024 and frankly, we see the us have even more come in as we go forward because we are not only performing well, where we are but we also are improving by getting into new higher.

Operator: Thank you. One moment for questions. Our next question comes from Bryan Spillane with Bank of America. You may proceed. Hey, thanks, operator. Good morning, everyone. I just had a question. I have a question about food service. And maybe if you could just drill in a little bit.

Speaker Change: Margin channels like independent noncommercial channels, plus driving big innovation, leveraging technology, leveraging that clinic brands that we have.

Bryan D. Spillane: In North America, it decelerated relative to the previous quarters. And I think even in your slide, you've got, you know, underperformed relative to the industry. And, and so I guess a couple of questions there. One is just, you know, was there a trade or an inventory deload happening in food service? Maybe if you could talk a little bit about the respective channels within food service, you know, what got better and maybe what got worse. Do you expect it to be kind of in line with your algorithm for food service this year or maybe even a touch better? Just want to unpack that food service a little bit more. I'm glad to.

Speaker Change: So until now we have seen the beginning of the potential for service and that is actually driving driving faster growth than we have seen in the industry and we actually believe that between the innovation that we have between not going into new channels that are higher margin and more attractive we can actually make that even a faster growing part of our portfolio as we go forward.

Speaker Change: Okay.

Speaker Change: I guess, if I'm looking at slide nine correctly, I think you've got the industry growing faster than your North America business in the fourth quarter.

Speaker Change: So again it just seems like I don't know if there is a.

Speaker Change: Disconnect between what you shipped versus what consumption was but.

Speaker Change: Again, unless I'm looking at this slide incorrectly it actually looks like you underperformed the industry.

Speaker Change: So let me just say I think you are looking at select incorrectly and happy to follow up with you Okay great.

Speaker Change: Okay Alright. Thank you. Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Stephen Powers with Deutsche Bank You May proceed.

Stephen Powers: Hey, Thanks, good morning, everybody.

Stephen Powers: I guess stepping back I, just think a little bit more detail on your conviction surrounding.

Stephen Powers: Improved total portfolio volume trends and presumably volume share trends.

Stephen Powers: And our return to growth as we progress through 'twenty four because on the one hand I understand.

Stephen Powers: Drivers that you talk about in your prepared remarks on the other hand, we're coming off a quarter that saw.

Stephen Powers: Sorry, you tweak organic growth expectations lower coming into the quarter, and then effectively undershoot those those expectations.

Carlos Abrams-Rivera: So we think actually it's gonna be a continued driver of our performance as we go into 2024. And frankly, we see that as us having even more coming as we go forward, because we are not only performing well where we are, but we are also improving by getting into new higher-margin channels, like independent and non-commercial channels, plus driving big innovation, leveraging our technology, and leveraging the iconic brands that we have. So until now, we have seen the beginning of the potential for service, and that is actually driving faster growth than we have seen in the industry.

Stephen Powers: When the dust settled so I guess again, what gives you the confidence that we're not only leveling off but we're approaching a level, where we can return to growth.

Stephen Powers: Without without I guess incremental investment in promotions and price because it doesn't seem like that's part of the outlook.

Speaker Change: Alright, let me just let me unpack that a little bit.

Speaker Change: First of all thank you.

Speaker Change: And as I mentioned earlier, there is some factors specifically affecting Q3 Q4 performance in terms of.

Speaker Change: Great. That's all the inventory that wouldn't have a repeat as we go forward as we go into 2024.

Speaker Change: I think about first the top line, we are going to continue that progression of emerging market of foodservice and the.

Speaker Change: Emerging market already growing volume, we are seeing the progress of our footwear business growing faster than the industry.

Bryan D. Spillane: And we actually believe that between the innovation that we have, between us going into new channels that are higher-margin and more attractive, we can actually make that even a faster-growing part of our portfolio as we go forward. I guess if I'm looking at slide nine correctly, I think you've got the industry growing faster than your North America business in the fourth quarter. So again, it just seems like, I don't know if there's a disconnect between what you shift versus what consumption was, but, again, unless I'm looking at this slide incorrectly, it actually looks like you underperformed the industry. Let me just say that I think you are looking at the slide incorrectly, and I'm happy to follow up with you specifically. Okay. All right.

Speaker Change: In North America on the top line, we actually expect to recover share as we are now making albeit all the pay off of the innovation investments. We have made we will start seeing that come in throughout the year. So I think that idea of us continuing to invest in the right things behind our insights and North America, it's paying up with innovation.

Speaker Change: And then you had also has to have the right business plans with our retailers those factors actually are going to help us drive the top line with confidence.

Speaker Change: About kind of the.

Speaker Change: The piece of the space, specifically you talked about volume.

One of the things that we're looking at is we are anticipating a return to the historical activity levels and in fact, we are seeing that already so we are expecting volumes to turn positive in the second happened the year before.

Speaker Change: Because as I mentioned, the idea of us continuing to invest in innovation that actually will give us the right.

Carlos Abrams-Rivera: One moment for questions. Our next question comes from Steven Powers with Deutsche Bank. You may proceed. Hey, thanks. Good morning, everybody. Stepping back, I'd just like a little bit more detail on your conviction surrounding improved total portfolio volume trends and, presumably, volume share trends and a return to growth as you progress through 24. Because, on the one hand, I understand.

Speaker Change: <unk> as we go into the year plus we no longer will have some headwinds associated with both pricing that we took in Q1 of last year as well as the snap benefits.

Speaker Change: <unk> debt as we go into the second half of the year. So.

Speaker Change: So that also that altogether. It gives me the confidence that we can see that coming together with a better performance as we go into 'twenty four in a way that actually allows us to exit the year in an hour ago.

Speaker Change: For our company.

Speaker Change: Okay. Okay very good very good. Thank you and then Andre if I could.

Speaker Change: There was.

Speaker Change: The free cash flow conversion this year improved as expected too. So that's a positive I guess just as we look into 'twenty four how are you thinking about for free cash flow conversion in the new year can we can we expect further improvements.

Steven Powers: Dr. Michael Mushkin, Michael Lavery, Christopher Growe, David Palmer, Jonathan Feeney, Kenneth Goldman, You know, without, without, I guess, incremental investment and promotions in price, because it doesn't seem like that's part of the outlook. Right, let me just unpack that a little bit. You know, first, as Andrew mentioned earlier, there are some factors specifically affecting our Q4 performance in terms of trade, as well as inventory that we're not going to repeat as we go forward. As we go into 2024, if I think about the first the top line, we are going to continue the progression of the emerging market for food services. And then, you know, emerging markets are already growing in volume.

Andre: And if not.

Andre: Either way I guess, one of the drivers of free cash flow progress as we go forward.

Andre: Sure.

So yes as you pointed out we were able to deliver a very solid cash flow conversion in 2023 above 80%.

Speaker Change: And we do expect.

Speaker Change: Small progression also as you head into 2024.

Speaker Change: We still.

Speaker Change: Wouldn't it be in the eighties territory.

Speaker Change: We do expect another year of solid Capex investments like we have been doing in the last two years, there's a lot of good investment opportunities for us in the organic business.

Speaker Change: Yeah, and perhaps some tax step up that you also mentioned thats affecting your earnings as well. So those two factors go against debt, but on the other had the working capital should expect to continue to improve as a consequence of the investments we have been making.

Speaker Change: The one thing I would add to is as we go into those of you joining us in Cagny.

Carlos Abrams-Rivera: We are seeing the progress of our food service business growing faster in the industry. And in North America, on the top line, we actually expect to recover share, as we are now making all the payoff of the innovation investments we have made. We'll start seeing that happen throughout the year.

Speaker Change: Are you able to unpack two little Moreover.

Speaker Change: Investments, we're making I mentioned quite a bit about innovation about how we're going to continue to invest in our brands, making sure. They are superior to our competition. So I think youll see a lot more details that for myself and the team when we're together in Florida.

Speaker Change: Okay very good. Thank you. Thank you.

Speaker Change: Okay. Thank.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Ken Goldman with Jpmorgan you May proceed.

Ken Goldman: Hi, good morning.

Carlos Abrams-Rivera: So I think that idea of continuing to invest in the right things behind our insights in North America is paying off with innovation. And then, yeah, and also, too, to have the right business plans with our retailers. Those factors are actually going to help us drive the top line with comfort. Now, when I think about the pieces, specifically, you talked about volume.

Ken Goldman: And I was curious.

Ken Goldman: Some early indications that maybe as an industry quick service restaurants.

Ken Goldman: Seeing some fraying at the edges in terms of consumer demand, mainly under the weight of higher prices I'm. Just curious if this is something you are seeing as well and to what extent if at all does your outlook.

Ken Goldman: Potentially factor some kind of slowdown there.

Ken Goldman: Yes.

Ken Goldman: Our business frankly.

Ken Goldman: A lot of our business, Ken it's really focused on front of the house and we actually see solid performance for our away from home business both in the U S.

Carlos Abrams-Rivera: You know, one of the things that we are looking at is that we are anticipating a return to the historical activity levels, and in fact, we are seeing that already. So we are expecting volumes to turn positive in the second half of the year. Because, as I mentioned, the idea of us continuing to invest in innovation will actually give us the right tailwinds as we go into the year, plus we no longer will have some headwinds associated with both the pricing that we took in Q1 of last year, as well as the SNAP benefits cycle as we go into the second half of the year. So that also, you know, that gives me the confidence that we can see us coming together with a better performance Okay. Okay.

Ken Goldman: As well as outside the U S. I mean, if you think about the fact that outside the U S. We use that channel very much as a way for us to drive awareness and build their brands that continues to drive positive growth for us.

Ken Goldman: In the U S as well, we see that even within the context of <unk>, we continue to see progress and improvements.

Ken Goldman: But at the same time, we're also expanding into new channels that allows us to continue to drive that growth whether that is from.

Ken Goldman: Pending opportunities and to new hospitality areas. So we also are having a little bit of a broader view of how we define our away from home business to go into new spaces that we know are margin accretive and not be dependent on just one channel in order for us to drive the growth.

Speaker Change: Understood. Thank you for that and then.

Speaker Change: The gross margin increase you're expecting this year, despite a little bit of lingering inflation can you just remind us what some of the key drivers will be of that is it simply a continuation of what helped 2023 in terms of Cogs efficiencies and some revenue growth management assistance.

Steven Powers: Very good. Very good. Thank you. And then, Andre, if I could, you know, the free cash flow conversion this year improved as it was expected to. So that's, that's a positive, I guess.

Speaker Change: Sure so.

Speaker Change: We expect gross margin to expand again in as part of our long term algorithm.

Speaker Change: So proud of what we have done so far.

Carlos Abrams-Rivera: Just as we look ahead to the 24, how are you thinking about free cash flow conversion in the new year? Can we, can we expect further improvement? And if not, you know, either way, I guess one of the drivers of free cash flow progress as we go forward. Sure. Good morning.

Speaker Change: I think that we always have been pricing to offset inflation on a dollar for dollar and Thats. What we have done in the last two years. However in 2020, Florida.

Speaker Change: We are expecting to price approximately at 1% level, which is below the inflation that you expected at 3%.

Speaker Change: But the main driver is really coming from technology efficiencies have been.

Carlos Abrams-Rivera: So yeah, as you pointed out, we were able to deliver a very solid cash flow conversion in 2023, above 80%. And we do expect a small progression also as we head into 2024. We still want to be in the 80s, because we do expect another year of solid CapEx investment like we have been doing in the last two years.

Speaker Change: Delivering ahead of what we.

Speaker Change: Outline to you a couple of years back so 2020 through some very solid a year almost 5% of gross efficiency as a percentage of Cogs.

Speaker Change: And in 2024 do you expect another solid year so.

Speaker Change: These growth efficiencies, helping us not only to offset a component of the inflation.

Speaker Change: But also is helping us to expand gross margins and investing a little more in the business on the SG&A side.

Steven Powers: There's a lot of good investment opportunities for the organic business, um, yeah, and you have some taxes going up that you also mentioned are affecting earnings as well, so those two factors go against that, but on the other hand, working capital should expect to continue to improve as a consequence of the investments you have been making. The one thing I would add to this, as we go into those of you joining us in CACNI, we'll be able I mentioned quite a bit about innovation, about how we are going to continue to invest in our brands, making sure they're superior to our competition. So I think you'll see a lot more details from myself and the team when we're together in Florida. Okay, very good. We'll see you there.

Speaker Change: That's something that you should expect to see from us.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Pamela Kaufman with Morgan Stanley You May proceed.

Pamela Kaufman: Good morning.

Pamela Kaufman: Good morning money.

Pamela Kaufman: I was hoping that you could double click on that into the drivers behind your Q4 results in North America, and how you are thinking about those factors going forward.

Pamela Kaufman: You pointed to weaker consumer demand, but also discrete headwinds like the inventory deload and lapping the trade accrual.

Pamela Kaufman: How are you thinking about North America consumer demand in 'twenty, four and can you explain what drove the onetime dynamics was it a specific retailer or specific categories, where you saw a de load and.

Pamela Kaufman: Maybe you can explain the effect of the trade accrual. Thank you.

Speaker Change: Let me let me let me start I guess gives you a sense for how we see the consumer today and then maybe Andrew you can go deeper into the specifics about the Q4 and how we are.

Andrew Lazar: We see that playing out as we go forward, but I.

Andrew Lazar: I guess the place that will start will be that we're seeing in the data integrity, regardless of the income levels that consumers looking for value and they continue to be under pressure and what we see as low income consumers are actually shopping more at places like dollar stores higher income consumers more club stores, but.

Operator: Thank you. Thank you. One moment, please.

Ken Goldman: Our next question comes from Ken Goldman with J.P. Morgan. You may proceed. Just curious, you know, there's some early indications that maybe, as an industry, you know, quick service restaurants, I'm seeing some fraying at the edges in terms of consumer demand, mainly under the weight of, you know, higher prices. I'm just curious if this is something you're seeing as well, and to what extent, if at all, does your outlook factor in some kind of slowdown there? In our business, frankly, a lot of our business candidates, it's really focused on front of the house.

Andrew Lazar: We are seeing then booking for overall smaller trips to stretch their dollars further.

Andrew Lazar: For us it continues to be about how do we continue to deliver value in different ways for that consumer who are very much focused on value through essentially investing in our brands, making sure. We have a number of value offerings and increasing the distribution in different channels to begin what we have done in the past.

Speaker Change: Now let me just be a specific before I give you the details on the Q4.

Andrew Lazar: And if I think about club channels.

Andrew Lazar: We have introduced a number of brands into club from Capri Sun to Lunchables Classico pasta sauce.

Andrew Lazar: We also tested new innovation with our club channels and in 2024, we will have 20% higher number of offerings into club that we did in 2023.

Carlos Abrams-Rivera: And we actually see solid performance for our away from home business, both in the US and outside the US. And if you think about the fact that outside the US, we use that channel very much as a way for us to drive awareness and build their brands, that continues to drive positive growth for us. In the US as well, we see that, you know, even within the context of USR, we continue to see progress and improvement.

Andrew Lazar: If I think about the entry price points in that category and the scale that we can have in kind of areas, where I'm dollar stores.

Andrew Lazar: We actually making sure that we're driving things like improving our assortment of barbeque on mustard of Kraft Mayo in salad dressing as well as new items around tackle Bell and our partnership that we have in order for us to drive expanded use of our Mexican initiatives.

Carlos Abrams-Rivera: But at the same time, we're also expanding into new channels that allow us to continue to drive growth, whether that is from, you know, our vending opportunities and new hospitality areas. So we also are having a little bit of a broader view of how we define our away from home business to go into new spaces that we know are margin accretive and not be dependent on just one channel in order for us to drive growth. understood. Thank you for that.

Andrew Lazar: If I think about dollar store, we actually have today over 300, skus and year on year over year, we are going to be increasing it by another 10% first of all we had in the past. So we are making sure that we are in the right channels with the right assortment and continuing to invest in innovation in order to make sure that we have.

Andrew Lazar: Absolutely consumers looking for value independent of what Theyre looking for.

Andrew Lazar: Different locations different formats different shopping behaviors.

Andrew Lazar: Now Andrew if you want to give a little more context on the Q4 sure. So North America net sales declined 3%.

Carlos Abrams-Rivera: And then, The gross margin increase you're expecting this year, despite a little bit of lingering inflation, can you just remind us what some of the key drivers will be of that? Is it simply a continuation of what helped 2023 in terms of COGS efficiencies and some revenue growth management assistance? Chet, so, We expect cross-margin to expand again and is part of our long-term algorithm. , Michael Lavery, Christopher Growe, David Palmer, Cody Ross, Bryan Spillane, Alexia Howard, Jonathan Feeney, Kenneth Goldman, David Palmer, Robert Moskow, Steven Strycula, Robert Moskow, John Baumgartner, Kenneth Goldman, Robert Moskow, Jonathan Feeney, Kenneth Goldman, Robert Moskow, Jonathan Feeney, Kenneth Goldman, Robert Moskow, Jonathan Feeney, Kenneth Goldman, But the main driver is really coming from the growth efficiencies.

Andrew Lazar: Approximately 140 bps is linked it to the trade accrual release from last year from 2022.

Andrew Lazar: And from even thought.

Andrew Lazar: The load year over year.

Andrew Lazar: It is not that we saw at the load happening in 2023 is that in Q4 2022, as we started to recover services. Dr. Ship ahead of consumption. So we're lapping that effect. So there's nothing really on that regard affecting 2022, just a lapping effect.

Andrew Lazar: Sell out was negative and it was softer than what we anticipated.

Andrew Lazar: We underestimated the impact of snap in Q4.

Andrew Lazar: It turned out to be.

Andrew Lazar: More than 150 basis points stronger than we thought if you remember there was a concentration of emergency lots of events at the end of 2022, so on a year over year basis. There is net benefits declined close to 40% which is substantial.

Andrew Lazar: What has affected a lot of sell out we should continue to see some of that in Q1, so on a year over year basis to 140 still be about 20% less.

Carlos Abrams-Rivera: We have been delivering ahead of what we expect, and in 2024, they expect another solid year. So this growth efficiency is helping us not only to offset a component of inflation but also to expand across margins and invest a little more in the business on the SG&A site. And that's something that you should expect to see from us. Great, thank you.

Speaker Change: It's not done.

Speaker Change: Then the last year, so we're still going to stay for a.

Speaker Change: A portion of this effect, but on the other hand, our market share has improved in Q4, as we anticipated which is a very good sign we are leaving exiting the year with the best share performance.

Speaker Change: 2023, so that gave us a lot of.

Andrew Lazar: Good momentum heading into this year.

Speaker Change: Hope that helps.

Speaker Change: Yes, Thanks, Jeff.

Speaker Change: Quick clarification.

Speaker Change: Are you, saying that snap.

Pamela Kauffman: Thank you. Our next question comes from Pamela Kauffman with Morgan Stanley. Good morning.

Speaker Change: Radar headwind in the fourth quarter than the prior two quarters.

Speaker Change: And why do you guys absolutely, yes, because there is a concentration of emergency allotments, we'll see that in Q4 of 'twenty. Two so the snap benefits in Q4 were actually higher than Q2 and Q3.

Carlos Abrams-Rivera: I was hoping that you could double-click a bit on the drivers behind your Q4 results in North America and how you're thinking about those factors going forward. You pointed to weaker consumer demand, but also discreet headwinds like the inventory deload and lapping the trade accrual. So how are you thinking about North American consumer demand in 24? And can you explain what drove the one-time dynamics?

Speaker Change: 2022.

Speaker Change: Okay.

Speaker Change: Jeff. This is itself is not a surprise, we just underestimated the elasticity of that.

Speaker Change: Yeah.

Jeff: Understood I'll pass it on thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Robert Moskow with TD Cowen You May proceed.

Robert Moskow: Hi, Thanks, a couple of questions.

Robert Moskow: Those of us analyzing your commodity exposure.

Carlos Abrams-Rivera: Was it a specific retailer or specific categories where you saw a deload? And maybe you could explain the effect of trade accrual. Thank you. Let me, let me, let me start I guess, give you a sense for how we see the consumer day and then maybe Andrew, you can go deeper into the specifics about the Q4 and how we are, how do you see that playing as we go forward? But, you know, I guess the place I would start would be that regardless of income levels, that consumer is looking for value, and they continue to be under pressure. And what we see is low income consumers are actually shopping more at places like dollar stores, and higher income consumers are shopping more at club stores.

Robert Moskow: See a lot of deflation running through on the ingredients side, maybe even the packaging side and your guidance for inflation to be positive can you walk through some of the components that we can't see maybe its conversion costs or things like that that.

Robert Moskow: Make this a continued to be an inflationary year and then my second question was you have a $25 million write down for I think systems related to your modernization efforts can you go into a little more detail as to what caused that write down.

Robert Moskow: Sure.

Speaker Change: Good morning, Rob.

Speaker Change: We'll hear from you.

Speaker Change: On the inflation side.

Speaker Change: As we said in prepared remarks, we do expect.

Speaker Change: Inflation again into 2024 low single digits on a percentage territory.

Speaker Change: Even though ingredient as a whole we see quite a few commodities that are discretionary we still have the impact of maybe tomatoes, and sugar affecting us negatively. So there is a net increase in terms of commodity inflation and then but the biggest bulk of deflation is really coming from.

Carlos Abrams-Rivera: But mostly, you know, we are seeing them looking for overall smaller trips to thresh their dollar further. So for us, it continues to be about how do we continue to deliver value in different ways to that consumer, who are very much focused on value, through eventually investing in our brands, making sure we have a longer value offerings, and increasing the distribution in different channels to be what we have done in the past. And let me just be specific before I give you the details on the Q4. You know, and if I think about club channels.

Speaker Change: Labor, we continue to see.

Speaker Change: Relevant to higher than pre pandemic level on has increased as well as transportation thinking 2020 due to transportation costs were quite low and we are seeing some signs of rebound on the transportation cost side. So this is what inflation is mostly coming from.

Speaker Change: On the second part of the question about the $25 million, so not 100% of that is.

Speaker Change: Is it system write offs, even though is the majority of it and this has to do with us deciding not to maintain investment in a certain.

Carlos Abrams-Rivera: You know, we have introduced a number of brands into clubs, from Capri Sun to Lunchables to Classical Pasta Sauce. In fact, we also tested new innovation in our club channels, and in 2024, we'll have a 20% higher number of offerings in clubs than we did in 2020. Now, if I think about the enterprise funds in the category and the SKUs that we can have in kind of areas around dollar stores, we're actually making sure that we're driving things like improving our assortment of barbecue and mustard or craft of mayo and salad dressing, as well as new items around Taco Bell and our partnership that we have in order for us to drive an expanded use of our Mexican initiatives. So if I think about Dollar Store, we actually have over 300 SKUs today, and year over year, we're going to be increasing about another 10% versus what we had in the past.

Speaker Change: That could knowledge at that we think will not be relevant.

Speaker Change: For the future so we decided to stop that investment.

Speaker Change: Redirect it just was something that you think would be more relevant to us brokerage Roger as you know technology is front and center of our strategy.

Speaker Change: And we have continued to make decisions to make sure that we can take that listen to our competitive advantage to us. So.

Speaker Change: It is my requires us to make decisions in between a quantity that do not initially anticipated because we saw the.

Speaker Change: The right thing for the business for the long term, we're not going to hesitate to do that.

Speaker Change: Okay. Thank you Andrea thank.

Andrea: Thank you Bob.

Speaker Change: Thank you operator, operator, we have time for one more question.

Speaker Change: Thank you.

Andrea: And our last question comes from John Baumgartner with Mizuho Securities You May proceed.

John Baumgartner: Good morning, Thanks for the question.

John Baumgartner: Good morning first off.

John Baumgartner: Good morning wondering if you could provide an update on the outlook for efficiencies just just given the over delivery in 2023. What's included in the guide for 2024 and as you think out to this next round of improvements specifically, the new overhead savings from automation and fixed assets. How are you thinking about the timing for when those benefits begin to accrue.

Carlos Abrams-Rivera: So we are making sure that we are in the right channels with the right assortment and continue to invest in innovation in order to make sure that we are capturing consumers looking for value, independent of where they're looking for it: different locations, different formats, different shopping behaviors. And now, Andre, if you want to give a little more context on Q4. Sure. So, in North America, net sales declined 3%, and approximately 140 BPS is linked to the trade accrual release from last year, from 2022, and from inventory deload year over year. But, in fact, it's not that we saw a deload happening in 2023; it's that in Q4 2022, as we started to recover, services started to ship ahead of consumption. So, we are lapping that effect. So, there's really nothing really affecting 2023. It's just a lapping effect.

Speaker Change: Okay. So thanks for the question.

Speaker Change: As we said 2023 was a very solid year, we delivered.

John Baumgartner: 5% of efficiency as a percentage of Cogs.

John Baumgartner: And we do expect 2020 to be another year, where we were.

John Baumgartner: We'll be delivering.

John Baumgartner: After 3% Cogs that you have outlined.

John Baumgartner:

John Baumgartner: Want to make sure that you understand that not only this is a consequence of the complete the ways of working change that to have any supply chain more focus on variable costs and continuous improvements.

John Baumgartner: But also we are we still have some.

John Baumgartner: Efficiency opportunities that are coming through as a consequence of the pandemic and all that.

John Baumgartner: The inefficiency generated by that so that helped us in 2023 and that is still going to help a little bit in 2034.

John Baumgartner: Beyond that there are.

John Baumgartner: A lot of things happening on the supply chain space.

John Baumgartner: Difficult to name only one because.

John Baumgartner: Given the sheer size of our Cogs, but we do have initiatives coming from network optimization and <unk>. We have a very complex distribution center network with more than 80 distribution centers. Overall, we do have initiatives in automation in factories has a very strong partnership with Microsoft trying to do with <unk>.

Carlos Abrams-Rivera: Now, the sellout was negative, and it was softer than we anticipated. We underestimated the impact of SNAP in Q4. It turned out to be more than 150 basis points stronger than we thought. If you remember, there was a concentration of emergency allotments at the end of 2022. So, on a year-over-year basis, SNAP benefits declined close to 40%, which is substantial. And that's what affected a lot of sellouts.

John Baumgartner: Apologies to allow us to make faster decisions.

John Baumgartner: Bruce labor usage and reduce.

John Baumgartner: Due to losses.

John Baumgartner: We have lots of opportunities on value engineering to continue to.

John Baumgartner: We showed you offer the right type of attributes your consumers. So there is a lot of different levers are going to touch on a few of them next week in cagny.

John Baumgartner: But I think we are very pleased with their quiet benign Manhattan supply chain and I think you will see is that how the investments we have been making in technology and the partnership we have been making in digital are basically fueling a lot of that efficiency in a way that actually create some benefit for us for now and to the future as well.

Carlos Abrams-Rivera: We should continue to see some of that in Q1. So, on a year-over-year basis, Q1 2040 will still be about 20% less SNAP than last year. So, we're still going to suffer a portion of this effect. But on the other hand, our market share has improved in Q4, as we anticipated, which is a very good sign. We're exiting the year with the best share performance of 2023, so that gives us a lot of good momentum heading into this year. Hope that that helps. Yes, thanks. Just a quick clarification. So are you saying that the snap was a greater headwind in the fourth quarter than the prior two quarters? And why do you think that is?

John Baumgartner: And again, it will impact that even further when we get together in Florida.

Speaker Change: Okay. Thanks for that and then just quickly on international emerging markets volume mix was pretty solid in Q4, but I'm wondering if you can speak to the vol mix in the developed markets, what you're seeing in Europe from category performance private label competition and the consumer dynamics, there sort of giving you confidence in the international guide for 2024. Thank you.

Speaker Change: Happy to.

Speaker Change: If we think about what we have mentioned in terms of value and how consumers are looking for value in the U S.

Speaker Change: Similar as well too in terms of.

Pamela Kauffman: Yes, because there is a concentration of emergency allotments considered in Q4 of 2022. So the SNAP benefits in Q4 of 2022 are actually higher than in Q2 and Q3 of 2022. This in itself is not a surprise; we just underestimated the elasticity of that. Okay. I'll pass it on.

Speaker Change: Consumers in Europe, I mean, they are looking for that value us well and we are continuing to make sure that we're bringing in that balance.

Speaker Change: Critical brands that we have like our highest business in the UK for example, and.

Speaker Change: And how do we continue to bring.

Speaker Change: Products to the market that bring a number of.

Speaker Change: Improvements on our quality of our products as well as focusing on the benefit that we bring so for example, a product like <unk>.

Speaker Change: Heinz beans, and the fact that he brings kind of such benefits around protein. That's something that is kind of now shifting in terms of how we think about that product. The fact that we are also bringing we think certain part of our categories new entries by leverage so our brands. So in baked beans will have not only the <unk>, but we also have HP.

Operator: Thank you. Okay. Thank you. One moment for a question. Our next question comes from Robert Moskow with TD Cal, and you may proceed. Hi, thanks. A couple of questions.

Robert Moskow: Those of us analyzing your commodity exposure see a lot of deflation running through on the ingredient side, maybe even the packaging side, and your guidance is for inflation to be positive. Can you walk through some of the components that we can't see, maybe it's conversion costs or things like that, that make this continue to be an inflationary year? And then my second question was, you know, you have a $25 million write-down for, I think, systems related to your modernization efforts. Can you go into a little more detail as to what caused that write-down?

Speaker Change: Baked beans, and that allows us to actually play in a couple of different areas with consumers both at the more mainstream as well as the more value and then in places like Germany. We're also introducing new benefits to consumers as they are looking also again for value whether days Heinz mayonnaise in new channels and the discount.

Speaker Change: Spaces, but also making sure that we continue to bring innovation consumers are looking for from us like our highest tomato ketchup and we see no sugar.

Speaker Change: So we are approaching it with the same sense as we do in the U S, which is let's make sure we are in the right channels with the right assortment.

Carlos Abrams-Rivera: Thanks. Chair, good morning, and luck. Good to hear from you. So, on the inflation side, as we said in two prior remarks, we do expect inflation, again, into 2024, in low single digits, 3% territory. Even though, as a whole, we see quite a few commodities that are deflationary, we still have the impact of mainly tomatoes and sugar affecting us negatively. So there is little net increase in terms of commodity inflation. But the biggest bulk of the inflation is really coming from labor. We continue to see a relevant higher than pre-pandemic level on age increase, as well as transportation. I think in 2023, transportation costs will be quite low, and we are seeing some signs of a rebound on the transportation cost side.

Speaker Change: The same time, let's focus on bringing focusing on the benefits that we bring with our products.

Speaker Change: Okay. Thanks, Carlos Thanks Andre.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you so much.

Speaker Change: I would now like to turn the call back over to Anne Marie Mccullough for any closing remarks.

Speaker Change: Thank you and thank you everyone for your interest we look forward to seeing you next week.

Speaker Change: Thank you for your participation you may now disconnect.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Carlos Abrams-Rivera: So this is where inflation is mostly coming from. On the second part of the question about the $25 million, so not 100% of that is in the system right away, even though it's the majority of it. And this has to do with us deciding not to maintain investment in a certain technology that we think will not be relevant in the future. So we decided to stop that investment and redirect it to something that we think would be more relevant to our future agenda. As you know, technology is front and center of our strategy, and we have continued to make decisions to make sure that we can turn this into a competitive advantage for us. So, and this might require us to make decisions in between a quarter that we did not initially anticipate because we saw that that's the right thing for the business for the long term. We're not going to hesitate to do that.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Carlos Abrams-Rivera: Okay, thank you, Andre. Thank you, thank you. Operator, we have time for one more question.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Operator: Thank you. And our last question comes from John Baumgartner with Mizzou Health Securities. He may proceed. Good morning. Thanks for the question. Um, maybe, maybe first off...

John Baumgartner: Morning. Wondering if you could provide an update on the outlook for efficiencies. Just given the overdelivery in 2023, what's included in the guide for 2024? And as you think out to this next round of improvements, specifically the new overhead savings from automation, and fixed assets, how are you thinking about the timing for when those benefits begin to accrue? Okay, so thanks for the question. As we said, 2013 was a very solid year.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Carlos Abrams-Rivera: We delivered close to 4% of efficiencies and a percentage of cards. And we do expect 2024 to be another year where we will be delivering ahead of the 3% costs that we have outlined. I want to make sure that you understand that not only is this a consequence of the complete way of working change that we have made in supply chain, more focus on variable costs and continuous improvement, but also we are, we still have some efficiency opportunities that are coming through as a consequence of the the pandemic and other The inefficiency generated by that helped in 2023, and that is still going to help a little bit in 2024. But beyond that, there are a lot of things happening in the supply chain space. Difficult to name only one, given the sheer size of our colleagues, but we do have initiatives coming from network optimization in the US.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Carlos Abrams-Rivera: We have a very complex distribution center network, more than 80 distribution centers overall. We do have initiatives for automation. In fact, we have a very strong partnership with Microsoft, trying to use technology to allow us to make faster decisions that improve labor usage and reduce yield losses. We have a lot of opportunities in value engineering to continue to make sure to offer the right type of attributes to consumers. So there are a lot of different levers.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Carlos Abrams-Rivera: We're going to touch on a few of them next week in Cagney, but I think we are very pleased with the quality of the pipeline we have in the supply chain now. And I think you will see that the investments we have been making in technology, the partnerships we have been making in digital, are basically fueling a lot of that efficiency in a way that actually creates some benefits for us for now and in the future as well. And again, we'll unpack that even further when we are together in Florida.

Speaker Change: [music].

Speaker Change: Uh huh.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Yeah.

Carlos Abrams-Rivera: And then just quickly on international, the emerging markets vol mix was pretty solid in Q4, but I'm wondering if you can speak to the vol mix in the developed markets, what you're seeing in Europe from category performance, private label competition, and the consumer dynamics there, you know, sort of giving you confidence in the international guide for 2024. Thank you, happy to, you know, I think if we think about what we mentioned in terms of value and how consumers are looking for value in the US, it's similar as well, too, in terms of consumers in Europe. I mean, they are looking for that value as well.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Carlos Abrams-Rivera: And we are continuing to make sure that we're bringing that value through the critical brands that we have, like our Heinz business in the UK, for example, and how we continue to bring products to the market that bring a number of improvements in the quality of our products, as well as focus on the benefits that we bring. So, for example, a product like, you know, Heinz beans, and the fact that it brings kind of such a benefit around protein, that's something that is kind of now shifting in terms of how we think about that product. The fact that we're also bringing, within certain parts of our categories, new entries by leveraging our brands So, in baked beans, we'll have not only Heinz beans, but we'll also have HP baked beans.

Carlos Abrams-Rivera: And that allows us to actually play in a couple of different areas with consumers, both at the mainstream as well as the higher value. And in places like Germany, we're also introducing new benefits to consumers as they are looking again for value, whether that is Heinz mayonnaise in new channels in the discount spaces, but also making sure that we continue to bring the innovation consumers are looking for from us, like our Heinz tomato ketchup with zero sugar. So we are approaching it with the same sense as we do in the US, which is, let's make sure we're in the right channels with the right assortment. And at the same time, let's focus on the benefits that we bring with our product. Thanks, Carlos.

Speaker Change: Okay.

Speaker Change: [music].

John Baumgartner: Thanks, Andre. Thank you. Thank you. Thank you very much.

Anne-Marie Magella: I would now like to turn the call back over to Anne-Marie Magella for any closing remarks. Thank you, and thank you everyone for your interest. We look forward to seeing you next week. Thank you for your participation. You may now disconnect. , , , , , www.mooji.org ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? https://www.youtube.com.ac ?? ?? ?? ?? ?? ?? ?? https://www.youtube.com.uk https://www.youtube.com.uk https://www.youtube.com.uk https://www.youtube.com.uk https://www.youtube.com.uk https://www.youtube.com.uk, Good day and thank you for standing by. Welcome to the Kraft Heinz Company fourth quarter results conference call. At this time, all participants are in a listen only mode.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Anne-Marie Magella: This is Anne-Marie Medela, head of investor relations at the Kraft Heinz Company, and welcome to our Q&A session for our fourth quarter 2023 business update. During today's call, we may make forward-looking statements regarding our expectations for the future, including items related to our business plans and expectations, strategy, efforts, and investments, and related timing and expected impacts. These statements are based on how we see things today, and actual results may differ materially due to risk and uncertainties. Please see the cautionary statements and risk factors contained in today's earnings release, which accompanies this call, as well as our most recent 10-K, 10-Q, and 8-K filings for more information regarding these risks and uncertainties. Please refer to today's earnings release and the non-GAAP information available on our website at ir.kraftheinzcompany.com under news and events for a discussion of our non-GAAP financial measures and reconciliation to the comparable GAAP financial measures. Before we begin the Q&A session, it gives me great pleasure to hand the microphone over to Carlos Abrams-Rivera for opening comments and to host his first Irons Update as our Chief Carlos, over to you. Well, thank you, Anne-Marie.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Carlos Abrams-Rivera: And thank you, everyone, for joining us today. You know, before opening the call for questions, I just would like to say thank you to all my colleagues here at Kraft Heinz and, at the same time, make strategic investments for the future. Frankly, all that while navigating some persistent industry pressure. I am very enthusiastic about our next chapter here at Kraft Heinz, and in 2024, we expect to drive top-line growth, return to positive volumes, expand growth margins and operating margins, and continue to reinvest in the business and an iconic brand. With that in mind, I have Andrew joining me today.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thanks.

Speaker Change: Yes.

Speaker Change: Good day and thank you for standing by welcome to the Kraft Heinz Company fourth quarter results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session. Please press star one on your telephone and wait for your name to be announced two with.

Carlos Abrams-Rivera: Let's open the call for the Q&A. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: Draw. Your question. Please press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, and Marine Megillah head of global Investor Relations.

Operator: One moment for questions. Our first question comes from Andrew Lazar with Barclays. He may proceed. Great. Thanks. Good morning, everybody.

Andrew Lazar: Morning. Good morning. Carlos, I was hoping to start out maybe, organic sales in the fourth quarter were impacted, as you talked about, by trade timing and a retail inventory deload. You're suggesting that you expect the first quarter organic sales to be similar to 4Q, which implies that underlying sales maybe could be a bit worse than 4Q. I don't think you expect the retailer deload to continue. So if I have that right, I guess, what would cause the sequential slowdown?

Speaker Change: During today's call we may make forward looking statements regarding our expectations for the future.

Speaker Change: Adding items related to our business plan and expectations strategy.

Speaker Change: Certain investments and related timing and expected impact.

Speaker Change: These statements are based on how we see things today actual results may differ materially.

Speaker Change: Risks and uncertainties.

Speaker Change: Please see the cautionary statements and risk factors contained in today's earnings release, which accompanies this call as well as our most recent 10-K 10.

Carlos Abrams-Rivera: Inorganic cells in one cue, and how do you see that playing out moving forward? Yeah, good question, Andrew. Thank you for that. You know, the math on Q4 to Q1 may be similar, but the factors driving it are very, very different. I think maybe, Andrew, if you could give a little more color as to the effects of both the North America business versus the emerging market business and how that's shaping the math behind the numbers. Sure. Good morning again, Andrew.

Speaker Change: Thank you and 8-K filings for more information regarding these risks and uncertainties.

Speaker Change: Additionally, we may refer to non-GAAP financial measures, which exclude certain items for our financial results reported in accordance with GAAP.

Speaker Change: Please refer to today's earnings release, and the non-GAAP information available on our website at IR dot crop highest capital Dot com under news and events for a discussion of our non-GAAP financial measures and reconciliation to the <unk>.

Speaker Change: Terrible GAAP financial measures.

Speaker Change: Before we begin the Q&A session. It gives me great pleasure.

Speaker Change: Hand, it over to Carlos Abrams Rivera for opening comments.

Speaker Change: His first earnings update is our chief Executive Officer, Carlos over to you.

Carlos Abrams-Rivera: So we, as Carlos said, we do expect similar numbers from Q4, but coming from different drivers. So for North America, we do expect better performance because we should not repeat both the trade timing and the inventory load. We think we're gonna be at a healthy level at this point. And sellout, if anything, maybe we'll be in line with slightly better, getting to Q1.

Speaker Change: Thank you Anne Marie and thank you everyone for joining us today.

Speaker Change: I'll open the call for questions I'd, just like to say thank you to all my colleagues here at Kraft Heinz for.

Speaker Change: For delivery.

Speaker Change: Solid 2000, 2023 results and at the same time, making the strategic investments for the future.

Speaker Change: And frankly, all of that while navigating some persistent industry pressures.

Speaker Change: I am very enthusiastic about our next chapter here at Kraft Heinz I think 2024, we expect to drive topline growth returned to positive volumes expand gross margins and operating margins and continue to reinvest in the business and an iconic brands.

Carlos Abrams-Rivera: Now, when you talk about emerging markets, we do expect a shipment phasing that will affect Q1. So we do expect, instead of growing double digits like we have been doing consistently, emerging markets should be growing in the mid-single-digit territory. You might remember that last year we had a very strong performance in Latin America. Brazil grew by 40% in Q1, so we're going to lap that, but there's nothing wrong with the underlying sell-out trends, both in North America and emerging markets. Great, really helpful. And then, Carlos, it seems like, if I have this right, most of the pressure on the GROW platform in the fourth quarter was on easy meals. If I have that right, can you talk a bit about what caused it?

Speaker Change: With that I have Andrew joining me today, let's open the call for the Q&A.

Andrew Lazar: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for questions.

Andrew Lazar: Our first question comes from Andrew Lazar with Barclays. You May proceed.

Andrew Lazar: Great. Thanks, good morning, everybody.

Andrew Lazar: Good morning.

Andrew Lazar: Cross I was I was hoping to start out maybe.

Andrew Lazar: Organic sales in the fourth quarter were impacted as you talked about by trade timing and a retail inventory deload.

Speaker Change: You are suggesting that you expect the first quarter organic sales to be similar to <unk>.

Speaker Change: Which implies an underlying sales maybe could be a bit worse than <unk> is I don't think you expect the retailer deload to continue so if I have that right I guess, what would cause the sequential slowdown.

Carlos Abrams-Rivera: And maybe how this plays out as you move into the first quarter? Because it sounds like you do expect North America to get better. You know, we also saw the return to growth of our business, driving both growth and share performance, as we continue to leverage kind of the new partnership we have with our same plot and really being able to serve the business to its full potential. Now on the kind of headwind side, I think we saw some challenges in our mac and cheese business. Frankly, it's a business that is driven disproportionately by our SNAP exposure, so that affected some of However, as I think about going forward, there are three key things we're doing to make sure we improve the trajectory.

Speaker Change: Inorganic sales in <unk> and how do you see that playing out moving forward.

Speaker Change: Yes. Good question, Andrew Thank you for that.

Speaker Change: The math on Q4 for Q1 may be similar but the factor driving at a very very different and I think maybe Andrew if you could give a little more color as to the effect of both in North America business versus the emerging market business and how that's shaping kind of the math behind the numbers sure. Good morning again, Andrew So we as Carlos said, we would.

Andrew Lazar: Similar numbers from Q4, but coming from different drivers. So North America, we do expect better performance, because we should not to be a bit both the timing and England diluted load. We think we are going to be able to healthy level at this point.

Andrew Lazar: And sell out if anything maybe it would be in line with slightly better.

Andrew Lazar: For Q1.

Andrew Lazar: When you talk about the emerging markets, we do expect a shipment phasing.

Andrew Lazar: That will affect Q1, so we would expect instead of growing double digits like we have been doing consistently emerging market should be growing to mid single digit territory.

Carlos Abrams-Rivera: One thing we're also making, we are investing further in our new campaign behind Mac and Cheese and driving new innovation behind it as well. So you'll see from us additional areas around bringing new SKU flavors, we're bringing variety packs, and we're bringing, you may have seen, a new plan-based option with Mac and Cheese in a partnership with Nortco. We're also making sure we continue to drive even better value with Mac and Cheese by leveraging the fact that we have in our portfolio partnerships that we can do with brands like Oscar Mayer to offer truly a complete meal solution for consumers, plus offering multi-packs of around 12 packs and four packs in different formats to different types of consumers who are looking for value.

Andrew Lazar: You might remember that last year, we had a very strong performance in Latin America, Brazil grew 40% in Q1, so we're going to lap that suit, but nothing wrong with the underlying sell out trends, both in North America and emerging markets.

Speaker Change: Great really helpful. And then and then Carlos it seems like if I have this right most of the pressure in the grow platform in the fourth quarter was an easy meals.

Carlos: Is that right can you talk a bit about what caused that and maybe how this plays out as you move into the first quarter because it sounds like you do expect North America to get better.

Carlos: Yeah, and frankly, Andrew if I think about Q4, let me start with some of the cockpit, which is we also saw the return to growth of ore Ida business driving both growth and share performance as we continue to leverage to kind of the new partnership we have with our same pluck and really being able to serve the business to a full <unk>.

Carlos Abrams-Rivera: And then finally, we're also making sure we're partnering with retailers. Are we actually improving the overall assortment to optimize the traffic down the aisle? So I feel very good about the fact that the team has been able to acknowledge what happened and take up creating a new plan for us into 24 to improve the performance of each meal. Thanks so much, and see you all next week.

Carlos: Tangible now on that.

Carlos: Kind of a headwind side I think we saw some challenges in our magnitude business frankly into business that is driven disproportionately by a snap exposure so that affected some of the business in Q4. However.

Carlos: About going forward.

Carlos: Key things, we're doing to make sure that we improve that trajectory.

Andrew Lazar: Thank you, I'll see you again. Thank you. Our next question comes from Bryan Spillane with Bank of America. You may proceed. Hey, thanks, operator. Good morning, everyone. I just had a question. I have a question about food service. And maybe if you could just drill in a little bit.

Carlos: One we also making sure we are investing further in our new campaign behind Mac, and cheese and driving new innovation behind it as well so you'll see from us additional areas around bringing new whiskey you flavors, we're bringing burn variety packs and we're bringing you may have seen a new plant based.

Bryan D. Spillane: In North America, it decelerated relative to the previous quarters. And I think even in your slide, you've got, you know, underperformed relative to the industry. And, and so I guess a couple of questions there. One is just, you know, was there a trade or an inventory deload happening in food service? Maybe if you could talk a little bit about the respective channels within food service, you know, what got better and maybe what got worse. And then, you know, sort of your expectations both for North America and global for food service. What do you expect? Do you expect it to be kind of in line with your algorithm for food service this year or maybe even a touch better? Just want to unpack that food service a little bit more. I'm glad to have it.

Carlos: Around 12 packs four packs in different formats to different types of consumers who are looking for value and then finally, we're also making sure we're partnering with retailers, we actually improving the overall assortment to optimize that track we've done to Io. So I feel very good about the fact that the team have been able to acknowledge will happen and taken up.

Carlos: Great and a new plan for us into 'twenty four to improve the performance of eating meals.

Speaker Change: Alright, thanks, so much.

Speaker Change: See you all next week.

Speaker Change: Hey, guys.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Bryan Spillane with Bank of America, You May proceed.

Bryan D. Spillane: Hey, Thanks, operator, good morning, everyone.

Bryan D. Spillane: Good morning.

Bryan D. Spillane: I just had a question I have a question about foodservice and maybe if you can just drill in a little bit.

Bryan D. Spillane: In North America, it decelerated relative to the previous quarters and I think even in your slides you've got.

Carlos Abrams-Rivera: Let me start by clarifying something you said in your question. You know, in our food service business, we are growing both ahead of the industry in North America and internationally. So I think that we actually feel very good about our performance in food service, and we see that as we go forward into 2024. So, you know, we see food service growing up, growing in 2024 appropriately with our long-term guidance, so high single digits. So we think actually it's gonna be a continued driver of our performance as we go into 2024. And frankly, we see that as us having even more coming as we go forward, because we are not only performing well where we are, but we are also improving by getting into new higher-margin channels, like independent and non-commercial channels, plus driving big innovation, leveraging our technology, and leveraging the iconic brands that we have.

Bryan D. Spillane: To perform relative to the industry and so I guess a couple questions. There. One is just was there a trade or inventory deload happening in foodservice.

Bryan D. Spillane: Maybe if you could talk a little bit about the respective channels.

Bryan D. Spillane: Within foodservice, what got better and maybe what got worse.

Carlos: Then.

Carlos: Sort of your expectations, both for North America, and global on Foodservice do you expect.

Carlos: Do you expect it to be kind of in line with your with your algorithm for foodservice this year or maybe even a touch better.

Carlos: Unpack that foodservice a little bit more please.

Speaker Change: Jeff too.

Jeff: Let me start by clarifying something you said in your question.

Jeff: Foodservice business, we are growing both ahead of the industry in North America and international.

Jeff: We actually feel very good about our performance.

Jeff: On foodservice and we see that as we go forward into 2024, So we see service growing up grow in 2024.

Jeff: With our long term guidance. So high single digits. So we think actually is going to be a continued driver of our performance as we go into 2024 and frankly, we see the us have even more come in as we go forward because we are not only performing well, where we are but we also are improving by getting into new higher margin.

Jeff: Channels like independent noncommercial channels, plus driving big innovation, leveraging technology, leveraging that clinic brands that we have.

Carlos Abrams-Rivera: So until now, we have seen the beginning of the potential for service, and that is actually driving faster growth than we have seen in the industry. And we actually believe that between the innovation that we have, between us going into new channels that are higher-margin and more attractive, we can actually make that even a faster growing part of our portfolio as we go forward. I guess, if I'm looking at slide nine correctly, I think you've got the industry growing faster than your North America business in the fourth quarter. So again, it just seems like, I don't know if there's a disconnect between what you shift versus what consumption was, but Again, unless I'm looking at this slide incorrectly, it actually looks like you underperformed the industry. Let me just say, I think you are looking at the slide incorrectly, and I'm happy to follow up with you specifically.

Jeff: So until now we have seen the beginning of the potential local service and that is actually driving driving faster growth than we have seen in dentistry and we actually believe that between the innovation that we have between not going into new channels that are higher margin and more attractive we can actually make that <unk> been impressed a growing part of our portfolio as we go forward.

Jeff: Okay.

Jeff: I guess, if I'm looking at slide nine correctly, I think you've got the industry growing faster than your North America business in the fourth quarter.

Jeff: So again it just seems like I don't know if there is a.

Speaker Change: Disconnect between what you shipped versus what consumption was but.

Speaker Change: Again, unless I'm looking at this slide and correctly it actually looks like you underperformed the industry.

Speaker Change: So let me just say I think you are looking at it incorrectly and happy to follow up with you okay.

Speaker Change: Okay Alright. Thank you. Thank you.

Speaker Change #101: Thank you.

Speaker Change #102: One moment for questions.

Speaker Change #101: Our next question comes from Stephen Powers with Deutsche Bank You May proceed.

Bryan D. Spillane: Okay. All right. Thank you. Thank you. One moment for questions. Our next question comes from Steven Powers with Deutsche Bank. You may proceed. Hey, thanks. Good morning, everybody. Stepping back, I'd just like a little bit more detail on your conviction surrounding improved total portfolio volume trends and, presumably, volume share trends and a return to growth as you progress through 24. Because on the one hand, I understand.

Stephen Powers: Hey, Thanks, good morning, everybody.

Stephen Powers: I guess stepping back just like a little bit more detail on your conviction surrounding.

Stephen Powers: Improved total portfolio volume trends and presumably volume share trends.

Stephen Powers: And our return to growth as we progress through 'twenty four because on the one hand I understand.

Stephen Powers: Drivers that you talk about in your prepared remarks on the other hand, we're coming off a quarter that saw you tweak organic growth expectations lower coming into the quarter.

Stephen Powers: Then effectively undershoot those those expectations.

Stephen Powers: When the dust settled so I guess again, what gives you the confidence that we're not only leveling off but we're approaching a level, where we can return to growth.

Steven Powers: Dr. Michael Mushkin, Michael Lavery, Christopher Growe, David Palmer, Jonathan Feeney, Kenneth Goldman, You know, without, without, I guess, incremental investment and promotions in price, because it doesn't seem like that's part of the outlook. Right, let me just unpack that a little bit. You know, first of all, as Andrew mentioned earlier, there are some factors specifically affecting our Q4 performance in terms of, and then, you know, the emerging market is already growing in volume. We are seeing the progress of our food service business growing faster in the industry. And in North America, on the top line, we actually expect to recover share, as we are now making all the payoff of the innovation investments we have made. We'll start seeing that coming throughout the year.

Stephen Powers: Without without I guess incremental investment in promotions and price because it doesn't seem like that's part of the outlook.

Speaker Change: Alright, let me just let me unpack that a little bit.

Speaker Change #103: First of all do you.

Stephen Powers: As Andrew mentioned earlier, there is some factor specifically affecting our Q3 before Q4 performance in terms of.

Stephen Powers: Great.

Stephen Powers: Inventory that wouldn't repeat as we go forward as we go into 2024.

Stephen Powers: About the first the top line.

Stephen Powers: We are going to continue that progression of emerging market a full service <unk>.

Stephen Powers: Emerging market already growing volume, we are seeing the progress of our footwear business growing faster than the industry and in North America on the top line, we actually expect to recover share as we are now making albeit all the pay off of the innovation investments. We have made we will start seeing that come in throughout the year. So I think that.

Steven Powers: So I think that idea of continuing to invest in the right things behind our insights in North America is paying off with innovation. And then, yeah, and also, too, to have the right business plans with our retailers. Those factors are actually going to help us drive the top line we've come from. Now, when I think about the pieces, specifically, you talked about volume.

Stephen Powers: The idea of US continue to invest in the right things behind our insights and North America, it's paying up with innovation and then you had also has to have the right business plans with our retailers those factors actually are going to help us drive the top line with confidence.

Stephen Powers: About the.

Stephen Powers: The piece of the Pacific specifically, you talked about volume.

Carlos Abrams-Rivera: You know, one of the things that we are looking at is we are anticipating a return to the historical average of 50s levels. In fact, we are seeing that already. So we are expecting volumes to turn positive in the second half of the year. Because, as I mentioned, the idea of us continuing to invest in innovation actually will give us the right tailwinds as we go into the year, plus we no longer will have some headwinds associated with both pricing that we took in Q1 of last year, as well as the SNAP benefits cycle as we go into the second half of the year. So that all together gives me the confidence that we can see that all coming together with a better performance as we go into 24 in a way that actually allows us to exit the year in a good way for us as a company. Okay.

Stephen Powers: One of the things that we're looking at is we are anticipating a return to the historical activity levels and in fact, we have seen that already so we are expecting volumes to turn positive in the second happened a year.

Stephen Powers: Because as I mentioned, the idea of us continuing to invest in innovation that actually that we gave is that right.

Stephen Powers: <unk> as we go into the year to us when the longer we will have some headwinds associated with both pricing that we took in Q1 of last year as well as the snap benefits cycling that as we go into the second half of the year.

Stephen Powers: So that also that altogether. It gives me the confidence that we can see that coming together with a better performance as we go into 'twenty four in a way that actually allows us to exit the year in an hour ago.

Stephen Powers: For our company.

Steven Powers: Very good. Very good. Thank you.

Speaker Change #107: Okay. Okay very good very good. Thank you and then Andre if I could.

Steven Powers: And then, Andre, if I could, you know, the free cash flow conversion this year improved as it was expected to. So that's, that's a positive, I guess, just as we look at the 24, how are you thinking about free cash flow conversion in the new year? Can we, can we expect further improvement? And if not, you know, either way, I guess one of the drivers of free cash flow progress as we go forward. Good morning. As you pointed out, we were able to deliver a very solid cash flow conversion in 2023, above 80%. And we do expect a small progression also as we head into 2024. We still want to be in the 80s, because we do expect another year of solid CapEx investment like we have been doing in the last two years.

Speaker Change #100: There was.

Speaker Change #100: The free cash flow conversion this year improved as as it was expected to so that's a positive I guess just as we look into 'twenty four how are you thinking about for free cash flow conversion in the new year can we can we expect further improvements.

Speaker Change #100: <unk>.

Speaker Change #105: And if not.

Speaker Change #105: Either way I guess, one of the drivers of free cash flow progress as we go forward.

Speaker Change #100: Sure.

Speaker Change #106: So yes as you pointed out we were able to deliver a very solid cash flow conversion in 2023 above 80%.

Speaker Change #100: And we do expect.

Speaker Change #100: As model progression also as you head into 2024.

Speaker Change #100: We still.

Speaker Change #100: Let it be the <unk> territory.

Speaker Change #100: Because we do expect another year of solid Capex investments like we have been doing in the last two years. There is a lot of good investment opportunities for us in the organic business.

Carlos Abrams-Rivera: There's a lot of good investment opportunities for the organic business, um, yeah, and they have some taxes going up that you also mentioned that are affecting earnings as well, so those two factors go against that, but on the other hand, working capital should expect to continue to improve as a consequence of the investments you have been making. The one thing I would add to this, as we go into those of you joining us in Cagney, we'll be I mentioned quite a bit about innovation, about how we are going to continue to invest in our brands, making sure they're superior to our competition. So I think you'll see a lot more details from myself and the team when we're together in Florida. Okay, very good. We'll see you there. Thank you. Thank you. One moment for questions. Our next question comes from Ken Goldman with J.P. Morgan. You may proceed. Hi, good morning. I'm curious, you know, there are some early indications that maybe as an industry, you know, quick service restaurants, are seeing some fraying at the edges in terms of consumer.

Speaker Change #100: And they have some tax step up that you also mentioned thats affecting your earnings as well. So those two factors go against debt, but on the other had the working capital should expect it to continue to improve as a consequence of the investments that have been making.

Speaker Change #100: The one thing I would add to is as we go into those of you joining us in Cagny.

Speaker Change #100: Would you able to impact to a little more of investment.

Speaker Change #104: The investments, we're making I mentioned quite a bit about innovation about how we are going to continue to invest in our brands, making sure. They are superior to our competition. So I think youll see a lot more details that for myself and the team when we're together in Florida.

Speaker Change #108: Okay very good. Thank you. Thank you.

Speaker Change #109: Okay. Thank.

Speaker Change #109: Thank you.

Speaker Change #111: One moment for questions.

Speaker Change #104: Our next question comes from Ken Goldman with Jpmorgan you May proceed.

Ken Goldman: Hi, good morning.

Ken Goldman: Just curious.

Ken Goldman: Some early indications that maybe as an industry quick service restaurants.

Ken Goldman: Seeing some fraying at the edges in terms of consumer.

Q4 2023 Kraft Heinz Co Earnings Call

Request a DemoDemo

KHC

Kraft Heinz

Earnings