The Kraft Heinz Company (NASDAQ:KHC) Q1 2018 Earnings Conference Call - Final Transcript

May 02, 2018 • 05:00 pm ET


The Kraft Heinz Company (NASDAQ:KHC) Q1 2018 Earnings Conference Call - Final Transcript


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Good day. My name is Latif and I will be your operator today. At this time, I would like to welcome everyone to the Kraft Heinz Company's First Quarter 2018 Earnings Conference Call.

I will now turn the call over to Chris Jakubik, Head of Global Investor Relations. Mr. Jakubik, you may begin.

Christopher M. Jakubik

Hello, everyone and thanks for joining our business update. We'll start today's call with an overview of our Q1 results and our 2018 plans from Bernardo Hees, our CEO; and David Knopf, our Chief Financial Officer. Then, Paulo Basilio, President of our US Zone; and George Zoghbi, Strategic Advisor and Director, will join the rest of us for the Q&A session.

Please note that during our remarks today, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties and these are discussed in our press release and our filings with the SEC. We'll also discuss some non-GAAP financial measures during the call today. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. And you can find the GAAP to non-GAAP reconciliations within our earnings release and at the end of the slide presentation available on our website.

Now, let's turn to Slide 2 and I'll hand it over to Bernardo.

Bernardo Hees

Thank you, Chris and good afternoon, everyone. Let me start by saying that we're feeling more confident about our outlook, with Q1 in line to a slightly better than our expectations from the February call. If you recall, there were several factors that lead us to be cautioned on our top line performance for the first half of 2018, including the headwinds in the United States from Planters and Ore-Ida, the impact from retail inventory reductions in Canada, and the risk we saw in Brazil from our SAP implementation.

[Indecipherable], we spoke about near-term pressures in the United States and the rest of the world from a further rate investment, in go-to-market capabilities, big debt launches, and increasing working media dollars, and best-in-class customer service, as well as significant cost inflation, especially freight at the beginning of the year. On the whole, it play out as expected. And we continue to expect many of these same factors to remain in Q2, as we anticipated in the outlook we provided in the February call.

Outside these transitory factors, we are seeing ongoing improvement in consumption trends in most countries and in most of the key categories that we believe will drive both top and bottom line growth into the second half of the year. These includes positive trend brands [Phonetic] in the first quarter traction of the third quarter in categories such as natural cheese, meals, and dessert and ready-to-drink beverage in the United States.

Cheese and coffee in Canada, condiments and sauces across Europe, soups and meals in the UK, and baby food in Russia, condiments and pasta sauce in Latin America, as well