Q4 2025 Kraft Heinz Co Earnings Call - Q&A

February 11, 2026

Speaker #1: Greetings and welcome to the Kraft Heinz Company fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings and welcome to The Kraft Heinz Company Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star or zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Anne-Marie Megela, Vice President of Investor Relations. Please go ahead.

Speaker #1: If anyone should require operator assistance, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Anne-Marie Megela, Vice President of Investor Relations.

Speaker #1: Please go

Speaker #1: ahead. Thank

Anne-Marie Megela: Thank you. And thank you, everyone, for joining us today. During today's call, we may make forward-looking statements regarding our expectations for the future. 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 and our most recent SEC filings for more information regarding these risks and uncertainties. Additionally, we may refer to non-GAAP financial measures. Please refer to today's earnings release and the non-GAAP information available on our website for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures. Joining me today to answer your questions is our Chief Executive Officer, Steve Cahillane, and our Chief Financial Officer, Andre Maciel. Operator, please open the call for the first question.

Speaker #2: Today, during today's Q&A, and thank you, everyone, for joining us. On this call, we may make forward-looking statements regarding our expectations for the future. These statements are based on how we see things today, and actual results may differ materially due to risks and uncertainties.

Speaker #2: Please see the cautionary statements and risk factors contained in today's earnings release and are most recent SEC filings for more information regarding these risks and uncertainties.

Speaker #2: Additionally, we may refer to non-GAAP financial measures. Please refer to today's earnings release and the non-GAAP information available on our website for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures.

Speaker #2: Joining me today to answer your questions is our Chief Executive Officer, Steve Cahilling, and our Chief Financial Officer, Andre Maciel. Operator, please open the call for the first question.

Speaker #1: Our first question is from Andrew Lazar with Barclays.

Operator: Our first question is from Andrew Lazar with Barclays.

Speaker #3: Great. Thanks so much for morning everybody and welcome back, Steve.

Andrew Lazar: Great. Thanks so much. Good morning, everybody, and welcome back, Steve.

Speaker #4: Thanks, Andrew.

Steve Cahillane: Thanks, Andrew.

Speaker #3: Yep. Maybe to start off, Steve, in the prepared remarks you mentioned a bunch of times for how Kraft Heinz is sort of underinvested in its brands and the incremental $600 million is an effort to sort of correct that.

Andrew Lazar: Yep. Maybe to start off, Steve, in the preparatory remarks, you mentioned a bunch of times how Kraft Heinz is sort of underinvested in its brands and the incremental $600 million is an effort to sort of correct that. I guess how much of this is simply the company catching up to where investment levels should have been, so more company-specific versus maybe acknowledging the currently more challenging industry environment in which other food names have also raised investment levels, including making price investments? And then following on that, how do you see this level of investment, or do you see this level of investment as sort of the right base of spending to be able to grow from, or will you have to reassess that as you go? Thanks so much.

Speaker #3: I guess, how much of this is simply the company catching up to where investment levels should have been? So more company-specific versus maybe acknowledging that the currently more challenging industry environment in which other food names have also raised investment levels, including making price investments.

Speaker #3: And then following on that, how do you see this level of investment or do you see this level of investment as sort of the right base of spending to be able to grow from, or will you have to reassess that as you go?

Speaker #3: Thanks so

Speaker #4: Yeah. Thanks for the question, Andrew. What I tell you is when I came in, I knew that the company was underinvested. That had been widely reported.

Steve Cahillane: Yeah. Thanks for the question, Andrew. What I tell you is when I came in, I knew that the company was underinvested. That's been widely reported. You guys have all written about that. We know the history of Kraft Heinz over the last 10 years. So I came in with the expectation that I would find underinvestment, and indeed, I did find underinvestment. But I also found a lot of opportunities. And I think the biggest change over the last six weeks has been the exploration that I've been on and what I have found in terms of brands that truly respond to investment, green shoots that the company was already working on, and areas where we could do a lot of self-help and fix the business and point ourselves in a more positive direction. And I'm talking about meaningful things that I've seen.

Speaker #4: You guys have all written about that. We know the history of Kraft Heinz over the last 10 years. So I came in with the expectation that I would find underinvestment.

Speaker #4: And indeed, I did find underinvestment. But I also the biggest change over the last six weeks has been the exploration that I've been on and what I have found in terms of brands that truly respond to investment, green shoots that the company was already working on, and areas where we could do a lot of self-help and fix the business and point ourselves in a more positive direction.

Speaker #4: And I'm talking about meaningful things that I've seen. And so we went through that exploration and did a lot of work around what would be required in order to invest appropriately against the business to return it to organic growth.

Steve Cahillane: And so we went through that exploration and did a lot of work around what would be required in order to invest appropriately against the business to return it to organic growth. And so I'd say the bulk of your question, the real answer to your question, is we're really getting back to where we ought to be, not necessarily looking at the challenging environment and saying we need to do something different. We're getting back to where we ought to be in terms of sufficiency against our brands, capability building in the commercial area to really put ourselves in a position of competitiveness.

Speaker #4: And so I'd say the bulk of your question the real answer to your question is we're really getting back to where we ought to be, not necessarily looking at the challenging environment and saying we need to do something different.

Speaker #4: We're getting back to where we ought to be in terms of sufficiency against our brands, capability, building in the commercial area, to really put ourselves in a position of competitiveness.

Speaker #4: And that led to the decision to pause the spin. Because we want to put 100% of our focus, 100% of our time, our people, our investment against returning the company to growth and not be distracted by the massive amount of work that's required in the separation.

Steve Cahillane: That led to the decision to pause the spin because we want to put 100% of our focus, 100% of our time, our people, our investment against returning the company to growth and not be distracted by the massive amount of work that's required in the separation. Obviously, I know what it takes to have a successful separation. You need stable businesses. You need a lot of things that we're going to be working on right now to preserve the optionality that we have going forward. So the real answer to your question is we're getting back to where we ought to be. I do think it's a level of sufficiency that is appropriate for us going forward. I have a lot of confidence that we're going to be able to return this company to solid, profitable, organic margin-enhancing growth.

Speaker #4: And obviously, I know what it's takes to have a successful separation. You need stable businesses. You need a lot of things that we're going to be working on right now to preserve the optionality that we have going forward.

Speaker #4: And so the real answer to your question is we're getting back to where we ought to be. And I do think it's a level of sufficiency that is appropriate for us going forward.

Speaker #4: And I have a lot of confidence that we're going to be able to return this company to solid, profitable, organic margin-enhancing growth.

Speaker #3: Great. Thank you. And see you next

Andrew Lazar: Great. Thank you. And see you next week.

Speaker #3: week. Thanks,

Steve Cahillane: Thanks, Andrew.

Speaker #4: Andrew.

Speaker #1: Our next question is from Peter Galbo with Bank of America.

Operator: Our next question is from Peter Galbo with Bank of America.

Speaker #4: Hey, Steve. Good morning. Thanks for taking the question. I guess, Steve, just going back on your comments in regarding to Andrew's question just now, when we all met a number of weeks ago with you, I think your commentary was, "Hey, I had to sign off on the spin before coming on board." And obviously, today, you're announcing a pause.

Peter Galbo: Hey, Steve. Good morning. Thanks for taking the question. I guess, Steve, just going back on your comments in regarding to Andrew's question just now, when we all met a number of weeks ago with you, I think your commentary was, "Hey, I had to sign off on the spin before coming on board." And obviously, today, you're announcing a pause. So just maybe help us understand a little bit more, even what's happened in the last four weeks to kind of cause that change in terms of the thinking. And then as a secondary kind of follow-up to that, just how should we be framing a temporary pause versus maybe a more indefinite pause would be helpful. Thanks very much.

Speaker #4: So just maybe help us understand a little bit more, even, what's happened in the last four weeks to kind of cause that change in terms of the thinking.

Speaker #4: And then as a secondary kind of follow-up to that, just how should we be framing a temporary pause versus maybe a more indefinite pause would be helpful.

Speaker #4: Thanks very

Speaker #4: much. Yeah.

Steve Cahillane: Yeah. Thanks, Peter. So when I was in discussions with the board of directors to come here, I came with eyes wide open and recognizing that there was a lot of opportunity and endorsing the strategic rationale around the separation. What I said to you guys when we met a couple of weeks ago, four weeks ago, or whatever it was, that I fully endorse and understand the industrial logic of the separation. I still do. I think it makes logical sense, and I think the board came to the right conclusion at the time. What I've since learned is how much opportunity there is to fix the business in the short term and to turn the business around in a more positive trajectory. Because resources are finite, I came to the conclusion that this was the best outcome for us.

Speaker #5: Thanks, Peter. So, when I was in discussions with the board of directors to come here, I came with eyes wide open, recognizing that there was a lot of opportunity, and endorsing the strategic rationale around the separation.

Speaker #5: And what I said to you guys when we met a couple of weeks ago four weeks ago or whatever it was, that I fully endorse and understand the industrial logic of the separation.

Speaker #5: And I still do. I think it makes logical sense. And I think the board came to the right conclusion at the time. What I've since learned is how much opportunity there is to fix the business in the short term.

Speaker #5: And to turn the business around in a more positive trajectory. And because resources are finite, I came to the conclusion that this was the best outcome for us.

Speaker #5: And I should backtrack because when I agreed to come on board in the discussions I had with the board, they said, "We reserve the right to get smarter." And as you get under the hood and really explore, everything from what's in the perimeter, how we could go about the separation, everything should be on the table.

Steve Cahillane: I should backtrack because when I agreed to come on board and the discussions I had with the board, they said, "We reserve the right to get smarter." And as you get under the hood and really explore everything from what's in the perimeter, how we could go about the separation, everything should be on the table. And so it was an iterative process that we came to. And I understand that when you're not going along with us through those four or five weeks of process, it can seem rather sudden. But this was something that was explored in depth. We've all been working 24/7 to come to this conclusion and build a plan that we're very confident in. And it preserves optionality for doing any other portfolio optimization things that you might imagine in the future.

Speaker #5: And so it was an iterative process that we came to. And I understand that when you're not going along process, it can seem rather sudden.

Speaker #5: But this was something that was explored in depth, been we've all been working 24/7 to come to this conclusion and build the plan that we're very confident in.

Speaker #5: And it preserves optionality for doing any other portfolio optimization things that you might imagine in the future. So I wouldn't put an end date on anything that we're going to say, "This is the date when we're going to re-explore whether or not a separation is the right thing." We're going to get smarter each and every day.

Steve Cahillane: So I wouldn't put an end date on anything that we're going to say, "This is the date when we're going to re-explore whether or not a separation is the right thing. We're going to get smarter each and every day. We're going to turn the business around to organic growth." And that will, as I already said, preserve optionality to do any number of portfolio optimization activities in the future. In companies like ours, we have to evaluate and re-evaluate on a regular basis where we are and where we want to go. And where we want to go right now is this investment against the business to drive organic growth.

Speaker #5: We're going to turn the business around to organic growth. And that will, as I already said, preserve optionality to do any number of portfolio optimization activities in the future.

Speaker #5: We in companies like ours, we have to evaluate and reevaluate on a regular basis where we are and where we want to go. And where we want to go right now is this investment against the business to drive organic

Speaker #5: growth. Great.

Peter Galbo: Great. Thanks very much, Steve.

Speaker #3: Thanks very much, Steve.

Speaker #1: Our next question is from David Palmer with Evercore IS.

Operator: Our next question is from David Palmer with Evercore ISI.

Speaker #6: Thanks, good morning, Steve. And welcome. I wanted to ask you about the investment and maybe what we're going to see in the market, in the scanner data.

David Palmer: Thanks. Good morning, Steve, and welcome. I wanted to ask you about the investment and maybe what we're going to see in the market, in the scanner data. First of all, how did you arrive at $600 million being the right number, but also perhaps discuss the phasing of that spending and maybe even categories and brands we could expect to see results earlier versus maybe later? And thank you.

Speaker #6: How did, first of all, how did you arrive at $600 million being the right number? But also, perhaps discuss the phasing of that spending and maybe even categories and brands we could expect to see results earlier versus maybe later, and thank you.

Speaker #5: Yeah. Thanks, Steve. So you're going to see the spend really start to ramp up in the second quarter. We've been in the planning process right now.

Steve Cahillane: Yeah. Thanks, Steve. So you're going to see the spend really start to ramp up in Q2. We've been in the planning process right now, and we would hope to see meaningful results in the back half of the year. When I say meaningful results, I mean a change in trend and bending the trend in market share. And we're going to be talking a lot about value market share and holding ourselves accountable to that. I think we said in the prepared remarks that about half of this would be against price, product, and packaging, improving the way we show up for our consumers at store. That's going to be very important. It will be across the portfolio, but a lot will be against what we heretofore had been calling the North American grocery company, where we've got some opportunities to really do better.

Speaker #5: And we would hope to see meaningful results in the back half of the year, meaning when I say meaningful results, I mean a change in trend and bending the trend in market share.

Speaker #5: And we're going to be talking a lot about value market share and holding ourselves accountable to that. I think we said in the prepared remarks that about half of this would be, again, price and product and packaging, improving the way we show up for our consumers at store.

Speaker #5: That's going to be very important. It will be across the portfolio, but a lot will be against what we heretofore had been calling the North American Grocery Company, where we've got some opportunities to really do better.

Speaker #5: But equally, brands like Heinz and Philadelphia Cream Cheese have already been showing in the last 13 weeks, in the last four weeks, some meaningful improvement based on things that the team had started to do in the back half of last year.

Steve Cahillane: But equally, brands like Heinz and Philadelphia Cream Cheese have already been showing in the last 13 weeks, in the last four weeks, some meaningful improvement based on things that the team had started to do in the back half of last year. So we'll continue against that. And we arrived at the $600 million really through as much science as we could and then a lot of experience in the company and the experience that I bring as well. So we'll be about 5.5% against a ratio of our top line in terms of what we're spending against the brands. We'll put meaningful investment in SG&A. We're lean. You can look at any metric and understand that Kraft Heinz is lean. We don't want to be lean in the commercial organization, so we'll be hiring sales and marketing professionals to beef up our capabilities there.

Speaker #5: So we'll continue against that. And we arrived at the $600 million really through as much science as we could and then a lot of experience in the company and the experience that I bring as well.

Speaker #5: So we'll be about five and a half percent against a against a ratio of our top line in terms of what we're spending against the brands.

Speaker #5: We'll put meaningful investment in SG&A. We're lean, you can look at any metric and understand their craft Heinz is lean. We don't want to be lean in the commercial organization, so we'll be hiring sales and marketing professionals to beef up our capabilities there.

Speaker #5: That takes some time, so that'll be more like a third and fourth quarter. Spend. But altogether, the $600 million I think gives us a lot of confidence that we've got what it takes against the entire company with half of that being, as I said, against the brands and showing up for consumers with the right opening price points, the right price, the right promotional opportunities, and the right brand marketing against what are really a collection of iconic and wonderful brands that I've already said do respond to investment.

Steve Cahillane: That takes some time, so that'll be more like a Q3 and Q4 spend. But altogether, the $600 million, I think, gives us a lot of confidence that we've got what it takes against the entire company, with half of that being, as I said, against the brands and showing up for consumers with the right opening price points, the right price, the right promotional opportunities, and the right brand marketing against what are really a collection of iconic and wonderful brands that, I've already said, do respond to investment.

Speaker #5: Maybe to build on that, I think we will continue—we have seen a steep climb to doubt, good momentum in our base elevation business: sausage, cream cheese.

Andre Maciel: Maybe to build on that, I think we will continue. We have seen, as Steve pointed out, good momentum in our Taste Elevation business, sauces, cream cheese. In the last 13 weeks, we flipped to market share growth, and 70% of the revenue in Taste Elevation is now gaining market share, which is very solid in the US. As we look even at early reads into January, we see that the momentum continuing. In fact, as a total portfolio in the US, we have seen the market share now back to what it was from three years ago. So it's good to be in that position. I mean, obviously, we have work to do.

Speaker #5: The last 13 weeks, we flipped to market share growth, and 70% of the revenue in base elevation is now gaining market share, which is very solid in the U.S.

Speaker #5: And as we look at even at early reads into January, we see that the momentum continuing. In fact, a total portfolio in the US, we have seen a market share now back to what it was until from three years ago.

Speaker #5: So it's good to be in that position. I mean, obviously, we have work to do. I think the objective with all this investment is to position to grow the company, to be delivering volume-led, profitable growth, and have a much higher percentage of the portfolio gaining market share like it was back in 2017, 2019.

Andre Maciel: I think the objective with all these investments is to position the growth, the company to be delivering volume-led, profitable growth, and have a much higher percentage of the portfolio gaining market share like it was back in 2017, 2019. We should continue to, as Steve pointed out, we're going to see this ramp up happening in the second half of the year. We should see emerging markets continue to deliver strong results. If we look in 2025, aside from Indonesia, we grew close to double digits, including with volume growth. We're going to continue to see our emerging markets delivering that level of growth aside from Indonesia from Q1 and building from that. So there's a very good momentum there. We're going to see our Canadian business continue to deliver growth as they had delivered the last three years.

Speaker #5: We should continue to, as Steve pointed out, we're going to see this ramp up happening in the second half of the year. We should see emerging markets continue to deliver strong results.

Speaker #5: If you look in 2025, aside from Indonesia, we grew close to double digits including with volume growth. We're going to continue to see our emerging markets delivering that level of growth aside from Indonesia, from Q1, and building from that.

Speaker #5: So it's a very good momentum there. We're going to see our Canadian business continue to deliver growth as they had delivered the last three years.

Speaker #5: So, there are good parts of the portfolio that have good momentum. We are also part of that investment to further accelerate those bright spots.

Andre Maciel: So there are good parts of the portfolio that have good momentum. We are also part of that investment to further accelerate those bright spots. But as Steve said, there is a good portion of this investment as well, is on the opportunities that we have seen on the North American grocery portfolio.

Speaker #5: But as Steve said, there is a good portion of this investment as well is on the opportunities that we have seen on the North American grocery

Speaker #5: portfolio. Thank

David Palmer: Thank you.

Speaker #1: Our next you. question is from Steve Powers with Deutsche

Operator: Our next question is from Steve Powers with Deutsche Bank.

Speaker #1: Bank. Great.

Steve Powers: Great. Good morning. Thank you very much. Steve, so I wanted to just follow up on Peter's earlier question. You talked about how this decision to postpone the separation was kind of premised on the opportunities you've uncovered to turn around the business in the short term. And I guess the natural follow-on question to that from my perspective is, how do we define short term? Do we need to see results in the next couple of quarters in the course of 2025, and therefore the separation is postponed sort of until 2026, or is there a different timeline associated with sort of the short-term response that you're expecting? And then if I could, then the second question would be, you talked about where these investments will be focused kind of by brand.

Speaker #6: Good morning. Thank you very much. Steve, so I wanted to just follow up on Peter's earlier question. You talked about how this decision to postpone the separation was kind of premised by or premised on the opportunities you've uncovered to turn around the business in the short term.

Speaker #6: And I guess the natural following question to that, from my perspective, is how do we define short term? Is that, do we need to see results in the next couple of quarters, in the course of 2025?

Speaker #6: And therefore, the separation is postponed and sort of until '26? Or is there a different timeline associated with sort of the short-term response that you're expecting?

Speaker #6: And then if I could, then the second question would be, you talked about where these investments will be focused. Kind of by brand, I'm assuming these are disproportionately focused on the US, but maybe just a little bit of elaboration if there's investment, whether brand or commercial investments that you see overseas as well.

Steve Powers: I'm assuming these are disproportionately focused on the US, but maybe just a little bit of elaboration if there's investment, whether brand or commercial investments, that you see overseas as well. Thank you.

Speaker #6: Thank you.

Speaker #5: Yeah, so I'll start with the second one. These will be disproportionately against the U.S., where we need a level of investment in order to turn the trends that we've had.

Steve Cahillane: Yeah. I'll start with the second one. These will be disproportionately against the US, where we need a level of investment in order to turn the trends that we've had. Andre, I think, just outlined very well the rest of the world where we've got a lot of strengths. There will be opportunities to invest outside the US, but predominantly, this will be in the US. We would expect to see, as I mentioned, a change in trend in the back half of this year. You see our guidance. We would hope to do the better end of that guidance, always. These investments take time, and they take commitment, and they take a level of sticking to it and reallocating as necessary as we learn what's working better than what may be not optimized.

Speaker #5: Andre, I think just outlined very well the rest of the world where we've got a lot of strengths. But there will be opportunities to invest outside the US, but predominantly, this will be in the US.

Speaker #5: And we would expect to see, as I mentioned, a change in trend in the back half of this year. You see our guidance. We would hope to do the better end of that guidance, always.

Speaker #5: But these investments take time, and they take commitment, and they take a level of sticking to it. And reallocating as necessary as we learn what's working better than what may be not optimized.

Speaker #5: And so as we think about 2027, we would aim to be in a position where we turn the we return the company to growth.

Steve Cahillane: As we think about 2027, we would aim to be in a position where we return the company to growth. We exit 2026 with the best trends that we've had during the course of the year. That would be our expectation. We go to 2027 with an eye towards growth. In terms of any kind of separation in the future, as we announced today, we're pausing and not putting an end date on that. When this business is successful and growing organically in 2027, we'll have all sorts of optionality to think about portfolio and the way we want to think about our portfolio going forward. Job one right now and why we've made this decision is to put all of our attention and resource against this stepped-up plan to return the company to organic growth.

Speaker #5: We exit 2026 with the best trends that we've had during the course of the year. That would be our expectation. And we go to 2027 with an eye towards growth.

Speaker #5: In terms of any kind of separation in the future, as we announced today, we're pausing and not putting an end date on that. When this business is successful and growing organically, in 2027, we'll have all sorts of optionality to think about portfolio and the way we want to think about our portfolio going forward.

Speaker #5: But job one right now and why we've made this decision is to put all of our attention and resource against this stepped-up plan to return the company to organic growth.

Speaker #6: Great. Thank you. I think I had said 2025. So thanks for correcting me on what year we're in. Appreciate that. Thanks.

Steve Powers: Great. Thank you. I think I had said 2025, so thanks for correcting me on what year we're in. Appreciate that. Thanks.

Speaker #5: Thank you for that.

Speaker #1: Our next question is from Robert Moscow with TD Cal.

Operator: Our next question is from Robert Moskow with TD Cowen.

Speaker #7: Hi. Thanks for the question. Hey, Steve, you mentioned that you want to put the resources against brands that respond to investment. And I was wondering in the work you did internally, did you find brands that have not responded well to investment as well?

Robert Moskow: Hi. Thanks for the question. Hey, Steve, you mentioned that you want to put the resources against brands that respond to investment. And I was wondering, in the work you did internally, did you find brands that have not responded well to investment as well? Because I think the nagging concern among many investors is that the portfolio has a lot of antiquated brands, the quality gap with competition has widened too far, and that they just won't respond. And then secondly, I wanted a follow-up on comments on the last earnings call from Carlos about investing in better coordination for your commodity exposure. I think he said that he thought the company had fallen behind vertically integrated players in meat, coffee, and cheese. And just wanted to know if I didn't see that in the comments. Do you feel like you have to invest in that too?

Speaker #7: Because I think the nagging concern among many investors is that the portfolio has a lot of antiquated brands, the quality gap with competition has widened too far, and that they just aren't they just won't respond.

Speaker #7: And then secondly, I wanted a follow-up on comments on the last earnings call from Carlos about investing in better coordination for your commodity exposure. I think he said that he thought the company had fallen behind vertically integrated players in meat, coffee, and cheese.

Robert Moskow: I wanted a follow-up on comments on the last earnings call from Carlos about investing in better coordination for your commodity exposure. I think he said that he thought the company had fallen behind vertically integrated players in meat, coffee, and cheese. And just wanted to know if I didn't see that in the comments. Do you feel like you have to invest in that too? They're kind of related.

Speaker #7: And just wanted to know if I didn't see that in the comments. Do you feel like you have to invest in that too? They're kind of related.

Robert Moskow: They're kind of related.

Speaker #5: Yeah. Thanks, Rob. I'll let Andre take the second part of the question. I'll take the first part of the question. We focus more on what's working, where the best investments are.

Steve Cahillane: Yeah. Thanks, Rob. I'll let Andre take the second part of the question. I'll take the first part of the question. We focus more on what's working, where the best investments are. But I've said in the past, when you have a portfolio as broad as ours, you're never going to be in a situation where every brand is growing. We all know that. So we're focusing our attention on where we can get the best responses. And obviously, those are some of the brands that have already been invested in, like Heinz and Philly Cream Cheese, which we've already mentioned. But we've got Mac and Cheese, a huge brand of ours that I have seen does respond very well. And we've got a great innovation in 17-gram protein Power Mac coming out this year. We're going to make sure that that is more than sufficiently supported in the marketplace.

Speaker #5: But I've said in the past, when you have a portfolio as broad as ours, you're never going to be in a situation where every brand is growing.

Speaker #5: We all know that. So we're focusing our attention on where we can get the best responses. And obviously, those are some of the brands that have already been invested in, like Heinz and Philly cream cheese, which we've already mentioned.

Speaker #5: But we've got Mac and Cheese a huge brand of ours that I have seen does respond very well. And we've got a great innovation in 17-gram protein super mac coming out this year.

Speaker #5: We're going to make sure that that is more than sufficiently supported in the marketplace. And we're going to look for other opportunities. And we have other opportunities like that.

Steve Cahillane: We're going to look for other opportunities. We have other opportunities like that so we can get the totality of the portfolio growing, which doesn't mean there might be a 20% of the portfolio that is more challenged. That's going to be the case in a portfolio like ours. We need to make sure we're doing portfolio management and optimization such that the winners far outpace the ones that are more challenged. Andre, you want to take the commodity?

Speaker #5: So we can get the totality of the portfolio growing, which doesn't mean there might be a 20% of the portfolio that is more challenged.

Speaker #5: That's going to be the case in a portfolio like ours. But we need to make sure that we're doing portfolio management and optimization such that the winners far outpace the ones that are more challenged.

Speaker #5: And Andre, you want to take the

Speaker #5: commodity? Yeah.

Speaker #4: Sure. And to build on what Steve just said, we are seeing good momentum on our taste elevation portfolio worldwide including the US. We turn hydration desserts.

Andre Maciel: Yeah. Sure. To build on what Steve just said, we are seeing good momentum on our Taste Elevation portfolio worldwide, including in the US. We turn hydration desserts back to share gain, which is good. So it is responding well to investment. So there is more to get there. It's a very profitable part of the portfolio. Mac and Cheese, there is a lot of investment to put in the back half of last year. We're starting to see some early signs of traction and have an innovation that we feel very strongly about. So there is a lot that is about fueling those places where we have good momentum. But it's also about, as you pointed out, Rob, deploying some of the resources to improve the rest of the portfolio as well. There are opportunities on continuing to invest in the product and in packaging.

Speaker #4: Back to share gain, which is good. So it is responding well to investment. So there is more to get there. It's a very profitable part of the portfolio.

Speaker #4: Mac and Cheese, there is a lot of investment to put in the back half of last year. We're starting to see some early signs of traction and have an innovation that we feel very strongly about.

Speaker #4: So there is a lot that is about fueling those places where you have good momentum. But it's also about, as you pointed out, Rob, deploying some of the resources to improve the rest of the portfolio as well.

Speaker #4: There are opportunities on continuing to invest in the product and in packaging. That's where a portion of the $300 million is going to get deployed against.

Andre Maciel: That's where a portion of the $300 million is going to get deployed against. So I think all of that will allow the whole portfolio to start to move in a more positive trajectory. Regarding the commodity question, look, nothing really changes, Rob. We have been, over the years, very disciplined about following the commodity and when we price. And we want to continue to remain disciplined. We cannot control how other competitors might do, react to commodity curves, and how they do or not. I think what we can do is what we can control, which is continue to be disciplined around following the commodity.

Speaker #4: So I think all of that will allow the whole portfolio to start to move in a more positive trajectory. Regarding the commodity question, look, nothing really changes, Rob.

Speaker #4: We have been over the years very disciplined about following the commodity and when we price. And we should we want to continue to remain disciplined.

Speaker #4: We cannot control how other competitors might do and react to commodity curves and how they do or not. I think what we can do is what we can control, which is continue to be disciplined around following the

Speaker #4: commodity. Okay.

Operator: Okay. Thank you. Our next question is from Michael Lavery with Piper Sandler.

Speaker #7: Thank you.

Speaker #1: Our next question is from Michael Laverry with Piper Sandler.

Speaker #8: Thank you. Good morning. Just

Michael Lavery: Thank you. Good morning. Just wondering if you could give us any sense of where you land long term. Do you think the long-term algo changes? Is this plan set to put you on algo? And if so, with what timing? And then maybe just a follow-up on this year. Would you have any repurchases considered in the guidance, and how should we think about that?

Speaker #1: Wondering if you could give us any sense of where you land long term . Do you think the long term algo changes is this plan set to put you on ?

Speaker #1: You on algo ? And if so , with what timing . And then maybe just a follow up on this year have any .

Speaker #1: Would repurchases be considered in the guidance? And how should we think about that?

Steve Cahillane: Yeah. Thanks for the question. We're not prepared, and it's too early to talk about long-term algorithms. I would just underscore what I said in terms of bending the trend and exiting the year with momentum and looking at 2027 as a year where we can turn to organic growth. Perhaps at that time, we'll be in a position to talk more about long-term algorithms. And the second part of the question was.

Speaker #2: Yeah . Thanks for the question . We're not prepared and it's too early to talk about long term algorithms . I would just underscore what I said in terms of bending the trend and exiting the year with momentum and looking at 2027 as a where we as a year can turn to organic growth be in a we'll at that time , perhaps position to talk more long term about algorithms .

Speaker #2: And the second part of the question was , look .

Andre Maciel: Yeah. Look, on the capital allocation priorities, we have stated for a long time that our number one priority is to deploy excess cash on the business. That's exactly what we're doing right now, followed by maintaining our net leverage at approximately three times. With what we're expected to be done to land in 2026 with the guidance we're providing, we will deploy excess cash to pay down debt this year. We will deploy part of the excess cash next year to pay down debt as well because we want to, our policy does not change. We continue to target the net leverage to be at three times.

Speaker #3: On the capital allocation priorities, we have stated for a long time that our number one priority is to deploy excess cash on the business, and that's exactly what we're doing right now, followed by maintaining our net leverage at approximately three times.

Speaker #3: And with what we're expecting EBITDA to land in '26 with the guidance we are providing, we will deploy excess cash to pay down debt this year.

Andre Maciel: We will deploy part of the excess cash next year to pay down debt as well because we want to, our policy does not change. We continue to target the net leverage to be at three times. So, once we believe we have now the sufficient level that the business needs on the organic front and we reinstated the debts to our target leverage, then if you have excess cash beyond that, you can deploy in alternative forms.

Speaker #3: You and we will deploy part the excess cash next year to pay down debt as well , because we want to our our policy does not change .

Speaker #3: So we continue to target the letter average about three times . So once we believe we have now the sufficient level that the business needs on the organic front .

Andre Maciel: So, once we believe we have now the sufficient level that the business needs on the organic front and we reinstated the debts to our target leverage, then if you have excess cash beyond that, you can deploy in alternative forms.

Speaker #3: And the reinstated to our target leverage , beyond that , you can then if you excess cash have deploy an alternative forms .

Michael Lavery: Okay. Great. Thank you.

Speaker #1: Okay . Great . Thank you .

Operator: Our next question is from Leah Jordan with Goldman Sachs.

Speaker #4: Our next question is from Leah Jordan with Goldman Sachs .

Leah Jordan: Good morning. Thank you for taking my question. I wanted to ask about SNAP, given you added a headwind to your outlook this year. What is your SNAP exposure today? How much have the recent SNAP changes impacted your business so far? And I think, ultimately, how do you think about addressing the needs for this customer cohort versus balancing the broader needs we've talked about so far this morning across your portfolio? And I guess, ultimately, how does this impact your view on the need to invest in base prices versus promotions as well? Thank you.

Speaker #5: Good morning . Thank you for taking my question . I wanted to ask about Snap given you added a headwind to your outlook this year , what is your snap exposure today ?

Speaker #5: How much have the recent Snap changes impacted your business so far ? And I think ultimately , how do you think about addressing the needs for this customer cohort versus balancing the broader needs ?

Speaker #5: We've talked about so far this morning across your portfolio . And I guess ultimately , you know , how does this impact your view on the need to invest in base prices versus promotions as well ?

Speaker #5: Thank you .

Steve Cahillane: Yeah. Thanks for the question. I'll start, and I'm sure Andre can build on it as well. SNAP is obviously a headwind in consumer goods because the consumer that's under the most pressure is having money removed from their household budget. But it also presents an opportunity for us to compete for that consumer with opening price points, with small pack sizes, with all the things that we talked about doing. And so there is a headwind, but that's before we work against mitigation and how we mitigate against those headwinds. And so we're all in the same boat in terms of this particular issue. But we've got a lot of plans in place, and we'll continue to develop plans to meet that consumer where they are with the right price points, the right entry price points, the right pack sizes.

Speaker #2: Yeah , thanks for the question . I'll start . And I'm sure Andre can build on it as well . You know , snap is obviously a headwind in consumer goods the because consumer that's under the most pressure is having money removed from their household budget .

Speaker #2: But it also presents an opportunity for us to compete for that with points, with small pack sizes, with all the things that we talked about doing.

Speaker #2: And so there is a headwind , but that's before we work against mitigation and how we mitigate against those headwinds . And so we're all in the same boat in terms of this , this particular issue .

Speaker #2: But we've got a lot of plans in place . And we'll continue to develop plans to meet that consumer where they are with the right price points , the right entry price points , the right pack sizes .

Andre Maciel: Yeah. Our exposure today, about 13% of the US retail business comes from SNAP compared to 11% in the industry. So we do over-index a little bit. Part of the $600 million investment is on opening price points. And we do anticipate roughly 40% of the categories, not of the SKUs, 40% of the categories will have some specific strategy around opening price points. And that's part of what's in the plan right now. We do expect, and it's contemplated in the guidance, 100 basis points headwind coming from SNAP as a function of the level of funding being reduced. But I think a part of the investment, as we said, is about getting that being deployed throughout the year, more concentrated in the second half of the year so we can mitigate or partially mitigate that impact.

Speaker #3: Yeah , our exposure today , about 13% of the US retail business comes from snap compared to 11% in the industry . So we do overindex a little bit .

Speaker #3: But of the $600 million investment is on opening price points and we we do anticipate roughly 40% of the categories SKUs , , not of the 40% of the categories will have some specific strategy around opening price points .

Speaker #3: And that's part of what's in the plan right now . We do expect and is contemplated in the guidance 100 headwind from from Snap coming as a function of the level of funding being reduced .

Speaker #3: But we—I think a part of the investment, as we said, is about getting that being deployed throughout the year, more concentrated in the second half of the year.

Speaker #3: So we can mitigate or partially mitigate that impact .

Leah Jordan: Great. Thank you.

Speaker #5: Great . Thank you .

Operator: Our next question is from Chris Carey with Wells Fargo.

Speaker #4: Our next question is from Chris Carey with Wells Fargo .

Chris Carey: Hi. Good morning, everyone. I want to ask about the investment into the concept of value pricing. In the prepared remarks today, you talked about leaning in on promotional activity. You talked about opening price points. You talked about revisiting base prices where necessary. Those all kind of have different lead times associated with them. I was just curious how you envision this playing out. Will you lead with more promotional activity early, starting in Q2? Should we expect price rollbacks beginning in Q2? And with the packaging investments, it certainly feels like there's going to be some revenue growth management associated with this, which tends to have longer lead times. So maybe price pack is a bit later in the curve, right?

Speaker #6: Good morning everyone Hi . . I wanted to ask about morning . I want to ask about the , you know , investment the into concept of value pricing in the remarks prepared today , you talked about leaning in on promotional activity .

Speaker #6: You talked about opening price points . You talked about revisiting base prices , where necessary . Those all kind of have different lead times associated with them .

Speaker #6: I was just curious how this how you envisioned this playing out . Will lead with more promotional activity early starting in Q2 ? Should we expect price rollbacks beginning in Q2 ?

Chris Carey: Will you lead with more promotional activity early, starting in Q2? Should we expect price rollbacks beginning in Q2? And with the packaging investments, it certainly feels like there's going to be some revenue growth management associated with this, which tends to have longer lead times. So maybe price pack is a bit later in the curve, right? So obviously, I'm just trying to understand how the implementation of the concept of value is going to happen as you phase through this between promotions, price rollbacks, and some of the price pack architecture initiatives you might have. Any clarity that would be helpful?

Speaker #6: And that fields with the packaging investments ? It certainly feels like there's going to be some , you know , revenue growth management associated with this , which which tends to have longer lead times .

Speaker #6: So maybe , you know , price pack is a bit later in the curve , right . So obviously I'm just trying to understand how the implementation of the concept of value is going to happen .

Chris Carey: So obviously, I'm just trying to understand how the implementation of the concept of value is going to happen as you phase through this between promotions, price rollbacks, and some of the price pack architecture initiatives you might have. Any clarity that would be helpful?

Speaker #6: As you face through this between promotions and, price, some of rollbacks, the price back architecture initiatives, you might have—any clarity there would be helpful.

Steve Cahillane: Yeah. I think you did a very good job answering your question because you're exactly right. Some of the price package architecture takes some time. We're working on it already right now. The company understood about the importance of opening price points and pack sizes and so forth before I got here. And so we're working to accelerate some of that work. We can make very quick adjustments, though, in pricing and opening price points. And nothing crazy or irrational here. You've heard me talk in the past, maybe, about the importance of earning price in the marketplace, giving consumers a reason to pay more, through innovation, through product, through performance. And what's happened over the course of the last several years, industry-wide, is because of the massive amount of input cost inflation, we busted through four or five levels of price points in a very accelerated fashion.

Speaker #2: I think you did a very good job answering your question because you're exactly right. Some of the price package architecture takes some time.

Speaker #2: We're working on it already . Right now , the company understood about the importance of opening price points and pack sizes and so forth .

Speaker #2: Before I got here. And so we're working to accelerate some of that, can make work. We made very quick adjustments, though, in pricing and opening price points.

Speaker #2: And nothing crazy or irrational here . You've heard me talk in the past . Maybe about the importance of earning price in the marketplace , giving consumers a reason to pay more through innovation , thru product , through performance .

Speaker #2: And what's happened over the course of the last several years industrywide is because massive of the amount input cost , of inflation . You know , we busted 4 or 5 levels of price points in a very accelerated fashion .

Steve Cahillane: The consumer was left very disappointed in that. That's been very well understood and obvious. So as we continue to work on our productivity programs, the company's done a very good job at delivering productivity. We aim to do that again. Between the productivity, between the investment, we believe we can get back to price points that are more friendly to consumers. We can do that pretty quickly. Andre, if you want to build on that.

Speaker #2: And the consumer was left very disappointed in that . And that's been very well understood and obvious . And so as we continue to work on our productivity programs , the company has done a very good job at delivering productivity .

Speaker #2: We aim to do that again . And between the productivity , between the investment , we believe we can get back to price points that are more friendly to consumers .

Speaker #2: can do And we that pretty Andre , quickly . if you want to build on that .

Andre Maciel: Yeah. So to be honest with you, this proportional amount or the majority of the $600 million is really deployed about what we believe are healthier ways to grow the business in the long term. So that is about more marketing, more R&D, investments in the product and packaging, and increasing the infrastructure or headcount around sales and marketing so it can show up with better execution. But there is a portion of the investment that is geared toward price, as you expect, given that we're saying that we expect to build share momentum heading to the second half. Most of the incremental resources related to price will show up more later in the year, later in Q2. However, you remember that we did step up investment on price in 2025. Not everything worked the way we anticipated. There was a lot of lessons learned there.

Speaker #3: Yeah . So to build on , Steve is saying a disproportional amount or the majority of the 600 million is really deployed about believe are healthier what we ways to grow the business the long term .

Speaker #3: So that is about more marketing, more R&D investments in the product and packaging, and increasing the infrastructure or headcount around sales and marketing.

Speaker #3: So we can show up with better execution . So but there is a portion of the investment that is geared toward price as you as you expect , given that you're saying that we expect to build momentum heading into the second half , most of the incremental resources related to price show up more later in the year .

Speaker #3: Later in Q2 , however , you remember that we did step up investment on price in 2025 . Not everything that worked the way we anticipated .

Speaker #3: There was a lot of lessons learned there . And so there is a portion of that investment that is starting earlier in Q2 .

Andre Maciel: And so there is a portion of that investment that is starting earlier in Q2 that is already about optimizing the tactics that we have deployed last year. Okay? So you could expect us to see improvement in what we have deployed last year, but then the incremental really focus on the second half. And in terms of base price versus new price points, just to clarify on that. So as I just said a moment ago, the opening price points is expected to impact about 40% of the categories, not 40% of the revenue, okay, 40% of the categories. We do have very selected places where base price makes sense.

Speaker #3: That is already about optimizing the tactics that we have deployed last year . So you could expect us to see improvement in what you have deployed last year .

Speaker #3: But then the incremental really focus on the second half . And in terms of base price versus new price points , that clarify on that .

Speaker #3: So as I just said a moment ago , the opening price points is expected to impact about 40% of the categories , not 40% of the categories 40% of the revenue , .

Speaker #3: do We have some very selected places where base price makes sense . So we don't want to talk the specific categories here on this call .

Andre Maciel: So we don't want to talk about the specific categories here on this call, but there are a couple of spots where it makes sense to do that because we cross some thresholds, and we believe it's not in a healthy level. But again, this is very selected. It should be expected that the majority is really around building momentum in e-commerce. I think we had a lot of traction in the second half, show up better in store execution, and deploy on the opening price points.

Speaker #3: But but there are a couple of spots where it makes sense to do that because we cross some thresholds and we believe it's not in a healthy level .

Speaker #3: again , this But is very selective . You should expect that the majority is really around building momentum in e-commerce . I think we had a lot of traction in the second half .

Speaker #3: Show up better in execution and deploying the opening price points .

Chris Carey: Okay. Makes sense.

Speaker #6: Okay . Makes sense .

Leah Jordan: Ryder, we have one more question.

Anne-Marie Megela: Ryder, we have one more question.

Speaker #7: Thank you . One more question .

Operator: Thank you. Our last question is from John Baumgartner with Mizuho Securities.

Speaker #4: Thank you. Our last question is from John Baumgartner with Mizuho Securities.

Chris Carey: Good morning. Thanks for the question. Steve, I'd like to ask about the reinvestment. You're ramping the financial resources. But if we could focus on the softer skills, how you connect with consumers, how you stand out to retailers on merits other than just maybe scale and trade promotion, are the soft skills, those consumer-facing skills, when you improve those, is it a matter of technology and insights at this point? Is it a matter of augmenting personnel, changing the culture? Just where do you see the company needing to improve aside from financial supports in the P&L? And how much of a heavy lift do you anticipate that to be?

John Baumgartner: Good morning. Thanks for the question. Steve, I'd like to ask about the reinvestment. You're ramping the financial resources. But if we could focus on the softer skills, how you connect with consumers, how you stand out to retailers on merits other than just maybe scale and trade promotion, are the soft skills, those consumer-facing skills, when you improve those, is it a matter of technology and insights at this point? Is it a matter of augmenting personnel, changing the culture? Just where do you see the company needing to improve aside from financial supports in the P&L? And how much of a heavy lift do you anticipate that to be?

Speaker #8: Good morning . Thanks for the question , Steve . I'd like to ask about the reinvestment you're ramping the financial resources . But if we could focus the on connect with softer skills , consumers , how you stand out to retailers on other than just maybe scale and trade promotion soft are the skills those consumer facing skills when you improve those , is it a matter of technology and insights at this point ?

Speaker #8: Is it a matter of augmenting personnel , changing the culture ? Just where do you see the company needing to improve ? Aside from financial supports and the personnel , and how much of a heavy lift do you anticipate that to be ?

Steve Cahillane: Yeah. Thanks for the question, John. This company has great capability and great people. We're just very lean. And so we need to supplement and bolster the people that we have against our commercial activities. And we need to continue to invest in technology and where the world is going. It's well-documented. AI is changing everything. And we need to be on the forefront of the way we think about technology and deploying it against our brands and with our customers. We start with a consumer-first mindset, no question about that. This investment is against making sure that we can attract consumers and drive greater household penetration. And I'm very confident that when our customers hear today what we're doing, reinvesting against this wonderful portfolio, I've had lots of conversations with all these customers already, I think this is going to be very welcome news.

Speaker #2: Yeah , thanks for the question , John . You know , this company has great capability and great people . We're very just lean .

Speaker #2: And so we need to supplement and bolster the people that we have against our commercial activities. And we need to continue to invest in technology, world, and where the is going.

Speaker #2: You know , it's well documented . AI is changing everything . And we need to be on the forefront of the way we think about technology and deploying it against our brands and with our customers .

Speaker #2: start with a You know , we consumer question about that . This investment is against making sure that we can attract consumers and drive greater household penetration .

Steve Cahillane: And I'm very confident that when our customers hear today what we're doing, reinvesting against this wonderful portfolio, I've had lots of conversations with all these customers already, I think this is going to be very welcome news. That's perhaps what we haven't talked much about. This means a lot to our customers when Kraft Heinz shows up with this type of investment plan against brands that matter. We're excited about the future and appreciate everybody's interest in the call today.

Speaker #2: And I'm very confident that when our customers here today , what we're doing reinvesting against this wonderful portfolio , I've had lots of conversations with all these customers already .

Speaker #2: I think this is going to be very welcome news . And so that's perhaps what we haven't talked much about . But this means a lot to our customers .

Steve Cahillane: That's perhaps what we haven't talked much about. This means a lot to our customers when Kraft Heinz shows up with this type of investment plan against brands that matter. We're excited about the future and appreciate everybody's interest in the call today.

Speaker #2: When Kraft Heinz shows up with this type of investment plan against brands that matter . And so we're excited about the future and I appreciate everybody's interest in the call today .

Chris Carey: Thank you.

Speaker #2: Great .

Speaker #8: Thank you .

Operator: Thank you. This concludes our question-and-answer session. I'd like to hand the floor back over to Anne-Marie Megela for any closing comments.

Speaker #4: Thank you. This concludes our question and answer session. I'd like to hand the floor back over to Anne-Marie Megela for any closing comments.

Leah Jordan: Just want to thank everyone for your interest today, for your questions. We will see you all next week at CAGNY.

Speaker #7: I just want to thank everyone for your interest your today , for questions , and we will see you all next week . Cagny .

Operator: This concludes today's conference. We thank you again for your participation. You may disconnect your lines at this time.

Q4 2025 Kraft Heinz Co Earnings Call - Q&A

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