Mondelez International, Inc.

Please stand by. Your program is about to begin. If you need assistance on today's call, please press star zero. Good day and welcome to the Mondelez International first quarter 2022 earnings conference call. Today's call is scheduled to last about one hour. including remarks by Mondelez and management in the question and answer session. In order to ask a question, please press the star key followed by the number one on your touch-tone phone at any time during the call. I'd now like to turn the call over to Mr. Shep Dunlap, Vice President, Investor Relations for Mondelez. Please go ahead, sir.

Good afternoon, and thanks for joining us. With me today are Dirk Vandeput, our Chairman and CEO, and Luca Zaramella, our CFO. Earlier today, we sent out our press release and presentation slides, which are available on our website. During this call, we'll make forward-looking statements about the company's performance. These statements are based on how we see things today. Actual results may differ materially due to risks and uncertainties. Please refer to the cautionary statements and risk factors contained in our 10-K, Q, and 8-K filings for more details on our forward-looking statements. As we discuss our results today, unless noted as reported, we'll be referencing our non-GAAP financial measures, which adjust for certain items included in our GAAP results. In addition, we provide our year-over-year growth on a constant currency basis, unless otherwise noted. You can find the comparable GAAP measures and GAAP to non-GAAP reconciliations within our earnings release and at the back of the slide presentation. In today's call, Dirk will provide a business and strategy update, then Luca will take you through our financial results and outlook. We will close with Q&A. Before turning it over to Dirk, a reminder that we have an investor update on May 10, and that will begin 9 Eastern, 8 Central, where Dirk, Luca, and other senior leaders will talk more about the evolution of our strategy. More details will be on our IR website soon. With that, I'll turn the call over to Dirk.

Thank you, Shep, and thanks to everyone for joining the call today. I will start on slide four. I am pleased to share that we have delivered an excellent start to the year with robust volume growth, solid pricing, strong gross profit dollar growth, and high cash delivery. Strong demand for snacks fueled broad-based growth all around the world, with the chocolate and biscuit categories continuing to demonstrate resilience and price elasticity remaining below historical levels. We also continue to effectively navigate a dynamic environment characterized by global input cost inflation, as well as lingering disruptions in the supply chain, labor, and transportation. Throughout the quarter, we succeeded in mitigating these challenges through ongoing cost discipline and strategic pricing actions. At the same time, we continue to invest to support our brands, our distribution, our capabilities, and acquisitions. We remain confident that the strength of our brands, our proven strategy, and our continued investment position as well to deliver attractive, sustainable growth for the remainder of 2022 and beyond. It is especially important to note that we remain extremely confident in our people, the very best in the CPG industry. Each and every day, our makers and bakers around the world remain focused on delivering high quality, great tasting snacks to enrich the lives of consumers. No matter how the external environment shifts from one quarter to the next, our diverse and dedicated teams continue to deliver the brands our consumers love. Turning to slide five, you can see that our strategy is continuing to drive a virtuous cycle. The strength of our brands are continuously increasing investments and significant pricing actions are sustaining top line momentum and solid profitability and position as well for another strong year in 2022. Our first quarter results show that we are off to a strong start. We grew revenue this quarter by 8.6%. We delivered gross profit growth of 9.9% due to higher pricing and robust volume. Our ANC investments have increased high single digits, and we gained our health share across half of our revenue base. We increased operating income by 13.5%. and delivered $1 billion in free cash flow. We view these results as a healthy indicator of our ability to continue to deliver on our long-term growth algorithm. As you can see on slide six, we are now averaging a 4.7% quarterly revenue growth rate since 2019. We feel good about this strong and consistent track record. In the second half of 2018, we shifted our paradigm on how to generate elevated growth by focusing on gross profit dollar growth, local first commercial execution, a virtuous cycle of always increasing investments, and a new approach to incentives. We are confident that this approach will continue to consistently deliver attractive growth. We also believe this performance demonstrates not only the strength of our execution, but the attractiveness and durability of our core categories of chocolate and biscuit. Against that backdrop, I am now on slide seven. We are excited to provide some additional details on our recently announced acquisition of Ricolino, the number one sugar confectionery and number four chocolate player in our priority market of Mexico. This strategic acquisition will enable us to double our size in Mexico, a key priority market for us and Latin America's second largest market after Brazil. Ricolino has a broad portfolio of iconic, widely loved chocolate and candy brands, including Ricolino, Vero, La Corona, and Coronado. In addition to these Taste of the Nation brands, The organization's robust route-to-market infrastructure, which has more than 2,100 DSD routes that serve more than 440,000 traditional trade outlets, will enable us to rapidly expand our share in biscuits and chocolate. We also will benefit from four new manufacturing facilities with strong production capabilities. We expect this acquisition to rapidly drive value Ricolino has been growing at an 8% CAGR with solid profitability over the past five years and currently delivers more than $500 million in net revenue. Its high strategic fit transforms our business with now 75% of revenues coming from core snacking categories and great opportunities for both revenue and cost synergies. Like other companies, as shown on slide eight, we are experiencing a dynamic operating environment driven by global cost inflation and supply chain volatility. We condemn the war in Ukraine, which is not only causing great human suffering, but adds to an already very difficult cost and supply chain environment. Let's take a closer look at each of these dynamics and the steps we are taking to address them. First, we continue to face elevated input cost inflation, especially in the areas of energy, transportation, packaging, wheat, dairy, and edible oils. To offset these challenges, we recently announced further pricing actions across key markets. Additionally, our commodity costs are about 85 percent hedged for the year and near fully hedged in key areas. We are also continuing to accelerate productivity and throughput initiatives. Second, we continue to manage through volatility in the supply chain, especially in the US, due to labor shortages at third parties, as well as a continuing gap between demand and supply of trucking capacity and containers. To offset these challenges, we are continuing to improve our manufacturing and warehouse capacity prioritizing key SKUs and implementing new measures to support employee retention. And third, we are working through numerous challenges related to the ongoing war in Ukraine. I would now like to spend a few minutes addressing our actions to care for and protect our people, as well as our operations in the region. First and foremost, our thoughts are with the people of Ukraine and all those around the world with family, friends, and loved ones who have been impacted. The current situation is devastating, and we condemn this senseless violence. We have taken a number of important steps to protect our colleagues, including strong financial support, border crossing assistance, and help with finding housing. As part of these steps, we are continuing to pay our employees in Ukraine. Additionally, we are stepping up our commitment to relief efforts, dedicating so far 10 million to humanitarian support and food security. This includes donations to international and local aid organizations focused on supporting all people in Ukraine, but also with a specific focus on the communities where we have plans. On top of financial donations, our teams are providing on the ground help. For instance, We have helped transfer more than 100 children from Ukraine to Turkey, secured diesel generators to help provide power to critical public facilities, and we are making food available in Ukraine, including product donations and working with distributors. Our two manufacturing operations in Ukraine have been shut down since the war began. Unfortunately, our site in Trostyanets has suffered significant damage. due to the substantial military action in the area. Our site in Vyshorod also remains closed. Thankfully, none of our employees were injured at either facilities. It is too early to provide you with potential next steps for the facilities, but we will work to make these facilities operational when the local situation allows. In terms of our business in Russia, as a food company, we have scaled back all non-essential activities, including stopping all new capital investments, any planned product launches and line extensions, commercial sponsorships, and advertising. We are focused on local production of shelf-stable packaged snacks that are staples in people's daily lives. We also continue to provide support to our colleagues. With that, I will hand over to Luca for more details on our financials.