Kellanova

Good morning. Welcome to the Kellogg Company first quarter 2019 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. Please limit yourself to one question during the Q&A session. Thank you. Please note, this event is being recorded. At this time, I will turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellogg Company. Mr. Renwick, you may begin your conference call.

Thank you, Gary. Good morning, and thank you for joining us today for a review of our first quarter 2019 results and update of our full year 2019 outlook. I'm joined this morning by Steve Cahalan, our Chairman and CEO, and Fareed Khan, our Chief Financial Officer, who has announced that he'll be leaving Kellogg this summer. Therefore, we were also joined by Ahmed Benadi, who is on the call not only as our current president of EMEA, but also as our incoming CFO. Slide number three shows our usual forward-looking statements disclaimer. As you are aware, certain statements made today, such as projections for Kellogg Company's future performance, are forward-looking statements. Actual results could be materially different from those projected. For further information concerning factors that could cause these results to differ, Please refer to this third slide of the presentation, as well as to our public SEC filings. A replay of today's conference call will be available by phone through Thursday, May 9th. The call will also be available via webcast, which will be archived for at least 90 days. As always, when referring to our results in Outlook, we will be referring to them on a currency-neutral adjusted basis, unless otherwise noted.

And now I'll turn it over to Steve. Thanks, John, and good morning, everyone. I think it's appropriate to start the call with our news of a transition in our Chief Financial Officer role. As you saw in our press release, Fareed will be leaving the company following the completion of our second quarter. Fareed has contributed mightily to the completion of Project K and to the creation and launch of our Deploy for Growth strategy. He has shown a real passion for growing our business, and he's been a valued partner to me and to our entire executive committee. So thank you, Fareed, for your service. We are fortunate to be able to name a fellow executive committee member, Amit Binati, to succeed Fareed. Most of you already know Amit, who has been a driving force behind the transformation of our Asia Pacific, Middle East, and Africa business. Not only does he have EMEA on track to more than double in size during his tenure, but he has diversified its portfolio, improved the margins of the base, and posted consistently solid results. What you may not know about Ahmed is that he earned his finance stripes early in his career, which makes him a particularly effective and financially oriented general manager. Because these two gentlemen have worked together for the past couple of years, and because Farid is staying on to ensure a smooth transition, you can be confident that this transition will be orderly and will cause no disruption to our plans, our results, or our transparency with investors. You'll hear from both of them momentarily. Turning to the quarter, I would describe our Q1 as on strategy and on plan. During the quarter, we took further decisive actions under our Deploy for Growth strategy. Some of these are listed on slide number six. For instance, we continued to shape a growth portfolio, reaching an agreement to sell cookies, fruit snacks, pie crusts, and ice cream cones to Ferrero. While it's never easy to part with solid brands and talented employees, We feel good that they're all going to a quality company. And for us, this divestiture will focus our portfolio on our biggest snacking categories and brands and improve our financial flexibility through a better margin mix and reduced debt. We reached an agreement expediently and will likely record a small gain on the sale. So, a very good outcome. Importantly, we continue to expand our emerging markets presence. Focusing on affordability and occasions, we have broadened our product line, both in foods and packaging. And recognizing the critical importance of distribution in these markets, we have bolstered our go-to-market capabilities and reach. As a result, our emerging markets had another strong quarter of organic net sales growth, and that does not even yet include the double-digit growth of our Nigerian distributor, Multipro. We also continue to invest in capabilities and processes. As you know, we reorganized our North America structure for a flatter, more nimble organization. As our new ways of working get refined, we should see greater agility and focus. We realigned global resources around key commercial priorities, and we invested money and resources into areas like digital and e-commerce. All of this requires investments up front, but will enhance our competitiveness. We're also on plan as described on slide number seven. Last year we invested in revitalizing key brands. We adjusted their positioning and their messaging. We ramped up their brand support and commercial execution. And it's working. Brands like the ones listed here did swing into growth or accelerate in 2018. This continued in 2019 with moderating investment behind these now revitalized brands, all according to plan. We spent the last couple of years enhancing our innovation capabilities and rebuilding a pipeline. In Q1, we launched a significantly greater quantity and quality of innovation than we have in years. It's early days, but as we'll discuss in a moment, these innovations are off to good starts. We also invested in PAC formats, such as retail-ready cases, harmonized PAC sizes in cereal, and on-the-go and affordability offerings around the world, just as we said we would. Also, as we previously communicated, we implemented revenue growth management actions in the marketplace across the globe and across our portfolio. Some of these actions started in late Q4, and some of them were implemented during Q1. Our international regions are showing solidly positive price realization already, while North America's is just getting going but turned positive already. As a company, we returned to organic growth in net sales in Q1. And this was despite some headwinds in North America. As we'll discuss in a moment, our recall of certain RX bars required inventory write-offs at our customers, pressuring net sales and profit. And we saw timing differences between shipments and consumption in certain categories, notably U.S. cereal. But behind these headwinds was good growth on core brands in North America, and our international regions continued to grow strongly. So we come out of Q1 on track for our first half and full year earnings estimates. And our full year guidance does not change either, save for layering on the impact of our already announced divestiture. So we're on strategy and on plan. Now let me turn it over to Freed, who will take you through our financial results and outlook in more detail.