Kellanova

Good morning. Welcome to the Kellogg Company's first quarter 2020 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, Operator. Good morning, everyone, and thank you for joining us today for a review of our first quarter results as well as our outlook for 2020. I'm joined this morning by Steve Cahillane, our Chairman and CEO, and Ahmed Binadi, our Chief Financial Officer. Due to the pandemic and measures to stay safe, we are calling in from multiple locations and even time zones, so hopefully technology will carry the day and we'll all hear each other clearly throughout the call. Slide number three shows our forward-looking statements disclaimer. As you are aware, certain statements made today, such as projections for catalog companies' 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 7th. The call will also be available via webcast, which can be archived for at least 90 days on the investor page of KelloggCompany.com. As always, when referring to our results and outlook, unless otherwise noted, we will be referring to them on a currency-neutral basis for net sales, and on a currency-neutral adjusted basis for operating profit and earnings per share. And now I'll turn it over to Steve.

Thanks, John, and good morning, everyone. Obviously, these are unprecedented times, and our hearts and thoughts go out to the families affected and lives disrupted by the coronavirus pandemic. And I sincerely hope you and your families are staying healthy and safe. Today, we'll share with you what we're doing to keep our employees safe and the markets supplied with food and how we're giving back to the community. These are the priorities right now. Obviously, it has been nothing close to business as usual over the past few weeks and is not likely to be business as usual for some time during the crisis, starting with slide number five. Our first priority, of course, is to keep our employees safe. We acted quickly to protect our employees, taking a global crisis management approach. We invested in incremental safety supplies, personal protection equipment, and cleaning protocols across our facilities. We took measures like temperature checks and social distancing protocols in our plants and distribution centers. We provided recognition bonuses and enhanced benefits like leave policies for our plant and distribution center employees. We implemented travel and meeting restrictions followed by work from home policies, investing in technology to make this possible. I meet daily with my leadership team to monitor, assess, and make timely decisions and we are having regular worldwide updates via video conferences with all employees. Safety will continue to be our highest priority. Our next priority has been to ensure we are supplying food to the marketplace, as captured on slide number six. As a food manufacturer, we have a unique role and responsibility during this crisis. Our beloved foods and brands are sought by consumers. worldwide, making it so important for us to find ways to get our products to them. Fortunately, governments have established that food is designated as an essential service, and we're collaborating closely with them. As a result, since late February, we've been able to run our plants at full capacity in most markets around the world, increasing production by focusing on key items. We are working closely with our retailers to get them what they need. We've invested in additional warehouse space redeployment of inventory, and increased access to transportation. We've deferred certain commercial activations and product launches, and we've invested in technology to support critical business and finance systems. I couldn't be more proud of the way our supply chain has responded to these challenges. It hasn't been easy. This has required a lot of extra planning, problem solving, and investment in execution. Another priority during the crisis has been aiding our communities as depicted on slide number seven. We pride ourselves for being a company with heart and soul, and we have stepped up our giving during this crisis, helping our food bank partners and neighbors in need during this pandemic. Local governments have specifically called out food security as a top priority in their fight against COVID-19. And so, aligned with our Kellogg's Better Days program to address food insecurity around the world, Kellogg and our charitable funds have donated more than $10 million so far in food and funds to fund global COVID-19 food relief efforts. Around the world, we're donating to everything from local food banks and school feeding programs to child care centers, hospitals, and senior care centers. All of this is completely consistent with Kellogg's heritage and values, which makes this company truly special. So let's turn to slide number eight and put this into the context of business performance and financials. Prior to and during the accelerated global spread of the coronavirus, our base business is performing very well. We accelerated our organic net sales growth, even excluding the estimated impact of the pandemic in March, and we had continued to make progress toward offsetting mixed headwinds and sequentially improving our gross profit margin. And, as promised, we had boosted our brand building investment behind targeted brands and categories around the world. We feel as strongly as ever that our Deploy for Growth strategy is working. Then, of course, the crisis hit and redirected our focus and plans. You've all seen the scanner data, notably for the United States and Western Europe, which showed a sharp acceleration in consumption growth beginning around the first and second weeks of March. Since that time, we have been focused on producing and shipping food. Most of our plants have ramped up their production, while in some emerging markets, restrictions and logistical challenges prevent us from running at full capacity. While shipments have accelerated, so has our investment in our plants, for safety and for our employee appreciation and benefits, and in our logistics for incremental warehouse space and transportation. From a brand investment standpoint, many of our second quarter commercial activities, as well as product launches, have been delayed to the third and fourth quarters. So where does this put us for the rest of the year? How long the crisis persists and how quickly we can return to business as usual operations and commercial activities is obviously unknown at this point. So far in quarter two, we're seeing elevated if slowing at home consumption, partially offset by severe softness and away from home channels, a slowing in certain emerging markets, high investment and utilization in our supply chain to get food to the marketplace, and less commercial activation and innovation activity as we and our customers focus on getting food on the shelf. Obviously, the third and fourth quarters are harder to predict. For now, though, we are prudently assuming economic softness and investment shifts to create a profit offset to the first half. Beyond the factors we cannot control, we are prepared to weather the crisis. Our employees are engaged and working to stay safe. We are supplying the market as best we can, and our financial health is solid. We're also taking a very close look at our plans in the event of a prolonged global economic slowdown. We've studied what worked well and what did not in past recessions, and how this one could be different for the globe and for our portfolio. We strongly believe that our Deploy for Growth strategy, with its focus on occasions, growth portfolio, world-class brands, and service, has us well-prepared for making any necessary adjustments. So with that, let me turn it over to Amit, who will take you through our financial results and outlook in more detail.