Kellanova

Good morning. Welcome to the Kellogg Company's third quarter 2020 earnings conference 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 session with publishing analysts. 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 third quarter results, as well as updates regarding our outlook for full year 2020. I'm joined this morning by Steve Cahillane, our chairman and CEO, and Amit Banati, our chief financial officer. Slide three shows our 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. This is of particular note during the current COVID-19 pandemic, when the length and severity of the crisis and resultant economic and business impacts are so difficult to predict. A replay of today's conference call will be available by phone through Thursday, November 5th. The call will also be available via webcast, which will 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. I hope you and your families are holding up well in these turbulent times. Here at Kellogg, to get through this crisis, we are executing well against our key priorities during the crisis. We remain vigilant and active in keeping our employees safe, which remains job number one for us, and our employees have handled this extremely well. We continue to supply the marketplace with our foods, with no major supply disruptions and service levels gradually improving in the quarter. We continue to aid our communities with significant cash and food donations, not to mention the time our employees have generously volunteered to various initiatives and causes. And amidst very uncertain economies and financial markets, we have effectively preserved and improved our financial flexibility. These have been our priorities throughout the crisis, and we are executing very well against them. From the standpoint of financial results, we had another strong quarter with some highlights shown on slide number six. First, our results came in stronger than we expected. We posted another quarter of strong organic net sales growth with a good balance between volume growth and price realization and with growth across all four regions and across all four major category groups, cereal, snacks, frozen, and noodles. We expanded our gross profit margin as price, volume, and productivity more than offset sustained high levels of incremental COVID costs. And as we said we would, we shifted brand building investment from the first half into the second half, resulting in a double-digit year-on-year increase in quarter three. We generated better than expected profit and earnings in the quarter, and particularly important in an uncertain economy, we generated better cash flow than we anticipated, allowing us to further reduce our net debt. Second, our emerging markets continue to exceed our expectations in spite of challenging COVID and economic conditions. We generated double-digit organic net sales growth in both Latin America and EMEA. Across all of our emerging markets, we collectively recorded double-digit organic net sales growth in cereal and noodles, and we grew snacks at a high single-digit rate despite their on-the-go orientation their reliance on traditional trade that's been more disrupted by COVID, and being a more discretionary purchase in difficult economic times. The strength of our portfolio, the diversification of our geographies, and the experience of our management teams are clearly on display. And third, we've continued to perform well in market. As expected, at-home consumption growth for packaged foods in general decelerated across the quarter, and our categories were no different. The good news is that year-to-date we have held or gained share in markets that represent almost three-quarters of our annual net sales in measured markets. Most notable in quarter three was the United States, where we gained share in five of our six primary categories, in Europe, where we gained share in cereal across most of our major markets, and in EMEA, where we gained share of cereal in 11 of 13 major markets. Clearly, our brands and our brand building are resonating. And even in away-from-home channels, which remain soft during this pandemic, we gain share in most of our categories in the U.S. We also like how we're performing in e-commerce, an area in which we've invested in capabilities in recent years and in which we continue to grow rapidly, outpacing our categories in key markets. So we are winning in the marketplace and delivering better-than-expected financial results in the process. Turning to slide number seven, this sustained strong performance puts us in a good position to finish the year, not only with strong results and financial flexibility, but also with investment for the future. Let's take each in turn. First, we're again raising our full-year guidance based on the strength of our better-than-expected third quarter results. As Amit will explain, we are raising our guidance for full-year organic net sales growth currency-neutral adjusted basis operating profit and earnings per share, and cash flow. It's been a lot of work, but we're headed for a very strong year. Second, we continue to invest for the future. Our brand-building investment will be up double digits again in quarter four as we continue to reinvest funds that were delayed from the first half during the pandemic on top of what had been planned for quarter four. Now is the time to communicate with consumers who discovered our foods during the pandemic. Now is the time to emphasize new messaging around certain brands. Now is the time to further develop our master brand approach to advertising multiple brands in certain international markets. And now is the time to invest behind the launch of new brands like plant-based incognito from Morningstar Farms in the U.S. and market expansion of brands like Cheez-It in Canada. On top of that, we're investing in capabilities, such as in e-commerce, in packaging capabilities, and in capacity. Simply put, we are taking actions now to emerge from this crisis a stronger company and with increased confidence in our trajectory for consistent, balanced growth. We're seeking to retain incremental households. We're building on our strength in e-commerce, and we're ensuring that our emerging markets remain engines of growth for us. We're also strengthening our financial flexibility and delivering increased earnings this year for our share owners. So with that, let me turn it over to Amit, who will take you through our financial results and outlook in more detail.