Kellanova

Good morning. Welcome to the Kellogg Company's fourth 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 session with publishing analysts. At this time, I will turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kellogg Company. As a reminder, this call is being recorded. Mr. Renwick, you may begin your conference call.

Good morning, and thank you for joining us today for a review of our fourth quarter and full year 2020 results, as well as a discussion regarding our outlook for 2021. I'm joined this morning by Steve Cahillane, our Chairman and CEO, and Amit Banati, our Chief Financial Officer. Slide number 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 a 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 recording of today's webcast and supporting documents 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 an organic 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. Certainly, 2020 was an extraordinary year, and I'm incredibly proud of how our organization responded to and executed during a business environment that was anything but business as usual. Keeping our employees safe remains job one, and this has required investment and changes to the way we work. Supplying the marketplace with food required agility, contingency planning, and creative ways to increase production, not to mention the courage and dedication of our frontline workers. And aiding our communities, a key element of our company's culture and legacy, was accelerated during the crisis, and it has been especially heartwarming to see our employees giving their time and effort to the cause. We also preserved and improved our financial flexibility. These have been our priorities during the crisis, and we have been executing well against all of them. And even while having to execute against crisis management priorities, we also over-delivered on our financial commitments. We did our best to provide you with guidance during the year, despite an uncertain environment, and I trust that transparency was helpful to you. We ended up raising that guidance twice during the year, ultimately hitting or exceeding that guidance with our quarter four and full year results, even after absorbing $20 million in one-time costs related to redeeming debt late in the year. This is the kind of dependability we are striving for. We set out this year to return to balanced financial growth. meaning balance between top-line growth, margin expansion, and cash flow conversion. And sure enough, through all the unusual impacts, divestiture impact, COVID impacts, 53rd week, we did return to balanced financial growth in 2020. Strong organic net sales growth, even if you exclude a reasonable estimate for COVID's net benefit. An expansion in gross profit margin, despite incremental COVID-related costs. Growth in operating profit, even despite losing about six percentage points from the mechanical impact of last year's divestiture. a better than expected increase in cash flow, featuring a significantly improved conversion of net income. Even excluding COVID net benefits, we returned to balanced financial growth in 2020, right on schedule. We executed very well in market. The pandemic presented us with a sampling event like none other, and we saw increases in household penetration that outpaced most of our categories, giving us an excellent opportunity to communicate to and retain new and lapsed consumers. and we outgrew most of our categories, holding or gaining share of categories representing more than 80% of our net sales in those measured markets. Our emerging markets are a key long-term growth driver for us, and they represent over 20% of our net sales. In 2020, they were severely tested by pandemic-related shutdowns, economic slowdowns, even social unrest, and yet they delivered high single-digit organic net sales growth for us in 2020, even accelerating from the prior two years growth rates. This is a real testament to our portfolio, our local supply chains, and our experienced management teams in these markets. In short, the business performed very well in 2020, and we will take that momentum into 2021. Throughout the crisis, we have been working to ensure that there are lasting impacts from 2020 that should increase confidence in our ability to deliver consistent, dependable, balanced growth over time. I'll discuss just a few of them here. One is communicating with new and lapsed households. Rather than giving up on A&P we couldn't execute in the first half, we shifted that budgeted investment to the second half, focusing on advertising to these new and lapsed users. And we've leveraged advanced data and analytics to target those households and occasions. This gives us our best opportunity to retain an expanded consumer base. We know that online shopping for food experienced a step change in 2020. Our triple-digit growth in e-commerce sales was made possible by the brands in our portfolio and by our recent year's investment in infrastructure and capabilities. This will continue to benefit us. We're investing in our supply chain. This includes sustaining enhanced safety protocols that carry with them higher costs. But the crisis also resulted in us increasing our supply chain's agility and reducing complexity with the exiting of certain non-core product lines and tail SKUs. and it accelerated our expansion of capacity in areas that were already tight before the pandemic hit. This, too, will benefit us in 2021 and beyond. Enhanced financial flexibility is another lasting benefit. Improved cash flow generation and the prioritization of debt reduction resulted in deleveraging our balance sheet faster than we had anticipated. As Ahmed will discuss in a moment, this financial flexibility puts us in a position to resume dividend increases and share repurchases earlier than previously planned, returning more cash to share owners. And lastly, we remain solidly on track for consistent balanced growth. Even amidst the crisis, our focus was on what is best for sustainable growth. In addition to sustaining our solid top line growth, we have organizational focus on improving gross profit margin, increasing the return on our brand building investment, and discipline on overhead. There will be noise and uncertainty around the pandemic and its impacts. But in the spirit of transparency, we will continue to provide you guidance on our planning stance today. Our guidance for 2021 indicates balanced growth on a two-year basis, attempting to smooth out 2020's unusual events and to ensure that we remain on our balanced trajectory. So with that, let me turn it over to Ahmed, who will take you through our financial results and outlook in more detail.