Kellanova

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 would like to turn the call over to John Renwick, Vice President of Investor Relations and Corporate Planning for Kelanova. 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 second quarter results as well as an update on our outlook for 2024. I am joined this morning by Steve Cahillane, our Chairman, President, and Chief Executive Officer, and Amit Bhanati, our Vice Chairman and Chief Financial Officer. Slide number three shows our forward-looking statements disclaimer. As you are aware, certain statements made today, such as projections for Calenova'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 the third slide of this presentation as well as to our public SEC filings. A recording of today's webcast and supporting documents will be archived for at least 90 days on the investor page of www.kelanova.com. As always, when referring to our results in 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. Also, remember that our 2023 results have been recast to treat the spun-off WK Kellogg Co. as a discontinued operation in accordance with applicable accounting guidelines. Those recast statements can be found in our Q4 2023 earnings press release from February 8th of this year.

And now I'll turn it over to Steve. Thanks, John, and good morning, everyone. We're once again pleased to report strong quarterly results that are clear evidence of our more growth-oriented and more profitable portfolio following last fall's spinoff. Our year-on-year organic growth in net sales was again on algorithm, and volume trends improved sequentially again outside of Nigeria. Our year-on-year currency-neutral operating profit growth was also on algorithm, and we continue to improve our profit margins. and we've returned to full commercial activity with our stepped-up innovation reaching shelves in the second quarter. Delighting consumers is never more important than it is right now, and we now have our full plan in the marketplace, which should help us continue to improve our in-market performance in the second half. On slide number six, we remind you of our strategy, differentiate, drive, and deliver, which we continue to execute, helping us to deliver our near-term commitments but also to build for a strong future and drive share owner value. On slide number seven, we remind you of our global footprint, whose diversification and exposure to faster growing markets is a true point of differentiation for Kelanova. This differentiated footprint, along with our return to full commercial activity around the world, contributed to our continued sequential improvement in volume in most of our regions. The chart on slide number eight excludes our joint ventures in Africa. where currency-driven price increases in Nigeria have resulted in recent elasticities as we expected. We see that our businesses outside those JVs posted a fourth consecutive quarter of sequential improvement in volume. And we drove this sequential improvement across our regions. Europe and the rest of EMEA both recorded moderating volume declines, and North America and Latin America both returned to outright volume growth. Another key driver is shown on slide number nine, innovation. As discussed previously, we are returning to a full innovation launch calendar after the pandemic era's supply disruptions. As you can see on the slide, we have a plethora of innovations launching across every one of the regions this year, ranging from limited editions to new flavors to amplified wellness credentials to entirely new food platforms. I'll just highlight a few notables. In the second half, we will be launching Pringles Mingles in North America, our first out of the can launch in the United States in over 15 years. In late Q3, we will be introducing Cheez-It to Europe with a big launch in the UK, supported by a full arsenal of sampling, social media, and public relations and advertising. We've innovated in away from home channels as well, sometimes leveraging these channels to drive consumer awareness. A good example is our partnering with Taco Bell to launch a Big Cheez-It Crunchwrap Supreme and a Big Cheez-It Tostada. So we feel very good about the quality of our innovations and the buzz, trial, and incremental purchases they will generate. Indeed, this heavy innovation calendar should bring us back to normal levels of net sales contribution from innovations. Slide number 10 measures year one incremental sales from innovation launches, expressed as a percent of our total net sales. Notice how the incremental net sales we expect to generate from this year's innovation launches are much higher than the last couple of years when we had been contending with global supply disruptions. Getting back to delighting consumers through innovation is a key component of what we refer to as getting back to full commercial activity. Another good sign is shown on slide number 11. In our return to full commercial activity, we obviously prioritized our biggest brand, Pringles. The chart shows how this investment and activities improving our net sales growth and in-market performance for this highly differentiated brand. All of it led to another quarter of differentiated results, starting with organic net sales growth. Slide number 12 shows how we continue to well outpace the median growth of our peer group, including our more directly comparable snacking and international peers. This is precisely the greater growth orientation I mentioned earlier about our strategy and portfolio. Now let's talk about how we are a more profitable company than we were previously. Slide number 13 shows how our year-to-date gross profit margin and operating profit margin this year as Kelanova are meaningfully higher than the same periods pre-pandemic and pre-spinoff. And our improvement in margins continued in the second quarter, as Amit will discuss in a moment, even with a substantial increase in brand investment. Improving our margins is an important part of our strategy. as they fuel our ability to invest in our brands and withstand unexpected shocks. And clearly, we are ahead of pace toward our 2026 target of a 15% operating profit margin. Because of how our business is performing, both from a top line and bottom line perspective, we are now raising our full year guidance. Our first half results came in better than expected, and we remain on track for our second half outlook. We feel good about our commercial activity now fully in the marketplace and that emerging markets will sustain their underlying momentum. Finally, we continue to progress on another element of our strategy, and that is our Better Days Promise program. Slide number 15 provides just a few examples of this program in action during the second quarter. So let me now turn it over to Amit. who will walk you through our financial results and outlook before I come back and discuss each of our businesses in more detail.