WK Kellogg Co

Good morning, everyone, and thanks for being here. Wasn't that a tremendous breakfast? Sabin, Diana, our team set that up all last night, and in particular, it was a cereal-only breakfast. I think you're going to hear that theme during the course of today. So again, a round of applause for our team who did a tremendous job. Thank you. I'm joined on stage today by Doug Vandevelde, our Chief Growth Officer, Bruce Brown, our Chief Customer Officer, and Dave McKinstry, our Chief Financial Officer. Our business and our brands have been part of all of your lives. We know that. Now let's fast forward to today, and we're going to unpack for you who we are, the unique opportunity that lies ahead of us, and how we're positioned to deliver against that opportunity. You're going to hear from us what's very different about how we're operating, how we're focused and integrated, and how we're investing for today and tomorrow. You'll also hear how excited we are about the cereal category. a very special category indeed. Now, we thought we'd start the morning with a quick look back at how WK came to life. Why don't we roll a quick video? We'll be right back.

Turn in the page. We are moving forward to write the next chapter of our great history, and we're going to do it together. We are WK.

Let's start by looking at our foundation and our opportunity as an independent company. We are in a unique position to leverage the foundation of our business. We have a leading position in a large and relevant category and a powerful portfolio to match. We call ourselves a 118-year-old startup because of our profound heritage and the singular attitude, energy, hunger, and unwavering belief that this business can and will do great things. This strong foundation will allow us to again win in cereal. Today, Doug, Bruce, Dave, and I will walk you through our strategy and how we're already executing against it. In our short time as an independent company, we're operating differently and we're starting to see those results. We're more focused. Everything is about cereal. We're more integrated. We're running one business with one P&L. And we're investing across our business, particularly to modernize our supply chain. We have the privilege to elevate this great business to new heights and to deliver significant margin improvement and attractive returns for our shareholders. Today, you will hear about our path and how we're going to get that done. But a quick reminder about who we are. We are a scaled $2.7 billion revenue business and a leading player in the US, Canada, and Caribbean. We have approximately 3,000 dedicated employees. We also have a direct sales force in the US and Canada with the same store coverage that existed pre-spend and a dedicated supply chain network. We have a deeply experienced management team who quickly identified our biggest opportunities as we designed our transformation. Let's take a closer look at that team. This is the WK leadership team, a highly talented group of leaders with a wide breadth of experience and deep knowledge and passion for our business. They have more than 180 years of combined Kellogg experience. They're talent magnets and are champions of culture, driving performance across our organization. And they are the ones who built the WK strategy. They are challenging the organization to think differently every day to unlock the full potential of our business. You will hear how we have reimagined each of our marketing, sales, and supply chain functions, and these are the leaders who knew what needed to be done and know how to do it. We are combining all of our experience with the energy of a startup to drive different outcomes. That's exactly what you're going to hear today. That's how we are doing things differently. Now let's take a look at our path to success. More than two years ago, we started exploring the idea of creating a standalone North American business. The spin logic became very clear. North American Cereal would be stronger as an independent company for a variety of reasons. It would have a dedicated team focused on a single business. The team would be integrated in a way that allowed for better visibility, decision-making, and agility. And we would have the balance sheet flexibility needed to invest, including investing in our supply chain. to make the business more reliable, agile, and profitable. As soon as the WK leadership team was named, we developed our strategy, then established the financial flexibility to execute the strategy, and built the organizations with the capabilities to win. Today, we're executing that strategy. While it can take some time, you can already see the benefits of doing things in what we like to call the WK way. Now let's take a look about how we're going to create value and the horizons over which we will do so. The first horizon is about building our foundation and optimizing this scale business. That is the horizon you're going to hear about today. We're already investing in the first horizon to drive much stronger business with a more reliable supply chain and stable top line, generating substantially more profit and cash flow. 500 basis points of margin expansion is indeed a unique opportunity and particularly when you're starting from a 9% EBITDA base. It's important to note that the 500 basis points of expanded margin is simply a mile marker, not a destination. We know that as we execute our first horizon, it's just the beginning. As we exit this horizon, we will have just started leveraging our transformed supply chain network, and we expect continued optimization to further expand margins. The second horizon, That's about growing beyond cereal, building on our iconic portfolio of brands, and further accelerating top-line growth. As we have said, we will be exploring inorganic growth like M&A, joint ventures, and the like during this horizon. But make no mistake, today we're focusing on horizon one, that is, optimizing our scaled business. So let's take a look at our category. There are many things that we know you already know about this great category, but I bet you there's some that you might not. For example, you know cereal is greater than a $10 billion category in North America, the number one breakfast choice for children, and number two for adults. And you know that WK Kellogg Co. has a leading position within the category. We're the number one largest seller of cereal in Canada and the Caribbean, and number two in the US. What you may not know is that cereal drives 50 million purchase decisions, just 50 million every single week. And basket sizes for our customers are almost 150% bigger when cereal is purchased. You have heard that cereal is a top five category, but it's also the largest warehouse delivered category. Add to that, it's the only one in the top that provides positive nutrition. You can see why cereal is an extremely important category for customers and our consumers. Now let's take a look at some other benefits of our foods. When you understand the credentials of cereal, It's easy to see why it's so large, durable, and strategically relevant. Families can and have relied on cereal to deliver the nutrients many people don't get enough of. You already know that cereal is low-fat, low-calorie, and nutrient-dense. But did you know cereal eaters get more vitamin D, more iron, more calcium, folate, whole grain, more fiber than non-cereal eaters? These are important nutrients that most people do not get enough of. Do you know that cereal eaters get less of sodium and saturated fat than non-cereal eaters? These are the nutrients we all get too much of. And importantly, cereal represents only 5% of the added sugar in the average daily diet. And multiple studies have shown that cereal eaters consume the same amount of sugar as non-cereal eaters. And if that wasn't enough, half of all milk is consumed with cereal. We know cereal is convenient and accessible Did you know it costs less than a dollar for a bowl of cereal and milk and fruit? Which is one of the many reasons it performs well when consumers are under pressure. Cereal's versatile. 25% of our sales are outside of the breakfast occasion. So when you combine the nutrition credentials with affordability, versatility, and convenience, you can see why cereal has been so durable for so long. Now, let's take a closer look at our strategy. As we shared with you at Investor Day and during our Q4 earnings call, we have three key priorities on which our entire organization is focused. First, we're integrating our commercial plan to win in serial. Second, we're modernizing our supply chain. And third, we're unleashing an energized and winning culture. Executing on these priorities would result in outsized margin growth, a stable top line, and meaningful cash flow improvement, creating value for our stakeholders. Our strategy is clear. We know when a strategy is understood by our teams, it drives even better execution. Critical to that execution is the way we're organized. This is one of the many reasons to believe we are one integrated organization. If you take a step back, the key parts of our business have been run separately in the past, and appropriately so when part of a global company focused on snacks, frozen foods, and other categories. Before the spin, The WK cereal business was separated across five different businesses that included multiple categories. Today, we have one integrated cereal business, bringing together U.S. retail, away from home, Canada, the Caribbean, and even Kashi and Bear Naked were operated separately. Now that these businesses are integrated, we have much better visibility and can already see its positive impact on decision-making as well as our investments. Everything is in service of Cereal, one business, one P&L. Not what's best for one part of the business, but what's best for our entire enterprise. The same could be said about our functions. Within WK, we have integrated sales, marketing, and supply chain functions, and the intentional end-to-end connectivity across these functions is allowing for better visibility and execution. We can go from idea to shelf much faster today than we could in the past. Previously, our functions served multiple categories, which would naturally create more complexity, competing priorities, and led to the deprioritization of serial. Now, across the board, our functions are dedicated and focused only on serial, under one aligned team and one performance plan. Now, let's take a look at our strategy that these teams are now executing. Integration is a huge enabler for us. It's the unlock that allows us to execute the first pillar of our strategy driving an integrated commercial plan to win. This priority brings together our demand-creating infrastructure under the leadership of one commercial team. Perhaps the most tangible example of this focus is our sales force. Every time they talk to a retailer or walk into a store, they sell cereal and only cereal. They are driving the category and amplifying our iconic brands and stores. And you'll hear more today about how our commercial plan is enabled by our supply chain. We are an integrated, connected team, and our priorities are end to end across the enterprise. Doug and Bruce will take you through this priority in much more detail in a moment. The second strategic priority is modernizing our supply chain, which is the centerpiece of our 500 basis point margin improvement plan. And we're confident we will capture that opportunity. This strategy can be broken into two parts, investing capital and building capability. In the short time we have been an independent company, the team has already made progress, and working with our people and our communities to drive improved economics, and as you heard on our Q4 call, we significantly improved both customer service and overall equipment effectiveness, or OEE. Dave will take you through that priority in a moment. Underpinning everything. is our strategy priority to unleash WK's winning culture, guided by our core beliefs and behaviors. Importantly, these beliefs and behaviors have been created with the input from every part of our organization, every function, every location, every manufacturing facility. Our focus strategy in everything we do will be supported by our people, truly our competitive advantage. We have a bold, entrepreneurial, and connected employee base that is hungry and ready to win and who passionately believe in our future. We are already getting after it the WK way. A big part of building our culture is winning with purpose. Let me introduce our sustainable business platform. Mr. Kellogg and we know that doing good for people and planet can and should also be good for business. You will hear from Bruce specific examples of how this program drives our commercial agenda. Just last week, we launched Feeding Happiness, our commitment to helping families, kids, and communities be healthier, happier together. And we will do this through the foods we make, the way we make them, and how we share them with the world. First, we're going to make eating well easy. That means increasing access to foods, providing positive nutrients and ingredients, making good food and ensuring it's in the reach of those who need it. Second, we will help millions of kids be their best through sports, play, and learning. This comes to life through our program called Mission Tiger, an initiative that we've already brought to life with customers and consumers. And finally, we'll better our communities by investing and engaging the communities where we live and work. yet another example of being more focused and a personal company, we can make a big impact. As you can see on this slide, we believe WK is a compelling investment opportunity. We're building a strong foundation, starting with a 118-year-old history and a portfolio of iconic brands, operating in a large and strategically relevant category. We're already seeing the benefits of our serial-focused sales force and integrated commercial plan to win which will help us deliver on our financial commitments. Our actions to modernize our supply chain will help us capture the margin opportunity as well as enable our top line. And we will be positioned to generate significant cash flow leading to attractive returns for our shareholders. With that, I'm going to turn it over to Doug Vandevelde who will share more about our integrated commercial plan to win. Doug is a longtime veteran of the Kellogg Company, where he spent the last 25 years in a variety of important leadership positions, most recently leading the U.S. cereal business. No one knows our brands and business better than he does, and I'm thrilled to be partnering with Doug at WK. Doug, over to you.