Thank you for joining us today. Welcome to the Q&A session for our third quarter 2026 business update.

During today's call, we may make forward-looking statements regarding our expectations for the future. These statements are based on how we see things today, and actual results may differ materially due to risk and uncertainties.

Please see the cautionary statements and risk factors contained in today's earnings release and our most recent SEC filings for more information regarding these risk and uncertainties. Additionally, we may refer to non-GAAP financial measures.

Please refer to today's earnings release and the non-GAAP information available on our website for a discussion of our non-GAAP financial measures and reconciliations to the comparable GAAP financial measures. I'll now pass it over to our Chief Executive Officer, Steve Cahillane, for a few opening comments.

Good morning, everyone. Before we open the call for questions, I want to take a moment to highlight this morning's announcement regarding the definitive agreement to divest our North American coffee business to One Rock.

This is an important step in simplifying and strengthening our portfolio. With this transaction, we can concentrate our capital and management attention where we see the greatest potential for growth, and where we can create the most value for our consumers, our customers, and our shareholders.

I also want to acknowledge the people behind this business. These brands have a long and proud history with consumers, and that is a credit to the teams who have cared for them for over many, many years.

Thank you for your dedication. We are confident these brands have a bright future under One Rock's focused ownership, and we are demonstrating that confidence by owning a 30% non-controlling equity stake in the business, which allows us to share in their future success.

With that, I'm joined by Andre Maciel, and we're happy to take your questions. Operator, please open the line for the first question.

Great. Thanks so much.

Good morning, everybody. Steve, I know you recently spoke a little bit a couple weeks back about maybe some weakening category trends in sort of U.S.

retail, but delivered the North America business organic as planned, even excluding the trade benefit. I'm wondering how you sort of square those two and what you're expecting in 4Q regarding sequential improvement in U.S.

retail, given I think the percent of revenue gaining or holding share seemed to take a little step back sequentially this quarter.

Andrew, thanks for the question. We did deliver a better result than our original plan, and you can see that in our narrowed top-line guidance.

I think what you're seeing in terms of our share trajectory and our consumption trajectory is what you would expect based on the investments that we've made. We've leveled out in terms of where we are in terms of holding share, we'll acknowledge that for certain, but if you think about the investments we're making, we're making those and we're making those against the innovations that were in the pipeline from last year.

There's a lot of benefit that you'll see in the velocity, but there's not the same benefit that you'll see in total distribution points and the like. You'll see that really start to get kind of its next boost, if you like, in the first quarter, spring of next year with the resets.

We've got very constructive dialogues going on with our retail partners. They love the fact that we're making these investments.

They like what they're seeing in brands like Kraft Mac & Cheese and Power Mac and Capri Sun that are benefiting from that. They like what they're seeing in condiments.

As we get into next year, you'll see we'll have a plan to actually grow TDPs, and you'll see that next level of improvement starting next year, and that's exactly as we expected it.

Great. Oh, yeah.

Keep going, Andre.

Sorry. Just to give a little more color as well, first, give credit inside North America to U.S.

Away From Home and Canada. They both grew low single digit in the quarter again, which is great and encouraging to see that consistency.

On U.S. retail, to your point, it did come a little better despite having probably more pressure from retailer inventory than we expected.

We mentioned 80 bps less in less earnings. There was a little more impact than that, but the consumption came a little better.

The category has indeed softened the way we were expecting, was about in our portfolio mix-adjusted about 50 bps softer. Just to maybe adjust a little bit what you said, in the quarter, our percentage of revenue gaining share has improved a little bit.

We went from roughly 25% in the first half to 28%. It's not a great improvement, but still another step in the right direction, which I think helps offset the headwind we saw on the inventory.

I know it's too early to talk about '27, and maybe we'll get more of that sort of next week, but just with expected higher inflation, a higher year-over-year tax rate next year, maybe some of the incremental investment this year likely to still be a year-over-year headwind next year, I guess are there any other key puts and takes we should consider? Maybe what sort of opportunities do you have to help mitigate some of these items, again, as we go into '27?

Thanks so much.

I think, as we think about '27, we'll give more guidance than we normally would at an investor meeting next week, or we'll talk more color about '27 next week. We are seeing more inflation.

I think everybody's seeing that. Our first line of defense is always productivity, and we're stepping up that productivity.

As we think about price, we want to take as little price as possible because of the consumer dynamic, but price is likely to have to be taken in '27 for sure. As I mentioned earlier, we're very bullish about the investments that we've made and the fact that we will get better returns on those investments after the spring resets.

Again, talk more about that next week at our investor meeting, which I hope many of you will be able to attend.

Thanks so much.

Thank you. Good morning, everyone.

Steve, I was hoping you can talk about Away From Home. We've been hearing from some other companies there's been some pressure from Away From Home, but obviously you had a very good quarter there.

Just wanted to get some more context. Is this something you think you can muscle through, some of this weakness, simply because you have these new partnerships and you're really leaning in?

Any context on that would be helpful. Then just kind of wanted to follow up on one of Andrew's questions regarding market share.

You talked about better shelf resets next year, but something that we're picking up across a lot of different categories is how retail is really kind of rethinking the aisle generally. I'm just curious if you've seen that, have had conversations with retailers around that, given how big you are as a supplier to many of the retailers.

Thank you.

Thanks, Nick. In Away From Home, most of our, if not all of our success this last couple of quarters has been through share gains, and a lot of that is based on the partnerships that you reference, the NFL and Disney are just really starting and proving to be quite valuable.

We're taking share. We're gaining new distribution across not only ketchup, but also the other condiments.

We're feeling very good about our Away From Home performance. As we look to the consumer recovering in '27, if we continue to gain share and the category itself gets a little bit of tailwind, it's a great place for us to be.

Global Away From Home grew nicely, and North America Away From Home grew nicely. We're feeling very good about that.

In terms of the North American retail and the way they're thinking about the aisles, we're involved in a lot of very constructive conversations around just that. How do you revitalize, and how do you make the aisle more interesting?

I wouldn't say there's anything dramatic in the offing for '27, but we're square at the table with those conversations, and I think part of that is we punched that ticket when we made the investment of $600 million, now $700 million, and was very bullish about we're going to grow. We want to be a tailwind for our retailers, not a headwind, and part of that comes through innovative thinking about how we make the aisle more dynamic, more interesting, how we bring more innovation, how we drive more traffic.

That is clearly a conversation that we're engaging up and down with our retailers.

Thank you.

Good morning. Thanks for the question.

I wanted to ask on the timing item you'd noted as it relates to operating profit in the quarter, the 450 basis points of help relative to your expectation from trade and marketing. What caused the timing shift?

Was there anything more tactical on your end to kind of think about? Then just to clarify, you would look for this to be fully made up for in 4Q, or is there a bit of a change in trade for the year as well?

Thank you.

Sure. Thanks for the question.

Nothing in particular. It's just the way the programming ended up working.

We have, by end of Q3, spent roughly 70% of the trade and the market investments planned for the year. Q3 year to date, we have already accrued in the P&L 6.1% of marketing.

We are pacing that, there's no intention to change our plan whatsoever. We do have, historically, our market share peaks in Thanksgiving and Christmas, we decided to concentrate more of the efforts to the Q4.

Nothing beyond that.

Understood. Thank you.

Hey, thanks for the question. Wanted to focus on your market share performance in U.S.

retail. Previously, when you announced these investment plans, you discussed how you expected to see meaningful results in the second half.

You expected to see a bend in the trend even in market share. You acknowledge you're a bit behind that schedule.

You're also saying things are playing out exactly as you expected, and you now expect a meaningful step-up next spring. Could you maybe provide a bit more color on why it does seem like market share has perhaps not really shown the progress you initially expected to see in the U.S., and then give a bit more color on why you remain confident about next year?

Thanks very much.

Thanks, Max. I'd remind you that we've never, and we won't, give market share forecasts, but our top line in North America and globally is moving better than we anticipated at the start of the year.

There's categories where we're doing better than we expected, and there's categories where we're acknowledging we're doing not as well as we expected. One of the not as well as expected is clearly in Philly cream cheese, and it's an interesting one because we're gaining share, but we're losing consumption because the category is under pressure.

Some of the pricing moves that we made proved to be deflationary to the category, they didn't work. We're adjusting.

I'd say, broadly speaking, the fact that we've bent the trend and we're holding that, improving it very modestly, is a better place to be than the opposite. We've also said all along that progress would not be linear, and so we reserve the right to continue to get smarter, to make the reinvestments, and move things around as we see what's working and what's not working.

As we study our market share and we study our North American retail performance, what we've seen is we're gaining velocity, we're proving and improving velocity against smaller shelf sets because we lost distribution last year, and we had an innovation pipeline that was based on the underinvestments of the years past. We looked at that pipeline and said, what could work for us?

We think Kraft Mac & Cheese Power Mac could work, we leaned into that. We thought Capri Sun Hydrate could work, we leaned into that.

We thought Ore-Ida and shapes and some of those things were good, we leaned into that. What we're looking forward to is the investments that we've made this year and the pipeline that we've built this year for next year will prove to be more beneficial to us.

Non-linear, but good progress. We're feeling good about where we are from a top-line perspective.

We're feeling good about our constructive discussions we're having with retailers about next year. That's kind of where we stand.

We're feeling good about the innovation pipeline for next year. If you look at one example of what's happening in Canada, we introduced KD Ramen, and literally we sold three months of inventory in a week.

Great innovation, we're going to bring that to North America next year. We'll continue to hold ourselves accountable for market share and for consumption growth, and we're feeling okay about where we are right now, and we're feeling better about what we're building for next year.

Thanks very much. I appreciate all the detail.

Hey, good morning. Thanks for taking the question.

Andre, I know you mentioned that inflation maybe could still be higher into '27. I think last call, you had provided kind of some early thoughts on, I think, 4% to 5% inflation guidance for '27.

I didn't see an update on that today, was just hoping to get some clarification there. Obviously, on some of the raw materials, we've seen some deflation, just curious kind of where you're falling in that band for next year.

Thanks very much.

Sure. As Steve said, we're going to provide a little more color on '27 next week, but I can tell you on inflation that we previously said in the prior call we're expecting 4% to 5% next year.

The expectation is now slightly above 5%. We continue to see, on one hand, more inflation coming from packaging, and from certain commodities.

Soybean oil remains a good item of pressure. We are having a lot of favorability this year from dairy, and we do expect some of that to reverse into next year, which will contribute to this year-over-year pressure.

That's why Steve mentioned a little while ago that even though productivity remains the first line of defense and we feel good about the pipeline we have for next year, there will be an element of price across all regions so we can protect our gross margins.

Great. Thanks very much.

Great. Thank you for taking my question.

I just wanted to follow up on the margin discussion. I know there's been a few questions different this morning, but you've previously suggested this year should be a trough in margins, and your investments continue to play out, some working, some not.

You've called out a little bit higher input cost inflation. Just wanting to get an update on your confidence in that view, the high-level puts and takes we should keep in mind around the stability, or what would you call out as the biggest tailwinds?

Is it productivity at this point, or just kind of help clarifying that point? Thank you.

What we have said is the level of investment that we have deployed in the P&L this year, $700 million, we believe to be sufficient to turn around the business and deliver sustainable volume-led growth, and that's still the case. We will invest in the P&L $700 million, and next year that's expected to remain the same level, there will be no margin decline driven by more investments required, so that's important.

Now, with the elevated levels of inflation, and inflation raising throughout the year, just to put a perspective, this year our level of inflation is expected to be slightly more than 4%, but in Q4 is around 6%, and which is prompting us the need to price across the regions. Normally, when you see rising inflation, the pricing obviously comes with a lag, and that lag puts temporary pressure on margins.

We do expect to see this type of dynamic affecting us, but that's just temporary as price flows to the P&L. Again, we're going to talk more about 2027 next week, but I want you to understand this dynamics.

Great. Thank you.

Thank you. Good morning.

You're obviously increasing the spending quite significantly this year, but you're also improving the ROI and ROAS. Can you maybe point to what's helping boost some of that effectiveness and efficiency, and is there more upside?

Is it specific to certain brands or categories that could be transferred more broadly across the portfolio or from one geography to another? What's kind of driving that lift, and is there more headroom to it?

Michael, thanks for the question. I'd say before I arrived, the company was making good progress in building capability around the efficiency of marketing spend, and the investments that we're making are not just in advertising, promotion, price, they're also in capability and people.

We continue to build on that capability. Technology continues to move forward rapidly in terms of our ability to understand in real time what we're getting returns for and what we're not.

I see continued upside in that. The level of spending that we have, as Andre said, we feel is very sufficient, and getting a better return on that in '27 versus what we got in '26 is, in fact, very realistic and something we're demanding of ourselves.

We feel good about the level of investment, and we feel very good about the capability that we're building and our ability to get continued improvement in returns based on those investments.

More tactically, if you look on trade investments, we have very good visibility to invest in capabilities in RGM for many years now, and there continue to have opportunities for us to improve certain promotional tactics, sometimes moving dollars across brands. On the marketing front, there is opportunity to redeploy dollars across brands to a certain extent and also improve the amount allocated to different media types.

We're going to speak a little bit about that next week as well, you'll hear more, but we feel confident about the ability to continue to improve a lot the returns on those investments.

Great. Thanks so much.

Great. Thank you.

Wanted to ask you about the investments this year. How much of that $700 million has been spent so far, and do you think you're going to hit that number in calendar 2026?

Good morning. As I said a few minutes ago, we have spent around 70% of the price investments for the year and about the same for marketing investments.

We have at this point hired 80% of the people that we have planned, and we expect to, by the end of the year, pretty much be hiring everyone that was previously anticipated. We will spend the $700 million this year as we have said before.

We're going to put more money in marketing because we are not spending the whole money behind people, right, because of the natural ramp-up. Next year, there will be a little bit of carryover of people, but we are redeploying resources across the different levers, and we do have a number of efficiencies on the SG&A front, further leveraging our shared services, further leveraging automation.

Then any ramp-up of people will be fully offset. Again, we are spending $700 million in the P&L this year.

Great. Thank you for that clarification.

I wanted to just ask, you've talked a bit about some of the things that you're learning, but if you had to sort of list the biggest things that you might do differently with the money that you're spending next year, first of all, do you envision it being similar in amount for this year, but maybe just spent better? Then why would it be better?

I guess there's going to be maybe some retailer resets, maybe the quality of the innovation, maybe some things you're learning on the promotion activity, ROI, any sort of proportions of why the ROI might be better. Thank you.

I'd say the ROI will be better simply because we're learning, right? We're learning about this incremental investment, what's working, what's not working.

The most obvious example that we've pointed out is the pricing on Philly cream cheese, which worked in brick, but didn't work on tub. Why is that?

We explore why that is, and we learn from it, and we reallocate that investment towards higher-returning areas. A lot of what we're spending on Heinz ketchup, really working.

What we're spending on Heinz Zero, really working. It's kind of as simple as that.

We're learning what's working, and we're spending more against that. In terms of innovation, as I mentioned earlier, we had the innovation pipeline as it was, and so we allocated investment against where we thought there were winners, and I've mentioned some of those.

We have a different innovation pipeline coming in '27, which we'll talk more about next week, which we feel is significantly better than '26, still not sufficient, we're going to get better even beyond '27 into '28. It's making sure that we're spending the appropriate amount of investment against R&D.

We've increased our spend 20%. R&D spending and investment doesn't happen overnight, but it's building towards the future.

We feel good about getting closer to 1% of net sales as a ratio against R&D, more than 6% in sales and marketing. The investment is there.

We feel the investment is sufficient, but it's a learning curve that we're on, and it's a good place to be relative to anything else. We feel good about '27 and the learnings that we'll apply based on '26 and onwards.

Thank you.

Great, thanks so much. Steve, obviously a couple comments on the call today about potential need to take some incremental price next year just to protect gross margin.

I'm just kind of curious kind of how you're viewing, let's say, the overall marketplace, right? The core tenant or one of the core tenants of the strategy longer-term is demand recovery, right, volume-led growth that's profitable.

Sometimes you take price, maybe it's harder to stimulate that demand, especially where the consumer is, but maybe that's less of a material event kind of if the entire marketplace does that. Just kind of trying to gauge or get some color is kind of the thoughts on how that could play out.

If you study the syndicated data for this year, you can see that we've been taking less price. We've said that all along, the consumer is in a fragile state, and we want to take as little price as possible in order to meet the consumers where they are.

When you look at what's happening in the fourth quarter of this year into next year, there's clearly more inflation. That's disappointing, but it's real.

A lot of that is logistics, it's fuel-driven, some commodities, but it's real. Everybody's seeing COGS inflation.

I do think you'll see more pricing in '27, not less pricing. As Andre already mentioned and we say over and over, our first line of defense is against productivity, and we'll continue to ramp up our efforts against productivity, but I do feel like '27 will require price.

You're seeing that from the peer set clearly, and so I think that's just the environment that we're going to be in, and we'll be in it with everybody, it won't be a competitive advantage or disadvantage. It'll just be the situation that we have to face.

Right, fair enough. Then maybe just one quick— Hello?

Go ahead. Go ahead.

Oh, sorry. Just a quick question on the meats business.

That's clearly kind of been a little bit of a drag for you kind of for some time. Obviously, announced the divestment, or I guess partial divestment, of coffee this morning.

Just curious, I guess, broader question is, is that fixable? Is the category itself a little disadvantaged, or is this an area where maybe you would consider kind of looking more in the justifiable reasons of keeping it kind of like you've done with part of cheese and nuts and coffee?

That's all. Thank you.

Yeah. We'll continue to look for opportunities to make our portfolio a more growth-oriented portfolio, and you saw that today with the announcement around coffee.

We feel very good about that. In terms of the meats business, Oscar Mayer, I would start with the strength of the brand.

It is a phenomenal brand. Yes, it is fixable.

There's areas where we've had some own goals, which we're fixing. It's improving quite a lot, it's stopped getting as bad, but that's clearly not sufficient.

There's still work to be done. We haven't innovated around the Oscar Mayer portfolio in ways that you'd expect.

We haven't addressed some of the concerns around the processed nature of it. There's a lot of things that we can do and we need to do around the Oscar business, but more broadly, I'd say we'll continue to look for areas where we can make portfolio improvements.

Super. Thanks, Steve.

Operator, we have time for one more question.

Hey, good morning. Thanks for squeezing us in here.

Wanted to just come back to the cream cheese category, Philadelphia, obviously part of the win-big bucket, talked about some of the price investments not working, maybe redeploying some of that. Just wondering if you can share a little bit about how you're thinking, is that investment being redeployed to other parts of the business where you're seeing more traction?

Are you putting it back into other areas of the Philadelphia business? Just any thinking or update around how you're thinking strategically about driving improvements forward for that brand and that category.

Thanks.

It's all fungible, obviously. When we look at Philly, the pricing investment didn't work, but we just launched lactose-free cream cheese, and so we're building distribution there.

I'd say what Philly needs from a category perspective is more innovation because it's very clear where we're losing as a category. We're losing to cottage cheese and other more protein-forward.

We need to do more innovation around what the consumer is looking for vis-à-vis protein, vis-à-vis flavors, vis-à-vis overall innovation. You'll see, and we'll talk more about that in the future in terms of what that brand can do and what the category can do.

The brand itself is an incredibly strong brand, there's nothing wrong with the brand. It's just the category is under some pressure relative to switching out of cream cheese into cottage cheese and others, and that's very addressable, but it's going to take just a little bit of time.

Appreciate it. Thanks.