Good day. My name is Ben, and I will be your operator today. At this time, I would like to welcome everyone to The Kraft Heinz Company Third Quarter 2015 Earnings Conference Call. I will now turn the call over to Chris Jakubik, Vice President of Investor Relations. Mr. Jakubik, you may begin.

Good afternoon, and thanks for joining our business update for the third quarter of 2015. With me today is Bernardo Hees, our Chief Executive Officer; Paulo Basilio, our Chief Financial Officer; and George Zoghbi, the Chief Operating Officer of our U.S. Commercial Business. During our remarks, we will make some forward-looking statements that are based on how we see things today. Actual results may differ due to risks and uncertainties, and these are discussed in our press release. We'll also be discussing some non-GAAP financial measures during the call today. And you can find the GAAP to non-GAAP reconciliation within the earnings release we issued about an hour ago and in the Investor Center on our corporate website. Before we get started, as you know, the merger between Kraft and Heinz to form the Kraft Heinz Company was completed on July 2, 2015. And therefore, this is the first time we've provided a business update as a combined company. So today, Bernardo, George and Paulo are going to provide some perspective on how we intend to run our business more generally, in addition to covering Q3 results and recent business trends. After that, we will be available to take your questions. So let's turn to slide number two, and I'll hand it over to Bernardo.

Thank you, Chris, and good afternoon, everyone. It's my pleasure and my honor to be speaking to you as the CEO of The Kraft Heinz Company. Since this is our first call since the merger, I thought it would be good to start by sharing with you some highlights of our first 120 days as a combined company. After completing the merger on July 2, we moved quickly to establish our new leadership team and put in place a streamlined structure for our businesses in the U.S. and Canada Zones. Having done that early on, our integration work has remained right on track working on people, systems and process. We have been pleased with our ability to retain top talent, particularly front-of-house marketers in key Kraft categories. We have been impressed with how the legacy Kraft team has embraced change and this performance-driven culture. We are instituting new rituals and routines that represent the discipline, accountability and methodology for how we will operate as one of the world's premiere companies. This includes cascading core business practices that will continue to build our competitive advantage, like Zero Based Budgeting, revenue management and Management by Objectives. We are currently rolling out our Zero Based Budgeting or ZBB across the legacy Kraft commercial units and functions and it will be the basis for our 2016 planning process, worldwide. In revenue management, we are building an internal function from the ground up to support how we go to market across roughly 40 categories in North America. We are also now installing our third core business practice that we call Management by Objectives or MBOs with all legacy Kraft leaders as part of our integration efforts. MBO is an important language that clearly outlines measurable expectations, goals and deliverables for all our Kraft Heinz leaders.…

Thank you, Bernardo, and good afternoon, everyone. To build on Bernardo's comments, what we've been most encouraged by and, in fact, most impressed with to date, is the speed at which our people have integrated our commercial organization. Let me give you some statistics on what our team has been able to achieve since the merger closed. By day one, we had the leadership team of the U.S. business appointed. By day 12, we had the top 67 leaders in place. On August 14, 5 weeks from closing, we stood up the commercial organization with all our sales, marketing, R&D, innovation and commercial teams in place. And by the end of September, we had business processes in place. Along the way, we've made a good number of promotions from within. Our new rituals and routines are already operational in areas such as sales and within our Monthly Performance Reviews in our U.S. commercial units. We've taken a best-of-both approach, with ongoing improvements as we harmonize trading terms and develop joint business plans with our retail customers. And, importantly, we are well positioned as we look forward to 2016. Our innovation pipeline is ready to be launched and we'll talk more about that in the coming months. And we expect to continue the progress we've been making in shifting our advertising spend from non-working to working media. Now, this may all sounds good and we do feel good about where we are at. But I also understand that the numbers show several challenges. During the third quarter in the U.S., while we didn't see anything fall off through the integration, our base business trends remained mixed. Overall, our market share in the United States has been stable with some increases and declines despite the changes we went through. And across our…

Thank you, Paulo and George. This is an exciting and challenging time for The Kraft Heinz Company. We have established our new leadership team throughout our organization to drive the next stage of the company's growth. We are firmly focused on finishing strong in 2015 and powering ahead towards 2016. Our integration efforts are going well and we have laid our plans throughout 2017. We are working hard to empower our teams and to increase the speed of the decision-making process. It is core to creating our culture of ownership, an environment where checks and balances happen routinely, and meritocracy can flourish as our backbone. For 2016, we're pushing a big agenda around innovation and sales and our efficiency savings will create an even bigger opportunity to invest in our people, our brands, and our products. Thank you for joining us today. Now, we'd be happy to take your questions.

Our first question comes from the line of Andrew Lazar of Barclays. Your line is open. Please go ahead.

Good evening, everybody. Two questions if I could. First, George, you mentioned how oil pricing is holding up in some key U.S. categories despite high pressure deflation as you called it. Can you expand on this a bit more and maybe compare it to the last time you faced this sort of deflation?

Thank you, Andrew. And, yes, we feel good about our pricing this time and the way our brands are behaving. As you know, last time we spoke about this, we were building our brand equity particularly in the refrigerated area and where we are now is very different from where we were and the brand equity has gotten a lot stronger and enabled us to do so. So not only are we seeing our ability to hold prices but even gaining market share in three out of the four cheese categories and in the cold cuts business in meat.

Okay. Thank you for that. And then, second, Bernardo, you may have mentioned previously that you don't expect the extent of SKU rationalization at the Kraft portfolio compared to what you have done on the Heinz portfolio over the past two years or so. And maybe that's one of the reasons why sales at Kraft are not likely, as expected, to be as negatively impacted as we saw at Heinz. Is that still the case based on what you've seen or you've lived with these businesses for a little bit? Does that thought process still hold? Or is there more to do with Kraft than maybe you have thought initially? Thank you.

Thank you Andrew. You're correct. As we get to know more, and now I can say, we have a very good understanding of the business and are already operating as Kraft Heinz. I think your assessment is right. We have a name to grow, and that's a big pillar of the company. But to be on, what you call, the profitable growth, to have profitable sales and in this case, we're going to have some SKU rationalization and we are going through the process as we work the revenue management business initiatives that I have said before. But you are right to say that's not in the magnitude that's what happened in the legacy Heinz over two years ago.

Thank you.

Thank you. Our next question comes from the line of Bryan Spillane of Bank of America. Your line is open. Please go ahead. Bryan D. Spillane - Bank of America/Merrill Lynch: Hi. Good evening everyone. I just had two questions. The first, could you talk a little bit about interest expense? I think in the quarter the GAAP interest expense is a lot higher than I think most of us were modeling. So I don't know if there's some one-time items in there. And maybe some clarity now that you've got at least the interim financing, how we should be thinking about interest expense going forward and then I have a follow up. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Hi, Bryan. This is Paulo. That's right. In the GAAP finance, the number that you see interest expense, there are some one-offs. They are related to the merger. So I think the easy way to think about our interest expense is that we have currently around $25 billion of gross debt, and our average interest rate is around the low 4%. So there's the simple way to do that. So when we file our Q you're going to have all the details about our debt and the cost for each of the tranche that we have. Bryan D. Spillane - Bank of America/Merrill Lynch: Okay. Thank you. That's helpful. And then, on slide 12, there was on the last bullet, you talk about the cost savings target of $1.5 billion by 2017. And then, $1.9 billion of it is pre-tax. So I just wanted to make sure that we're talking about – those two numbers match, meaning above the pre-tax income line, it's $1.9 billion savings. And then, the net effect is $1.5 billion at…

Thank you. Our next question comes from the line of Jason English of Goldman Sachs. Your line is open. Please go ahead. Jason M. English - Goldman Sachs & Co.: Hey, good afternoon, folks. Thank you for the question. I have another question on productivity. Paulo, I think you said $1.5 billion to be delivered fully in 2017. At the same time, you said you got a fair amount of manufacturing work that will take around two years to complete, suggesting it won't be complete until late 2017. So, first, did I hear that right? And if so, are you suggesting once you complete the manufacturing work, there's going to be incremental savings over and above the $1.5 billion? Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Yes. Hi, Jason. Now when we think about the $1.5 billion, so first, you're right. We are believing that we are seeing that we are going to deliver the $1.5 billion synergies in 2017. So it's your first question. And we really believe that the majority – this is the bulk of saves [sic] savings (46:27) that we're seeing for this program that we are running now. We should have some carryover for the following year, yes, but I think the bulk of the savings is now going to be $1.5 billion in 2017. Jason M. English - Goldman Sachs & Co.: Okay. And that's sort of hard cost, love to comment on some softer costs. You mentioned your ability to pull out ineffective promotional spend in the UK. I think it was referencing Heinz beans. As you look at the rather large tray budget in promotional spend for Kraft, have you identified opportunity to do something similar? And if so, what do you think the magnitude may be?

Jason, this is George here. I will take this question. For the next couple of years we are focusing on revenue management rather than just trade promotion, which will include price-pack architecture and looking at return on investment in promotion. Then we will make a decision what we do with that savings, whether to invest it in better-returning promotion and grow the top line and bottom line, or drop it to the bottom line. Once we complete that analysis, we'll be in a better position to share that with you. Jason M. English - Goldman Sachs & Co.: Great. Thanks. Look forward to hearing more. I'll pass it on.

Thank you. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Thank you, Jason.

Thank you. Our next question comes from the line of Ken Goldman of J.P. Morgan. Your line is open. Please go ahead.

Hi. Good afternoon, everyone. You said a couple of times that some of the activities you're taking will take two years to complete. It seemed to be an emphasis. So two questions on that. One is the implication or is the message that we should be modeling most of that $1.5 billion in savings a little bit later than earlier? That's question one. And then question two is and maybe I'm reading way too much into this, but is the other implication there that you're unlikely to make a large, complex acquisition until that process is done. I'm just curious why you were sort of emphasizing that and whether there's anything really to read into either of those? Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: No. When you think about the ramp-up of the savings, Ken, there will be some ramp-up of the savings. Again, when you think about the savings, it is always thinking three buckets, right? We have the organization savings; we have the ZBB savings; we have the footprint savings. So the first two, they come first. The footprint is the one that takes longer. So if you think about the view that we have today for how this savings is going to flow through our P&L, we are seeing this, the $1.5 billion full in 2017. So this is for your first question. Of course, they will ramp up as they do start to happen, the footprint piece, according to (49:20) in 2016 and the beginning of 2017. When you go to our second question related to our M&A ability and activities during this period of time, for sure, we have our plate full during the period of this complex integration. We don't use to comment about M&A strategy or hypotheticals in this case. But, for sure, we will be evaluating any type of opportunity that appears for the company that makes sense for the value and do create value for the company.

Very helpful. Thank you. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Welcome.

Thank you. Our next question comes from the line of Chris Growe of Stifel Nicolaus. Your line is open. Please go ahead. Christopher Growe - Stifel, Nicolaus & Co., Inc.: Hi. Good evening. I just had two questions as well if I could. I want to ask first if I could just – as you implement a program like ZBB, and we're learning more and more about that through Heinz and through other companies of running the program as well. Given that Kraft had had an already low overhead level, is there more or less opportunity that you see at Kraft for implementing ZBB, more or less say in relation to where Heinz is today? Do you see much improvement in Kraft's overhead level from ZBB?

Hi, Chris. It's Bernardo. The way we like to think ZBB, to be honest, is much less as a one-time event and much more as a systematic approach of doing business. It's really fighting for the penny in the terms of capturing all the opportunities that allows us to be in a position that you can reinvest more behind working dollars, behind our people, behind our products, behind our brands and so on. So it's not only a program, but it is really a business tool that we apply in different ways. And in that sense, you're right to say that the level Kraft already had achieved was positive within the industry. But we are finding significant opportunities, like Paulo described already embedded in the $1.5 billion. And we're also learning things from the legacy Kraft side that you're applying on the Heinz side. Just to give you an example, Kraft used to have a bag of media buy structure and costs that hurt Heinz and then they elaborated the other way around in that sense. So it's a two way, if you want to think about this. But it is true there are significant opportunities. And as we materialize then allowed us to be in a position to invest for growth. And that's idea that myself, George and the entire team here will be pushing this agenda. Christopher Growe - Stifel, Nicolaus & Co., Inc.: Okay. Thank you. Good color. And maybe a quick question for George in relation to the U.S. to see your sales down, call it, 4% for the quarter. In relation to consumption that was much better than that, as you showed, and our data certainly shows as well. Are there unique factors weighing on reported sales this quarter that we're not picking up in the measured channel data?

Yeah. Thank you, Chris. You probably touched on it yourself. Two things that differentiate shipment from consumption. Number one, there are changes between quarter relate on where the promotions fall and when we ship the product to the customers' DC. And that will adjust itself over time. That's not a big thing. Then you have channels that are not tracked by scanned sales, most importantly the foodservice channels. So in the foodservice channel, we have two things going on. Number one we have a large number of contracts, particularly in the large commodity segments that are based on what we call mark-to-market. And in a deflationary market of dairy and meat, you just change the price automatically, and in a deflationary market you see a pressure on the top line. And two, both legacy companies in the foodservice business lost a couple of large accounts prior to the merger, and we are nearing the tail of that. And we see the overlap to a better comp coming in future quarters. Christopher Growe - Stifel, Nicolaus & Co., Inc.: Okay. Thank you for the time.

Thanks, Chris.

Thank you. Our next question comes from the line of Matthew Grainger of Morgan Stanley. Your line is open. Please go ahead.

Hi. Good evening, everyone. Thanks for the questions. I had two questions. First, could you talk a bit more about the broader promotional environment in the U.S.? We've seen a fairly widespread decline in merchandising depth and I guess retail merchandising opportunities across the industry this year. And given that retailers are demanding more contributions from the industry, many of your competitors have become more gross margin focused as well. Is this setting up as an environment where it's, in a way, easier for you to realize the kinds of trade spend optimization efficiencies that you're going to be targeting over the next year?

Thank you, Matthew, about the question. Let me separate it into two. One is we talked a lot in the past about the return on promotions. And that return on promotions in general in the industry comes under pressure. But two, we are seeing the merchandising levels widely in the retail coming down. But that's not what we are focusing on. We're more focusing on return on investment by categories and mainly price-pack architectures and pricing, both on an everyday and on an ad hoc by category what we want to achieve. So we believe, in the future, we will see better implementation of promotional activities based on better return on investment. And that's what we are putting our resources in and where we're making our investment.

Okay. Thank you, George. That's helpful.

Thank you, Matt.

And just second question for Bernardo, I suppose. In the past, you've talked about a willingness to take a look at the entire portfolio and assess whether given brands and categories offer you the potential for profitable growth. And today, you talked about a few categories, like frozen and ready-to-drink beverages, that have been consistent headwinds. I know you consider these turnaround opportunities. And for now, you're investing, but is there still a willingness there to assess the relevance of those products in the portfolio over the next year or two?

Hi, Matt. Thanks for the question. Look, we're always evaluating our portfolio on a broader basis. You're right to say that in the past, we looked different in some segments against others and we're going to do the same. I think right now, our focus really is really consolidating integration. It's a lot of work that's coming through, and we are very pleased with the steps that are happening now within the company already working as Kraft Heinz, and so we're unified in operations, in sales, in our go-to-market. We're going through a huge system integration and a lot of different efforts. What does it mean in the future? We can always evaluate the portfolio with pros and cons and take significant steps, but I don't think that now is the appropriate time to do that and the time will come for us to have a better knowledge and to have a better understanding to take the right steps. That being said, we know very well, like George already pointed out, and Paulo also mentioned, the segment, the innovation in the places we're going to be betting more of our money that we can push for an agenda of growth.

Okay. Great. Thank you, again, everyone.

Thank you. Our next question comes from the line of Pablo Zuanic of Susquehanna. Your line is open. Please go ahead.

Yes. Good afternoon, everyone. To assess your performance so far obviously, I think, for us, it's easier to look at the hindsight on Kraft, Kraft, you've just started there. And if I look at international piece, which obviously mostly is just Heinz, I'm very impressed with your 160 bps (58:05) of margin expansion in Europe and more than 500 in the first half. So, I guess, that gives us an idea of what to expect in the other places. But there's three questions here. One, it would be great if you could tell us what was your margin expansion in Europe in 2014? Last night in the 8-K, you only gave us the first half of 2015. That will be very useful again, to understand the visibility of what you're actually doing. The second question would be that type of margin expansion in Europe, it's even more impressive when you think that that was already your highest margin division and it's a very tough retail environment there and also a tougher regulatory environment from the cost-cutting perspective compared to the U.S? So if you can comment on that. And then three, just give us more color in terms of what you found and what allowed you to pull that type of margin expansion in Europe. All of my questions are about Europe because I assume that that's the best proof of what you are doing, what you've done at Heinz and, I guess, we can think of what you would do in North America. Thanks.

Thanks for the question. Addressing Europe from the business side before passing to Paolo here, who can get into more details on the margin expansion and so on, I think you are right to say that's a cycle that's playing out in Europe and we actually pretend to expand in that sense, but if you see what's happening in Europe that's innovation, an aggressive go-to-market, and higher working dollars investment that are pushing the growth. But we went through also restructuring on the portfolio and on the sales in the last couple of years to get us the base and the results to allow us to invest big on the segments and products and ideas that we really thought could be winning the marketplace. And what's happening right now, if you see, is really the working dollars increasing in Europe. That will continue and you're going to see more investment in Europe. So, in a sense, it's coming to a point that now we're investing more and you're going to see our non-extension (1:00:30) of margin in that sense but more sales coming through more investment in a retail environment that you are right also to say that is extremely challenging. But in order to be in that position, first of all, we need to have the Big Bets ideas on innovation. But I think our pipeline, not only in Europe but also in United States, Canada and other places are quite robust, what make me optimistic when I see 2017, 2018 and beyond. And we need to be in a position of efficiency that you say, hey, that is a right plateau you need to have so you can come and invest big to win not only on the sales piece, but expanding segments and product line within the environment we are facing in Europe. So commercially, you can expect more investment in marketing and selling in Europe as we continue to expand our product line in the region. Paulo, do you want to comment on the margin? Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Oh, yeah. If think about Europe, if I understood correctly, Europe business in 2014, nine months would be around 30ish% in terms of margin. But I think that Chris and Rishi can help you to go through the details based on our filings later.

Yeah. I mean, I don't want to cease on the point. I mean, you gave us a number last night, it's 30.2% in Europe. I'm just asking what was not given. What was your margin expansion in Europe in 2014? Is that something you have over the top of your head, or was it really just flat margins in 2014 in Europe?

Yeah, Pablo, we'll come back to you on it, because you really have to look at the historical Heinz filings, right?

Okay. All right.

So we'll come back to you on it.

Okay. Can I ask one very last one? In terms of coffee K-Cups, you talked about you're looking at your portfolio and, of course, you cannot comment on what you may or may not do in the future. But specifically, in the case of K-Cups, the agreement (1:02:27) the ideas is that they're willing to be co-packing for you. You're willing to move your lines to that company, but you haven't moved those lines. So is there a plan for you to continue to start manufacturing K-Cups on your own?

Pablo, thank you. This is George. I'll take this question. First, you are right. I can't comment on the details of the commercial agreements between us and other organization. But what I can say, we are very happy with the coffee category. We have been growing shares steadily in the last four weeks, in the last 13 weeks, and the last 52 weeks. On all fronts, we have been able to grow share. And the business in the K-Cups has been very, very healthy, a main driver to share and it will continue to be a main driver of growth for us in this category. But unfortunately, I can't give you the details of the agreement between us and other organization.

Understood. Thank you.

Thank you.

Thank you.

Thank you. Our next question comes from the line of David Driscoll of Citigroup. Your line is open. Please go ahead.

Great. Thank you. And good evening, everyone. Would just like to start off with just a question about the quarter. Since it's our first time with the combined company, did you hit your internal objectives for the quarter? And just to note that consensus was out there on EPS at like $0.62, versus the $0.44 you report, EBITDA at $1.6 billion versus the $1.27 billion. I'm just wondering if the consensus just didn't have this run rate at all. But did you guys hit the numbers that you thought you would hit in this quarter?

Hi, David, this is Bernardo. I'm not going to comment on the numbers of the market, or consensus, or the projections within the Street. What I can tell you, from an integration standpoint and from a business perspective, as we already point out in the beginning during the presentation, we are very pleased with the progress of the business and very optimistic about the prospective what we can build here together. So to answer your question would be yes, we are. That being said, there's a lot of moving pieces. Those are two very big companies that are pulling together in a very fast pace, already operating as one in the marketplace. What George, his team on the commercial side and the entire company from Paulo and entire leadership here is really putting a lot of efforts for us to be on a much faster pace as we move to 2016 and 2017. So to answer your question on our internal expectation and goals and the things we wanted to achieve for 2015, yes, we are on target. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: And Driscoll just about the EPS figures that you mentioned, I think it appears for me that the main difference, the large difference of the consensus and the number that we published was the fact that our EPS we consider post the preferred dividend is the EPS to common. So this is the main driver which in the out years we don't believe it's a big difference because all the Analyst Day they assume that we are going to refi the preferred.

The EBITDA one misses too, so I don't -- there's something going on, but I want to ask a different question. So on the $1.5 billion of gross savings, do you have the intention of reinvesting any of that in the business and can you give us just some color there on, if so, what kind of magnitudes are appropriate for the business? Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: When we think about the investments, this $1.5 billion number that we have is now focused on our savings, and our restructuring programs that we have, net of inflation for 2017. We don't treat this, inside this number any type of reinvestment that we may decide to do. We don't treat the investments in the brand as the same bucket. So whatever is going to be – we are going to decide to do in terms of marketing or innovation need to pay itself have a return inside the investments. So we don't treat this together.

And just one detail question. Do you guys know what the adjusted gross margin was? I don't think in the press release there was enough information to a portion, the various charges between the gross margin and the operating margin. But do you have the gross, adjusted gross margin handy?

David, I don't have the number, but it will be in the 10-Q when that comes out. So you'll have the disclosure there.

Okay. Thank you.

Okay.

Operator, if we could take one more question, that'll be great.

Absolutely. Our final question will come from the line of Priya Ohri-Gupta of Barclays. Your line is open. Please go ahead.

Great. Thank you so much for taking the call. I have two quick questions. One, should we still be looking for the $2 billion in debt pay down by the middle of 2017? And then secondly, with all of the synergies accruing to 2017 EBITDA, should we think about you hitting that leverage target of getting below three times as a 2017 phenomenon? Or should we think about it as 2018? Thank you. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: Hi. So, I think about the first question, yes, as I said, I think we have pretty much the same all the initial financial expectations we had in the merger call, including the pay down of $2 billion in debt. We have these already structured in the way that we refied our debt. So we have this already structured in this way. And in terms of the leverage that we expect to do, what we said before, and you are keeping track on that, that to expect to be below three times in the medium term. Of course the reason that we said in the medium term is, we don't expect the leverage to get to that level of levering the long term. So that's why we use the word medium term. But it didn't change our original expectations so far.

But as we think about medium term, I'm just trying to get a better sense of, is that 2017, 2018 or 2019? Or is it sort of anywhere in between those types of years? Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: What I can say is it's exactly the same original expectations we have at the moment that went for ratings and we had all the discussions about the capital structure of the company in the merger moment.

Okay. Thank you very much. Paulo Luiz Araújo Basílio - Chief Financial Officer & Executive Vice President: You're welcome.

Thank you. And that does conclude our question-and-answer period. I'd like to turn the conference back over to Mr. Chris Jakubik for any closing remarks.

Thanks, everybody, for joining us this evening. And for those of you who have follow-up questions, Rishi Natarajan and I will be around for the analysts and Michael Mullen will be around for anybody from the media. So, let me turn it over to Bernardo.

I just want to thank you for the commitment in following up and looking forward to be updating you as the company progress and we continue to deliver the results. We believe will be coming in the coming quarters. Have all a good evening.

Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. And you may all disconnect. Have a great rest of your day.