Great! Thanks, everybody. Welcome back for our fireside chat with Kraft Heinz. I'm thrilled to welcome Kraft Heinz back to our conference. And with me this morning are CEO, Carlos Abrams-Rivera, and CFO, Andre Maciel. Welcome.
Thank you.
Thank you.
Thank you for coming with us again. Of course. Perhaps a good place to start would be with you, Carlos. You've been in the CEO seat for about nine months now, and even in just that timeframe, it seems as though the operating environment has obviously shifted pretty meaningfully. I know you've got plenty of experience in the packaged food arena, and I'm curious how what you're seeing today is either different or similar to what you've managed through before in your career. You know, I think the sentiment on the packaged food group and associated sort of valuations make it seem as though investors believe it is somehow different.
Hmm.
Um.
I hope the comment about a lot of my experience. I mean, you're calling me old. I have been around for a little bit, and in fact, I-
I love the socks, by the way.
Thank you.
I appreciate that.
I appreciate that. That was,
... It's a good look.
That's a good Christmas gift. If you guys don't see it, there's Heinz socks, and by the way, feel free to buy them, too, and if you go to Kate Spade, you actually get the phone case, too.
And the liquids, and the liquid color as well.
Anyway, now through... What was the question again? No, I'm kidding. So the... Listen, I think part of it is that there have been a lot of changes, I think, in the food industry, but at the same time, if I go back to some of the times, 2008 recession time, I think it was even, even more pronounced, I think. So there's a cyclicality, I think, to some of the, of what you see in terms of food companies. So we... I don't think it's as bad as it was, but I think there is a cyclical nature. I think a lot of it has to do also how the Fed is gonna react here in the U.S., and that probably will affect things.
But listen, if I think about just overall kind of the composite of whether it's Nasdaq or the New York Stock Exchange, you see that high valuations are going to anything that has AI next to it. And what I would tell you what is true is that no matter how many AIs you come up with, you still have to feed people. Today we have about eight billion people in the world. That's 20% that just, you know, less than twenty years ago, up from six and a half billion. So all those people have to eat, and what we are going to do at Kraft Heinz is making sure we continue to provide great food solutions for people around the world in a way that can be accessed to everybody.
So that, to me, is our job, and I think that leads us to think about, how do we think about the strategy of the company and our portfolio, which I feel great about. You know, well, I've been in this job now for a little bit over eight months. It was about six months ago that we went to CAGNY, and we talked about the strategy of the company, having a clear view of the next 10 years and having clarity on that portfolio to make sure with the designation between Accelerate, Protect, and Balance portfolio. That is guiding the decisions that we're making and the investments that we're making. And within that, we have, you know, six billion-dollar brands that I feel great about, that we continue to spend behind and support.
But importantly, I think if I think about our strategy, we have three big components of our strategy in order for us to continue to thrive in this moment. One is the idea of us continuing to look at emerging markets and how we continue to grow that, where we today only have about 10% of the business, our away from home business globally and our accelerated platforms in the U.S. So that continues to be kind of the way in which we're gonna continue to grow as we go forward. So while today I think you'll see that kind of pressure, what is important for us is maintaining the focus on our strategy, maintaining a focus on making the right trade-offs, to live into the strategic pillars that we have laid out for the company, and continue to make those investments.
I also feel great about the fact that we are doing that, putting those investments in spite of the fact that we're seeing some challenges with consumers. So we you don't see us cutting in marketing, you don't see us cutting in technology, you don't see us cutting in G&A. We're actually expanding gross margin and investing in the business so that we are not only here for the for the next year, but also here for the long run as well, too.
Great. Thank you for that.
Thank you.
Andre, Kraft Heinz obviously is in a very different place than it was just a few years ago from a portfolio, balance sheet, productivity, data capabilities, you know, compensation, and sort of personnel standpoint. Maybe just to level set those that have not followed the story as closely, can you bring us up to speed on sort of those factors?
Sure. Thanks for the question, Andrew. Look, I've been in the company eleven years, and I have seen a lot of things have happened here, and I feel very proud and excited with where I have been since 2019. A huge transformation in several different lenses, starting with having strategic clarity, as Carlos said, right? So we have not only the clarity on the strategy, but also the focus on the organic business, compared to before, where we are primarily focused on inorganic activities. That clarity on the strategy lead us to have a much more robust operating model. There were multiple changes made in terms of how we are organized internally. Things like integrating commercial and supply chain, which until a few years ago, they were really two independent companies, operating in extremely inefficient and siloed way.
We integrated food service with the retail business, especially in terms of marketing thinking. We have reorganized our zone structures in a way that is more cohesive to the strategy, like giving the right importance to emerging markets. We created a dedicated Away From Home organization that didn't exist some years ago. We organized our teams around platforms, so people looking at how to serve consumers for that particular platform instead of looking category by category. So a lot of changes in operating model. Lots of changes in incentive models as well. So now the incentives, both short and long term, are a lot more aligned with shareholder value creation. So things like cash flow management, which before was just a target for finance people, now everyone in the company has skin on the game on delivering cash flow.
Market share and gross margin, everyone in the company has targets linkages, because we want to create distinction about growing profitably in a healthy way. TSR is one of the long-term incentives that we have in the company, so incentives were aligned with shareholder value creation. We changed the ways of working as well, so not only bringing agility, as Carlos mentioned, but technology as well, bringing to the front of the conversation, how to use technology as a competitive advantage, and having the functions and the units responsible for building their tech road map in a way that creates advantage. Capital allocation is tremendous amount of discipline. We introduced the concept of return on invested capital, EVA, economic profit, depending how you want to call it, but...
To drive, to guide decisions on how to deploy the organic resources on the company. And we see tremendous change in the quality of the plans and the returns on the capital because of that change. The mindset of continuous improvement is extremely important, and it permeates pretty much every aspect of the business. I think as a result of all of that, you start to see the results coming, right? The performance has been now, for the last five years, very robust. Supply chain efficiencies or efficiencies in general, very robust. Before we had 1.5% of COGS efficiencies, now we are for four consecutive years ahead of 3.5%. The balance sheet is in great shape. We got upgraded twice, so BBB.
We are very pleased with the level that we are. We generate now very good excess cash, which has been allowing us to not only invest the business organically what they need. We feel that we are at a sufficient level for a CapEx standpoint, mostly there for marketing standpoint. And now we have the excess cash that we had the first ever approved buyback program, so I think demonstrates the confidence that the board has as well on our cash flow generation. And on the people side as well, like, meritocracy continues to be a core component of who we are, so treat people differently based on their results they deliver and their potential to grow.
Engagement is at the highest level it has ever been in this company, and I witness very different level of engagement in this company. It's the highest, literally right now. I think we were able to balance as well, having younger people with a lot of talent and drive, with properly valuing experience. We brought a lot of people in the last four years with very, very robust experience and delivering good track record across several functions on commercial and supply chain. So I think we feel very good with the company we are today, you know. Obviously, there's a lot of work to do. It's still. I think we are still not done, but yeah.
Thank you for that. That's really helpful context. Maybe we should jump right into the largest part of the business, US retail. So on the last call, you talked about needing to lean in a bit, as others are on trade promotions and other aspects, to deliver better value. And you talk about sort of 30%-40% of the portfolio-
Mm.
-really to better engage consumers that are more value conscious. And that percentage, I think, struck many as higher or broader than maybe folks had expected. Yet you're still also looking for a price to be a modest positive year-over-year benefit for the full year. So it still seems like you believe you can sort of manage to balance these dynamics. Can you help us think through this a bit and what, sort of, if anything, you've seen thus far in response to these actions?
You want to take that one, Andre?
Yeah. So as we said in earnings, right, we do expect price to be flat to positive year to go, despite having some incremental promotions. We are very thoughtful and surgical where deploying these promotions. And we only said in earnings that we have 30-40% of the portfolio in the U.S. today where it requires promotion. I think some of this maybe got misinterpreted, and I want to make it very clear. We refer to 30% of the categories where we want to deploy, not 30% of the revenue that-
Okay.
Okay, so-
Yep.
I'll give an example of that. Mac and cheese is one. Mac and cheese was a $1.6-$1.7 billion business for us. The cups business, where we were limited by capacity and now we have plenty of available capacity, is a place that we are seeing that makes sense to deploy those promotions. And in fact, we went from declining Q2 revenue there on sell out and now to quarter to date to be growing, in part because of that. We saw places like pasta sauces, for example, where there was a big change in commodity the beginning of the year, soybean oil coming down. That's a place that the promotions made sense. We put the promotions, we are seeing now pasta sauce growing quarter to date.
So again, we are thoughtful where to deploy that, and I think we are going to continue to do so. I think our commitment is that we want to grow the business in a healthy way. We're not going to be chasing volume in a way that is not sustainable over time. The way we want to grow the business is by having meaningful marketing, good innovation, good renovation, and not by just relying on promotions.
Yep.
And when we invest in promotion, because there is a reason why sometimes you do want to make those investments. I think is we do it with two things. One, being thoughtful about the return of those investments. So we do have make internally a number of investments to improve our revenue growth management in a way that are driven by AI modeling, that allows us to make sure we understand better what are the categories that it makes sense and what the return that we expect to see on those things. And then also understanding from the consumer point of view, what are the times during the year in which actually they are looking for solutions that if they get our products, it has a benefit outside of that particular season?...
So if you think about back to school, if you think about holidays, some of our brands that play well during those times of the year, by us getting the consumers to actually engage with our brands, it allows us to have increased base volumes to post those promotions. So it's again, a discipline, but also be thoughtful about how consumers are shopping in a way that we can provide a good investment without necessarily sacrificing the gross margins of the company.
Got it. Thanks. Appreciate the context, and I think some of the clarification also on the you know, broadness or not of the nature of the promotional activity. You know, other than price investments, you're taking a lot of other actions as well. What actions are you taking to better address the more pressured consumer in the U.S.? And, you know, as consumers shift to more value-oriented channels, how does Kraft Heinz ensure that it is fair share of distribution in those channels and where can sort of package type, size efforts start to take hold?
Great question, Andrew. I think, you know, we talk a lot about value, and as many CPG companies do, what I would say is, we need to make sure we have products that are worth paying for.
Mm-hmm.
That consumers feel that it is the right kind of way in which they can manage their cash flow by actually investing in these brands. I'll give you an example. When we think about Philadelphia Cream Cheese, you know, we're a premium product to the category. At the same time, we know that if consumer actually brings the product home, one, they're gonna make great desserts that is not gonna fail them. Two, everybody in the household will also actually enjoy the product, so it will get eaten. If you have to throw away half of the product because it's been not as good quality, that actually is not a good value for consumers.
So for us, it's continue to stay focused on renovating our brands, to make sure we continue to bring the high-quality benefits that consumers want, continue to drive marketing in the investment in the brands, continue to bring innovation that will bring some excitement in our category, whether that is things that we do with because we have partnerships with people like Transformers in our Lunchables business, whether we do it with Heinz and the Deadpool movies that we have just launched. That idea of us continuing to bring excitement is part of us making sure the consumer understands the value we bring for the whole family because of the joy that we bring to the whole family. So this idea is making sure we are bringing products that are worth paying for, and then being ubiquitous in where they're gonna find us.
One of the things we have learned through this year is that as consumers are looking more focused on value, they're also expanding the number of channels in which they purchase. So it's no accident that we have increased by 13% the number of distribution in our Dollar General stores, that we have increased 10% in club stores, and that we continue to make sure we have the right formats so that consumers who are feeling like the best way to address my cash flow in the family is to go to a club store because I'm gonna be thoughtful about the price point per ounce or per serving, that we have a product for them.
That's why we take a product, Capri Sun, that's always been in the pouch, and actually bring it to a bottle that is 32-ounce, and it's a lower price per serving. But it's also making sure we have a $1 product in many of our Oscar Mayer businesses that are being present now in Dollar General, in a way for us to make sure that we have entry price point for families that really are managing kind of a weekly cash flow. So we have both of those things happening at the same time. The last thing, Andrew, I will say, is that maybe people don't think too much about in terms of how the consumers are also shopping so much differently, is also how they're behaving in Away From Home.
In the moment in which consumers are thinking that there is a connection and this all this coverage around the value and consumers feeling like, you know, there's all this inflation happening and how they're managing the cash flow, the reality is that in the US, the ten biggest days of travel that have ever happened have happened in twenty twenty-four. So people are actually traveling and spending money in different ways than they have in the past, too. And for us, it's important that if we think about channel presence, we also think about our away-from-home business. So we have expanded now to be more in travel aisles, to travel and leisure, to hotels. We just signed a partnership with Vail Resorts to make sure, again, we continue to bring our brands into new channels where we know consumers are gonna be now playing, too.
With both consumers who are very much focused on value and cash flow, and these consumers who are also making choices about how they spend their money by doing more traveling and going to different locations.
Got it. Thanks for that. You know, typically anyway, it can take sort of 12-18 months for consumers to kind of adjust their sort of reference price points.
Mm.
You know, when promoted prices have risen. Where do you think we are along this continuum? And maybe what evidence do you have that sort of plan leaning in on promos and package adjustments and such will be sort of sufficient to meet consumers where they are, so to speak?
Yeah. I think, listen, it's hard to tell where in the U.S. right now is in that journey. What I would say is, you know, if I think about emerging markets, you know, we have been able to take pricing. We have been growing, growing share in those businesses as well, too. If you think about some of the things that are happening in QSR, certainly between first half and second half of the year, there have been more investment in promotions and value, and that's helping the consumer also kind of actually improve the traffic in some of the QSRs. In the U.S. retail in particular, you know, what my team and I are working on is, let's focus on the things we can control.
If we continue to invest in making sure we bring great consumer products, great quality, continue to drive innovation in our category, particularly in those accelerated businesses that we talked about, the consumers are gonna come along with us. You know, I'll take a brand like Jell-O, for example, that, you know, is in our protect set of categories. Last year, we renovated Jell-O, we brought in zero sugar. And even in the world of GLP-1s, we're actually seeing tremendous growth in the desserts business, because we're bringing actually benefits to consumers that they were not expecting to see from our category.
So for us, let's focus on whatever the consumer journey is in that S-curve. Let's make sure we are focusing on driving innovation, driving marketing, make sure we have the right benefits for consumers, so they continue to make sure that as they're making decisions about cash flow, that we are a brand that is worth paying for.
Thank you. There's always quite a bit of talk at times like these when the topic of price gaps come up about some of Kraft Heinz's pass-through businesses, such as Oscar Mayer or cheese, et cetera. Can you explain a bit more about how you manage these sorts of businesses in this sort of environment, maybe compared to some of your others, such as the great assets you have in taste elevation, as an example?
Let me start on there, Andre, if you want to comment. What I'll say is, you know, we talked about the strategic role that our business has. And I think for us, disproportionately, you should see more, Andrew, of our business being driven by the accelerated platforms: the Taste Elevation, ready meals, Substantial Snacking. We also have a balanced portfolio, coffee, meat, and cheese. Those are businesses that are important to us, but they also have a role to play within our portfolio. So those are businesses that we all continue to renovate. We continue to bring different news to the business. In fact, we launched our stuffed hot dog for the first time this summer, helped us grow the business and grow our share within hot dogs.
We are gonna continue to bring kind of that sense of how do we continue to renovate packaging in Oscar Mayer? How do we make sure that we continue to bring quality products in things that are truly beneficial for consumers at a price point that is also accessible to them?
Mm-hmm.
We think internally, what they have to help us contribute is, how do they contribute to the gross margin to expand so that we can actually fund some of the accelerated platforms that we have to do. So it's a little bit of a balance, literally, of us being able to renovate in a way that is, brings relevance to the category without disproportionately driving growth or innovation, and at the same time, fulfilling this role about making sure we drive efficiency, that are helping us fuel the overall growth within accelerated platforms. Anything you would add, Andre?
Oh, look, I think you said pretty much everything. As you mentioned before, a few times, there are places like meats that there is so many opportunities for us on the supply chain efficiency side.
Mm-hmm.
So it's not expanding gross margin at the expense of the consumer, it's just by us operating, producing more efficiently.
Mm-hmm.
Yep. And you mentioned productivity, and productivity has certainly been enabled by better data capabilities, and it's continued to be robust and allowing for a lot of the planned incremental brand investment that you're doing. Where's the company now in this sort of continuous productivity journey, and how embedded is the sort of agile at scale program, as part of the success at this point?
You want to give the productivity?
Yeah.
Then I'll get into Agile at Scale.
Yeah, so on the productivity, we typically... I think people typically ask this in the context of supply chain-
Mm-hmm.
Which, for sure, we feel very good about where we are in the supply chain organization. As I mentioned earlier, this conversation, four consecutive years of very robust efficiencies, and there is a whole spectrum still ahead of us in pipeline. There is a lot of initiatives about warehouse consolidation, automation, continue to deploy technology to have faster decision making on the floor. So there is a lot in that space, but for us, it goes well beyond on the supply chain. This continuous improvement and efficiency is permeated across the entire organization, entire P&L. So marketing is a good example. We have increased market investment quite a lot in the last three, four years. We have now visibility that we didn't have before, for all the top brands worldwide, by how to optimize the market investments.
By putting the right amount of dollars in each type of media type, and also how to optimize among the brands, and there is tremendous opportunity for us with the dollars we have today, to deploy that in a way that can unlock more top-line potential. On the SG&A side, people think that we are extremely lean or bare bones. We are lean, and we're proud of that, but there's still a lot more to do. We are very underdeveloped in shared services. We just opened our captive center in India eighteen months ago. We just opened, literally this month, our second captive center in Mexico, and there are a lot of activities still performed by traditional functions. Even in finance, I have a lot of accounting roles, FP&A roles, and a few others that could be done by the shared services.
There's a lot of work to migrate, gradually migrate those services there, and this will unlock efficiencies on the SG&A that allow us to continue to increase the investments in market and, even though at this point, I think we are very close to the sufficient levels.
Got it.
You mentioned Agile at Scale, for those in the audience who may not be as familiar. I mean, this is something that we began in the U.S. about, you know, now two and a half years ago. Its idea was working with the mindset of Agile against our top priorities. Some of that includes both in terms of areas you're going to grow, marketing, like Andre mentioned, around marketing. We're also doing innovation, and we're doing it in procurement operations and across the sales. The idea is, we actually have dedicated people who are working on an Agile way with scrum masters, with data analysts, with data scientists, to make sure that we're thinking through a different way in which we can apply technology to solve those priorities, capture efficiencies, and help us drive growth.
We are now, as part of what we've been doing now in the last few months, now we're deploying that at a global scale.
Mm.
So we went from last year, about 35 different Agile Pods. Today, we have over 75 Agile Pods across the company, globally, working on some of the biggest opportunities that we can now deploy technology, not for the technology's sake, but because they actually are going to help us whether it's in our operation level, at our factory level, with digital twins, to make sure we create more efficiency and productivity. But it's also that it helps in terms of how do we ingest data from our customers to make sure we're better in our logistics and how we can service them better, too. So those are things that are now gonna be continuing to drive some of that efficiency and productivity you mentioned.
And a comment on that is, this is very built into our day-to-day. Like, Carlos and I, and the C level, on a quarterly basis, we review all the use cases for those digital solutions, the value that is being delivered, which ones got a level of maturity that they need to graduate, which ones we need to stop, which ones we need to start. So that's really built into our decision making.
With weakness in U.S. Away From Home in the channel looking somewhat more persistent, I think, the company sort of changed its expectations recently for the channel and is no longer planning for an improvement for the remainder of the year. What drove this decision, and I mean, could you provide an update on what you're seeing from the channel more recently, and specifically around QSRs?
You wanna start it?
Yeah, we. Look, we. If you remember Q2 earnings, if you normalize by the factory-
Mm-hmm
... situation, we are pretty much flat to Q1.
Mm-hmm.
We are now seeing, heading into Q3, gradual improvement as we expected. So it's a combination of industry doing a little better. I think it has something to do as well with the travel that Carlos mentioned, so industry is a little bit better. As we said in earnings, the customer wins that we have the new contracts; they're starting to happen. So we see some incrementally path forward on that. As we said, they're not gonna be on our goal this year, year to go, but we are seeing movement in the right direction as expected.
I think what's important, too, is that besides this particular moment, this is a channel that has a huge opportunity and runway for us. It is in a place where, you know, brands like ours with Heinz, you know, it's not only for socks, by the way. We also can put it in different products across the world. What you find is that everywhere in the world you go to, people, there is a latent demand for our products. So the idea of us using Away From Home as a way to actually get to consumers' lives in a different way, it is why we're doing partnership with hotels, not only in the U.S., but Central America and Latin America, in a way that make it accessible to people. It gives us a permission for us to continue to build on what we've done.
We're doing it not only through expansion and distribution, but also hopefully, some of you saw downstairs, our Heinz Remix Machine, bringing new equipment and innovative ways in which we can bring different combinations of flavors and products to consumers in an environment of food service as well, too. That's important not only for us, but also for the operators, because that gives them a sense of something unique that it can help drive traffic into the stores as well.
Yep. You know, in emerging markets, the company's spoken about progressively building its presence and investment in markets as the, sort of the concept proves out. Where does Kraft Heinz stand in this regard, in each of the key emerging market countries such as Brazil, Mexico, Indonesia, and China?
Yeah, and for those of you who may not know, I mean, emerging markets... We're a $2.5 billion business in emerging markets, yet, so it's only 10% of our company. So while sizable, we still have a huge opportunity ahead of us. We have declared that, you know, we certainly are committed to being selective on those emerging markets. To me, back to your first question, I've been long enough here that I've seen many companies go in disarray because they're just planting flags in different countries. For us, we wanna be focused on a go-to-market model in which we actually go in, make sure we build the right infrastructure, both in sales and in operations, in order for them to continue to drive the growth within those markets.
And particularly focused with Brazil, Mexico, Indonesia, China, and in some places where we have made acquisitions in order to improve our presence, like Turkey. So that, that I think is not only important part of our strategic pillar, it's a third of a contribution of growth, but it's also something that we are seeing continue to pay off. Brazil, for example, is a country that we know well, we understand. We have been able to continue the direct distribution. Acquisitions that we have done in Brazil has helped us build scale in the country. I can tell you that in Mexico, we continue to see progress as well.
I'll say, you know, out of all the countries that we have designated as focus for us, probably the only one that has been maybe a little softer in here, is China, where we're seeing consumer, maybe the industry may be a little more soft, and probably that will stay longer, with us. But the rest of the emerging markets, we continue to see the fact that we're growing, we're growing share. By the way, we are growing and growing share in China, too. But I think ultimately, I think we're seeing that a little bit softer overall behavior. But we feel good about the presence we have and the opportunity that we have still ahead of us.
When the company first laid out its portfolio strategy of accelerate, protect, and balance, I think the investor view is that this potentially is a precursor to further sort of portfolio optimization activity. How do you see the portfolio today?
First of all, I would say, you know, we have been pretty active in our portfolio management.
Mm-hmm.
And that's the way I think that all, all C-suites have to be thinking about it, is that you have to be in a constant sense of looking at your portfolio and, and how you continue to add and subtract. You know, I joined Kraft Heinz, I think, four and a half years ago now. Couple of places that I felt like we didn't have the right to win, things like Planters, things like our Kraft Natural Cheese, even though Kraft is in the name of the company... These are places that were highly exposed to commodities, highly exposed to private label, and we didn't feel they were the right fit for us as a company, which is why we led to divestitures. But frankly, you know, Andrew, we also were very disciplined in the way in which we did divestitures.
If you do acquisitions, we've also been thoughtful about the places that we add to our product, our categories, that have been within taste elevation, and 75% of them have been actually in emerging markets. So it, for us, is a way that help us accelerate our strategy, and that is how probably investors should look at it. We have a 10-year plan that we laid out on CAGNY. The areas that can help us accelerate our plan towards 10-year plan, is areas that we're gonna be looking at both in terms of M&A, whether it's mergers or acquisitions. And we're also gonna be thinking through what are different type of formats that allows us to do that. So it doesn't always gonna have to be an acquisition. We've also done some partnerships that are very unique in the industry.
If you look at our Ore-Ida business, for example, we have a partnership with the largest potato maker of food service in the world, in which they actually are producing the potatoes for us now. And we actually were able to get... They now took operations of our own factory in order for us to drive efficiency and release a number of capacity in that product, that for a long time was really kind of, you know, constrained in terms of capacity. So we've also been thinking around joint ventures, partnerships that allow us to accelerate our strategy. But M&A is an active area, is a place in which we're gonna continue to look forward to in order to continue to improve our portfolio, but with the discipline that we have shown so far of what it makes sense for us financially.
Great. I know we've tried to jam, you know, a lot in for this session, but maybe before we close it out, is there a sort of a key message, right, you want to make sure to deliver to investors that, you know, we may not have covered thus far?
Yeah. Listen, I think first of all, we at Kraft Heinz have changed dramatically over the last three years, and I think it may be harder sometimes for investors to look to see it. I mean, we had pandemics, we have high inflations, we have external wars, we have all these things going on in the world, and I think in that time, we have rebuilt the organization from the ground up. Today, we sit here with a clarity of a strategy. You know exactly what is gonna drive our algorithm for growth. You know exactly the categories it's gonna go to driving our resources. We have a clarity on the people that we have brought in, how they're complementing the skills that we have in the company, as Andrew mentioned. We have a great people who were very much focused, smart people who were drivers.
We complemented that with a certain level of expertise and capabilities that we're adding into the company over the past three years, that can help us make sure that we've gone from a company that was focused on inorganic growth to organic growth. At the same time, we also have a culture that is unique and very much a competitive advantage in the industry. When we talk about a sense of ownership, we mean literally a sense of ownership. It's people that are both compensated to make sure they're looking at the business from the way the shareholder looks at the business. So driving kind of TSR component through the company, to make sure this has a sense of meritocracy and a compensation based on that.
So there's a sense of ownership that is very unique and across and with all the companies that I have worked at and people that I have seen in other places. And then lastly, we continue to improve our execution. That is an area that now, as we have deployed the strategy, we have the right people, we're making sure that we have the right culture, and we continue to foster that, also we improve the execution, and we are seeing that already. We are seeing improvements in areas that even as, you know, as far as, as closely as earnings, in which we thought that there were areas that were gonna be headwind for us, we have continued to see improvement in those areas as well, too. So the execution is coming along, too.
At the same time, there are probably a couple areas that you haven't paid attention to, that people may not have paid attention to. We have improved significantly our balance sheet from three years ago, where now, as Andrew said, we have been upgraded twice, and we have yields that are leading in the industry. So we have a company that is tremendously, if you look at our share today, very much undervalued. I think a lot of it because the transformation has been so great, that I think it's hard for people to understand how much we have changed. That when we talk about Agile at Scale, that we are leading AI using AI to solve our biggest efficiencies, that we are now delivering world-class levels of productivity. Those things that have happened, even as we continue to make all these changes and all those things happening in the world.
So the last thing I will say is that, you know, something that maybe, again, from the outside in, you cannot see, we truly have the highest levels of engagement the company's ever seen. We came together as a company about 11 years ago, and today, as I sit here, even with all this changing, all the investments we do and all the resiliency our employees have seen, we have had the highest levels of engagement that our company have ever seen, and that's not just in salary, but that is around 36,000 employees across the world, so we feel great about the people that we have, and they're committed to the journey that we have ahead of us.
Great. All right, I think that's a great place to cut it off here and take it over to the breakout. Please join me in thanking Carlos and Andre for being here today.
Thank you.