Core Insights - Mondelez International (MDLZ) is facing significant challenges due to record cocoa inflation, impacting gross profit despite a 3.1% increase in organic revenues in Q1 2025 driven by strong pricing in its chocolate portfolio [1][8] - The company has implemented a multipronged mitigation strategy focusing on pricing, revenue growth management, and strategic pack architecture, which has shown minimal disruption and maintained consumer loyalty to core brands [2][5] - There are concerns regarding Mondelez's ability to sustain profitability amid prolonged commodity inflation, with a 3.5% decline in volume mix attributed to pricing elasticity and planned pack downsizing [3][4] Financial Performance - In Q1 2025, Mondelez reported a 3.1% organic revenue growth, primarily from pricing gains in its chocolate segment, but experienced a decline in gross profit and adjusted earnings per share due to soaring cocoa prices [1][8] - Operating income in developed markets, particularly North America, was negatively affected by cocoa cost pressures and soft consumer demand, while Europe saw pricing success but still faced operating income erosion [3][4] Future Outlook - Mondelez is positioned to manage cocoa volatility effectively, with strong pricing strategies, cost controls, and resilient brands supporting its margin strategy [5] - The company anticipates benefiting from improved leverage as cocoa markets stabilize, allowing for reinvestment in long-term growth [5] Stock Performance - Mondelez shares have increased by 13.4% over the past six months, outperforming the industry and broader Consumer Staples sector [6] - The stock is currently trading at a forward P/E ratio of 20.95, above the industry average of 15.72, indicating market expectations of business stability [13] Earnings Estimates - The Zacks Consensus Estimate for Mondelez's earnings has been revised upward, with current fiscal year estimates at $3.02 per share and next fiscal year at $3.33 per share, reflecting positive sentiment [16]

Financial Data and Key Metrics Changes - For the first quarter, the company generated over $1.4 billion in revenue, with a same-store sales increase of 3.5% and positive traffic growth [7][21] - Revenue growth was reported at 9.6%, driven by a 2.4% increase in average unit volume and 7.1% store week growth [21] - Diluted earnings per share increased by 1% to $1.7, while restaurant margin dollars increased by 4.7% to $239 million [21][22] Business Line Data and Key Metrics Changes - Weekly sales averaged $167,000 at Texas Roadhouse, $123,000 at Bubba's 33, and $71,000 at Jaggers, all showing positive same-store sales and traffic growth [15] - Average weekly sales for the first quarter were over $163,000, with To Go sales representing approximately 13.6% of total weekly sales [21] Market Data and Key Metrics Changes - The company opened eight company-owned restaurants in the first quarter, with plans to open approximately 30 company-owned restaurants this year [9][10] - Franchise openings are expected to include five international Texas Roadhouses and two domestic Jaggers [10] Company Strategy and Development Direction - The company aims to focus on delivering legendary food and service while navigating external economic factors [8] - Technology initiatives are progressing, with 65% of restaurants using a digital kitchen and 70% having upgraded guest management systems [11][12] - The company is committed to maintaining its pricing strategy, which is below inflation levels for both commodities and labor [32][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current operating environment, citing strong demand for the brand and positive sales trends [8][15] - The company anticipates a full-year commodity inflation of approximately 4%, influenced by updated expectations for beef costs and tariffs [19][95] Other Important Information - The company celebrated the success of its operators at the annual Managing Partner Conference, emphasizing the importance of community engagement [26] - The company is focusing on improving the guest experience through new beverage menus tailored to regional preferences [12] Q&A Session Summary Question: Pricing strategy in relation to inflation - The company confirmed a 3.1% price increase in the first quarter, which is expected to drop to 2.3% in the following quarters, indicating pricing below inflation [32][34] Question: Labor leverage and hours - Labor hours grew at approximately 35% of comparable traffic growth, maintaining productivity despite challenges [40][41] Question: Restaurant margin performance - Management acknowledged a slight decline in restaurant profit dollars per week and emphasized the importance of monitoring this metric throughout the year [45][47] Question: To Go sales performance - The company noted improvements in To Go sales due to operational enhancements and better packaging, with margins being neutral to slightly positive [101][103] Question: Commodity inflation outlook - The company expects commodity inflation to remain under pressure, with specific guidance of approximately 4% for the full year [19][95] Question: Franchise acquisitions - The company maintains an active dialogue with franchisees regarding potential acquisitions but has no imminent plans beyond those already disclosed [140][142]

Financial Data and Key Metrics Changes - For the first quarter, the company reported revenue of over $1.4 billion, representing a 9.6% increase year-over-year, driven by a 2.4% increase in average unit volume and 7.1% store week growth [19][5] - The diluted earnings per share increased by 1% to $1.7, while restaurant margin dollars increased by 4.7% to $239 million [19][20] - Cash flow from operations was $238 million, with $221 million in cash at the end of the quarter [18] Business Line Data and Key Metrics Changes - Average weekly sales were $167,000 at Texas Roadhouse, $123,000 at Bubba's 33, and $71,000 at Jaggers, all showing positive same-store sales and traffic growth [13] - Same-store sales increased by 3.5% in the first quarter, with traffic growth of 1.1% and a 2.4% increase in average check [19] Market Data and Key Metrics Changes - The company opened eight company-owned restaurants in the first quarter, with plans to open approximately 30 company-owned restaurants this year [6][7] - Franchise openings are expected to include five international Texas Roadhouses and two domestic Jaggers [7] Company Strategy and Development Direction - The company aims to focus on delivering legendary food and service while navigating external economic factors [5] - The management emphasized the importance of maintaining operational excellence and community engagement as part of their long-term growth strategy [23] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the current demand for their brands, despite external challenges such as tariffs and inflation [5][14] - The company anticipates a full-year commodity inflation of approximately 4%, influenced by updated expectations for beef costs and tariffs [16][89] Other Important Information - The company is implementing technology upgrades, with 65% of restaurants using a digital kitchen and 70% having a new guest management system [9][10] - The company celebrated the achievements of its top operators during the annual Managing Partner Conference, reinforcing its commitment to operational excellence [2][11] Q&A Session Summary Question: Pricing strategy in relation to inflation - Management confirmed a 3.1% price increase in Q1, which is expected to drop to 2.3% in the following quarters, indicating they are pricing below inflation [29][30] Question: Labor leverage and hours - Management clarified that labor hours grew at 35% of traffic growth, maintaining productivity despite challenges [37][38] Question: Restaurant margin performance - Management acknowledged a slight decline in restaurant profit dollars per week and emphasized the importance of monitoring this metric throughout the year [42][44] Question: Consumer behavior and sales trends - Management attributed sales fluctuations to weather conditions and noted a strong rebound in March, April, and May [68][69] Question: Franchise acquisitions and future plans - Management stated there are no immediate plans for further franchise roll-ups but maintains active dialogue with existing franchisees [135][137] Question: Bar menu relaunch and profitability - Management indicated that the bar menu changes were driven by consumer demand and are expected to enhance profitability [141][144]

Financial Data and Key Metrics Changes - Total first quarter revenues were $282.2 million, an increase of 16.4% compared to the previous year [21] - Same restaurant sales growth was positive at 0.7%, while same restaurant traffic was down by 0.7% [21] - Adjusted EBITDA was $22.8 million, with adjusted EBITDA margins slipping to 8.1% from 11.8% [26][27] Business Line Data and Key Metrics Changes - The company opened 13 new system-wide restaurants during the quarter, including 10 company-owned and 3 franchise-owned [27] - Restaurant level operating profit margin decreased to 16.5% from 20.8% year-over-year [25] - Food and beverage expenses rose to 23.8% of sales compared to 21.8% in the same quarter last year, driven by commodity inflation [24] Market Data and Key Metrics Changes - The company reported a significant opportunity for expansion in the New England market, with successful openings in Massachusetts and plans for further locations in New Hampshire and Tennessee [12][13] - The Florida market has outperformed the rest of the country, with continued new restaurant openings [92] Company Strategy and Development Direction - The company is focused on growth through new restaurant openings and enhancing customer experiences, with a target of 59 to 64 net new system-wide restaurants for the year [30] - Strategic marketing efforts have been enhanced to drive brand awareness and customer engagement, particularly through digital and social media [10][11] - The company aims to maintain a long-term target of 18-20% on restaurant level operating profit margins [110] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatile macro environment affecting consumer demand and input costs, but expressed optimism about achieving positive traffic growth for the year [6][19] - The company expects commodity inflation to peak in the second quarter, with a forecast of high single-digit inflation for the full year [28][30] - Management remains confident in the brand's competitive positioning and customer service experience despite current margin pressures [19][90] Other Important Information - The company completed the acquisition of 16 restaurants in North and South Carolina and three in Missouri, enhancing its presence in key states [13] - The company is implementing a "surprise and delight" initiative to enhance customer loyalty, which has had a short-term impact on margins [17][74] Q&A Session Summary Question: Can you expand on the comment that sales turned positive in March and then traffic turned positive in April? - Management noted that traffic trends improved sequentially, with positive dine-in traffic improvement for all four quarters last year [36] Question: Can you talk more about the trade-off between driving traffic through third-party actions and other initiatives at a lower margin? - Management expressed confidence in the effectiveness of their strategies to drive traffic, despite cost pressures [38] Question: What are the learnings from the increased media spend and engagement following new media efforts? - Management reported positive results from the new media efforts, contributing to improved traffic trends [44] Question: Can you comment on the peak of commodity costs in Q2? - Management indicated that the peak is expected due to crop-related issues and rebuilding of egg flocks, but does not foresee this as a permanent issue [46] Question: How is the Florida market performing relative to the system? - Management stated that Florida has been performing well and continues to open new restaurants there [92]