General Mills, Inc. · NYSE:GIS
General Mills — Q3 2022 Earnings Presentation
46 slides from General Mills's earnings presentation, Mar 23, 2022
Slide 1: Fiscal 2022 Q3 Earnings
Fiscal 2022 Q3 Earnings March 23, 2022 1
Slide 2: A Reminder on Forward-looking Statements
A Reminder on Forward-looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s current expectations and assumptions. These forward-looking statements are subject to certain risks
Slide 3: Jeff Harmening, Chairman and Chief Executive Officer
Jeff Harmening Chairman and Chief Executive Officer General Mills Third Quarter Fiscal 2022 3
Slide 4: Today's Key Messages
Today’s Key Messages • Executing Well in a Volatile Operating Environment • Addressing Short-term Supply Disruptions; Closed Q3 with Improved Momentum • Expecting to Drive Strong Growth in Q4, Fueled by Accelerating Net Price Realization • Raising Fiscal 2022 Financial Guidance General Mills Third Q
Slide 5: Third-quarter and YTD Performance
Third-quarter and YTD Performance Q3 YTD Organic Net Sales1 + 4% + 4% 2-yr CGR +5% 2-yr CGR +6% Adjusted Operating Profit2 - 6% - 5% 2-yr CGR -1% 2-yr CGR +3% Adjusted Diluted EPS2 + 2% - 2% 2-yr CGR +4% 2-yr CGR +6% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant
Slide 6: We've Strengthened the Business in the Past Two Years
We’ve Strengthened the Business in the Past Two Years Larger and More Profitable Stronger Balance Sheet Total General Mills Debt Leverage³ +11% +12% 3.6x $18.6B $3.73 3.0x $16.8B $3.34 Net Sales Adj. EPS¹ Q3 F20 Q3 F22 Pre-Pandemic¹ Pre-Pandemic² 4 Qtrs Ended F22Q3 ¹Non-GAAP measure. See appendix fo
Slide 7: Delivering on Our Fiscal 2022 Priorities
Delivering on Our Fiscal 2022 Priorities Compete 1 Continue to Compete Effectively Navigate 2 Successfully Navigate the Dynamic Supply Chain Environment Reshape 3 Execute Reshaping Actions Without Disruption General Mills Third Quarter Fiscal 2022 7
Slide 8: Priority 1: Continuing to Compete Effectively
Priority 1: Continuing to Compete Effectively Growing or Holding Share in 66% of Our Priority Businesses YTD Global Platforms Local Gems CEREAL PET ICE CREAM MEXICAN Sources: Pet U.S. NielsenIQ xAOC + Pet Retail FYTD ending Feb 2022, Brazil NielsenIQ FYTD ending Jan 2022, China NielsenIQ FTYD ending
Slide 9: Priority 2: Successfully Navigating the Dynamic Supply Chain Environment
Priority 2: Successfully Navigating the Dynamic Supply Chain Environment Supply Chain Environment Managing Short-term Disruptions Remains Challenging on Key U.S. Platforms General Mills U.S. Retail Upstream Operating % On-Shelf Availability (Fiscal 2022) Constraints 100.0% 95.0% 90.0% Transportation
Slide 10: Priority 2: Successfully Navigating the Dynamic Supply Chain Environment
Priority 2: Successfully Navigating the Dynamic Supply Chain Environment F22 Input Cost Inflation Outlook SRM Driving Increased Price/Mix Remains at 8-9% • Spot Inflation at Multi-decade High General Mills Organic Price/Mix • Hedging Strategy Reduces Input Cost Higher Volatility and Increases Visibi
Slide 11: Priority 3: Reshaping our Organization for Growth
Priority 3: Reshaping our Organization for Growth Old Segment Structure* New Segment Structure* *Pro-forma sales represent F21 reported net sales adjusted for portfolio reshaping activity, including the European Yogurt dives titure and the Pet Treat acquisition. General Mills Third Quarter Fiscal 20
Slide 12: Being a Force For Good
Being a Force For Good Priority Areas Supporting Food Security for Ukraine REGENERATING IMPROVING OUR PLANET FOOD SECURITY PROTECTING STRENGTHENING OUR OUR PEOPLE COMMUNITIES General Mills Third Quarter Fiscal 2022 12
Slide 13: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Third Quarter Fiscal 2022 13
Slide 14: Third Quarter Fiscal 2022 Financial Results
Third Quarter Fiscal 2022 Financial Results Q3 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $4,538 Flat +4% Organic Net Sales¹ +4% +5% Adjusted Operating Profit¹ $676 -6%² -1%² Adjusted Diluted EPS¹ $0.84 +2%² +4%² (1) Non-GAAP measures. See appendix for reconciliation. (2) Constant currency
Slide 15: Components of Third Quarter Net Sales Growth
Components of Third Quarter Net Sales Growth Organic Net Sales1 +4% +7 pts Flat Flat -3 pts -4 pts Organic Organic Foreign Acquisitions & Total Net Sales Volume Price / Mix Exchange Divestitures As Reported (1) Non-GAAP measure General Mills Third Quarter Fiscal 2022 15 Table may not foot due to rou
Slide 16: Third Quarter Fiscal 2022 North America Retail
Third Quarter Fiscal 2022 North America Retail Segment Results Segment Highlights North America Retail Q3 • Q3 organic net sales growth driven by positive Organic Net Sales¹ +1% price/mix, partially offset by lower volume 2-year CGR¹ +6% • Growth in U.S. Morning Foods and U.S. Snacks, Segment Op Pro
Slide 17: Third Quarter Fiscal 2022 Pet
Third Quarter Fiscal 2022 Pet Segment Results Segment Highlights Pet Q3 • Q3 organic net sales growth includes DD growth in Organic Net Sales¹ +16% cat food/treats and HSD in dog food/treats 2-year CGR¹ +15% • Year-to-date strong retail sales growth and market Segment Op Profit² +8% share gains for
Slide 18: Third Quarter Fiscal 2022 North America Foodservice
Third Quarter Fiscal 2022 North America Foodservice Segment Results Segment Highlights North America Foodservice Q3 • Q3 organic net sales growth driven by increased Organic Net Sales¹ +22% demand in away-from-home food channels, 2-year CGR¹ -3% including Schools, Restaurants, and Lodging, and marke
Slide 19: Third Quarter Fiscal 2022 International
Third Quarter Fiscal 2022 International Segment Results Segment Highlights International Q3 • Q3 organic net sales decline reflects a Organic Net Sales¹ -1% difficult comparison to year-ago results that 2-year CGR¹ +4% were up +DD Segment Op Profit² -16% • Grew market share year-to-date in Mexican 2
Slide 20: Third Quarter Fiscal 2022 Joint Ventures
Third Quarter Fiscal 2022 Joint Ventures Q3 AFTER-TAX JV EARNINGS: $30MM VS. $12MM LY JV Results JV Highlights NET SALES¹ Q3 • CPW net sales growth driven by positive price/mix, partially offset by lower volume CPW +1% HDJ +9% • HDJ net sales growth due to strong core performance and improved distri
Slide 21: Third Quarter Fiscal 2022 Margin Results
Third Quarter Fiscal 2022 Margin Results Adjusted Gross Margin1 (% OF NET SALES) 33.0% 31.4% F21 Q3 Adj GM Price/Mix HMM Inflation Supply Chain Disruptions/ F22 Q3 Adj GM Deleverage/Other • Positive price/mix and HMM offsetting input cost inflation; elevated costs related to supply chain disruptions
Slide 22: Third Quarter Fiscal 2022 Other Income Statement Items
Third Quarter Fiscal 2022 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Increased $19MM • Net Interest Expense Decreased $20MM • Adjusted Effective Tax Rate 21.0% vs. 21.6% LY¹ • Average Diluted Shares Outstanding -1% vs. LY (1) Non-GAAP measure. See appendix for reconciliat
Slide 23: Nine-month Fiscal 2022 Financial Results
Nine-month Fiscal 2022 Financial Results 9 MONTHS 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $14,102 +4% +6% Organic Net Sales¹ +4% +6% Adjusted Operating Profit¹ $2,317 -5%² +3%² Adjusted Diluted EPS¹ $2.82 -2%² +6%² (1) Non-GAAP measures. See appendix for reconciliation. (2) Constant curr
Slide 24: Nine-month Fiscal 2022 Cash Flow Performance
Nine-month Fiscal 2022 Cash Flow Performance Operating Cash Flow ($ IN MILLIONS) $2,228 • Core Working Capital -$159MM vs LY $2,208 • Capital Investments = $351MM • Dividends Paid = $934MM • Net Shares Repurchased = $454MM F21 F22 General Mills Third Quarter Fiscal 2022 24
Slide 25: Fourth Quarter Fiscal 2022 Financial Assumptions
Fourth Quarter Fiscal 2022 Financial Assumptions • Organic Price/Mix to Step Up from Q3 to Q4, Reflecting Full Benefit of Recent SRM Actions • Q4 Input Cost Inflation +DD (Full Year +8 to 9%) • Operating Environment to Remain Challenging; Expect Improvement in Customer Service Levels from Q3 to Q4 G
Slide 26: Updated Fiscal 2022 Financial Outlook
Updated Fiscal 2022 Financial Outlook PREVIOUS UPDATED KEY FINANCIAL METRICS¹ F22 OUTLOOK F22 OUTLOOK Organic Net Sales Growth +4 to +5% ~+5% Adjusted Operating Profit Growth² -4 to -1% -2% to Flat Adjusted Diluted EPS Growth² -2 to +1% Flat to +2% Free Cash Flow Conversion ~95% ~95% (1) Non-GAAP me
Slide 27: Today's Key Messages
Today’s Key Messages • Executing Well in a Volatile Operating Environment • Addressing Short-term Supply Disruptions; Closed Q3 with Improved Momentum • Expecting to Drive Strong Growth in Q4, Fueled by Accelerating Net Price Realization • Raising Fiscal 2022 Financial Guidance General Mills Third Q
Slide 28: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2022 outlook for organic net sales growth, adjusted operating profit growth, adjusted diluted EPS growth, and free cash flow conversion are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, includi
Slide 29: Appendix: Q3 Fiscal 2022 North America Retail Operating Unit Results
Appendix: Third Quarter Fiscal 2022 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q3 U.S. Morning Foods +4% U.S. Snacks +3% Canada -2% Canada Constant-currency¹ -2% U.S. Meals & Baking Solutions -2% (1) Net sales growth in constant currency. Non-GAAP measure. See appe
Slide 30: Reconciliation of Q3 Canada Constant-Currency Net Sales Growth
Reconciliation of Third Quarter Fiscal 2022 Canada Operating Unit Constant-Currency Net Sales Growth Canada Impact of Percentage Change Foreign Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q3 (2) % Flat (2) % General Mills Third Quarter Fiscal
Slide 31: Reconciliation of Q3 Organic Net Sales Growth
Reconciliation of Third Quarter Fiscal 2022 Organic Net Sales Growth Q3 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail (8) pts 9 pts 1% - - 1% International (3) pts 2 pts (1)% (2) pts (20) pts (23)% Pet 3
Slide 32: Reconciliation of Q3 Organic Net Sales Compound Growth Rates
Reconciliation of Third Quarter Fiscal 2022 Organic Net Sales Compound Growth Rates Q3 Reported Foreign Acquisitions Organic Net Net Sales Exchange & Divestitures Sales Growth Growth North America Retail Feb. 28, 2021 vs. Feb. 23, 2020 9% - (3) pts 11% Feb. 27, 2022 vs. Feb. 28, 2021 1% - - 1% 2-yea
Slide 33: Reconciliation of Q3 Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Third Quarter Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q3 2-year compound 2022 2021 Change 2021 2020 Change growth Operating profit as reported $ 815.3 $ 826.6 (1) % $ 826.6 $ 650.8 27 % 12% Divestitures gain (170.1) - - - Ma
Slide 34: Reconciliation of Q3 Adjusted Diluted EPS Growth Rates
Reconciliation of Third Quarter Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q3 2-year compound Per Share Data 2022 2021 Change 2021 2020 Change growth Diluted earnings per share, as reported $ 1.08 $ 0.96 13 % $ 0.96 $ 0.74 30 % 21% Divestitures gain**
Slide 35: Reconciliation of Nine-month Organic Net Sales Growth
Reconciliation of Nine-month Fiscal 2022 Organic Net Sales Growth Nine-Months Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail (7) pts 7 pts Flat - - Flat International Flat 1 pt 1% 1 pt (8) pts (5)% Pet 8
Slide 36: Reconciliation of Nine-month Organic Net Sales Compound Growth Rates
Reconciliation of Nine-month Fiscal 2022 Organic Net Sales Compound Growth Rates Nine-months Reported Foreign Acquisitions Organic Net Net Sales Exchange & Divestitures Sales Growth Growth Total Feb. 28, 2021 vs. Feb. 23, 2020 8% - - 8% Feb. 27, 2022 vs. Feb. 28, 2021 4% 1 pt (1) pt 4% 2-year compou
Slide 37: Reconciliation of Nine-month Adjusted Operating Profit Growth Rate
Reconciliation of Nine-month Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Nine-month 2-year compound 2022 2021 Change 2021 2020 Change growth Operating profit as reported $ 2,459.7 $ 2,596.9 (5) % $ 2,596.9 $ 2,124.4 22 % 8% Divestitures gain (170
Slide 38: Reconciliation of Nine-month Adjusted Diluted EPS Growth Rates
Reconciliation of Nine-month Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Nine-month 2-year compound Per Share Data 2022 2021 Change 2021 2020 Change growth Diluted earnings per share, as reported $ 3.07 $ 3.10 (1) % $ 3.10 $ 2.54 22 % 10% Divestitures g
Slide 39: Reconciliation of Trailing 4 Quarters Adjusted Diluted EPS Growth Rates
Reconciliation of Trailing 4 Quarters Adjusted Diluted EPS Growth Rates Nine-Month FY21 Trailing 4 Nine-Month FY19 Trailing 4 2-year Per Share Data 2022 Q4 Quarters 2020 Q4 Quarters growth Diluted earnings per share, as reported $ 3.07 $ 0.68 $ 3.75 $ 2.54 $ 0.94 $ 3.48 Divestitures (gain) loss (0.2
Slide 40: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) Trailing 12-months F20 Q3 F22 Q3 Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $ 2,165.0 $ 2,309.1 Income taxes 395.6 558.8 Interest, net 472.7 377.6 Depreciation
Slide 41: Reconciliation of Q3 Constant-currency Segment Operating Profit Growth
Reconciliation of Third Quarter Fiscal 2022 Constant-currency Segment Operating Profit Growth Q3 Percentage Change in Percentage Change in Impact of Foreign Operating Profit as Operating Profit on Constant- Currency Exchange Reported Currency Basis North America Retail Feb. 28, 2021 vs. Feb. 23, 202
Slide 42: Reconciliation of Q3 Adjusted Gross Margin
Reconciliation of Third Quarter Fiscal 2022 Adjusted Gross Margin (FISCAL YEARS) % of Net Sales Q3 2022 2021 Gross margin as reported 30.9 % 34.4 % Mark-to-market effects 0.4 % (1.2) % Product recall - % (0.2) % Adjusted gross margin 31.4 % 33.0 % *Table may not foot due to rounding General Mills Th
Slide 43: Reconciliation of Q3 Adjusted Operating Profit Margin
Reconciliation of Third Quarter Fiscal 2022 Adjusted Operating Profit Margin % of Net Sales (FISCAL YEARS) Q3 2022 2021 Operating profit as reported 18.0 % 18.3 % Divestitures gain (3.7) % - % Mark-to-market effects 0.4 % (1.2) % Investment activity, net (0.2) % (1.3) % Transaction costs 0.2 % - % R
Slide 44: Reconciliation of Q3 Adjusted Tax Rates
Reconciliation of Third Quarter Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q3 2022 2021 2020 Pretax Income Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes Earnings** Taxes As reported $ 755.9 $ 123.2 $ 754.0 $ 162.0 $ 571.3 $ 118.2 Divestitures g
Slide 45: Adjusted Tax Rates
Reconciliation of Nine-month Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) *Table may not foot due to rounding **Earnings before income taxes and after-tax earnings from joint ventures General Mills Third Quarter Fiscal 2022 45
Slide 46: Reconciliation of Trailing 4 Quarters Adjusted Tax Rates
Reconciliation of Trailing 4 Quarters Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Nine-Months 2022 Q4 FY21 Nine-Months 2020 Q4 FY19 Pretax Income Pretax Income Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes Earnings** Taxes Earnings** Taxes As reported $ 2,2