General Mills, Inc. · NYSE:GIS
General Mills — Q4 2020 Earnings Presentation
51 slides from General Mills's earnings presentation, Jul 1, 2020
Slide 1: General Mills Earnings Fourth Quarter Fiscal 2020
General Mills Earnings Investor Day Fiscal Fourth Quarter Fiscal 2020 2020 July 1, 2020 July 9, 2019 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 Earnings Investor Day Fiscal Fourth Quarter Fiscal 2020 2020 July 9, 2019 July 1, 2020 3
Slide 4: Thank You
Thank You FROM THE BOTTOM OF OUR HEARTS
Slide 5: Today's Key Messages
Today’s Key Messages • Focusing on Employees, Consumers, and Executional Excellence During COVID-19 Pandemic • Delivered Outstanding Performance in Q4; Achieved F20 Priorities • Key Priorities for Fiscal 2021: 1. Compete Effectively, Everywhere We Play 2. Drive Efficiency to Fuel Investment 3. Reduc
Slide 6: Business Impacts of COVID-19
Business Impacts of COVID-19 • Unprecedented Shift from Away-from-home to At-home Food Demand • Enhanced Health & Safety Practices • Importance of Supply Chain Excellence • Household Penetration Improvements for Our Brands • Accelerated Consumer Adoption of Food E-commerce 6
Slide 7: Outstanding Performance in F20 Q4
Outstanding Performance in F20 Q4 • Increased Agility Organic +16%¹ Net Sales • Strengthened Customer Relationships Adjusted • Exceptional Consumer Trial Op. Profit +24%² • Broad-based Market Share Gains Adjusted Diluted EPS +33%² • Expanded Margins While Investing in People, Brands, and Capabilitie
Slide 8: Achieved Fiscal 2020 Priorities
Achieved Fiscal 2020 Priorities Assessment 1 Accelerate Organic Sales Improve NAR while continuing to drive Pet growth Maintain 2 Strong Margins Fuel growth investments through HMM and SRM 3 Reduce Leverage Continue cash discipline and pay down debt 8
Slide 9: Exceptional Year for North America Retail
Exceptional Year for North America Retail • On Track to Improve Organic Sales Growth Prior to COVID-19 • U.S. Category Growth Accelerated to +32% in Q4 Behind Increase in Demand for At-home Food • Superior Supply Chain Execution to Service the Business • Best U.S. Retail Market Share Performance in
Slide 10: Accelerated Topline Growth in NAR in F20
Accelerated Topline Growth in NAR in F20 • Significant Increase in Demand for U.S. Meals & Baking; Q4 Retail Sales +68% • Extended Our Lead in U.S. Cereal; F20 Share +0.7pts • Exited F20 With Improvement in U.S. Snacks & U.S. Yogurt • Returned Canada to Growth Source: Nielsen xAOC 10
Slide 11: Competed Effectively
Competed Effectively General Mills U.S. Retail Market Share Q4 F20 F20 Cereal Bars Yogurt Refrigerated Dough Soup Hot Snacks Desserts Mexican Fruit Snacks Natural & Organic Top 10 Holding/Gaining Share 9 of 10 7 of 10 Top 10 Categories Represent ~85% of measured U.S. Retail Sales Source: Nielsen xAO
Slide 12: Continued to Drive Strong Pet Growth in F20
Continued to Drive Strong Pet Growth in F20 BLUE HOUSEHOLD PENETRATION 13.3% 11.5% 8.7% F18 F19 F20 BLUE All-channel Retail Sales +DD Continued Gains in F20 BLUE Net Sales +18% Source: Nielsen Household Panel, All Outlets, Total Blue Buffalo, 52 weeks ending 5/26/18, 5/25/19, 5/16/20 Source: Nielsen
Slide 13: Margin and Leverage Improvement in F20
Margin and Leverage Improvement in F20 ADJUSTED OPERATING PROFIT MARGIN* NET DEBT-TO-ADJUSTED EBITDA RATIO* (% OF NET SALES) 17.3% 4.2x 16.9% 3.9x 3.5x 16.6% 3.2x F18 F19 F20 F18 F19 F20 Target F20 Actual Pro Forma *Non-GAAP measures. See appendix for reconciliation 13
Slide 14: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Earnings Investor Day Fiscal Fourth Quarter Fiscal 2020 2020 July 9, 2019 July 1, 2020 14
Slide 15: Fourth Quarter Fiscal 2020 Financial Results
Fourth Quarter Fiscal 2020 Financial Results Dollars in millions except per share data Q4 TOTAL GENERAL MILLS $ VS LY Net Sales $5,023 +21% • 53rd Week and Extra Month for Pet Added ~10 pts to Reported Net Sales Growth Organic Sales* +16% • Pandemic-driven At-home Food Demand Accelerated Organic Adj
Slide 16: Fourth Quarter Fiscal 2020 Components of Net Sales Growth
Fourth Quarter Fiscal 2020 Components of Net Sales Growth Organic Net Sales* 21% = 16% +12 pts +7 pts +3 pts -2 pts Flat Organic Organic Foreign Acquisitions / 53rd Week Total Net Sales Volume Price / Mix Exchange Divestitures As Reported *Non-GAAP measure Table may not foot due to rounding 16
Slide 17: Fiscal 2020 North America Retail
Fiscal 2020 North America Retail SEGMENT RESULTS Q4 F20 SEGMENT HIGHLIGHTS Net Sales +28%¹ +6%¹ • Q4 net sales growth primarily driven by U.S. Meals & Baking and U.S. Cereal, elevated by Segment Operating Profit +69%² +15%² COVID-19-driven at-home food demand • Q4 share gains in 9 of top 10 U.S. cat
Slide 18: Fiscal 2020 Pet Segment
Fiscal 2020 Pet Segment SEGMENT RESULTS Q4 F20 SEGMENT HIGHLIGHTS Net Sales +37%¹ +18%¹ • Year-end calendar alignment resulted in an extra month of results in Q4 Segment Operating Profit +23% +46% • F20 all-channel retail sales growth +DD, driven by FDM • Q4 profit growth driven by net sales growth,
Slide 19: Fiscal 2020 Convenience Stores & Foodservice
Fiscal 2020 Convenience Stores & Foodservice SEGMENT RESULTS Q4 F20 SEGMENT HIGHLIGHTS Net Sales -29%¹ -9%¹ • Q4 net sales decline due to COVID-19-driven reduction in away-from-home food demand Segment Operating Profit -67% -20% • Significantly reduced foot traffic in Schools, Lodging, Restaurants,
Slide 20: Fiscal 2020 Europe & Australia
Fiscal 2020 Europe & Australia SEGMENT RESULTS Q4 F20 SEGMENT HIGHLIGHTS Net Sales +4%¹ -1%¹ • Q4 net sales growth driven by Mexican Food and Baking products, partially offset by Segment Operating Profit -14%² -3%² declines in away-from-home channels • Q4 retail sales +DD on Mexican Food, Ice Cream,
Slide 21: Fiscal 2020 Asia & Latin America
Fiscal 2020 Asia & Latin America SEGMENT RESULTS Q4 F20 SEGMENT HIGHLIGHTS Net Sales -7%¹ -2%¹ • Q4 Asia net sales -DD driven by COVID-19 impacts to foodservice outlets including Häagen-Dazs Segment Operating Profit NM -73%² Shops, partially offset by Wanchai Ferry growth • Q4 LATAM net sales +MSD,
Slide 22: Fourth Quarter Fiscal 2020 Joint Ventures
Fourth Quarter Fiscal 2020 Joint Ventures AFTER-TAX EARNINGS: $34MM; +68% VS. LY JV GROWTH CPW HDJ Net Sales* +13% -13% Highlights: • Q4 CPW net sales increase driven by Brazil, UK, Australia, and Europe region growth and positive price/mix • Q4 HDJ net sales decline driven by lower volume • Q4 afte
Slide 23: Fiscal 2020 Margin Results
Fiscal 2020 Margin Results ADJUSTED GROSS MARGIN* ADJUSTED OP PROFIT MARGIN* (% OF NET SALES) (% OF NET SALES) 35.3% 36.1% 17.7% 34.4% 35.2% 17.3% 16.9% 17.3% Q4 F19 Q4 F20 F19 F20 Q4 F19 Q4 F20 F19 F20 Q4 margin expansion driven by favorable price/mix, partially offset by higher SG&A expenses inclu
Slide 24: Fourth Quarter Fiscal 2020 Other Income Statement Items
Fourth Quarter Fiscal 2020 Other Income Statement Items • Unallocated Corporate Expenses Increased $91MM ex. Certain Items, driven by Compensation & Benefits Expense • Net Interest Expense Decreased $6MM • Adjusted Effective Tax Rate 19.1% vs. 20.6% LY* • Average Diluted Shares Outstanding Up 1% *No
Slide 25: Full-year Fiscal 2020 Financial Results
Full-year Fiscal 2020 Financial Results Dollars in millions except per share data F20 TOTAL GENERAL MILLS $ VS LY • 53rd Week and Extra Month for Net Sales $17,627 +5% Pet Added ~2.5 pts to Reported Net Sales Growth Organic Sales* +4% • Elevated Demand from COVID-19 Added ~3 pts to Organic Net Adjus
Slide 26: Fiscal 2020 Balance Sheet and Cash Flow
Fiscal 2020 Balance Sheet and Cash Flow OPERATING CASH FLOW ($ IN MILLIONS) • Core Working Capital -$591MM vs. LY $3,676 • Capital Investments = $461MM $2,807 • FCF Conversion* = 143% • Dividends Paid = $1.2B • Leverage Ratio** = 3.2x F19 F20 *Non-GAAP measure. See Appendix for reconciliation. **Net
Slide 27: Fiscal 2021 Topline Assumptions
Fiscal 2021 Topline Assumptions • Anticipate Continued Consumer Behavior Changes Tied to Virus Transmission and Recession Concerns • Expect Elevated At-home Food Demand, Though Magnitude and Duration Remain Highly Uncertain • Calendar Differences in Q4 (53rd Week and Extra Month for Pet in F20) to R
Slide 28: Fiscal 2021 Financial Assumptions
Fiscal 2021 Financial Assumptions • Objective: Adjusted Operating Profit Margin* Roughly in Line with F20 • HMM Savings ~4% of COGS; Input Cost Inflation ~3% of COGS • Incremental Costs to Service Demand Amid COVID-19 • Increased Investments in Brands and Capabilities • Net Interest Expense of ~$430
Slide 29: Our Fiscal 2021 Priorities
Our Fiscal 2021 Priorities Compete 1 Compete Effectively, Everywhere We Play 2 Fuel Investment Drive Efficiency to Fuel Investment Reduce Leverage 3 Reduce Leverage to Increase Financial Flexibility 29
Slide 30: Increasing Investment in Brand Building in F21
Increasing Investment in Brand Building in F21 Cheerios Heart Health Pillsbury Product News Investment Behind Blue Buffalo Global Häagen-Dazs Campaign 30
Slide 31: Continuing to Innovate in F21
Continuing to Innovate in F21 31
Slide 32: Global Capabilities to Drive Growth in F21
Global Capabilities to Drive Growth in F21 E-COMMERCE DATA & ANALYTICS (% of Net Sales) 9% • Drive Efficiencies in Procurement 6% 5% • Amplify SRM Efforts • Personalize Communication and Offers to Consumers F19 F20 Q1-Q3 F20 Q4 Full Year Estimate of E-commerce % of Net Sales at Constant FX Rate 32
Slide 33: Today's Key Messages
Today’s Key Messages • Focusing on Employees, Consumers, and Executional Excellence During COVID-19 Pandemic • Delivered Outstanding Performance in Q4; Achieved F20 Priorities • Key Priorities for Fiscal 2021: 1. Compete Effectively, Everywhere We Play 2. Drive Efficiency to Fuel Investment 3. Reduc
Slide 34: Appendix: North America Retail
Appendix: North America Retail OPERATING UNIT NET SALES % VS. LY Operating Unit Q4 F20 Full-year F20 U.S. Meals & Baking +75% +15% U.S. Cereal +26% +8% Canada +12% +4% Canada Constant-currency1 +17% +5% U.S. Snacks +10% +2% U.S. Yogurt +10% +1% (1) Constant currency growth rate. Non-GAAP measure. Se
Slide 35: Reconciliation of Fourth Quarter Fiscal 2020 Organic Net Sales Growth
Reconciliation of Fourth Quarter Fiscal 2020 Organic Net Sales Growth (FISCAL YEAR) Q4 Reported Organic Organic Organic Foreign Acquisitions Net Sales Volume Price/Mix Net Sales Exchange & Divestitures 53rd Week Growth North America Retail 35 pts (7) pts 28 % - - 9 pts 36 % Convenience Stores (21) p
Slide 36: Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q4 2020 2019 Change Operating profit as reported $ 829.5 $ 716.1 16 % Mark-to-market effects 23.7 (0.4) Product recall costs 19.3 - Restructuring charges 13.0 16.6 Inves
Slide 37: Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Diluted EPS
Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Q4 Per Share Data 2020 2019 Change Diluted earnings per share, as reported $ 1.02 $ 0.94 9% Mark-to-market effects** 0.03 - Product recall costs** 0.03 - Restructuring charges**
Slide 38: Reconciliation of Tax Rate Excluding Items
Reconciliation of Fourth Quarter Fiscal 2020 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS) Q4 2020 2019 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $733.0 $139.6 $615.9 $54.7 Tax item - - - 72.9 Mark-to-market effects 23.7 5.5 (0.4) (0.1) Product recall costs 1
Slide 39: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Adjusted Operating Profit Margin (FISCAL YEARS) Full Year 2020 2019 2018 % of % of % of Net Sales Net Sales Net Sales Operating profit margin as reported 16.8 % 14.9 % 15.4 % Restructuring charges 0.3 0.5 0.5 Mark-to-market effects 0.1 0.2 (0.2) Product recall costs 0.1 - - Asset i
Slide 40: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio 2020 2019 2018* (FISCAL YEARS, $ IN MILLIONS) Total Debt $13,539.5 $14,490.0 $15,818.6 Cash 1,677.8 450.0 399.0 Net Debt $11,861.7 $14,040.0 $15,419.6 Net earnings, including earnings attributable to redeemable and noncontrolling interests, as repo
Slide 41: Reconciliation of Fiscal 2020 Organic Net Sales Growth
Reconciliation of Fiscal 2020 Organic Net Sales Growth (FISCAL YEAR) Full Year Reported Organic Organic Organic Foreign Acquisitions Net Sales Volume Price/Mix Net Sales Exchange & Divestitures 53rd Week Growth North America Retail 8 pts (1) pt 6% - - 2 pts 8% Convenience Stores (7) pts (2) pts (9)
Slide 42: Reconciliation of Fourth Quarter Fiscal 2020 Constant-currency Segment Operating Profit Growth
Reconciliation of Fourth Quarter Fiscal 2020 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q4 Percentage Change in Impact of Foreign Percentage Change in Segment Operating Currency Segment Operating Profit on Profit as Reported Exchange a Constant-currency Basis North America Retai
Slide 43: Reconciliation of Fiscal 2020 Constant-currency Segment Operating Profit Growth
Reconciliation of Fiscal 2020 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Full Year Percentage Change in Impact of Foreign Percentage Change in Segment Operating Currency Segment Operating Profit on Profit as Reported Exchange a Constant-currency Basis North America Retail 15 % F
Slide 44: Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Gross Margin
Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Gross Margin (FISCAL YEARS) Q4 2020 2019 % of % of Net Sales Net Sales Gross margin as reported 35.2 % 35.1 % Mark-to-market effects 0.5 - Product recall costs 0.4 - Restructuring charges - 0.2 Adjusted gross margin 36.1 % 35.3 % *Table may not f
Slide 45: Reconciliation of Fiscal 2020 Adjusted Gross Margin
Reconciliation of Fiscal 2020 Adjusted Gross Margin (FISCAL YEARS) Full Year 2020 2019 % of % of Net Sales Net Sales Gross margin as reported 34.8 % 34.1 % Mark-to-market effects 0.1 0.2 Product recall costs 0.1 - Restructuring charges 0.1 0.1 Adjusted gross margin 35.2 % 34.4 % *Table may not foot
Slide 46: Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Operating Profit Margin
Reconciliation of Fourth Quarter Fiscal 2020 Adjusted Operating Profit Margin (FISCAL YEARS) Q4 2020 2019 % of % of Net Sales Net Sales Operating profit margin as reported 16.5 % 17.2 % Mark-to-market effects 0.5 - Product recall costs 0.4 - Restructuring charges 0.3 0.4 Investment activity, net - (
Slide 47: Reconciliation of Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Full Year 2020 2019 Change Operating profit as reported $ 2,953.9 $ 2,515.9 17 % Restructuring charges 50.2 77.6 Mark-to-market effects 24.7 36.0 Product recall costs 19.3 - Investment
Slide 48: Reconciliation of Fiscal 2020 Adjusted Diluted EPS
Reconciliation of Fiscal 2020 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Full Year Per Share Data 2020 2019 Change Diluted earnings per share, as reported $ 3.56 $ 2.90 23 % Restructuring charges** 0.06 0.10 Mark-to-market effects** 0.03 0.05 Product recall costs**
Slide 49: Reconciliation of Tax Rate Excluding Items
Reconciliation of Tax Rate Excluding Items Full Year 2020 Full Year 2019 (FISCAL YEARS, $ IN MILLIONS) Pretax Earnings** Income Taxes Pretax Earnings** Income Taxes As reported $2,600.2 $480.5 $2.082.0 $367.8 Tax item - 53.1 - 72.9 Restructuring charges 50.2 11.2 77.6 14.6 Mark-to-market effects 24.
Slide 50: Reconciliation of Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) 2020 2019 Net earnings, including earnings attributable to redeemable and noncontrolling interests $2,210.8 $1,786.2 Mark-to-market effects** 19.0 27.7 Restructuring charges** 39.0 63.0 Product recall costs*
Slide 51: Reconciliation of Fiscal 2020 Canada Operating Unit Constant-currency Net Sales Growth
Reconciliation of Fiscal 2020 Canada Operating Unit Constant-currency Net Sales Growth (FISCAL YEAR) 2020 Impact of Percentage Change Foreign Percentage Change in in Canada Net Sales Currency Canada Net Sales on a as Reported Exchange Constant-currency Basis Q4 12 % (5) pts 17% Full Year 4% (1) pt 5