Slide 1: General Mills Earnings First Quarter Fiscal 2021
General Mills Earnings First Quarter Fiscal 2021 September 23, 2020 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: General Mills Earnings - Jeff Harmening, CEO
General Mills Earnings First Quarter Fiscal 2021 September 23, 2020 Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Today's Key Messages
Today’s Key Messages • Exceptional Performance in Q1 • Enabled by Continued Focus on Employees and Consumers During COVID-19 Pandemic • Delivering on Fiscal 2021 Priorities • Resuming Dividend Growth, Ahead of Schedule General Mills First Quarter Fiscal 2021 4
Slide 5: Operating in a Dynamic Environment
Operating in a Dynamic Environment • At-home Food Demand Remains Elevated Globally • Developed Markets Moderated from F20 Q4; Q1 Demand +LDD in NAR and +MSD in EUAU • Emerging Market Recovery Mixed • Away-from-home Demand Improved from F20 Q4, but Still Under Pressure • Adapting to Capture Increment
Slide 6: Exceptional Performance in Q1
Exceptional Performance in Q1 +10% 1 Organic Net Sales +22% 2 Adjusted Operating Profit +27% 2 Adjusted Diluted EPS 1 Non-GAAP measure. See appendix for reconciliation 2 Constant currency growth.Non-GAAP measure. See appendix for reconciliation 6
Slide 7: Our Fiscal 2021 Priorities
Our Fiscal 2021 Priorities Compete 1 Compete Effectively, Everywhere We Play Fuel Investments 2 Drive Efficiency to Fuel Investments in Brands and Capabilities Reduce 3 Reduce Debt Leverage to Increase Financial Flexibility 7
Slide 8: Competing Effectively: Growing Share
1 Competing Effectively: Growing Share Holding or Growing Share in Key Markets Holding or Growing Share in Key Categories U.S. Canada France Cereal Snack Bars Mexican U.K. China Brazil Pet Food Ice Cream Yogurt (U.S., France, Canada) Ref. Dough Dessert Mixes (U.S., U.K.) Source: Nielsen/IRI, U.S., C
Slide 9: Competing Effectively: Winning New Consumers
Competing Effectively: Winning New Consumers • Significant, Broad-based Global Household Penetration Gains • U.S. Repeat Rates Higher than Pre-pandemic Levels and Ahead of Competition • New U.S. Consumers Over Index to Younger and Hispanic Households • Penetration Gains Outpacing Competition in U.S.
Slide 10: Competing Effectively: Winning New Consumers
Competing Effectively: Winning New Consumers Penetration Gains Outpacing Competition During the Pandemic in U.S. Retail Change in Household Penetration General Mills Top Competitor 4.5 3.9 3.5 3.1 2.9 2.6 2.8 2.4 2.1 1.8 1.7 1.2 1.2 1.2 0.3 0.0 0.0 -0.4 -1.0 -1.9 Desserts Ref. Mexican Dry Soup Hot C
Slide 11: Competing Effectively: Increasing the Stickiness of Demand
Competing Effectively: Increasing the “Stickiness” of Demand Meaningful Renovation Relevant Innovation 11
Slide 12: Competing Effectively: Increasing the Stickiness of Demand
Competing Effectively: Increasing the “Stickiness” of Demand Breakthrough Brand Building Fueling E-commerce Growth 12
Slide 13: Driving Efficiency to Fuel Investments
2 Driving Efficiency to Fuel Investments Margin Tailwinds Margin Headwinds • 4% COGS HMM Savings • 3% Input Cost Inflation • Volume Leverage from Internal • Higher Cost to Service Demand, Capacity Including External Manufacturing • Increased Brand and Capability Investments • Ongoing Health & Safety
Slide 14: Reducing Debt Leverage and Resuming Dividend Growth
3 Reducing Debt Leverage and Resuming Dividend Growth Net Debt to Adjusted EBITDA* • Significant Deleverage Since Blue Buffalo Acquisition (F18) 4.2x 3.9x • Returning to Normal Capital 3.2x 3.0x Allocation Priorities: 1. Dividend Growth 2. Strategic M&A 3. Share Repurchase • Announced 4% Quarterly D
Slide 15: General Mills Earnings - Kofi Bruce, CFO
General Mills Earnings First Quarter Fiscal 2021 September 23, 2020 Kofi Bruce Chief Financial Officer 15
Slide 16: First Quarter Fiscal 2021 Financial Results
First Quarter Fiscal 2021 Financial Results Q1 TOTAL GENERAL MILLS $MM VS LY Net Sales $4,364 +9% Organic Net Sales* +10% Adjusted Operating Profit* $832 +22%1 Adjusted Diluted EPS* $1.00 +27%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant currency growth rate. Non-GAAP measure. Se
Slide 17: Components of First Quarter Net Sales Growth
Components of First Quarter Net Sales Growth Organic Net Sales* = 10% +8 pts 9% +2 pts -1 pt Flat Organic Organic Foreign Acquisitions / Total Net Sales Volume Price / Mix Exchange Divestitures As Reported *Non-GAAP measure Table may not foot due to rounding 17
Slide 18: North America Retail
First Quarter Fiscal 2021 North America Retail Segment Results Segment Highlights North America Retail Q1 • Q1 net sales growth primarily driven by U.S. Meals & Organic Net Sales +14%¹ Baking and U.S. Cereal, reflecting pandemic-driven elevated at-home food demand Segment Op Profit +24%² • Held or g
Slide 19: Pet
First Quarter Fiscal 2021 Pet Segment Results Segment Highlights Pet Q1 • Q1 net sales growth driven by FDM and E-commerce sales Organic Net Sales +6%¹ • Reduction in at-home inventory during Q1 was a headwind Segment Op Profit +12%² to net sales • Continued household penetration and market share ga
Slide 20: Convenience Stores & Foodservice
First Quarter Fiscal 2021 Convenience Stores & Foodservice Segment Results Segment Highlights CS&F Q1 • Q1 net sales decline due to pandemic-driven Organic Net Sales -12%¹ reduction in away-from-home food demand Segment Op Profit -24% • Reduced consumer traffic impacted Restaurants, Lodging, and Con
Slide 21: Europe & Australia
First Quarter Fiscal 2021 Europe & Australia Segment Results Segment Highlights EUAU Q1 • Q1 net sales growth primarily driven by Mexican Food, Organic Net Sales +7%¹ Retail Ice Cream, and Baking products Segment Op Profit +89%² • Q1 aggregate market share growth • Q1 profit growth driven by higher
Slide 22: Asia & Latin America
First Quarter Fiscal 2021 Asia & Latin America Segment Results Segment Highlights ASLA Q1 • Q1 LATAM net sales growth +DD driven by Yoki and Organic Net Sales +17%¹ Kitano in Brazil Segment Op Profit +68%² • Q1 Asia net sales growth +DD driven primarily by Wanchai Ferry and Häagen-Dazs Retail in Chi
Slide 23: Joint Ventures
First Quarter Fiscal 2021 Joint Ventures Q1 AFTER-TAX EARNINGS: $41MM VS. $22MM LY JV Results JV Highlights NET SALES Q1 • Q1 broad-based CPW net sales growth driven by Latin CPW +9%¹ America, Turkey, UK, and Europe Region HDJ -1%¹ • HDJ volume decline partially offset by positive price/mix • Q1 JV
Slide 24: Margin Results
First Quarter Fiscal 2021 Margin Results Adjusted Gross Margin* Adjusted Operating Profit Margin* (% OF NET SALES) (% OF NET SALES) 19.1% 36.2% 35.2% 17.0% Q1 F20 Q1 F21 Q1 F20 Q1 F21 • Q1 Adj. Gross Margin expansion driven primarily by volume leverage, partially offset by health and safety expenses
Slide 25: Other Income Statement Items
First Quarter Fiscal 2021 Other Income Statement Items • Unallocated Corporate Expenses Increased $8MM ex. Certain Items • Net Interest Expense Decreased $8MM • Adjusted Effective Tax Rate 21.9% vs. 20.9% LY* • Average Diluted Shares Outstanding Up 1% *Non-GAAP measure. See appendix for reconciliati
Slide 26: Balance Sheet and Cash Flow
First Quarter Fiscal 2021 Balance Sheet and Cash Flow Operating Cash Flow ($ IN MILLIONS) • Core Working Capital -$570MM vs. LY $584 $572 • Capital Investments = $117MM • Dividends Paid = $303MM • Leverage Ratio* = 3.0x F20 F21 *Net Debt to Trailing 12-Month Adjusted-EBITDA Ratio. Non-GAAP measure.
Slide 27: Year-to-go Fiscal 2021 Assumptions
Year-to-go Fiscal 2021 Assumptions • Balance of Full-year At-home and Away-from-home Food Demand Remains Uncertain • Anticipate Elevated At-home Demand in Q2, with North America Retail Categories Growing ~HSD • Expect Q4 Net Sales to Decline Due to Difficult Comparison, Including Calendar Difference
Slide 28: Today's Key Messages
Today’s Key Messages • Exceptional Performance in Q1 • Enabled by Continued Focus on Employees and Consumers During COVID-19 Pandemic • Delivering on Fiscal 2021 Priorities • Resuming Dividend Growth, Ahead of Schedule General Mills First Quarter Fiscal 2021 28
Slide 29: North America Retail Operating Unit Results
Appendix: First Quarter Fiscal 2021 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q1 U.S. Meals & Baking +31% U.S. Cereal +10% U.S. Yogurt +5% Canada +3% Canada Constant-currency +5%¹ U.S. Snacks -2% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 30: Reconciliation of Organic Net Sales Growth
Reconciliation of First Quarter Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Q1 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 17 pts (2) pts 14% - - 14% Convenience Stores (9) pts (3) pts (12)% - -
Slide 31: Reconciliation of Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of First Quarter Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q1 2021 2020 Change Operating profit as reported $ 853.7 $ 662.4 29 % Product recall costs 7.1 - Restructuring charges 1.0 14.3 Investment activity, net (13.0) (9.5) Mark
Slide 32: Reconciliation of Adjusted Diluted EPS and Constant-currency Growth Rates
Reconciliation of First Quarter Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q1 Per Share Data 2021 2020 Change Diluted earnings per share, as reported $ 1.03 $ 0.85 21 % Product recall costs** 0.01 - Restructuring charges** - 0.02 Tax item - (0.09) Mark
Slide 33: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) Trailing 12 Months 2020 2019 2018* Ending 2021 Q1 Full-year Full-year Full-year Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $ 2,328.7 $ 2,210.8 $ 1,786.2 $ 2,28
Slide 34: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of First Quarter Fiscal 2021 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q1 Percentage Change Impact of Foreign Percentage Change in in Operating Profit Currency Operating Profit on as Reported Exchange Constant-Currency North America Retail 24 % Flat 24 % Europe &
Slide 35: Reconciliation of Adjusted Gross Margin
Reconciliation of First Quarter Fiscal 2021 Adjusted Gross Margin (FISCAL YEARS) Q1 2021 2020 % of % of Net Sales Net Sales Gross margin as reported 36.4 % 34.7 % Product recall costs 0.2 % - % Restructuring charges - % 0.2 % Mark-to-market effects (0.4) % 0.4 % Adjusted gross margin 36.2 % 35.2 % *
Slide 36: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of First Quarter Fiscal 2021 Adjusted Operating Profit Margin (FISCAL YEARS) Q1 2021 2020 Percent Percent of Net Sales Net Sales Operating profit as reported 19.6 % 16.5 % Mark-to-market effects (0.4) % 0.4 % Investment activity, net (0.3) % (0.2) % Product recall costs 0.2 % - % Rest
Slide 37: Reconciliation of Tax Rate Excluding Items
Reconciliation of First Quarter Fiscal 2021 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q1 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 775.9 $ 170.8 $ 573.9 $ 67.2 Product recall costs 7.1 0.8 - - Restructuring charges 1.0 0.
Slide 38: Reconciliation of Canada Operating Unit Constant-Currency Net Sales Growth
Reconciliation of First Quarter Fiscal 2021 Canada Operating Unit Constant-Currency Net Sales Growth (FISCAL YEAR) 2021 Percentage Impact of Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q1 3% -2 pts 5% *Table may not foot due to rounding 38