General Mills, Inc. · NYSE:GIS
General Mills — Q1 2015 Earnings Presentation
51 slides from General Mills's earnings presentation, Sep 17, 2014
Slide 1: Fiscal 2015 First Quarter Results
GENERAL MILLS Fiscal 2015 First Quarter Results
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: Q1 Financial Review
Q1 FINANCIAL REVIEW Don Mulligan Executive Vice President; Chief Financial Officer
Slide 4: First Quarter Fiscal 2015 Financial Summary
First Quarter Fiscal 2015 Financial Summary ($ in Millions, Except per Share) Constant- currency $ % Change % Change* Net Sales $4,268 -2% -1% Segment Operating Profit* 690 -15 -15 Net Earnings Attributable to General Mills 345 -25 Diluted EPS .55 -21 Certain Items Affecting Comparability .06 Adjust
Slide 5: First Quarter Fiscal 2015 Components of Net Sales Growth
First Quarter Fiscal 2015 Components of Net Sales Growth As Reported +1pt -1pt -2pts -2pts Volume Price & Foreign Total Mix Exchange Net Sales 7226-5
Slide 6: First Quarter Fiscal 2015 U.S. Retail Segment Results
First Quarter Fiscal 2015 U.S. Retail Segment Results Segment Net Sales -5% vs. LY Segment Operating Profit -25% vs. LY % Change vs. LY Net Sales Pounds Snacks +3% + Small Planet Foods +2 + Yoplait +1 + Frozen -6 Flat Big G Cereals -9 – Baking Products -11 – Meals -13 -DD Total U.S. Retail -5% -2% 7
Slide 7: Trade Merchandising Expense Drivers
Trade Merchandising Expense Drivers • Higher New Product Activity • Merchandising Programs Less Effective • Difficult Comparison to Year Ago 7226-7
Slide 8: Merchandising Trends vs. Last Year
Merchandising Trends vs. Last Year General Mills General Mills % Volume Sold With Quality Merchandising Quality Merchandising % Discount (Index: Q1 F14 = 100) (Index: Q1 F14 = 100) 103 100 100 89 Q1 Q1 Q1 Q1 F14 F15 F14 F15 Source: Nielsen XAOC FYTD ended 8.23.14 7226-8
Slide 9: First Quarter Fiscal 2015 Convenience Stores & Foodservice
First Quarter Fiscal 2015 Convenience Stores & Foodservice Segment Net Sales +1% vs. LY Segment Operating Profit +18% vs. LY Q1 Net Sales Growth Yogurt +34% Frozen Breakfast +13 Snacks +6 Biscuits +3 Cereal -8 Mixes -9 Total Priority Platforms +4% 7226-9
Slide 10: First Quarter Fiscal 2015 International Segment
First Quarter Fiscal 2015 International Segment Constant-currency Segment Net Sales* +6% vs. LY Constant-currency Segment Operating Profit* +17% vs. LY Q1 Constant-currency Net Sales* (Change vs. LY) Latin America +20% Asia / Pacific +4 Europe +4 Canada -2 *Non-GAAP measures. See appendix for reconc
Slide 11: First Quarter Fiscal 2015 Segment Operating Profit
First Quarter Fiscal 2015 Segment Operating Profit ($ in Millions) Constant Currency $ % Change % Change* Total Segment Operating Profit* $690 -15% -15% U.S. Retail 457 -25 International 146 +16 +17 Convenience Stores & Foodservice 87 +18 *Non-GAAP measures. See appendix for reconciliation. 7226-11
Slide 12: First Quarter Fiscal 2015 Joint Venture Results
First Quarter Fiscal 2015 Joint Venture Results After-tax Earnings: $26MM; +5% vs. LY* CPW HDJ Net Sales -1%** Net Sales +3** *Growth rate in constant currency. Non-GAAP measure. See appendix for reconciliation. **Growth rates in constant currency. 7226-12
Slide 13: First Quarter Fiscal 2015 Other Income Statement Items
First Quarter Fiscal 2015 Other Income Statement Items • Unallocated Corporate Expense Decreased Excluding Mark-to-market Effects • Restructuring and other Exit Costs of $14MM Pre-tax – Excluded from Adjusted Diluted EPS • Adjusted Effective Tax Rate 32.3% vs. 32.2% LY* • Average Number of Diluted S
Slide 14: Fiscal 2015 Core Working Capital
Fiscal 2015 Core Working Capital ($ in Millions) Q1 F15 F14 Accounts Receivable $1,623 $1,638 Inventories 1,823 1,774 Accounts Payable 1,571 1,426 7226-14
Slide 15: First Quarter Fiscal 2015 Cash Flow Highlights
First Quarter Fiscal 2015 Cash Flow Highlights Q1 Operating Cash Flow Uses of Cash ($ in Millions) $381 • Fixed Asset Investment = $329 $149MM • Dividends Paid = $254MM • Share Repurchases = $462MM F14 F15 7226-15
Slide 16: Annie's Acquisition
Annie’s Acquisition • Annie’s Fiscal 2014 Net Sales = $204 Million • Purchase Price = $46 per Share in Cash – Funded through Debt – No Impact on F15 Share Repurchase Plan • Accretive in First 12 Months After Closing* • Expect Transaction to Close in Calendar 2014 *Excludes purchase accounting adjust
Slide 17: Fiscal 2015 Financial Targets
Fiscal 2015 Financial Targets • Mid Single-digit Growth in Constant-currency Net Sales*, including 53rd Week • Mid Single-digit Growth in Constant-currency Segment Operating Profit* • High Single-digit Growth in Constant-currency Adjusted Diluted EPS* *Non-GAAP measures 7226-17
Slide 18: Supply Chain Update
SUPPLY CHAIN UPDATE John Church Executive Vice President, Supply Chain
Slide 19: Global Supply Chain Strategy
Global Supply Chain Strategy Lead With Safety Total Employee Engagement ROC Grow Our Our World Business 7226-19
Slide 20: Holistic Margin Management
Holistic Margin Management COGS Productivity Mix Management Offset Inflation HMM Admin Processes Pricing Consumer Consumer & Trade Investment Programs 7226-20
Slide 21: General Mills Input Cost Inflation
General Mills Input Cost Inflation +10% Avg: +4-5% +4% +4% +3% +3% F11 F12 F13 F14 F15 Plan Supply Chain costs including raw materials, energy, wages, benefits, handling costs. 7226-21
Slide 22: On Pace To Achieve Our HMM Goal
On Pace To Achieve Our HMM Goal (COGS HMM, Fiscal Years, $ in Millions) $4,000 >$400 $2,000 2010-2014 Cumulative 2015 Plan Cumulative 2010-2020 Savings Savings Goal 7226-22
Slide 23: 2015 HMM Projects
2015 HMM Projects Pouso Alegre, Brazil End-to-end Optimization Factory HMM $5MM $10MM Savings Savings Global Sourcing $10MM Savings 7226-23
Slide 24: HMM Has Helped Maintain Margins
HMM Has Helped Maintain Margins Gross Margin % of Sales 39.6% 40.0% 35.5% 35.6% 36.3% 36.1% 35.6% F08 F09 F10 F11 F12 F13 F14 7226-24
Slide 25: Project Century Overview
Project Century Overview • North America Supply Chain Asset Optimization Project • Objectives: – Streamline & Simplify – Position Supply Chain for Future Growth • $100 Million Cumulative Savings by F17 – Material Savings Beginning in F16 7226-25
Slide 26: Operating Highlights
OPERATING HIGHLIGHTS Ken Powel Chairman and CEO
Slide 27: Today's Operating Environment
Today’s Operating Environment • Convenience Stores & Foodservice: Stable • U.S. Retail: Category Trends Weakened in Q1 – Aggregate Retail Sales -1% vs. LY • International Markets: Growth Slowed Somewhat 7226-27
Slide 28: U.S. Retail First Quarter Operating Summary
U.S. Retail First Quarter Operating Summary • Dessert Mixes, Meal Products, and Frozen Vegetables Drove U.S. Retail Volume Decline • Good Progress on Top F15 Priorities: Cereal, Yogurt, and Snacks 7226-28
Slide 29: Big G Continued Market Share Gains
Big G Continued Market Share Gains Q1 Highlights RTE Cereal Dollar Share: 31.1%, +0.3pts vs LY Source: Nielsen XAOC FYTD ended 8.23.14 7226-29
Slide 30: Renewed Sales and Market Share Growth for Yoplait Division
Renewed Sales and Market Share Growth for Yoplait Division Q1 Highlights Yoplait Retail Sales +3% Dollar Share 24.4%, +0.5pts vs LY Source: Nielsen XAOC FYTD ended 8.23.14 7226-30
Slide 31: Continued Strong Snacks Momentum
Continued Strong Snacks Momentum Fiber One Nature Valley Fruit Snacks Q1 % Change Q1 Change Retail Sales Market Share Grain Snacks +6% +2.9 pts Fruit Snacks +5% +2.1 pts Source: Nielsen XAOC FYTD ended 8.23.14 7226-31
Slide 32: Natural & Organic Foods
Natural & Organic Foods Q1 Natural/Organic Snacks Cause-related Retail Sales +17% Consumer Investment Source: Nielsen XAOC FYTD ended 8.23.14, SPINS FYTD ended 8.10.14 7226-32
Slide 33: Expanding Our Portfolio
Expanding Our Portfolio 7226-33
Slide 34: Additional First Quarter Highlights
Additional First Quarter Highlights Totino’s Old El Paso (Shelf-stable and Frozen) Q1 % Change Q1 Change Retail Sales Market Share Q1 Old El Paso Pizza +7% +0.8 pts Retail Sales +7% Hot Snacks +3% +1.2 pts Source: Nielsen XAOC FYTD ended 8.23.14; Old El Paso data includes frozen and shelf stable ex-
Slide 35: Growing Share in Majority of Key U.S. Retail Categories
Growing Share in Majority of Key U.S. Retail Categories Q1 Dollar Share +/- LY Grain Snacks 43.7% 2.9pts Fruit Snacks 46.7 2.1 RTS Soup 37.5 1.4 Frozen Hot Snacks 27.3 1.2 Frozen Pizza 10.5 0.8 Yogurt 24.4 0.5 RTE Cereal 31.1 0.3 Dry Packaged Dinners 17.5 -0.2 Mexican Aisle Products* 16.6 -0.3 Refri
Slide 36: Convenience Stores & Foodservice First Quarter Fiscal 2015 Net Sales Growth
Convenience Stores & Foodservice First Quarter Fiscal 2015 Net Sales Growth Yogurt Snacks +34% +6% Frozen Breakfast +13% 7226-36
Slide 37: International Highlights Europe Region
International Highlights Europe Region Häagen-Dazs Old El Paso Q1 Retail Sales +5% Q1 Retail Sales +12% Yoplait UK Q1 Retail Sales +7% France Q1 Retail Sales +5% Source: Nielsen & IRI latest quarter ended July 2014 7226-37
Slide 38: International Highlights Asia/Pacific Region
International Highlights Asia/Pacific Region Häagen-Dazs Constant-currency Q1 Wanchai Ferry Net Sales +9%* New Items * Actual net sales in local currency translated to USD at a fixed exchange rate. 7226-38
Slide 39: International Highlights Latin America Region
International Highlights Latin America Region Successful Festa Junina Execution Q1 Launch 7226-39
Slide 40: Second Quarter Initiatives
Second Quarter Initiatives Progresso Soup Season Key Baking Season International Media Support & Innovation 7226-40
Slide 41: Today's General Mills Fiscal 2015 Update
Today’s General Mills Fiscal 2015 Update • Maintaining Outlook for Full Year Sales and Earnings Growth • Top Priority is Accelerating Net Sales Growth • Ongoing HMM Program and New Cost-reduction Efforts to Boost Efficiency and Sharpen Focus 7226-41
Slide 42: Additional Information Related to the Annie's Transaction
Additional Information Related to the Annie’s Transaction The tender offer described in this document has not yet commenced. This document and the description contained herein is neither an offer to purchase nor a solicitation of an offer to sell shares of Annie’s, Inc. At the time the tender offer
Slide 43: Reconciliation of Total Segment Operating Profit
Reconciliation of Total Segment Operating Profit (Fiscal Years, $ in Millions) Q1 2015 2014 U.S. Retail $457 $612 International 146 126 Convenience Stores & Foodservice 87 74 Total Segment Operating Profit $690 $812 Unallocated Corporate Items 119 74 Restructuring, Impairment, and Other Exit Costs 1
Slide 44: Reconciliation of Adjusted Diluted EPS and Related Constant-currency Growth Rate
Reconciliation of Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) Q1 2015 2014 Change Diluted EPS $0.55 $0.70 -21% Mark-to-market Effects .05 -- Restructuring .01 -- Adjusted Diluted EPS $0.61 $0.70 -13% Impact of Foreign Currency Exchange -- Adjusted Diluted EPS On a C
Slide 45: Reconciliation of Constant-currency Net Sales Growth
Reconciliation of Constant-currency Net Sales Growth (Fiscal Years) Q1 2015 % Change in % Change in Net Sales Net Sales Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Europe 9% 5 pts 4% Canada -6 -4 -2 Asia/Pacific 4 -- 4 Latin America -4 -24 20 Total International 2%
Slide 46: Reconciliation of Constant-currency International Segment Operating Profit Growth
Reconciliation of Constant-currency International Segment Operating Profit Growth (Fiscal Years) Q1 2015 % Change in % Change in Segment Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis International Segment Operating Profit 16%
Slide 47: Reconciliation of Constant-currency Total Segment Operating Profit Growth
Reconciliation of Constant-currency Total Segment Operating Profit Growth (Fiscal Years) Q1 2015 % Change in % Change in Total Segment Total Segment Operating Profit Operating Profit Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Total Segment Operating Profit -15% --
Slide 48: Reconciliation of Constant-currency After-tax JV Earnings
Reconciliation of Constant-currency After-tax JV Earnings (Fiscal Years) Q1 2015 % Change in % Change in After-tax After-tax JV Earnings JV Earnings Impact of Foreign on a Constant- as Reported Currency Exchange currency Basis Total After-tax Earnings from Joint Ventures 7% 2 pts 5% 7226-48
Slide 49: Reconciliation of Tax Rate Excluding Items
Reconciliation of Tax Rate Excluding Items (Fiscal Years, $ in Millions) Q1 2015 Q1 2014 Pre-tax Income Pre-tax Income Earnings* Taxes Earnings* Taxes As Reported $479 $153 $656 $212 Mark-to-market effects 49 18 1 -- Restructuring Costs 14 5 3 -- As Adjusted $542 $175 $660 $213 Effective Tax Rate: A
Slide 50: Full Year Historical Data for Changes to International Segment Operating Profit
Full Year Historical Data for Changes to International Segment Operating Profit and Unallocated Corporate Items Beginning in the first quarter of fiscal 2015, we changed how we assess segment operating performance to exclude the asset and liability remeasurement impact of hyperinflationary economies
Slide 51: Fiscal 2014 Quarterly Data for Changes to International Segment Operating Profit
Fiscal 2014 Quarterly Data for Changes to International Segment Operating Profit and Unallocated Corporate Items Beginning in the first quarter of fiscal 2015, we changed how we assess segment operating performance to exclude the asset and liability remeasurement impact of hyperinflationary economie