General Mills, Inc. · NYSE:GIS
General Mills — Q4 2023 Earnings Presentation
50 slides from General Mills's earnings presentation, Jun 28, 2023
Slide 1: Fiscal 2023 Q4 Earnings
Fiscal 2023 Q4 Earnings June 28, 2023 General Mills Fourth Quarter Fiscal 2023
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 our current expectations and assumptions. These forward-looking statements, including the statements under the c
Slide 3: Jeff Harmening, Chairman and Chief Executive Officer
Jeff Harmening Chairman and Chief Executive Officer General Mills Fourth Quarter Fiscal 2023 3
Slide 4: Today's Key Messages
Today’s Key Messages • Delivered Strong Growth and Executed Well Against our Accelerate Strategy in F23 • Targeting F24 Growth At or Ahead of our Long-term Goals • Announced 9% Dividend Raise, Payable Aug. 1 General Mills Fourth Quarter Fiscal 2023 4
Slide 5: Fourth-quarter and Fiscal 2023 Performance
Fourth-quarter and Fiscal 2023 Performance Q4 Annual Organic Net Sales1 + 5% + 10% 2-yr CGR + 9% + 8% Adj. Operating Profit2 Flat + 8% 2-yr CGR + 10% + 5% Adj. Diluted EPS2 + 1% + 10% 2-yr CGR + 11% + 7% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant currency. Non
Slide 6: Delivered Our Fiscal 2023 Priorities
Delivered Our Fiscal 2023 Priorities 1 Continue to Compete Effectively 2 Continue to Invest for the Future 3 Continue to Reshape our Portfolio General Mills Fourth Quarter Fiscal 2023 6
Slide 7: Continued to Compete Effectively in F23
Continued to Compete Effectively in F23 Consistently Growing or Holding Share Market Share Gains in Majority of our Priority Businesses Across Many Categories General Mills % Priority Business Holding/Growing Share 67% 70% 63% 64% Cereal¹ Ref. Dough Fruit Snacks 53%¹ (Global) (U.S.) (U.S.) Hot Snack
Slide 8: Continued to Invest for the Future in F23
Continued to Invest for the Future in F23 Investing in Investing in Investing in Brand Building Capabilities Growth Capacity Digital & Media $$ Technology Growth Capital +17% in F23 Investment +DD% in F23 +DD% in F23 General Mills Fourth Quarter Fiscal 2023 8
Slide 9: Continued to Stand for Good in F23
Continued to Stand for Good in F23 Strong Progress on Scope 1 & 2 Developed Glide Path for Scope 3 Greenhouse Gas Emissions Emissions Reductions General Mills Scope 1 & 2 GHG Emissions Regenerative Agriculture -49% Dairy Management Deforestation Mitigation Logistics Optimization Supplier Engagement
Slide 10: Continued to Reshape our Portfolio in F23
Continued to Reshape our Portfolio in F23 Closed Multiple Transactions in F23 Increased Net Sales Growth Exposure by > 1pt since F18 >1pt +2 to +3% Acquisition = + Divestitures F18 Portfolio Current Growth Reshaping Growth Exposure Impact Exposure General Mills Fourth Quarter Fiscal 2023 10
Slide 11: An Evolving Environment in Fiscal 2024
An Evolving Environment in Fiscal 2024 Moderating Resilient Yet Increasingly Stabilizing Supply Chain Inflation Cautious Consumer General Mills Fourth Quarter Fiscal 2023 11
Slide 12: Our Fiscal 2024 Priorities
Our Fiscal 2024 Priorities Continue to Leverage Advantaged Capabilities 1 Compete Effectively to Adapt to New Environment Improve Supply Chain Drive HMM Cost Savings and 2 Efficiency Reduce Disruption-related Costs Maintain Capital Invest in the Business, Return Cash 3 Allocation Discipline to Share
Slide 13: Compete Effectively Through Bold Brand Building
F24 Priority Compete Effectively Through Bold Brand Building .1 General Mills Fourth Quarter Fiscal 2023 13
Slide 14: Compete Effectively Through Relentless Innovation
F24 Priority Compete Effectively Through Relentless Innovation 1. General Mills Fourth Quarter Fiscal 2023 14
Slide 15: Compete Effectively Through Excellent Execution In Store & Online
Compete Effectively Through Excellent Execution F24 Priority 1 In Store & Online Expanding Distribution Quality Merchandising Online Execution U.S. Retail E-commerce Retail Sales¹ +24% F22 F23 General Mills Fourth Quarter Fiscal 2023 (1) E-commerce Retail Sales Nielsen IQ and other customer reportin
Slide 16: Improve Supply Chain Efficiency
F24 Priority Improve Supply Chain Efficiency .2 Return to Pre-pandemic HMM Levels Key Drivers General Mills HMM Cost Savings • Reduced Supply Chain Disruptions % of COGS • Internalize Manufacturing Long-term Goal • Re-adjust Formulas 4% 4% 4% • Optimize Logistics 3% 3% • Leverage Supply Chain Digiti
Slide 17: Maintain Disciplined Approach to Capital Allocation
F24 Priority Maintain Disciplined Approach to Capital Allocation 3. Capital Allocation F24 Plans Priorities CAPEX ~4% of Net Sales; Prioritize Cost Savings and Capacity for Constrained Platforms Dividend Growth 9% Dividend Increase as of Aug. 1 M&A Debt Leverage of 2.7x Provides Flexibility for Stra
Slide 18: Fiscal 2024 Financial Outlook
Fiscal 2024 Financial Outlook Organic Net Sales Adjusted Operating Adjusted Diluted Free Cash Flow Growth¹ Profit Growth² EPS Growth² Conversion¹ MSD- HSD% MSD% MSD% MSD% 95%+ 95%+ 3-4% 2-3% LT Target F24 LT Target F24 LT Target F24 LT Target F24 ¹ Non-GAAP measures General Mills Fourth Quarter Fisc
Slide 19: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Fourth Quarter Fiscal 2023 19
Slide 20: Fourth Quarter Fiscal 2023 Financial Results
Fourth Quarter Fiscal 2023 Financial Results Q4 TOTAL GENERAL MILLS $MM VS. LY Net Sales $5,030 +3% Organic Net Sales1 +5% Adjusted Operating Profit1 $889 Flat2 Adjusted Diluted EPS1 $1.12 +1%2 (1) Non-GAAP measure. See appendix for reconciliation General Mills Fourth Quarter Fiscal 2023 (2) Constan
Slide 21: Components of Fourth Quarter Net Sales Growth
Components of Fourth Quarter Net Sales Growth Organic Net Sales1 +5% +11 pts +3% -1 pt -1 pt -6 pts Organic Organic Foreign Acquisitions & Total Net Sales Volume Price / Mix Exchange Divestitures As Reported General Mills Fourth Quarter Fiscal 2023 (1) Non-GAAP measure 21
Slide 22: Fourth Quarter and Fiscal 2023 North America Retail
Fourth Quarter and Fiscal 2023 North America Retail Segment Results Segment Highlights North America Retail Q4 F23 • Q4 organic net sales lagged Nielsen-measured Organic Net Sales¹ +5% +12% retail sales growth due to retailer inventory decline Segment Op Profit² +2% +18% • Broad-based growth across
Slide 23: Fourth Quarter and Fiscal 2023 Pet
Fourth Quarter and Fiscal 2023 Pet Segment Results Segment Highlights Pet Q4 F23 • F23 organic net sales growth includes +DD% growth Organic Net Sales¹ +7% +9% in dry food and treats, while wet food was flat vs LY Segment Op Profit² +18% -5% • F23 2H net sales growth accelerated to +DD%, driven by i
Slide 24: Fourth Quarter and Fiscal 2023 North America Foodservice
Fourth Quarter and Fiscal 2023 North America Foodservice Segment Results Segment Highlights North America Foodservice Q4 F23 • Q4 organic net sales growth included a 2-point headwind from index pricing on bakery flour Organic Net Sales¹ +1% +13% Segment Op Profit² -10% +14% • F23 organic net sales g
Slide 25: Fourth Quarter and Fiscal 2023 International
Fourth Quarter and Fiscal 2023 International Segment Results Segment Highlights International Q4 F23 • F23 organic net sales growth driven by growth in Organic Net Sales¹ +6% +4% Europe & Australia, Brazil, and Distributor markets, Segment Op Profit² -9% -25% partially offset by declines in China in
Slide 26: Fourth Quarter and Fiscal 2023 Joint Ventures
Fourth Quarter and Fiscal 2023 Joint Ventures F23 AFTER-TAX JV EARNINGS: $81MM VS $112MM LY Joint Venture Results Joint Venture Highlights NET SALES¹ Q4 F23 • F23 CPW net sales growth driven by positive CPW +8% +4% price/mix, partially offset by lower volume HDJ Flat -5% • F23 HDJ net sales decline
Slide 27: Fourth Quarter Fiscal 2023 Other Income Statement Items
Fourth Quarter Fiscal 2023 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Increased $25MM • Net Interest Expense Increased $2MM • Adjusted Effective Tax Rate 19.1%, +10bps vs. LY¹ • Average Diluted Shares Outstanding -2% vs. LY General Mills Fourth Quarter Fiscal 2023 (1) Non
Slide 28: Fiscal 2023 Financial Results
Fiscal 2023 Financial Results F23 TOTAL GENERAL MILLS $MM VS. LY Net Sales $20,094 +6% Organic Net Sales1 +10% Adjusted Operating Profit1 $3,457 +8%2 Adjusted Diluted EPS1 $4.30 +10%2 (1) Non-GAAP measure. See appendix for reconciliation General Mills Fourth Quarter Fiscal 2023 (2) Constant currency
Slide 29: Fiscal 2023 Margin Results
Fiscal 2023 Margin Results Adjusted Gross Margin1 Adj. Op. Profit Margin1 (% of Net Sales) (% of Net Sales) 34.4% 34.2% 17.2% 33.0% 16.9% F19 F22 F23 F22 F23 • F23 Adj. Gross Margin increase driven by positive price/mix and HMM cost savings, partially offset by input cost inflation, volume deleverag
Slide 30: Fiscal 2023 Cash Flow Performance
Fiscal 2023 Cash Flow Performance Operating Cash Flow ($ IN MILLIONS) • Operating Cash Flow Decline Driven by Changes in Inventory and Accounts Payable $3,316 $2,779 • Capital Investments = $690MM • FCF Conversion¹ = 80% • Debt Leverage² = 2.7x F22 F23 (1) Non-GAAP measure. See appendix for reconcil
Slide 31: Fiscal 2023 Cash Returns to Shareholders
Fiscal 2023 Cash Returns to Shareholders Cash Returns to Shareholders ($ IN BILLIONS) • Dividends Paid = $1.3B $2.5 $2.0 • Net Share Repurchases = $1.2B • 9% Dividend Increase Announced Today, Effective with the August 2023 Payment F22 F23 Net Share Repurchases Dividends Paid General Mills Fourth Qu
Slide 32: Key Fiscal 2024 Outlook Assumptions
Key Fiscal 2024 Outlook Assumptions Key Financial Metrics¹ Key Considerations • Price/Mix Follows Inflation Trend: Decelerating but Remaining Positive • Volume Performance Improves vs. F23 Trend Organic Net Sales Less Headwind from Price/Mix Growth Stronger Commercial Activities: Distribution, I
Slide 33: Fiscal 2024 Financial Outlook
Fiscal 2024 Financial Outlook KEY FINANCIAL METRICS¹ F24 OUTLOOK Organic Net Sales Growth +3 to +4% Adjusted Operating Profit Growth² +4 to +6% Adjusted Diluted EPS Growth² +4 to +6% Free Cash Flow Conversion 95%+ (1) Non-GAAP measures General Mills Fourth Quarter Fiscal 2023 (2) Growth rates in con
Slide 34: Today's Key Messages
Today’s Key Messages • Delivered Strong Growth and Executed Well Against our Accelerate Strategy in F23 • Targeting F24 Growth At or Ahead of our Long-term Goals • Announced 9% Dividend Raise, Payable Aug. 1 General Mills Fourth Quarter Fiscal 2023 34
Slide 35: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2024 outlook for organic net sales growth, constant-currency adjusted operating profit, adjusted diluted EPS, and free cash flow are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the
Slide 36: Appendix: Fiscal 2023 North America Retail Operating Unit Results
Appendix: Fiscal 2023 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q4 Annual U.S. Snacks +4% +13% U.S. Meals & Baking Solutions -2% +10% U.S. Morning Foods +4% +7% Canada +5% +2% Canada Constant-currency¹ +12% +8% General Mills Fourth Quarter Fiscal 2023 (1) Net sale
Slide 37: Reconciliation of Canada Operating Unit Constant-Currency Net Sales Growth
Reconciliation of Fourth Quarter and Fiscal 2023 Canada Operating Unit Constant-Currency Net Sales Growth General Mills Fourth Quarter Fiscal 2023 37
Slide 38: Reconciliation of Organic Net Sales Growth
Reconciliation of Fourth Quarter and Fiscal 2023 Organic Net Sales Growth General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 38
Slide 39: Reconciliation of Organic and Reported Net Sales Compound Growth Rates
Reconciliation of Fiscal 2023 Organic and Reported Net Sales Compound Growth Rates General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 39
Slide 40: Reconciliation of Q4 Adjusted Operating Profit Compound Growth Rate
Reconciliation of Fourth Quarter Fiscal 2023 Adjusted Operating Profit Constant-currency Compound Growth Rate (FISCAL YEARS, $ IN MILLIONS) General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 40
Slide 41: Reconciliation of Fiscal 2023 Adjusted Operating Profit Compound Growth Rate
Reconciliation of Fiscal 2023 Adjusted Operating Profit Constant-currency Compound Growth Rate (FISCAL YEARS, $ IN MILLIONS) General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 41
Slide 42: Reconciliation of Q4 Adjusted Diluted EPS Growth Rates
Reconciliation of Fourth Quarter Adjusted Diluted EPS and Related Constant-currency Compound Growth Rates (FISCAL YEARS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2023 **See reconciliation of tax rate items for tax impact of individual items 42
Slide 43: Reconciliation of Fiscal 2023 Adjusted Diluted EPS Growth Rates
Reconciliation of Fiscal 2023 Adjusted Diluted EPS and Related Constant-currency Compound Growth Rates (FISCAL YEARS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2023 **See reconciliation of tax rate items for tax impact of individual items 43
Slide 44: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of Fourth Quarter and Fiscal 2023 Constant-currency Segment Operating Profit Growth General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 44
Slide 45: Reconciliation of Fiscal 2023 Adjusted Gross Margin
Reconciliation of Fiscal 2023 Adjusted Gross Margin (FISCAL YEARS) General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 45
Slide 46: Reconciliation of Fiscal 2023 Adjusted Operating Profit Margin
Reconciliation of Fiscal 2023 Adjusted Operating Profit Margin (FISCAL YEARS) General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 46
Slide 47: Reconciliation of Fiscal 2022 to Fiscal 2023 Adjusted Tax Rates
Reconciliation of Fiscal 2022 to Fiscal 2023 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2023 (a) Earnings before income taxes and after-tax earnings from joint ventures 47
Slide 48: Reconciliation of Q4 Fiscal 2022 to Fiscal 2023 Adjusted Tax Rates
Reconciliation of Fourth Quarter Fiscal 2022 to Fiscal 2023 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2023 (a) Earnings before income taxes and after-tax earnings from joint ventures 48
Slide 49: Reconciliation of Fiscal 2023 Free Cash Flow Conversion
Reconciliation of Fiscal 2023 Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) General Mills Fourth Quarter Fiscal 2023 *Table may not foot due to rounding 49
Slide 50: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2023 (a) Notes payable and long-term debt, including current portion. 50