General Mills, Inc. · NYSE:GIS
General Mills — Q3 2021 Earnings Presentation
60 slides from General Mills's earnings presentation, Mar 24, 2021
Slide 1: General Mills Earnings Third Quarter Fiscal 2021
General Mills Earnings Third Quarter Fiscal 2021 March 24, 2021
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
General Mills Earnings Third Quarter Fiscal 2021 March 24, 2021 Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Today's Key Messages
Today’s Key Messages • Another Strong Quarter of Top- and Bottom-line Growth in Q3 • Delivering on Fiscal 2021 Priorities • Focusing on Our Accelerate Strategy; Leveraging Our Full Suite of Capital Allocation Tools • Resumed Dividend Growth in Q2 • Resuming Share Repurchases in Q4 • Announced Portfo
Slide 5: Reshaping the Portfolio: Yoplait Europe Divestiture
Reshaping the Portfolio Yoplait Europe Divestiture • Proposed Sale of Our Yoplait Europe Interest to Sodiaal • Advances Portfolio Reshaping Strategy • Growth Accretive • Margin Accretive • Shareholder Value Accretive • Delivers on Commitment to Divest ~5% of Net Sales • Remain Committed to Further P
Slide 6: Continued Momentum in Q3
Continued Momentum in Q3 +7% 1 Organic Net Sales +5% 2 Adjusted Operating Profit +6% 2 Adjusted Diluted EPS (1) Non-GAAP measure. See appendix for reconciliation (2) Constant currency growth rate. Non-GAAP measure. See appendix for reconciliation General Mills Third Quarter Fiscal 2021 6
Slide 7: On Track to Deliver Our Fiscal 2021 Priorities
On Track to Deliver 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 General Mills Third Quarter Fiscal 2021 7
Slide 8: Winning Across Priority Markets and Platforms
Winning Across Priority Markets and Platforms Holding or Growing Share Growing Share in Across Key Markets All Global Platforms CEREAL BARS PET +60 bps +30 bps +40 bps ICE CREAM MEXICAN +30 bps +110 bps Sources: Pet - GMI Custom Market including NielsenIQ xAOC plus select big box pet specialty retai
Slide 9: Investing to Build Brands and Capabilities
Investing to Build Brands and Capabilities Q3 YTD Media Spending Building Critical Capabilities +12% Digital, Data and E-Commerce Analytics Holistic Margin Strategic Revenue F20 F21 Management Management General Mills Third Quarter Fiscal 2021 9
Slide 10: Resuming Share Repurchases in Q4
Resuming Share Repurchases in Q4 Debt Leverage* 4.2x • Further Reduced Leverage in F21 3.9x 3.2x • Resuming Share Repurchases in Q4 2.8x • Committed to Using All Capital Allocation Tools to Drive Shareholder Value F18 F19 F20 Q3 F21 Pro Forma *Net Debt to Trailing 12-Month Adjusted-EBITDA Ratio. Non
Slide 11: Looking Ahead
Looking Ahead • Building on Positive Momentum Across our Business • Delivering on Fiscal 2021 Priorities and On Track to Generate Strong Full-year Growth and Profitability • Focused on Our Accelerate Strategy to Drive Long-term, Profitable Growth General Mills Third Quarter Fiscal 2021 11
Slide 12: General Mills Earnings - Bethany Quam, Group President, Pet
General Mills Earnings Third Quarter Fiscal 2021 March 24, 2021 Bethany Quam Group President, Pet 12
Slide 13: 3 Years Ago: Compelling Acquisition Rationale
3 Years Ago: Compelling Acquisition Rationale • Attractive Growth Category • Leading Brand with Loyal Consumer Base • Proven Success in Existing and Emerging Channels • Scaled Platform with Strong Growth and Operational Efficiency • Meaningful Improvement to General Mills’ Growth and Margin Profile
Slide 14: Delivering Profitable Growth
Delivering Profitable Growth NET SALES OPERATING PROFIT +$450MM +$120MM $1.7B $0.4B $1.3B $0.3B 2017 LTM ended 2/28/21 2017 LTM ended 2/28/21 +10% CAGR +11% CAGR 2017: Blue Buffalo Pet Products, Inc. for the year ending 12/31/17 2021: General Mills Pet Segment for the last 12 months ending 2/28/21 (
Slide 15: Loving & Feeding More Pets Like Family
Loving & Feeding More Pets Like Family MORE STORES MORE HOUSEHOLDS GAINING SHARE BLUE % ACV in FDM1 BLUE % Household BLUE Market Share3 Penetration2 86% 14% ~7.7 ~6.5 8% 22% 2017 2020 2017 2020 2017 2020 (1) NielsenIQ U.S. xAOC (2) NielsenIQ U.S. Homescan (3) U.S. market share based on Euromonitor I
Slide 16: Staying True to the BLUE Purpose & Foundation
Staying True to the BLUE Purpose & Foundation General Mills Third Quarter Fiscal 2021 16
Slide 17: Pandemic Accelerated Trends in Pet
Pandemic Accelerated Trends in Pet • Roughly Doubled the Typical Rate of New Pet Acquisition1 • Accelerated Humanization with 59% of Pet Parents More Bonded with Pets1 • Continued Premiumization with 6% Increase in Average Pet Food Spend2 • Increased Importance of Omnichannel (1) APPA’s COVID-19 Pul
Slide 18: BLUE is Well Positioned for Continued Growth
BLUE is Well Positioned for Continued Growth • Attractive and Growing Category • Leader in the Most Attractive Segment with a Brand Fueled by Mission and Purpose • Accelerate Plan for Growth General Mills Third Quarter Fiscal 2021 18
Slide 19: Attractive, Growing Category
Attractive, Growing Category U.S. PET FOOD LARGE AND NATURAL PET FOOD LEADING GROWING1 THE CATEGORY2 +3.8% CAGR $36.3B Natural $32.5B +9% vs. LY All Other +1% vs. LY 2017 2020 (1) Source: Euromonitor International Data (2) NielsenIQ xAOC 2020 General Mills Third Quarter Fiscal 2021 19
Slide 20: BLUE #1 Natural Pet Food Brand
BLUE #1 Natural Pet Food Brand • #1 Natural Brand for Dogs and Cats1 • #1 Brand Most Likely to Recommend2 • Most Loved & Trusted Natural Brand2 (1) NielsenIQ xAOC, Pet Retail, and company estimates (2) General Mills Brand Equity Study, February 2021 n=5.1M General Mills Third Quarter Fiscal 2021 20
Slide 21: BLUE's Accelerate Plan for Growth
BLUE’s Accelerate Plan for Growth OUR PURPOSE Love them Like Family. Feed them Like Family ® W H ER E TO P L AY High-quality, Natural Ingredients in Feeding & Treating for Dogs & Cats HOW TO WIN Boldly Building Relentlessly Leveraging the Scale Being a Force BLUE Innovating of General Mills for Good
Slide 22: Boldly Building BLUE
Boldly Building BLUE Broad Awareness Pet Parent Education $1.4B Spent on Brand Building Since 2003 General Mills Third Quarter Fiscal 2021 22
Slide 23: Boldly Building BLUE Across Channels
Boldly Building BLUE Across Channels Pet Specialty E-commerce FDM General Mills Third Quarter Fiscal 2021 23
Slide 24: Relentlessly Innovating
Relentlessly Innovating General Mills Third Quarter Fiscal 2021 24
Slide 25: Leveraging Scale
Leveraging Scale Digital, Data and Analytics Relentlessly Innovating Combined Power of Our Buffs General Mills Third Quarter Fiscal 2021 25
Slide 26: Force for Good
Force for Good General Mills Third Quarter Fiscal 2021 26
Slide 27: The Future is BLUE
The Future is BLUE • BLUE’s Purpose to ‘Love Them Like Family. Feed them Like Family’ Never More Relevant • Committed to Continuing to Lead in Natural Pet Food with our Accelerate Plan • Attractive Growth Ahead for BLUE General Mills Third Quarter Fiscal 2021 27
Slide 28: General Mills Earnings - Kofi Bruce, Chief Financial Officer
General Mills Earnings Third Quarter Fiscal 2021 March 24, 2021 Kofi Bruce Chief Financial Officer 28
Slide 29: Third Quarter Fiscal 2021 Financial Results
Third Quarter Fiscal 2021 Financial Results Q3 TOTAL GENERAL MILLS $MM VS LY Net Sales $4,520 +8% Organic Net Sales* +7% Adjusted Operating Profit* $716 +5%1 Adjusted Diluted EPS* $0.82 +6%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant currency growth rate. Non-GAAP measure. See a
Slide 30: Components of Third Quarter Net Sales Growth
Components of Third Quarter Net Sales Growth Organic Net Sales* +7% +8% +5 pts +3 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 General Mills Third Quarter Fiscal 2021 30
Slide 31: Third Quarter Fiscal 2021 North America Retail
Third Quarter Fiscal 2021 North America Retail Segment Results Segment Highlights North America Retail Q3 • Q3 net sales growth primarily driven by U.S. Meals & Organic Net Sales +9%¹ Baking, Canada, and U.S. Cereal, reflecting continued Segment Op Profit +14%² elevated at-home food demand amid the
Slide 32: Third Quarter Fiscal 2021 Pet
Third Quarter Fiscal 2021 Pet Segment Results Segment Highlights Pet Q3 • Q3 net sales growth driven by +DD growth in Dog Food Organic Net Sales +14%¹ and Cat Food Segment Op Profit +9%² • Year-to-date net sales up ~25% for Wet Food and for Treats • Continued market share and household penetration g
Slide 33: Third Quarter Fiscal 2021 Convenience Stores & Foodservice
Third Quarter Fiscal 2021 Convenience Stores & Foodservice Segment Results Segment Highlights CS&F Q3 • Q3 net sales decline due to continued lower away- Organic Net Sales -10%¹ from-home food demand amid the pandemic Segment Op Profit -31% • Reduced consumer traffic continued to impact Restaurants,
Slide 34: Third Quarter Fiscal 2021 Europe & Australia
Third Quarter Fiscal 2021 Europe & Australia Segment Results Segment Highlights EUAU Q3 • Q3 net sales growth primarily driven by Mexican Food Organic Net Sales +7%¹ and Retail Ice Cream Segment Op Profit +24%² • Grew or held year-to-date market share in France, UK, and Australia • Q3 profit growth
Slide 35: Third Quarter Fiscal 2021 Asia & Latin America
Third Quarter Fiscal 2021 Asia & Latin America Segment Results Segment Highlights ASLA Q3 • Q3 LATAM net sales growth +DD driven by continued Organic Net Sales +14%¹ strong Yoki and Kitano performance in Brazil Segment Op Profit +18%² • Q3 Asia net sales up +DD driven primarily by growth in Häagen-D
Slide 36: Third Quarter Fiscal 2021 Joint Ventures
Third Quarter Fiscal 2021 Joint Ventures Q3 AFTER-TAX EARNINGS: $12MM, +9% VS. LY JV Results JV Highlights NET SALES Q3 • Q3 CPW net sales growth broad-based, led by Brazil, CPW +5%¹ Turkey, France, Russia, and Chile HDJ +1%¹ • Q3 HDJ net sales driven by positive price/mix • Q3 JV after-tax earnings
Slide 37: Third Quarter Fiscal 2021 Margin Results
Third Quarter Fiscal 2021 Margin Results Adjusted Gross Margin* Adjusted Operating Profit Margin* (% OF NET SALES) (% OF NET SALES) 33.9% 17.7% 33.0% 17.2% 34.8% 34.9% 16.1% 15.8% Q3 F20 Q3 F21 9 Months 9 Months Q3 F20 Q3 F21 9 Months 9 Months F20 F21 F20 F21 Q3 margin contraction primarily driven b
Slide 38: Third Quarter Fiscal 2021 Other Income Statement Items
Third Quarter Fiscal 2021 Other Income Statement Items • Unallocated Corporate Expenses Increased $25MM ex. Certain Items • Net Interest Expense Decreased $4MM • Adjusted Effective Tax Rate 21.6% vs. 21.0% LY* • Average Diluted Shares Outstanding Up 1% *Non-GAAP measure. See appendix for reconciliat
Slide 39: Nine-month Fiscal 2021 Financial Results
Nine-month Fiscal 2021 Financial Results 9 MONTHS TOTAL GENERAL MILLS $MM VS LY Net Sales $13,603 +8% Organic Net Sales* +8% Adjusted Operating Profit* $2,414 +11%1 Adjusted Diluted EPS* $2.88 +14%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant currency growth rate. Non-GAAP measur
Slide 40: Nine-month Fiscal 2021 Balance Sheet and Cash Flow
Nine-month Fiscal 2021 Balance Sheet and Cash Flow Operating Cash Flow ($ IN MILLIONS) • Core Working Capital -$198MM vs. LY $2,208 $2,160 • Capital Investments = $346MM, +$77MM vs. LY • Dividends Paid = $932MM • Debt Leverage = 2.8x* F20 F21 *Net Debt to Trailing 12-Month Adjusted-EBITDA Ratio. Non
Slide 41: Fourth Quarter and Full-year F21 Expectations
Fourth Quarter and Full-year F21 Expectations • Fourth Quarter Compares Against Pandemic-driven Stock Up and Calendar Differences Last Year (F20 Q4 Net Sales +21%) • Expect to Continue Competing Effectively; Targeting Full-year Organic Net Sales Growth* of ~3.5% • Expect Full-year Adjusted Operating
Slide 42: Fiscal '21 Net Sales Continues to Build On Pre-pandemic Momentum
Fiscal ’21 Net Sales Continues to Build On Pre-pandemic Momentum 2-year Organic Net Sales Growth* CAGR (2 YEARS ENDING) ~4% 2% Flat -2% F18 F19 F20 F21 Est. *Non-GAAP measure. See appendix for reconciliation. 2-year CAGRs calculated using annual Organic Net Sales Growth rates General Mills Third Qua
Slide 43: Yoplait Europe Divestiture Details
Yoplait Europe Divestiture Details • Proposed Sale of Our 51% Interest in Yoplait S.A.S. to Sodiaal • Non-cash Consideration: • General Mills Acquires Sodiaal’s 49% Interest in Yoplait Canada • Royalty Rate for U.S. and Canada Yoplait and Liberté Licenses Reduced to 0% • Growth Accretive (~25bps for
Slide 44: Today's Key Messages
Today’s Key Messages • Another Strong Quarter of Top- and Bottom-line Growth in Q3 • Delivering on Fiscal 2021 Priorities • Focusing on Our Accelerate Strategy; Leveraging Our Full Suite of Capital Allocation Tools • Resumed Dividend Growth in Q2 • Resuming Share Repurchases in Q4 • Announced Portfo
Slide 45: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our outlook for organic net sales growth and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchange rate fluctuations, acquisi
Slide 46: Appendix: Q3 North America Retail Operating Unit Results
Appendix: Third Quarter Fiscal 2021 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q3 U.S. Meals & Baking +15% Canada +13% Canada Constant-currency +9%¹ U.S. Cereal +9% U.S. Yogurt +3% U.S. Snacks -3% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 47: Reconciliation of Q3 Fiscal 2021 Organic Net Sales Growth
Reconciliation of Third Quarter Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Q3 2021 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 9 pts Flat 9% - - 9% Europe & Australia 2 pts 4 pts 7% 9 pts (1) p
Slide 48: Reconciliation of Q3 Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Third Quarter Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q3 2021 2020 Change Operating profit as reported $ 826.6 $ 650.8 27 % Investment activity, net (59.3) 3.0 Mark-to-market effects (55.7) 8.6 Product recall adjustment (7.8
Slide 49: Reconciliation of Q3 Adjusted Diluted EPS Growth Rates
Reconciliation of Third Quarter Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q3 Per Share Data 2021 2020 Change Diluted earnings per share, as reported $ 0.96 $ 0.74 30 % Investment activity, net** (0.08) - Mark-to-market effects** (0.07) 0.01 Product re
Slide 50: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) Trailing 12 Months Ending 2021 Q3 2020 Full-year 2019 Full-year 2018* Full-year Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $ 2,573.1 $ 2,210.8 $ 1,786.2 $ 2,28
Slide 51: Reconciliation of Q3 Constant-currency Segment Operating Profit Growth
Reconciliation of Third Quarter Fiscal 2021 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q3 Percentage Change Impact of Foreign Percentage Change in in Operating Profit Currency Operating Profit on as Reported Exchange Constant-Currency Basis North America Retail 14 % Flat 14 % Pe
Slide 52: Reconciliation of Q3 Canada Constant-Currency Net Sales Growth
Reconciliation of Third Quarter Fiscal 2021 Canada Operating Unit Constant-Currency Net Sales Growth (FISCAL YEAR) Q3 Percentage Change Impact of Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis 13 % 4 pts 9% *Table may not foot due to rounding Ge
Slide 53: Reconciliation of Q3 and Nine Month Adjusted Gross Margin
Reconciliation of Third Quarter and Nine Month Fiscal 2021 Adjusted Gross Margin (FISCAL YEARS) % of Net Sales Q3 Nine Months 2021 2020 2021 2020 Gross margin as reported 34.4 % 33.6 % 35.8 % 34.6 % Mark-to-market effects (1.2) % 0.2 % (0.9) % -% Product recall adjustment, net (0.2) % -% - % -% Rest
Slide 54: Reconciliation of Q3 and Nine Month Adjusted Operating Profit Margin
Reconciliation of Third Quarter and Nine Month Fiscal 2021 Adjusted Operating Profit Margin (FISCAL YEARS) % of Net Sales Q3 Nine Months 2021 2020 2021 2020 Operating profit as reported 18.3 % 15.6 % 19.1 % 16.9 % Investment activity, net (1.3) % 0.1 % (0.6) % 0.1 % Mark-to-market effects (1.2) % 0.
Slide 55: Reconciliation of Q3 Adjusted Tax Rates
Reconciliation of Third Quarter Fiscal 2021 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q3 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 754.0 $ 162.0 $ 571.3 $ 118.2 Mark-to-market effects (55.7) (12.8) 8.6 1.9 Investment activity,
Slide 56: Reconciliation of Nine-month Organic Net Sales Growth
Reconciliation of Nine-month Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Nine Months 2021 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 12 pts (1) pt 11% - - 11% Europe & Australia 1 pt 5 pts 5% 6
Slide 57: Reconciliation of Nine-month Adjusted Operating Profit Growth Rate
Reconciliation of Nine-month Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Nine Months 2021 2020 Change Operating profit as reported $ 2,596.9 $ 2,124.4 22 % Mark-to-market effects (118.0) 1.0 Investment activity, net (78.3) 6.7 Product recall adju
Slide 58: Reconciliation of Nine-month Adjusted Diluted EPS Growth Rates
Reconciliation of Nine-month Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Nine Months Per Share Data 2021 2020 Change Diluted earnings per share, as reported $ 3.10 $ 2.54 22 % Mark-to-market effects** (0.15) - Investment activity, net** (0.10) - Restruc
Slide 59: Reconciliation of Nine-month Adjusted Tax Rates
Reconciliation of Nine-month Fiscal 2021 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Nine Months 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 2,378.8 $ 522.2 $ 1,867.2 $ 340.9 Mark-to-market effects (118.0) (27.1) 1.0 0.2 Investment
Slide 60: Compound Annual Growth Rates
Reconciliation of Organic Net Sales Compound Annual Growth Rates Full-year Organic Foreign Acquisitions 53rd Reported Net Net Sales Exchange & Divestitures Week Sales Growth 2017 vs. 2016 (4)% (1) pt (1) pt - (6)% 2018 vs. 2017 Flat 1 pt - - 1% 2-year Ended F18 CAGR (2)% 2018 vs. 2017 Flat 1 pt - -