General Mills, Inc. · NYSE:GIS
General Mills — Q2 2024 Earnings Presentation
46 slides from General Mills's earnings presentation, Dec 20, 2023
Slide 1: Fiscal 2024 Q2 Earnings
Fiscal 2024 Q2 Earnings December 20, 2023 General Mills Second-quarter Fiscal 2024 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 Second-quarter Fiscal 2024 3
Slide 4: Today's Key Messages
Today’s Key Messages • Q2 Results: Slower-than-expected Volume Recovery; Adj. Op. Profit and EPS Growth Enabled by Strong HMM Cost Savings • Adapting Our Plans to Compete in a More Challenging Consumer Demand Environment • Updating F24 Guidance to Reflect Slower Near-term Volume Recovery and Increas
Slide 5: Second-quarter and YTD Fiscal 2024 Performance
Second-quarter and YTD Fiscal 2024 Performance F24 Q2 F24 YTD Actual Actual Organic Net Sales1 -2% +1% 2-yr CGR +4% +6% Adj. Operating Profit2 +13% +7% Adj. Diluted EPS2 +14% +6% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant currency. Non-GAAP measures. See app
Slide 6: A Dynamic Operating Environment in Fiscal 2024
A Dynamic Operating Environment in Fiscal 2024 Consistent with Different than Plan Expectations Plan Expectations • Moderating, but Positive, Input • Consumer Value-seeking Cost Inflation and Price/Mix Behaviors Delaying Volume Recovery • Price Elasticity Below Historical Levels, but Increasing • Fa
Slide 7: Progressing Against Our Fiscal 2024 Priorities
Progressing Against 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
Slide 8: Investing in Bold Brand Building
F24 Priority 1 Investing in Bold Brand Building General Mills Second-quarter Fiscal 2024 8
Slide 9: Innovating on Global Platforms and Local Gems
F24 Priority 1 Innovating on Global Platforms and Local Gems General Mills Second-quarter Fiscal 2024 9
Slide 10: Improving Fundamentals in North America Retail
F24 Priority 1 Improving Fundamentals in North America Retail Winning Distribution Improving Display Executing Online U.S. Retail Priority Categories Percent U.S. Retail Display Support vs. LY1 U.S. Retail E-commerce Retail Sales vs. LY2 Holding/Winning Share of Distribution1 85% +7% +12% 71% +4% F2
Slide 11: Q2 Topline Headwinds for North America Pet
F24 Priority 1 Q2 Topline Headwinds for North America Pet Q2 Organic Net Sales -4% vs. LY1 Retail Sales Trends by Channel F24 Q2 Blue Buffalo Retail Sales vs. Last Year2 • Pet Parent Mobility and Value-seeking Behavior Continues to be a Headwind +MSD% +LSD% • Retail Sales Decline in Pet Retail, Part
Slide 12: Blue Buffalo Pivot Plans in Progress
F24 Priority 1 Blue Buffalo Pivot Plans in Progress LPF Ingredient Create Demand Better Value on Wilderness Superiority on Treats Wet Food PPA Progress Progress Progress Progress Life Protection Improving Dog Launching New Smaller 24lb Pack Formula Retail Treats Retail Sales Value Pack Available in
Slide 13: Improving Supply Chain Efficiency
F24 Priority 2 Improving Supply Chain Efficiency Removing Disruption-related Costs Accelerating HMM Delivery in F24 General Mills HMM Cost Savings as % of COGS • Improved Logistics Efficiency Long-term goal 5% • Manufacturing Optimization 4% 4% 3% 3% • Reduced Levels of Safety Stock • Efficient Prod
Slide 14: Maintain Capital Allocation Discipline
F24 Priority 3 Maintain Capital Allocation Discipline Priorities Fiscal 2024 Outlook CAPEX Unchanged ~4% of Net Sales Dividend Growth Unchanged 9% Dividend Increase as of Aug. 1, 2023 M&A Unchanged Retain Flexibility for Strategic Acquisitions Share Repurchases Increased Now ~3% Reduction to Average
Slide 15: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Second-quarter Fiscal 2024 15
Slide 16: Second-quarter Fiscal 2024 Financial Results
Second-quarter Fiscal 2024 Financial Results Q2 Total General Mills $MM vs. LY Net Sales $5,139 -2% Organic Net Sales1 -2% Adjusted Operating Profit1 $989 +13%2 Adjusted Diluted EPS1 $1.25 +14%2 (1) Non-GAAP measures. See appendix for reconciliation (2) Growth rates in constant currency. Non-GAAP
Slide 17: Components of Second-quarter Net Sales Growth
Components of Second-quarter Net Sales Growth Organic Net Sales1 = -2% +3 pts Flat Flat -2 pts -4 pts Organic Organic Foreign Acquisitions & Total Net Sales Volume Price / Mix Exchange Divestitures As Reported (1) Non-GAAP measure May not foot due to rounding General Mills Second-quarter Fiscal 2024
Slide 18: Second-quarter Fiscal 2024 North America Retail
Second-quarter Fiscal 2024 North America Retail North America Retail Q2 • Q2 organic net sales compared to +DD% growth LY; 2-yr organic net sales CGR +5% Organic Net Sales¹ -2% Segment Op Profit² +3% • Net sales declined in U.S. Snacks and U.S. Morning Foods, partially offset by growth in U.S. Meals
Slide 19: Second-quarter Fiscal 2024 Pet
Second-quarter Fiscal 2024 Pet Pet Q2 • Q2 organic net sales results include -MSD% on dry food, -DD% on wet food, and +DD% on treats Organic Net Sales¹ -4% Segment Op Profit² +18% • Continue to experience short-term U.S. premium pet food category headwinds driven by greater value orientation and mob
Slide 20: Second-quarter Fiscal 2024 North America Foodservice
Second-quarter Fiscal 2024 North America Foodservice North America Foodservice Q2 • Q2 organic net sales driven by lower pound volume, offset by positive price/mix Organic Net Sales¹ Flat Segment Op Profit² +17% • Short-term capacity constraints on bakery flour • Bakery flour index pricing a 2-point
Slide 21: Second-quarter Fiscal 2024 International
Second-quarter Fiscal 2024 International International Q2 • Q2 organic net sales flat; declines in Brazil offset by continued growth in Distributor Organic Net Sales¹ Flat markets and Europe & Australia Segment Op Profit² +100% • Multi-year inflation in Brazil and economic slowdown in China were hea
Slide 22: Second-quarter Fiscal 2024 Joint Ventures
Second-quarter Fiscal 2024 Joint Ventures Q2 AFTER-TAX JV EARNINGS: $24MM, +5%¹ VS. LY Net Sales² Q2 • Q2 CPW net sales growth driven by positive price/mix, partially offset by lower volume Cereal Partners Worldwide +11% Häagen-Dazs Japan +6% • Q2 HDJ net sales growth driven by positive price/mix a
Slide 23: Second-quarter Fiscal 2024 Margin Results
Second-quarter Fiscal 2024 Margin Results Adjusted Gross Margin1 Adjusted Operating Profit Margin1 (% of Net Sales) (% of Net Sales) 35.3% 19.3% 35.0% 16.9% 33.2% Q2 F20 Q2 F23 Q2 F24 Q2 F23 Q2 F24 (Pre-pandemic) • Q2 Adj. Gross Margin increase driven by HMM cost savings and positive price/mix, part
Slide 24: Second-quarter Fiscal 2024 Other Income Statement Items
Second-quarter Fiscal 2024 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Decreased $39MM • Net Interest Expense Increased $26MM • Adjusted Effective Tax Rate 20.8%, -30bps vs. LY¹ • Average Diluted Shares Outstanding -3% vs. LY (1) Non-GAAP measure. See appendix for reconcil
Slide 25: First-half Fiscal 2024 Balance Sheet and Cash Flow
First-half Fiscal 2024 Balance Sheet and Cash Flow Operating Cash Flow ($ in Millions) • Capital Investments = $294MM $1,496 • Dividends Paid = $691MM $1,201 • Net Share Repurchases = $1,296MM F23 F24 General Mills Second-quarter Fiscal 2024 25
Slide 26: Updated Fiscal 2024 Outlook Assumptions
Updated Fiscal 2024 Outlook Assumptions Key Financial Metrics¹ Key Considerations • 2H Organic Net Sales Growth Expectations Relative to Q2: Organic Net - NAR: 2H Trend Roughly In Line with Q2 Sales Growth - NAF & International: Acceleration in 2H; Leading Company Growth - Pet: Sequential Slowdown i
Slide 27: Updated Fiscal 2024 Financial Outlook
Updated Fiscal 2024 Financial Outlook Previous F24 Updated F24 Key Financial Metrics¹ Outlook Outlook Organic Net Sales Growth +3 to +4% -1% to Flat Adjusted Operating Profit Growth² +4 to +6% +4 to +5% Adjusted Diluted EPS Growth² +4 to +6% +4 to +5% Free Cash Flow Conversion 95%+ 95%+ (1) Non-GAAP
Slide 28: Today's Key Messages
Today’s Key Messages • Q2 Results: Slower-than-expected Volume Recovery; Adj. Op. Profit and EPS Growth Enabled by Strong HMM Cost Savings • Adapting Our Plans to Compete in a More Challenging Consumer Demand Environment • Updating F24 Guidance to Reflect Slower Near-term Volume Recovery and Increas
Slide 29: 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 30: Q2 Fiscal 2024 North America Retail Operating Unit Results
Appendix: Second-quarter Fiscal 2024 North America Retail Operating Unit Results Net Sales % vs. LY Operating Unit Q2 U.S. Snacks -6% U.S. Morning Foods -6% U.S. Meals & Baking Solutions +2% Canada +7% Canada Constant-currency¹ +9% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 31: Reconciliation of Q2 Canada Constant-currency Net Sales Growth
Reconciliation of Second-quarter Fiscal 2024 Canada Operating Unit Constant-currency Net Sales Growth General Mills Second-quarter Fiscal 2024 31
Slide 32: Reconciliation of Q2 Organic Net Sales Growth
Reconciliation of Second-quarter Fiscal 2024 Organic Net Sales Growth *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 32
Slide 33: Reconciliation of Q2 Organic Net Sales Compound Growth Rates
Reconciliation of Second-quarter Fiscal 2024 Organic Net Sales Compound Growth Rates (Fiscal Years) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 33
Slide 34: Reconciliation of Q2 Adjusted Operating Profit Constant-currency Growth
Reconciliation of Second-quarter Fiscal 2024 Adjusted Operating Profit Constant-currency Growth Rate (Fiscal Years, $ in Millions) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 34
Slide 35: Reconciliation of Q2 Adjusted Diluted EPS Growth
Reconciliation of Second-quarter Fiscal 2024 Adjusted Diluted EPS and Related Constant-currency Growth Rate (Fiscal Years) *Table may not foot due to rounding **See reconciliation of tax rate items for tax impact of individual items General Mills Second-quarter Fiscal 2024 35
Slide 36: Reconciliation of First-half Organic Net Sales Growth
Reconciliation of First-half Fiscal 2024 Organic Net Sales Growth *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 36
Slide 37: Reconciliation of First-half Organic Net Sales Compound Growth Rates
Reconciliation of First-half Fiscal 2024 Organic Net Sales Compound Growth Rates (Fiscal Years) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 37
Slide 38: Reconciliation of First-half Adjusted Operating Profit Growth
Reconciliation of First-half Fiscal 2024 Adjusted Operating Profit Constant-currency Growth Rate (Fiscal Years, $ in Millions) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 38
Slide 39: Reconciliation of First-half Adjusted Diluted EPS Growth
Reconciliation of First-half Fiscal 2024 Adjusted Diluted EPS and Related Constant-currency Growth Rates (Fiscal Years) *Table may not foot due to rounding **See reconciliation of tax rate items for tax impact of individual items General Mills Second-quarter Fiscal 2024 39
Slide 40: Reconciliation of Q2 North America Retail Operating Unit Compound Growth
Reconciliation of Second-quarter Fiscal 2024 North America Retail Operating Unit Organic Net Sales Compound Growth Rate (Fiscal Years) General Mills Second-quarter Fiscal 2024 40
Slide 41: Reconciliation of Q2 Constant-currency Segment Operating Profit Growth
Reconciliation of Second-quarter Fiscal 2024 Constant-currency Segment Operating Profit Growth (Fiscal Years) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 41
Slide 42: Constant-currency After-tax Earnings from Joint Ventures Growth Rates
Constant-currency After-tax Earnings from Joint Ventures Growth Rates (Fiscal Years) Percentage Change in Impact of Percentage Change in After-Tax Earnings from Foreign After-Tax Joint Currency Earnings from Joint Q2 (5) % (9) pts 5 % *Table may not foot due to rounding General Mills Second-quarter
Slide 43: Reconciliation of Q2 Adjusted Gross Margin
Reconciliation of Second-quarter Fiscal 2024 Adjusted Gross Margin (Fiscal Years) Q2 2024 2023 2020 Gross margin as 34.4 % 32.7 % 35.5 % Mark-to-market 0.5 % 0.5 % (0.5) % Restructuring charges 0.2 % - % 0.3 % Product recall - % 0.1 % - % Adjusted gross margin 35.0 % 33.2 % 35.3 % *Table may not f
Slide 44: Reconciliation of Q2 Adjusted Operating Profit Margin
Reconciliation of Second-quarter Fiscal 2024 Adjusted Operating Profit Margin (Fiscal Years) *Table may not foot due to rounding General Mills Second-quarter Fiscal 2024 44
Slide 45: Reconciliation of Q2 Adjusted Tax Rate
Reconciliation of Second-quarter Fiscal 2024 Adjusted Tax Rate (Fiscal Years, $ in Millions except Per Share Data) Q2 2024 2023 In Millions Pretax Income Pretax Income (Except Per Share Data) Earnings (a) Taxes Earnings (a) Taxes As reported $ 714.1 $ 136.0 $ 730.0 $ 147.1 Goodwill impairment 117.1
Slide 46: Reconciliation of First-half Adjusted Tax Rate
Reconciliation of First-half Fiscal 2024 Adjusted Tax Rate (Fiscal Years, $ in Millions except Per Share Data) 1H 2024 2023 In Millions Pretax Income Pretax Income (Except Per Share Data) Earnings (a) Taxes Earnings (a) Taxes As reported $ 1,544.1 $ 309.2 $ 1,749.6 $ 363.2 Goodwill impairment 117.1