General Mills, Inc. · NYSE:GIS
General Mills — Investor Day (July 2019)
66 slides from General Mills's investor day presentation, Jul 9, 2019
Slide 1: Fiscal 2020 Investor Day
Fiscal 2020 Investor Day July 9, 2019 1
Slide 2: Billy Bishop, Group President, Pet Segment
Billy Bishop Group President, Pet Segment Fiscal 2020 Investor Day July 9, 2019 2
Slide 3: Blue Buffalo Key Messages
Blue Buffalo Key Messages • Leading the Transformation of U.S. Pet Food • Double-digit Top and Bottom Line Growth* in F19 • Strong F20 Plans in FDM, E-Commerce, and Pet Specialty Targeting 8–10% Topline Growth on a Like for Like Basis Expect All-channel Retail Sales to Accelerate vs. F19 • Lever
Slide 4: Love Them Like Family. Feed Them Like Family.
Love Them Like Family. Feed Them Like Family. FORMULATED WITH THE FINEST NATURAL INGREDIENTS BRINGING TRANSPARENCY TO THE INDUSTRY Top 5 Ingredients Top 5 Ingredients Deboned Chicken Ground Whole Grain Chicken Meal Corn Brown Rice Poultry By-product Meal Barley Corn Gluten Meal Oatmeal Animal Fat Me
Slide 5: Pet Food Category Driven by Wholesome Natural Segment
Pet Food Category Driven by Wholesome Natural Segment U.S. PET FOOD IS A LARGE AND PREMIUM WHOLESOME NATURAL GROWING CATEGORY SEGMENT OUTPACING CATEGORY (Retail Sales, $ in billions, % vs. LY) (U.S. Pet Food Retail Sales, $ in billions, % vs. LY) +2% $28.9 Wholesome $28.4 Natural +HSD vs. LY All Oth
Slide 6: Blue Buffalo Strategic Framework
Blue Buffalo Strategic Framework OBJECTIVE: REACH MORE PET PARENTS AND FEED MORE PETS! Grow Market Share in the U.S. and Canada Grow with Increase our Drive awareness Make BLUE younger pets and share of wet with pet parents more available younger foods and influencers pet parents and treats 6
Slide 7: Blue Buffalo Fiscal 2020 Priorities
Blue Buffalo Fiscal 2020 Priorities 1 Continue Strong Topline Growth • Drive Growth in FDM and E-commerce • Execute Exclusive Pet Specialty Initiatives 2 Expand Profit Margins 7
Slide 8: Drive Awareness with Pet Parents and Influencers
Drive Awareness with Pet Parents and Influencers TRADITIONAL MEDIA IN-STORE DIGITAL $1B Spent on Brand Building Since 2003 8
Slide 9: Significant Progress in FDM
Significant Progress in FDM RETAIL SALES AT FDM CUSTOMERS BLUE DRIVING CATEGORY WITH BLUE MORE THAN 12 MONTHS GROWTH IN FDM ($ in millions, 12 weeks ending) (U.S. FDM Pet Food Retail Sales vs LY, $ in millions) +29% F18 Q4 F19 Q4 BLUE Drove More than 50% of FDM Pet Food 11.4.18 Category Retail Sales
Slide 10: FDM Expansion is Reaching New Pet Parents
FDM Expansion is Reaching New Pet Parents BLUE BUYER BLUE BUFFALO HOUSEHOLD INCREMENTALITY IN FDM PENETRATION TREND (% of BLUE buyers in FDM) 9.8 8.4 FDM Buyers Who Previously Bought BLUE 6.2 4.8 5.2 FDM Buyers Who Are New to BLUE 2015 2016 2017 2018 L52Wks end 5/19/19 More than 70% of BLUE Buyers i
Slide 11: F20 Plans: Drive Growth in FDM
F20 Plans: Drive Growth in FDM • Continue Expansion of Life Protection Formula and Wilderness • Execute National Merchandising Events • Drive In-Store Visibility • Launch into Club and Drug Channels 11
Slide 12: F20 Plans: Drive Growth in E-commerce
F20 Plans: Drive Growth in E-commerce OPTIMIZE AVAILABILITY AND ONLINE BRANDING PRODUCT ASSORTMENT IMPROVEMENT Brand Store Product Detail Page 12
Slide 13: F20 Plans: Execute Exclusive Pet Specialty Initiatives
F20 Plans: Execute Exclusive Pet Specialty Initiatives EXCLUSIVE PRODUCT DIFFERENTIATED EXCLUSIVE INNOVATION ASSORTMENT PROGRAMS 13
Slide 14: Expand Profit Margins
Expand Profit Margins • Advance SRM and HMM Capabilities and Impact • Deliver $50MM in Synergies* • Fully Ramp Up and Leverage New Plants *compared to pre-acquisition cost structure. 14
Slide 15: Blue Buffalo Key Messages
Blue Buffalo Key Messages • Leading the Transformation of U.S. Pet Food • Double-digit Top and Bottom Line Growth* in F19 • Strong F20 Plans in FDM, E-Commerce, and Pet Specialty Targeting 8–10% Topline Growth on a Like for Like Basis Expect All-channel Retail Sales to Accelerate vs. F19 • Lever
Slide 16: Bethany Quam, Group President, Europe & Australia
Bethany Quam Group President, Europe & Australia Fiscal 2020 Investor Day July 9, 2019 16
Slide 17: Europe & Australia Segment
Europe & Australia Segment AN EMERGING COMPANY F19 NET SALES: $1.9 BILLION IN A DEVELOPED MARKET (Fiscal 2019 Net Sales by Platform) (Europe & Australia Household Penetration %) 98% 88% 77% 56% Accelerate Yogurt 49% France, UK, &26% 29% 15% Australia All Other Yogurt Ice Cream Snack Bars Mexican Cat
Slide 18: Europe Australia
EUROPE AUSTRALIA Gz S = R\/| \ ¢ EUAU
Slide 19: Europe & Australia Fiscal 2020 Priorities
Europe & Australia Fiscal 2020 Priorities 1 Grow Mexican, Ice Cream, and Snack Bars 2 Compete Effectively in Yogurt 3 Deliver Margin Expansion Continued Strong HMM Savings SRM Actions to Drive Positive Price/Mix 19
Slide 20: Mexican Category Growth Opportunity
Mexican Category Growth Opportunity OLD EL PASO IN EUROPE & AUSTRALIA MEXICAN CATEGORY PENETRATION #1 Mexican Brand in Europe & Australia 97% 94% 83% Meal Kits, Tortillas, Chips, & Sides 49% Geographic Footprint: 25+ Countries Growing Category (+3% L52 Weeks) U.S Europe & Australia Open to Mexican B
Slide 21: Accelerate Growth for Old El Paso
Accelerate Growth for Old El Paso DRIVE CORE VISIBILITY INNOVATE TO CAPTURE AT HOME, ONLINE, IN-STORE NEW PENETRATION 21
Slide 22: A History of Double-digit Growth in Ice Cream
A History of Double-digit Growth in Ice Cream ICE CREAM IN EUROPE & AUSTRALIA HÄAGEN-DAZS RETAIL SALES (EUROPE & AUSTRALIA, $ IN MILLIONS) Pints, Mini Cups, Stick Bars, & Shops CGR = +14% Geographic Footprint: 25+ Countries Growing Category (+5% L52 Weeks) F16 F19 Source: Nielsen EUAU L52 Weeks to M
Slide 23: Grow Häagen-Dazs Across Europe & Australia
Grow Häagen-Dazs Across Europe & Australia EXTRÄORDINARY EXTRÄORDINARY DISTRIBUTION INNOVATION BRAND EQUITY EXPANSION Poland Czech Republic 23
Slide 24: Significant Momentum on Snack Bars
Significant Momentum on Snack Bars SNACK BARS NATURE VALLEY & FIBRE ONE IN EUROPE & AUSTRALIA RETAIL SALES (EUROPE & AUSTRALIA, $ IN MILLIONS) Nature Valley, Fibre One, & Lärabar CGR = +35% Geographic Footprint: 20+ Countries Growing Category (+4% L52 Weeks) F16 F19 Source: Nielsen EUAU L52 Weeks to
Slide 25: Grow Snack Bars Across Europe & Australia
Grow Snack Bars Across Europe & Australia NATURE VALLEY FIBRE ONE LÄRABAR Consumer Activations Fueling Innovation F19 Launch in the U.K. Omni-Channel Leadership and Distribution Growth Digital, PR, Sampling 25
Slide 26: Yogurt in Europe
Yogurt in Europe YOPLAIT IN EUROPE TOP BRANDS • #3 Branded Player • Broad Portfolio • 12% Market Share ~$150MM ~$100MM • #3 Branded Player • Focused Portfolio • 7% Market Share ~$100MM ~$100MM Source: Nielsen UK & France Retail Sales Latest 52 Weeks to May 2019 26
Slide 27: Compete Effectively: Yogurt in France
Compete Effectively: Yogurt in France PANIER PERLE DE LAIT YOP Innovation & Renovation Innovation & Communications Engaging With Teens 27
Slide 28: Compete Effectively: Yogurt in the U.K.
Compete Effectively: Yogurt in the U.K. PETITS FILOUS Launched “Mess Free” Drinkable “No Added Sugar” News “Play Free” Campaign 28
Slide 29: Deliver Margin Expansion in Fiscal 2020
Deliver Margin Expansion in Fiscal 2020 + Deliver Continued Strong HMM Savings + Accelerate SRM to Drive Positive Price/Mix -- External Environment Remains Volatile 29
Slide 30: Europe & Australia Summary
Europe & Australia Summary • Emerging Company in a Developed Market • Fiscal 2020 Priorities 1) Grow Mexican, Ice Cream, and Snack Bars 2) Compete Effectively in Yogurt 3) Deliver Margin Expansion 30
Slide 31: Sean Walker, Group President, Asia & Latin America
Sean Walker Group President, Asia & Latin America Fiscal 2020 Investor Day July 9, 2019 31
Slide 32: Asia & Latin America Segment
Asia & Latin America Segment • Diverse Global Footprint: F19 NET SALES: $1.65 BILLION 150+ Countries, 6 Billion People China, Brazil, & India = ~60% of Net Sales • Drove +MSD Organic Net Sales* Growth and Significant Margin Expansion in F19 • Focused on Delivering Sustainable Sales and Profit Growth
Slide 33: Asia & Latin America Fiscal 2020 Priorities
Asia & Latin America Fiscal 2020 Priorities 1 Ice Cream and Snacks Platforms Will Lead Growth 2 Compete Effectively on Key Local Brands 3 Deliver Significant Margin Expansion 33
Slide 34: Grow Häagen-Dazs Across Asia & Latin America
Grow Häagen-Dazs Across Asia & Latin America ICE CREAM CATEGORY RETAIL SALES IN ASIA & LATIN AMERICA ($ in Billions) • Projected Category Growth of +8% CGR = +6% Over Next 5 Years $33 • Häagen-Dazs is One-third of Segment $25 Net Sales • Key F20 Initiatives: Launch Differential Innovation Execute
Slide 35: Launch Differential Innovation
Launch Differential Innovation HANDHELD IS THE LARGEST SUCCESSFULLY LAUNCH CONES ICE CREAM SEGMENT IN ASIA IN SELECT ASIAN COUNTRIES Others 7% Minicups 8% Pints/Tubes 17% Handheld 68% 35 Source: Nielsen | China, HK, TW MAT Sept. 2018 | KR MAT Aug. 2018
Slide 36: Extend Proven Winners During Key Seasons
Extend Proven Winners During Key Seasons FRUIT INNOVATION REFRESHED MOONCAKES MOCHI INNOVATION SUMMER AUTUMN WINTER 36
Slide 37: Execute a Unified Consumer Activation Plan
Execute a Unified Consumer Activation Plan #1 Share Positions 37
Slide 38: Accelerate Channel Development
Accelerate Channel Development SUPERIOR IN-STORE E-COMMERCE GROWTH LEVERAGE SHOPS EXECUTION Consistent Execution Data-driven Innovation Integrate Insights Across Markets F20 E-commerce Sales +DD Across Channels 38
Slide 39: Grow Nature Valley Across Asia & Latin America
Grow Nature Valley Across Asia & Latin America PORTFOLIO EXPANSION DRIVE BRAND AWARENESS Nutri-Biscuits Launch in India and Middle East Sampling Program Introducing New Items in Latin America Digital Marketing 39
Slide 40: Compete Effectively on Key Local Brands
Compete Effectively on Key Local Brands Snacks Platform Expansion Excellent In-store Execution Premium Innovation 40
Slide 41: Deliver Significant Margin Expansion in F20
Deliver Significant Margin Expansion in F20 CHINA BRAZIL INDIA HMM and Strategic Execute Route-to-Market Expand Profitable Bakeries & Revenue Management Optimization Plan Foodservice Business 41
Slide 42: Asia & Latin America Summary
Asia & Latin America Summary • Ice Cream and Snacks Platforms Will Lead Growth • Competing Effectively on Key Local Brands • Actions in Place to Drive Significant Margin Expansion 42
Slide 43: Don Mulligan, Chief Financial Officer
Don Mulligan Chief Financial Officer Fiscal 2020 Investor Day July 9, 2019 43
Slide 44: Joint Ventures
Joint Ventures CEREAL PARTNERS WORLDWIDE HÄAGEN-DAZS JAPAN • 50+ Brands Across 130 Markets • Operating in Japan for 30+ Years • F19 Net Sales: $1.65 Billion* • F19 Net Sales: $0.4 Billion* *Joint Venture net sales on a 100 percent basis. 44
Slide 45: Joint Ventures Fiscal 2020 Plans
Joint Ventures Fiscal 2020 Plans CEREAL PARTNERS WORLDWIDE HÄAGEN-DAZS JAPAN • Drive News on Whole Grain • Green Tea Innovation and Product News • Launch Differential Innovation • Integrated Consumer Activations • Actions in Place to Improve Margins • Executing SRM and HMM Initiatives 45
Slide 46: Four Levers to Drive Shareholder Returns
Four Levers to Drive Shareholder Returns Sales Margin Cash Cash Growth Expansion Conversion Returns Long-term Target: +LSD +MSD ≥ 95% ≥ 90% Organic Sales* Adj. Operating Profit* Adj. EAT to FCF* of FCF* *Non-GAAP measures. 46
Slide 47: Delivered Margin Expansion
Delivered Margin Expansion F15-F19 COST SAVINGS DRIVERS ADJUSTED OP PROFIT MARGIN* (% of Net Sales) 16.9% • Cumulative COGS HMM Savings = $2.1B 15.7% Record Levels of HMM Savings in F19 Achieved $4B Target This Decade +120 bps • Additional Project Savings = $700MM F15 F19 *Non-GAAP measure. See
Slide 48: Actions to Support Profitability in Fiscal 2020 and Beyond
Actions to Support Profitability in Fiscal 2020 and Beyond COGS HMM SAVINGS ($ in Millions) • Ongoing HMM Savings ~4% of COGS $506 $516 ~4% • SRM Driving Positive Price/Mix COGS $396 • Further Global Efficiency Opportunities Enterprise Process Transformation Route-to-Market Optimization F18 F19
Slide 49: Investing to Accelerate Growth in Fiscal 2020 and Beyond
Investing to Accelerate Growth in Fiscal 2020 and Beyond KEY CAPABILITIES BRAND BUILDING Optimal Mix Price Pack Promotion Price Management Architecture Optimization 49
Slide 50: Maintaining Strong Margins in Fiscal 2020
Maintaining Strong Margins in Fiscal 2020 TAILWINDS HEADWINDS • Significant HMM Savings • Input Cost Inflation • SRM Actions • Growth Investments • Blue Buffalo - Brand Building - Key Capabilities • Other Efficiency Initiatives 50
Slide 51: Delivering Working Capital Improvement
Delivering Working Capital Improvement ($ in Billions) -71% Cum Decline 1.6 35 $1.4 1.4 30 29 $1.2 25 1.2 24 20 1 $0.8 15 0.8 $0.7 $0.6 10 0.6 10 8 5 $0.4 0.4 Source $0.3 0 0 of Cash 0.2 -5 -6 0 -10 F14 F15 F16 F17 F18 F19 F20 Target Core Working Capital CWC Days 51
Slide 52: Opportunities to Drive Further Core Working Capital Improvement
Opportunities to Drive Further Core Working Capital Improvement CORE WORKING CAPITAL DAYS 52 GLOBAL CPG PEER MEDIAN = 5 DAYS Top Quartile -6 Source: CapIQ, peer fiscal 2019/fiscal 2018/calendar year 2018. -43 Industry Peer Group excluding KDP – see 2018 proxy for full list. 52
Slide 53: Strong Free Cash Flow Conversion
Strong Free Cash Flow Conversion LONG-TERM TARGET ≥ 95% (3-Year Rolling, $ in Billions) $6.2 $6.3 $6.2 $5.9 $6.0 $5.7 115% 115% 108% 108% 109% 103% F12-F14 F13-F15 F14-F16 F15-F17 F16-F18 F17-F19 Free Cash Flow Free Cash Flow Conversion* *Non-GAAP measure. See appendix for reconciliation. 53
Slide 54: Capital Allocation Priorities
Capital Allocation Priorities PRIORITIES LONG-RUN TARGETS F20 PLAN 1 Capital Investments ~4% of Net Sales ~3.5% of Net Sales 2 Dividends Grow with Earnings Maintain Current Rate 3 Strategic Acquisitions Opportunistic On Hold 4 Share Repurchases -2% Annual Avg.* On Hold Achieve 3.5x 5 Debt Reduction
Slide 55: Pet Segment F20 Calendar Differences
Pet Segment F20 Calendar Differences Calendar Differences to Add ~7pts to Pet Segment Organic Net Sales* Growth in F20 F19 Calendar Weeks (53) F20 Calendar Weeks (57) 20 20 18 18 18 16 14 16 14 13 13 13 14 13 13 13 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 7 days from month Extra repor
Slide 56: Fiscal 2020 Plan Assumptions
Fiscal 2020 Plan Assumptions • Blue Buffalo Shifts to May Year-end (13 Months); Included in Organic Sales* • 53rd Week, F19 Divestitures, and FX Add 1 to 2 Points to F20 Net Sales • Increased Investment in Brand Building and Capabilities • HMM Savings and Input Cost Inflation = ~4% of COGS • Benefit
Slide 57: Fiscal 2020 Financial Outlook
Fiscal 2020 Financial Outlook KEY FINANCIAL METRICS* FISCAL 2020 OUTLOOK Organic Net Sales Growth +1 to +2% Adjusted Operating Profit Growth +2 to +4%¹ Adjusted Diluted EPS Growth +3 to +5%¹ Free Cash Flow Conversion ≥95% *Non-GAAP measures. (1) Constant-currency growth rate 57
Slide 58: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2020 outlook for organic net sales growth, adjusted operating profit, and adjusted diluted EPS are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchang
Slide 59: Reconciliation of Fiscal 2019 Organic Net Sales Growth
Reconciliation of Fiscal 2019 Organic Net Sales Growth (FISCAL YEAR) 2019 Full Year Organic Organic Organic Net Foreign Acquisitions & Reported Net Volume Price/Mix Sales Exchange Divestitures Sales Growth North America Retail (2) pts 1 pt (1) % (1) pt - (2) % Convenience Stores (2) pts 4 pts 2% - -
Slide 60: Reconciliation of Fiscal 2019 Constant-currency Net Sales Growth
Reconciliation of Fiscal 2019 Constant-currency Net Sales Growth (FISCAL YEAR) 2019 Percentage Change Percentage Change in in Net Sales Impact of Foreign Net Sales on a Constant- as Reported Currency Exchange currency Basis Full Year 7% (2) pts 9% 60
Slide 61: Reconciliation of Fiscal 2019 Adjusted Operating Profit
Reconciliation of Fiscal 2019 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Full Year 2019 2018 Change Operating profit as reported $ 2,515.9 $ 2,419.9 4% Mark-to-market effects 36.0 (32.1) Investment valuation adjustments (22.8) - Legal recovery (16.2) - Rest
Slide 62: Reconciliation of Fiscal 2019 Adjusted Diluted EPS
Reconciliation of Fiscal 2019 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Full Year Per Share Data 2019 2018 Change Diluted earnings per share, as reported $ 2.90 $ 3.64 (20) % Net tax benefit (0.01) (0.89) Tax items (0.12) 0.07 Mark-to-market effects* 0.05 (0.04) I
Slide 63: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Adjusted Operating Profit Margin (FISCAL YEARS) % of Net Sales 2019 2015 Operating profit as reported 14.9 % 11.8 % Mark-to-market effects 0.2 0.5 Divestitures loss 0.2 - Acquisition transaction and integration costs 0.1 0.1 Restructuring charges 0.5 1.7 Project-related costs - 0.1
Slide 64: Reconciliation of Free Cash Flow and Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) 2019 2018 2017 2016 2015 2014 2013 2012 Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $1,786 $2,163 $1,701 $1,737 $1,259 $1,861 $1,892 $1,589 Mark-to-m
Slide 65: Reconciliation of Income Taxes on Adjusting Items
Reconciliation of Income Taxes on Adjusting Items (FISCAL YEARS, $ IN MILLIONS) 2019 2018 2017 2016 2015 2014 2013 2012 Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes Earnings* Taxes Earnings* Taxes Earn
Slide 66: Reconciliation of Fiscal 2019 Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Fiscal 2019 Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEAR, $ IN MILLIONS) Full Year 2019 Total Debt $14,490.0 Cash 450.0 Net Debt $14,040.0 Net earnings attributable to General Mills, as reported $1,752.7 Net earnings, attributable to redeemable and noncontrolling interests 33.5 A