General Mills, Inc. · NYSE:GIS
General Mills — Q1 2023 Earnings Presentation
37 slides from General Mills's earnings presentation, Sep 21, 2022
Slide 1: Fiscal 2023 Q1 Earnings
Fiscal 2023 Q1 Earnings September 21, 2022
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 First Quarter Fiscal 2023 3
Slide 4: Today's Key Messages
Today’s Key Messages • Strong Start to Fiscal 2023 • Operating Environment Remains Volatile • Executing Well Against our Accelerate Strategy and F23 Priorities • Raising Full-year Guidance on Net Sales, Operating Profit, and EPS General Mills First Quarter Fiscal 2023 4
Slide 5: Delivered Strong Performance in Q1
Delivered Strong Performance in Q1 Organic Net Sales1 + 10% Adj. Operating Profit2 + 8% Adj. Diluted EPS2 + 13% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant currency. Non-GAAP measures. See appendix for reconciliation General Mills First Quarter Fiscal 2023 5
Slide 6: Environment Remains Dynamic in F23
Environment Remains Dynamic in F23 Continued Economic Volatility Continued Supply Ongoing High Inflation Chain Disruptions Pandemic Impact General Mills First Quarter Fiscal 2023 6
Slide 7: Continue to Drive our Accelerate Strategy in F23
Delivering on Our Fiscal 2023 Priorities Continue to Drive our Accelerate Strategy in F23 1 Continue to Compete Effectively 2 Continue to Invest for the Future 3 Continue to Reshape our Portfolio General Mills First Quarter Fiscal 2023 7
Slide 8: Continuing to Compete Effectively in Q1
Continuing to Compete Effectively in Q1 Growing or Holding Share in Better On-shelf Availability 56% of our Priority Businesses¹ than Competition in U.S. Retail On-shelf Availability General Mills +/- Category² 1.5% Cereal Ref. Dough Fruit Snacks 1.1% 0.9% (Global) (U.S.) (U.S.) 0.7% 0.6% 0.4% 0.5%
Slide 9: Continuing to Invest for the Future
Continuing to Invest for the Future Investing in Investing in Digital Investing in Brand Building Consumer Engagement Growth Capacity Pet Food Fruit Snacks Hot Snacks Mexican Cereal General Mills First Quarter Fiscal 2023 9
Slide 10: Totino's Investing in Brand Building, Innovation, and Capacity
Totino’s Investing in Brand Building, Innovation, and Capacity Totino’s Hot Snacks Retail Sales +7% CGR +4% CGR F16 F19 F22 Source: NielsenIQ xAOC General Mills First Quarter Fiscal 2023 10
Slide 11: General Mills' Billion Dollar Brands
General Mills’ 9 Billion Dollar Brands Our 9th Billion Dollar Brand Brands with $1B+ in retail sales, Source: Nielsen and Euromonitor General Mills First Quarter Fiscal 2023 11
Slide 12: Continuing to Stand for Good
Continuing to Stand for Good 10 Key Commitments Advancing Regenerative Agriculture SUSTAINABLE GHG Plan to Achieve SOURCING EMISSIONS 350M Acres HUMAN REGENERATIVE towards 1MM Acre commitment RIGHTS AGRICULTURE by end of Fiscal 2023 RENEWABLE ELECTRICITY PACKAGING ANIMAL WATER WELFARE FOOD ZERO WAST
Slide 13: Continuing to Reshape our Portfolio in Q1
Continuing to Reshape our Portfolio in Q1 N.A. Foodservice N.A. Main Meals & Dough Acquisition Side Dishes Divestiture • Transaction Closed June 21 • Transaction Closed July 1 • Fast-growing Away-from-home • Improves Growth Profile and Frozen Baked Goods Category Increases Focus in N.A. Retail • Q1
Slide 14: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills First Quarter Fiscal 2023 14
Slide 15: First Quarter Fiscal 2023 Financial Results
First Quarter Fiscal 2023 Financial Results Q1 TOTAL GENERAL MILLS $MM VS. LY Net Sales $4,718 +4% Organic Net Sales1 +10% Adjusted Operating Profit1 $881 +8%2 Adjusted Diluted EPS1 $1.11 +13%2 (1) Non-GAAP measure. See appendix for reconciliation (2) Constant currency growth rates. Non-GAAP measure
Slide 16: Components of First Quarter Net Sales Growth
Components of First Quarter Net Sales Growth Organic Net Sales1 +10% +15 pts +4 pts -1 pt -5 pts -5 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 First Quarter Fiscal 202
Slide 17: First Quarter Fiscal 2023 North America Retail
First Quarter Fiscal 2023 North America Retail Segment Results Segment Highlights North America Retail Q1 • Q1 organic net sales increase driven by positive price/mix, partially offset by lower volume Organic Net Sales¹ +12% Segment Op Profit² +20% • Volume elasticities better than expected in Q1 an
Slide 18: First Quarter Fiscal 2023 Pet
First Quarter Fiscal 2023 Pet Segment Results Segment Highlights Pet Q1 • Q1 organic net sales driven by positive price/mix, partially offset by lower volume Organic Net Sales¹ +14% Segment Op Profit² +7% • Gained market share in wet food; capacity constraints drove share declines in dry food and tr
Slide 19: First Quarter Fiscal 2023 North America Foodservice
First Quarter Fiscal 2023 North America Foodservice Segment Results Segment Highlights North America Foodservice Q1 • Q1 organic net sales growth driven by 17-point Organic Net Sales¹ +18% benefit from index pricing on bakery flour Segment Op Profit² -25% • Q1 profit decline resulted from SRM action
Slide 20: First Quarter Fiscal 2023 International
First Quarter Fiscal 2023 International Segment Results Segment Highlights International Q1 • Q1 organic net sales decline driven by lower Organic Net Sales¹ -2% volume, including the impact of the Ice Cream recall, partially offset by positive price/mix Segment Op Profit² -34% • Q1 profit decline d
Slide 21: First Quarter Fiscal 2023 Joint Ventures
First Quarter Fiscal 2023 Joint Ventures Q1 AFTER-TAX JV EARNINGS: $20MM, -32% VS. LY Joint Venture Results Q1 Joint Venture Highlights NET SALES¹ Q1 • CPW net sales growth driven by positive price/mix, CPW +3% partially offset by lower volume HDJ -8% • HDJ net sales decline due to lower volume • Af
Slide 22: First Quarter Fiscal 2023 Margin Results
First Quarter Fiscal 2023 Margin Results Adjusted Gross Margin1 Adjusted Operating Profit Margin1 (% OF NET SALES) (% OF NET SALES) 34.9% 18.7% 34.7% 18.0% Q1 F22 Q1 F23 Q1 F22 Q1 F23 • Q1 Adj. Gross Margin increase driven by positive price/mix and HMM cost savings, partially offset by input cost in
Slide 23: First Quarter Fiscal 2023 Other Income Statement Items
First Quarter Fiscal 2023 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Increased $30MM • Net Interest Expense Decreased $8MM • Adjusted Effective Tax Rate 19.7% vs. 21.7% LY1 • Average Diluted Shares Outstanding -1% vs. LY (1) Non-GAAP measure. See appendix for reconciliati
Slide 24: First Quarter Fiscal 2023 Balance Sheet and Cash Flow
First Quarter Fiscal 2023 Balance Sheet and Cash Flow Operating Cash Flow ($ IN MILLIONS) • Capital Investments = $91MM $389 $370 • Dividends Paid = $325MM • Net Shares Repurchased = $435MM F22 F23 General Mills First Quarter Fiscal 2023 24
Slide 25: Updated Fiscal 2023 Financial Assumptions
Updated Fiscal 2023 Financial Assumptions What Has Changed: • Lower Volume Elasticities vs. Original Plan; Expect Elasticities to Increase in Year-to-go Quarters, but Remaining Below Historical Levels • Higher Input Cost Inflation of ~14 to 15% of COGS • Increased Growth Investments vs. Original Pla
Slide 26: Raising Fiscal 2023 Financial Outlook
Raising Fiscal 2023 Financial Outlook PREVIOUS UPDATED KEY FINANCIAL METRICS* F23 OUTLOOK F23 OUTLOOK Organic Net Sales Growth +4% to +5% +6% to +7% Adjusted Operating Profit Growth† -2% to +1%1 Flat to +3%1,2 Adjusted Diluted EPS Growth† Flat to +3%1 +2% to +5%1,2 Free Cash Flow Conversion 90%+ 90%
Slide 27: Today's Key Messages
Today’s Key Messages • Strong Start to Fiscal 2023 • Operating Environment Remains Volatile • Executing Well Against our Accelerate Strategy and F23 Priorities • Raising Full-year Guidance on Net Sales, Operating Profit, and EPS General Mills First Quarter Fiscal 2023 27
Slide 28: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2023 outlook for organic net sales growth, adjusted operating profit growth, adjusted diluted EPS growth, and free cash flow conversion are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, includi
Slide 29: Appendix: First Quarter Fiscal 2023 North America Retail Operating Unit Results
Appendix: First Quarter Fiscal 2023 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q1 U.S. Snacks +14% U.S. Meals & Baking Solutions +10% U.S. Morning Foods +9% Canada +4% Canada Constant-currency¹ +7% (1) Net sales growth in constant currency. Non-GAAP measure. See ap
Slide 30: Reconciliation of Q1 Fiscal 2023 Canada Constant-Currency Net Sales Growth
Reconciliation of First Quarter Fiscal 2023 Canada Operating Unit Constant-Currency Net Sales Growth *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 30
Slide 31: Reconciliation of Q1 Fiscal 2023 Organic Net Sales Growth
Reconciliation of First Quarter Fiscal 2023 Organic Net Sales Growth *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 31
Slide 32: Reconciliation of Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of First Quarter Fiscal 2023 Adjusted Operating Profit Constant-currency Growth Rate ($ IN MILLIONS) *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 32
Slide 33: Reconciliation of Adjusted Diluted EPS and Constant-currency Growth Rates
Reconciliation of First Quarter Fiscal 2023 Adjusted Diluted EPS and Related Constant-currency Growth Rates *Table may not foot due to rounding **See reconciliation of tax rate items for tax impact of individual items General Mills First Quarter Fiscal 2023 33
Slide 34: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of First Quarter Fiscal 2023 Constant-currency Segment Operating Profit Growth *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 34
Slide 35: Reconciliation of Adjusted Gross Margin
Reconciliation of First Quarter Fiscal 2023 Adjusted Gross Margin (a) Net sales less cost of sales *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 35
Slide 36: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of First Quarter Fiscal 2023 Adjusted Operating Profit Margin *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 36
Slide 37: Reconciliation of Adjusted Tax Rates
Reconciliation of First Quarter Fiscal 2023 Adjusted Tax Rates ($ IN MILLIONS EXCEPT PER SHARE DATA) (a) Earnings before income taxes and after-tax earnings from joint ventures. *Table may not foot due to rounding General Mills First Quarter Fiscal 2023 37