General Mills, Inc. · NYSE:GIS
General Mills — Q1 2022 Earnings Presentation
39 slides from General Mills's earnings presentation, Sep 22, 2021
Slide 1: Fiscal 2022 Q1 Earnings
Fiscal 2022 Q1 Earnings September 22, 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: Jeff Harmening, Chairman and Chief Executive Officer
Jeff Harmening Chairman and Chief Executive Officer General Mills First Quarter Fiscal 2022 3
Slide 4: Today's Key Messages
Today’s Key Messages • Q1 Performance Above Expectations in a Dynamic and Challenging Environment • Delivering on Fiscal 2022 Priorities • Advancing Our Accelerate Strategy, Including Progress on Portfolio Reshaping • On Track to Achieve Higher End of Fiscal 2022 Financial Guidance Ranges General Mi
Slide 5: A Dynamic and Challenging Operating Environment
A Dynamic and Challenging Operating Environment Continued Elevated High Input Industry-Wide At-home Demand Cost Inflation Labor Shortages General Mills U.S. Retail Sales1 General Mills’ North America Job Open Rate 2-year CGR Market Basket2 U.S. National Non-Farm3 5% 5% 4% 4% F21 Q2 F21 Q3 F21 Q4 F22
Slide 6: Q1 Performance Ahead of Expectations
Q1 Performance Ahead of Expectations vs. LY 2-yr CGR Organic Net Sales1 + 2% + 6% - 18%2 Adjusted Operating Profit2 - 2% + 9% Adjusted Diluted EPS2 - 2% + 12% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant currency. Non-GAAP measures. See appendix for reconciliati
Slide 7: Delivering on Our Fiscal 2022 Priorities
Delivering on Our Fiscal 2022 Priorities Compete 1 Continue to Compete Effectively Navigate 2 Successfully Navigate the Dynamic Supply Chain Environment Reshape 3 Execute Reshaping Actions Without Disruption General Mills First Quarter Fiscal 2022 7
Slide 8: Priority 1: Continuing to Compete Effectively in Q1
Priority 1: Continuing to Compete Effectively in Q1 Growing or Holding Share in 66% of our Priority Businesses U.S. Cereal U.S. Refrigerated Dough U.S. Pet Food Global Mexican +30bps +80bps +40bps +120bps Sources: Pet U.S. NielsenIQ xAOC + Pet Retail, 13 weeks ending 8/28/21 Other Categories - Niels
Slide 9: Priority 2: Successfully Navigating the Dynamic Supply Chain Environment in Q1
Priority 2: Successfully Navigating the Dynamic Supply Chain Environment in Q1 Actions to Actions to Maximize Service Levels Manage Costs & Margins • Weekly/Daily Control Tower • Strong HMM Productivity Meetings for Rapid Savings at 4% of COGS Decision Making • Broad SRM Actions Across • Adapting Ne
Slide 10: Priority 3: Progress on Portfolio Reshaping in Q1
Priority 3: Progress on Portfolio Reshaping in Q1 Dog Treats Acquisition Yoplait Europe Divestiture • Transaction Closed July 6 • Definitive Agreement Signed with • Integration Work Underway Sodiaal on Aug. 27 • Strong In-market Performance • On Track to Close by End of CY21 We Remain Committed to A
Slide 11: Advancing Our Accelerate Strategy with Connected Commerce Initiatives
Advancing Our Accelerate Strategy with Connected Commerce Initiatives Box Tops for Education Buddies by Blue Buffalo Häagen-Dazs Smart Shop General Mills First Quarter Fiscal 2022 11
Slide 12: Acting as a Force For Good
Acting as a Force For Good REGENERATING OUR PLANET IMPROVING FOOD SECURITY • Reducing greenhouse gas emissions • Nutrition-forward foods • Advancing regenerative agriculture • Variety, nutrient density, • Protecting watersheds affordability & accessibility • Making packaging recyclable or reusable •
Slide 13: Advancing Diversity, Equity and Inclusion
Advancing Diversity, Equity and Inclusion We’re Making Progress, and We Have More Work To Do General Mills First Quarter Fiscal 2022 13
Slide 14: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills First Quarter Fiscal 2022 14
Slide 15: First Quarter Fiscal 2022 Financial Results
First Quarter Fiscal 2022 Financial Results Q1 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $4,540 +4% +6% Organic Net Sales1 +2% +6% Adjusted Operating Profit1 $819 -2%2 +9%2 Adjusted Diluted EPS1 $0.99 -2%2 +12%2 (1) Non-GAAP measures. See appendix for reconciliation (2) Constant currency g
Slide 16: Components of First Quarter Net Sales Growth
Components of First Quarter Net Sales Growth Organic Net Sales1 +2% +4 pts +2 pts +1 pt +1 pt Flat Organic Organic Foreign Acquisitions & Total Net Sales Volume Price / Mix Exchange Divestitures As Reported (1) Non-GAAP measure Table may not foot due to rounding General Mills First Quarter Fiscal 20
Slide 17: First Quarter Fiscal 2022 North America Retail
First Quarter Fiscal 2022 North America Retail Segment Results Segment Highlights North America Retail Q1 • Q1 organic net sales decline driven by lower at-home Organic Net Sales¹ -3% demand and comparison to retailer inventory build LY 2-year CGR¹ +5% • Declines in U.S. Meals & Baking and U.S. Cere
Slide 18: First Quarter Fiscal 2022 Pet
First Quarter Fiscal 2022 Pet Segment Results Segment Highlights Pet Q1 • Q1 organic net sales growth includes +DD growth for Organic Net Sales¹ +20% both cat food and dog food 2-year CGR¹ +13% • Strong retail sales growth and market share gains for Segment Op Profit² +28% Blue Buffalo 2-year CGR² +
Slide 19: First Quarter Fiscal 2022 Convenience Stores & Foodservice
First Quarter Fiscal 2022 Convenience Stores & Foodservice Segment Results Segment Highlights CS&F Q1 • Q1 organic net sales growth driven by strong execution Organic Net Sales¹ +23% and partial recovery in away-from-home food channels, 2-year CGR¹ +4% including Schools, Restaurants, Lodging and C-s
Slide 20: First Quarter Fiscal 2022 Europe & Australia
First Quarter Fiscal 2022 Europe & Australia Segment Results Segment Highlights EUAU Q1 • Q1 organic net sales flat, with growth in Snack Bars Organic Net Sales¹ Flat and Yogurt offset by a decline in Ice Cream 2-year CGR¹ +3% • Q1 profit decline primarily driven by input cost inflation Segment Op P
Slide 21: First Quarter Fiscal 2022 Asia & Latin America
First Quarter Fiscal 2022 Asia & Latin America Segment Results Segment Highlights ASLA Q1 • Q1 Latin America net sales +HSD driven by strong Yoki Organic Net Sales¹ +6% performance in Brazil 2-year CGR¹ +11% • Q1 Asia net sales +MSD led by Häagen-Dazs Ice Cream Segment Op Profit² -26% in China 2-yea
Slide 22: First Quarter Fiscal 2022 Joint Ventures
First Quarter Fiscal 2022 Joint Ventures Q1 AFTER-TAX JV EARNINGS: $29MM, -30% VS. LY JV Results JV Highlights NET SALES¹ Q1 • Q1 CPW net sales decline due to lapping elevated at- CPW -5% home demand in early stages of the pandemic LY HDJ +14% • Q1 HDJ net sales growth due to strong innovation perfo
Slide 23: First Quarter Fiscal 2022 Margin Results
First Quarter Fiscal 2022 Margin Results Adjusted Gross Margin1 Adjusted Operating Profit Margin1 (% OF NET SALES) (% OF NET SALES) 35.2% 36.2% 19.1% 34.7% 18.0% 17.0% Q1 F20 Q1 F21 Q1 F22 Q1 F20 Q1 F21 Q1 F22 • Q1 margin performance better than expected, driven by favorable admin and net pricing •
Slide 24: First Quarter Fiscal 2022 Other Income Statement Items
First Quarter Fiscal 2022 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Decreased $19MM ex. Certain Items • Net Interest Expense decreased $15MM • Adjusted Effective Tax Rate 21.7% vs. 21.9% LY1 • Average Diluted Shares Outstanding Down -1% (1) Non-GAAP measure. See appendix
Slide 25: First Quarter Fiscal 2022 Balance Sheet and Cash Flow
First Quarter Fiscal 2022 Balance Sheet and Cash Flow Operating Cash Flow ($ IN MILLIONS) • Capital Investments = $104MM $584 • Dividends Paid = $312MM $370 • Net Shares Repurchased = $150MM F21 F22 General Mills First Quarter Fiscal 2022 25
Slide 26: Updating Fiscal 2022 Financial Assumptions
Updating Fiscal 2022 Financial Assumptions Higher Cost Outlook than on F21 Q4 Earnings Call • Input Cost Inflation Now ~7% to 8% (was ~7%) • Higher Costs Related to Labor Shortages Across Supply Chain Actions to Address Dynamic Cost Environment • HMM Cost Savings = 4% of COGS • Increased SRM Actions
Slide 27: Our Fiscal 2022 Financial Outlook
Our Fiscal 2022 Financial Outlook KEY FINANCIAL METRICS¹ F22 OUTLOOK Organic Net Sales Growth Higher end of -3 to -1% range Adjusted Operating Profit Growth² Higher end of -4 to -2% range Adjusted Diluted EPS Growth² Higher end of -2% to Flat range Free Cash Flow Conversion ~95% (1) Non-GAAP measure
Slide 28: Today's Key Messages
Today’s Key Messages • Q1 Performance Above Expectations in a Dynamic and Challenging Environment • Delivering on Fiscal 2022 Priorities • Advancing Our Accelerate Strategy, Including Progress on Portfolio Reshaping • On Track to Achieve Higher End of Fiscal 2022 Financial Guidance Ranges General Mi
Slide 29: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2022 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 30: Appendix: North America Retail Operating Unit Results
Appendix: First Quarter Fiscal 2022 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q1 U.S. Meals & Baking -7% U.S. Cereal -6% U.S. Yogurt Flat Canada +12% Canada Constant-currency¹ +3% U.S. Snacks +3% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 31: Reconciliation of Canada Constant-Currency Net Sales Growth
Reconciliation of First Quarter Fiscal 2022 Canada Operating Unit Constant-Currency Net Sales Growth Canada Impact of Percentage Change Foreign Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q1 12 % 8 pts 3% General Mills First Quarter Fiscal 20
Slide 32: Reconciliation of Organic Net Sales Growth
Reconciliation of First Quarter Fiscal 2022 Organic Net Sales Growth (FISCAL YEAR) Q1 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail (7) pts 4 pts (3)% 1 pt - (3)% Pet 12 pts 8 pts 20% - 5 pts 25% Conveni
Slide 33: Reconciliation of Organic Net Sales Compound Growth Rates
Reconciliation of First Quarter Fiscal 2022 Organic Net Sales Compound Growth Rates Q1 Organic Foreign Acquisitions Reported Net Net Sales Exchange & Divestitures Sales Growth North America Retail Aug. 30, 2020 vs. Aug. 25, 2019 14% - - 14% Aug. 29, 2021 vs. Aug. 30, 2020 (3)% 1 pt - (3)% 2-year com
Slide 34: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of First Quarter Fiscal 2022 Constant-currency Segment Operating Profit Growth Q1 Percentage Change in Percentage Change in Impact of Foreign Operating Profit as Operating Profit on Constant- Currency Exchange Reported Currency Basis North America Retail Aug. 30, 2020 vs. Aug. 25, 201
Slide 35: Reconciliation of Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of First Quarter Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q1 2-year compound 2022 2021 Change 2021 2020 Change growth Operating profit as reported $ 844.3 $ 853.7 (1) % $ 853.7 $ 662.4 29 % 13% Mark-to-market effects (24.1) (16.
Slide 36: Reconciliation of Adjusted Diluted EPS and Constant-currency Growth Rates
Reconciliation of Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates Q1 (FISCAL YEARS) 2-year compound Per Share Data 2022 2021 Change 2021 2020 Change growth Diluted earnings per share, as reported $ 1.02 $ 1.03 (1) % $ 1.03 $ 0.85 21 % 9% Mark-to-market effects** (0.03) (0
Slide 37: Reconciliation of Adjusted Gross Margin
Reconciliation of First Quarter Fiscal 2022 Adjusted Gross Margin (FISCAL YEARS) % of Net Sales Q1 2022 2021 2020 Gross margin as reported 35.2 % 36.4 % 34.7 % Mark-to-market effects (0.5) % (0.4) % 0.4 % Product recall adjustment, net - % 0.2 % - Restructuring charges - % - % 0.2 % Adjusted gross m
Slide 38: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of First Quarter Fiscal 2022 Adjusted Operating Profit Margin % of Net Sales (FISCAL YEARS) Q1 2022 2021 2020 Operating profit as reported 18.6 % 19.6 % 16.5 % Mark-to-market effects (0.5) % (0.4) % 0.4 % Non-income tax recovery (0.5) % - - Acquisition integration costs 0.3 % - - Tran
Slide 39: Reconciliation of Adjusted Tax Rates
Reconciliation of First Quarter Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q1 2022 2021 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 778.0 $ 168.9 $ 775.9 $ 170.8 Mark-to-market effects (24.1) (5.5) (16.4) (3.8) Non-income tax re