Slide 1: General Mills Fiscal 2019 Fourth-Quarter Earnings
GENERAL MILLS FISCAL 2019 FOURTH-QUARTER EARNINGS JUNE 26, 2019 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: Fiscal 2019 Fourth-Quarter Results – Jeff Harmening
GENERAL MILLS FISCAL 2019 FOURTH-QUARTER RESULTS JUNE 26, 2019 Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Today's Key Messages
Today’s Key Messages • Met or Exceeded F19 Targets for Sales, Profit, EPS, Cash, and Blue Buffalo • Continuing to Pursue Consumer First Strategy and Compete, Accelerate, Reshape Global Growth Framework • F20 Priorities: Accelerate Organic Sales Growth While Maintaining Strong Margins and Reducing Le
Slide 5: Fiscal 2019 Financial Results
Fiscal 2019 Financial Results Dollars in millions except per share data Q4 ANNUAL TOTAL GENERAL MILLS $ VS LY¹ $ VS LY¹ Net Sales $4,162 +9% $16,865 +9% Organic Sales* -1% Flat Adjusted Operating $722 +5% $2,858 +10% Profit* Adjusted Diluted EPS* $0.83 +6% $3.22 +4% *Non-GAAP measure. See appendix f
Slide 6: Our Fiscal 2019 Priorities
Our Fiscal 2019 Priorities Deliver Financial Grow The Core Transition Blue Buffalo Commitments Compete Effectively and Successfully Transition Blue Buffalo Achieve Profit and Accelerate Growth Platforms and Maintain Momentum Cash Flow Goals 6
Slide 7: Progress on Growing the Core in F19
Progress on Growing the Core in F19 Improve U.S. Yogurt Improve Emerging Markets Strengthen Innovation Stabilize U.S. Distribution Increase Benefits from Price/Mix 7
Slide 8: General Mills U.S. Retail Market Share Performance
General Mills U.S. Retail Market Share Performance F17 F18 F19 Cereal Bars Yogurt Refrigerated Dough Soup Hot Snacks Desserts Mexican Fruit Snacks Natural & Organic Top 10 Holding / Gaining Share 3 of 10 8 of 10 7 of 10 Top 10 categories represent approximately 85% of measured U.S. Retail Sales Sour
Slide 9: Strong Global Cereal Performance in F19
Strong Global Cereal Performance in F19 BRAND BUILDING AND STRONG CONVENIENCE STORES CEREAL PARTNERS INNOVATION IN U.S. RETAIL & FOODSERVICE GROWTH WORLDWIDE U.S. Retail Sales +0.2% Net Sales +LSD Net Sales +1%* Share +0.3 pts Source: Nielsen xAOC * Constant Currency Growth Rate 9
Slide 10: Improved U.S. Yogurt in F19
Improved U.S. Yogurt in F19 SIMPLY BETTER AND CORE PORTFOLIO DROVE U.S. RETAIL IMPROVEMENT (Retail Sales % vs. LY) F17 F18 F19 -2% -11% -19% Share pts. vs. LY -3.8 -1.5 +0.1 Source: Nielsen xAOC 10
Slide 11: Retail Sales Growth on 3 of 4 Accelerate Platforms
Retail Sales Growth on 3 of 4 Accelerate Platforms (% vs. LY) • Double-Digit Häagen-Dazs Growth • Old El Paso up LSD, Led by the U.S. • U.S. Bars -MSD; International Bars +30% • Natural & Organic +LSD Häagen-Dazs, OEP and Bars Source: Nielsen xAOC and IRI FYTD through April 2019 11 Natural & Organic
Slide 12: Successful Blue Buffalo Transition in F19
Successful Blue Buffalo Transition in F19 Deliver Financial • Delivered F19 Guidance Transition Blue Buffalo Commitments Pro Forma Net Sales and SOP* +11% vs. LY • F19 Retail Sales +HSD • Significant F19 Q4 FDM Expansion: Expanded BLUE to Walmart Expanded Wilderness Product Line Across FDM Source
Slide 13: BLUE All-channel Retail Sales +HSD in F19
BLUE All-channel Retail Sales +HSD in F19 FDM PET SPECIALTY E-COMMERCE RETAIL SALES AT CUSTOMERS WITH BLUE MORE THAN 12 MONTHS +29% F18 Q4 F19 Q4 • Retail Sales +++ • Retail Sales -DD • Retail Sales +21% • Market Share Gains • Market Share Declines • Market Share Gains Source: Source: Nielsen and IR
Slide 14: Delivered Financial Commitments in F19
Delivered Financial Commitments in F19 • SRM Generated 2 Transition Points of Blue Buffalo Positive Organic Price/Mix • Record-level COGS HMM Savings • Strong Cash Conversion Drove Reduction in Net Debt- to-Adjusted EBITDA* to 3.9x 14 *Non-GAAP measure. See appendix for reconciliation.
Slide 15: Our Fiscal 2020 Priorities
Our Fiscal 2020 Priorities 1 Accelerate Organic Net Sales Growth • Improve Growth in North America Retail: Maintain Momentum on U.S. Cereal; Improve U.S. Yogurt and U.S. Snacks • Drive Continued Growth on Blue Buffalo: +8 to 10% Like for Like Growth, +DD including Extra Period 2 Maintain Strong Marg
Slide 16: 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 16
Slide 17: Fiscal 2019 Fourth-Quarter Results – Don Mulligan
GENERAL MILLS FISCAL 2019 FOURTH-QUARTER RESULTS JUNE 26, 2019 Don Mulligan Chief Financial Officer 17
Slide 18: Components of Net Sales Growth
Fourth Quarter Fiscal 2019 Components of Net Sales Growth +10 pts Organic Net Sales* +7 pts = -1% Flat -1 pt -2 pts Organic Organic Foreign Acquisitions / Total Net Sales Volume Price & Mix Exchange Divestitures As Reported *Non-GAAP measure. 18
Slide 19: North America Retail
Fiscal 2019 North America Retail SEGMENT RESULTS Q4 F19 NET SALES GROWTH BY OPERATING UNIT Q4 F19 Organic Net Sales -2%¹ -1%¹ U.S. Cereal Flat Flat U.S. Yogurt Flat -2 Segment Operating Profit -2%² +3%² U.S. Meals & Baking Flat -1 Highlights: Canada -7 -7 • Nielsen-measured U.S. retail sales slightl
Slide 20: Convenience Stores & Foodservice
Fiscal 2019 Convenience Stores & Foodservice SEGMENT RESULTS Q4 F19 NET SALES GROWTH BY PLATFORM Q4 F19 Organic Net Sales +2%¹ +2%¹ Focus 6 +4% +4% Other -1% Flat Segment Operating Profit -1% +7% Highlights: • All Focus 6 platforms grew net sales in Q4 and F19 • Frozen Meals, Snacks, and Frozen Bake
Slide 21: Europe & Australia
Fiscal 2019 Europe & Australia SEGMENT RESULTS Q4 F19 Organic Net Sales -3%¹ -1%¹ Segment Operating Profit -20%² -8%² Highlights: • Net sales declines on Yogurt partially offset by growth on Snack Bars and Ice Cream • Double-digit retail sales growth on Nature Valley, Fibre One, and Häagen-Dazs • F1
Slide 22: Asia & Latin America
Fiscal 2019 Asia & Latin America SEGMENT RESULTS Q4 F19 Organic Net Sales +1%¹ +6%¹ Segment Operating Profit +162%² +71%² Highlights: • F19 net sales growth in China, Brazil, and India • Snacks, Häagen-Dazs, and Wanchai Ferry led growth • Q4 organic sales increase lapping +DD growth LY excluding rep
Slide 23: Pet Segment
Fiscal 2019 Pet Segment SEGMENT RESULTS Q4 F19 Net Sales +38%¹ +11%¹ Segment Operating Profit +82%¹ -11%¹ SOP ex. Purchase Accounting* +88%¹ +11%¹ Highlights: • Delivered +DD top and bottom line growth in F19* • Net sales increase driven by significant growth in FDM and E-commerce, partially offset
Slide 24: Margin Results
Fiscal 2019 Margin Results ADJUSTED GROSS MARGIN* ADJUSTED OP PROFIT MARGIN* (% of Net Sales) (% of Net Sales) 35.8% 35.3% 17.8% 34.5% 34.4% 17.3% 16.9% 16.6% +30 bps F18-Q4 F19-Q4 F18 F19 F18-Q4 F19-Q4 F18 F19 • Q4 margins compare against significant margin expansion in prior-year period • F19 op p
Slide 25: Joint Ventures
Fiscal 2019 Joint Ventures AFTER-TAX EARNINGS: $72MM VS. $85MM LY JV GROWTH CPW HDJ Net Sales* +1% -7% Highlights: • CPW net sales increase driven by Asia, Middle East, and Africa and Europe regions, partially offset by LATAM • HDJ net sales impacted by seasonal innovation timing and declines on min
Slide 26: Other Income Statement Items
Fourth Quarter Fiscal 2019 Other Income Statement Items • Unallocated Corporate Expense Increased $62MM ex. Certain Items • Net Interest Expense Decreased $12MM • Adjusted Effective Tax Rate 20.6% vs. 26.7% LY* • Average Diluted Shares Outstanding Up 3% *Non-GAAP measure. See appendix for reconcilia
Slide 27: Balance Sheet and Cash Flow
Fiscal 2019 Balance Sheet and Cash Flow FULL-YEAR OPERATING CASH FLOW • Core Working Capital -34% vs. LY ($ IN MILLIONS) $2,841 $2,807 • Capital Investments = $538MM • FCF Conversion* = 115% • Dividends Paid = $1,182MM • Total Debt Reduction = $1,329MM F18 F19 *Non-GAAP measure. See appendix for rec
Slide 28: Fiscal 2020 Plan Assumptions
Fiscal 2020 Plan Assumptions • 53rd Week, F19 Divestitures, and FX Add 1 to 2 Points to F20 Net Sales • Blue Buffalo Shifts to May Year-end (13 Months); Included in Organic Sales* • Increased Investment in Brand Building and Capabilities • HMM Savings and Input Cost Inflation = ~4% of COGS • Benefit
Slide 29: 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 29
Slide 30: Today's Key Messages
Today’s Key Messages • Met or Exceeded F19 Targets for Sales, Profit, EPS, Cash, and Blue Buffalo • Continuing to Pursue Consumer First Strategy and Compete, Accelerate, Reshape Global Growth Framework • F20 Priorities: Accelerate Organic Sales Growth While Maintaining Strong Margins and Reducing Le
Slide 31: Supplemental Information
Supplemental Information (FISCAL YEARS, $ IN MILLIONS) Q4 2019 2018 Change Net sales: North America Retail $ 2,341.7 $ 2,388.0 (2) % Convenience Stores & Foodservice 519.0 510.6 2 Europe & Australia 499.5 556.2 (10) Asia & Latin America 395.9 435.4 (9) Pet 405.6 - NM Total net sales $ 4,161.7 $ 3,89
Slide 32: Supplemental Information
Supplemental Information (FISCAL YEARS, $ IN MILLIONS) Full Year 2019 2018 Change Net sales: North America Retail $ 9,925.2 $ 10,115.4 (2) % Convenience Stores & Foodservice 1,969.1 1,930.2 2 Europe & Australia 1,886.7 1,984.6 (5) Asia & Latin America 1,653.3 1,710.2 (3) Pet 1,430.9 - NM Total net s
Slide 33: 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 34: Constant-currency Net Sales Growth
Reconciliation of Fourth Quarter 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 Q4 7% (2) pts 9% 34
Slide 35: Organic Net Sales Growth
Reconciliation of Fourth Quarter Fiscal 2019 Organic Net Sales Growth (FISCAL YEAR) Q4 2019 Organic Organic Organic Net Foreign Acquisitions & Reported Net Volume Price/Mix Sales Exchange Divestitures Sales Growth North America Retail - (2) pts (2) % - - (2) % Convenience Stores - 2 pts 2% - - 2% &
Slide 36: Operating Profit Constant-currency Growth Rate
Reconciliation of Fourth Quarter Fiscal 2019 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q4 2019 2018 Change Operating profit as reported $ 716.1 $ 536.1 34 % Mark-to-market effects (0.4) (28.6) Investment valuation adjustments (9.8) - Restructuring charges
Slide 37: Reconciliation of Fourth Quarter Fiscal 2019 Adjusted Diluted EPS
Reconciliation of Fourth Quarter Fiscal 2019 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Q4 Per Share Data 2019 2018 Change Diluted earnings per share, as reported $ 0.94 $ 0.59 59 % Net tax benefit - (0.03) Tax items (0.12) - Mark-to-market effects* - (0.04) Invest
Slide 38: 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% 38
Slide 39: 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 40: Operating Profit Constant-currency Growth Rate
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 41: 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 42: 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
Slide 43: Organic Net Sales Growth
Reconciliation of Fourth Quarter Fiscal 2018 Organic Net Sales Growth (FISCAL YEAR) Q4 2018 Reported Organic Organic Organic Foreign Acquisitions Net Sales Volume Price/Mix Net Sales Exchange & Divestitures Growth North America Retail (2) pts 1 pt (1) % 1 pt - Flat Convenience Stores - 5 pts 5% - -
Slide 44: Organic Net Sales Growth
Reconciliation of Fiscal 2018 Organic Net Sales Growth (FISCAL YEAR) 2018 Full Year Reported Organic Organic Organic Foreign Acquisitions Net Sales Volume Price/Mix Net Sales Exchange & Divestitures Growth North America Retail Flat (1) pt (1) % - Flat (1) % Convenience Stores 1 pt 2 pts 3% - - 3% &
Slide 45: Reconciliation of Fiscal 2019 Canada Operating Unit Constant-currency Net Sales Growth
Reconciliation of Fiscal 2019 Canada Operating Unit 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 Q4 (7)% (4) pts (3) % Full Year (7)% (3) pts (4) % 45
Slide 46: Constant-currency Segment Operating Profit Growth
Reconciliation of Fourth Quarter Fiscal 2019 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q4 2019 Percentage Change in Impact of Foreign Percentage Change in Segment Operating Currency Segment Operating Profit on Profit as Reported Exchange a Constant-currency Basis North America
Slide 47: Constant-currency Segment Operating Profit Growth
Reconciliation of Fiscal 2019 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) 2019 Full Year Percentage Change in Impact of Foreign Percentage Change in Segment Operating Currency Segment Operating Profit on Profit as Reported Exchange a Constant-currency Basis North America Retail 3
Slide 48: Adjusted Gross Margin
Reconciliation of Fourth Quarter Fiscal 2019 Adjusted Gross Margin (FISCAL YEARS) Q4 2019 2018 % of % of Net Sales Net Sales Gross margin as reported 35.1 % 36.5 % Mark-to-market effects - (0.8) Restructuring charges 0.2 - Project-related costs - 0.1 Adjusted gross margin 35.3 % 35.8 % 48
Slide 49: Adjusted Operating Profit Margin
Reconciliation of Fourth Quarter Fiscal 2019 Adjusted Operating Profit Margin (FISCAL YEARS) Q4 2019 2018 % of % of Net Sales Net Sales Operating profit margin as reported 17.2 % 13.8 % Mark-to-market effects - (0.8) Investment valuation adjustments (0.3) - Restructuring charges 0.4 1.4 Project-rela
Slide 50: Adjusted Gross Margin
Reconciliation of Fiscal 2019 Adjusted Gross Margin (FISCAL YEARS) Full Year 2019 2018 % of % of Net Sales Net Sales Gross margin as reported 34.1 % 34.5 % Mark-to-market effects 0.2 (0.2) Restructuring charges 0.1 0.1 Project-related costs - 0.1 Adjusted gross margin 34.4 % 34.5 % 50
Slide 51: Adjusted Operating Profit Margin
Reconciliation of Fiscal 2019 Adjusted Operating Profit Margin (FISCAL YEARS) Full Year 2019 2018 % of % of Net Sales Net Sales Operating profit margin as reported 14.9 % 15.4 % Mark-to-market effects 0.2 (0.2) Investment valuation adjustments (0.1) - Legal recovery (0.1) - Restructuring charges 0.5
Slide 52: Tax Rate Excluding Items
Reconciliation of Fourth Quarter Fiscal 2019 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS) Q4 2019 2018 Pretax Income Pretax Income Earnings* Taxes Earnings* Taxes As reported $615.9 $54.7 $423.9 $86.4 Net tax benefit - - - 19.7 Tax items - 72.9 - (0.4) Mark-to-market effects (0.4) (0.1) (2
Slide 53: Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Fiscal 2019 Free Cash Flow and Free Cash Flow Conversion (FISCAL YEAR, $ IN MILLIONS) Full Year 2019 Net earnings, including earnings attributable to redeemable and noncontrolling interests $1,786.2 Net tax benefit (7.2) Tax item (72.9) Mark-to-market effects* 27.7 Investment valua