General Mills, Inc. · NYSE:GIS
General Mills — Q2 2021 Earnings Presentation
43 slides from General Mills's earnings presentation, Dec 17, 2020
Slide 1: General Mills Earnings Second Quarter Fiscal 2021
General Mills Earnings Second Quarter Fiscal 2021 December 17, 2020
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: General Mills Earnings - Jeff Harmening, CEO
General Mills Earnings Second Quarter Fiscal 2021 December 17, 2020 Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Today's Key Messages
Today’s Key Messages • Excellent Execution Drove Strong Performance in Q2 • Delivering on Fiscal 2021 Priorities • Expect Continued Strong Top and Bottom-line Growth in Q3 • Full-year Adjusted Operating Profit Margin* Now Expected to Be In Line or Better than LY *Non-GAAP measure General Mills Secon
Slide 5: Continued Strong Performance in Q2
Continued Strong Performance in Q2 +7% 1 Organic Net Sales +6% 2 Adjusted Operating Profit +9% 2 Adjusted Diluted EPS 1 Non-GAAP measure. See appendix for reconciliation 2 Constant currency growth rate. Non-GAAP measure. See appendix for reconciliation General Mills Second Quarter Fiscal 2021 5
Slide 6: Our Fiscal 2021 Priorities
Our Fiscal 2021 Priorities Status Compete 1 Compete Effectively, Everywhere We Play Fuel Investments 2 Drive Efficiency to Fuel Investments in Brands and Capabilities Reduce 3 Reduce Debt Leverage to Increase Financial Flexibility General Mills Second Quarter Fiscal 2021 6
Slide 7: Pandemic Still Affecting Consumer Behavior Globally
Pandemic Still Affecting Consumer Behavior Globally US Away from Home Trends1 • Developed Markets (US, UK, FR): • Sustained elevated at-home demand & Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 0% suppressed away-from-home demand • Emerging Markets (BR, CH): -40% • Brazil at-home demand
Slide 8: Evolving Consumer Behaviors to Stick Beyond the Pandemic
Evolving Consumer Behaviors to Stick Beyond the Pandemic Elevated At Home Satisfaction with Shift to Digital and Food Consumption Leading Brands E-commerce General Mills Second Quarter Fiscal 2021 8
Slide 9: How We're Winning...Today and for the Long Term
How We’re Winning…Today and for the Long Term • Boldly Building Our Brands • Relentlessly Innovating • Unleashing Our Scale with Advantaged Capabilities General Mills Second Quarter Fiscal 2021 9
Slide 10: Boldly Building Our Brands
Boldly Building Our Brands General Mills Second Quarter Fiscal 2021 10
Slide 11: Relentlessly Innovating
Relentlessly Innovating First Half F21 Second Half F21 General Mills Second Quarter Fiscal 2021 11
Slide 12: Relentlessly Innovating in Pet
Relentlessly Innovating in Pet General Mills Second Quarter Fiscal 2021 12
Slide 13: Unleashing Our Scale with Advantaged Capabilities
Unleashing Our Scale with Advantaged Capabilities Strategic Holistic Digital Integrated Revenue E-commerce Margin Marketing Planning Management Management Data & Analytics General Mills Second Quarter Fiscal 2021 13
Slide 14: Data and Analytics Drives Growth with Digital Marketing
Data and Analytics Drives Growth with Digital Marketing Digital Enables Agile Delivering Faster Learning & Personalized Marketing and Double-digit Growth Keto Messaging on :Ratio Value Messaging on Pillsbury General Mills Second Quarter Fiscal 2021 14
Slide 15: General Mills Earnings - Kofi Bruce, CFO
General Mills Earnings Second Quarter Fiscal 2021 December 17, 2020 Kofi Bruce Chief Financial Officer 15
Slide 16: Second Quarter Fiscal 2021 Financial Results
Second Quarter Fiscal 2021 Financial Results Q2 TOTAL GENERAL MILLS $MM VS LY Net Sales $4,719 +7% Organic Net Sales* +7% Adjusted Operating Profit* $866 +6%1 Adjusted Diluted EPS* $1.06 +9%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant currency growth rate. Non-GAAP measure. See
Slide 17: Components of Second Quarter Net Sales Growth
Components of Second Quarter Net Sales Growth Organic Net Sales* = 7% 7% +4 pts +3 pts Flat Flat Organic Organic Foreign Acquisitions / Total Net Sales Volume Price / Mix Exchange Divestitures As Reported *Non-GAAP measure Table may not foot due to rounding General Mills Second Quarter Fiscal 2021 1
Slide 18: Second Quarter Fiscal 2021 North America Retail
Second Quarter Fiscal 2021 North America Retail Segment Results Segment Highlights North America Retail Q2 • Q2 net sales growth primarily driven by U.S. Meals & Organic Net Sales +9%¹ Baking, Canada, and U.S. Cereal, reflecting continued Segment Op Profit +9%² elevated at-home food demand amid the
Slide 19: Second Quarter Fiscal 2021 Pet
Second Quarter Fiscal 2021 Pet Segment Results Segment Highlights Pet Q2 • Q2 net sales growth across product segments Organic Net Sales +18%¹ • +DD growth in Dog Food and Cat Food Segment Op Profit +48%² • ~25% growth in Wet Food and ~40% growth in Treats • Continued market share and household pene
Slide 20: Second Quarter Fiscal 2021 Convenience Stores & Foodservice
Second Quarter Fiscal 2021 Convenience Stores & Foodservice Segment Results Segment Highlights CS&F Q2 • Q2 net sales decline due to continued reduction in Organic Net Sales -14%¹ away-from-home food demand amid the pandemic Segment Op Profit -32% • Reduced consumer traffic continued to impact Resta
Slide 21: Second Quarter Fiscal 2021 Europe & Australia
Second Quarter Fiscal 2021 Europe & Australia Segment Results Segment Highlights EUAU Q2 • Q2 net sales growth primarily driven by Mexican Food Organic Net Sales +3%¹ and Retail Ice Cream Segment Op Profit +7%² • Held or grew share in France and the UK in 1H • Q2 profit growth driven by positive pri
Slide 22: Second Quarter Fiscal 2021 Asia & Latin America
Second Quarter Fiscal 2021 Asia & Latin America Segment Results Segment Highlights ASLA Q2 • Q2 LATAM net sales growth +DD driven by continued Organic Net Sales +10%¹ strong Yoki and Kitano growth in Brazil Segment Op Profit +8%² • Q2 Asia net sales growth +HSD driven primarily by Wanchai Ferry in C
Slide 23: Second Quarter Fiscal 2021 Joint Ventures
Second Quarter Fiscal 2021 Joint Ventures Q2 AFTER-TAX EARNINGS: $36MM VS. $25MM LY JV Results JV Highlights NET SALES Q2 • Q2 CPW net sales growth broad-based, led by Latin CPW +7%¹ America, Russia, Turkey, and Australia HDJ +12%¹ • Q2 HDJ net sales driven by innovation-driven volume growth and pos
Slide 24: Second Quarter Fiscal 2021 Margin Results
Second Quarter Fiscal 2021 Margin Results Adjusted Gross Margin* Adjusted Operating Profit Margin* (% OF NET SALES) (% OF NET SALES) 18.4% 18.3% 35.3% 35.5% Q2 F20 Q2 F21 Q2 F20 Q2 F21 • Q2 Adj. Gross Margin expansion driven by positive price/mix, partially offset by higher input costs and compariso
Slide 25: Second Quarter Fiscal 2021 Other Income Statement Items
Second Quarter Fiscal 2021 Other Income Statement Items • Unallocated Corporate Expenses Increased $19MM ex. Certain Items • Net Interest Expense Decreased $19MM • Adjusted Effective Tax Rate 22.3% vs. 21.9% LY* • Average Diluted Shares Outstanding Up 1% *Non-GAAP measure. See appendix for reconcili
Slide 26: First Half Fiscal 2021 Financial Results
First Half Fiscal 2021 Financial Results 1H TOTAL GENERAL MILLS $MM VS LY Net Sales $9,083 +8% Organic Net Sales* +8% Adjusted Operating Profit* $1,698 +13%1 Adjusted Diluted EPS* $2.06 +17%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant currency growth rate. Non-GAAP measure. See
Slide 27: First Half Fiscal 2021 Balance Sheet and Cash Flow
First Half Fiscal 2021 Balance Sheet and Cash Flow Operating Cash Flow ($ IN MILLIONS) • Core Working Capital -$331MM vs. LY $1,457 $1,427 • Capital Investments = $226MM, +$68MM vs. LY • Dividends Paid = $618MM F20 F21 General Mills Second Quarter Fiscal 2021 27
Slide 28: Second Half Fiscal 2021 Assumptions
Second Half Fiscal 2021 Assumptions • Expect Continued Elevated At-home Food Demand • Q3 Guidance: • Organic Net Sales* Growth Roughly Similar to F21 Q2 • Adj. Operating Profit Margin* In Line with LY • Expect Q4 Net Sales to be Above Pre-pandemic Levels, though Below F20 Q4 Due to Difficult Compari
Slide 29: Today's Key Messages
Today’s Key Messages • Excellent Execution Drove Strong Performance in Q2 • Delivering on Fiscal 2021 Priorities • Expect Continued Strong Top and Bottom-line Growth in Q3 • Full-year Adjusted Operating Profit Margin* Now Expected to Be In Line or Better than LY *Non-GAAP measure General Mills Secon
Slide 30: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our outlook for organic net sales growth and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchange rate fluctuations, acquisi
Slide 31: Appendix: Q2 Fiscal 2021 North America Retail Operating Unit Results
Appendix: Second Quarter Fiscal 2021 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q2 U.S. Meals & Baking +18% Canada +7% Canada Constant-currency +6%¹ U.S. Cereal +4% U.S. Yogurt +3% U.S. Snacks -2% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 32: Reconciliation of Q2 Fiscal 2021 Organic Net Sales Growth
Reconciliation of Second Quarter Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Q2 Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 10 pts (1) pt 9% - - 9% Convenience Stores (12) pts (2) pts (14)% - -
Slide 33: Reconciliation of Q2 Adjusted Operating Profit Constant-currency Growth
Reconciliation of Second Quarter Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q2 2021 2020 Change Operating profit as reported $ 916.6 $ 811.2 13 % Mark-to-market effects (45.9) (22.6) Investment activity, net (6.0) 13.2 Restructuring charges 0.9
Slide 34: Reconciliation of Q2 Adjusted Diluted EPS
Reconciliation of Second Quarter Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q2 Per Share Data 2021 2020 Change Diluted earnings per share, as reported $ 1.11 $ 0.95 17 % Mark-to-market effects** (0.06) (0.03) Restructuring charges** - 0.01 Investment a
Slide 35: Reconciliation of Q2 Constant-currency Segment Operating Profit Growth
Reconciliation of Second Quarter Fiscal 2021 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q2 Percentage Change Impact of Foreign Percentage Change in in Operating Profit Currency Operating Profit on as Reported Exchange Constant-Currency Basis North America Retail 9% Flat 9% Europ
Slide 36: Reconciliation of Q2 Adjusted Gross Margin
Reconciliation of Second Quarter Fiscal 2021 Adjusted Gross Margin (FISCAL YEARS) Q2 2021 2020 % of % of Net Sales Net Sales Gross margin as reported 36.5 % 35.5 % Mark-to-market effects (1.0) % (0.5) % Restructuring charges - % 0.3 % Adjusted gross margin 35.5 % 35.3 % *Table may not foot due to ro
Slide 37: Reconciliation of Q2 Adjusted Operating Profit Margin
Reconciliation of Second Quarter Fiscal 2021 Adjusted Operating Profit Margin (FISCAL YEARS) Q2 2021 2020 Percent Percent of Net Sales Net Sales Operating profit as reported 19.4 % 18.3 % Mark-to-market effects (1.0) % (0.5) % Investment activity, net (0.1) % 0.3 % Restructuring charges - % 0.2 % Ad
Slide 38: Reconciliation of Q2 Tax Rate Excluding Items
Reconciliation of Second Quarter Fiscal 2021 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q2 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 848.9 $ 189.4 $ 722.0 $ 155.5 Mark-to-market effects (45.9) (10.5) (22.6) (5.2) Investmen
Slide 39: Reconciliation of First Half Organic Net Sales Growth
Reconciliation of First Half Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) 1H Organic Organic Organic Foreign Acquisitions Reported Net Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 13 pts (2) pts 12% - - 11% Convenience Stores (11) pts (3) pts (13)% - - (
Slide 40: Reconciliation of First Half Adjusted Operating Profit Growth
Reconciliation of First Half Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) 1H 2021 2020 Change Operating profit as reported $ 1,770.3 $ 1,473.6 20 % Mark-to-market effects (62.3) (7.6) Investment activity, net (19.0) 3.7 Product recall 7.1 - Restru
Slide 41: Reconciliation of First Half Adjusted Diluted EPS
Reconciliation of First Half Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) 1H Per Share Data 2021 2020 Change Diluted earnings per share, as reported $ 2.14 $ 1.80 19 % Mark-to-market effects** (0.08) (0.01) Investment activity, net** (0.02) - Product rec
Slide 42: Reconciliation of First Half Tax Rate Excluding Items
Reconciliation of First Half Fiscal 2021 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) 1H 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 1,624.8 $ 360.2 $ 1,295.9 $ 222.7 Mark-to-market effects (62.3) (14.3) (7.6) (1.7) Investment
Slide 43: Reconciliation of Q2 Canada Constant-Currency Net Sales Growth
Reconciliation of Second Quarter Fiscal 2021 Canada Operating Unit Constant-Currency Net Sales Growth (FISCAL YEAR) 2021 Percentage Change Impact of Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q2 7% Flat 6% *Table may not foot due to rounding