General Mills, Inc. · NYSE:GIS
General Mills — CAGNY Conference 2017
66 slides from General Mills's conference presentation, Feb 21, 2017
Slide 1: General Mills CAGNY Conference February 21, 2017
‘ General Mills CAGNY Conference February 21, 2017
Slide 2: Ken Powell, Chairman and Chief Executive Officer
\ Ken Powell Chairman and Chief Executive Officer
Slide 3: A Reminder on Forward-Looking Statements
A Reminder on 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 and uncertainties that cou
Slide 4: Our Strategic Framework is Grounded on The Consumer
Our Strategic Framework is Grounded on The Consumer OUR PURPOSE We serve the world by making food people love OUR STRATEGY Consumer First = Deeply understand the needs and lives of our consumers and respond quickly to give them what they want
Slide 5: Update on Fiscal 2017 Performance
Update on Fiscal 2017 Performance * Sales Trends Below Expectations for U.S. Yogurt and Soup « Adding Support in Select Businesses in Q4 * Revised F17 Growth Targets: Organic Net Sales* Approximately -4% Total Segment Operating Profit -1% to +1% in Constant Currency* Adjusted Operating Profit Margin
Slide 6: A Long History of Double-digit TSR
A Long History of Double-digit TSR (Price Appreciation Plus Dividends, Compound Annual Growth Through CY16) 15% 12% 12% 12% 11% 11% 10% 10% 10% o% 8% i i 30 Years 20 Years 10 Years 5 Years 3 Years 1 Year Mi sap 500 ME General Mills Source: CaplQ. 6
Slide 7: Four Levers to Generate Shareholder Returns
Four Levers to Generate Shareholder Returns Margin Cash Expansion Conversion
Slide 8: Progress on Margin and Cash Levers
Progress on Margin and Cash Levers Adjusted Cash Returns to Operating Profit Margin* Free Cash Flow* Shareholders (% of Net Sales) (3-Year Rolling, $ in Billions) (Net Share Repurchases Plus Dividends Paid, 3-Year Rolling, $ in Billions) 18+% $6.1 ia | if 1| F1é6 = F17 Goal F10-F12 F14-F16 F10-F12 F
Slide 9: Responding to Consumer Trends, Investing in Global Growth Platforms, Leveraging Global Organization
Responding to Investing in Leveraging Our Consumer Global Global Trends Growth Platforms Organization
Slide 10: Consumer Trends That Will Continue
Consumer Trends That Will Wellness and Transparency 10
Slide 11: Global Category Retail Sales and Growth
Global Category RTE Cereal Ice Cream Yogurt Convenient Meals Sweet & Savory Snacks 2016 Projected Retail Sales 5-Yr. CGR $23 Billion +3% $64 Billion +5% $78 Billion +8% $89 Billion +4% $291 Billion +5% Source: Euromoni itor, Calendar 201611 |
Slide 12: F16 Net Sales Growth Platforms and Foundation
F1é Net Sales = $164.6 Billion Growth Foundation North America Retail North America Retail Cereal Progresso Soup Snack Bars Pillsbury Refrigerated Dough Natural & Organic Betty Crocker Desserts Totino's Others Old El Paso Yogurt Convenience Stores & Foodservice Convenience Stores Non-Focus 6 Platfor
Slide 13: A Leaner, More Agile Organization
A Leaner, More Agile Organization Asia & Latin America Europe & Australia North America Convenience External Relations Global Business Solutions Strategic Revenue j|anagemen Resources
Slide 14: Focused on Balancing
Focused on Balancing ef oO om. no <7 oC 2a a ay a orl. io to g 3S <7 oC € 5 ae cy n- Oo Le oO wa 2 <= D a £ _ 2 = i o E —) n Cc fe) 1) ° _ me} Cc ° fox n o a Invest in Global Growth Platforms Leverage Our Global Organization Maintain Focus on Efficiency
Slide 15: Jeff Harmening
| Jeff Harmening
Slide 16: General Mills Growth Priorities
General Mills Growth Priorities 1. Grow Cereal Globally 2. Return U.S. Yogurt and China to Growth 3. Invest for Differential Growth Haagen-Dazs Snack Bars Old El Paso ¢ Natural & Organic 4. Manage Foundation Businesses with Appropriate Investment 16
Slide 17: Grow Cereal Globally
1. Grow Cereal Globally Cereal Growth Drivers: * Renovation on Our Core Brands * Innovation Aligned with Consumer Needs * Investment Behind Compelling News Consumer Growth Vectors for Cereal: *« Wellness * Taste
Slide 18: Whole Grain
Whole Grain cial No i Flavors or Colors AND Sener? WAND Serre ounces A ND Aizces* Gluten Free
Slide 19: Taste News is Working...with More to Come
Taste News is Working...with More to Come Taste News for \ +17% vs. LY® } \ . / \ Honey Nut Cheerios / (a) Nielsen XAOC, 3 years ended December 31, 2016 {b) Nielsen XAOC, 12 months ended January 28, 2017 {c}_Nielsen/IRI/Kantar (Malaysia, Indonesia, Thailand), 12 months ended November 2016 \ 3-Year C
Slide 20: Innovation Aligned with Consumer Needs
d with Consumer Needs Innovation Al igne Taste Wellness
Slide 21: Investing Behind Compelling Consumer News
Investing Behind Compelling Consumer News \4
Slide 22: Return U.S. Yogurt and China to Growth
to Growth Return U.S. Yogurt and China 2.
Slide 23: U.S. Yogurt Category and Yoplait have a Long History of Growth
U.S. Yogurt Category and Yoplait have a Long History of Growth U.S. Yogurt Retail Sales U.S. Yoplait Retail Sales ($ in Billions) ($ in Billions) CGR = +6% CGR = +6% F96 Fé Source: Nielsen Total U.S. Food 23 | ao
Slide 24: But Recent Performance Has Declined
But Recent Performance a U.S. Yogurt Category * F17 YTD Retail Sales: -3% * High Merchandising Activity * Lack of Meaningful Innovation KD 3 (~ >) General Mills U.S. Yogurt ¢ F17 YTD Retail Sales: -18% * Light and Greek Driving Declines * Portfolio Underweight in Growing Segments YY Source: Nielsen
Slide 25: Keys to Restore U.S. Yogurt Growth
Keys to Restore U.S. Yogurt Growth (Natural & Organic \ Penetration
Slide 26: Core Renovation
+ Improved Value + New Package Design + New Package Design + More Protein * Thicker Texture Core Renovation + All-family Snack Positioning + New Package Design
Slide 27: Snacking Innovation
Snacking Innovation Custard a / <> GPs | + 15tHalf F17 Test; Expand Q4 + Hispanic Markets + Launched January + Whole Milk Yogurt + Launched January * Chip + Greek Yogurt
Slide 28: Organic Whole Milk and Fruit
* Organic Whole Milk *Organic Whole Milk and Fruit — *Simplicity and Value *Crafted Adult Indulgence *Mom Approved «WIC Approved
Slide 29: U.S. Yogurt Innovation Pipeline
U.S. Yogurt Innovation Pipeline * Build New Segments: “Simply Better” * Extend Offerings in Growing Segments: Natural & Organic and Beverages * Continue to Innovate in Snacking 29
Slide 30: China Growth Has Slowed
3 China Growth Has Slowed General Mills China Net Sales China Portfolio ($ in Billions) (% of F16 Net Sales) Other Snacks Flat Yoplait CGR=+18% ————_; Wanchai HGagen-Dazs J Ferry FO4 FOS FO6 FO7 FO8 FO? F10 F1l F12 F13 F14 F15 F16 Note: Net sales translated to U.S. dollars at a fixed exchange rate 3
Slide 31: Shop Renovation and Retail Innovation
Shop Renovation and Retail Innovation Renovation and Innovation Distribution Expansion
Slide 32: Snack Bars
f Snack Bars CRUNCHY a
Slide 33: Haagen-Dazs is a Global Growth Opportunity
Haagen-Dazs isa Global Growth Opportunity * Retail Sales = $1.3B ¢ 2-Year CGR: +5% * Leading Super-premium Ice Cream Brand ¢ Strong Positions in Emerging Markets
Slide 34: Packaging Refresh, Global Ad Campaign, Partnerships
4 NA \ >) Packaging Refresh Global Ad Campaign Partnerships 34
Slide 35: Impulse Segment is a Huge Opportunity
Impulse Segment is a Huge Opportunity Ice Cream Retail Sales (Segment Market Shares) Impulse Ice Cream Retail Sales Growth (2016-2021 CGR) 7% 5% f / f t j f | | / f f f j f f t f | Take Home Impulse / J Source: Euromonitor 2016; Excludes North America 35
Slide 36: Drive Growth In EES Segment
Drive Growth In EES Segment Rest of Asia VY 36
Slide 37: Haagen-Dazs Distribution Expansion
Existing Market * Increase Retail Presence * Expand to New Cities \¢ Haagen-Dazs Distribution Expansion a New Markets | | | | | | | | | | | | |
Slide 38: Snack Bars is a Global Growth Opportunity
Snack Bars isa Global Growth Opportunity * Retail Sales = $1.7B ¢ 2-Year CGR: +3% * Leading Brands ¢ Strong Innovation Capabilities Source: Nielsen, Fiscal 2016 38
Slide 39: General Mills Snack Bars Growth Drivers
General Mills Snack Bars Growth Drivers * Innovate Globally + Grow Penetration + Stabilize U.S. + Expand in Europe + Expand in Europe
Slide 40: Old El Paso is a Global Growth Opportunity
Old El Paso isa Global Growth Opportunity * Retail Sales = $1.2B ¢ 2-Year CGR: +3% « #] Global Mexican Foods Brand * Over Half of Net Sales Outside the U.S. a Source: Nielsen, Fiscal 2016 40 |
Slide 41: Old El Paso Growth Drivers
Old El Paso Growth Drivers Communication 10n grap Expans Poland Russia Netherlands Austria Innovation
Slide 42: Natural & Organic is a Significant Growth Opportunity
5 Natural & Organic is a Significant Growth Opportunity * Retail Sales = $1.1B ¢ 2-Year CGR: +HSD ¢ Strong Portfolio of Brands ¢ 15+ Year History Operating in N&O Industry ‘ 4 Cheddar Bunnies Geeks £ 7 Nou HIGH EPIC LARABAR Source: Nielsen, Fiscal 2016 (U.S. and Canada) 42
Slide 43: Natural & Organic Growth Drivers
Natural & Organic Growth Drivers Yummy Ch/ “4 Cheddar Bunnies Canada: +7%° \ U.S.: FI7 Relaunch J FOOD MADE FROM FOOD {a} Nielsen XAOC, 12 months ended January 28, 2017 {b) Nielsen Canada, 12 months ended December 31, 2016 43
Slide 44: Extend Annie's Momentum
Extend Annie’s Momentum (U.S. Household Penetration) +577% | / Drive Distribution \ a — Penetration »\ ee Source: Nielsen Panel, 12 months ended November 2016 44
Slide 45: Manage Foundation Businesses with Appropriate Investment
4. Manage Foundation Businesses with a efrigerated Dough (R ) ( Baking Mixes >)
Slide 46: Focused on Generating Sales Growth
3 Focused on Generating Sales Growth 1. Grow Cereal Globally 2. Return U.S. Yogurt and China to Growth 3. Invest for Differential Growth Haagen-Dazs Snack Bars * Old El Paso ¢ Natural & Organic 4. Manage Foundation Businesses with Appropriate Investment 46
Slide 47: Don Mulligan
\ Don Mulligan
Slide 48: Our Shareholder Return Model
Our Shareholder Return Model Free Cash Flow* | = Target: Cash Conversion 2 95% | | / I | / | ( Growth a? a Cash Returns -\( Shareholder )\ | (Constant Currency*) Return | . 2-3% Double Digit | Mic se 7 | J . — Single Digit 7 | = { | Low / Single Digit | | J } Net Sales Segment Operating Net Share Di
Slide 49: Profit Margins and Cost Structure
Profit Margins and Cost Structure | Ahead of Food Peer Median Adjusted Operating Profit SG&A Expense Excluding Margin* Media and R&D* (% of Net Sales) (% of Net Sales) 3 22.1 19.2 16.8 Pood PeerMedian 4 7 7 , Food Peer Median:16.3 | | | ; i | | [| GIS
Slide 50: Significant Progress Streamlining Structure
Significant Progress Streamlining Structure Announced Projects COGS HMM Savings (F15-F17) Cost Savings ‘ ($ in Millions) * Cumulative COGS HMM Savings = $1.2B $700 Announced Projects (F15-F18) $500 « Announced Closure of 11 Plants $350 « ~5,000 Positions Impacted — Includes Plants and Organization C
Slide 51: Cost Efficiency Opportunities Beyond Fiscal 2018
Cost Efficiency Opportunities _BeyondFiscal 2018 Global ( Process Improvement >) Sourcing Ne Human Finance Go to Resources Market
Slide 52: Reducing Core Working Capital
Reducing Core Working Capital ($ in Billions) | -59% Cum Reduction Fll F12 F13 F14 F15 F16 HB Core Working Capital — Core Working Capital Days
Slide 53: Improving Free Cash Flow
Improving Free Cash Flow (3-Year Rolling, $ in Billions) Target: Cash Conversion 2 957% CGR = +8% $5.9 $6.0 $5.6 F10-F12 F11-F13 F12-F14 F13-F15 F14-F16 ME Free Cash Flow* —— Free Cash Flow Conversion* *Non-GAAP measure. See appendix forreconciliation.
Slide 54: Free Cash Flow Growth Ahead of Peer Median
’ | 3 F10-F12 Free Cash Flow* Growth Ahead of Peer Median (Index, F10-F12= 100} Peer Median Free Cash Flow General Mills Free Cash Flow F14-F16 - - p i a F10-F12 CGR = +4% i F14-F16 Source: CapI@ through fiscal 2016/calendar year 2015. Industry peer group — see 2016 proxy for full lst. *Non-GAAP mea
Slide 55: Strong Cash Returns to Shareholders
Strong Cash Returns to Shareholders (3-Year Rolling, $ in Billions) Target: Cash Return 2 90% $5.9 $6.0 $6.2 55,5 $6.1 $4.9 $5.1 $4.1 $4.0 - ) 7 F10-F12 F11-F13 F12-F14 F13-F15 F14-F16 Cash Return %: 80% 81% 86% 104% 110% y 3 MM Free Cash Flow* ‘fll. Net Share Repurchases + Dividends Paid *Non-GAAP
Slide 56: Cash Returns to Shareholders Ahead of Peer Median
Cash Returns to Shareholders Ahead of Peer Median (Dividends Plus Net Share Repurchases as% of Free Cash Flow*) 110% 10 Years 5 Years 3 Years Ml General Mills M) Peer Median Source: Capl@ through fiscal 2016/calendar year 2015. Industry peer group — see 2016 proxy for full ist. *Non-GAAP measure. Se
Slide 57: Financial Summary
Financial Summary * Committed to Our Long-term Shareholder Return Model ¢ Current Cost Structure and Profit Margins Ahead of Peer Median * Opportunities to Drive Further Cost Efficiencies Beyond Fiscal ‘18 * Strong Focus and Performance on Cash Generation and Cash Returns *Non-GAAP measure. 87
Slide 58: Today's General Mills Summary
Today’s General Mills Summary * Deep Commitment to Consumer First Strategy « Sharp Focus on Global Priorities to Generate Topline Growth * Maintaining Emphasis on Margins and Cash ¢ Balancing All Levers of Our Shareholder Return Model 58
Slide 59: General Mills CAGNY Conference February 21, 2017
‘ General Mills CAGNY Conference February 21, 2017
Slide 60: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidanc Our fiscal 2017 outlook for organic net sales growth, constant-currency total segment operating profit and adjusted diluted EPS, and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comp
Slide 61: Reconciliation of Full Year Fiscal 2016
Reconciliation of Full Year Fiscal 2016 Fiscal year 2016 Fiscal year 2015 % of Net Sales % of Net Sales Operating Profit as Reported 16.3% 11.8% Mark-to-market Effects (0.4) 0.5 Divestitures (gain) (0.9) - Acquisition Integration Costs - 0.1 Restructuring Charges 1.4 1g Project-related Costs 0.4 0.1
Slide 62: Reconciliation of Fiscal 2016 SG&A Expense
Reconciliation of Fiscal 2016 SG&A Expense Excluding Media and R&D ($ in Millions) Full Year 2016 $ % of Net Sales SG&A as Reported $3,119 18.8% Media 754 4.6 R&D 222 1.3 SG&A Excluding Media and R&D $2,142 12.9% Table does not foot due torounding. 62
Slide 63: Reconciliation of Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (Fiscal Years, $ in Millions) 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net Earnings, Including Earnings Attributable to Redeemable and $1,737 $1,259 $1,861 $1,893 $1,589 $1,804 $1,535 Noncontrolling Interests Mark-to-market, Net
Slide 64: Cash Return to Shareholders
Cash Return to Shareholders (Fiscal Years, $ in Millions) Dividends Paid Purchases of Common Stock for Treasury Proceeds from Common Stock Issued on Exercised Options Total Cash Return to Shareholders Cash Returns, Rolling 3-Years Cash Returns, Cumulative 10-Years Cash Returns, Cumulative 5-Years 20
Slide 65: Reconciliation of Income Taxes on Adjusting Items
Reconciliation of Income Taxes on Adjusting Items (Fiscal Years, $ in Millions) 2016 2015 2014 2013 2012 2011 2010 Pre-tax Income Pre-tax Income Pre-tax Income Pre-tax Income Pre-tax Income Pre-tax Income Pre-tax Income Earnings* Taxes _Earnings* Taxes _Earnings* Taxes _Earnings* Taxes _Earnings* Ta
Slide 66: General Mills
‘ General Mills CAGNY Conference February 21, 2017