Slide 1: General Mills Earnings Third Quarter Fiscal 2020
General Mills Earnings Investor DayFiscal Third Quarter Fiscal 20202020 March 18, 2020July 9, 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: Jeff Harmening, Chairman and Chief Executive Officer
Jeff Harmening Chairman and Chief Executive Officer General Mills Earnings Investor Day Fiscal Third Quarter 2020 Fiscal 2020 July 9, 2019 March 18, 2020 3
Slide 4: Today's Key Messages
Today’s Key Messages • Our Top Objectives are the Health and Safety of Our Employees and Serving Our Consumers Through the COVID-19 Virus Situation • Continued Strong Focus and Execution Against Our F20 Priorities • Third-quarter Results Broadly In Line with Our Expectations, Excluding the Impact of
Slide 5: COVID-19 Status
COVID-19 Status • Reduced Consumer Traffic Drove Declines in Häagen-Dazs in Asia in February; Estimated Impact to General Mills F20 Q3 Growth Rates: • Net Sales: -50 bps • Adj. Operating Profit* and Adj. Diluted EPS*: -150 bps • Spread of Virus Driving Increased Near-term Consumer Demand for Food at
Slide 6: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Earnings Investor Day Fiscal Third Quarter 2020 Fiscal 2020 July 9, 2019 March 18, 2020 6
Slide 7: Third Quarter Fiscal 2020 Financial Results
Third Quarter Fiscal 2020 Financial Results Dollars in millions except per share data Q3 TOTAL GENERAL MILLS $MM VS LY Net Sales $4,180 Flat Organic Net Sales* Flat Adjusted Operating Profit* $675 -8%1 Adjusted Diluted EPS* $0.77 -6%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant c
Slide 8: Components of Net Sales Growth
Third Quarter Fiscal 2020 Components of Net Sales Growth Organic Net Sales* = Flat +1 pt Flat Flat Flat Flat Organic Organic Foreign Acquisitions / Total Net Sales Volume Price / Mix Exchange Divestitures As Reported *Non-GAAP measure 8
Slide 9: North America Retail
Third Quarter Fiscal 2020 North America Retail SEGMENT RESULTS $MM VS. LY SEGMENT HIGHLIGHTS Net Sales $2,502 -1%¹ • Q3 net sales decline primarily driven by U.S. Meals & Baking Segment Operating Profit $532 -9%² • Sequential improvement in U.S. Snacks and U.S. Yogurt net sales results in Q3 • Grew
Slide 10: Convenience Stores & Foodservice
Third Quarter Fiscal 2020 Convenience Stores & Foodservice SEGMENT RESULTS $MM VS. LY SEGMENT HIGHLIGHTS Net Sales $465 -2%¹ • Q3 net sales decline driven by Non-Focus 6 Flour and Mix businesses Segment Operating Profit $92 -5% • Q3 Focus 6 net sales +2%, led by Cereal, Frozen Baked Goods, and Yogur
Slide 11: Europe & Australia
Third Quarter Fiscal 2020 Europe & Australia SEGMENT RESULTS $MM VS. LY SEGMENT HIGHLIGHTS Net Sales $422 -1%¹ • Lower Q3 net sales driven by Yogurt and Ice Cream, partially offset by growth in Snack Bars Segment Operating Profit $22 -11%² and Mexican Food • Q3 retail sales +DD on Snack Bars and +MS
Slide 12: Asia & Latin America
Third Quarter Fiscal 2020 Asia & Latin America SEGMENT RESULTS $MM VS. LY SEGMENT HIGHLIGHTS Net Sales $408 Flat¹ • Q3 LATAM net sales +LSD, driven by Brazil Segment Operating Profit $8 -64%² • Q3 Asia net sales -LSD • COVID-19 negatively impacted traffic in Häagen-Dazs shops and foodservice outlets
Slide 13: Pet Segment
Third Quarter Fiscal 2020 Pet Segment SEGMENT RESULTS $MM VS. LY SEGMENT HIGHLIGHTS Net Sales $384 +11%¹ • Q3 net sales increase driven by strong growth in FDM and positive price/mix Segment Operating Profit $94 +29% • Q3 Life Protection Formula and Wilderness net sales +DD • Year-to-date all-channe
Slide 14: Joint Ventures
Third Quarter Fiscal 2020 Joint Ventures Q3 AFTER-TAX EARNINGS: $11MM; -8% VS. LY JV GROWTH CPW HDJ Net Sales* +1% -5% Highlights: • Q3 CPW net sales increase driven by growth in UK, Middle East, Mexico, and Turkey • Q3 HDJ net sales decline driven by lower volume, partially offset by favorable pric
Slide 15: Margin Results
Third Quarter Fiscal 2020 Margin Results ADJUSTED GROSS ADJUSTED OP PROFIT MARGIN* MARGIN* (% OF NET SALES) (% OF NET SALES) 34.2% 33.9% 17.4% 16.1% F19-Q3 F20-Q3 F19-Q3 F20-Q3 • Lower adjusted gross margin driven by higher input costs, partially offset by positive net price realization and mix • Lo
Slide 16: Other Income Statement Items
Third Quarter Fiscal 2020 Other Income Statement Items • Unallocated Corporate Expenses Increased $8MM ex. Certain Items • Net Interest Expense Decreased $21MM • Adjusted Effective Tax Rate 21.0% vs. 19.9% LY* • Average Diluted Shares Outstanding Up 1% *Non-GAAP measure. See appendix for reconciliat
Slide 17: Nine-month Fiscal 2020 Financial Results
Nine-month Fiscal 2020 Financial Results Dollars in millions except per share data TOTAL GENERAL MILLS $MM VS LY Net Sales $12,604 -1% Organic Net Sales* Flat Adjusted Operating Profit* $2,170 +2%1 Adjusted Diluted EPS* $2.51 +5%1 *Non-GAAP measure. See appendix for reconciliation (1) Constant curre
Slide 18: Nine-month Fiscal 2020 Balance Sheet and Cash Flow
Nine-month Fiscal 2020 Balance Sheet and Cash Flow OPERATING CASH FLOW ($ IN MILLIONS) • Core Working Capital -31% vs. LY $2,160 $2,028 • Capital Investments = $269MM • Dividends Paid = $895MM • Debt Reduction = $862MM F19 F20 18
Slide 19: Fourth Quarter Fiscal 2020 Expectations
Fourth Quarter Fiscal 2020 Expectations • Organic Net Sales* Acceleration, Driven by: • Stronger Growth in North America Retail • Fiscal Year End Alignment: Extra Month of Results in Pet in Q4 • 53rd Week in May, Benefiting Net Sales and Profit • Significant Increase in Brand-building and Capability
Slide 20: Updating Fiscal 2020 Guidance
Updating Fiscal 2020 Guidance PREVIOUS UPDATED KEY FINANCIAL METRICS* 2020 2020 GUIDANCE GUIDANCE Organic Net Sales Growth +1 to +2% +1 to +2% Adjusted Operating Profit Growth +2 to +4%¹ +4 to +6%¹ Adjusted Diluted EPS Growth +3 to +5%¹ +6 to +8%¹ Free Cash Flow Conversion >105% >105% Leverage Ratio
Slide 21: Our Fiscal 2020 Priorities
Our Fiscal 2020 Priorities 1 Accelerate Organic Sales Improve NAR while continuing to drive Pet growth Maintain 2 Strong Margins Fuel growth investments through HMM and SRM 3 Reduce Leverage Continue cash discipline and pay down debt 21
Slide 22: Continued Momentum on U.S. Cereal
Continued Momentum on U.S. Cereal GENERAL MILLS U.S. CEREAL STRONG FUNDAMENTALS (Retail Sales, % vs. LY) DRIVING GROWTH +1% Flat Flat Brand-building Investment and Product News F18 F19 F20 YTD #1 #2 #3 Share pts +0.8 +0.3 +0.8 vs. LY Category Leading Innovation Source: Nielsen xAOC, F20 YTD through
Slide 23: U.S. Yogurt
U.S. Yogurt INNOVATION AND CONSUMER SUPPORT GENERAL MILLS U.S. YOGURT (Retail Sales % vs. LY) TO DRIVE IMPROVEMENT -1% -2% Innovation Across Core and Simply Better -3% F19 F20 YTD Feb. 2020 Source: Nielsen xAOC, F20 YTD through February 2020 Increased Brand-building Support 23
Slide 24: Improving U.S. Snacks
Improving U.S. Snacks U.S. SNACKS ON TRACK TO IMPROVE VERSUS F19 (Retail Sales, % vs. LY) +1.3% -1.5% Innovation, Product News, and Distribution -3.5% F19 F20 YTD Feb. 2020 Source: Nielsen xAOC, F20 YTD through February 2020 Movie Equities and In-store Execution 24
Slide 25: Pet All-channel YTD F20 Retail Sales +DD
Pet All-channel YTD F20 Retail Sales +DD FDM PET SPECIALTY E-COMMERCE • Significant FYTD Retail Sales Growth • FYTD Retail Sales Declines • Strong FYTD Retail Sales Growth Through Expanded Distribution • Unique Innovation Launching in 2H (RETAIL SALES AT CUSTOMERS WITH BLUE MORE THAN 18 MONTHS) +31%
Slide 26: Focus Areas for CS&F, EUAU, and ASLA
Focus Areas for CS&F, EUAU, and ASLA • Convenience Stores & Foodservice: Continue Focus 6 Growth While Improving Performance on Flour and Mixes • Europe & Australia: Fuel Brand-building Investment in Accelerate Platforms; Sharpen Execution in the U.K. • Asia & Latin America: Drive Growth on Häagen-D
Slide 27: Today's Key Messages
Today’s Key Messages • Our Top Objectives are the Health and Safety of Our Employees and Serving Our Consumers Through the COVID-19 Virus Situation • Continued Strong Focus and Execution Against Our F20 Priorities • Third-quarter Results Broadly In Line with Our Expectations, Excluding the Impact of
Slide 28: 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 29: Appendix: North America Retail
Appendix: North America Retail F20 Q3 OPERATING UNIT RESULTS Operating Unit Net Sales % vs. LY Canada +6% Canada Constant-currency1 +5% U.S. Yogurt -1% U.S. Cereal -1% U.S. Snacks -1% U.S. Meals & Baking -2% (1) Constant currency growth rate. Non-GAAP measure. See appendix for reconciliation 29
Slide 30: Reconciliation of Canada Operating Unit Constant-currency Net Sales Growth
Reconciliation of Third Quarter Fiscal 2020 Canada Operating Unit Constant-currency Net Sales Growth (FISCAL YEAR) Q3 2020 Percentage Change in Impact of Percentage Change in Canada Net Sales Foreign Currency Canada Net Sales on a as Reported Exchange Constant-currency Basis 6% 1 pt 5% *Table may no
Slide 31: Reconciliation of Organic Net Sales Growth
Reconciliation of Third Quarter Fiscal 2020 Organic Net Sales Growth (FISCAL YEAR) Q3 2020 Organic Organic Organic Net Foreign Acquisitions & Reported Net Volume Price/Mix Sales Exchange Divestitures Sales Growth North America Retail - (1) pt (1) % - - (1) % Convenience Stores (2) pts 1 pt (2) % - -
Slide 32: Reconciliation of Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Third Quarter Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q3 2020 2019 Change Operating profit as reported $ 650.8 $ 651.3 Flat Mark-to-market effects 8.6 (6.5) Restructuring charges 12.4 58.6 Project-related costs 0.4 0.1 Asset
Slide 33: Reconciliation of Adjusted Diluted EPS and Constant-currency Growth Rate
Reconciliation of Third Quarter Fiscal 2020 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Q3 Per Share Data 2020 2019 Change Diluted earnings per share, as reported $ 0.74 $ 0.74 Flat Tax item - (0.01) Mark-to-market effects** 0.01 (0.01) Restructuring charges** 0.02
Slide 34: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of Third Quarter Fiscal 2020 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q3 2020 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 R
Slide 35: Reconciliation of Adjusted Gross Margin
Reconciliation of Third Quarter Fiscal 2020 Adjusted Gross Margin (FISCAL YEARS) Q3 2020 2019 % of % of Net Sales Net Sales Gross margin as reported 33.6 % 34.4 % Mark-to-market effects 0.2 (0.2) Restructuring charges 0.2 - Adjusted gross margin 33.9 % 34.2 % *Table may not foot due to rounding 35
Slide 36: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Third Quarter Fiscal 2020 Adjusted Operating Profit Margin (FISCAL YEARS) Q3 2020 2019 % of % of Net Sales Net Sales Operating profit margin as reported 15.6 % 15.5 % Mark-to-market effects 0.2 (0.1) Restructuring charges 0.3 1.4 Project-related costs - - Asset impairments - - Inve
Slide 37: Reconciliation of Tax Rate Excluding Items
Reconciliation of Third Quarter Fiscal 2020 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS) Q3 2020 2019 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $571.3 $118.2 $541.9 $95.8 Tax item - - - 7.2 Mark-to-market effects 8.6 1.9 (6.5) (1.5) Restructuring charges 12.
Slide 38: Reconciliation of Nine-month Fiscal 2020 Organic Net Sales Growth
Reconciliation of Nine-month Fiscal 2020 Organic Net Sales Growth (FISCAL YEAR) Nine Months 2020 Organic Organic Organic Net Foreign Acquisitions & Reported Net Volume Price/Mix Sales Exchange Divestitures Sales Growth North America Retail - - Flat - - Flat Convenience Stores (2) pts - (2) % - - (2)
Slide 39: Reconciliation of Nine-month Adjusted Operating Profit Constant-currency Growth
Reconciliation of Nine-month Fiscal 2020 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Nine Months 2020 2019 Change Operating profit as reported $ 2,124.4l $ 1,799.8l 18 % Mark-to-market effects 1.0 36.4l Restructuring charges 37.2l 61.0l Project-related costs
Slide 40: Reconciliation of Nine-month Adjusted Diluted EPS
Reconciliation of Nine-month Fiscal 2020 Adjusted Diluted EPS and Related Constant-currency Growth Rate (FISCAL YEARS) Nine Months Per Share Data 2020 2019 Change Diluted earnings per share, as reported $ 2.54 $ 1.96 30 % Tax item (0.09) (0.01) Mark-to-market effects** - 0.05 Restructuring charges**
Slide 41: Reconciliation of Nine-month Tax Rate Excluding Items
Reconciliation of Nine-month Fiscal 2020 Tax Rate Excluding Items (FISCAL YEARS, $ IN MILLIONS) Nine Months 2020 2019 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $1,867.2 $340.9 $1,466.1 $313.1 Tax item - 53.1 - 7.2 Mark-to-market effects 1.0 0.2 36.4 8.4 Restructuring
Slide 42: Reconciliation of Nine-month Fiscal 2020 Free Cash Flow
Reconciliation of Nine-month Fiscal 2020 Free Cash Flow (FISCAL YEARS, $ IN MILLIONS) Nine Months 2020 2019 Net cash provided by operating activities $ 2,159.8 $ 2,027.6 Purchases of land, buildings, and equipment (269.4) (367.9) Free cash flow $ 1,890.4 $ 1,659.7 42 *Table may not foot due to round
Slide 43: Reconciliation of Fiscal 2019 Adjusted Diluted EPS
Reconciliation of Fiscal 2019 Adjusted Diluted EPS (FISCAL YEAR) Full Year Per Share Data 2019 Diluted earnings per share, as reported $ 2.90 Net tax benefit (0.01) Tax items (0.12) Mark-to-market effects* 0.05 Divestiture loss, net* 0.03 Acquisition transaction and integration costs* 0.03 Restructu
Slide 44: Reconciliation of Fiscal 2019 Income Taxes on Adjusting Items
Reconciliation of Fiscal 2019 Income Taxes on Adjusting Items (FISCAL YEAR, $ IN MILLIONS) 2019 Full Year Pretax Income Earnings* Taxes As reported $2,082.0 $367.8 Net tax benefit - 7.2 Tax items - 72.9 Mark-to-market effects 36.0 8.3 Divestitures loss 30.0 13.6 Acquisition transaction and integrati