General Mills, Inc. · NYSE:GIS
General Mills — Q2 2022 Earnings Presentation
55 slides from General Mills's earnings presentation, Dec 21, 2021
Slide 1: Fiscal 2022 Q2 Earnings
Fiscal 2022 Q2 Earnings December 21, 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 CEO
Jeff Harmening Chairman and Chief Executive Officer General Mills Second Quarter Fiscal 2022 3
Slide 4: Today's Key Messages
Today’s Key Messages • Competing Effectively and Executing Well Amid Unprecedented Inflation and Supply Chain Disruptions • Advancing Our Accelerate Strategy, Including Further Progress on Portfolio Reshaping • Updating Fiscal 2022 Financial Guidance General Mills Second Quarter Fiscal 2022 4
Slide 5: Second-quarter and YTD Performance
Second-quarter and YTD Performance Q2 YTD Organic Net Sales1 + 5% + 4% 2-yr CGR +6% 2-yr CGR +6% Adjusted Operating Profit2 - 6% - 4% 2-yr CGR Flat 2-yr CGR +4% Adjusted Diluted EPS2 - 7% - 4% 2-yr CGR +1% 2-yr CGR +6% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constan
Slide 6: 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 Second Quarter Fiscal 2022 6
Slide 7: Priority 1: Continuing to Compete Effectively
Priority 1: Continuing to Compete Effectively Growing or Holding Share in 62% of Our Priority Businesses YTD Global Platforms Local Gems CEREAL PET ICE CREAM MEXICAN Sources: Pet U.S. NielsenIQ xAOC + Pet Retail, FYTD 26 WE 11/27/21, Brazil NielsenIQ FYTD ending Sept 2021, China NielsenIQ FTYD endin
Slide 8: Priority 2: Successfully Navigating the Dynamic Supply Chain Environment
Priority 2: Successfully Navigating the Dynamic Supply Chain Environment Unprecedented Operating Incremental SRM Actions to Environment Further Increase Price/Mix General Mills Organic Price/Mix At Home Food Demand Higher Input Cost 5% Inflation 2% Supply Chain Disruptions F22 Q1 F22 Q2 F22 H2 Gener
Slide 9: Priority 3: Further Progress on Portfolio Reshaping
Priority 3: Further Progress on Portfolio Reshaping Integrating Dog Treats Completed Yoplait Announced European Acquisition Europe Divestiture Dough Divestiture We Remain Committed to Additional Portfolio Reshaping to Further Enhance Growth General Mills Second Quarter Fiscal 2022 9
Slide 10: 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 11: Strengthening our Communities: Charitable Giving
Strengthening our Communities: Charitable Giving Corporate General Mills 25% Contributions Fiscal 2021 Charitable Giving Food 60% Donations 15% Foundation ~$100 million Giving General Mills Second Quarter Fiscal 2022 11
Slide 12: Jon Nudi, Group President, North America Retail
Jon Nudi Group President, North America Retail Segment General Mills Second Quarter Fiscal 2022 12
Slide 13: North America Retail Segment Overview
North America Retail Segment Overview F21 SERVE ~95% NET SALES = $11B 25 CATEGORIES LEADING BRANDS HOUSEHOLDS U.S. Yogurt Canada U.S. Meals U.S. & Baking Snacks U.S. Cereal NielsenIQ Household Panel, 12 months ending October 2021 General Mills Second Quarter Fiscal 2022 13
Slide 14: Delivering Strong Growth
Delivering Strong Growth North America Retail Net Sales Segment Operating Profit $10.8 $11.0 $9.9 +8% +2% $2.3 $2.6 $2.6 F19 F20 F21 $ in Billions General Mills Second Quarter Fiscal 2022 14
Slide 15: Consistently Competing Effectively Amid Elevated At-home Demand
Consistently Competing Effectively Amid Elevated At-home Demand Consistently Holding or Growing Share At-home Demand Remains Elevated in the Majority of Our Business General Mills U.S. Retail Sales 2-year CGR Pre- Start of F22 YTD Pandemic Pandemic 6% 5% 5% % of U.S. Retail Holding / Growing Share 4
Slide 16: Consistently Competing Effectively in Cereal
Consistently Competing Effectively in Cereal Winning Brand Building Continued Share Growth and Innovation U.S. RTE Cereal Dollar Share General Mills +7% Retail Sales vs F181 Leading Competitor 34.0% 33.1% 32.5% 31.3% 31.7% 31.2% 30.6% 30.3% 30.0% 29.0% F18 F19 F20 F21 F22 1H Source: NielsenIQ xAOC ¹
Slide 17: Consistently Competing Effectively in Refrigerated Dough
Consistently Competing Effectively in Refrigerated Dough Winning Brand Building Continued Share Growth and Innovation General Mills U.S. Refrigerated Dough Dollar Share +30% Retail Sales vs F181 72.3% 71.4% 71.3% 70.4% 68.0% 66.7% F18 F19 F20 F21 F21 F22 1H 1H Source: NielsenIQ xAOC ¹ 52 weeks endin
Slide 18: Consistently Competing Effectively in Fruit Snacks
Consistently Competing Effectively in Fruit Snacks Winning Brand Building Continued Share Growth and Innovation General Mills U.S. Fruit Snacks Dollar Share +39% Retail Sales vs F181 50.9% 51.1% 50.1% 49.8% 49.3% 48.8% F18 F19 F20 F21 F21 F22 1H 1H Source: NielsenIQ xAOC, ¹ 52 weeks ending 11/27/21
Slide 19: Consistently Competing Effectively in Mexican
Consistently Competing Effectively in Mexican Winning Brand Building Continued Share Growth and Innovation General Mills U.S. Mexican Food Dollar Share +39% Retail Sales vs F181 18.6% 18.0% 17.7% 17.2% 16.9% 16.7% F18 F19 F20 F21 F21 F22 1H 1H Source: NielsenIQ xAOC ¹ 52 weeks ending 11/27/21 vs 52w
Slide 20: Environment Remains Dynamic and Challenging
Environment Remains Dynamic and Challenging Disruptions Remain Elevated at Every Point in the Supply Chain Suppliers Manufacturing Distribution Customer Centers Warehouses General Mills Second Quarter Fiscal 2022 20
Slide 21: Outperforming in Service and Stepping Up Pricing
Outperforming in Service and Stepping Up Pricing Leading in Customer Increasing Net Price Realization to Service Levels Address Inflation & Other Costs U.S. Retail % On-Shelf Availability General Mills U.S. Retail F22 Q2 F22 Average Unit Price % +/- LY 94.2% 9.4% 9.4% 7.8% 92.8% 5.7% 4.4% 2.5% Gener
Slide 22: Stronger Business Than Before Pandemic
Stronger Business Than Before Pandemic Increased Household Enhanced Capabilities Strength of Brands Penetration and Agility U.S. Household Penetration Higher Connected Strategic Revenue Commerce Management Pre-Pandemic Current Organizational Agility Source: NielsenIQ Household Penetration: Pre-pande
Slide 23: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer General Mills Second Quarter Fiscal 2022
Slide 24: Second Quarter Fiscal 2022 Financial Results
Second Quarter Fiscal 2022 Financial Results Q2 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $5,024 +6% +6% Organic Net Sales¹ +5% +6% Adjusted Operating Profit¹ $821 -6%² Flat² Adjusted Diluted EPS¹ $0.99 -7%² +1%² (1) Non-GAAP measures. See appendix for reconciliation. (2) Constant currency
Slide 25: Components of Second Quarter Net Sales Growth
Components of Second Quarter Net Sales Growth Organic Net Sales1 +5% +6 pts +5 pts +1 pt +1 pt Flat Organic Organic Foreign Acquisitions Total Net Sales Volume Price / Mix Exchange & As Reported Divestitures (1) Non-GAAP measure Table may not foot due to rounding General Mills Second Quarter Fiscal
Slide 26: Second Quarter Fiscal 2022 North America Retail
Second Quarter Fiscal 2022 North America Retail Segment Results Segment Highlights North America Retail Q2 • Q2 organic net sales growth driven by price/mix, Organic Net Sales¹ +1% partially offset by lower volume 2-year CGR¹ +5% • Growth in U.S. Snacks and U.S. Cereal, partially Segment Op Profit²
Slide 27: Second Quarter Fiscal 2022 Pet
Second Quarter Fiscal 2022 Pet Segment Results Segment Highlights Pet Q2 • Q2 organic net sales growth includes DD growth Organic Net Sales¹ +14% for both cat food and dog food 2-year CGR¹ +16% • Year-to-date strong retail sales growth and Segment Op Profit² +10% market share gains for Blue Buffalo
Slide 28: Second Quarter Fiscal 2022 Convenience Stores & Foodservice
Second Quarter Fiscal 2022 Convenience Stores & Foodservice Segment Results Segment Highlights CS&F Q2 • Q2 organic net sales growth driven by increased Organic Net Sales¹ +23% demand in away-from-home food channels, 2-year CGR¹ +3% including Schools, Restaurants, Lodging and C- stores, and market i
Slide 29: Second Quarter Fiscal 2022 Europe & Australia
Second Quarter Fiscal 2022 Europe & Australia Segment Results Segment Highlights EUAU Q2 • Q2 organic net sales decline driven by Yogurt Organic Net Sales¹ -2% and Dough 2-year CGR¹ Flat • Grew market share year-to-date in Snack Bars Segment Op Profit² -61% and Mexican 2-year CGR² -35% • Q2 profit d
Slide 30: Second Quarter Fiscal 2022 Asia & Latin America
Second Quarter Fiscal 2022 Asia & Latin America Segment Results Segment Highlights ASLA Q2 • Q2 organic net sales growth driven by Yoki Organic Net Sales¹ +5% meals and snacks in Brazil 2-year CGR¹ +7% • Q2 profit growth driven primarily by positive Segment Op Profit² +40% price/mix and lower SG&A e
Slide 31: Second Quarter Fiscal 2022 Joint Ventures
Second Quarter Fiscal 2022 Joint Ventures Q2 AFTER-TAX JV EARNINGS: $33MM, -9% VS. LY JV Results JV Highlights NET SALES¹ Q2 • Q2 CPW net sales decline due to lower at-home demand vs LY CPW -2% HDJ +8% • Q2 HDJ net sales grew primarily due to strong innovation performance • Q2 after-tax earnings dec
Slide 32: Second Quarter Fiscal 2022 Margin Results
Second Quarter Fiscal 2022 Margin Results Adjusted Gross Margin1 (% OF NET SALES) 35.5% 32.2% Price/Mix Supply Chain Disruptions/ Deleverage/Other • Positive price/mix and HMM sufficient to offset input cost inflation; elevated costs related to supply chain disruptions and deleverage drove down Q2 a
Slide 33: Second Quarter Fiscal 2022 Other Income Statement Items
Second Quarter Fiscal 2022 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Increased $12MM • Net Interest Expense Decreased $8MM • Adjusted Effective Tax Rate 22.3%, Flat vs. LY¹ • Average Diluted Shares Outstanding -1% vs. LY (1) Non-GAAP measure. See appendix for reconciliat
Slide 34: First Half Fiscal 2022 Financial Results
First Half Fiscal 2022 Financial Results 1H 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $9,564 +5% +6% Organic Net Sales¹ +4% +6% Adjusted Operating Profit¹ $1,640 -4%² +4%² Adjusted Diluted EPS¹ $1.98 -4%² +6%² (1) Non-GAAP measures. See appendix for reconciliation. (2) Constant currency gr
Slide 35: First Half Fiscal 2022 Cash Flow Performance
First Half Fiscal 2022 Cash Flow Performance Operating Cash Flow ($ IN MILLIONS) • Capital Investments = $224MM • Dividends Paid = $623MM • Net Shares Repurchased = $375MM General Mills Second Quarter Fiscal 2022 35
Slide 36: Yoplait Europe Divestiture Completed
Yoplait Europe Divestiture Completed • Transaction Closed Nov. 30th; General Mills Will Continue to Operate Yoplait in U.S. and Canada • Reduces Net Sales by ~$700MM and Adj. Diluted EPS by ~1% in First 12 Months After Close • Increases Europe & Australia Segment’s Focus on Faster- growing, Higher-m
Slide 37: Second-half Fiscal 2022 Financial Assumptions
Second-half Fiscal 2022 Financial Assumptions • Price/Mix to Step Up in 2H, Driven by Incremental SRM Actions • Input Cost Inflation Up Double Digits in 2H; Now Up 8 to 9% for Full Year • Operating Environment to Remain Challenging; Expect 2H Customer Service Levels Generally In Line with 1H • Adjus
Slide 38: Updated Fiscal 2022 Financial Outlook
Updated Fiscal 2022 Financial Outlook UPDATED KEY FINANCIAL METRICS¹ PREVIOUS F22 OUTLOOK F22 OUTLOOK* Organic Net Sales Growth Higher end of -3 to -1% range +4 to +5% Adjusted Operating Profit Growth² Higher end of -4 to -2% range -4 to -1% Adjusted Diluted EPS Growth² Higher end of -2% to Flat ran
Slide 39: Today's Key Messages
Today’s Key Messages • Competing Effectively and Executing Well Amid Unprecedented Inflation and Supply Chain Disruptions • Advancing Our Accelerate Strategy, Including Further Progress on Portfolio Reshaping • Updating Fiscal 2022 Financial Guidance General Mills Second Quarter Fiscal 2022 39
Slide 40: 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 41: Appendix: Q2 Fiscal 2022 North America Retail Operating Unit Results
Appendix: Second Quarter Fiscal 2022 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q2 U.S. Meals & Baking -4% U.S. Cereal 3% U.S. Yogurt Flat Canada +6% Canada Constant-currency¹ +1% U.S. Snacks +16% (1) Net sales growth in constant currency. Non-GAAP measure. See app
Slide 42: Reconciliation of Q2 Canada Constant-Currency Net Sales Growth
Reconciliation of Second Quarter Fiscal 2022 Canada Operating Unit Constant-Currency Net Sales Growth Canada Percentage Change Foreign Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q2 6% 5 pts 1% General Mills Second Quarter Fiscal 2022 42
Slide 43: Reconciliation of Q2 Organic Net Sales Growth
Reconciliation of Second Quarter Fiscal 2022 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 (6) pts 7 pts 1% - - 2% Pet 9 pts 4 pts 14% - 15 pts 29% Convenience S
Slide 44: Reconciliation of Q2 Organic Net Sales Compound Growth Rates
Reconciliation of Second Quarter Fiscal 2022 Organic Net Sales Compound Growth Rates Q2 Reported Foreign Acquisitions Organic Net Net Sales Exchange & Divestitures Sales Growth Growth North America Retail Nov. 29, 2020 v.s Nov. 24, 2019 9% - - 9% Nov. 28, 2021 vs. Nov. 29, 2020 2% - - 1% 2-year comp
Slide 45: Reconciliation of Q2 Adjusted Operating Profit Constant-currency Growth
Reconciliation of Second Quarter Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q2 2-year compound 2022 2021 Change 2021 2020 Change growth Operating profit as reported $ 800.1 $ 916.6 (13) % $ 916.6 $ 811.2 13 % (1)% Mark-to-market effects (12.1) (
Slide 46: Reconciliation of Q2 Adjusted Diluted EPS
Reconciliation of Second Quarter Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q2 2-year compound Per Share Data 2022 2021 Change 2021 2020 Change growth Diluted earnings per share, as reported $ 0.97 $ 1.11 (13) % $ 1.11 $ 0.95 17 % 1% Mark-to-market eff
Slide 47: Reconciliation of First Half Organic Net Sales Growth
Reconciliation of First Half Fiscal 2022 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 (6) pts 5 pts (1)% 1 pt - Flat Europe & Australia (1) pt - (1)% 3 pts - 2%
Slide 48: Reconciliation of First Half Organic Net Sales Compound Growth Rates
Reconciliation of First Half Fiscal 2022 Organic Net Sales Compound Growth Rates 1H Reported Foreign Acquisitions Organic Net Net Sales Exchange & Divestitures Sales Growth Growth Total Nov. 29, 2020 v.s Nov. 24, 2019 8% - - 8% Nov. 28, 2021 vs. Nov. 29, 2020 5% 1 pt 1 pt 4% 2-year compound growth 6
Slide 49: Reconciliation of First Half Adjusted Operating Profit Growth
Reconciliation of First Half Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) 1H 2-year compound 2022 2021 Change 2021 2020 Change growth Operating profit as reported $ 1,644.4 $ 1,770.3 (7) % $ 1,770.3 $ 1,473.6 20 % 6% Mark-to-market effects (36.2)
Slide 50: Reconciliation of First Half Adjusted Diluted EPS
Reconciliation of First Half Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) 1H 2-year compound Per Share Data 2022 2021 Change 2021 2020 Change growth Diluted earnings per share, as reported $ 1.99 $ 2.14 (7) % $ 2.14 $ 1.80 19 % 5% Mark-to-market effects*
Slide 51: Reconciliation of Q2 Constant-currency Segment Operating Profit Growth
Reconciliation of Second Quarter Fiscal 2022 Constant-currency Segment Operating Profit Growth Q2 Percentage Change in Percentage Change in Impact of Foreign Operating Profit as Operating Profit on Constant- Currency Exchange Reported Currency Basis North America Retail Nov. 29, 2020 vs. Nov. 24, 20
Slide 52: Reconciliation of Q2 Adjusted Gross Margin
Reconciliation of Second Quarter Fiscal 2022 Adjusted Gross Margin (FISCAL YEARS) % of Net Sales Q2 2022 2021 Gross margin as reported 32.5 % 36.5 % Mark-to-market effects (0.2) % (1.0) % Adjusted gross margin 32.2 % 35.5 % *Table may not foot due to rounding General Mills Second Quarter Fiscal 2022
Slide 53: Reconciliation of Q2 Adjusted Operating Profit Margin
Reconciliation of Second Quarter Fiscal 2022 Adjusted Operating Profit Margin % of Net Sales (FISCAL YEARS) Q2 2022 2021 Operating profit as reported 15.9 % 19.4 % Mark-to-market effects (0.2) % (1.0) % Acquisition integration costs 0.1 % - Transaction costs 0.7 % - Restructuring charges 0.1 % - Inv
Slide 54: Reconciliation of Q2 Adjusted Tax Rates
Reconciliation of Second Quarter Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) Q2 2022 2021 2020 Pretax Income Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes Earnings** Taxes As reported $ 735.1 $ 159.7 $ 848.9 $ 189.4 $ 722.0 $ 155.5 Transaction c
Slide 55: Reconciliation of First Half Adjusted Tax Rates
Reconciliation of First Half Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) 1H 2022 2021 2020 Pretax Income Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes Earnings** Taxes As reported $ 1,513.1 $ 328.6 $ 1,624.8 $ 360.2 $ 1,295.9 $ 222.7 Transaction