General Mills, Inc. · NYSE:GIS
General Mills — CAGNY 2020
45 slides from General Mills's conference presentation, Feb 18, 2020
Slide 1: General Mills: Making Food People Love, CAGNY 2020
General Mills Making Food People Love CAGNY 2020 February 18, 2020
Slide 2: Jeff Harmening, Chairman and Chief Executive Officer
Jeff Harmening Chairman and Chief Executive Officer CAGNY 2020 February 18, 2020
Slide 3: 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 4: Key Messages
Key Messages ¢ Improving Topline Growth Through Increased Brand Investment, Stronger Innovation, and Enhanced Capabilities ¢ Maintaining Strong Margin and Cash Discipline ¢ Remain On Track to Deliver Our Fiscal 2020 Targets
Slide 5: Consumers Are At the Heart of Everything We Do
Consumers Are At the Heart of Everything We Do OUR GOAL EIGHT $1B BRANDS COMPETING GLOBALLY Create market-leading growth to deliver top tier shareholder returns Cheerios 3 (NATUREVALLEY) plait OUR STRATEGY Consumer First: Deeply understand the needs and lives of our consumers and respond quickly to
Slide 6: Our Portfolio Today
Our Portfolio Today FISCAL 2019 NET SALES: $16.9 BILLION Pet Cereal Yogurt Asia & Latin America Regional yt Accelerate By pasion Australia eel Sue Segment North * Snack Bars Platform jeals America + Ice Cream Convenience Retail + Mexican Stores & + Natural & Organic* Foodservice Dough & Baking Mixes
Slide 7: Restoring Topline Growth Will Drive Long-term Shareholder Returns
Restoring Topline Growth Will Drive Long-term Shareholder Returns FOUR LEVERS TO DRIVE SHAREHOLDER RETURNS o0o090O Sales Margin Cash Cash Growth Expansion Conversion Returns
Slide 8: Our Global Growth Framework
Our Global Growth Framework
Slide 9: How We Will Step Up Growth
How We Will Step Up Growth BOLDLY BUILD OUR BRANDS LEVERAGE OUR SCALE Data & Analytics E-commerce g Strategic Revenue Management Regeneration RELENTLESSLY INNOVATE of gi works SOlINC UNLEASH THE POWER OF OUR PEOPLE AND CULTURE
Slide 10: Growing Our Cereal Business Globally
Growing Our Cereal Business Globally CONVENIENCE STORES CEREAL PARTNERS & FOODSERVICE WORLDWIDE U.S. RETAIL Cheerios Cinnamon Uz cain Cs YTD F20 Retail Sales +2% F20 1H Net Sales +MSD F20 1H Net Sales* +2%
Slide 11: Keys to Continued Cereal Growth
Keys to Continued Cereal Growth CONTINUE STRONG INNOVATION BOLDLY BUILD OUR BRANDS
Slide 12: More Work Ahead to Improve Yogurt
More Work Ahead to Improve Yogurt CONVENIENCE STORES U.S. AIL EUROPE & AUSTRALIA eanee & FOODSERVICE YOP 22 YTD F20 Retail Sales -3% F20 1H Net Sales +LSD YTD F20 Retail Sales -6%
Slide 13: Improve Yogurt Through Brand Investment and Innovation
Improve Yogurt Through Brand Investment and Innovation GROW THE CORE INNOVATE INTO NEW SPACES Taste News Core Renovation New Occasions
Slide 14: Focus on Innovation and Brand Building to Drive Snack Bars Growth
Focus on Innovation and Brand Building to Drive Snack Bars Growth NORTH AMERICA RETAIL EUROPE & AUSTRALIA YTD F20 Retail Sales -3% vs. LY YTD F20 Retail Sales +6% vs. LY
Slide 15: World's Largest Mexican Food Brand
World’s Largest Mexican Food Brand COMPELLING CAMPAIGNS AND EVENTS YTD F20 Retail Sales +5% vs. LY
Slide 16: Wholesome Natural Pet Food is an Attractive Space
Wholesome Natural Pet Food is an Attractive Space & U.S. PET FOOD IS A LARGE AND PREMIUM WHOLESOME NATURAL GROWING CATEGORY SEGMENT OUTPACING CATEGORY (Retail Sales, $ in billions, % vs. LY) (U.S. Retail Sales, $ in billions, % vs. LY) +3% — $31 PREMIUM WHOLESOME NATURAL +HSD vs. LY $30 2018 2019 So
Slide 17: BLUE's Mission
BLUE’s Mission: Love Them Like Family. Feed Them Like Family. ource: 2019 Attitude & TRUE BLUE PROMISE WHEN PET PARENTS THINK OF BLUE... ALWAYS Starts with Protein-Rich REAL MEAT * Meat First NO Chicken/Poultry By-Product Meals NO Corn, Wheat or Soy . i i NO Artificial Flavors or Preservatives Ingre
Slide 18: BLUE is a $1.5B Business with Significant Growth Ahead
BLUE is a $1.5B Business with Significant Growth Ahead FUTURE GROWTH DRIVERS BLUE HOUSEHOLD PENETRATION ¢ Attracting New Pet Parents 13% ¢ Innovating Across Feeding & Treating ¢ Leveraging General Mills Capabilities 2017 2018 2019 Source: Nielsen Household Panel, All Outlets, Total Blue Buffalo 18
Slide 19: Attracting New Pet Parents: Communication and Education
Attracting New Pet Parents: Communication and Education BLUE IS THE LEADING PET FOOD BEST-IN-CLASS BRAND BUILDING AND ADVERTISER EDUCATION (2019 Ad Spend by Brand, % of Total) Compare Your Pet's Food Take the True BLUE Test and see how your brand stacks up to the ingredients in BLUE.
Slide 20: Innovating Across the Portfolio
Innovating Across the Portfolio: Strong F20 2H Innovation Plans Across Occasions FEEDING TREATING Baby BLUE True Solutions Scooby Snacks & Cat Bursts More Innovation Coming in Fiscal ‘21
Slide 21: Broad Portfolio of Products for All Diet Types
Broad Portfolio of Products for All Diet Types GRAIN-FREl mo IMITED GREDIENT DIET B ADULT RECIPES
Slide 22: Leverage Our Scale: Data & Analytics
Leverage Our Scale: Data & Analytics Data Into Actionable Insights Efficiency in Value Chain
Slide 23: Leverage Our Scale: SRM and E-commerce
Leverage Our Scale: SRM and E-commerce STRATEGIC REVENUE MANAGEMENT 6 ®@ Optimal Price Mix Management VS SAVE Price Pack Promotion Architecture Optimization YTD F20 Organic Price/Mix = +1pt E-COMMERCE SCORE A TASTE OF THE COG 1171/3 bn ie 2 @ al. Walmart >< atibabacom ocado amazon “JD FF CheWyeon F2
Slide 24: Leverage Our Scale as a Force for Good
Leverage Our Scale as a Force for Good ' FROM SUSTAINABILITY TO RE RATION BY COMMITTING TO ADVANCE REGENERATIVE AGRICULTURE | PRACTICES ON OF FARMLAND BY 2030, WE ARE USING THE SCALE OF OUR BUSINESS AND THE POWER OF OUR BRANDS TO LEAD IN THE FIGHT AGAINST CLIMATE CHANGE. IT'S GOOD FOR BUSINESS AND C
Slide 25: Unleash the Power of Our People and Culture
Unleash the Power of Our People and Culture CREATING A CULTURE OF BELONGING DRIVES STRONGER 2020 World’s Most BUSINESS RESULTS Admired Companies 2020 Best Places to Work — Fortune for LGBTQ Equality — Human Rights Campaign Som" Hawise et Responsible Companies — Newsweek — 100 Best Companies — Workin
Slide 26: General Mills Leadership Team
General Mills Leadership Team Richard Allendorf Legal Dana McNabb Europe & Australia Ivan Pollard Marketing Jeff Harmening Chairman and CEO Jodi Benson Kofi Bruce Innovation, Technology Finance & Quality Jon Nudi North America Retail Jaime Montemayor Digital & Technology Sean Walker Asia & Latin Ame
Slide 27: Kofi Bruce, Chief Financial Officer
Kofi Bruce Chief Financial Officer CAGNY 2020 February 18, 2020
Slide 28: Four Levers to Drive Shareholder Returns
Four Levers to Drive Shareholder Returns Oo0o08o Sales Margin Cash Cash Growth Expansion Conversion Returns tag +LSD +MSD = 95% = 90% Organic Sales* Adj. Operating Profit* Adj. EAT to FCF* of FCF* *Non-GAAP measures 28
Slide 29: Progress Toward Restoring Consistent Topline Growth
Progress Toward Restoring Consistent Topline Growth 4% ORGANIC SALES GROWTH* FLAT F1i9 F20 Target Long-term Target 29
Slide 30: Maintaining Strong Margins
Maintaining Strong Margins ADJ. OP PROFIT MARGIN* (% OF NET SALES) g Fi5 F1i9 GIs U.S. Food Peer Median F19/CY18 Source: FactSet, Fiscal Year *Non-GAAP measure. See appendix for reconciliation Food Peers: CAG, CPB, HSY, K, KHC, MDLZ, SJM 30
Slide 31: Working to Restore the Virtuous Cycle
Working to Restore the Virtuous Cycle TARGET INCREASING BRAND INVESTMENT AT OR AHEAD OF SALES GROWTH MARGIN EXPANSION EFFORTS Topline Growth (? > HMM ~4% of COGS Brand Healthy _ ran Investment Margins — *) Leverage Our Global Scale 31
Slide 32: Delivering Working Capital Improvement
Delivering Working Capital Improvement ($ IN BILLIONS) $1.4 -71% Cumulative Decline F14 Fis F1i6 Fig Fis F19 m™Core Working Capital —CWC Days F20 Target 32
Slide 33: Strong Free Cash Flow Conversion
Strong Free Cash Flow Conversion LONG-TERM TARGET 2 95% (3-Year Rolling, $ in Billions) $6.2 $6.0 F14-F16 F15-F17 F16-F18 F17-F19 li Free Cash Flow* === Free Cash Flow Conversion*
Slide 34: Return to Long-term Capital Allocation Priorities
Return to Long-term Capital Allocation Priorities NEAR-TERM (post-BLue acquisition) 1. Healthy CAPEX Investment 2. Maintain Current Dividend Rate 3. Strategic M&A and Share Repurchases on Hold 4. Debt Pay-down « F19 Leverage*: 3.9x ¢ F20 Target: 3.5x *Net-Debt-to-Adjusted-EBITDA. See appendix for re
Slide 35: Our Fiscal 2020 Priorities
Our Fiscal 2020 Priorities 1 ) Accelerate \ + Organic Sales Ra Maintain (2 ) Strong Margins Reduce Leverage 3) Improve NAR while continuing to drive Pet growth Fuel growth investments through HMM and SRM Continue cash discipline and pay down debt 35
Slide 36: On Track to Deliver Fiscal 2020 Targets
On Track to Deliver Fiscal 2020 Targets FISCAL 2020 * KEY FINANCIAL METRICS TARGETS Organic Net Sales Growth +1 to +2% Adjusted Operating Profit Growth +2 to +4%1 Adjusted Diluted EPS Growth +3 to +5%! Free Cash Flow Conversion >105% Leverage Ratio 3.5x
Slide 37: Today's Key Messages
Today’s Key Messages ¢ Improving Topline Growth * Boldly Building our Brands * Relentlessly Innovating ¢ Leveraging our Scale to Drive Competitive Advantage ¢ Unleashing the Power of our People ¢ Maintaining Strong Margin and Cash Discipline * Remain On Track to Deliver Our Fiscal 2020 Targets
Slide 38: General Mills: Making Food People Love, CAGNY 2020
General Mills Making Food People Love CAGNY 2020 February 18, 2020
Slide 39: 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 40: Reconciliation of Organic Net Sales Growth
Reconciliation of Organic Net Sales Growth (FISCAL YEARS) Full Year Organic Organic : Organic Foreign Acquisitions & Reported Net Volume _Price/Mix: NetSales Exchange _Divestitures Sales Growth 2017 ~—s (7) pts 3 pts! (4) % (1) pt (1) pt (6) % 2018 (1) pt 1pt! Flat 1pt Flat 1% 2019 (2)pts ~~ 2 pts!
Slide 41: Reconciliation of Adjusted Operating Profit Margin
Reconciliation of Adjusted Operating Profit Margin (FISCAL YEARS) Operating profit margin as reported Mark-to-market effects Divestitures loss Acquisition transaction and integration costs Restructuring charges Project-related costs Asset impairments Investment valuation adjustments Legal recovery A
Slide 42: Reconciliation of Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) *See reconciliation of Income Taxes on Adjusting Items. Table does not foot due to r 2019 2018 2017 2016 2015 2014 Net earnings, including earnings attributable to redeemable and noncontrolling interests $1,
Slide 43: Reconciliation of Fiscal 2019 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 44: 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 Restru
Slide 45: Reconciliation of Income Taxes on Adjusting Items
Reconciliation of Income Taxes on Adjusting Items (FISCAL YEARS, $ IN MILLIONS) 2019 2018 2017 2016 2015 2014 Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income Pretax Income x Taxes x Taxes com x Taxes * Taxes x Taxes As reported $2,082 $368 $2,136 $57 $2,271 $655 $2,404 $755 $1,