General Mills, Inc. · NYSE:GIS
General Mills — Q4 2021 Earnings Presentation
52 slides from General Mills's earnings presentation, Jun 30, 2021
Slide 1: General Mills Earnings Fourth Quarter Fiscal 2021
General Mills Earnings Fourth Quarter Fiscal 2021 June 30, 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: General Mills Earnings - Jeff Harmening, CEO
General Mills Earnings Fourth Quarter Fiscal 2021 June 30, 2021 Jeff Harmening Chairman and Chief Executive Officer 3
Slide 4: Today's Key Messages
Today’s Key Messages • Strong Performance in F21; Achieved All F21 Priorities • Reshaping our Portfolio and Organization for Growth, Aligned with Our Accelerate Strategy • F22 Priorities • Continue to Compete Effectively • Successfully Navigate the Dynamic Cost Environment • Execute Reshaping Action
Slide 5: Fiscal 2021 Financial Results vs. LY
Fiscal 2021 Financial Results vs. LY Annual Q4 +4% Organic Net Sales1 - 6% 2-yr CGR +4% 2-yr CGR +4% - 18%2 +2% Adjusted Operating Profit2 - 18% 2-yr CGR +4% 2-yr CGR +1% +4% 2-yr CGR +8% Adjusted Diluted EPS2 - 19% 2-yr CGR +4% (1) Non-GAAP measures. See appendix for reconciliation (2) Growth rates
Slide 6: Delivered Our Fiscal 2021 Priorities
Delivered Our Fiscal 2021 Priorities 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 Fourth Quarter Fiscal 2021 6
Slide 7: Growing Across Core Markets & Global Platforms
Growing Across Core Markets & Global Platforms F21 Market Share vs. LY • Broad-based Net Sales Growth CEREAL BARS PET Across Core Markets • Growing Market Share in All Global Platforms +60 bps +10 bps +40 bps • Penetration & Repeat Rates Higher ICE CREAM MEXICAN than Pre-pandemic Levels in 7 of Top
Slide 8: Investing to Build Brands and Capabilities
Investing to Build Brands and Capabilities Annual Media Spending ($MM) Building Critical Capabilities CGR = +11% Digital, Data and E-commerce Analytics Holistic Margin Strategic Revenue F19 F20 F21 Management Management General Mills Fourth Quarter Fiscal 2021 8
Slide 9: Utilizing All Capital Allocation Levers
Utilizing All Capital Allocation Levers Debt Leverage1 • CapEx: Investments to Fuel Growth and HMM 4.2x 3.9x • Dividends: +4% per Share in F21 Q2 3.2x 2.9x • M&A: Announced Tyson Pet Treats Acquisition in F21 Q4 • Share Repurchases: $301MM in F21 Q4 F18 F19 F20 F21 Pro Forma (1) Net Debt-to-Adjusted
Slide 10: Reshaping Our Portfolio for Growth
Reshaping Our Portfolio for Growth Yoplait Europe Divestiture Tyson Pet Treats Acquisition • Proposed Sale of Our Yoplait • Purchase of Tyson Pet Treats Europe Interest to Sodiaal Business • Anticipated Close: End of CY21 • Anticipated Close: F22 Q1 We Remain Committed to Additional Portfolio Reshap
Slide 11: Reshaping Our Organization for Growth
Reshaping Our Organization for Growth • Aligning Structure and Resources with Accelerate Strategy • Streamlining and Simplifying the Organization, Bringing Functions and Capabilities Closer to the Business • Creating New Strategy & Growth Team • Redeploying Resources to Growth-facing Areas: • Digita
Slide 12: Our Fiscal 2022 Priorities
Our Fiscal 2022 Priorities Compete 1 Continue to Compete Effectively Navigate 2 Successfully Navigate the Dynamic Cost Environment Reshape 3 Execute Reshaping Actions Without Disruption General Mills Fourth Quarter Fiscal 2021 12
Slide 13: F22 Brand Building, Innovation, and Force for Good
F22 Brand Building, Innovation, and Force for Good Boldly Building Brands Relentlessly Innovating General Mills Fourth Quarter Fiscal 2021 13
Slide 14: Leveraging Capabilities in F22
Leveraging Capabilities in F22 Strategic Revenue Management Connected Commerce Optimal Price Mix Management Price Pack Promotion Architecture Optimization General Mills Fourth Quarter Fiscal 2021 14
Slide 15: Fiscal 2022 Financial Outlook
Fiscal 2022 Financial Outlook Expect F22 At-home Food Demand to Decline from Elevated F21 Levels, but Remain Higher than Pre-pandemic KEY FINANCIAL METRICS1 F22 OUTLOOK F19-F22 CGR2 Organic Net Sales Growth -3 to -1% ~2% Adjusted Operating Profit Growth3 -4 to -2% ~2% Adjusted Diluted EPS Growth3 -2
Slide 16: General Mills Earnings - Kofi Bruce, CFO
General Mills Earnings Fourth Quarter Fiscal 2021 June 30, 2021 Kofi Bruce Chief Financial Officer 16
Slide 17: Fourth Quarter Fiscal 2021 Financial Results
Fourth Quarter Fiscal 2021 Financial Results Q4 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $4,524 -10% +4% Organic Net Sales1 -6% +4% Adjusted Operating Profit1 $740 -18%2 +1%2 Adjusted Diluted EPS1 $0.91 -19%2 +4%2 (1) Non-GAAP measures. See appendix for reconciliation (2) Constant currenc
Slide 18: Components of Fourth Quarter Net Sales Growth
Components of Fourth Quarter Net Sales Growth Organic Net Sales1 -6% +2 pts Flat Flat -5 pts -6 pts -10 pts Organic Organic Foreign Acquisitions & Total Net Sales 53rd Week Volume Price / Mix Exchange Divestitures As Reported (1) Non-GAAP measure Table may not foot due to rounding General Mills Four
Slide 19: Fiscal 2021 North America Retail
Fiscal 2021 North America Retail Segment Results Full-year Segment Highlights North America Retail Q4 F21 • Broad-based F21 net sales growth across U.S. Meals Organic Net Sales¹ -13% +4% & Baking, Canada, U.S. Cereal, and U.S. Yogurt 2-year CGR¹ +6% +5% • Grew or held market share in ~50% of U.S. re
Slide 20: Fiscal 2021 Pet
Fiscal 2021 Pet Segment Results Full-year Segment Highlights Pet Q4 F21 • Lapping Fiscal ’20 calendar alignment that resulted in extra month of results in F20 Q4 Organic Net Sales¹ -20% +2% 2-year CGR¹ +5% +10% • F21 retail sales +DD; strong market share growth and household penetration gains Segmen
Slide 21: Fiscal 2021 Convenience Stores & Foodservice
Fiscal 2021 Convenience Stores & Foodservice Segment Results Full-year Segment Highlights CS&F Q4 F21 • F21 net sales decline due to lower away-from-home Organic Net Sales¹ +33% -3% food demand amid the pandemic 2-year CGR¹ -3% -6% • Sequential improvement in consumer traffic in Schools, Restaurants
Slide 22: Fiscal 2021 Europe & Australia
Fiscal 2021 Europe & Australia Segment Results Full-year Segment Highlights EUAU Q4 F21 • F21 net sales growth primarily driven by Mexican Food Organic Net Sales¹ -2% +3% and Ice Cream 2-year CGR¹ +1% +1% • Grew full-year market share on Ice Cream and Snack Bars Segment Op Profit² -16% +24% • F21 pr
Slide 23: Fiscal 2021 Asia & Latin America
Fiscal 2021 Asia & Latin America Segment Results Full-year Segment Highlights ASLA Q4 F21 • F21 Latin America net sales growth +DD driven by Organic Net Sales¹ +22% +15% strong Yoki and Kitano performance in Brazil 2-year CGR¹ +7% +6% • F21 Asia net sales +DD led by China and India, Segment Op Profi
Slide 24: Fiscal 2021 Joint Ventures
Fiscal 2021 Joint Ventures F21 AFTER-TAX JV EARNINGS: $118MM, +29% VS. LY JV Results Full-year JV Highlights NET SALES¹ Q4 F21 • F21 CPW net sales driven by broad-based volume growth, led by Brazil, Turkey, Russia, and Mexico CPW -2% +5% HDJ +12% +6% • F21 HDJ net sales driven by positive price/mix
Slide 25: Fiscal 2021 Margin Results
Fiscal 2021 Margin Results Adjusted Gross Margin1 Adjusted Operating Profit Margin1 (% OF NET SALES) (% OF NET SALES) 36.1% 35.2% 34.5% 34.8% 17.7% 17.3% 17.4% 16.3% Q4 F20 Q4 F21 F20 F21 Q4 F20 Q4 F21 F20 F21 Q4 margin contraction as expected, driven by volume deleverage F21 Adj. Op Profit Margin +
Slide 26: Fourth Quarter Fiscal 2021 Other Income Statement Items
Fourth Quarter Fiscal 2021 Other Income Statement Items • Unallocated Corporate Expenses Decreased $53MM ex. Certain Items • Net Interest Expense Decreased $16MM • Adjusted Effective Tax Rate 18.5% vs. 19.1% LY1 • Average Diluted Shares Outstanding Flat (1) Non-GAAP measure. See appendix for reconci
Slide 27: Fiscal 2021 Financial Results
Fiscal 2021 Financial Results FULL-YEAR 2-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $18,127 +3% +4% Organic Net Sales1 +4% +4% Adjusted Operating Profit1 $3,153 +2%2 +4%2 Adjusted Diluted EPS1 $3.79 +4%2 +8%2 (1) Non-GAAP measures. See appendix for reconciliation (2) Constant currency growth
Slide 28: Fiscal 2021 Balance Sheet and Cash Flow
Fiscal 2021 Balance Sheet and Cash Flow Operating Cash Flow • Core Working Capital +6% vs. LY ($ IN MILLIONS) • Capital Investments = $531MM, $3,676 +$70MM vs. LY $2,807 $2,983 • FCF Conversion = 103%1 • Dividends Paid = $1.2B • Shares Repurchased = $301MM F19 F20 F21 • Debt Leverage = 2.9x2 (1) Non
Slide 29: Fiscal 2022 Topline Assumptions
Fiscal 2022 Topline Assumptions We Will Continue to Compete Effectively in F22 % of Net Segments Key Consumer Demand Assumptions Sales North America Retail, Expect at-home food demand to decline vs. F21, ~70% Europe & Australia though remain above pre-pandemic levels Convenience Stores & Expect away
Slide 30: Fiscal 2022 Financial Assumptions
Fiscal 2022 Financial Assumptions Adjusted Operating Profit1 Assumptions: Headwinds Tailwinds Input Cost Inflation ~7% of COGS HMM Savings ~4% of COGS Volume Decline Positive Price/Mix from SRM Actions Supply Chain Deleverage Streamlined Organization Structure Growth Investments Reduction in COVID C
Slide 31: Fiscal 2022 Financial Outlook
Fiscal 2022 Financial Outlook KEY FINANCIAL METRICS1 F22 OUTLOOK F19-F22 CGR2 Organic Net Sales Growth -3 to -1% ~2% Adjusted Operating Profit Growth3 -4 to -2% ~2% Adjusted Diluted EPS Growth3 -2% to Flat ~5% Free Cash Flow Conversion ~95% (1) Non-GAAP measures (2) F19-F22 CGRs assume midpoint of F
Slide 32: Today's Key Messages
Today’s Key Messages • Strong Performance in F21; Achieved all F21 Priorities • Reshaping our Portfolio and Organization for Growth, Aligned with our Accelerate Strategy • F22 Priorities • Continue to Compete Effectively • Successfully Navigate the Dynamic Cost Environment • Execute Reshaping Action
Slide 33: 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 34: Appendix: Fiscal 2021 North America Retail Operating Unit Results
Appendix: Fiscal 2021 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q4 F21 Full-year F21 U.S. Meals & Baking -30% +5% Canada +3% +6% Canada Constant-currency¹ -9% +3% U.S. Cereal -16% +1% U.S. Yogurt -6% +1% U.S. Snacks -2% -2% (1) Net sales growth rates in constant c
Slide 35: Reconciliation of Fiscal 2021 Organic Net Sales Growth
Reconciliation of Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Full-year 2021 Organic Organic Organic Foreign Acquisitions Reported Net 53rd Week Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail 3 pts 1 pt 4% - - (2) pts 2% Europe & Australia - 4 pts 3% 7 pt
Slide 36: Reconciliation of Fiscal 2021 Organic Net Sales Compound Growth Rates
Reconciliation of Fiscal 2021 Organic Net Sales Compound Growth Rates Full-year (FISCAL YEARS) Organic Foreign Acquisitions 53rd Reported Net Net Sales Exchange & Divestitures Week Sales Growth North America Retail 2020 vs. 2019 6% - - 2 pts 8% 2021 vs. 2020 4% - - (2) pts 2% 2-year Ended F21 CGR 5%
Slide 37: Reconciliation of Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Full-year 2-year 2021 2020 Change 2020 2019 Change Ended F21 CGR Operating profit as reported $ 3,144.8 $ 2,953.9 6% $ 2,953.9 $ 2,515.9 17 % 11 % Restructuring charges 172.7 50.2 50.2
Slide 38: Reconciliation of Fiscal 2021 Adjusted Diluted EPS
Reconciliation of Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates Full-year (FISCAL YEARS) 2-year Per Share Data 2021 2020 Change 2020 2019 Change Ended F21 CGR Diluted earnings per share, as reported $ 3.78 $ 3.56 6 % $ 3.56 $ 2.90 23 % 14 % Restructuring charges** 0.22
Slide 39: Reconciliation of Fourth Quarter Fiscal 2021 Organic Net Sales Growth
Reconciliation of Fourth Quarter Fiscal 2021 Organic Net Sales Growth (FISCAL YEAR) Q4 2021 Organic Organic Organic Foreign Acquisitions Reported Net 53rd Week Volume Price/Mix Net Sales Exchange & Divestitures Sales Growth North America Retail (19) pts 7 pts (13)% 1 pt - (6) pts (17)% Pet (23) pts
Slide 40: Reconciliation of Fourth Quarter Fiscal 2021 Organic Net Sales Compound Growth Rates
Reconciliation of Fourth Quarter Fiscal 2021 Organic Net Sales Compound Growth Rates Q4 (FISCAL YEARS) Organic Foreign Acquisitions Net Sales Exchange & Divestitures 53rd Week Reported Net Sales Growth North America Retail 2020 vs. 2019 28% - - 9 pts 36% 2021 vs. 2020 (13)% 1 pt - (6) pts (17)% 2-ye
Slide 41: Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Operating Profit
Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) Q4 2-year 2021 2020 Change 2020 2019 Change Ended F21 CGR Operating profit as reported $ 547.9 $ 829.5 (34) % $ 829.5 $ 716.1 16 % (13) % Restructuring charges 159.1 13.
Slide 42: Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Diluted EPS
Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) Q4 2-year Per Share Data 2021 2020 Change 2020 2019 Change Ended F21 CGR Diluted earnings per share, as reported $ 0.68 $ 1.02 (33) % $ 1.02 $ 0.94 9% (15) % Restructuring char
Slide 43: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) 2021 Full-year 2020 2019 2018* Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $ 2,346.0 $ 2,210.8 $ 1,786.2 $ 2,284.4 Income taxes 629.1 480.5 367.8 104.3 Interest
Slide 44: Reconciliation of Fourth Quarter Fiscal 2021 Constant-currency Segment Operating Profit Growth
Reconciliation of Fourth Quarter Fiscal 2021 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Q4 Percentage Change Impact of Foreign Percentage Change in in Operating Profit Currency Operating Profit on as Reported Exchange Constant-Currency Basis North America Retail (30) % Flat (31)
Slide 45: Reconciliation of Fiscal 2021 Constant-currency Segment Operating Profit Growth
Reconciliation of Fiscal 2021 Constant-currency Segment Operating Profit Growth (FISCAL YEAR) Full-year Percentage Change Impact of Foreign Percentage Change in in Operating Profit Currency Operating Profit on as Reported Exchange Constant-Currency Basis North America Retail Flat Flat Flat Europe &
Slide 46: Reconciliation of Fourth Quarter and Fiscal 2021 Canada Constant-Currency Net Sales Growth
Reconciliation of Fourth Quarter and Fiscal 2021 Canada Operating Unit Constant-Currency Net Sales Growth (FISCAL YEAR) Canada Impact of Percentage Change Foreign Percentage Change in in Net Sales Currency Net Sales on Constant- as Reported Exchange Currency Basis Q4 3% (11) pts (9) % Full-year 6% 4
Slide 47: Reconciliation of Fourth Quarter and Fiscal 2021 Adjusted Gross Margin
Reconciliation of Fourth Quarter and Fiscal 2021 Adjusted Gross Margin (FISCAL YEAR) % of Net Sales Q4 Full-year 2021 2020 2021 2020 Gross margin as reported 35.0 % 35.2 % 35.6 % 34.8 % Mark-to-market effects (0.5) % 0.5 % (0.8) % 0.1 % Product recall adjustment, net (0.1) % 0.4 % - % 0.1 % Restruct
Slide 48: Reconciliation of Fourth Quarter and Fiscal 2021 Adjusted Operating Profit Margin
Reconciliation of Fourth Quarter and Fiscal 2021 Adjusted Operating Profit Margin (FISCAL YEAR) % of Net Sales Q4 Full-year 2021 2020 2021 2020 Operating profit as reported 12.1 % 16.5 % 17.3 % 16.8 % Restructuring charges 3.5 % 0.3 % 1.0 % 0.3 % Divesture loss 1.2 % -% 0.3 % -% Transaction costs 0.
Slide 49: Reconciliation of First Quarter Fiscal 2021 Adjusted Operating Profit Margin
Reconciliation of First Quarter Fiscal 2021 Adjusted Operating Profit Margin *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2021 49
Slide 50: Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Tax Rates
Reconciliation of Fourth Quarter Fiscal 2021 Adjusted Tax Rates (FISCAL YEAR, $ IN MILLIONS EXCEPT PER SHARE DATA) Q4 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 478.6 $ 106.9 $ 733.0 $ 139.6 Restructuring charges 159.1 33.0 13.0 3.2 Divestiture loss 53.5 0.
Slide 51: Reconciliation of Fiscal 2021 Adjusted Tax Rates
Reconciliation of Fiscal 2021 Adjusted Tax Rates (FISCAL YEAR, $ IN MILLIONS EXCEPT SHARE DATA) Full-year 2021 2020 Pretax Income Pretax Income Earnings** Taxes Earnings** Taxes As reported $ 2,857.4 $ 629.1 $ 2,600.2 $ 480.5 Restructuring charges 172.7 35.5 50.2 11.2 Divestiture loss 53.5 0.4 - - T
Slide 52: Reconciliation of Free Cash Flow and Free Cash Flow Conversion
Reconciliation of Free Cash Flow and Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) Full-year 2021 Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported $ 2,346.0 Restructuring charges** 137.2 Divestiture loss** 53.1 Tax item 11.2 Transaction