General Mills, Inc. · NYSE:GIS
General Mills — Q4 2022 Earnings Presentation
53 slides from General Mills's earnings presentation, Jun 29, 2022
Slide 1: Fiscal 2022 Q4 Earnings
Fiscal 2022 Q4 Earnings June 29, 2022
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
Jeff Harmening Chairman and Chief Executive Officer General Mills Fourth Quarter Fiscal 2022 3
Slide 4: Today's Key Messages
Today’s Key Messages • Delivered Strong Performance in F22 by Executing Well in a Volatile Operating Environment • Executed Significant Portfolio Reshaping Activity in F22 • Continue to Drive our Accelerate Strategy in Fiscal 2023 • Announced 6% Increase to Quarterly Dividend, Payable Aug. 1 General
Slide 5: Fourth-quarter and Fiscal 2022 Performance
Fourth-quarter and Fiscal 2022 Performance Q4 Annual 3-Yr CGR + 13% Organic Net Sales1 + 6% + 5% + 21% Adj. Operating Profit2 + 2% + 4% + 23% Adj. Diluted EPS2 + 4% + 7% (1) Non-GAAP measure. See appendix for reconciliation (2) Growth rates in constant currency. Non-GAAP measures. See appendix for r
Slide 6: Delivered Our Fiscal 2022 Priorities
Delivered 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 Fourth Quarter Fiscal 2022 6
Slide 7: Continued to Compete Effectively in F22
Continued to Compete Effectively in F22 Holding or Growing Share Strong Sustained Share Gains in Key Categories and Markets General Mills % Priority Business Holding/Growing Share 67% 70% Cereal Pet Food Mexican 63% 64% (Global) (Global) (Global) Ref. Dough Fruit Snacks Frozen Dumplings (U.S.) (U.S.
Slide 8: Successfully Navigated the Dynamic Supply Chain Environment in F22
Successfully Navigated the Dynamic Supply Chain Environment in F22 Overcame Disruptions to Addressed Inflation with Ensure Product Availability HMM and Increased Price/Mix General Mills U.S. Retail General Mills Organic Price/Mix % On-Shelf Availability¹ (Fiscal 2022) (ex Index Pricing) 100.0% 13% 9
Slide 9: Reshaped our Portfolio for Growth in F22
Reshaped our Portfolio for Growth in F22 Acquisitions Divestitures N.A. Pet N.A. Foodservice Europe Europe & Israel N.A. Main Meals Treats Dough Yogurt Dough & Side Dishes Europe Closed F22 Q1 Closed F23 Q1 Closed F22 Q3 Closed F22 H2* Est. Close F23 Q1 Executing an “Always On” Portfolio Reshaping S
Slide 10: Reshaped our Organization in F22
Reshaped our Organization in F22 • N.A. Retail: Realigned Structure & Commercial/Supply Chain Resources • N.A. Foodservice: Streamlined Focus on Foodservice Channels • International: Simplified Go-to-market Approach and Structure • Strategy & Growth Team: Enabling Activation of Accelerate Strategy R
Slide 11: Continue to Drive our Accelerate Strategy in F23
Our Fiscal 2023 Priorities Continue to Drive our Accelerate Strategy in F23 1 Continue to Compete Effectively 2 Continue to Invest for the Future 3 Continue to Reshape our Portfolio General Mills Fourth Quarter Fiscal 2022 11
Slide 12: Environment will Remain Dynamic in F23
Environment will Remain Dynamic in F23 Record Inflation Economic Volatility Continued Ongoing Pandemic Disruptions Impact General Mills Fourth Quarter Fiscal 2022 12
Slide 13: Continue to Compete Effectively in F23: Boldly Building Brands
Continue to Compete Effectively in F23 …by Boldly Building Brands General Mills Media ($MM) CGR = +5% Higher F19 F22 F23 Plan General Mills Fourth Quarter Fiscal 2022 13
Slide 14: Continue to Compete Effectively in F23: Relentlessly Innovating
Continue to Compete Effectively in F23 …by Relentlessly Innovating General Mills Fourth Quarter Fiscal 2022 14
Slide 15: Continue to Invest for the Future in F23
Continue to Invest for the Future in F23 HMM & SRM to Address Inflation Strategic Investments Growth Capital Connected Commerce Input Cost Inflation ~14% of COGS LDD% HMM Cost Savings 3% to 4% of COGS Digital & Technology Force for Good SRM Carryover + New Actions +LDD% Price/Mix General Mills Fourt
Slide 16: Committed to Being a Force for Good
Committed to Being a Force for Good Force for Good Priorities Progress on 10 Key Commitments SUSTAINABLE GHG SOURCING EMISSIONS HUMAN REGENERATIVE RIGHTS AGRICULTURE Regenerating Improving our Planet Food Security RENEWABLE PACKAGING ELECTRICITY ANIMAL WATER WELFARE Protecting Strengthening our FOOD
Slide 17: Fiscal 2023 Financial Outlook
Fiscal 2023 Financial Outlook KEY FINANCIAL METRICS1 F23 OUTLOOK Organic Net Sales Growth +4% to +5% Adjusted Operating Profit Growth² -2% to +1%* Adjusted Diluted EPS Growth² Flat to +3%* Free Cash Flow Conversion 90%+ *Includes F23 Net Impact of Divestitures and Acquisitions: -3 pts on Adj. Op Pro
Slide 18: Kofi Bruce
Kofi Bruce Chief Financial Officer General Mills Fourth Quarter Fiscal 2022 18
Slide 19: Fourth Quarter Fiscal 2022 Financial Results
Fourth Quarter Fiscal 2022 Financial Results Q4 TOTAL GENERAL MILLS $MM VS. LY Net Sales $4,891 +8% Organic Net Sales¹ +13% Adjusted Operating Profit¹ $896 +21%² Adjusted Diluted EPS¹ $1.12 +23%² (1) Non-GAAP measures. See appendix for reconciliation (2) Constant currency growth rates. Non-GAAP meas
Slide 20: Components of Fourth Quarter Net Sales Growth
Components of Fourth Quarter Net Sales Growth Organic Net Sales1 +13% +14 pts +8% -1 pt -2 pts -4 pts Organic Organic Foreign Acquisitions & Total Net Sales Volume Price / Mix Exchange Divestitures As Reported (1) Non-GAAP measure Table may not foot due to rounding General Mills Fourth Quarter Fisca
Slide 21: Fourth Quarter and Fiscal 2022 North America Retail
Fourth Quarter and Fiscal 2022 North America Retail Segment Results Full-year Segment Highlights North America Retail Q4 F22 • Organic net sales growth driven by positive price/mix, partially offset by lower volume Organic Net Sales +11%¹ +3%¹ Segment Op Profit +18%² -1%² • Net sales growth in U.S.
Slide 22: Fourth Quarter and Fiscal 2022 Pet
Fourth Quarter and Fiscal 2022 Pet Segment Results Full-year Segment Highlights • Annual organic net sales increase driven by Pet Q4 F22 positive price/mix and strong volume growth Organic Net Sales +22%¹ +18%¹ • Strong annual retail sales growth and market Segment Op Profit +10%² +13%² share gains
Slide 23: Fourth Quarter and Fiscal 2022 North America Foodservice
Fourth Quarter and Fiscal 2022 North America Foodservice Segment Results Full-year Segment Highlights • Organic net sales growth driven by positive North America Foodservice Q4 F22 price/mix, including market index pricing on Organic Net Sales +25%¹ +24%¹ bakery flour, as well as increased demand in
Slide 24: Fourth Quarter and Fiscal 2022 International
Fourth Quarter and Fiscal 2022 International Segment Results Full-year Segment Highlights • Organic net sales growth driven by positive International Q4 F22 price/mix Organic Net Sales +6%¹ +2%¹ • Grew or held market share in 69% of retail sales Segment Op Profit +40%² -4%² • Profit declined due to
Slide 25: Fourth Quarter and Fiscal 2022 Joint Ventures
Fourth Quarter and Fiscal 2022 Joint Ventures JV Net Sales¹ vs. LY Full-year JV Performance Highlights Q4 F22 • CPW net sales decline reflects comparison against pandemic-driven elevated volume in Fiscal 2021 CPW Flat -1% HDJ +6% +9% • HDJ net sales growth due to new product performance and strong u
Slide 26: Fourth Quarter Fiscal 2022 Margin Results
Fourth Quarter Fiscal 2022 Margin Results Adjusted Gross Margin1 Adjusted Operating Profit Margin1 (% OF NET SALES) (% OF NET SALES) 34.5% 33.8% 18.3% 16.3% 26 Q4 F21 Q4 F22 Q4 F21 Q4 F22 Q4 Adj. Gross Margin -70 bps driven by +DD input cost inflation, higher other COGS, and supply chain deleverage,
Slide 27: Fourth Quarter Fiscal 2022 Other Income Statement Items
Fourth Quarter Fiscal 2022 Other Income Statement Items • Adjusted Unallocated Corporate Expenses Increased $4MM • Net Interest Expense Increased $2MM • Adjusted Effective Tax Rate¹ 19.0% vs. 18.5% LY • Average Diluted Shares Outstanding -1% vs. LY (1) Non-GAAP measure. See appendix for reconciliati
Slide 28: Fiscal 2022 Financial Results
Fiscal 2022 Financial Results F22 3-YEAR TOTAL GENERAL MILLS $MM VS. LY CGR Net Sales $18,993 +5% +4% Organic Net Sales¹ +6% +5% Adjusted Operating Profit¹ $3,213 +2%² +4%² Adjusted Diluted EPS¹ $3.94 +4%² +7%² (1) Non-GAAP measures. See appendix for reconciliation (2) Constant currency growth rates
Slide 29: Fiscal 2022 Margin Results
Fiscal 2022 Margin Results Adjusted Gross Margin1 (% OF NET SALES) 34.8% 33.0% F21 Adj GM Price/Mix HMM Inflation Supply Chain Disruptions/ F22 Adj GM Deleverage/Other • Positive price/mix and HMM cost savings offset 8% input cost inflation; F22 Adj. Gross Margin decline driven by higher costs relat
Slide 30: Fiscal 2022 Cash Flow Performance
Fiscal 2022 Cash Flow Performance Operating Cash Flow ($ IN MILLIONS) • Core Working Capital -$205MM vs. LY $3,316 $2,983 • CAPEX = $569MM, +7% vs. LY • FCF Conversion¹ = 113% • Debt Leverage² = 2.8x F21 F22 (1) Non-GAAP measure. See appendix for reconciliation (2) Net Debt-to-Adjusted-EBITDA Ratio.
Slide 31: Fiscal 2022 Shareholder Return
Fiscal 2022 Shareholder Return Cash Return to Shareholders ($ IN BILLIONS) • Dividends Paid = $1.2B $2.0 $1.5 • Net Share Repurchases = $0.7B • 6% Dividend Increase Announced Today, Effective with the August 2022 Payment F21 F22 Net Share Repurchases Dividends Paid General Mills Fourth Quarter Fisca
Slide 32: Fiscal 2023 Financial Assumptions
Fiscal 2023 Financial Assumptions Adjusted Operating Profit¹ Assumptions Other Assumptions • Input Cost Inflation ~14% of COGS • Net Interest Roughly Flat at ~$380MM • HMM Savings 3 to 4% of COGS • Adjusted Effective Tax Rate¹ 21 to 22% • Price/Mix +LDD% • Average Diluted Shares Outstanding -2 to -3
Slide 33: Fiscal 2023 Financial Outlook
Fiscal 2023 Financial Outlook KEY FINANCIAL METRICS1 F23 OUTLOOK Organic Net Sales Growth +4% to +5% Adjusted Operating Profit Growth² -2% to +1%* Adjusted Diluted EPS Growth² Flat to +3%* Free Cash Flow Conversion 90%+ *Includes F23 Net Impact of Divestitures and Acquisitions: -3 pts on Adj. Op Pro
Slide 34: Today's Key Messages
Today’s Key Messages • Delivered Strong Performance in F22 by Executing Well in a Volatile Operating Environment • Executed Significant Portfolio Reshaping Activity in F22 • Continue to Drive our Accelerate Strategy in Fiscal 2023 • Announced 6% Increase to Quarterly Dividend, Payable Aug. 1 General
Slide 35: A Reminder on Non-GAAP Guidance
A Reminder on Non-GAAP Guidance Our fiscal 2023 outlook for organic net sales growth, constant-currency adjusted operating profit, adjusted diluted EPS, and free cash flow are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the
Slide 36: Appendix: Fiscal 2022 North America Retail Operating Unit Results
Appendix: Fiscal 2022 North America Retail Operating Unit Results NET SALES % VS. LY Operating Unit Q4 Annual U.S. Snacks +18% +9% U.S. Morning Foods +5% +2% Canada -1% +3% Canada Constant-currency¹ +1% +1% U.S. Meals & Baking Solutions +14% Flat (1) Net sales growth in constant currency. Non-GAAP m
Slide 37: Reconciliation of Canada Operating Unit Constant-Currency Net Sales Growth
Reconciliation of Fourth Quarter and Fiscal 2022 Canada Operating Unit Constant-Currency Net Sales Growth General Mills Fourth Quarter Fiscal 2022 37
Slide 38: Reconciliation of Fourth Quarter and Fiscal 2022 Organic Net Sales Growth
Reconciliation of Fourth Quarter and Fiscal 2022 Organic Net Sales Growth *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 38
Slide 39: Reconciliation of Organic and Reported Net Sales Compound Growth Rates
Reconciliation of Fiscal 2022 Organic and Reported Net Sales Compound Growth Rates *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 39
Slide 40: Reconciliation of Adjusted Operating Profit Constant-currency Growth Rate
Reconciliation of Fourth Quarter and Fiscal 2022 Adjusted Operating Profit Constant-currency Growth Rate (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 40
Slide 41: Reconciliation of Adjusted Operating Profit Compounded Growth Rate
Reconciliation of Fiscal 2022 Adjusted Operating Profit Constant-currency Compounded Growth Rate (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 41
Slide 42: Reconciliation of Adjusted Diluted EPS and Constant-currency Growth Rates
Reconciliation of Fourth Quarter and Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Growth Rates (FISCAL YEARS) *Table may not foot due to rounding **See reconciliation of tax rate items for tax impact of individual items General Mills Fourth Quarter Fiscal 2022 42
Slide 43: Reconciliation of Adjusted Diluted EPS Compound Growth Rates
Reconciliation of Fiscal 2022 Adjusted Diluted EPS and Related Constant-currency Compound Growth Rates (FISCAL YEARS) *Table may not foot due to rounding **See reconciliation of tax rate items for tax impact of individual items General Mills Fourth Quarter Fiscal 2022 43
Slide 44: Reconciliation of Segment Organic Net Sales Growth Rates
Reconciliation of Fourth Quarter and Fiscal 2022 Segment Organic Net Sales Growth Rates *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 44
Slide 45: Reconciliation of Constant-currency Segment Operating Profit Growth
Reconciliation of Fourth Quarter and Fiscal 2022 Constant-currency Segment Operating Profit Growth *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 45
Slide 46: Reconciliation of Fourth Quarter Adjusted Gross Margin
Reconciliation of Fourth Quarter Fiscal 2022 Adjusted Gross Margin (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 46
Slide 47: Reconciliation of Fourth Quarter Adjusted Operating Profit Margin
Reconciliation of Fourth Quarter Fiscal 2022 Adjusted Operating Profit Margin (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 47
Slide 48: Reconciliation of Fourth Quarter Adjusted Tax Rates
Reconciliation of Fourth Quarter Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) *Table may not foot due to rounding (a) Earnings before income taxes and after-tax earnings from joint ventures General Mills Fourth Quarter Fiscal 2022 48
Slide 49: Reconciliation of Fiscal 2022 Adjusted Gross Margin
Reconciliation of Fiscal 2022 Adjusted Gross Margin (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 49
Slide 50: Reconciliation of Fiscal 2022 Adjusted Operating Profit Margin
Reconciliation of Fiscal 2022 Adjusted Operating Profit Margin (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 50
Slide 51: Reconciliation of Fiscal 2022 Free Cash Flow Conversion
Reconciliation of Fiscal 2022 Free Cash Flow Conversion (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding General Mills Fourth Quarter Fiscal 2022 51
Slide 52: Reconciliation of Net Debt-to-Adjusted EBITDA Ratio
Reconciliation of Net Debt-to-Adjusted EBITDA Ratio (FISCAL YEARS, $ IN MILLIONS) *Table may not foot due to rounding (a) Notes payable and long-term debt, including current portion. General Mills Fourth Quarter Fiscal 2022 52
Slide 53: Adjusted Tax Rates
Reconciliation of Fiscal 2019 to Fiscal 2022 Adjusted Tax Rates (FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA) *Table may not foot due to rounding (a) Earnings before income taxes and after-tax earnings from joint ventures General Mills Fourth Quarter Fiscal 2022 53