General Mills : CAGNY 2021 Presentation Slides

CAGNY 2021

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 and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including: the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the supply chain, including any impact of the COVID-19 pandemic; competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, and energy; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our

information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war. The company undertakes no obligation to publicly revise any forward-looking statements to reflect any future events or circumstances.

CAGNY 2021

2

JEFF HARMENING

Chairman and CEO

TODAY'S KEY MESSAGES

BUILDING on our sustained momentum

EXECUTING our Accelerate Strategy

BULLISH on our prospects for generating profitable growth and superior shareholder returns

CAGNY 2021

4

WE'VE BEEN WINNING

Building Momentum

Pre-PandemicContinued Strong Execution

Amid Pandemic

1H F21:

sales growth +8%1

Strengthened organic net

Improved market share

performance +13%2

Continued strong results

on margins and cash +17%2

Organic Net Sales

Adjusted Operating Profit

Adjusted Diluted EPS

• 1 Non-GAAP measure. See appendix for reconciliation

• 2 Constant currency growth rate. Non-GAAP measure. See appendix for reconciliation

5

OUR ACCELERATE STRATEGY

*Non-GAAP measures

1 Constant currency growth rate

6

Core markets make up

95%

of total F20 Net Sales

PRIORITIZING 8 CORE MARKETS

WINNING IN NORTH AMERICA AS #1 PRIORITY

7

of F20 Net Sales

GLOBAL PLATFORMS

INVE AS D T V I A N N G TA IN GE A D RE P A L S AT W FO IT R H MS WITH

HIGHEST GROWTH POTENTIAL

GLOBAL GROWTH POTENTIAL

CAGNY 2021

8

of F20 Net Sales

LOCAL GEMS

ATTRACTIVE LOCAL AND REGIONAL GROWTH DRIVERS

CAGNY 2021

9

• ✓ Growth accretive

• ✓ Bolt-on

  PORTFOLIO RESHAPING

  BUILDING ON OUR STRONG TRACK RECORD OF GROWTH-ENHANCING M&A

  Accretive Acquisitions

• ✓ Present in our core markets

• ✓ Existing or new growth platforms that leverage our capabilities

Strategic Divestitures

✓ Targeting roughly 5% of sales

✓ Growth dilutive platforms with lower ROI

BOLDLY BUILDING BRANDS

MEETING CONSUMERS WHERE THEY ARE WITH

PURPOSE-DRIVEN BRANDS

CREATING NEW SOLUTIONS TO REAL CONSUMER PROBLEMS

RELENTLESSLY INNOVATING

Core Platform

InnovationInternal Start-Up Accelerator

301 INC Investment Arm

UNLEASHING OUR SCALE

Enhancing Core Capabilities

Across our Business

Management

BEING A FORCE FOR GOOD

Our Priorities

CLIMATE COMMITMENTS

By 2030:

By 2050:

Advance regenerative	Reduce greenhouse	Achieve net-zero
agriculture on	gas emissions	greenhouse gas
1MM acres	by 30%	emissions

WHERE TO PLAYHOW TO WIN

ACCELERATE GROWTH

Goal: Drive Top-Tier Shareholder Returns

IVAN POLLARD

Chief Marketing Officer

OUR BELIEFS ABOUT BRAND BUILDING

Brands	Big Ideas	Execution
Matter	Count	is Crucial

OUR PLAYBOOK FOR BOLDLY BUILDING BRANDS IS EVOLVING

Clear Brand Anatomies,

Built with PurposeExecuting with a New, Modern Playbook

Connected CommerceCultural CapitalCompelling Creative

Upskill marketers 3x the Speed

Quantum Marketing

Intelligent Investment

Evolution of Insights

THE SIZE OF OUR INVESTMENT IS INCREASING

TOTAL MEDIA SPENDING

F19

F20

F21 Est.

$ in Millions

THE SHAPE OF OUR INVESTMENT IS EVOLVING

FOLLOW THE CONSUMER AND USE THE BEST TOOL TO GET THE JOB DONE

MIX OF MEDIA SPENDING

F19

F21 Est.

Bars represent proportion of total media spend in each fiscal year

THE CREATION OF CONNECTED COMMERCE:

BOX TOPS FOR EDUCATION

ACTION

Digitized Box Tops Program

IMPACT

LEVERAGING CULTURAL CAPITAL

FOR GOOD: WHEATIES

ACTION

Featuring Influencers and their Causes

IMPACT

Source: Wheaties Nielsen xAOC FYTD vs. LY through 1/2/21

Source: Newsweek December 2020

Growth

#1

Consumer

Goods

#6

Overall

THE ELEVATION OF COMPELLING

CREATIVITY: HÄAGEN-DAZS

ACTION

New Modern Campaign

Source: Häagen-Dazs Europe & Australia Nielsen/IRI June to August 2020 vs. LY

IMPACT

Growth

Growth

Chief Financial Officer

KOFI BRUCE

ACCELERATE GROWTH

Goal: Drive Top-Tier Shareholder Returns

Organic Net Sales* +2 to +3%

*Non-GAAP measures

1 Constant currency growth rate. Non-GAAP measures

Adj. Operating Profit*

+MSD1

FCF Conversion* 95%+

Cash Returns to

Shareholders ~80-90%Adj. Diluted EPS* +MSD to +HSD1

INCREASING NET SALES GROWTH EXPOSURE

WITH PORTFOLIO RESHAPING

NET SALES GROWTH EXPOSURE

+2 to +3%

Existing Portfolio

Portfolio Reshaping Impact

Target Exposure

MARGIN EXPANSION TO SUPPORT +MSD ADJ. OPERATING PROFIT GROWTH

Adj. Op. Profit Margin*

(% of Net Sales)

17.3%

F18

16.6%

16.9%

F19

*Non-GAAP measure. See appendix for reconciliation

F20

F21 Est.

Levers to Expand Margins

EXCELLENT CASH MANAGEMENT PROVIDES

BALANCE SHEET FLEXIBILITY

(3-Year Rolling, $ in Billions)

$8.0

$7.7

$7.0

$6.0

$5.0

$4.0

$3.0

$2.0

F15-F17

160% 150% 140%

Delivering on

F16-F18

F17-F19

F18-F20

130%Long-term FCF

120%Conversion

110%

Target ≥ 95%

100%

90%

80%

70%

Free Cash Flow*Free Cash Flow Conversion*

*Non-GAAP measures. See appendix for reconciliation

LONG-TERM CAPITAL ALLOCATION PRIORITIES

Achieved Target Leverage* of 3.0x in F21

Enables Execution on our

Long-term Priorities

F18 Pro Forma

F19

3.2x

2.9x

F20

Q2 F21

*Net Debt to Trailing 12-Month Adjusted-EBTIDA Ratio. Non-GAAP measure. See appendix for reconciliation

• • CAPEX ~4% of Net Sales

• • Grow Dividends with Earnings

• • Strategic M&A

• • Share Repurchases

ACHIEVING OUR FISCAL

2021 PRIORITIES

3

1

Compete

Fuel Investments

Reduce

Compete Effectively, Everywhere We Play

Drive Efficiency to Fuel Investments in Brands and Capabilities

Reduce Debt Leverage to Increase Financial Flexibility

REAFFIRMING SECOND HALF FISCAL 2021 ASSUMPTIONS

*Non-GAAP measures

TODAY'S KEY MESSAGES

BUILDING on our sustained momentum

EXECUTING our Accelerate Strategy

BULLISH on our prospects for generating profitable growth and superior shareholder returns

OUR ACCELERATE STRATEGY

*Non-GAAP measures

1 Constant currency growth rate

CAGNY 2021

A REMINDER ON NON-GAAP GUIDANCE

Our outlook for organic net sales growth and adjusted operating profit margin are non-GAAP financial measures that exclude, or have otherwise been adjusted for, items impacting comparability, including the effect of foreign currency exchange rate fluctuations, acquisitions, divestitures, and a 53rd week, when applicable. We are not able to reconcile these forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measure without unreasonable efforts because we are unable to predict with a reasonable degree of certainty the actual impact of changes in foreign currency exchange rates or the timing of acquisitions and divestitures throughout fiscal 2021. The unavailable information could have a significant impact on our fiscal 2021 GAAP financial results.

RECONCILIATION OF FISCAL 2021 ORGANIC NET SALES GROWTH

*Table may not foot due to rounding

Organic

(FISCAL YEAR)

OrganicOrganic Foreign Acquisitions Reported NetVolume Price/MixNet Sales Exchange & Divestitures Sales Growth

F21 Q2	4 pts	3 pts	7%	-	-	7%
F21 1H	6 pts	3 pts	8%	-	-	8%

RECONCILIATION OF FIRST HALF FISCAL 2021 ADJUSTED OPERATING PROFIT CONSTANT-CURRENCY GROWTH RATE

*Table may not foot due to rounding

(FISCAL YEARS, $ IN MILLIONS)

2021

1H

2020

ChangeOperating profit as reported Mark-to-market effects Investment activity, net Product recall Restructuring charges Project-related costs

$ 1,770.3 $ 1,473.6

(62.3) (19.0)

(7.6) 3.7

7.1

1.9 24.8

- 0.7

20 %

-

Adjusted operating profit

$ 1,698.0

$ 1,495.2

Foreign currency exchange impact Adjusted operating profit growth, on a constant-currency basis

14 % 1 pt

13 %

RECONCILIATION OF FIRST HALF FISCAL 2021 ADJUSTED DILUTED EPS AND RELATED CONSTANT-CURRENCY GROWTH RATES

Per Share Data

Diluted earnings per share, as reported

Mark-to-market effects**

Investment activity, net** Product recall** Restructuring charges** Tax item

Adjusted diluted earnings per share Foreign currency exchange impact Adjusted diluted earnings per share growth, on a constant-currency basis

*Table may not foot due to rounding **See reconciliation of tax rate excluding items for tax impact of individual items

(FISCAL YEARS)

1H

2021

2020

$

2.14 $ 1.80

• (0.08) (0.01)

(0.02) 0.01

- -

• - 0.03

• - (0.09)

$

2.06 $

Change

19 %

1.74

18 % 1 pt

17 %

RECONCILIATION OF FIRST HALF FISCAL 2021 INCOME TAXES ON ADJUSTING ITEMS

(FISCAL YEARS, $ IN MILLIONS EXCEPT PER SHARE DATA)

Pretax Earnings**

As reported Mark-to-market effects Investment activity, net Product recall Restructuring charges Project-related costs Tax item

As adjusted Effective tax rate:

As reported

As adjusted

Sum of adjustment to income taxes

Average number of common shares - diluted EPS

Impact of income tax adjustments on adjusted diluted EPS

*Table may not foot due to rounding **Earnings before income taxes and after-tax earnings from joint ventures

2021

1H

2020

Income Taxes

Pretax Earnings**

$

1,624.8 $

(62.3)

(19.0)

7.1

1.9

- -$

1,552.4 $

360.2 $

(14.3)

(4.4)

0.8

0.5

- -342.8 $

Income Taxes

1,295.9 $ 222.7

• (7.6) (1.7)

• 3.7 4.4

  -

• 24.8 4.3

• 0.7 0.1

• - 53.1

-1,317.5 $ 282.8

22.2% 17.2%

22.1% 21.5%

$

(17.4)

$ 60.2

619.7 611.8

$

(0.03)

$ 0.10

RECONCILIATION OF ADJUSTED OPERATING PROFIT MARGIN

(FISCAL YEARS)

Percent of Net Sales

2020	2020
Full-year	Q3
Operating profit margin as reported	16.8 %	15.6 %
Restructuring charges	0.3	0.3
Mark-to-market effects	0.1	0.2
Product recall	0.1	-
Asset impairments	-	-
Divestitures loss	-	-
Acquisition transaction and integration costs	-	-
Investment activity, net	-
Legal recovery	-
Project-related costs	-
Adjusted operating profit margin	17.3 %
*Table may not foot due to rounding

2019	2018
Full-year	Full-year
14.9 %	15.4 %
0.5	0.5
0.2	(0.2)
-	-
1.2	0.6
0.2	-
0.1	0.2
(0.1)	-
-	(0.1)	-
-	-
16.1 %	16.9 %

0.1

0.1 16.6 %

RECONCILIATION OF FREE CASH FLOW AND FREE CASH FLOW CONVERSION

Net earnings, including earnings attributable to redeemable and noncontrolling interests Restructuring charges** Mark-to-market effects** Product recall**

CPW restructuring costs Investment activity** Project-related costs** Tax items

Asset impairments**

Acquisition transaction and integration costs** Divestitures loss (gain)**

Hyperinflationary accounting** Net tax benefit

Legal recovery**

Venezuela currency devaluation**

Adjusted net earnings, including earnings attributable to redeemable and noncontrolling interests

Net cash provided by operating activities, as reported Purchases of land, buildings, and equipment

Free cash flow

Free cash flow, rolling 3-year

Free cash flow conversion, rolling 3-years

(FISCAL YEARS, $ IN MILLIONS)
Full-year
2020 2019 2018	2017	2016	2015
$1,701	$1,737	$1,259
154	161	218
(9)	(40)	56
-	-	-
-	-	-
-	-	-
28	37	8
-	-	79
-	-	177
-	-	10
9	(66)	-
-	-	-
-	-	-
-	-	-
-	-	8
$1,884	$1,829	$1,815
$2,415	$2,764	$2,648
($684)	($729)	($712)
$1,731	$2,035	$1,936
$5,702	$5,930	$6,329
103%	108%	115%

$2,211

$1,786

$2,163

39

63

19

• 28 (22)

17

-

5

11

3

(18)

1

1

(53)

(73)

- - - - - - -

160

20

16

3

• (7) (523)

(11)

-

$2,242

$1,980

$1,853

$3,676

$2,807

$2,841

($461)

($538)

$3,215

$2,269

$2,218

$7,703

$6,219

$5,984

127%

109%

*Table may not foot due to rounding

**All adjustments are Net of Income Taxes. See reconciliation of Income Taxes on Adjusting Items

61

- 2 - 8 41 65 58 - -

- -

($623)

108%

RECONCILIATION OF NET DEBT-TO-ADJUSTED EBITDA RATIO

(FISCAL YEARS, $ IN MILLIONS)

Net earnings, including earnings attributable to redeemable and noncontrolling interests, as reported

Income taxes 618.0

Interest, net 440.2

Depreciation and amortization 582.1

EBITDA

After-tax earnings from joint ventures Mark-to-market effects

Investment activity, net Project-related costs Product recall Restructuring charges Asset impairments Divestitures loss Acquisition integration costs Hyperinflationary accounting Legal recovery

Adjusted EBITDA

Total debt

Cash

Net debt

Net debt-to-adjusted EBITDA ratio

*Table may not foot due to rounding

**On a pro-forma basis

Trailing 12 Months Ending 2021 Q2

$ 2,433.1

$

$ $

4,073.4

(122.1)

(30.0)

(14.3)

$

$

2020	2019	2018**
Full-year	Full-year	Full-year
2,210.8 $	1,786.2 $	2,284.4
480.5	367.8	104.3
466.5	521.8	527.8
594.7	620.1	642.6
3,559.1
(84.7)
(32.1)
-

3,752.5 $

3,295.9 $

(91.1) (72.0) 24.7 36.0 8.4 (22.8)

0.8

1.5 1.3 11.3

26.4

19.3 50.2

27.3

-

77.6 82.7

- - - - -- - - - -

3,961.5

$

3,765.6 $

207.4 96.9

-

(16.2)

30.0

25.6

3.2

- - - -

3,566.0 $ 3,633.2

13,964.4 $ 13,539.5 $ 14,490.0 $ 15,818.6

2,582.8 1,677.8 450.0

$

11,381.7

$ 11,861.7 $ 14,040.0 $

399.0 15,419.6

2.9

3.2

3.9

4.2

RECONCILIATION OF INCOME TAXES ON ADJUSTING ITEMS

Pretax Earnings**

As reported

Tax items Restructuring charges Mark-to-market effects Product recall Investment activity, net Project-related costs Asset impairments Divestitures loss (gain) Acquisition transaction and integration costs Hyperinflationary accounting Legal recovery

Net tax benefit

Venezuela currency devaluation As adjusted

*Table may not foot due to rounding

**Earnings before income taxes and after-tax earnings from joint ventures

(FISCAL YEARS, $ IN MILLIONS)

Full-year

2020

2019

2018

2017

2016

2015

Income

PretaxTaxes Earnings**

$2,600

$481

$2,082

Income Pretax Income Pretax	Income Pretax	Income Pretax Income
Taxes Earnings** Taxes Earnings**	Taxes Earnings**	Taxes Earnings** Taxes

$368

$2,136

- 53

50 11

25 6

19 2

8 5

2 0

- 78 36

73 15 8

(23)

(5)

1

-

- - - - - - - $2,704

- - - - - - - $559

207

48

30

14

26

3

6 -

• (16) (5)

- 83 (32)

$57

(41) 21 (10)

$2,271

- 224 (14)

$655

- 70 (5)

$2,404

- 230 (63)

$755

-$1,762 $587 - (79)

• 69 344 126

• (23) 90 33

- - $2,424

7 - $528

- $2,378

- 11 97 - 84

- -

• - 523

- $612

- 3 32 - 25

- -

- - - - - $2,539

- 44 - 14

- 16 - 4 - - - - - $740

- $2,480

- (148)

- 58

-

-

-

-

- - - - - $740

- 21 - (82)

- - - 8 $2,492

- 13 260 - 16

- 5 83 - 6 - - - - $761