General Mills Board of Directors Declares
Six Percent Dividend Increase
Full Year Highlights
- Net sales of $19.0 billion increased 5 percent from the
prior year; organic net sales¹ were up 6 percent.
- Operating profit increased 11 percent to $3.5 billion;
constant-currency adjusted operating profit was up 2
percent.
- Diluted earnings per share (EPS) of $4.42 were up 17
percent; adjusted diluted EPS of $3.94 increased 4 percent in
constant currency.
- Operating cash flow increased 11 percent to $3.3
billion.
Fourth Quarter
Highlights
- Net sales increased 8 percent to $4.9 billion; organic net
sales increased 13 percent.
- Operating profit increased 85 percent to $1.0 billion;
constant-currency adjusted operating profit increased 21
percent.
- Diluted EPS of $1.35 increased 98 percent; adjusted diluted
EPS of $1.12 were up 23 percent in constant currency.
¹ Please see Note 7 to the Consolidated Financial Statements
below for reconciliation of this and other non-GAAP measures used
in this release.
General Mills (NYSE: GIS) today reported results for the fourth
quarter and fiscal year ended May 29, 2022.
“Fiscal 2022 was another successful year for General Mills,
marking the fourth consecutive year that we’ve delivered results
that met or exceeded our targets for top and bottom-line growth and
cash generation,” said General Mills Chairman and Chief Executive
Officer Jeff Harmening. “I am proud of the way our team advanced
our Accelerate strategy this year by executing well on our core
business while taking significant steps to reshape our portfolio.
Though significant inflation and supply chain disruptions put
pressure on our margins, we responded quickly to address those
challenges and keep our brands on shelf for our customers and
consumers.
“We plan to build on our strong momentum in fiscal 2023 by
continuing to compete effectively, investing in our brands and
capabilities, and reshaping our portfolio. Importantly, our board
reinforced its confidence in our performance and outlook by
approving a six percent increase in our dividend, underlining our
commitment to driving strong returns for General Mills shareholders
over the long term.”
General Mills is executing its Accelerate strategy to drive
sustainable, profitable growth and top-tier shareholder returns
over the long term. The strategy focuses on four pillars to create
competitive advantages and win: boldly building brands,
relentlessly innovating, unleashing scale, and being a force for
good. The company is prioritizing its core markets, global
platforms, and local gem brands that have the best prospects for
profitable growth and is committed to reshaping its portfolio with
strategic acquisitions and divestitures, including seven
transactions announced or completed in fiscal 2022, to further
enhance its growth profile.
Fourth Quarter Results
Summary
- Net sales increased 8 percent to $4.9 billion, including
a 4-point net headwind from divestiture and acquisition activity
and one point of unfavorable foreign currency exchange. Organic net
sales increased 13 percent. Organic net price realization and mix
added 14 points to organic net sales growth, driven by Strategic
Revenue Management (SRM) actions put in place in response to
significant input cost inflation including a 2-point benefit from
index pricing on bakery flour in the North America Foodservice
segment. Lower organic pound volume was a 2-point headwind to
organic net sales growth.
- Gross margin was up 120 basis points to 36.2 percent of
net sales, driven by favorable net price realization and mix and
mark-to-market effects, partially offset by higher input costs.
Adjusted gross margin was down 70 basis points to 33.8 percent of
net sales, driven by double-digit input cost inflation, higher
other cost of goods sold, and supply chain deleverage, partially
offset by favorable net price realization and mix and Holistic
Margin Management (HMM) cost savings.
- Operating profit of $1.0 billion was up 85 percent,
driven primarily by higher gross profit dollars, lower
restructuring charges, and divestiture gains, partially offset by
unfavorable net investment activity. Operating profit margin
of 20.8 percent was up 870 basis points. Constant-currency adjusted
operating profit increased 21 percent, driven by higher adjusted
gross profit dollars and lower adjusted selling, general, and
administrative (SG&A) expenses. Adjusted operating profit
margin increased 200 basis points to 18.3 percent.
- Net earnings attributable to General Mills were up 97
percent to $823 million and diluted EPS was up 98 percent to
$1.35, driven primarily by higher operating profit and lower
average diluted shares outstanding. Adjusted diluted EPS of $1.12
increased 23 percent in constant currency, driven primarily by
higher adjusted operating profit and lower average diluted shares
outstanding.
Full Year Results
Summary
- Net sales increased 5 percent to $19.0 billion,
including a 1-point net headwind from divestiture and acquisition
activity. Organic net sales increased 6 percent. Organic net price
realization and mix added 7 points to organic net sales growth,
driven by SRM actions put in place in response to significant input
cost inflation including a 1-point benefit from index pricing on
bakery flour in the North America Foodservice segment. Lower
organic pound volume was a 1-point headwind to organic net sales
growth.
- Gross margin was down 190 basis points to 33.7 percent
of net sales, driven by higher input costs, partially offset by
favorable net price realization and mix. Adjusted gross margin was
down 180 basis points to 33.0 percent of net sales, driven by 8
percent annual input cost inflation, higher other cost of goods
sold, and supply chain deleverage, partially offset by favorable
net price realization and mix and HMM cost savings.
- Operating profit of $3.5 billion was up 11 percent,
driven primarily by gains on divestitures and lower restructuring
charges, partially offset by unfavorable net investment activity.
Operating profit margin of 18.3 percent was up 100 basis
points. Constant-currency adjusted operating profit increased 2
percent, driven by lower adjusted SG&A expenses. Adjusted
operating profit margin decreased 50 basis points to 16.9
percent.
- Net earnings attributable to General Mills were up 16
percent to $2.7 billion and diluted EPS was up 17 percent to
$4.42, primarily reflecting higher operating profit, a lower
effective tax rate, and lower average diluted shares outstanding.
Adjusted diluted EPS of $3.94 was up 4 percent in constant
currency, driven primarily by higher adjusted operating profit,
lower net interest expense, and lower average diluted shares
outstanding, partially offset by lower non-service benefit plan
income.
Portfolio Reshaping
General Mills took important steps to advance its portfolio
reshaping efforts during fiscal 2022, announcing or closing seven
transactions that are expected to increase the company’s top- and
bottom-line growth profile over the long term. These include the
acquisition of the Nudges, True Chews, and Top Chews pet treats
brands in North America, which closed in the first quarter of
fiscal 2022; the divestiture of yogurt in Europe, which closed in
the second quarter of fiscal 2022; a series of divestitures of
dough in Europe and Israel, which closed between the third quarter
of fiscal 2022 and the first quarter of fiscal 2023; the
acquisition of the TNT Crust foodservice pizza crust business in
North America, which closed in the first quarter of fiscal 2023;
and the prospective divestiture of the Helper main meals and
Suddenly Salad side dishes businesses in North America, which is
expected to close in the first quarter of fiscal 2023.
Operating Segment
Results
Note: Tables may not foot due to rounding.
Components of Fiscal 2022
Reported Net Sales Growth
Fourth Quarter
Volume
Price/Mix
Foreign Exchange
Reported Net Sales
North America Retail
(3) pts
15 pts
--
11%
Pet
12 pts
25 pts
--
37%
North America Foodservice
(2) pts
27 pts
--
25%
International
(33) pts
14 pts
(2) pts
(21)%
Total
(9) pts
18 pts
(1) pt
8%
Full Year
North America Retail
(6) pts
9 pts
--
3%
Pet
11 pts
19 pts
--
30%
North America Foodservice
5 pts
19 pts
--
24%
International
(19) pts
9 pts
1 pt
(9)%
Total
(5) pts
10 pts
--
5%
Components of Fiscal 2022
Organic Net Sales Growth
Fourth Quarter
Organic Volume
Organic Price/Mix
Organic Net Sales
Foreign Exchange
Acquisitions &
Divestitures
Reported Net Sales
North America Retail
(3) pts
15 pts
11%
--
--
11%
Pet
8 pts
14 pts
22%
--
15 pts
37%
North America Foodservice
(2) pts
27 pts
25%
--
--
25%
International
--
6 pts
6%
(2) pts
(25) pts
(21)%
Total
(2) pts
14 pts
13%
(1) pt
(4) pts
8%
Full Year
North America Retail
(6) pts
9 pts
3%
--
--
3%
Pet
8 pts
10 pts
18%
--
13 pts
30%
North America Foodservice
5 pts
19 pts
24%
--
--
24%
International
--
2 pts
2%
1 pt
(12) pts
(9)%
Total
(1) pt
7 pts
6%
--
(1) pt
5%
Fiscal 2022 Segment Operating
Profit Growth
Fourth Quarter
% Change as Reported
% Change in Constant
Currency
North America Retail
18%
18%
Pet
10%
10%
North America Foodservice
23%
23%
International
36%
40%
Total
18%
19%
Full Year
North America Retail
(1)%
(1)%
Pet
13%
13%
North America Foodservice
26%
26%
International
(2)%
(4)%
Total
2%
2%
North America Retail Segment
Fourth-quarter net sales for General Mills’ North America Retail
segment increased 11 percent to $3.0 billion, driven by favorable
net price realization and mix, partially offset by lower pound
volume. Organic net sales were also up 11 percent. Net sales were
up 18 percent in U.S. Snacks, up 14 percent in U.S. Meals &
Baking Solutions, up 5 percent in U.S. Morning Foods, and down 1
percent in Canada. Segment operating profit of $764 million was up
18 percent as reported and in constant currency, driven primarily
by favorable net price realization and mix, partially offset by
higher input costs and lower volume.
For the full year, North America Retail segment net sales
increased 3 percent to $11.6 billion. Net price realization and mix
added 9 points to net sales growth, driven by SRM actions put in
place in response to significant input cost inflation. Pound volume
was a 6-point headwind to net sales growth. Organic net sales were
also up 3 percent. Segment operating profit of $2.7 billion was
down 1 percent as reported and in constant currency, driven
primarily by higher input costs and lower volume, partially offset
by favorable net price realization and mix and lower SG&A
expenses.
Pet Segment
Fourth-quarter net sales for the Pet segment increased 37
percent to $610 million, driven by favorable net price realization
and mix and pound volume growth. Net sales results in the quarter
included a 15-point benefit from the pet treats acquisition.
Organic net sales were up 22 percent. Segment operating profit
increased 10 percent to $113 million, driven primarily by favorable
net price realization and mix and higher volume, including benefits
from the pet treats acquisition, partially offset by higher input
costs and higher SG&A expenses.
For the full year, Pet segment net sales increased 30 percent to
$2.3 billion. Net price realization and mix added 19 points to net
sales growth, including 9 points of favorable mix from the pet
treats acquisition and the impact of SRM actions put in place in
response to input cost inflation. Pound volume added 11 points to
net sales growth, including a 3- point benefit from the pet treats
acquisition. Organic net sales were up 18 percent. Segment
operating profit increased 13 percent to $471 million, driven
primarily by favorable net price realization and mix and higher
volume, including benefits from the pet treats acquisition,
partially offset by higher input costs and higher SG&A
expenses.
North America Foodservice
Segment
Fourth-quarter net sales for the North America Foodservice
segment increased 25 percent to $526 million, driven by favorable
net price realization and mix, including a 16-point benefit from
market index pricing on bakery flour, partially offset by lower
pound volume. Organic net sales were also up 25 percent. Segment
operating profit increased 23 percent to $81 million, driven by
favorable net price realization and mix, partially offset by higher
input costs and higher SG&A expenses.
For the full year, North America Foodservice net sales increased
24 percent to $1.8 billion. Net price realization and mix added 19
points to net sales growth, driven by 11 points from market index
pricing on bakery flour and other SRM actions put in place in
response to significant input cost inflation. Pound volume added 5
points to net sales growth. Organic net sales were also up 24
percent. Segment operating profit increased 26 percent to $256
million, driven by favorable net price realization and mix and
higher volume, partially offset by higher input costs.
International Segment
Fourth-quarter net sales for the International segment were down
21 percent to $750 million, including a 25-point headwind from the
divestitures of the European yogurt and dough businesses and 2
points of unfavorable foreign currency exchange. Organic net sales
were up 6 percent. Segment operating profit of $76 million was up
36 percent as reported and up 40 percent in constant currency,
driven primarily by favorable net price realization and mix and
lower SG&A expenses, partially offset by lower volume,
including the impact of the European yogurt and dough divestitures,
and higher input costs.
For the full year, International net sales declined 9 percent to
$3.3 billion, including a 12-point headwind from the divestitures
of the European yogurt and dough businesses and 1 point of
favorable foreign currency exchange. Organic net sales were up 2
percent, driven by favorable organic net price realization and mix.
Segment operating profit of $232 million was down 2 percent as
reported and down 4 percent in constant currency, driven primarily
by higher input costs and lower volume, including the impact of the
European yogurt and dough divestitures, partially offset by
favorable net price realization and mix and lower SG&A
expenses.
Joint Venture Summary
Fourth-quarter net sales for Cereal Partners Worldwide (CPW)
essentially matched year-ago results in constant currency, driven
by positive net price realization and mix, offset by lower volume.
Constant-currency net sales increased 6 percent for Häagen-Dazs
Japan (HDJ) in the quarter, driven by strong core performance and
improved distribution. Combined after-tax earnings from joint
ventures in the quarter were $20 million compared to $28 million a
year ago, driven primarily by lower profit at CPW. For the full
year, after-tax earnings from joint ventures decreased 5 percent to
$112 million. On a 3-year compound growth basis, relative to
pre-pandemic levels, after-tax earnings from joint ventures were up
16 percent.
Other Income Statement
Items
Full-year unallocated corporate items totaled $403 million net
expense compared to $212 million net expense a year ago. Excluding
mark-to-market valuation effects and other items affecting
comparability, unallocated corporate items totaled $445 million net
expense this year compared to $428 million net expense last
year.
The company recorded a net $194 million pre-tax gain on
divestitures in fiscal 2022 compared to a $54 million loss a year
ago (please see Note 2 below for more information on these items).
Restructuring, impairment, and other exit costs totaled a $26
million net recovery this year compared to a $170 million expense a
year ago (please see Note 3 below for more information on these
charges).
Net interest expense in fiscal 2022 totaled $380 million
compared to $420 million a year ago, driven primarily by lower
average debt balances. The effective tax rate for fiscal 2022 was
18.3 percent compared to 22.0 percent last year (please see Note 6
below for more information on our effective tax rate). The adjusted
effective tax rate was 20.9 percent compared to 21.1 percent a year
ago.
Net earnings attributable to redeemable and non-controlling
interests totaled $28 million in fiscal 2022 compared to $6 million
a year ago, driven primarily by the loss on the sale of the
Laticínios Carolina yogurt business in Brazil in fiscal 2021,
partially offset by the sale of the company’s interests in Yoplait
SAS, Yoplait Marques SNC, and Liberté Marques Sàrl in fiscal
2022.
Cash Flow Generation and Cash
Returns
Fiscal 2022 cash provided by operating activities increased 11
percent to $3.3 billion, driven primarily by higher net earnings.
Capital investments of $569 million were up 7 percent from a year
ago. Full-year operating cash flow conversion was 121 percent of
after-tax earnings and free cash flow conversion was 113 percent of
adjusted after-tax earnings. Dividends paid essentially matched
year-ago levels at $1.2 billion. General Mills repurchased
approximately 14 million shares of common stock in fiscal 2022 for
a total of $877 million compared to $301 million in share
repurchases a year ago. Average diluted shares outstanding
decreased 1 percent to 613 million.
Dividend Increase
The General Mills board of directors declared a quarterly
dividend of $0.54 per share, payable August 1, 2022, to
shareholders of record July 8, 2022. This represents a 6 percent
increase from the previous quarterly rate of $0.51 per share.
General Mills and its predecessor company have paid dividends
without interruption for 123 years.
Fiscal 2023 Outlook
General Mills expects the largest factors impacting its
performance in fiscal 2023 will be the economic health of
consumers, the inflationary cost environment, and the frequency and
severity of disruptions in the supply chain. The company
anticipates double-digit inflation on its cost of goods sold in
fiscal 2023 and is addressing inflation headwinds with HMM cost
savings and net price realization generated through its SRM
capability. The company is planning for volume elasticities to
increase but remain below historical levels and supply chain
disruptions to slowly moderate in fiscal 2023 compared to fiscal
2022 levels.
General Mills has announced a series of portfolio reshaping
transactions over the past year that are expected to increase the
company’s top- and bottom-line growth profile over the long term.
The company estimates the net impact of these transactions will
reduce fiscal 2023 adjusted operating profit growth and adjusted
diluted EPS growth by approximately 3 percent each, driven by the
impact of foregone operating profit and stranded costs related to
the divested businesses, partially offset by incremental profit
from the acquired businesses. The company expects the net proceeds
from the divestitures will support an increased share repurchase
plan in fiscal 2023, resulting in a 2 to 3 percent net reduction in
its average diluted share count for the year, which is above its
long-run target of a 1 to 2 percent annual net share count
reduction.
With these assumptions in mind, General Mills outlined its key
full-year fiscal 2023 financial targets:
- Organic net sales are expected to increase 4 to 5
percent.
- Adjusted operating profit is expected to range between
down 2 percent and up 1 percent in constant currency from the base
of $3.2 billion reported in fiscal 2022, including a 3-point net
headwind from divestitures and acquisitions announced or closed in
fiscal 2022.
- Adjusted diluted EPS are expected to range between flat
and up 3 percent in constant currency from the base of $3.94 earned
in fiscal 2022, including a 3-point net headwind from divestitures
and acquisitions announced or closed in fiscal 2022.
- Free cash flow conversion is expected to be at least 90
percent of adjusted after-tax earnings.
- The net impact of divestitures, acquisitions, and foreign
currency exchange is expected to reduce full-year reported net
sales growth by approximately 3 percent, and foreign currency
exchange is expected to reduce adjusted operating profit and
adjusted diluted EPS growth by approximately 1 percent.
General Mills will issue pre-recorded management remarks today,
June 29, 2022, at approximately 6:30 a.m. Central time (7:30 a.m.
Eastern time) and will hold a live, webcasted question and answer
session beginning at 8:00 a.m. Central time (9:00 a.m. Eastern
time). The pre-recorded remarks and the webcast will be made
available at www.generalmills.com/investors.
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are based on our current expectations and assumptions. These
forward-looking statements, including the statements under the
caption “Fiscal 2023 Outlook,” and statements made by Mr.
Harmening, 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
coronavirus (COVID-19) pandemic on our business, suppliers,
consumers, customers, and employees; disruptions or inefficiencies
in the supply chain, including any impact of the coronavirus
(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, energy, and
transportation; 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
statement to reflect any future events or circumstances.
Consolidated Statements of
Earnings and Supplementary Information
GENERAL MILLS, INC. AND
SUBSIDIARIES
(In Millions, Except per Share
Data)
Fiscal Year
2022
% Change
2021
% Change
2020
(Unaudited)
Net sales
$
18,992.8
5
%
$
18,127.0
3
%
$
17,626.6
Cost of sales
12,590.6
8
%
11,678.7
2
%
11,496.7
Selling, general, and administrative
expenses
3,147.0
2
%
3,079.6
(2
%)
3,151.6
Divestitures (gain) loss
(194.1
)
NM
53.5
NM
-
Restructuring, impairment, and other exit
(recoveries) costs
(26.5
)
NM
170.4
NM
24.4
Operating profit
3,475.8
11
%
3,144.8
6
%
2,953.9
Benefit plan non-service income
(113.4
)
(15
%)
(132.9
)
18
%
(112.8
)
Interest, net
379.6
(10
%)
420.3
(10
%)
466.5
Earnings before income taxes and after-tax
earnings from joint ventures
3,209.6
12
%
2,857.4
10
%
2,600.2
Income taxes
586.3
(7
%)
629.1
31
%
480.5
After-tax earnings from joint ventures
111.7
(5
%)
117.7
29
%
91.1
Net earnings, including earnings
attributable to redeemable and noncontrolling interests
2,735.0
17
%
2,346.0
6
%
2,210.8
Net earnings attributable to redeemable
and noncontrolling interests
27.7
NM
6.2
(79
%)
29.6
Net earnings attributable to General
Mills
$
2,707.3
16
%
$
2,339.8
7
%
$
2,181.2
Earnings per share — basic
$
4.46
17
%
$
3.81
6
%
$
3.59
Earnings per share — diluted
$
4.42
17
%
$
3.78
6
%
$
3.56
Dividends per share
$
2.04
1
%
$
2.02
3
%
$
1.96
Fiscal Year
Comparisons as a % of net sales:
2022
Basis Pt
Change
2021
Basis Pt
Change
2020
Gross margin
33.7
%
(190
)
35.6
%
80
34.8
%
Selling, general, and administrative
expenses
16.6
%
(40
)
17.0
%
(90
)
17.9
%
Operating profit
18.3
%
100
17.3
%
50
16.8
%
Net earnings attributable to General
Mills
14.3
%
140
12.9
%
50
12.4
%
Fiscal Year
Adjusted comparisons as a % of net sales
(a):
2022
Basis Pt
Change
2021
Basis Pt
Change
2020
Adjusted gross margin
33.0
%
(180
)
34.8
%
(40
)
35.2
%
Adjusted operating profit
16.9
%
(50
)
17.4
%
10
17.3
%
Adjusted net earnings attributable to
General Mills
12.7
%
(30
)
13.0
%
40
12.6
%
(a) See Note 7 for a reconciliation of
these measures not defined by generally accepted accounting
principles (GAAP).
See accompanying notes to consolidated
financial statements.
Consolidated Statements of
Earnings and Supplementary Information
GENERAL MILLS, INC. AND
SUBSIDIARIES
(Unaudited) (In Millions, Except
per Share Data)
Quarter Ended
May 29, 2022
May 30, 2021
% Change
Net sales
$
4,891.2
$
4,523.6
8
%
Cost of sales
3,121.3
2,940.7
6
%
Selling, general, and administrative
expenses
809.4
823.0
(2
%)
Divestiture (gain) loss
(24.0
)
53.5
NM
Restructuring, impairment, and other exit
(recoveries) costs
(31.6
)
158.5
NM
Operating profit
1,016.1
547.9
85
%
Benefit plan non-service income
(29.0
)
(33.3
)
(13
%)
Interest, net
104.5
102.6
2
%
Earnings before income taxes and after-tax
earnings from joint ventures
940.6
478.6
97
%
Income taxes
134.5
106.9
26
%
After-tax earnings from joint ventures
19.7
28.2
(30
%)
Net earnings, including earnings
attributable to redeemable and noncontrolling interests
825.8
399.9
107
%
Net earnings attributable to redeemable
and noncontrolling interests
3.0
(16.9
)
NM
Net earnings attributable to General
Mills
$
822.8
$
416.8
97
%
Earnings per share — basic
$
1.36
$
0.68
100
%
Earnings per share — diluted
$
1.35
$
0.68
98
%
Quarter Ended
Comparisons as a % of net sales:
May 29, 2022
May 30, 2021
Basis Pt
Change
Gross margin
36.2
%
35.0
%
120
Selling, general, and administrative
expenses
16.5
%
18.2
%
(170
)
Operating profit
20.8
%
12.1
%
870
Net earnings attributable to General
Mills
16.8
%
9.2
%
760
Quarter Ended
Adjusted comparisons as a % of net sales
(a):
May 29, 2022
May 30, 2021
Basis Pt
Change
Adjusted gross margin
33.8
%
34.5
%
(70
)
Adjusted operating profit
18.3
%
16.3
%
200
Adjusted net earnings attributable to
General Mills
13.9
%
12.5
%
140
(a) See Note 7 for a reconciliation of
these measures not defined by generally accepted accounting
principles (GAAP)
See accompanying notes to consolidated
financial statements.
Operating Segment Results and
Supplementary Information
GENERAL MILLS, INC. AND
SUBSIDIARIES
(In Millions)
Fiscal Year
2022
% Change
2021
% Change
2020
(Unaudited)
Net sales:
North America Retail
$
11,572.0
3
%
$
11,250.0
2
%
$
10,978.1
International
3,315.7
(9
%)
3,656.8
9
%
3,365.1
Pet
2,259.4
30
%
1,732.4
2
%
1,694.6
North America Foodservice
1,845.7
24
%
1,487.8
(6
%)
1,588.8
Total
$
18,992.8
5
%
$
18,127.0
3
%
$
17,626.6
Operating profit:
North America Retail
$
2,699.7
(1
%)
$
2,725.9
1
%
$
2,708.9
International
232.0
(2
%)
236.6
79
%
132.5
Pet
470.6
13
%
415.0
6
%
390.7
North America Foodservice
255.5
26
%
203.3
(20
%)
255.3
Total segment operating profit
$
3,657.8
2
%
$
3,580.8
3
%
$
3,487.4
Unallocated corporate items
402.6
90
%
212.1
(58
%)
509.1
Divestitures (gain) loss
(194.1
)
NM
53.5
NM
-
Restructuring, impairment, and other exit
(recoveries) costs
(26.5
)
NM
170.4
NM
24.4
Operating profit
$
3,475.8
11
%
$
3,144.8
6
%
$
2,953.9
For the Pet segment, fiscal 2022 and
fiscal 2021 included 12 months of results. Fiscal 2020 included 13
months of results as we changed the Pet segment’s reporting period
from an April fiscal year-end to a May fiscal year-end to match our
fiscal calendar.
See accompanying notes to the consolidated
financial statements.
Operating Segment Results and
Supplementary Information
GENERAL MILLS, INC. AND
SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
May 29, 2022
May 30, 2021
% Change
Net sales:
North America Retail
$
3,004.9
$
2,710.7
11
%
International
749.7
945.9
(21
%)
Pet
610.3
444.4
37
%
North America Foodservice
526.3
422.6
25
%
Total
$
4,891.2
$
4,523.6
8
%
Operating profit:
North America Retail
$
764.2
$
649.1
18
%
International
76.1
55.8
36
%
Pet
113.3
103.1
10
%
North America Foodservice
80.6
65.7
23
%
Total segment operating profit
$
1,034.2
873.7
18
%
Unallocated corporate items
73.7
113.8
(35
%)
Divestiture (gain) loss
(24.0
)
53.5
NM
Restructuring, impairment, and other exit
(recoveries) costs
(31.6
)
158.5
NM
Operating profit
$
1,016.1
$
547.9
85
%
See accompanying notes to the consolidated
financial statements.
Consolidated Balance
Sheets
GENERAL MILLS, INC. AND
SUBSIDIARIES
(In Millions, Except Par
Value)
May 29, 2022
May 30, 2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
569.4
$
1,505.2
Receivables
1,692.1
1,638.5
Inventories
1,867.3
1,820.5
Prepaid expenses and other current
assets
802.1
790.3
Assets held for sale
158.9
-
Total current assets
5,089.8
5,754.5
Land, buildings, and equipment
3,393.8
3,606.8
Goodwill
14,378.5
14,062.4
Other intangible assets
6,999.9
7,150.6
Other assets
1,228.1
1,267.6
Total assets
$
31,090.1
$
31,841.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
3,982.3
$
3,653.5
Current portion of long-term debt
1,674.2
2,463.8
Notes payable
811.4
361.3
Other current liabilities
1,552.0
1,787.2
Total current liabilities
8,019.9
8,265.8
Long-term debt
9,134.8
9,786.9
Deferred income taxes
2,218.3
2,118.4
Other liabilities
929.1
1,292.7
Total liabilities
20,302.1
21,463.8
Redeemable interest
-
604.9
Stockholders' equity:
Common stock, 754.6 shares issued, $0.10
par value
75.5
75.5
Additional paid-in capital
1,182.9
1,365.5
Retained earnings
18,532.6
17,069.8
Common stock in treasury, at cost, shares
of 155.7 and 146.9
(7,278.1
)
(6,611.2
)
Accumulated other comprehensive loss
(1,970.5
)
(2,429.2
)
Total stockholders' equity
10,542.4
9,470.4
Noncontrolling interests
245.6
302.8
Total equity
10,788.0
9,773.2
Total liabilities and equity
$
31,090.1
$
31,841.9
See accompanying notes to consolidated
financial statements.
Consolidated Statements of
Cash Flows
GENERAL MILLS, INC. AND
SUBSIDIARIES
(In Millions)
Fiscal Year
2022
2021
(Unaudited)
Cash Flows - Operating Activities
Net earnings, including earnings
attributable to redeemable and noncontrolling interests
$
2,735.0
$
2,346.0
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
570.3
601.3
After-tax earnings from joint ventures
(111.7
)
(117.7
)
Distributions of earnings from joint
ventures
107.5
95.2
Stock-based compensation
98.7
89.9
Deferred income taxes
62.2
118.8
Pension and other postretirement benefit
plan contributions
(31.3
)
(33.4
)
Pension and other postretirement benefit
plan costs
(30.1
)
(33.6
)
Divestitures (gain) loss
(194.1
)
53.5
Restructuring, impairment, and other exit
(recoveries) costs
(117.1
)
150.9
Changes in current assets and
liabilities, excluding the effects of acquisition and
divestitures
277.4
(155.9
)
Other, net
(50.7
)
(131.8
)
Net cash provided by operating
activities
3,316.1
2,983.2
Cash Flows - Investing Activities
Purchases of land, buildings, and
equipment
(568.7
)
(530.8
)
Acquisition
(1,201.3
)
-
Investments in affiliates, net
15.4
15.5
Proceeds from disposal of land, buildings,
and equipment
3.3
2.7
Proceeds from divestitures, net of cash
divested
74.1
2.9
Other, net
(13.5
)
(3.1
)
Net cash used by investing activities
(1,690.7
)
(512.8
)
Cash Flows - Financing Activities
Change in notes payable
551.4
71.7
Issuance of long-term debt
2,203.7
1,576.5
Payment of long-term debt
(3,140.9
)
(2,609.0
)
Debt exchange participation incentive cash
payment
-
(201.4
)
Proceeds from common stock issued on
exercised options
161.7
74.3
Purchases of common stock for treasury
(876.8
)
(301.4
)
Dividends paid
(1,244.5
)
(1,246.4
)
Distributions to noncontrolling and
redeemable interest holders
(129.8
)
(48.9
)
Other, net
(28.0
)
(30.9
)
Net cash used by financing activities
(2,503.2
)
(2,715.5
)
Effect of exchange rate changes on cash
and cash equivalents
(58.0
)
72.5
Decrease in cash and cash equivalents
(935.8
)
(172.6
)
Cash and cash equivalents - beginning of
year
1,505.2
1,677.8
Cash and cash equivalents - end of
year
$
569.4
$
1,505.2
Cash flow from changes in current assets
and liabilities, excluding the effects of acquisition and
divestitures:
Receivables
$
(166.3
)
$
27.9
Inventories
(85.8
)
(354.7
)
Prepaid expenses and other current
assets
(35.3
)
(42.7
)
Accounts payable
456.7
343.1
Other current liabilities
108.1
(129.5
)
Changes in current assets and
liabilities
$
277.4
$
(155.9
)
See accompanying notes to consolidated
financial statements.
GENERAL MILLS, INC. AND
SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1)
The accompanying Consolidated Financial
Statements of General Mills, Inc. (we, us, our, General Mills, or
the Company) have been prepared in accordance with accounting
principles generally accepted in the United States for annual and
interim financial information. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included and are of a normal recurring nature.
Our fiscal year ends on the last Sunday in
May. Fiscal years 2022 and 2021 consist of 52 weeks, while fiscal
2020 consisted of 53 weeks.
As part of a long-term plan to conform the
fiscal year ends of all our operations, in fiscal 2020 we changed
the reporting period of our Pet segment from an April fiscal
year-end to a May fiscal year-end to match our fiscal calendar.
Accordingly, our fiscal 2020 results include 13 months of Pet
segment results compared to 12 months in fiscal 2022 and 2021. The
impact of this change was not material to our consolidated results
of operations and, therefore, we did not restate prior period
financial statements for comparability. Our India business is on an
April fiscal year end.
(2)
During the fourth quarter of fiscal 2022,
we entered into a definitive agreement to acquire TNT Crust. The
transaction closed subsequent to the end of the fourth quarter of
fiscal 2022.
During the fourth quarter of fiscal 2022,
we entered into a definitive agreement to sell our Helper main
meals and Suddenly Salad side dishes business to Eagle Family Foods
Group for approximately $610 million. We expect to close the
divestiture in the first quarter of fiscal 2023. We have classified
all related assets as held for sale in our Consolidated Balance
Sheets as of May 29, 2022.
During the third quarter of fiscal 2022,
we sold our interests in Yoplait SAS, Yoplait Marques SNC, and
Liberté Marques Sàrl to Sodiaal International (Sodiaal) in exchange
for Sodiaal’s interest in our Canadian yogurt business, a modified
agreement for the use of Yoplait and Liberté brands in the United
States and Canada, and cash. We recorded a net pre-tax gain of $164
million on the sale of these businesses including an additional net
pre-tax gain of $15 million related to purchase price adjustments
in the fourth quarter of fiscal 2022.
During the first quarter of fiscal 2022,
we acquired Tyson Foods’ pet treats business for $1.2 billion in
cash. We financed the transaction with a combination of cash on
hand and short-term debt. We consolidated Tyson Foods’ pet treats
business into our Consolidated Balance Sheets and recorded goodwill
of $762 million, indefinite-lived intangible assets for the Nudges,
Top Chews, and True Chews brands totaling $330 million in
aggregate, and a finite-lived customer relationship asset of $40
million. The goodwill is included in the Pet reporting unit and is
deductible for tax purposes. The pro forma effects of this
acquisition were not material.
During the fourth quarter of fiscal 2021,
we recorded a pre-tax loss of $54 million related to the sale of
our Laticínios Carolina business in Brazil.
(3)
Restructuring and impairment charges and project-related costs
are recorded in our Consolidated Statements of Earnings as
follows:
Quarter Ended
Fiscal Year
In Millions
May 29, 2022
May 30, 2021
2022
2021
2020
Restructuring, impairment, and other exit
(recoveries) costs
$
(31.6
)
$
158.5
$
(26.5
)
$
170.4
$
24.4
Cost of sales
0.5
0.6
3.3
2.3
25.8
Total restructuring and impairment
(recoveries) charges
(31.1
)
159.1
(23.2
)
172.7
50.2
Project-related costs classified in cost
of sales
$
-
$
-
$
-
$
-
$
1.5
In fiscal 2022, we approved restructuring
actions in the International segment to drive efficiencies in
manufacturing and logistics operations. We expect to incur
approximately $21 million of restructuring charges and
project-related costs related to these actions, of which
approximately $12 million will be cash. These charges are expected
to consist of approximately $8 million of severance and $10 million
of other costs, primarily asset write-offs. We also expect to incur
approximately $3 million of project-related costs. We recognized $8
million of severance and $7 million of other costs in fiscal 2022.
We expect these actions to be completed by the end of fiscal
2024.
As a result of shifts in the composition
of estimated expenses related to our previously announced global
organizational structure and resource realignment actions, we
recorded a $34 million reduction to our restructuring reserves as
of May 29, 2022, primarily related to estimated severance charges.
We expect these actions to incur total restructuring charges of
approximately $125 million to $135 million, of which we expect
approximately $100 million to be severance and $30 million of other
costs. We expect these actions to be completed by the end of fiscal
2023.
In fiscal 2021, we approved restructuring
actions designed to better align our organization structure and
resources with strategic initiatives and recognized $157 million of
restructuring charges, consisting of $149 million of severance and
other benefits costs and $8 million of other costs. In fiscal 2021,
we also approved restructuring actions to leverage more efficient
and effective route- to-market models and to optimize our supply
chain in our International segment and recognized $13 million of
restructuring charges related to these actions, consisting of $9
million of severance costs and $4 million of other costs.
(4)
In the fourth quarter of fiscal 2022, unallocated corporate expense
decreased $40 million to $74 million compared to $114 million last
year. We recorded a $117 million net decrease in expense related to
mark-to-market valuations of certain commodity positions and grain
inventories in the fourth quarter of fiscal 2022, compared to a $21
million net decrease in expense in the fourth quarter of fiscal
2021. In fiscal 2022, we recorded $36 million of net losses related
to the sale of corporate investments and valuation adjustments,
compared to $2 million of net losses in fiscal 2021. We recorded $2
million of integration costs related to acquisition of Tyson Foods’
pet treats business and $16 million of transaction costs primarily
related to the sale of our interests in Yoplait SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl, the definitive agreements to
sell our Helper main meals and Suddenly Salad side dishes business,
and definitive agreement to acquire TNT Crust in fiscal 2022,
compared to $9 million of transaction costs in fiscal 2021. In
addition, we recorded a $2 million recovery related to a Brazil
indirect tax item in fiscal 2022 compared to a $9 million recovery
in fiscal 2021. In fiscal 2021, we recorded a $3 million favorable
adjustment related to a product recall in fiscal 2020 in our
international Green Giant business.
In fiscal 2022, unallocated corporate
expense increased $191 million to $403 million compared to $212
million last year. In fiscal 2022, we recorded a $133 million net
decrease in expense related to mark-to-market valuation of certain
commodity positions and grain inventories, compared to a $139
million net decrease in expense in the prior year. In fiscal 2022,
we recorded $15 million of net losses related to the sale of
corporate investments and valuation adjustments, compared to $76
million of net gains in fiscal 2021. We recorded $22 million of
integration costs related to our acquisition of Tyson Foods’ pet
treats business and $73 million of transaction costs primarily
related to the sale of our interests in Yoplait SAS, Yoplait
Marques SNC, and Liberté Marques Sàrl, the definitive agreements to
sell our Helper main meals and Suddenly Salad side dishes business,
and definitive agreement to acquire TNT Crust in fiscal 2022
compared to $10 million of transaction costs in fiscal 2021. In
addition, we recorded a $22 million recovery related to a Brazil
indirect tax item in fiscal 2022 compared to a $9 million recovery
in fiscal 2021. We recorded a $13 million insurance recovery in
fiscal 2022. In fiscal 2021, we recorded a $4 million favorable
adjustment related to a product recall in fiscal 2020 in our
international Green Giant business.
(5)
Basic and diluted earnings per share (EPS) were calculated as
follows:
Quarter Ended
Fiscal Year
In Millions, Except per Share
Data
May 29, 2022
May 30, 2021
2022
2021
2020
Net earnings attributable to General
Mills
$
822.8
$
416.8
$
2,707.3
$
2,339.8
$
2,181.2
Average number of common shares - basic
EPS
604.9
612.4
607.5
614.1
608.1
Incremental share effect from: (a)
Stock options
2.8
2.4
2.5
2.5
2.7
Restricted stock units and performance
share units
2.9
2.7
2.6
2.5
2.5
Average number of common shares - diluted
EPS
610.6
617.5
612.6
619.1
613.3
Earnings per share — basic
$
1.36
$
0.68
$
4.46
$
3.81
$
3.59
Earnings per share — diluted
$
1.35
$
0.68
$
4.42
$
3.78
$
3.56
(a) Incremental shares from stock options, restricted stock
units, and performance share units are computed by the treasury
stock method.
(6)
The effective tax rate for the fourth
quarter of fiscal 2022 was 14.3 percent compared to 22.3 percent
for the fourth quarter of fiscal 2021. The 8.0 percentage point
decrease was primarily due to a change in valuation allowance on
our capital loss carryforward, certain non-taxable components of
the divestiture gains, and certain unfavorable non-recurring
discrete tax items in fiscal 2021. Our adjusted effective tax rate
was 19.0 percent in the fourth quarter of fiscal 2022 compared to
18.5 percent in the same period last year (see Note 7 below for a
description of our use of measures not defined by GAAP).
The effective tax rate for fiscal 2022 was
18.3 percent compared to 22.0 percent in fiscal 2021. The 3.7
percentage point decrease was primarily due to a change in
valuation allowance on our capital loss carryforward, certain
non-taxable components of the divestiture gains, and favorable
changes in earnings mix by jurisdiction. Our adjusted effective tax
rate was 20.9 percent in fiscal 2022, compared to 21.1 percent in
the same period of fiscal 2021 (see Note 7 below for a description
of our use of measures not defined by GAAP).
(7)
We have included measures in this release
that are not defined by GAAP. For each of these non-GAAP financial
measures, we are providing below a reconciliation of the
differences between the non-GAAP measure and the most directly
comparable GAAP measure, an explanation of why we believe the
non-GAAP measure provides useful information to investors and any
additional material purposes for which our management or Board of
Directors uses the non-GAAP measure. These non-GAAP measures should
be viewed in addition to, and not in lieu of, the comparable GAAP
measure.
We provide organic net sales growth rates
for our consolidated net sales and segment net sales. This measure
is used in reporting to our Board of Directors and executive
management and as a component of the Board of Directors’
measurement of our performance for incentive compensation purposes.
We believe that organic net sales growth rates provide useful
information to investors because they provide transparency to
underlying performance in our net sales by excluding the effect
that foreign currency exchange rate fluctuations, acquisitions,
divestitures, and a 53rd week, when applicable, have on
year-to-year comparability. A reconciliation of these measures to
reported net sales growth rates, the relevant GAAP measures, are
included in our Operating Segment Results above.
Certain measures in this release are
presented excluding the impact of foreign currency exchange
(constant-currency). To present this information, current period
results for entities reporting in currencies other than United
States dollars are translated into United States dollars at the
average exchange rates in effect during the corresponding period of
the prior fiscal year, rather than the actual average exchange
rates in effect during the current fiscal year. Therefore, the
foreign currency impact is equal to current year results in local
currencies multiplied by the change in the average foreign currency
exchange rate between the current fiscal period and the
corresponding period of the prior fiscal year. We believe that
these constant-currency measures provide useful information to
investors because they provide transparency to underlying
performance by excluding the effect that foreign currency exchange
rate fluctuations have on period-to-period comparability given
volatility in foreign currency exchange markets.
Also, certain measures in this release are
presented on an adjusted basis. The adjustments are either items
resulting from infrequently occurring events or items that, in
management’s judgment, significantly affect the year-to-year
assessment of operating results.
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 effect of foreign currency exchange
rate fluctuations, restructuring charges and project-related costs,
acquisition transaction and integration costs, acquisitions,
divestitures, and mark-to-market effects. We are not able to
reconcile these forward- looking non-GAAP financial measures to
their most directly comparable forward-looking GAAP financial
measures 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 and commodity prices or
the timing or impact of acquisitions, divestitures, and
restructuring actions throughout fiscal 2023. The unavailable
information could have a significant impact on our fiscal 2023 GAAP
financial results.
For fiscal 2023, we currently expect:
foreign currency exchange rates (based on a blend of forward and
forecasted rates and hedge positions) and acquisitions and
divestitures completed prior to fiscal 2023 and those closed or
expected to close in fiscal 2023 to reduce net sales growth by
approximately 3 percent; foreign currency exchange rates to reduce
adjusted operating profit and adjusted diluted EPS growth by
approximately 1 percent; and restructuring charges and
project-related costs and transaction and acquisition integration
costs related to actions previously announced to total
approximately $15 million to $25 million.
Significant Items Impacting Comparability
Several measures below are presented on an adjusted basis. The
adjustments are either items resulting from infrequently occurring
events or items that, in management’s judgement, significantly
affect the year-to-year assessment of operating results.
The following are descriptions of significant items impacting
comparability of our results.
Divestitures (gain)
loss Divestitures gain related to the sale of our interests
in Yoplait SAS, Yoplait Marques SNC, and Liberté Marques Sàrl and
the sale of our European dough businesses in fiscal 2022.
Divestiture loss related to the sale of our Laticínios Carolina
business in Brazil in fiscal 2021. Please see Note 2.
Transaction
costs Fiscal 2022 transaction costs relate primarily to the
sale of our interests in Yoplait SAS, Yoplait Marques SNC, and
Liberté Marques Sàrl, the sale of our European dough businesses,
the definitive agreements to sell our Helper main meals and
Suddenly Salad side dishes business, and the definitive agreement
to acquire TNT Crust. Fiscal 2021 transaction costs related to the
sale of our interests in Yoplait SAS, Yoplait Marques SNC, and
Liberté Marques Sàrl and the acquisition of Tyson Foods’ pet treats
business. Please see Note 2.
Non-income tax
recovery Recovery related to a Brazil indirect tax item
recorded in fiscal 2022 and fiscal 2021. Please see Note 4.
Acquisition integration
costs Integration costs resulting from the acquisition of
Tyson Foods’ pet treats business. Please see Note 4.
Investment activity,
net Valuation adjustments and the gain on sale of certain
corporate investments in fiscal 2022 and fiscal 2021. Valuation
adjustments and the loss on sale of certain corporate investments
in fiscal 2020. Please see Note 4.
Mark-to-market
effects Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items. Please see
Note 4.
Restructuring
(recoveries) charges Restructuring charges for International
supply chain optimization actions and net restructuring recoveries
for previously announced restructuring actions in fiscal 2022.
Restructuring charges for previously announced restructuring
actions in fiscal 2021 and fiscal 2020. Please see Note 3.
Product recall
Product recall adjustment recorded in fiscal 2021 related to a
recall in our international Green Giant business in fiscal 2020.
Please see Note 4.
CPW restructuring
charges CPW restructuring charges related to previously
announced restructuring actions.
Tax items
Discrete tax benefit recognized in fiscal 2022 related to a release
of a valuation allowance associated with our capital loss
carryforwards expected to be used against future divestiture gains.
Discrete tax item related to amendments to reorganize certain U.S.
retiree health and welfare benefits plans in fiscal 2021. Discrete
tax benefit related to the reorganization of certain wholly owned
subsidiaries in fiscal 2020.
Adjusted Operating Profit Growth on a
Constant-currency Basis
This measure is used in reporting to our Board of Directors and
executive management and as a component of the measurement of our
performance for incentive compensation purposes. We believe that
this measure provides useful information to investors because it is
the operating profit measure we use to evaluate operating profit
performance on a comparable year-to-year basis. The measure is
evaluated on a constant-currency basis by excluding the effect that
foreign currency exchange rate fluctuations have on year-to-year
comparability given the volatility in foreign currency exchange
rates.
Our adjusted operating profit growth on a constant-currency
basis is calculated as follows:
Quarter Ended
Fiscal Year
May 29, 2022
May 30, 2021
Change
2022
2021
Change
Operating profit growth as reported
$
1,016.1
$
547.9
85
%
$
3,475.8
$
3,144.8
11
%
Divestitures (gain) loss
(24.0
)
53.5
(194.1
)
53.5
Mark-to-market effects
(116.9
)
(20.8
)
(133.1
)
(138.8
)
Transaction costs
16.0
9.5
72.8
9.5
Restructuring (recoveries) charges
(31.1
)
159.1
(23.2
)
172.7
Acquisition integration costs
2.2
-
22.4
-
Non-income tax recovery
(1.6
)
(8.8
)
(22.0
)
(8.8
)
Investment activity, net
35.6
1.9
14.7
(76.4
)
Product recall adjustment, net
-
(2.8
)
-
(3.5
)
Adjusted operating profit
$
896.3
$
739.6
21
%
$
3,213.3
$
3,153.2
2
%
Foreign currency exchange impact
Flat
Flat
Adjusted operating profit growth on a
constant-currency basis
21
%
2
%
Note: Table may not foot due to
rounding.
Adjusted Diluted EPS and Related
Constant-currency Growth Rate
This measure is used in reporting to our Board of Directors and
executive management. We believe that this measure provides useful
information to investors because it is the profitability measure we
use to evaluate earnings performance on a comparable year-to-year
basis.
The reconciliation of our GAAP measure, diluted EPS, to adjusted
diluted EPS and the related constant-currency growth rate
follows:
Quarter Ended
Fiscal Year
Per Share Data
May 29, 2022
May 30, 2021
Change
2022
2021
Change
Diluted earnings per share, as
reported
$
1.35
$
0.68
99
%
$
4.42
$
3.78
17
%
Restructuring (recoveries) charges
(0.04
)
0.20
(0.03
)
0.22
Mark-to-market effects
(0.15
)
(0.02
)
(0.17
)
(0.17
)
Investment activity, net
0.04
-
0.01
(0.10
)
Divestitures (gain) loss
(0.03
)
0.04
(0.31
)
0.04
Tax items
(0.08
)
0.02
(0.08
)
0.02
Transaction costs
0.02
0.01
0.09
0.01
Acquisition integration costs
-
-
0.03
-
Non-income tax recovery
-
(0.01
)
(0.02
)
(0.01
)
Adjusted diluted earnings per share
$
1.12
$
0.91
23
%
$
3.94
$
3.79
4
%
Foreign currency exchange impact
Flat
Flat
Adjusted diluted earnings per share
growth, on a constant-currency basis
23
%
4
%
Note: Table may not foot due to
rounding.
Adjusted Earnings Comparisons as a Percent
of Net Sales
We believe that these measures provide useful information to
investors because they are important for assessing our adjusted
earnings comparisons as a percent of net sales on a comparable
year-to-year basis.
Our adjusted earnings comparisons as a percent of net sales are
calculated as follows:
Quarter Ended
In Millions
May 29, 2022
May 30, 2021
Comparisons as a % of Net Sales
Value
Percent of Net Sales
Value
Percent of Net Sales
Gross margin as reported (a)
$
1,769.9
36.2
%
$
1,582.9
35.0
%
Mark-to-market effects
(116.9
)
(2.4
)
%
(20.8
)
(0.5
)
%
Product recall adjustment, net
-
-
%
(2.8
)
(0.1
)
%
Transaction costs
-
-
%
1.0
-
%
Restructuring charges
0.6
-
%
0.6
-
%
Adjusted gross margin
$
1,653.6
33.8
%
$
1,560.9
34.5
%
Operating profit as reported
$
1,016.1
20.8
%
$
547.9
12.1
%
Mark-to-market effects
(116.9
)
(2.4
)
%
(20.8
)
(0.5
)
%
Product recall adjustment, net
-
-
%
(2.8
)
(0.1
)
%
Transaction costs
16.0
0.3
%
9.5
0.2
%
Restructuring (recoveries) charges
(31.1
)
(0.6
)
%
159.1
3.5
%
Divestitures (gain) loss
(24.0
)
(0.5
)
%
53.5
1.2
%
Non-income tax recovery
(1.6
)
-
%
(8.8
)
(0.2
)
%
Acquisition integration costs
2.2
-
%
-
-
%
Investment activity, net
35.6
0.7
%
1.9
-
%
Adjusted operating profit
$
896.3
18.3
%
$
739.6
16.3
%
Net earnings attributable to General Mills
as reported
$
822.8
16.8
%
$
416.8
9.2
%
Mark-to-market effects, net of tax (b)
(90.0
)
(1.8
)
%
(16.0
)
(0.4
)
%
Product recall adjustment, net, net of tax
(b)
-
-
%
(2.5
)
(0.1
)
%
Transaction costs, net of tax (b)
10.8
0.2
%
6.7
0.1
%
Restructuring (recoveries) charges, net of
tax (b)
(21.0
)
(0.4
)
%
126.1
2.8
%
Divestitures (gain) loss, net of tax
(b)
(18.5
)
(0.4
)
%
27.1
0.6
%
Non-income tax recovery, net of tax
(b)
(1.1
)
-
%
(5.8
)
(0.1
)
%
Investment activity, net, net of tax
(b)
27.4
0.6
%
1.4
-
%
Acquisition integration costs, net of tax
(b)
1.7
-
%
-
-
%
Tax items
(50.7
)
(1.0
)
%
11.2
0.2
%
CPW restructuring charges, net of tax
0.2
-
%
(0.1
)
-
%
Adjusted net earnings attributable to
General Mills
$
681.6
13.9
%
$
565.0
12.5
%
Note: Table may not foot due to
rounding.
For more information on the reconciling
items, please refer to the Significant Items Impacting
Comparability section above.
(a) Net sales less cost of sales. (b) See reconciliation of
adjusted effective income tax rate below for tax impact of each
adjustment.
Fiscal Year
In Millions
2022
2021
2020
Comparisons as a % of Net Sales
Value
Percent of Net Sales
Value
Percent of Net Sales
Value
Percent of Net Sales
Gross margin as reported (a)
$
6,402.2
33.7
%
$
6,448.3
35.6
%
$
6,129.9
34.8
%
Mark-to-market effects
(133.1
)
(0.7
)
%
(138.8
)
(0.8
)
%
24.7
0.1
%
Product recall adjustment, net
-
-
%
(3.5
)
-
%
19.3
0.1
%
Restructuring charges
3.4
-
%
2.3
-
%
25.8
0.1
%
Project-related costs
-
-
%
-
-
%
1.5
-
%
Transaction costs
0.8
-
%
1.0
-
%
-
-
%
Acquisition integration costs
0.1
-
%
-
-
%
-
-
%
Adjusted gross margin
$
6,273.4
33.0
%
$
6,309.4
34.8
%
$
6,201.2
35.2
%
Operating profit as reported
$
3,475.8
18.3
%
$
3,144.8
17.3
%
$
2,953.9
16.8
%
Mark-to-market effects
(133.1
)
(0.7
)
%
(138.8
)
(0.8
)
%
24.7
0.1
%
Product recall adjustment, net
-
-
%
(3.5
)
-
%
19.3
0.1
%
Restructuring (recoveries) charges
(23.2
)
(0.1
)
%
172.7
1.0
%
50.2
0.3
%
Project-related costs
-
-
%
-
-
%
1.5
-
%
Transaction costs
72.8
0.4
%
9.5
0.1
%
-
-
%
Acquisition integration costs
22.4
0.1
%
-
-
%
-
-
%
Investment activity, net
14.7
0.1
%
(76.4
)
(0.4
)
%
8.4
-
%
Divestitures (gain) loss
(194.1
)
(1.0
)
%
53.5
0.3
%
-
-
%
Non-income tax recovery
(22.0
)
(0.1
)
%
(8.8
)
-
%
-
-
%
Adjusted operating profit
$
3,213.3
16.9
%
$
3,153.2
17.4
%
$
3,058.0
17.3
%
Net earnings attributable to General Mills
as reported
$
2,707.3
14.3
%
$
2,339.8
12.9
%
$
2,181.2
12.4
%
Mark-to-market effects, net of tax (b)
(102.5
)
(0.5
)
%
(106.9
)
(0.6
)
%
19.0
0.1
%
Product recall adjustment, net, net of tax
(b)
-
-
%
(3.1
)
-
%
17.1
0.1
%
Restructuring (recoveries) charges, net of
tax (b)
(16.7
)
(0.1
)
%
137.2
0.8
%
39.0
0.2
%
Project-related costs, net of tax (b)
-
-
%
-
-
%
1.2
-
%
Transaction costs, net of tax (b)
55.7
0.3
%
6.7
-
%
-
-
%
Acquisition integration costs, net of tax
(b)
17.2
0.1
%
-
-
%
-
-
%
Investment activity, net, net of tax
(b)
6.2
-
%
(60.8
)
(0.3
)
%
3.0
-
%
Divestitures (gain) loss, net of tax
(b)
(189.0
)
(1.0
)
%
27.1
0.1
%
-
-
%
Non-income tax recovery, net of tax
(b)
(14.5
)
(0.1
)
%
(5.8
)
-
%
-
-
%
Tax items
(50.7
)
(0.3
)
%
11.2
-
%
(53.1
)
(0.3
)
%
CPW restructuring charges, net of tax
(0.9
)
-
%
1.9
-
%
5.0
-
%
Adjusted net earnings attributable to
General Mills
$
2,412.2
12.7
%
$
2,347.5
13.0
%
$
2,212.3
12.6
%
Note: Table may not foot due to
rounding.
For more information on the reconciling
items, please refer to the Significant Items Impacting
Comparability section above.
(a) Net sales less cost of sales. (b) See reconciliation of
adjusted effective income tax rate below for tax impact of each
adjustment.
Constant-currency Segment Operating Profit
Growth Rates
We believe that this measure provides useful information to
investors because it provides transparency to underlying
performance of our segments by excluding the effect that foreign
currency exchange rate fluctuations have on year-to-year
comparability given volatility in foreign currency exchange
markets.
Our segments' operating profit growth rates on a
constant-currency basis are calculated as follows:
Quarter Ended May 29,
2022
Percentage Change in Operating
Profit
as Reported
Impact of Foreign Currency
Exchange
Percentage Change in Operating
Profit on a Constant-Currency Basis
North America Retail
18
%
Flat
18
%
International
36
%
(3)
pts
40
%
Pet
10
%
Flat
10
%
North America Foodservice
23
%
Flat
23
%
Fiscal Year Ended May 29,
2022
Percentage Change in Operating
Profit
as Reported
Impact of Foreign Currency
Exchange
Percentage Change in Operating
Profit on a Constant-Currency Basis
North America Retail
(1
)
%
Flat
(1
)
%
International
(2
)
%
2
pts
(4
)
%
Pet
13
%
Flat
13
%
North America Foodservice
26
%
Flat
26
%
Total segment operating profit
2
%
Flat
2
%
Note: Tables may not foot due to
rounding.
Adjusted Effective Income Tax
Rate
We believe this measure provides useful information to investors
because it presents the adjusted effective income tax rate on a
comparable year-to-year basis.
Adjusted effective income tax rates are calculated as
follows:
Quarter Ended
May 29, 2022
May 30, 2021
In Millions
Pretax Earnings
(a)
Income Taxes
Pretax Earnings
(a)
Income Taxes
As reported
$
940.6
$
134.5
$
478.6
$
106.9
Restructuring (recoveries) charges
(31.1
)
(10.0
)
159.1
33.0
Mark-to-market effects
(116.9
)
(26.9
)
(20.8
)
(4.8
)
Investment activity, net
35.6
8.2
1.9
0.5
Divestitures (gain) loss
(24.0
)
(5.5
)
53.5
0.4
Tax items
-
50.7
-
(11.2
)
Transaction costs
16.0
5.2
9.5
2.3
Acquisition integration costs
2.2
0.5
-
-
Non-income tax recovery
(1.6
)
(0.6
)
(8.8
)
(3.0
)
Product recall adjustment, net
-
-
(2.8
)
(0.3
)
As adjusted
$
820.8
$
156.1
$
670.2
$
123.8
Effective tax rate:
As reported
14.3
%
22.3
%
As adjusted
19.0
%
18.5
%
Sum of adjustments to income taxes
$
21.6
$
16.8
Average number of common shares - diluted
EPS
610.6
617.5
Impact of income tax adjustments on
adjusted diluted EPS
$
(0.04
)
$
(0.02
)
Note: Table may not foot due to
rounding.
(a) Earnings before income taxes and
after-tax earnings from joint ventures.
Fiscal Year Ended
May 29, 2022
May 30, 2021
May 31, 2020
In Millions
Pretax Earnings (a)
Income Taxes
Pretax Earnings (a)
Income Taxes
Pretax Earnings (a)
Income Taxes
As reported
$
3,209.6
$
586.3
$
2,857.4
$
629.1
$
2,600.2
$
480.5
Restructuring (recoveries) charges
(23.2
)
(6.4
)
172.7
35.5
50.2
11.2
Project-related costs
-
-
-
-
1.5
0.3
Mark-to-market effects
(133.1
)
(30.6
)
(138.8
)
(31.9
)
24.7
5.7
Investment activity, net
14.7
8.5
(76.4
)
(15.6
)
8.4
5.4
Divestitures (gain) loss
(194.1
)
(5.1
)
53.5
0.4
-
-
Tax items
-
50.7
-
(11.2
)
-
53.1
Transaction costs
72.8
16.4
9.5
2.3
-
-
Acquisition integration costs
22.4
5.1
-
-
-
-
Non-income tax gain
(22.0
)
(7.5
)
(8.8
)
(3.0
)
-
-
Product recall adjustment, net
-
-
(3.5
)
(0.4
)
19.3
2.2
As adjusted
$
2,947.1
$
617.4
$
2,865.7
$
605.2
$
2,704.3
$
558.5
Effective tax rate:
As reported
18.3
%
22.0
%
18.5
%
As adjusted
20.9
%
21.1
%
20.7
%
Sum of adjustments to income taxes
$
31.1
$
(24.0
)
$
78.0
Average number of common shares - diluted
EPS
612.6
619.1
613.3
Impact of income tax adjustments on
adjusted diluted EPS
$
(0.05
)
$
0.04
$
(0.13
)
Note: Table may not foot due to
rounding.
(a) Earnings before income taxes and
after-tax earnings from joint ventures.
Free Cash Flow Conversion Rate
We believe this measure provides useful information to investors
because it is important for assessing our efficiency in converting
earnings to cash and returning cash to shareholders. The
calculation of free cash flow conversion rate and net cash provided
by operating activities conversion rate, its equivalent GAAP
measure, follows:
Fiscal Year
In Millions
2022
2021
Net earnings, including earnings
attributable to redeemable and noncontrolling interests, as
reported
$
2,735.0
$
2,346.0
Restructuring (recoveries) charges, net of
tax
$
(16.7
)
$
137.2
Mark-to-market effects, net of tax
(102.5
)
(106.9
)
Investment activity, net, net of tax
6.2
(60.8
)
Divestitures (gain) loss, net of tax
(189.0
)
53.1
Tax items
(50.7
)
11.2
Transaction costs, net of tax
56.4
7.2
Acquisition integration costs
17.2
-
Non-income tax recovery, net of tax
(14.5
)
(5.8
)
Product recall adjustment, net, net of
tax
-
(3.1
)
CPW restructuring charges, net of tax
(0.9
)
1.9
Adjusted net earnings, including earnings
attributable to redeemable and noncontrolling interests
$
2,440.5
$
2,380.1
Net cash provided by operating
activities
3,316.1
2,983.2
Purchases of land, buildings, and
equipment
(568.7
)
(530.8
)
Free cash flow
$
2,747.4
$
2,452.4
Net cash provided by operating activities
conversion rate
121
%
127
%
Free cash flow conversion rate
113
%
103
%
Note: Table may not foot due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220627005816/en/
(Investors) Jeff Siemon: +1-763-764-2301 (Media) Kelsey
Roemhildt: +1-763-764-6364
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