General Mills Inc Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kenneth Goldman - J. P. Morgan - Analyst : Hi, thank you very much. I appreciate it. I wanted to make sure, rather than I understood the dynamics in international, it's a bit of a specific question to start with the commentary in the prepared remarks about consumer challenges might indicate that volume would have been more pressure than price mix, but it was the latter that down by a greater degree so. I'm just curious we can walk us through the dynamic there, are there any unusual puts and take this past quarter and then I have a broad follow up?

Question: Kenneth Goldman - J. P. Morgan - Analyst : I'm stepping on your words. I apologize, but I appreciate that. The [VPM], the follow-up is, and thank you for all the detailed guidance you always provide from top to bottom in the P&L every year. I'm curious if you could break out for us a little bit of the cadence of the top line and EPS growth this year? And in particular, if there's any considerations as we think about modeling the first quarter?

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Great. Thanks. Good morning, everybody. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 1:00PM, GIS.N - Q4 2024 General Mills Inc Earnings Call

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Maybe you have to start off. I know in the prepared remarks you discuss sort of a clear mission to drive better volume results the reinvestment, which I know is contemplated in your outlook for '25 and you mentioned commonly the need to improve sort of the value equation for consumers. You've been mentioning optimizing price points in certain areas, a 20% increase in [coupon] spending sort of as examples. And I know the consumer measures value in lots of different ways, not just price. So I was hoping to get maybe a better sense of how the mix of incremental spending for '25 is sort of broken out across what would you consider higher power quality through brand equity building versus, let's say, more trade or price oriented spend time, particularly as this is such a sort of a hot-button topic among investors right now?

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Thank you for that. And then just a quick one Kofi. The commentary around HMM for fiscal '25 versus cost of goods inflation suggests, as Jeff highlighted, some gross margin flexibility to reinvest given the amount of reinvestment you're planning, not just in SG&A, but that reinvestment that goes against gross margin. Do your plan, I guess, anticipate that you can at least protect if not expand gross margins a little bit for the full year? Or could there still be some gross margin pressure for the full year, given kind of what you need to do across both sort of trade and consumer? Thank you.

Question: Andrew Lazar - Barclays Bank PLC - Analyst : Thank you.

Question: Bryan Spillane - Bank of America Securities - Analyst : Thanks, operator. Good morning Kofi and Jeff. I had just had one question, and it's come in a couple of different angles to us this morning. And it really the starting point on had has have you guided low enough for fiscal '25. And I say that in the context of there are some reinvestment rate that for increased investment, I should say that that's implied in your plan for this year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 1:00PM, GIS.N - Q4 2024 General Mills Inc Earnings Call If we look back over the last four quarters, you know, we've been kind of waiting for the time to come around the corner, and that's just General Mills. I think that's true across the whole Group. And so it seems like, you know, there's just more uncertainty. We're planning the business this year versus most. And I'm just, you know, given the opportunity right to give yourself the I guess, more cushion or actually more than that gets you more potential money to spend back. Why not take that opportunity now?

Question: Bryan Spillane - Bank of America Securities - Analyst : Thank you Jeff. Maybe just a quick follow on that is, as you've planned this year, what's your expectation on competitiveness? Meaning, you know, do you expect competitors to make similar moves? And just how you are anticipating that how the competitive environment with set up this year again, given just how dynamic things are the one.

Question: Bryan Spillane - Bank of America Securities - Analyst : Okay. Thank you.

Question: Steve Powers - Deutsche Bank - Analyst : Yes, hi, good morning. Apologies if you hear construction there, someone who start drilling has we've had in the call started to behind me on one. I guess what I have started, you talk about a roughly equal contribution from price and volume through the year, at the company level so it take to mean sort of flat to slightly positive in each case. I guess is there any deviation from that as you think about the sequence through the year or across the different business segments? Or do you expect that sort of who we are roughly equal contribution to be a representative of kind of expect across the totality of the enterprise?

Question: Steve Powers - Deutsche Bank - Analyst : Yes. Okay, great. Thanks for the clarification as well, You know on the Kofi, may be going back to where you started or Jeff started the call on international, you've talked about some of the challenges in Brazil and China at the moment. I guess, any perspective on how you expect those regions, countries markets to develop as the year progresses? Just kind of what you've embedded in terms of contribution in '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 1:00PM, GIS.N - Q4 2024 General Mills Inc Earnings Call

Question: Steve Powers - Deutsche Bank - Analyst : Thank you very much.

Question: Connor Cerniglia - AllianceBernstein - Analyst : Hi, good morning, this is Connor Cerniglia stepping in for Alexia Howard. Jeff, I'd like to ask about your ready to eat cereal. Measured channel data suggests you've experienced a bit more challenged market share dynamics at a time when promotional spend has increased at what our competitors. Can you talk about how you think about this segment in 2025 and you can see irrational pricing behavior? Or is there a concern on this front? Thanks and I'll pass it on.

Question: Tom Palmer - Citi - Analyst : Good morning and thanks for the question. I appreciate your earlier comments, I want to be overly specific here, but I guess I'll give it a dry look, if we exclude the inventory reductions in trade accrual, I think organic sales growth was down around 3%. Should we look at this is kind of a slow starting point as we entered the year? Or are there other considerations we should be thinking about as we move into the first quarter?

Question: Tom Palmer - Citi - Analyst : Got it. Okay, thank you. And then in the presentation, you listed M&A above share repo in terms of capital allocation priorities. I had kind of two pieces here. Of course, to what extent this is a 3% share count declining guidance assume that free cash flow in excess of the dividend is deployed for share repo versus other uses. And then look, I know you've been at quality of assets over the past year, but could you give us an update on your M&A criteria and appetite from a size standpoint? Thank you.

Question: Tom Palmer - Citi - Analyst : Great. Thank you.

Question: Matthew Smith - Stifel Nicolaus and Company - Analyst : Hi, good morning. And one of the dive in a little bit on the profitability or the profit performance in the pet segment, you are solidly in the mid-20s, even with the volume decline in the quarter. You talked about some increased investment behind wilderness as you tried to stabilize that business and get it back to growth. But is this a sustainable margin performance in the fourth quarter that we should look to as we look at fiscal 2025?

Question: Matthew Smith - Stifel Nicolaus and Company - Analyst : Thank you. And just a quick follow-up. You talked about distribution losses in the pet division. Any more detail to add to that. Is that something that remains a drag as we look at fiscal '25, that perhaps keeps volume growth, a little profit to achieve as we look into next year?

Question: Matthew Smith - Stifel Nicolaus and Company - Analyst : Thank you. I'll pass it on.

Question: David Palmer - Evercore ISI - Analyst : Thanks. I'll just follow up on pets for a second. I know one of the big areas of focus was the specialty pet segment clearly was a drag into the fourth quarter. Do you talked about in the prepared remarks about revenue growth for pet in fiscal '25? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 1:00PM, GIS.N - Q4 2024 General Mills Inc Earnings Call Do you also see the that that pet specialty segment also slicing and growing in fiscal '25?

Question: David Palmer - Evercore ISI - Analyst : And just a question on the banking segment, that seem to be an area that we did very well during COVID. You said that one of the areas that was most declining in this quarter. Are you seeing I just wanted to get your pulse on that segment and be consumer behaviors around that, right and make sure that's not going to be an ongoing drag for you in fiscal '25. Kofi, how are you feeling about that segment in the consumer behaviors around baking and the at-home occasions that would drive that? I know it's a high margin segment for you, and I'll pass it on. Thanks.

Question: David Palmer - Evercore ISI - Analyst : Thanks for that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 26, 2024 / 1:00PM, GIS.N - Q4 2024 General Mills Inc Earnings Call

Question: Robert Moskow - TD Cowen - Analyst : Hey, thanks, question. Good morning, Jeff. I wanted to know if you and a lot of your peers has shifted the emphasis more to volume, and I'm not denying the importance of it right now. But it is it just sounds different than the strategy that a lot of CPG companies have used over the years to create value through premiumization, convenience, that's been a win improves historically. Can you do both of these things at the same time? It seems like there's a lot of discussion volume today. And I'm wondering if there's still a consumer can still absorb or except that's more premium offerings in this environment.

Question: Robert Moskow - TD Cowen - Analyst : Great, thank you.

Question: Chris Carey - Wells Fargo Securities, LLC - Analyst : Hi, thank you all. Just wrap it up with a couple of follow-ups on. So number one, coffee on gross margins, you said expansion for the full year, in the prepared remarks you did highlight, however, that gross margin compares are harder in Q1. You'll be doing more couponing in Q1. We expect gross margins be down year over year to start the fiscal year but improve as couponing becomes more balance in comps get easier. Apologies if I missed that, but that would be number one. And then second, just you know, the recurring debate throughout the Q&A this morning has been the sales re-accelerate, our acceleration and slide in the outlook. If you just think about SRM couponing and perhaps other items, how would you frame the relative contribution of these items to the acceleration that you're expecting in your outlook for the year? So thanks so much of those two.

Question: Chris Carey - Wells Fargo Securities, LLC - Analyst : Okay. Thank you.