filings.toolsGeneral Mills 10-Q 2024-11-24
Filed 2024-12-18. 7 sections, 131K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
☑
QUARTERLY
REPORT
PURSUANT
TO
SECTION
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE QUARTERLY
PERIOD ENDED
NOVEMBER 24, 2024
☐
TRANSITION
REPORT
PURSUANT
TO
SECTION
OR
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934
FOR THE TRANSITION PERIOD FROM
TO
Commission file number:
001-01185
GENERAL MILLS, INC.
(Exact name of registrant as specified in its charter)
Delaware
41-0274440
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
Number One General Mills Boulevard
Minneapolis
,
Minnesota
55426
(Address of principal executive offices)
(Zip Code)
(763)
764-7600
(Registrant’s telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange
on which registered
Common Stock, $.10 par value
GIS
New York Stock Exchange
0.125% Notes due 2025
GIS 25A
New York Stock Exchange
0.450% Notes due 2026
GIS 26
New York Stock Exchange
1.500% Notes due 2027
GIS 27
New York Stock Exchange
3.907% Notes due 2029
GIS 29
New York Stock Exchange
3.650% Notes due 2030
GIS 30A
New York Stock Exchange
3.850% Notes due 2034
GIS 34
New York Stock Exchange
Indicate
by
check
mark
whether
the
registrant
(1)
has
filed
all
reports
required
to
be
filed
by
Section
or
15(d)
of
the
Securities
Exchange Act of 1934
during the preceding 12
months (or for such shorter
period that the registrant
was required to file such
reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes
☑
No
☐
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
every
Interactive
Data
File
required
to
be
submitted
pursuant to Rule 405
of Regulation S-T (§
232.405 of this chapter) during
the preceding 12 months (or
for such shorter period that
the
registrant was required to submit such files).
Yes
☑
No
☐
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
a
smaller
reporting
company,
or
an
emerging
growth
company.
See
the
definitions
of
“large
accelerated
filer,”
“accelerated
filer,”
“smaller
reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☑
Number
of shares
of Common
Stock outstanding
as of
December 11,
2024:
551,231,250
(excluding
203,382,078
shares held
in the
treasury).
General Mills, Inc.
Table of Contents
Page
PART I – Financial Information
24, 2024 and November 26, 2023
Consolidated Balance Sheets as of November 24, 2024 and May 26, 2024
Consolidated Statements of Cash Flows for the six-month periods ended November 24, 2024 and November
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
PART
I.
FINANCIAL INFORMATION
Item 1. Financial Statements.
Financial Statements.
Consolidated Statements of Earnings
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Net sales
$
5,240.1
$
5,139.4
$
10,088.2
$
10,044.1
Cost of sales
3,309.0
3,373.5
6,468.3
6,507.7
Selling, general, and administrative expenses
852.0
830.5
1,707.1
1,669.8
Restructuring, impairment, and other exit costs
1.2
123.6
3.4
124.8
Operating profit
1,077.9
811.8
1,909.4
1,741.8
Benefit plan non-service income
(13.8)
(20.1)
(27.7)
(37.1)
Interest, net
124.6
117.8
248.2
234.8
Earnings before income taxes and after-tax earnings
from
joint ventures
967.1
714.1
1,688.9
1,544.1
Income taxes
194.8
136.0
352.2
309.2
After-tax earnings from joint ventures
30.0
24.2
49.2
47.7
Net earnings, including earnings attributable to
noncontrolling interests
802.3
602.3
1,385.9
1,282.6
Net earnings attributable to noncontrolling interests
6.6
6.8
10.3
13.6
Net earnings attributable to General Mills
$
795.7
$
595.5
$
1,375.6
$
1,269.0
Earnings per share – basic
$
1.43
$
1.03
$
2.46
$
2.18
Earnings per share – diluted
$
1.42
$
1.02
$
2.45
$
2.16
See accompanying notes to consolidated financial statements.
Consolidated Statements of Comprehensive Income
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Quarter Ended
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Net earnings, including earnings attributable to
noncontrolling interests
$
802.3
$
602.3
$
1,385.9
$
1,282.6
Other comprehensive income (loss), net of tax:
Foreign currency translation
28.8
(22.3)
(33.1)
(40.4)
Other fair value changes:
Hedge derivatives
9.2
1.9
3.2
(0.4)
Reclassification to earnings:
Hedge derivatives
1.7
(2.4)
1.7
(2.2)
Amortization of losses and prior service costs
11.7
9.2
23.3
18.3
Other comprehensive income (loss), net of tax
51.4
(13.6)
(4.9)
(24.7)
Total comprehensive
income
853.7
588.7
1,381.0
1,257.9
Comprehensive income attributable to noncontrolling
interests
5.3
7.1
9.5
14.0
Comprehensive income attributable to General Mills
$
848.4
$
581.6
$
1,371.5
$
1,243.9
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
GENERAL MILLS, INC. AND SUBSIDIARIES
(In Millions, Except Par Value)
Nov. 24, 2024
May 26, 2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
2,292.8
$
418.0
Receivables
1,781.9
1,696.2
Inventories
1,967.9
1,898.2
Prepaid expenses and other current assets
458.0
568.5
Assets held for sale
880.8
-
Total current
assets
7,381.4
4,580.9
Land, buildings, and equipment
3,457.0
3,863.9
Goodwill
14,427.7
14,750.7
Other intangible assets
6,743.3
6,979.9
Other assets
1,386.7
1,294.5
Total assets
$
33,396.1
$
31,469.9
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
4,068.8
$
3,987.8
Current portion of long-term debt
1,821.5
1,614.1
Notes payable
264.3
11.8
Other current liabilities
1,804.5
1,419.4
Liabilities held for sale
65.2
-
Total current
liabilities
8,024.3
7,033.1
Long-term debt
12,435.8
11,304.2
Deferred income taxes
2,232.9
2,200.6
Other liabilities
1,253.9
1,283.5
Total liabilities
23,946.9
21,821.4
Stockholders’ equity:
Common stock,
754.6
shares issued, $
0.10
par value
75.5
75.5
Additional paid-in capital
1,182.0
1,227.0
Retained earnings
21,340.3
20,971.8
Common stock in treasury,
at cost, shares of
202.4
and
195.5
(10,873.3)
(10,357.9)
Accumulated other comprehensive loss
(2,523.8)
(2,519.7)
Total stockholders’
equity
9,200.7
9,396.7
Noncontrolling interests
248.5
251.8
Total equity
9,449.2
9,648.5
Total liabilities and equity
$
33,396.1
$
31,469.9
See accompanying notes to consolidated financial statements.
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Quarter Ended
Nov. 24, 2024
Nov. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
9,526.6
$
10,515.4
Common stock,
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,164.6
1,185.7
Stock compensation plans
(4.1)
(6.5)
Unearned compensation related to stock unit awards
(4.6)
(0.5)
Earned compensation
26.1
23.1
Ending balance
1,182.0
1,201.8
Retained earnings:
Beginning balance
21,213.9
20,163.6
Net earnings attributable to General Mills
795.7
595.5
Cash dividends declared ($
1.20
and $
1.18
per share)
(669.3)
(678.2)
Ending balance
21,340.3
20,080.9
Common stock in treasury:
Beginning balance
(198.8)
(10,601.9)
(173.4)
(8,874.3)
Shares purchased, including excise tax of $
2.6
and
$
7.9
million
(4.2)
(303.0)
(12.4)
(808.8)
Stock compensation plans
0.6
31.6
0.1
5.7
Ending balance
(202.4)
(10,873.3)
(185.7)
(9,677.4)
Accumulated other comprehensive loss:
Beginning balance
(2,576.5)
(2,288.1)
Comprehensive income (loss)
52.7
(13.9)
Ending balance
(2,523.8)
(2,302.0)
Noncontrolling interests:
Beginning balance
251.0
253.0
Comprehensive income
5.3
7.1
Distributions to noncontrolling interest holders
(7.8)
(7.7)
Change in ownership interest
-
0.7
Ending balance
248.5
253.1
Total equity,
ending balance
$
9,449.2
$
9,631.9
See accompanying notes to consolidated financial statements.
Consolidated Statements of Total
Equity
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions, Except per Share Data)
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
Shares
Amount
Shares
Amount
Total equity,
beginning balance
$
9,648.5
$
10,700.0
Common stock,
billion shares authorized, $
0.10
par value
754.6
75.5
754.6
75.5
Additional paid-in capital:
Beginning balance
1,227.0
1,222.4
Stock compensation plans
(9.3)
0.8
Unearned compensation related to stock unit awards
(81.7)
(79.9)
Earned compensation
46.0
58.5
Ending balance
1,182.0
1,201.8
Retained earnings:
Beginning balance
20,971.8
19,838.6
Net earnings attributable to General Mills
1,375.6
1,269.0
Cash dividends declared ($
1.80
and $
1.77
per share)
(1,007.1)
(1,026.7)
Ending balance
21,340.3
20,080.9
Common stock in treasury:
Beginning balance
(195.5)
(10,357.9)
(168.0)
(8,410.0)
Shares purchased, including excise tax of $
4.8
and
$
12.1
million
(8.7)
(605.2)
(18.8)
(1,313.5)
Stock compensation plans
1.8
89.8
1.1
46.1
Ending balance
(202.4)
(10,873.3)
(185.7)
(9,677.4)
Accumulated other comprehensive loss:
Beginning balance
(2,519.7)
(2,276.9)
Comprehensive loss
(4.1)
(25.1)
Ending balance
(2,523.8)
(2,302.0)
Noncontrolling interests:
Beginning balance
251.8
250.4
Comprehensive income
9.5
14.0
Distributions to noncontrolling interest holders
(12.8)
(12.0)
Change in ownership interest
-
0.7
Ending balance
248.5
253.1
Total equity,
ending balance
$
9,449.2
$
9,631.9
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows
GENERAL MILLS, INC. AND SUBSIDIARIES
(Unaudited) (In Millions)
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
Cash Flows - Operating Activities
Net earnings, including earnings attributable to noncontrolling interests
$
1,385.9
$
1,282.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization
269.1
265.8
After-tax earnings from joint ventures
(49.2)
(47.7)
Distributions of earnings from joint ventures
23.1
23.5
Stock-based compensation
46.6
58.5
Deferred income taxes
(11.5)
(58.7)
Pension and other postretirement benefit plan contributions
(15.2)
(12.5)
Pension and other postretirement benefit plan costs
(6.5)
(13.5)
Restructuring, impairment, and other exit costs
(0.9)
123.1
Changes in current assets and liabilities, excluding the effects of
acquisitions and divestitures
172.3
(166.1)
Other, net
(39.0)
40.8
Net cash provided by operating activities
1,774.7
1,495.8
Cash Flows - Investing Activities
Purchases of land, buildings, and equipment
(301.2)
(293.9)
Acquisition, net of cash acquired
(7.7)
(25.5)
Investments in affiliates, net
6.6
(1.5)
Proceeds from disposal of land, buildings, and equipment
0.9
0.1
Other, net
(4.5)
4.6
Net cash used by investing activities
(305.9)
(316.2)
Cash Flows - Financing Activities
Change in notes payable
254.3
766.9
Issuance of long-term debt
1,500.0
500.0
Payment of long-term debt
-
(400.0)
Proceeds from common stock issued on exercised options
33.8
5.7
Purchases of common stock for treasury
(600.4)
(1,301.4)
Dividends paid
(675.8)
(691.0)
Distributions to noncontrolling interest holders
(12.8)
(12.0)
Other, net
(77.0)
(41.8)
Net cash provided (used) by financing activities
422.1
(1,173.6)
Effect of exchange rate changes on cash and cash equivalents
(16.1)
2.3
Increase in cash and cash equivalents
1,874.8
8.3
Cash and cash equivalents - beginning of year
418.0
585.5
Cash and cash equivalents - end of period
$
2,292.8
$
593.8
Cash Flows from changes in current assets and liabilities, excluding
the effects of
acquisitions and divestitures:
Receivables
$
(109.3)
$
(69.2)
Inventories
(169.5)
13.8
Prepaid expenses and other current assets
83.4
209.0
Accounts payable
266.4
(329.1)
Other current liabilities
101.3
9.4
Changes in current assets and liabilities
$
172.3
$
(166.1)
See accompanying notes to consolidated financial statements.
GENERAL MILLS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
(1) Background
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
(GAAP) for
interim financial
information
and with
the rules
and regulations
for reporting
on Form
10-Q. Accordingly,
they do
not include
certain information
and disclosures
required
for
comprehensive
financial
statements.
In
the
opinion
of
management,
all
adjustments
considered
necessary
for
a
fair
presentation have
been included
and are
of a
normal recurring
nature, including
the elimination
of all
intercompany transactions
and
any
noncontrolling
interests’
share
of
those
transactions.
Operating
results
for
the
fiscal
quarter
ended
November
24,
2024,
are not
necessarily indicative of the results that may be expected for the fiscal year ending
May 25, 2025.
These
statements
should
be
read
in
conjunction
with
the
Consolidated
Financial
Statements
and
footnotes
included
in
our
Annual
Report on Form
10-K for the fiscal
year ended May
26, 2024. The
accounting policies used
in preparing these
Consolidated Financial
Statements are the same as those described in Note 2 to the Consolidated Financial
Statements in that Form 10-K.
Certain terms used throughout this report are defined in the “Glossary” section
below.
(2) Acquisitions and Divestitures
During
the
second
quarter
of
fiscal
2025,
we
entered
into
a
definitive
agreement
to
acquire
NX
Pet
Holding,
Inc.,
representing
Whitebridge Pet
Brands’ North American
premium cat feeding
and pet treating
business, for approximately
$
1.4
billion (Whitebridge
Pet Brands acquisition).
We
expect to close
the transaction in
the third quarter
of fiscal 2025,
subject to regulatory
approval and other
customary closing conditions. We
intend to fund the acquisition with cash on hand.
During
the
second
quarter
of
fiscal
2025,
we
entered
into
definitive
agreements
to
sell
our
North
American
yogurt
businesses
to
affiliates
of
Groupe
Lactalis
S.A.
(Lactalis)
and
Sodiaal
International
(Sodiaal)
for
approximately
$
2.1
billion.
We
expect
to
close
these divestitures in calendar year 2025, subject to regulatory
approvals and other customary closing conditions. We
have classified all
assets and
liabilities associated
with our
North American
yogurt businesses
as held
for sale
in our
Consolidated Balance
Sheets as
of
November 24, 2024.
The components of assets held for sale and liabilities held for sale are as follows:
In Millions
Nov. 24, 2024
Receivables
$
3.2
Inventories
74.8
Prepaid expenses and other current assets
20.4
Land, buildings, and equipment
283.1
Goodwill
267.6
Other intangible assets
206.2
Other assets
25.5
Assets held for sale
$
880.8
Accounts payable
$
32.5
Other current liabilities
8.5
Deferred income taxes
10.0
Other liabilities
14.2
Liabilities held for sale
$
65.2
During the fourth
quarter of fiscal 2024,
we acquired a pet
food business in Europe
for a purchase price
of $
434.1
million, net of
cash
acquired.
During
the
first
quarter
of
fiscal
2025,
we
paid
$
7.7
million
related
to
a
purchase
price
holdback
after
certain
closing
conditions
were
met.
We
financed
the
transaction
with
cash
on
hand.
We
consolidated
the
business
into
our
Consolidated
Balance
Sheets
and
recorded
goodwill
of
$
317.5
million,
an
indefinite-lived
brand
intangible
asset
of
$
118.4
million
and
a
finite-lived
customer
relationship
asset
of
$
14.2
million.
The
goodwill
is
included
in
the
International
segment
and
is
not
deductible
for
tax
purposes. The pro forma effects
of this acquisition were not
material. We
have conducted a preliminary assessment
of the fair value of
the acquired
assets and
liabilities of
the business
and we
are continuing
our review
of these
items during
the measurement
period. If
new
information
is
obtained
about
facts
and
circumstances
that
existed
at
the
acquisition
date,
the
acquisition
accounting
will
be
revised
to
reflect
the
resulting
adjustments
to
current
estimates
of
those
items.
The
consolidated
results
are
reported
in
our
International operating segment on a one-month lag beginning in
fiscal 2025.
(3) Restructuring, Impairment, and Other Exit Costs
Restructuring and impairment charges were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Charges associated with restructuring actions
previously announced
$
1.3
$
14.8
$
4.2
$
24.6
Goodwill impairment
-
117.1
-
117.1
Total
$
1.3
$
131.9
$
4.2
$
141.7
In the
six-month period
ended November
24, 2024,
we did not
undertake any
new restructuring
actions. We
recorded $
1.3
million of
restructuring
charges
in
the
second
quarter
of
fiscal
2025
and
$
4.2
million
of
restructuring
charges
in
the
six-month
period
ended
November 24,
2024, related
to restructuring
actions previously
announced. We
recorded $
14.8
million of
restructuring charges
in the
second quarter of
fiscal 2024 and
$
24.6
million of restructuring
charges in the
six-month period ended
November 26, 2023,
related to
restructuring actions previously announced.
We expect these actions to
be completed by the end of fiscal 2026.
In the second
quarter of fiscal
2024, we recorded
a $
117.1
million non-cash goodwill
impairment charge
related to our Latin
America
reporting unit. Please see Note 4 for additional information.
We
paid
net
$
5.1
million
of
cash
in
the
six-month
period
ended
November
24,
2024,
related
to
restructuring
actions.
We
paid
net
$
18.6
million of cash in the same period of fiscal 2024.
Restructuring and impairment charges and project-related
costs are recorded in our Consolidated Statements of Earnings as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Restructuring, impairment, and other exit costs
$
1.2
$
123.6
$
3.4
$
124.8
Cost of sales
0.1
8.3
0.8
16.9
Total restructuring
and impairment charges
$
1.3
$
131.9
$
4.2
$
141.7
Project-related costs classified in cost of sales
$
0.1
$
0.3
$
0.2
$
1.1
(4) Goodwill and Other Intangible Assets
The components of goodwill and other intangible assets are as follows:
In Millions
Nov. 24, 2024
May 26, 2024
Goodwill
$
14,427.7
$
14,750.7
Other intangible assets:
Intangible assets not subject to amortization:
Brands and other indefinite-lived intangibles
6,502.5
6,728.6
Intangible assets subject to amortization:
Customer relationships and other finite-lived intangibles
387.1
402.2
Less accumulated amortization
(146.3)
(150.9)
Intangible assets subject to amortization, net
240.8
251.3
Other intangible assets
6,743.3
6,979.9
Total
$
21,171.0
$
21,730.6
Based
on
the carrying
value
of
finite-lived
intangible
assets as
of
November
24,
2024,
annual
amortization
expense
for
each of
the
next five fiscal years is estimated to be approximately $
million.
The changes in the carrying amount of goodwill during the six-month period
ended November 24, 2024, were as follows:
In Millions
North
America
Retail
North
America
Pet
North
America
Foodservice
International
(a)
Corporate
and Joint
Ventures
Total
Balance as of May 26, 2024
$
6,541.9
$
6,062.8
$
805.5
$
917.1
$
423.4
$
14,750.7
Reclassified to assets held
for sale
(217.6)
-
(50.0)
-
-
(267.6)
Other activity, primarily
foreign currency translation
(2.7)
-
-
(37.0)
(15.7)
(55.4)
Balance as of Nov. 24, 2024
$
6,321.6
$
6,062.8
$
755.5
$
880.1
$
407.7
$
14,427.7
(a)
The carrying amounts of goodwill within the International segment as of
May 26, 2024, and November 24, 2024, were net of
accumulated impairment losses of $
117.1
million. For additional information, see Note 6 to the Consolidated Financial
Statements included in our Annual Report on Form 10-K for the fiscal year
ended May 26, 2024.
The changes in the carrying amount of other intangible assets during the six-month
period ended November 24, 2024, were as follows:
In Millions
Total
Balance as of May 26, 2024
$
6,979.9
Reclassified to assets held for sale
(206.2)
Other activity, primarily
foreign currency translation and amortization
(30.4)
Balance as of Nov. 24, 2024
$
6,743.3
Our
annual
goodwill
and
indefinite-lived
intangible
assets
impairment
test
was
performed
on
the
first
day
of
the
second
quarter
of
fiscal
2025,
and
we
determined
there
was
no
impairment
of
our
intangible
assets
as
their
related
fair
values
were
substantially
in
excess of the
carrying values,
except for
the
Uncle Toby’s
brand intangible
asset. In addition,
while having
significant coverage
as of
our
fiscal
2025
assessment
date,
the
Progresso
,
Nudges
,
True
Chews
,
and
Kitano
brand
intangible
assets
had
risk
of
decreasing
coverage. We will continue
to monitor these businesses for potential impairment.
(5) Inventories
The components of inventories were as follows:
In Millions
Nov. 24, 2024
May 26, 2024
Finished goods
$
1,986.1
$
1,827.7
Raw materials and packaging
441.1
500.5
Grain
82.9
111.1
Excess of FIFO over LIFO cost
(542.2)
(541.1)
Total
$
1,967.9
$
1,898.2
In addition, we had $
74.8
million of inventories classified as held for sale as of November 24, 2024.
(6) Risk Management Activities
Many commodities we
use in the
production and distribution
of our products
are exposed to
market price risks.
We
utilize derivatives
to manage price risk for our principal
ingredients and energy costs, including
grains (oats, wheat, and corn), oils
(principally soybean),
dairy products, natural
gas, and diesel fuel.
Our primary objective
when entering into
these derivative contracts
is to achieve
certainty
with
regard
to
the
future
price
of
commodities
purchased
for
use
in
our
supply
chain.
We
manage
our
exposures
through
a
combination of purchase orders, long-term
contracts with suppliers, exchange-traded
futures and options, and over-the-counter
options
and swaps.
We
offset
our exposures
based on
current and
projected market
conditions and
generally seek
to acquire
the inputs
at as
close as possible to or below our planned cost.
We
use derivatives
to manage
our exposure
to changes
in commodity
prices. We
do not
perform the
assessments required
to achieve
hedge
accounting
for
commodity
derivative
positions.
Accordingly,
the
changes
in
the
values
of
these
derivatives
are
recorded
currently in cost of sales in our Consolidated Statements of Earnings.
Although we do
not meet the
criteria for
cash flow hedge
accounting, we believe
that these instruments
are effective
in achieving our
objective of providing certainty
in the future price of commodities purchased
for use in our supply chain.
Accordingly, for
purposes of
measuring
segment
operating
performance,
these
gains
and
losses
are
reported
in
unallocated
corporate
items
outside
of
segment
operating results
until such time
that the exposure
we are managing
affects earnings.
At that time,
we reclassify
the gain or
loss from
unallocated
corporate
items
to
segment
operating
profit,
allowing
our
operating
segments
to
realize
the
economic
effects
of
the
derivative without experiencing any resulting mark-to-market volatility,
which remains in unallocated corporate items.
Unallocated corporate items for the quarters and six-month periods ended
November 24, 2024, and November 26, 2023, included:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Net gain (loss) on mark-to-market valuation of certain
commodity positions
$
3.4
$
(38.2)
$
(34.3)
$
(9.8)
Net loss on commodity positions reclassified from
unallocated corporate items to segment operating profit
19.1
14.6
36.3
17.8
Net mark-to-market revaluation of certain grain inventories
6.9
(1.5)
(1.4)
11.8
Net mark-to-market valuation of certain commodity
positions recognized in unallocated corporate items
$
29.4
$
(25.1)
$
0.6
$
19.8
As of
November
24,
2024,
the net
notional
value
of
commodity
derivatives
was $
264.5
million,
of
which
$
157.4
million
related
to
agricultural inputs and $
107.1
million related to energy inputs. These contracts relate to inputs
that generally will be utilized within the
next
months.
We also
have net investments in foreign
subsidiaries that are denominated
in euros. As of November
24, 2024, we hedged a
portion of
these investments with €
3,986.5
million of euro-denominated bonds.
During the
second quarter of
fiscal 2025, in
advance of planned
debt financing,
we entered into
$
350.0
million of treasury
locks. The
treasury locks were terminated during the second quarter
of fiscal 2025, in conjunction with the Company’s
issuance of $
750.0
million
of
fixed-rate
notes
due
January 30, 2035
.
Upon
termination,
a
gain
of $
0.1
million
was recognized
in AOCI
and
will be
amortized
through interest expense over the respective term of the debt.
During the
second quarter
of fiscal
2025, we
entered into
a $
750.0
million notional
amount interest
rate swap
to convert
our $
750.0
million of fixed-rate notes due January 30, 2030, to a floating rate.
During the second quarter of fiscal 2025, our
$
500.0
million notional amount interest rate swap to convert
our $
500.0
million of fixed-
rate notes due
November 18, 2025
to a floating
rate was called
by the counterparty
prior to the
maturity date. The
previously existing
swap was designated
as a fair value
hedge, and concurrent
with the swap
being called, we
ceased recording
market value adjustments
to the associated hedged debt.
The
fair
values
of
the
derivative
positions
used
in
our
risk
management
activities
and
other
assets
recorded
at
fair
value
were
not
material
as
of
November
24,
2024,
and
were
Level
or
Level
assets
and
liabilities
in
the
fair
value
hierarchy.
We
did
not
significantly change our valuation techniques from prior periods.
We
offer
certain
suppliers
access
to
third-party
services
that
allow
them
to
view
our
scheduled
payments
online.
The
third-party
services also
allow suppliers
to finance
advances on
our scheduled
payments at
the sole
discretion of
the supplier
and the third
party.
We
have no
economic interest
in these
financing arrangements
and no
direct relationship
with the
suppliers, the
third parties,
or any
financial institutions
concerning these
services, including
not providing
any form
of guarantee
and not
pledging assets
as security
to
the third
parties or
financial institutions.
All of
our accounts
payable remain
as obligations
to our
suppliers as
stated in
our supplier
agreements.
As
of
November
24,
2024,
$
1,555.2
million
of
our
total
accounts
payable
were
payable
to
suppliers
who
utilize
these
third-party services.
As of
May 26,
2024, $
1,404.4
million of
our total
accounts payable
were payable
to suppliers
who utilize
these
third-party services.
(7) Debt
The components of notes payable were as follows:
Nov. 24, 2024
May 26, 2024
In Millions
Notes Payable
Weighted-
Average
Interest Rate
Notes Payable
Weighted-
Average
Interest Rate
U.S. commercial paper
$
251.4
4.8
%
$
-
-
%
Financial institutions
12.9
6.7
11.8
8.8
Total
$
264.3
4.9
%
$
11.8
8.8
%
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
The following table details the fee-paid committed and uncommitted credit
lines we had available as of November 24, 2024:
In Billions
Facility
Amount
Borrowed
Amount
Committed credit facility expiring October 2029
$
2.7
$
-
Uncommitted credit facilities
0.7
-
Total committed
and uncommitted credit facilities
$
3.4
$
-
In
the
second
quarter
of fiscal
2025,
we
entered
into
a
$
2.7
billion
fee-paid
committed
credit
facility
that
is
scheduled
to
expire
in
October 2029
. Concurrent with the execution of this credit facility,
we terminated our existing $
2.7
billion credit facility.
The
credit
facilities
contain
covenants,
including
a
requirement
to
maintain
a
fixed
charge
coverage
ratio
of
at
least
2.5
times.
We
were in compliance with all credit facility covenants as of November 24, 2024.
Long-Term
Debt
The fair values
and carrying
amounts of long-term
debt, including
the current portion,
were $
13,683.8
million and $
14,257.3
million,
respectively,
as of
November 24,
- The
fair value
of long-term
debt was
estimated using
market quotations
and discounted
cash
flows based
on our
current incremental
borrowing rates
for similar
types of
instruments. Long
-term debt
is a
Level 2
liability in
the
fair value hierarchy.
In the
second quarter
of fiscal
2025, we
issued $
750.0
million of
4.875
percent fixed-rate
notes due
January 30, 2030
. We
intend to
use the net proceeds to fund the Whitebridge Pet Brands acquisition.
In the second quarter
of fiscal 2025, we
issued $
750.0
million of
5.25
percent fixed-rate notes due
January 30, 2035
. We
intend to use
the net proceeds to fund the Whitebridge Pet Brands acquisition.
In the
second quarter
of fiscal
2025, we
issued €
250.0
million of
floating-rate notes
due
April 22, 2026
. We
used the
net proceeds
to
repay €
250.0
million of floating-rate notes due
November 8, 2024
.
In the
second quarter
of fiscal
2025, we
issued €
500.0
million of
floating-rate notes
due
October 22, 2026
. We
used the
net proceeds
to repay €
500.0
million of floating-rate notes due
November 8, 2024
.
In the
fourth quarter
of fiscal 2024,
we issued €
500.0
million of
3.65
percent fixed-rate
notes due
October 23, 2030
. We
used the
net
proceeds for general corporate purposes.
In
the fourth
quarter
of fiscal
2024,
we issued
€
500.0
million
of
3.85
percent
fixed-rate notes
due
April 23, 2034
.
We
used
the net
proceeds for general corporate purposes.
In
the
third
quarter of
fiscal
2024,
we
issued
$
500.0
million
of
4.7
percent
fixed-rate
notes due
January 30, 2027
. We
used
the
net
proceeds to repay $
500.0
million of
3.65
percent fixed-rate notes due
February 15, 2024
.
In the second
quarter of fiscal 2024,
we issued €
250.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to repay €
250.0
million of floating-rate notes due
November 10, 2023
.
In the
second quarter
of fiscal
2024, we
issued $
500.0
million of
5.5
percent fixed-rate
notes due
October 17, 2028
. We
used the
net
proceeds to repay $
400.0
million of floating-rate notes due
October 17, 2023
, and for general corporate purposes.
In the first
quarter of fiscal
2024, we issued
€
500.0
million of floating-rate
notes due
November 8, 2024
. We
used the net proceeds
to
repay €
500.0
million of floating-rate notes due
July 27, 2023
.
Certain of our
long-term debt agreements
contain restrictive
covenants.
As of November 24, 2024, we were in compliance with all of
these covenants.
(8) Noncontrolling Interests
The
third-party
holder
of
the
General
Mills
Cereals,
LLC
(GMC)
Class A
Interests
receives
quarterly
preferred
distributions
from
available net
income based
on the application
of a
floating preferred
return rate
to the
holder’s capital
account balance
established in
the
most
recent
mark-to-market
valuation
(currently
$
251.5
million).
On
June
1,
2024,
the
floating
preferred
return
rate
on
GMC’s
Class A Interests was reset to the sum of the
three-month Term SOFR
plus
basis points. The preferred return rate is adjusted
every
three years
through a negotiated agreement with the Class A Interest holder or through a remarketing
auction.
Our noncontrolling interests contain restrictive covenants. As of November 24, 2024, we were in compliance with all of these
covenants.
(9) Stockholders’ Equity
The following tables provide details of total comprehensive income:
Quarter Ended
Quarter Ended
Nov. 24, 2024
Nov. 26, 2023
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
795.7
$
6.6
$
595.5
$
6.8
Other comprehensive income (loss):
Foreign currency translation
$
100.9
$
(70.8)
30.1
(1.3)
$
(32.4)
$
9.8
(22.6)
0.3
Other fair value changes:
Hedge derivatives
11.8
(2.6)
9.2
-
2.5
(0.6)
1.9
-
Reclassification to earnings:
Hedge derivatives (a)
1.2
0.5
1.7
-
(3.4)
1.0
(2.4)
-
Amortization of losses and
prior service costs (b)
14.6
(2.9)
11.7
-
11.5
(2.3)
9.2
-
Other comprehensive income (loss)
$
128.5
$
(75.8)
52.7
(1.3)
$
(21.8)
$
7.9
(13.9)
0.3
Total comprehensive income
$
848.4
$
5.3
$
581.6
$
7.1
(a)
Loss (gain) reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Six-Month Period Ended
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
General Mills
Noncontrolling
Interests
General Mills
Noncontrolling
Interests
In Millions
Pretax
Tax
Net
Net
Pretax
Tax
Net
Net
Net earnings, including earnings
attributable to noncontrolling interests
$
1,375.6
$
10.3
$
1,269.0
$
13.6
Other comprehensive (loss) income:
Foreign currency translation
$
7.0
$
(39.3)
(32.3)
(0.8)
$
(54.4)
$
13.6
(40.8)
0.4
Other fair value changes:
Hedge derivatives
4.3
(1.1)
3.2
-
(0.2)
(0.2)
(0.4)
-
Reclassification to earnings:
Hedge derivatives (a)
0.8
0.9
1.7
-
(4.7)
2.5
(2.2)
-
Amortization of losses and
prior service costs (b)
29.1
(5.8)
23.3
-
23.0
(4.7)
18.3
-
Other comprehensive (loss) income
$
41.2
$
(45.3)
(4.1)
(0.8)
$
(36.3)
$
11.2
(25.1)
0.4
Total comprehensive income
$
1,371.5
$
9.5
$
1,243.9
$
14.0
(a)
Loss (gain) reclassified from AOCI into earnings is reported in interest, net for interest rate swaps and in cost of sales and SG&A expenses for foreign exchange contracts.
(b)
Loss reclassified from AOCI into earnings is reported in benefit plan non-service income.
Accumulated other comprehensive loss balances, net of tax effects,
were as follows:
In Millions
Nov. 24, 2024
May 26, 2024
Foreign currency translation adjustments
$
(827.6)
$
(795.3)
Unrealized gain from hedge derivatives
5.1
0.2
Pension, other postretirement, and postemployment benefits:
Net actuarial loss
(1,775.1)
(1,806.3)
Prior service credits
73.8
81.7
Accumulated other comprehensive loss
$
(2,523.8)
$
(2,519.7)
(10) Stock Plans
We
have various
stock-based compensation
programs under
which awards,
including stock
options, restricted
stock, restricted
stock
units, and performance
awards, may be granted
to employees and non-employee
directors. These programs
and related accounting
are
described in Note
12 to the
Consolidated Financial
Statements included
in our Annual
Report on Form
10-K for the
fiscal year ended
May 26, 2024.
Compensation expense related to stock-based payments recognized
in the Consolidated Statements of Earnings was as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Compensation expense related to stock-based payments
$
26.3
$
23.1
$
46.6
$
58.5
Windfall tax benefits from stock-based
payments in income tax expense in our Consolidated Statements of Earnings
were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Windfall tax benefits from stock-based payments
$
2.0
$
0.5
$
4.8
$
8.9
As
of
November
24,
2024,
unrecognized
compensation
expense
related
to
non-vested
stock
options,
restricted
stock
units,
and
performance share units was $
164.4
million. This expense will be recognized over
months, on average.
Net cash proceeds from the exercise of stock options
less shares used for withholding taxes and the intrinsic
value of options exercised
were as follows:
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Net cash proceeds
$
33.8
$
5.7
Intrinsic value of options exercised
$
10.0
$
2.3
We
estimate the
fair value
of each
option on
the grant
date using
a Black-Scholes
option-pricing
model, which
requires us
to make
predictive assumptions
regarding future
stock price volatility,
employee exercise
behavior, dividend
yield, and
the forfeiture
rate. We
estimate our future
stock price volatility
using the historical
volatility over
the expected term
of the option,
excluding time
periods of
volatility we believe a marketplace participant would
exclude in estimating our stock price volatility.
We also have
considered, but did
not use, implied
volatility in our estimate,
because trading activity in
options on our stock,
especially those with
tenors of greater than
6 months, is
insufficient to
provide a reliable
measure of expected
volatility.
Our method of
selecting the other
valuation assumptions
is
explained
in
Note
to
the
Consolidated
Financial
Statements
included
in
our
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended May 26, 2024.
The
estimated
fair
values
of
stock
options
granted
and
the
assumptions
used
for
the
Black-Scholes
option-pricing
model
were
as
follows:
Six-Month Period Ended
Nov. 24, 2024
Nov. 26, 2023
Estimated fair values of stock options granted
$
13.26
$
17.47
Assumptions:
Risk-free interest rate
4.5
%
4.0
%
Expected term
8.5
years
8.5
years
Expected volatility
21.6
%
21.4
%
Dividend yield
3.8
%
2.8
%
The total grant date fair value of restricted stock unit awards that vested during
the period was as follows:
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Total grant date fair
value
$
97.0
$
87.4
(11) Earnings Per Share
Basic and diluted earnings per share (EPS) were calculated using the following:
Quarter Ended
Six-Month Period Ended
In Millions, Except per Share Data
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Net earnings attributable to General Mills
$
795.7
$
595.5
$
1,375.6
$
1,269.0
Average number
of common shares – basic EPS
556.9
580.1
558.7
583.2
Incremental share effect from: (a)
Stock options
1.9
1.4
1.7
2.1
Restricted stock units and performance share units
1.6
1.9
1.8
2.1
Average number
of common shares – diluted EPS
560.4
583.4
562.2
587.4
Earnings per share – basic
$
1.43
$
1.03
$
2.46
$
2.18
Earnings per share – diluted
$
1.42
$
1.02
$
2.45
$
2.16
(a)
Incremental
shares
from
stock
options,
restricted
stock
units,
and
performance
share
units
are
computed
by
the
treasury
stock
method. Stock options, restricted
stock units, and performance
share units excluded from
our computation of diluted
EPS because
they were not dilutive were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Anti-dilutive stock options, restricted stock units, and
performance share units
3.1
4.5
3.2
2.4
(12) Share Repurchases
Share repurchases were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Shares of common stock
4.2
12.4
8.7
18.8
Aggregate purchase price
$
303.0
$
808.8
$
605.2
$
1,313.5
(13) Statements of Cash Flows
Our Consolidated Statements of Cash Flows include the following:
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Net cash interest payments
$
139.6
$
212.2
Net income tax payments
$
252.1
$
207.0
(14) Retirement and Postemployment Benefits
Components of net periodic benefit expense (income) are as follows:
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Quarter Ended
Quarter Ended
Quarter Ended
In Millions
Nov. 24,
2024
Nov. 26,
2023
Nov. 24,
2024
Nov. 26,
2023
Nov. 24,
2024
Nov. 26,
2023
Service cost
$
12.9
$
14.4
$
1.1
$
1.2
$
1.7
$
1.9
Interest cost
76.7
74.1
5.3
5.4
1.0
1.0
Expected return on plan assets
(105.0)
(106.0)
(8.9)
(8.7)
-
-
Amortization of losses (gains)
24.9
21.5
(5.1)
(5.1)
0.2
(0.1)
Amortization of prior service costs (credits)
0.4
0.5
(5.6)
(5.5)
(0.2)
0.2
Other adjustments
-
-
-
-
2.5
2.6
Curtailment gain
-
(3.4)
-
-
-
-
Net expense (income)
$
9.9
$
1.1
$
(13.2)
$
(12.7)
$
5.2
$
5.6
Defined Benefit
Pension Plans
Other Postretirement
Benefit Plans
Postemployment
Benefit Plans
Six-Month
Period Ended
Six-Month
Period Ended
Six-Month
Period Ended
In Millions
Nov. 24,
2024
Nov. 26,
2023
Nov. 24,
2024
Nov. 26,
2023
Nov. 24,
2024
Nov. 26,
2023
Service cost
$
25.9
$
28.6
$
2.2
$
2.4
$
3.5
$
3.7
Interest cost
153.4
148.3
10.6
10.7
2.0
2.0
Expected return on plan assets
(210.0)
(208.9)
(17.9)
(17.4)
-
-
Amortization of losses (gains)
50.0
43.0
(10.3)
(10.2)
0.3
(0.1)
Amortization of prior service costs (credits)
0.7
0.9
(11.1)
(10.9)
(0.5)
0.3
Other adjustments
-
-
-
-
5.1
5.2
Curtailment gain
-
(3.4)
-
-
-
-
Net expense (income)
$
20.0
$
8.5
$
(26.5)
$
(25.4)
$
10.4
$
11.1
In addition, we had $
0.9
million of net plan assets classified as held for sale as of November 24, 2024.
(15) Income Taxes
In
December
2021,
the
Organization
for
Economic
Cooperation
and
Development
(OECD)
established
a
framework,
referred
to
as
Pillar
2,
designed
to
ensure
large
multinational
enterprises
pay
a
minimum
percent
level
of
tax
on
the
income
arising
in
each
jurisdiction
in
which
they
operate.
Numerous
countries
have
already
enacted
the
OECD
model
rules
effective
for
taxable
years
beginning
after
December
31,
2023,
which
for
us
is
fiscal
There
was
no
material
impact
on
our
consolidated
financial
statements.
Several
other
countries
have
enacted
or
drafted
legislation
that
is
not
yet
effective
for
us,
and
we
do
not
expect
this
legislation
to
have
a
material
impact
on
our
consolidated
financial
statements.
We
will
continue
to monitor
for
new
legislation
and
guidance and evaluate potential impact on our consolidated financial
statements.
During the
second quarter
of fiscal
2024, we
received a
notice of
proposed adjustment
from the
Internal Revenue
Service associated
with a capital loss
from fiscal 2019.
We
believe that we
have meritorious defenses
against this assessment
and will vigorously
defend
our
position. We
do
not
expect
the
resolution
of
the
proposed
adjustment
to
have
a
material
impact
on
our
financial
position
or
liquidity.
(16) Business Segment and Geographic Information
We
operate
in
the
packaged
foods
industry.
Our
operating
segments
are
as
follows:
North
America
Retail,
International,
North
America Pet,
and North
America Foodservice.
In the
first quarter
of fiscal
2025, we
renamed the
Pet segment
to the
North America
Pet segment to reflect that
pet food results outside
North America are recorded
in the International segment.
There were no changes to
the
composition
of
our
reportable
segments
or
information
reviewed
by
our
chief
operating
decision
maker
and
no
impact
on
our
historical segment operating results.
Our North America Retail
operating segment reflects business
with a wide variety of
grocery stores, mass merchandisers, membership
stores,
natural
food
chains,
drug,
dollar
and
discount
chains,
convenience
stores,
and
e-commerce
grocery
providers.
Our
product
categories
in
this
business
segment
include
ready-to-eat
cereals,
refrigerated
yogurt,
soup,
meal
kits,
refrigerated
and
frozen
dough
products,
dessert
and
baking
mixes,
frozen
pizza
and
pizza
snacks,
snack
bars,
fruit
snacks,
savory
snacks,
and
a
wide
variety
of
organic products including ready-to-eat cereal, frozen
and shelf-stable vegetables, meal kits, fruit snacks, and snack bars.
Our
International
operating
segment
consists
of
retail
and
foodservice
businesses
outside
of
the
United
States
and
Canada.
Our
product categories include super-premium
ice cream and frozen desserts, meal kits, salty snacks,
snack bars, dessert and baking mixes,
shelf-stable
vegetables,
and
pet
food
products.
We
also
sell
super-premium
ice
cream
and
frozen
desserts
directly
to
consumers
through owned
retail shops. Our
International segment
also includes products
manufactured in
the United States
for export, mainly
to
Caribbean and Latin American markets, as well as products we
manufacture for sale to our international joint ventures. Revenues
from
export activities are reported in the region or country where the end customer
is located.
Our North
America Pet
operating segment
includes pet
food products
sold primarily
in the
United States
and Canada
in national
pet
superstore
chains,
e-commerce
retailers,
grocery
stores,
regional
pet
store
chains,
mass
merchandisers,
and
veterinary
clinics
and
hospitals.
Our
product
categories
include
dog
and
cat
food
(dry
foods,
wet
foods,
and
treats)
made
with
whole
meats,
fruits,
vegetables,
and other
high-quality
natural
ingredients.
Our tailored
pet product
offerings
address
specific dietary,
lifestyle,
and
life-
stage needs
and span
different product
types, diet
types, breed
sizes for
dogs, life-stages,
flavors, product
functions,
and textures
and
cuts for wet foods.
Our
North
America
Foodservice
segment
consists
of
foodservice
businesses
in
the
United
States
and
Canada.
Our
major
product
categories
in
our
North
America
Foodservice
operating
segment
are
ready-to-eat
cereals,
snacks,
refrigerated
yogurt,
frozen
meals,
unbaked and
fully baked
frozen dough products,
baking mixes,
and bakery
flour.
Many products we
sell are branded
to the consumer
and nearly
all are
branded to
our customers.
We
sell to
distributors and
operators in
many customer
channels including
foodservice,
vending, and supermarket bakeries.
Operating profit
for these
segments excludes
unallocated corporate
items, gain
or loss
on divestitures,
and restructuring,
impairment,
and other
exit costs.
Results from
certain businesses
managed by
our Gold
Medal Ventures
entity are
included within
corporate and
other net
sales and
unallocated corporate
items within
operating
profit. Unallocated
corporate items
also include
corporate overhead
expenses,
variances
to
planned
North
American
employee
benefits
and
incentives,
certain
charitable
contributions,
restructuring
initiative
project-related
costs,
gains
and
losses
on
corporate
investments,
and
other
items
that
are
not
part
of
our
measurement
of
segment operating performance.
These include gains and
losses arising from the
revaluation of certain grain
inventories and gains
and
losses
from
mark-to-market
valuation
of
certain
commodity
positions
until
passed
back
to
our
operating
segments.
These
items
affecting
operating
profit
are
centrally
managed
at
the
corporate
level
and
are
excluded
from
the
measure
of
segment
profitability
reviewed
by executive
management.
Under our
supply chain
organization,
our manufacturing,
warehouse,
and distribution
activities
are
substantially
integrated
across
our
operations
in
order
to
maximize
efficiency
and
productivity.
As
a
result,
fixed
assets
and
depreciation and amortization expenses are neither maintained nor available
by operating segment.
Our operating segment results were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Net sales:
North America Retail
$
3,321.5
$
3,305.0
$
6,338.1
$
6,378.0
International
690.6
683.1
1,407.6
1,398.9
North America Pet
595.8
569.3
1,171.9
1,149.2
North America Foodservice
630.0
582.0
1,166.2
1,118.0
Total segment net
sales
$
5,237.9
$
5,139.4
$
10,083.8
$
10,044.1
Corporate and other
2.2
-
4.4
-
Total net sales
$
5,240.1
$
5,139.4
$
10,088.2
$
10,044.1
Operating profit:
North America Retail
$
862.3
$
859.9
$
1,608.0
$
1,658.1
International
23.8
34.6
44.7
84.6
North America Pet
139.3
102.5
258.7
213.7
North America Foodservice
118.5
95.5
190.0
154.6
Total segment operating
profit
$
1,143.9
$
1,092.5
$
2,101.4
$
2,111.0
Unallocated corporate items
64.8
157.1
188.6
244.4
Restructuring, impairment, and other exit costs
1.2
123.6
3.4
124.8
Operating profit
$
1,077.9
$
811.8
$
1,909.4
$
1,741.8
Net sales for our North America Retail operating units were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
U.S. Meals & Baking Solutions
$
1,327.9
$
1,343.3
$
2,274.2
$
2,285.2
U.S. Morning Foods
892.9
856.9
1,795.8
1,784.7
U.S. Snacks
843.1
836.3
1,753.6
1,790.8
Canada
257.6
268.5
514.5
517.3
Total
$
3,321.5
$
3,305.0
$
6,338.1
$
6,378.0
Net sales by class of similar products were as follows:
Quarter Ended
Six-Month Period Ended
In Millions
Nov. 24, 2024
Nov. 26, 2023
Nov. 24, 2024
Nov. 26, 2023
Snacks
$
1,055.0
$
1,037.3
$
2,161.8
$
2,174.0
Cereal
829.5
776.9
1,622.6
1,594.8
Convenient meals
795.1
785.1
1,474.0
1,450.6
Dough
722.6
775.1
1,240.4
1,310.0
Pet
623.8
572.3
1,228.4
1,152.2
Baking mixes and ingredients
577.2
562.3
1,034.3
1,028.8
Yogurt
377.8
364.9
749.7
733.3
Super-premium ice cream
163.6
168.3
376.5
392.3
Other
95.5
97.2
200.5
208.1
Total
$
5,240.1
$
5,139.4
$
10,088.2
$
10,044.1
Item 2. Management’s Discussion and Analysis
Management’s Discussion and Analysis
of Financial Condition and Results of Operations.
INTRODUCTION
This
Management’s
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
(MD&A)
should
be
read
in
conjunction
with
the
MD&A
included
in
our
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
May
26,
2024,
for
important
background
regarding,
among other
things, our
key business
drivers.
Significant
trademarks and
service marks
used in
our business
are set forth in
italics
herein. Certain terms used throughout this report are defined in the
“Glossary” section below.
Our
key
priorities
in
fiscal
2025
are
to
accelerate
our
organic
net
sales
growth,
create
fuel
for
investment,
and
drive
strong
cash
generation.
Amid
a
continued
uncertain
macroeconomic
backdrop
for
consumers,
we
are
focused
on
delivering
remarkable
experiences across our leading food brands, resulting in sustainable improvement
in volume growth and market share trends over time.
Our
fiscal
2025 plan
calls for
product
news
and
innovation
focused
on taste,
health,
convenience,
and value,
supported
with
strong
brand
campaigns
and
omnichannel
visibility.
We
expect
to
generate
higher
levels
of
Holistic
Margin
Management
(HMM)
cost
savings
to
more
than
offset
input
cost
inflation
in
fiscal
We
expect
to
reinvest
in
the
business,
including
plans
for
increased
brand-building investment in fiscal 2025 to drive improved volume performance.
CONSOLIDATED
RESULTS
OF OPERATIONS
Second Quarter Results
In
the
second
quarter
of
fiscal
2025,
net
sales
increased
percent
and
organic
net
sales
increased
percent
compared
to
the
same
period last
year.
Operating profit
increased 33
percent to
$1,078 million,
primarily driven
by a
goodwill impairment
charge recorded
in
fiscal
2024
and
lower
restructuring
charges,
lower
input
costs,
a
favorable
change
in
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories,
and
an
increase
in
contributions
from
volume growth,
partially
offset
by an
increase
in
selling, general
and administrative
(SG&A) expenses
and unfavorable
net price
realization and
mix. Operating
profit margin
of 20.6
percent
increased
basis
points.
Adjusted
operating
profit
of
$1,064
million
increased
percent
on
a
constant-currency
basis,
primarily driven
by lower
input costs
and an
increase in
contributions
from volume
growth, partially
offset by
an increase
in SG&A
expenses and
unfavorable net
price realization
and mix.
Adjusted operating
profit margin
increased 100
basis points
to 20.3
percent.
Diluted earnings
per share
of $1.42
increased 39
percent in
the second
quarter of
fiscal 2025.
Adjusted diluted
earnings per
share of
$1.40
increased
percent
on
a
constant-currency
basis
compared
to
the
second
quarter
of
fiscal
See
the
“Non-GAAP
Measures” section below for a description of our use of measures not defined
by GAAP.
A summary of our consolidated financial results for the second quarter
of fiscal 2025 follows:
Quarter Ended Nov. 24,
2024
In millions,
except per share
Quarter Ended
Nov. 24, 2024 vs.
Nov. 26, 2023
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
5,240.1
%
Operating profit
1,077.9
%
20.6
%
Net earnings attributable to General Mills
795.7
%
Diluted earnings per share
$
1.42
%
Organic net sales growth rate (a)
%
Adjusted operating profit (a)
1,064.0
%
20.3
%
%
Adjusted diluted earnings per share (a)
$
1.40
%
%
(a)
See the “Non-GAAP Measures” section below for our use of measures not defined
by GAAP.
Consolidated
net sales
were as follows:
Quarter Ended
Nov. 24, 2024
Nov. 24, 2024 vs.
Nov. 26, 2023
Nov. 26, 2023
Net sales (in millions)
$
5,240.1
%
$
5,139.4
Contributions from volume growth (a)
pts
Net price realization and mix
(1)
pt
Foreign currency exchange
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Net sales in the
second quarter of fiscal
2025 increased 2 percent
compared to the same
period in fiscal 2024,
driven by an increase
in
contributions from volume growth, partially offset by
unfavorable net price realization and mix.
Components of organic net sales growth are shown in the following
table:
Quarter Ended Nov. 24, 2024 vs.
Quarter Ended Nov. 26, 2023
Contributions from organic volume growth (a)
pts
Organic net price realization and mix
(1)
pt
Organic net sales growth
pt
Foreign currency exchange
Flat
Acquisitions
Flat
Net sales growth
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Organic
net sales
increased 1
percent in
the second
quarter of
fiscal 2025
compared to
the same
period in
fiscal 2024,
driven by
an
increase in contributions from organic volume growth,
partially offset by unfavorable organic net price realization
and mix.
Cost of sales
decreased $64 million to $3,309
million in the second quarter
of fiscal 2025 compared
to the same period
in fiscal 2024.
The decrease
was primarily
driven by
an $87 million
decrease attributable
to product
rate and
mix, partially
offset by
an $85
million
increase
attributable
to
volume.
We
recorded
a
$29 million
net
decrease
in
cost
of
sales
related
to
the
mark-to-market
valuation
of
certain commodity
positions and
grain inventories
in the
second quarter
of fiscal
2025, compared
to a
$25 million net
increase in
the
second
quarter
of fiscal
We
recorded
$8
million
of
restructuring
charges
in
the
second
quarter of
fiscal
2024
(please refer
to
Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
SG&A
expenses
increased
$22 million
to
$852 million
in
the
second
quarter
of
fiscal
2025,
compared
to
the
same
period
in
fiscal
2024,
primarily driven by an increase in
certain compensation and benefits expenses
and the addition of a pet food business
in Europe.
SG&A expenses as a percent
of net sales in the
second quarter of fiscal 2025
increased 10 basis points compared
to the second quarter
of fiscal 2024.
Restructuring, impairment, and other exit costs
totaled $1 million in the second quarter of
fiscal 2025,
compared to $124 million in
the
same
period
last
year.
We
recorded
$1
million
of
charges
in
the
second
quarter
of
fiscal
2025
related
to
actions
previously
announced compared
to $6 million in
the same period
last year.
In the second
quarter of fiscal 2024,
we recorded a $117
million non-
cash
goodwill
impairment
charge
related
to
our
Latin
America
reporting
unit
(please
refer
to
Note
to
the
Consolidated
Financial
Statements in Part I, Item 1 of this report).
Benefit plan non-service income
totaled $14 million in the second quarter
of fiscal 2025, compared to $20
million in the same period
last year, primarily reflecting higher
amortization of losses and interest costs.
Interest, net
for the second quarter of fiscal 2025
totaled $125 million, up $7 million from the second quarter
of fiscal 2024, primarily
driven by higher average long-term debt levels.
The
effective tax rate
for the second quarter
of fiscal 2025 was 20.1
percent compared to 19.0
percent for the second
quarter of fiscal
- The
1.1 percentage
point increase was
primarily due
to certain nonrecurring
discrete tax benefits
in the second
quarter of
fiscal
2024, partially
offset by
favorable earnings
mix by
jurisdiction in
the second
quarter of
fiscal 2025.
Our effective
tax rate
excluding
certain
items
affecting
comparability
w
Showing the first 8K of 71K characters. Open the full section
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Quantitative and Qualitative Disclosures About Market Risk.
The
estimated
maximum
potential
value-at-risk
arising
from
a
one-day
loss
in
fair
value
for
our
interest
rate,
foreign
exchange,
commodity, and equity
market-risk-sensitive instruments outstanding as of November 24,
2024, was as follows:
In Millions
One-day Risk
of Loss
Change During
Six Month
Period Ended
Nov. 24, 2024
Analysis of Change
Interest rate instruments
$
$
(6)
Decrease in interest rates
Foreign currency instruments
Increase in portfolio basis
Commodity instruments
(1)
Immaterial
Equity instruments
-
Immaterial
For additional information, see Item 7A of Part II of our Annual Report on Form 10-K
for the fiscal year ended May 26, 2024.
Item 4. Controls and Procedures.
Controls and Procedures.
We,
under the
supervision and
with the
participation of
our management,
including our
Chief Executive
Officer and
Chief Financial
Officer,
have
evaluated
the
effectiveness
of
the design
and
operation
of
our
disclosure
controls
and
procedures
(as
defined
in
Rule
13a-15(e)
under
the
Securities
Exchange
Act
of
1934).
Based
on
our
evaluation,
our
Chief
Executive
Officer
and
Chief
Financial
Officer
have
concluded
that,
as
of
November
24,
2024,
our
disclosure
controls
and
procedures
were
effective
to
ensure
that
information required to
be disclosed by us
in reports that we
file or submit under
the Securities Exchange Act
of 1934 is (1)
recorded,
processed, summarized,
and reported
within the
time periods
specified in
Securities and
Exchange Commission
rules and
forms, and
(2)
accumulated
and
communicated
to
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
in
a
manner that allows timely decisions regarding required disclosure.
There were no changes in our internal
control over financial reporting (as defined
in Rule 13a-15(f) under the Securities Exchange
Act
of
during
the
quarter
ended
November
24,
2024,
that
materially
affected,
or
are
reasonably
likely
to
materially
affect,
our
internal control over financial reporting.
PART
II.
OTHER INFORMATION
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
The
following
table
sets forth
information
with
respect
to
shares
of
our
common
stock
that we
purchased
during
the quarter
ended
November 24, 2024:
Period
Total
Number
of Shares
Purchased (a)
Average
Price Paid
Per Share
Total
Number of Shares
Purchased as Part of a Publicly
Announced Program (b)
Maximum Number of Shares
that may yet be Purchased
Under the Program (b)
August 26, 2024 -
September 29, 2024
1,711,787
$
74.19
1,711,787
49,414,101
September 30, 2024 -
October 27, 2024
2,022,335
71.76
2,022,335
47,391,766
October 28, 2024 -
November 24, 2024
446,461
69.02
446,461
46,945,305
Total
4,180,583
$
72.46
4,180,583
46,945,305
(a)
The total number
of shares purchased
includes shares of
common stock withheld
for the payment
of withholding taxes
upon the distribution
of
deferred option units.
(b)
On June
27, 2022,
our Board
of Directors approved
an authorization
for the
repurchase of
up to
100,000,000 shares of
our common stock
and
terminated the
prior authorization.
Purchases can
be made
in the
open market
or in
privately negotiated
transactions, including
the use
of call
options
and
other
derivative
instruments,
Rule
10b5-1
trading
plans,
and
accelerated
repurchase
programs.
The
Board
did
not
specify
an
expiration date for the authorization.
Item 5. Other Information.
Other Information.
During
the
fiscal
quarter
ended
November
24,
2024,
no
director
or
officer
of
the
Company
adopted
or
terminated
a
“Rule
10b5-1
trading arrangement” or “
non-Rule
10b5-1
trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
PART
II. OTHER INFORMATION
Item 6. Exhibits.
Exhibits.
10.1
Form 8-K filed October 15, 2024).
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Financial Statements from the
Quarterly Report on Form
10-Q of the Company
for the quarter ended November
24,
2024,
formatted
in
Inline
Extensible
Business
Reporting
Language:
(i)
Consolidated
Statements
of
Earnings;
(ii)
Consolidated
Statements
of
Comprehensive
Income,
(iii)
Consolidated
Balance
Sheets;
(iv)
Consolidated
Statements of
Total
Equity; (v)
Consolidated Statements
of Cash
Flows; and
(vi) Notes
to Consolidated
Financial
Statements.
Cover Page, formatted in Inline Extensible Business Reporting Language
and contained in Exhibit 101.
SIGNATURES
Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalf by the undersigned thereunto duly authorized.
GENERAL MILLS, INC.
(Registrant)
Date: December 18, 2024
/s/ Mark A. Pallot
Mark A. Pallot
Vice President, Chief Accounting
Officer
(Principal Accounting Officer and Duly Authorized
Officer)