filings.toolsItem 2. Management’s Discussion and Analysis
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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.
The
impact
that
the
imposition
of
tariffs
and
changes
to
global
trade
policies
will have
on
our
consolidated
results
of operations
is
uncertain. We
expect tariffs on
goods imported into
the U.S. from
Canada, Mexico, and
China, and other
countries upon which
tariffs
may
be imposed,
to continue
to be
met with
retaliatory
tariffs
from
those countries
which
would
impact
our consolidated
results of
operations as we import
inputs required for our
manufacturing processes and
export our finished products.
The extent and duration
of
tariffs
and the
resulting impact
on macroeconomic
conditions and
on our
business are
uncertain and
may depend
on various
factors,
including
negotiations
between
the
U.S.
and
affected
countries,
retaliation
imposed
by
other
countries,
tariff
exemptions,
negative
sentiment
toward
U.S.
companies
and
products,
and
availability
of
lower
cost
inputs
that
may
be
sourced
domestically.
We
will
continue to evaluate the nature and extent of the impact to our business and
consolidated results of operations.
CONSOLIDATED
RESULTS
OF OPERATIONS
Third Quarter Results
In the third quarter of fiscal 2025,
net sales and organic net sales decreased
5 percent compared to the same period
last year. Operating
profit decreased
2 percent
to $891
million, primarily
driven by
unfavorable net
price realization
and mix,
a decrease
in contributions
from volume growth, net recoveries recorded in fiscal 2024 from
the fiscal 2023 voluntary recall on certain international
Häagen-Dazs
ice cream
products,
and transaction
costs primarily
related to
the definitive
agreements to
sell our
North American
yogurt businesses
and the Whitebridge
Pet Brands acquisition.
These impacts were partially
offset by a
divestiture gain related
to the sale of
our Canada
yogurt
business
and
a
favorable
change
in
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories.
Operating profit margin
of 18.4 percent increased 50
basis points. Adjusted operating profit
of $801 million decreased
13 percent on a
constant-currency
basis, primarily
driven
by unfavorable
net price
realization
and
mix and
a decrease
in contributions
from
volume
growth. Adjusted
operating profit
margin decreased
140 basis points
to 16.5 percent.
Diluted earnings
per share
of $1.12
decreased 4
percent in
the third
quarter of
fiscal 2025.
Adjusted diluted
earnings per
share of
$1.00 decreased
15 percent
on a
constant-currency
basis
compared
to
the
third
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 third quarter of
fiscal 2025 follows:
Quarter Ended Feb. 23, 2025
In millions,
except per share
Quarter Ended
Feb. 23, 2025 vs.
Feb. 25, 2024
Percent
of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
4,842.2
(5)
%
Operating profit
891.4
(2)
%
18.4
%
Net earnings attributable to General Mills
625.6
(7)
%
Diluted earnings per share
$
1.12
(4)
%
Organic net sales growth rate (a)
(5)
%
Adjusted operating profit (a)
800.8
(12)
%
16.5
%
(13)
%
Adjusted diluted earnings per share (a)
$
1.00
(15)
%
(15)
%
(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
Feb. 23, 2025
Feb. 23, 2025 vs.
Feb. 25, 2024
Feb. 25, 2024
Net sales (in millions)
$
4,842.2
(5)
%
$
5,099.2
Contributions from volume growth (a)
(4)
pts
Net price realization and mix
Flat
Foreign currency exchange
(1)
pt
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
third quarter
of fiscal
2025 decreased
5 percent
compared to
the same
period in
fiscal 2024,
driven by
a decrease
in
contributions from volume growth and unfavorable foreign currency
exchange.
Components of organic net sales growth are shown in the following
table:
Quarter Ended Feb. 23, 2025 vs.
Quarter Ended Feb. 25, 2024
Contributions from organic volume growth (a)
(4)
pts
Organic net price realization and mix
(1)
pt
Organic net sales growth
(5)
pts
Foreign currency exchange
(1)
pt
Acquisitions and divestiture
pt
Net sales growth
(5)
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
decreased
percent
in
the
third
quarter
of
fiscal
2025
compared
to
the
same
period
in
fiscal
2024,
driven
by
a
decrease in contributions from organic volume growth
and unfavorable organic net price realization and mix.
Cost of sales
decreased $189 million
to $3,203 million
in the third
quarter of fiscal
2025 compared to
the same period
in fiscal 2024.
The decrease was primarily
driven by a $122 million decrease
attributable to lower volume
and a $18 million net
decrease attributable
to
product
rate
and
mix.
We
recorded
a
$23 million
net
decrease
in
cost
of
sales
related
to
the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
third
quarter
of
fiscal
2025,
compared
to
a
$26 million
net
increase
in
the
third
quarter of fiscal 2024.
Selling,
general
and
administrative
(SG&A)
expenses
increased
$54 million
to
$844 million
in
the
third
quarter
of
fiscal
2025,
compared to
the same period
in fiscal 2024,
primarily driven
by net recoveries
recorded in fiscal
2024 from
the fiscal 2023
voluntary
recall on
certain
international
Häagen-Dazs
ice cream
products and
transaction
costs related
to the
definitive agreements
to sell
our
North American
yogurt businesses
and the
Whitebridge Pet
Brands acquisition.
SG&A expenses
as a
percent of
net sales
in the
third
quarter of fiscal 2025 increased 190 basis points compared to the third quarter
of fiscal 2024.
Divestiture
gain
of $96
million in
the third
quarter of
fiscal 2025,
related to
the sale
of our
Canada yogurt
business (please
refer to
Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Restructuring, impairment,
and other exit
(recoveries) costs
totaled $1
million of net
recoveries in
the third quarter
of fiscal 2025
related to actions
previously announced,
compared to $6
million of net
restructuring costs in
the same period
last year (please
refer to
Note 3 to the Consolidated Financial Statements in Part I, Item 1 of this report).
Benefit plan
non-service income
totaled $14 million
in the
third quarter
of fiscal
2025,
compared to
$19 million in
the same
period
last year, primarily reflecting higher
amortization of losses and interest costs.
Interest,
net
for the
third quarter
of fiscal
2025 totaled
$136 million, up
$15 million from
the third
quarter of
fiscal 2024,
primarily
driven by higher average long-term debt levels.
The
effective
tax
rate
for
the third
quarter
of fiscal
2025
was 19.8
percent
compared
to 18.5
percent
for
the
third
quarter
of fiscal
- The
1.3 percentage
point increase
was primarily
due to
certain nonrecurring
discrete tax
benefits in fiscal
2024, partially
offset
by
favorable
earnings
mix
by jurisdiction
in
fiscal
Our effective
tax rate
excluding
certain
items
affecting
comparability
was
21.0 percent in the
third quarter of fiscal
2025,
compared to 18.4 percent
in the same period
last year (see the “Non-GAAP
Measures”
section below for
a description of
our use of measures
not defined by
GAAP). The 2.6 percentage
point increase was
primarily due to
certain nonrecurring discrete tax benefits in fiscal 2024, partially offset
by favorable earnings mix by jurisdiction in fiscal 2025.
After-tax earnings
from joint
ventures
for the
third quarter
of fiscal
2025
decreased to
$14 million compared
to $18 million
in the
same
period
in
fiscal
2024,
primarily
driven
by
our
share
of
asset
impairment
charges
at
Cereal
Partners
Worldwide
(CPW)
in
the
third
quarter
of
fiscal
2025,
partially
offset
by
lower
SG&A
expenses
and
higher
volume
at
Häagen-Dazs
Japan,
Inc.
(HDJ).
On
a
constant-currency
basis,
after-tax
earnings
from
joint ventures
decreased
16 percent
(see the
“Non-GAAP
Measures”
section
below
for a description of our use of measures not defined by GAAP).
The components of our joint ventures’ net sales growth are shown in the following
table:
Quarter Ended Feb. 23, 2025 vs.
Quarter Ended Feb. 25, 2024
CPW
HDJ
Total
Contributions from volume growth (a)
(4)
pts
pts
Net price realization and mix
pts
pts
Net sales growth in constant currency
(1)
pt
pts
pt
Foreign currency exchange
(7)
pts
(5)
pts
(7)
pts
Net sales growth
(8)
pts
pts
(6)
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Average
diluted
shares
outstanding
decreased
by
million
in
the
third
quarter
of
fiscal
2025
from
the
same
period
a
year
ago
primarily due to share repurchases, partially offset by option
exercises.
Nine-Month Results
In the
nine-month period
ended February
23, 2025,
net sales
and organic
net sales
decreased 1
percent compared
to the
same period
last year.
Operating profit
increased 6 percent
to $2,801
million, primarily
driven by
a goodwill impairment
charge recorded
in fiscal
2024 and lower restructuring charges
,
lower input costs, and a divestiture gain
related to the sale of our Canada yogurt
business.
These
impacts
were
partially
offset
by
unfavorable
net
price
realization
and
mix,
an
increase
in
SG&A
expenses,
and
transaction
costs
primarily
related
to
the
definitive
agreements
to
sell
our
North
American
yogurt
businesses
and
the
Whitebridge
Pet
Brands
acquisition.
Operating
profit
margin
of
18.8
percent
increased
basis
points
compared
to
the
same
period
last
year.
Adjusted
operating
profit
of
$2,730
million
decreased
percent
on
a
constant-currency
basis,
primarily
driven
by
unfavorable
net
price
realization
and
mix
and
an
increase
in
SG&A
expenses,
partially
offset
by
lower
input
costs.
Adjusted
operating
profit
margin
decreased
basis
points
to
18.3
percent.
Diluted
earnings
per
share
of
$3.57
increased
percent
in
the
nine-month
period
ended
February 23, 2025,
and adjusted diluted
earnings per share
of $3.47 decreased
1 percent on
a constant-currency basis
compared to the
same period last year (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 nine-month period
ended February 23, 2025, follows:
Nine-Month Period Ended Feb. 23, 2025
In millions,
except per share
Nine-Month
Period Ended
Feb. 23, 2025 vs.
Feb. 25, 2024
Percent of Net
Sales
Constant-
Currency
Growth (a)
Net sales
$
14,930.4
(1)
%
Operating profit
2,800.8
%
18.8
%
Net earnings attributable to General Mills
2,001.2
%
Diluted earnings per share
$
3.57
%
Organic net sales growth rate (a)
(1)
%
Adjusted operating profit (a)
2,730.1
(3)
%
18.3
%
(3)
%
Adjusted diluted earnings per share (a)
$
3.47
(1)
%
(1)
%
(a)
See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP.
Consolidated
net sales
were as follows:
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025 vs.
Feb. 25, 2024
Feb. 25, 2024
Net sales (in millions)
$
14,930.4
(1)
%
$
15,143.3
Contributions from volume growth (a)
Flat
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.
The
percent
decrease
in
net
sales
for
the
nine-month
period
ended
February
23,
2025,
was
driven
by
unfavorable
net
price
realization and mix.
Components of organic net sales growth are shown in the following
table:
Nine-Month Period Ended Feb. 23, 2025 vs.
Nine-Month Period Ended Feb. 25, 2024
Contributions from organic volume growth (a)
Flat
Organic net price realization and mix
(1)
pt
Organic net sales growth
(1)
pt
Foreign currency exchange
Flat
Acquisitions and divestiture
pt
Net sales growth
(1)
pt
Note: Table may not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Organic
net
sales
decreased
percent
in
the
nine-month
period
ended
February
23,
2025,
driven
by
unfavorable
organic
net
price
realization and mix.
Cost
of
sales
decreased
$228 million
to
$9,671
million
in
the
nine-month
period
ended
February
23,
2025,
compared
to
the
same
period
in fiscal
- The
decrease was
primarily
driven by
a $152
million
decrease attributable
to product
rate and
mix
and
a $30
million decrease
attributable to
lower volume.
We
recorded a
$24 million net
decrease in
cost of
sales related
to the
mark-to-market
valuation
of
certain
commodity
positions
and
grain
inventories
in
the
nine-month
period
ended
February
23,
2025,
compared
to
a
$6 million net increase in the nine-month period ended February
25, 2024. In addition, we recorded $1 million of restructuring
charges
in
the
nine-month
period
ended
February
23,
2025,
compared
to
$17
million
of
restructuring
charges
in
the
same
period
last
year
(please refer to Note 3 to the Consolidated Financial Statements in Part I, Item 1 of
this report).
SG&A expenses
increased $91
million to
$2,552 million
in the
nine-month
period ended
February
23, 2025,
compared to
the same
period
in
fiscal
2024,
primarily
driven
by
transaction
costs
related
to
the
definitive
agreements
to
sell
our
North
American
yogurt
businesses and the
Whitebridge Pet Brands
acquisition,
net recoveries recorded
in fiscal 2024
from the fiscal 2023
voluntary recall on
certain international
Häagen-Dazs
ice cream products,
and the addition of a pet
food business in Europe. SG&A
expenses as a percent
of net sales increased 90 basis points in the nine-month period ended February
23, 2025, compared to the same period of fiscal 2024.
Divestiture gain
of $96
million in the
nine-month period
ended February
23, 2025, related
to the sale
of our
Canada yogurt
business
(please refer to Note 2 to the Consolidated Financial Statements in Part I, Item 1
of this report).
Restructuring, impairment,
and other exit
costs
totaled $3 million in
the nine-month period
ended February 23,
2025, compared to
$131 million
of net
restructuring and
impairment costs
in the
same period
last year.
In 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 $42 million
in the nine-month
period ended February
23, 2025, compared
to $56 million
in
the same period last year, primarily reflecting
higher amortization of losses and interest costs.
Interest, net
for the nine-month
period ended February
23, 2025,
increased $28 million
to $384 million
compared to the
same period
of fiscal 2024, primarily driven by higher average long-term debt levels.
The
effective
tax rate
for
the nine-month
period ended
February
23,
2025, was
20.5
percent compared
to 19.5
percent in
the same
period
last
year.
The
1.0
percentage
point
increase
was
primarily
due
to
certain
nonrecurring
discrete
tax
benefits
in
fiscal
2024,
partially
offset
by
favorable
earnings
mix
by
jurisdiction
in
fiscal
Our
effective
tax
rate
excluding
certain
items
affecting
comparability was
20.9
percent in
the nine-month
period ended
February 23,
2025, compared
to 20.1
percent in
the same
period last
year
(see
the
“Non-GAAP
Measures”
section
below
for
a
description
of
our
use
of
measures
not
defined
by
GAAP).
The
0.8
percentage
point
increase
is
primarily
due
to
certain
nonrecurring
discrete
tax
benefits
in
fiscal
2024,
partially
offset
by
favorable
earnings mix by jurisdiction in fiscal 2025.
After-tax earnings
from
joint ventures
for the
nine-month
period ended
February 23,
2025,
decreased to
$64 million compared
to
$66 million
in
the
same
period
in
fiscal
2024,
primarily
driven
by
our
share
of
asset
impairment
charges
at
CPW
in
fiscal
2025,
partially offset
by lower input costs
at CPW and lower
SG&A expenses at
HDJ. On a constant-currency
basis, after-tax earnings
from
joint ventures decreased
1 percent (see the
“Non-GAAP Measures” section
below for a description
of our use of
measures not defined
by GAAP).
Nine-Month Period Ended Feb. 23, 2025 vs.
Nine-Month Period Ended Feb. 25, 2024
CPW
HDJ
Total
Contributions from volume growth (a)
(3)
pts
pts
Net price realization and mix
pts
Flat
Net sales growth in constant currency
Flat
pts
pt
Foreign currency exchange
(4)
pts
(4)
pts
(4)
pts
Net sales growth
(3)
pts
Flat
(3)
pts
Note: Table may not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
Average
diluted
shares
outstanding
decreased
by
23 million
in
the
nine-month
period
ended
February
23,
2025,
from
the
same
period a year ago primarily due to share repurchases, partially offset
by option exercises.
SEGMENT OPERATING
RESULTS
Our
businesses
are
organized
into
four
operating
segments:
North
America
Retail,
International,
North
America
Pet,
and
North
America Foodservice. Please refer
to Note 16 of the
Consolidated Financial Statements in
Part I, Item 1 of
this report for a description
of our operating segments.
North America Retail Segment Results
North America Retail net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Net sales (in millions)
$
3,009.1
(7)
%
$
3,242.1
$
9,347.2
(3)
%
$
9,620.1
Contributions from volume growth (a)
(6)
pts
(3)
pts
Net price realization and mix
(1)
pt
pt
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North
America
Retail net
sales decreased
7 percent
in the
third
quarter
of fiscal
2025,
compared
to
the same
period in
fiscal
2024,
driven by a decrease in contributions from volume growth and unfavorable
net price realization and mix.
North America Retail net sales decreased 3 percent in
the nine-month period ended February 23, 2025, compared
to the same period in
fiscal 2024, driven by a decrease in contributions from volume growth,
partially offset by favorable net price realization and mix.
The components of North America Retail organic net
sales growth are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025
Contributions from organic volume growth (a)
(5)
pts
(3)
pts
Organic net price realization and mix
(1)
pt
Flat
Organic net sales growth
(6)
pts
(2)
pts
Foreign currency exchange
Flat
Flat
Divestiture (b)
(1)
pt
Flat
Net sales growth
(7)
pts
(3)
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Divestiture of Canada yogurt business in the third quarter of fiscal 2025. Please refer
to Note 2 to the Consolidated Financial
Statements in Part I, Item 1 of this report.
North America
Retail organic
net sales
decreased 6
percent in
the third
quarter of
fiscal 2025,
compared to
the same
period in
fiscal
2024, driven by a decrease in contributions from organic
volume growth and unfavorable organic net price realization
and mix.
North America Retail
organic net
sales decreased 2
percent in the
nine-month period
ended February 23,
2025, compared to
the same
period in fiscal 2024, driven by a decrease in contributions from organic
volume growth.
North America Retail net sales percentage change by operating unit are shown
in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025
U.S. Snacks
(6)
%
(3)
%
U.S. Morning Foods
(10)
%
(3)
%
Canada (a)
(19)
%
(7)
%
U.S. Meals & Baking Solutions
(3)
%
(1)
%
Total
(7)
%
(3)
%
(a)
On a constant-currency
basis, Canada net
sales decreased 14
percent in the
third quarter of fiscal
2025 and decreased
4 percent in
the nine
-month period
ended February
23, 2025,
compared to
the same
periods in
fiscal 2024.
See the
“Non-GAAP Measures”
section below for our use of this measure not defined by GAAP.
Segment
operating
profit
decreased
percent
to
$648 million
in
the
third
quarter
of
fiscal
2025,
compared
to
$752
million
in
the
same period
in fiscal 2024
,
primarily driven
by a decrease
in contributions
from volume
growth and
unfavorable net
price realization
and mix.
Segment operating
profit decreased
14 percent
on a
constant-currency basis
in the
third quarter
of fiscal
2025, compared
to
the same period in fiscal 2024 (see the “Non-GAAP Measures” section below
for our use of this measure not defined by GAAP).
Segment
operating
profit
decreased
percent
to
$2,256 million
in
the
nine-month
period
ended
February
23,
2025,
compared
to
$2,410 million in the same
period in fiscal 2024, primarily
driven by a decrease in
contributions from volume growth
and higher input
costs, partially offset
by favorable net
price realization
and mix. Segment
operating profit decreased
6 percent on
a constant-currency
basis in the nine
-month period ended
February 23, 2025,
compared to the
same period in fiscal
2024 (see the
“Non-GAAP Measures”
section below for our use of this measure not defined by GAAP).
International Segment Results
International net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Net sales (in millions)
$
651.3
(4)
%
$
680.1
$
2,058.9
(1)
%
$
2,079.0
Contributions from volume growth (a)
(1)
pt
pts
Net price realization and mix
pts
(2)
pts
Foreign currency exchange
(5)
pts
(2)
pts
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
International net
sales decreased
4 percent
in the
third quarter
of fiscal
2025, compared
to the
same period
in fiscal
2024, driven
by
unfavorable
foreign
currency
exchange
and
a
decrease
in
contributions
from
volume
growth,
partially
offset
by
favorable
net
price
realization and mix.
International net
sales decreased
1 percent
in the
nine-month period
ended February
23, 2025,
compared to
the same
period in
fiscal
2024, driven
by unfavorable
net price
realization and
mix and
unfavorable foreign
currency exchange,
partially offset
by an
increase
in contributions from volume growth.
The components of International organic net sales growth
are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025
Contributions from organic volume growth (a)
(4)
pts
pts
Organic net price realization and mix
Flat
(4)
pts
Organic net sales growth
(3)
pts
(2)
pts
Foreign currency exchange
(5)
pts
(2)
pts
Acquisition (b)
pts
pts
Net sales growth
(4)
pts
(1)
pt
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of a pet food business in Europe in fiscal 2024. Please refer
to Note 2 to the Consolidated Financial Statements in
Part I, Item 1 of this report.
International
organic
net
sales
decreased
percent
in
the
third
quarter
of
fiscal
2025,
compared
to
the
same
period
in
fiscal
2024,
driven by a decrease in contributions from organic volume
growth.
International organic net
sales decreased 2 percent
in the nine-month period
ended February 23, 2025,
compared to the same period
in
fiscal 2024,
driven by
unfavorable organic
net price
realization and
mix, partially
offset by
an increase
in contributions
from organic
volume growth.
Segment operating
profit decreased
1 percent
to $18
million in
the third
quarter of
fiscal 2025,
compared to
the same period
in fiscal
2024,
primarily driven
by unfavorable net
price realization and
mix and higher
SG&A expenses, partially
offset by
lower input costs.
Segment operating
profit decreased
20 percent
on a
constant-currency basis
in the
third quarter
of fiscal
2025, compared
to the
same
period in fiscal 2024 (see the “Non-GAAP Measures” section below
for our use of this measure not defined by GAAP).
Segment
operating
profit
decreased
percent
to
$63 million
in
the
nine-month
period
ended
February
23,
2025,
compared
to
$103 million
in
the
same
period
in
fiscal
2024,
primarily
driven
by
unfavorable
net
price
realization
and
mix
and
higher
SG&A
expenses,
partially
offset
by
lower
input
costs
and
an
increase
in
contributions
from
volume
growth.
Segment
operating
profit
decreased 50 percent
on a constant-currency
basis in the nine-month
period ended February
23, 2025, compared
to the same period
in
fiscal 2024 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
North America Pet Segment Results
North America Pet net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Net sales (in millions)
$
623.7
Flat
$
624.5
$
1,795.6
%
$
1,773.7
Contributions from volume growth (a)
(1)
pt
pts
Net price realization and mix
pt
(2)
pts
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North America Pet net sales in the third quarter of fiscal 2025, essentially matched
the same period in fiscal 2024.
North America
Pet net
sales increased
1 percent
in the
nine-month period
ended February
23, 2025,
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.
The components of North America Pet organic net sales growth are
shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025
Contributions from organic volume growth (a)
(3)
pts
pts
Organic net price realization and mix
(1)
pt
(3)
pts
Organic net sales growth
(5)
pts
Flat
Foreign currency exchange
Flat
Flat
Acquisition (b)
pts
pts
Net sales growth
Flat
pt
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
(b) Acquisition of Whitebridge Pet Brands business in fiscal 2025.
Please refer to Note 2 to the Consolidated Financial Statements in
Part I, Item 1 of this report.
North
America
Pet
organic
net
sales
decreased
percent
in
the
third
quarter
of
fiscal
2025,
compared
to
the
same
period
in
fiscal
2024, driven by a decrease in contributions from organic volume
growth and unfavorable organic net price realization and mix.
North America
Pet organic
net sales in
the nine-month
period ended February
23, 2025, essentially
matched the
same period
in fiscal
Segment
operating
profit
decreased
percent
to
$102
million
in
the
third
quarter
of
fiscal
2025,
compared
to
$128 million
in
the
same
period
in
fiscal
2024,
primarily
driven
by
higher
SG&A
expenses,
including
increased
media
and
advertising
expenses,
and
higher
input
costs.
Segment
operating
profit
decreased
percent
on
a
constant-currency
basis
in
the
third
quarter
of
fiscal
2025,
compared to the
same period in
fiscal 2024 (see
the “Non-GAAP Measures”
section below for
our use of
this measure not
defined by
GAAP).
Segment
operating
profit
increased
percent
to
$361 million
in
the
nine-month
period
ended
February
23,
2025,
compared
to
$342 million
in the
same period
in fiscal
2024,
primarily
driven by
lower input
costs and
an increase
in contributions
from
volume
growth,
partially
offset
by
unfavorable
net
price
realization
and
mix
and
higher
SG&A
expenses,
including
increased
media
and
advertising
expenses.
Segment
operating
profit
increased
percent
on
a
constant-currency
basis
in
the
nine-month
period
ended
February
23,
2025,
compared
to
the
same
period
in
fiscal
2024
(see
the
“Non-GAAP
Measures”
section
below
for
our
use
of
this
measure not defined by GAAP).
North America Foodservice Segment Results
North America Foodservice net sales were as follows:
Quarter Ended
Nine-Month Period Ended
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Feb. 23,
2025
Feb. 23, 2025 vs
Feb. 25, 2024
Feb. 25,
2024
Net sales (in millions)
$
555.3
%
$
551.7
$
1,721.5
%
$
1,669.7
Contributions from volume growth (a)
(1)
pt
pts
Net price realization and mix
pts
pts
Foreign currency exchange
Flat
Flat
Note: Table may
not foot due to rounding.
(a)
Measured in tons based on the stated weight of our product shipments.
North
America
Foodservice
net
sales
increased
percent
in
the
third
quarter
of
fiscal
2025,
compared
to
the
same
period
in
fiscal
2024,
driven by favorable net price realization and mix, partially offset by
a decrease in contributions from volume growth.
North
America
Foodservice net
sales increased
3 percent
in the
nine-month
period ended
February 23,
2025,
compared to
the same
period in fiscal 2024, driven by an increase in contributions from volume growth
and favorable net price realization and mix.
The components of North America Foodservice organic
net sales growth are shown in the following table:
Quarter Ended
Nine-Month Period Ended
Feb. 23, 2025
Feb. 23, 2025
Contributions from organic volume growth (a)
(1)
pt
pts
Organic net price realization and mix
pts
pts
Organic net sales growth
pt
pts
Foreign currency exchange
Flat
Flat
Net sales growth
pt
pts
Note: Table may
not foot due to rounding.
(a) Measured in tons based on the stated weight of our product shipments.
North America
Foodservice organic
net sales
increased 1
percent in
the third
quarter of
fiscal 2025,
compared to
the same
period in
fiscal
2024,
driven
by
favorable
organic
net
price
realization
and
mix,
partially
offset
by
a
decrease
in
contributions
from
organic
volume growth.
North America Foodservice
organic net
sales increased 3
percent in the
nine-month period
ended February 23,
2025, compared
to the
same
period
in
fiscal
2024,
driven
by
an
increase
in
contributions
from
organic
volume
growth
and
favorable
organic
net
price
realization and mix.
Segment operating
profit increased
1 percent
to $82
million in
the third
quarter of
fiscal 2025,
compared to
the same
period in
fiscal
2024,
primarily
driven
by
favorable
net
price
realization
and
mix,
partially
offset
by
higher
input
costs.
Segment
operating
profit
increased 1 percent on a constant-currency basis in
the third quarter of fiscal 2025, compared to
the same period in fiscal 2024 (see the
“Non-GAAP Measures” section below for our use of this measure not
defined by GAAP).
Segment
operating
profit
increased
percent
to
$272 million
in
the
nine-month
period
ended
February
23,
2025,
compared
to
$236 million in
the same
period in
fiscal 2024,
primarily driven
by favorable
net price
realization and
mix. Segment
operating profit
increased 15
percent on a
constant-currency basis in
the nine-month period
ended February 23,
2025, compared
to the same
period in
fiscal 2024 (see the “Non-GAAP Measures” section below for our use of this measure
not defined by GAAP).
UNALLOCATED
CORPORATE
ITEMS
Unallocated corporate
expenses totaled
$56 million
in the third
quarter of
fiscal 2025,
compared to
$64 million
in the same
period in
fiscal
In
the
third
quarter
of
fiscal
2025,
we
recorded
a
$23
million
net
decrease
in
expense
related
to
the
mark-to-market
valuation of
certain commodity
positions and grain
inventories, compared
to a $26
million net increase
in expense in
the same period
last year.
In the third quarter
of fiscal 2024, we
recorded $31 million of
net recoveries related
to a voluntary recall
on certain
Häagen-
Dazs
ice cream
products in
fiscal 2023.
In addition,
we recorded
$24 million
of transaction
costs related
to the
definitive agreements
to sell our North American
yogurt businesses in the third quarter of fiscal 2025.
We also recorded
$3 million of integration costs in the
third quarter
of fiscal
2025, related
to the
fiscal 2025
acquisition of
Whitebridge
Pet Brands
and the
fiscal 2024
acquisition of
a pet
food business in
Europe.
Certain compensation and
benefit related expenses decreased
in the third quarter
of fiscal 2025,
compared to
the same period
in fiscal 2024.
In addition,
we recorded
$2 million of
net losses related
to valuation
adjustments on
certain corporate
investments in the third quarter of fiscal 2025, compared to $3
million of net losses in the same quarter of fiscal 2024.
Unallocated corporate
expenses totaled $244
million in the
nine-month period
ended February 23,
2025, compared
to $308 million
in
the same period
in fiscal 2024. In
the nine-month period
ended February 23, 2025,
we recorded a
$24 million net
decrease in expense
related to the mark-to-market
valuation of certain commodity
positions and grain inventories, compared
to a $6 million net
increase in
expense in
the same
period last year.
In addition,
we recorded
$33 million
of transaction
costs related
to the
definitive agreements
to
sell our
North American
yogurt businesses
and the
Whitebridge Pet
Brands acquisition
in the
nine-month period
ended February
23,
2025, compared to $1 million of
transaction costs in the same period
last year.
We
also recorded $7 million of integration
costs related
to the
fiscal 2025
acquisition of
Whitebridge Pet
Brands and
the fiscal
2024 acquisition
of a
pet food
business in
Europe in
the nine-
month period ended
February 23, 2025.
In the nine-month
period ended February
25, 2024, we recorded
$31 million of net
recoveries
related to a voluntary
recall on certain
Häagen-Dazs
ice cream products in fiscal
- We
recorded $5 million of
net losses related to
valuation adjustments on certain corporate
investments in the nine-month period
ended February 23, 2025, compared to
$25 million of
net
losses
in
the
same
period
of
fiscal
In
addition,
certain
compensation
and
benefit
related
expenses
decreased
in
the
nine-
month period
ended February
23, 2025,
compared to
the same period
in fiscal
- We
recorded $1
million of
restructuring charges
and an immaterial
amount of restructuring
initiative project-related
costs in cost
of sales in
the nine-month period
ended February 23,
2025, compared to $17 million of restructuring charges
and $2 million of restructuring initiative project-related
costs in cost of sales in
the same period last year.
LIQUIDITY
AND CAPITAL
RESOURCES
During the
nine-month period
ended February
23, 2025,
cash provided
by operations
was $2,307 million
compared to
$2,439 million
in the
same period
last year.
The $132
million decrease
was primarily
driven by
a $123
million change
in restructuring,
impairment,
and other exit (recoveries) costs and a $38 million decrease in net earnings
excluding the impact of the divestiture in fiscal 2025.
Cash
used
by
investing
activities
during
the
nine-month
period
ended
February
23,
2025,
was
$1,579 million
compared
to
$508 million
for the
same period
in fiscal
- In
the third
quarter of
fiscal 2025
,
we acquired
Whitebridge
Pet Brands
for
$1,410
million cash,
net of
cash acquired.
During the
third quarter
of fiscal
2025, we
completed the
sale of
our Canada
yogurt business
for
$242 million cash.
In addition, we
spent $405 million
on purchases of
land, buildings, and
equipment in the
nine-month period ended
February 23, 2025, compared to $486 million in the same period last year.
Cash
used
by
financing
activities
during
the
nine-month
period
ended
February
23,
2025,
was
$610
million
compared
to
$1,928 million in the
same period in
fiscal 2024. We
paid $902 million for
purchases of common
stock for treasury
in the nine-month
period
ended
February
23,
2025,
compared
to $1,602
million
in the
same period
in fiscal
We
had
$1,397 million
of
net debt
issuances in the nine-month period ended
February 23, 2025, compared to $754 million of net debt
issuances in the same period a year
ago. In
addition, we paid
$1,008 million of
dividends in the
nine-month period
ended February 23,
2025, compared
to $1,028 million
in the same period last year.
As
of
February
23,
2025,
we
had
$404 million
of
cash
and
cash
equivalents
in
foreign
jurisdictions. In
anticipation
of
repatriating
funds
from
foreign
jurisdictions,
we
record
local
country
withholding
taxes
on
our
international
earnings,
as
applicable.
We
may
repatriate our
cash and
cash equivalents
held by
our foreign
subsidiaries without
such funds
being subject
to further
U.S. income
tax
liability. Earnings
prior to fiscal 2018 from our foreign subsidiaries remain permanently reinvested in
those jurisdictions.
The following table details the fee-paid committed and uncommitted credit
lines we had available as of February 23, 2025:
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
$
-
To ensure availability
of funds, we maintain bank credit lines and have commercial paper programs
available to us in the United States
and Europe.
Certain
of
our
long-term
debt
agreements,
our
credit
facilities,
and
our
noncontrolling
interests
contain
restrictive
covenants.
As
of
February 23, 2025, we were in compliance with all of these covenants.
We
have $1,941
million of
long-term debt
maturing in
the next
12 months
that is
classified as
current, including
$800 million
of 4.0
percent fixed-rate notes
due April 17,
2025, €500 million
of 0.125 percent
fixed-rate notes due
November 15,
2025, and €600
million
of 0.45
percent fixed-rate
notes due
January 15, 2026.
We
believe that
cash flows
from operations,
together with
available short-
and
long-term debt financing, will be adequate to meet our liquidity and capital needs
for at least the next 12 months.
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 $252 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 261 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.
We
have an option
to purchase the
Class A Interests for
consideration equal to
the then current
capital account value,
plus any unpaid
preferred return
and the
prescribed make-whole
amount. If
we purchase
these interests,
any change
in the
third-party holder’s
capital
account
from
its
original
value
will
be
charged
directly
to
retained
earnings
and
will
increase
or
decrease
the
net
earnings
used
to
calculate EPS in that period.
CRITICAL ACCOUNTING ESTIMATES
Our significant accounting policies are described in Note 2
to the Consolidated Financial Statements included in
our Annual Report on
Form
10-K for
the fiscal
year ended
May 26,
- The
accounting policies
used in
preparing our
interim fiscal
2025 Consolidated
Financial
Statements
are
the
same
as
those
described
in
our
Form
10-K.
Please
refer
to
Note
to
the
Consolidated
Financial
Statements in Part I, Item 1 of this report for additional information.
Our
critical
accounting
estimates
are
those
that
have
meaningful
impact
on
the
reporting
of
our
financial
condition
and
results
of
operations.
These estimates
include
our accounting
for revenue
recognition,
valuation of
long-lived
assets, intangible
assets, income
taxes,
and
defined
benefit
pension,
other
postretirement
benefit,
and
postemployment
benefit
plans.
The
assumptions
and
methodologies
used in
the determination
of those
estimates as
of February
23, 2025,
are the
same as
those described
in our
Annual
Report on Form 10-K for the fiscal year ended May 26, 2024.
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.
RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2024, the Financial Accounting
Standards Board (FASB
)
issued Accounting Standards Update (ASU)
2024-03 requiring
additional income
statement disclosures.
The ASU
requires the
disaggregation
of specific
categories of
expenses underlying
the line
items presented
on the
income statement.
Additionally,
the ASU
requires enhanced
disclosure of
selling expenses.
The requirements
of the ASU are effective for annual periods beginning
after December 15, 2026, and interim periods within fiscal years
beginning after
December
15,
For
us,
annual
reporting
requirements
will
be
effective
for
our
fiscal
2028
Form
10-K
and
interim
reporting
requirements will be
effective beginning
with our first
quarter of fiscal
- Early adoption
is permitted and
the amendments
should
be applied on a prospective
basis. Retrospective application is permitted.
We are
in the process of analyzing
the impact of the ASU on
our related disclosures.
In March 2024,
the Securities and
Exchange Commission
(SEC) issued final
rules on the
enhancement and standardization
of climate
related disclosures. The rules require
disclosure of, among other things:
material climate-related risks; activities
to mitigate or adapt
to
such
risks;
governance
and
management
of
such
risks;
and
material
greenhouse
gas
(GHG)
emissions
from
operations
owned
or
controlled
(Scope
and/or
indirect
emissions
from
purchased
energy
consumed
in
operations
(Scope
2).
Additionally,
the
rules
require disclosure
in the
notes to
the financial
statements of
the effects
of severe
weather events
and other
natural conditions,
subject
to
certain
materiality
thresholds.
The
SEC
has
issued
a
stay
on
the
final
rules
due
to
litigation
and
the
effective
date
is
delayed
indefinitely. We
are in the process of analyzing the impact of the rules on our disclosures.
In
December
2023,
the
FASB
issued
ASU
2023-09
requiring
enhanced
income
tax
disclosures.
The
ASU
requires
disclosure
of
specific
categories
and
disaggregation
of
information
in
the
rate
reconciliation
table.
The
ASU
also
requires
disclosure
of
disaggregated
information
related
to
income
taxes
paid,
income
or
loss
from
continuing
operations
before
income
tax
expense
or
benefit, and
income tax
expense or benefit
from continuing
operations. The
requirements of
the ASU are
effective for
annual periods
beginning after December 15, 2024,
which for us is fiscal 2026.
Early adoption is permitted
and the amendments should be
applied on
a prospective
basis. Retrospective
application is
permitted. We
are in
the process
of analyzing
the impact
of the
ASU on
our related
disclosures.
In
November
2023,
the
FASB
issued
ASU
2023-07
requiring
enhanced
segment
disclosures.
The
ASU
requires
disclosure
of
significant
segment
expenses
regularly
provided
to
the
chief
operating
decision
maker
(CODM)
included
within
segment
operating
profit
or
loss.
Additionally,
the
ASU
requires
a
description
of
how
the
CODM
utilizes
segment
operating
profit
or
loss
to
assess
segment performance.
The requirements
of the
ASU are effective
for annual
periods beginning
after December
15, 2023,
and interim
periods within
fiscal years
beginning after
December 15,
- For
us, annual
reporting requirements
will be
effective for
our fiscal
2025 Form 10-K
and interim reporting requirements
will be effective
beginning with our first
quarter of fiscal
- Early adoption
is
permitted and retrospective application
is required for all
periods presented. We
are in the process
of analyzing the impact
of the ASU
on our related disclosures.
NON-GAAP MEASURES
We
have
included
in
this
report
measures
of
financial
performance
that
are not
defined
by
GAAP.
We
believe
that
these
measures
provide useful information to investors, and include these measures in
other communications to investors.
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.
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
judgment, significantly affect the year-to-year
assessment of operating results.
The following are descriptions of significant items impacting comparability
of our results.
Divestiture gain
Divestiture gain
related to
the sale of
our Canada
yogurt business
in fiscal
- Please
refer to
Note 2
to the
Consolidated Financial
Statements in Part I, Item 1 of this report.
Transaction costs
Fiscal 2025
transaction costs
related to
the definitive
agreements to
sell our
North American
yogurt businesses
and the
Whitebridge
Pet
Brands
acquisition.
Immaterial
transaction
costs
incurred
in
fiscal
Please
refer
to
Note
to
the
Consolidated
Financial
Statements in Part I, Item 1 of this report.
Mark-to-market effects
Net mark-to-market
valuation of
certain commodity
positions recognized
in unallocated
corporate items.
Please refer to
Note 6 to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Acquisition integration costs
Integration
costs related
to the
Whitebridge
Pet Brands
acquisition and
the acquisition
of a
pet food
business in
Europe
recorded
in
fiscal 2025. In addition,
integration costs primarily resulting
from the acquisition of
TNT Crust recorded in fiscal 2024.
Please refer to
Note 2 to the Consolidated Financial Statements in Part I, Item 1 of this report.
Investment activity, net
Valuation
adjustments of certain corporate investments in fiscal 2025 and fiscal 2024.
Restructuring (recoveries) charges and project-related
costs
Restructuring
(recoveries)
charges
and
project-related
costs related
to
previously
announced
restructuring
actions
recorded
in
fiscal
2025 and fiscal 2024. Please refer to Note 3 to the Consolidated Financial
Statements in Part I, Item 1 of this report.
Goodwill impairment
Non-cash
goodwill
impairment
charge
related
to
our
Latin
America
reporting
unit
in
fiscal
Please
refer
to
Note
to
the
Consolidated Financial Statements in Part I, Item 1 of this report.
Product recall, net
Costs related to the fiscal 2023 voluntary recall of certain international
Häagen-Dazs
ice cream products,
net of recoveries.
CPW asset impairment
Our share of impairment charges related to certain long-lived
assets recorded in fiscal 2025.
Organic Net Sales Growth Rates
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
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 53
rd
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 Consolidated
Results of
Operations and
Results of
Segment Operations discussions in the MD&A above.
Adjusted Operating Profit as a Percent of Net Sales (Adjusted Operating
Profit Margin)
We believe
this measure provides useful information
to investors because it is important
for assessing our operating profit margin
on a
comparable basis.
Our adjusted operating profit margins are calculated as follows:
Quarter Ended
Feb. 23, 2025
Feb. 25, 2024
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
891.4
18.4
%
$
910.7
17.9
%
Divestiture gain
(95.9)
(2.0)
%
-
-
%
Transaction costs
24.0
0.5
%
-
-
%
Mark-to-market effects
(23.2)
(0.5)
%
25.7
0.5
%
Acquisition integration costs
3.3
0.1
%
-
-
%
Investment activity, net
1.7
-
%
2.7
0.1
%
Restructuring (recoveries) charges
(0.6)
-
%
5.9
0.1
%
Project-related costs
0.2
-
%
0.5
-
%
Product recall, net
-
-
%
(31.1)
(0.6)
%
Adjusted operating profit
$
800.8
16.5
%
$
914.5
17.9
%
Nine-Month Period Ended
Feb. 23, 2025
Feb. 25, 2024
In Millions
Value
Percent of
Net Sales
Value
Percent of
Net Sales
Operating profit as reported
$
2,800.8
18.8
%
$
2,652.5
17.5
%
Divestiture gain
(95.9)
(0.6)
%
-
-
%
Transaction costs
32.9
0.2
%
0.6
-
%
Mark-to-market effects
(23.8)
(0.2)
%
5.9
-
%
Acquisition integration costs
7.2
-
%
0.2
-
%
Investment activity, net
4.9
-
%
25.2
0.2
%
Restructuring charges
3.6
-
%
30.5
0.2
%
Project-related costs
0.4
-
%
1.6
-
%
Goodwill impairment
-
-
%
117.1
0.8
%
Product recall, net
-
-
%
(30.7)
(0.2)
%
Adjusted operating profit
$
2,730.1
18.3
%
$
2,802.9
18.5
%
Note: Tables
may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
Adjusted Operating Profit and Related Constant-currency Growth Rate
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.
Additionally,
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
Nine-Month Period Ended
Feb. 23, 2025
Feb. 25, 2024
Change
Feb. 23, 2025
Feb. 25, 2024
Change
Operating profit as reported
$
891.4
$
910.7
(2)
%
$
2,800.8
$
2,652.5
%
Divestiture gain
(95.9)
-
(95.9)
-
Transaction costs
24.0
-
32.9
0.6
Mark-to-market effects
(23.2)
25.7
(23.8)
5.9
Acquisition integration costs
3.3
-
7.2
0.2
Investment activity, net
1.7
2.7
4.9
25.2
Restructuring (recoveries) charges
(0.6)
5.9
3.6
30.5
Project-related costs
0.2
0.5
0.4
1.6
Goodwill impairment
-
-
-
117.1
Product recall, net
-
(31.1)
-
(30.7)
Adjusted operating profit
$
800.8
$
914.5
(12)
%
$
2,730.1
$
2,802.9
(3)
%
Foreign currency exchange impact
Flat
Flat
Adjusted operating profit growth,
on a constant-currency basis
(13)
%
(3)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
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 rates follows:
Quarter Ended
Nine-Month Period Ended
Per Share Data
Feb. 23, 2025
Feb. 25, 2024
Change
Feb. 23, 2025
Feb. 25, 2024
Change
Diluted earnings per share, as reported
$
1.12
$
1.17
(4)
%
$
3.57
$
3.33
%
Divestiture gain
(0.15)
-
(0.15)
-
Transaction costs
0.03
-
0.04
-
Mark-to-market effects
(0.03)
0.04
(0.03)
0.01
Acquisition integration costs
-
-
0.01
-
Investment activity, net
0.01
-
0.01
0.03
CPW asset impairment
0.01
-
0.01
-
Restructuring charges
-
0.01
0.01
0.04
Goodwill impairment
-
-
-
0.14
Product recall, net
-
(0.04)
-
(0.04)
Adjusted diluted earnings per share
$
1.00
$
1.17
(15)
%
$
3.47
$
3.51
(1)
%
Foreign currency exchange impact
pt
Flat
Adjusted diluted earnings per share
growth, on a constant-currency basis
(15)
%
(1)
%
Note: Table may not foot due to rounding.
For more information on the reconciling items, see the Significant Items Impacting Comparability section above.
See our reconciliation
below of the effective
income tax rate as
reported to the adjusted
effective income tax
rate for the tax
impact of
each item affecting comparability.
Constant-currency After-tax Earnings from Joint Ventures
Growth Rates
We
believe that
this measure
provides useful
information to
investors because
it provides
transparency to
underlying performance
of
our joint
ventures by
excluding the
effect
that foreign
currency exchange
rate fluctuations
have on
year-to-year
comparability given
volatility in foreign currency exchange markets.
After-tax earnings from joint ventures growth rates on a constant-currency
basis are calculated as follows:
Percentage Change in
After-Tax
Earnings from Joint
Ventures
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in After-Tax
Earnings from Joint Ventures
on Constant-Currency Basis
Quarter Ended Feb. 23, 2025
(20)
%
(4)
pts
(16)
%
Nine-Month Period Ended Feb. 23, 2025
(3)
%
(2)
pts
(1)
%
Note: Table may not foot due to rounding.
Net Sales Growth Rates for Our Canada Operating Unit on Constant-currency
Basis
We
believe
that
this
measure
of
our
Canada
operating
unit
net
sales
provides
useful
information
to
investors
because
it
provides
transparency to
the underlying
performance for
the Canada operating
unit within our
North America
Retail segment
by excluding
the
effect
that
foreign
currency
exchange
rate
fluctuations
have
on
year-to-year
comparability
given
volatility
in
foreign
currency
exchange markets.
Net sales growth rates for our Canada operating unit on a constant-currency
basis are calculated as follows:
Percentage Change in
Net Sales
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in
Net Sales on Constant-
Currency Basis
Quarter Ended Feb. 23, 2025
(19)
%
(5)
pts
(14)
%
Nine-Month Period Ended Feb. 23, 2025
(7)
%
(3)
pts
(4)
%
Note: Table may not foot due to rounding.
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 Feb. 23, 2025
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
(14)
%
Flat
(14)
%
International
(1)
%
pts
(20)
%
North America Pet
(20)
%
Flat
(20)
%
North America Foodservice
%
Flat
%
Nine-Month Period Ended Feb. 23, 2025
Percentage Change in
Operating Profit
as Reported
Impact of Foreign
Currency
Exchange
Percentage Change in Operating
Profit on Constant-Currency
Basis
North America Retail
(6)
%
Flat
(6)
%
International
(39)
%
pts
(50)
%
North America Pet
%
Flat
%
North America Foodservice
%
Flat
%
Note: Tables may not foot due to rounding.
Adjusted Effective Income Tax
Rates
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
Nine-Month Period Ended
Feb. 23, 2025
Feb. 25, 2024
Feb. 23, 2025
Feb. 25, 2024
In Millions
(Except Per Share Data)
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
Pretax
Earnings
(a)
Income
Taxes
As reported
$
769.0
$
152.4
$
807.6
$
149.3
$
2,457.9
$
504.6
$
2,351.7
$
458.5
Divestiture gain
(95.9)
(11.1)
-
-
(95.9)
(11.1)
-
-
Transaction costs
24.0
5.6
-
-
32.9
7.6
0.6
-
Mark-to-market effects
(23.2)
(5.4)
25.7
6.0
(23.8)
(5.5)
5.9
1.4
Acquisition integration costs
3.3
0.7
-
-
7.2
1.6
0.2
0.1
Investment activity, net
1.7
0.4
2.7
2.2
4.9
1.1
25.2
7.4
Restructuring (recoveries) charges
(0.6)
(0.1)
5.9
(1.2)
3.6
0.9
30.5
8.0
Project-related costs
0.2
-
0.5
0.1
0.4
0.1
1.6
0.5
Goodwill impairment
-
-
-
-
-
-
117.1
34.7
Product recall, net
-
-
(31.1)
(7.2)
-
-
(30.7)
(7.1)
As adjusted
$
678.4
$
142.5
$
811.3
$
149.4
$
2,387.2
$
499.4
$
2,502.1
$
503.6
Effective tax rate:
As reported
19.8%
18.5%
20.5%
19.5%
As adjusted
21.0%
18.4%
20.9%
20.1%
Sum of adjustments to income taxes
$
(9.9)
$
0.1
$
(5.2)
$
45.1
Average number
of common
shares - diluted EPS
555.0
572.8
559.8
582.5
Impact of income tax adjustments
on adjusted diluted EPS
$
0.02
$
-
$
0.01
$
(0.08)
Note: Table may not foot due to rounding.
(a)
Earnings before income taxes and after-tax earnings from joint ventures.
For more information on the reconciling items, please see the Significant Items Impacting Comparability section above.
Glossary
AOCI
. Accumulated other comprehensive income (loss).
Adjusted diluted EPS.
Diluted EPS adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit.
Operating profit adjusted for certain items affecting year-to-year
comparability.
Adjusted operating profit
margin.
Operating profit adjusted
for certain items
affecting year-over-year
comparability,
divided by net
sales.
Constant currency.
Financial results
translated to
United States
dollars using
constant foreign
currency exchange
rates based
on the
rates
in
effect
for
the
comparable
prior-year
period.
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.
Core working capital.
Accounts receivable plus inventories less accounts payable.
Derivatives.
Financial instruments such
as futures, swaps,
options, and forward
contracts that we
use to manage
our risk arising
from
changes in commodity prices, interest rates, foreign exchange rates, and stock
prices.
Euribor.
Euro Interbank Offered Rate.
Fair value
hierarchy.
For purposes
of fair
value measurement,
we categorize
assets and
liabilities into
one of
three levels
based on
the assumptions
(inputs) used
in valuing
the asset or
liability.
Level 1 provides
the most reliable
measure of
fair value, while
Level 3
generally requires significant management judgment. The three levels are
defined as follows:
Level 1:
Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2:
Observable inputs other than quoted prices included in
Level 1, such as quoted prices for similar assets or liabilities in
active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3:
Unobservable inputs reflecting management’s
assumptions about the inputs used in pricing the asset or liability.
Free cash flow.
Net cash provided by operating activities less purchases of land, buildings, and equipment.
Generally Accepted
Accounting Principles
(GAAP).
Guidelines, procedures,
and practices
that we
are required
to use in
recording
and reporting accounting information in our financial statements.
Goodwill.
The difference
between the purchase
price of acquired
companies plus the fair
value of any noncontrolling
and redeemable
interests and the related fair values of net assets acquired.
Gross margin.
Net sales less cost of sales.
Hedge accounting.
Accounting for qualifying
hedges that allows changes in
a hedging instrument’s
fair value to offset
corresponding
changes in
the hedged
item in
the same
reporting period.
Hedge accounting
is permitted
for certain
hedging instruments
and hedged
items
only
if
the
hedging
relationship
is
highly
effective,
and
only
prospectively
from
the
date
a
hedging
relationship
is
formally
documented.
Holistic Margin Management
(HMM).
Company-wide initiative to
use productivity savings, mix
management, and price realization
to offset input cost inflation, protect margins,
and generate funds to reinvest in sales-generating activities.
Interest
bearing
instruments.
Notes
payable,
long-term
debt,
including
current
portion,
cash
and
cash
equivalents,
and
certain
interest bearing investments classified within prepaid expenses and other
current assets and other assets.
Mark-to-market.
The act of determining a value for
financial instruments, commodity contracts, and
related assets or liabilities based
on the current market price for that item.
Net
mark-to-market
valuation of
certain
commodity
positions.
Realized
and
unrealized
gains
and
losses on
derivative
contracts
that will be allocated to segment operating profit when the exposure we are hedging
affects earnings.
Net price realization.
The impact of list and promoted price changes, net of trade and other price
promotion costs.
Net realizable
value.
The estimated
selling price
in the
ordinary course
of business,
less reasonably
predictable costs
of completion,
disposal, and transportation.
Noncontrolling interests.
Interests of subsidiaries held by third parties.
Notional
amount.
The
amount
of
a
position
or
an
agreed
upon
amount
in
a
derivative
contract
on
which
the
value
of
financial
instruments are calculated.
OCI.
Other Comprehensive Income (Loss).
Organic net sales growth
. Net sales growth adjusted
for foreign currency translation,
acquisitions, divestitures and a
rd
fiscal week,
when applicable.
Project-related costs.
Costs incurred related to our restructuring initiatives not included in restructuring
charges.
Reporting unit
. An operating segment or a business one level below an operating
segment.
SOFR.
Secured Overnight Financing Rate.
Strategic
Revenue
Management
(SRM).
A
company-wide
capability
focused
on
generating
sustainable
benefits
from
net
price
realization
and
mix
by
identifying
and
executing
against
specific
opportunities
to
apply
tools
including
pricing,
sizing,
mix
management, and promotion optimization across each of our businesses.
Supply chain
input costs.
Costs incurred
to produce
and deliver
product,
including costs
for
ingredients
and
conversion, inventory
management, logistics, and warehousing.
Translation
adjustments.
The impact
of the conversion
of our foreign
affiliates’ financial
statements to United
States dollars
for the
purpose of consolidating our financial statements.
Working capital
. Current assets and current liabilities, all as of the last day of our fiscal year.
CAUTIONARY STATEMENT
RELEVANT
TO FORWARD
-LOOKING INFORMATION
FOR THE PURPOSE OF “SAFE
HARBOR” PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION
REFORM ACT OF 1995
This report
contains or
incorporates by
reference
forward-looking
statements within
the meaning
of the
Private Securities
Litigation
Reform Act
of 1995
that are
based on
our current
expectations and
assumptions. We
also may
make written
or oral
forward-looking
statements,
including
statements
contained
in
our
filings
with
the
Securities
and
Exchange
Commission
and
in
our
reports
to
stockholders.
The words or
phrases “will likely
result,” “are expected
to,” “will continue,”
“is anticipated,” “estimate,”
“plan,” “project,” or
similar
expressions identify
“forward-looking statements”
within the
meaning of
the Private
Securities Litigation
Reform Act
of 1995.
Such
statements are
subject to
certain risks
and uncertainties
that could
cause actual
results to
differ
materially from
historical results
and
those currently anticipated or projected. We
caution you not to place undue reliance on any such forward-looking statements.
In connection
with the “safe
harbor” provisions
of the Private
Securities Litigation
Reform Act of
1995, we are
identifying important
factors
that could
affect
our financial
performance
and could
cause our
actual results
in future
periods
to differ
materially
from any
current opinions or statements.
Our future results could
be affected by a
variety of factors, such
as: imposed and threatened
tariffs by the United
States and its trading
partners; disruptions
or inefficiencies
in the
supply chain;
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,
tariffs,
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,
imposition
of
tariffs,
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 critical
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 tariffs; and political unrest in foreign
markets and economic uncertainty due to terrorism or war.
You
should also
consider the risk
factors that we
identify in Item
1A of Part
I of our
Annual Report on
Form 10-K for
the fiscal year
ended May 26, 2024, which could also affect our future results.
We undertake
no obligation to publicly revise any forward-looking
statements to reflect events or circumstances
after the date of those
statements or to reflect the occurrence of anticipated or unanticipated events.
Previous: Item 1. Financial Statements. · Next: Item 3. Quantitative and Qualitative Disclosures About Market Risk.