Q4 2021 General Mills Inc Earnings Call - Q&A Session

As we look at the year.

I think it's important for us just to give some perspective and I'll address it maybe through the lens of bones.

The flow of margin, we would expect our our back half to deliver.

Higher margin than the front half from particular pressure on Q1, where we would see the combination obviously of inflation.

Pricing that starts later in the quarter the benefits of pricing flowing through later in the quarter. So.

As for the flow of those.

Net debt guidance on margin would reflect.

Roughly.

Relatively balanced flow on our expectations for the full year for inflation.

And then obviously with the pricing really kicking in as we step into Q2.

Alright, Thank you and then.

Second question is about 40 basis points for the year that the street is looking for us that far out of line with what Youre thinking coffee.

Well, we're not going to give guidance at a gross margin.

But obviously our guidance on profit an operating profit and sales.

Would indicate.

Something in the range of a modest decline.

<unk> profit margin.

Okay. Thanks, so much.

You bet.

Yeah.

Our next question comes from Andrew Lazar with Barclays. Please proceed.

Thanks for the question good morning, everybody.

I'm, Jeff I know you used the words dynamic and uncertain a bunch of times in your prepared remarks, and even though the consumer side of things, maybe getting maybe a little bit more visible obviously the cost in comparison side of the equation are still pretty challenging. So I guess my question is how much flexibility do you.

I think you've left yourselves in the FY 'twenty 2 guidance in light of the industry challenges also knowing how the timing of pricing and other actions tends to work to offset costs.

Yeah, Andrew I think your observation is a good 1 and we use dynamic and we use uncertainty I'd also say volatile. So we can throw that 1 it too right and it is from a demand perspective, it still is volatile and even if mentally many consumers who are getting beyond COVID-19. The demand environment is volatile and not only with respect to at home versus away from home consumption.

Samsung, but also what is the impact of pricing going to be and what does that mean for elasticity. So I would say the demand environment still volatile and as is the cost environment and.

And so whether that's whether that's input costs on manufacturing or whether thats.

Transportation or whether those are commodities.

Is it a pretty volatile environment, you know what I am.

What I am proud of all of us over the past year, we've been able to navigate that well and do what we said we're going to do in fact Asia last 3 years, we've done what we said we're going to do it and now we still have to face this year and but I feel good about our guidance I don't think it is I don't think it's that it's so conservative and I don't think we're out over our skis.

We're trying to tell you here's what we think we will do us.

And as it is in this kind of environment, no, but but I feel good about our capabilities and how we're executing right now and we're very clear on our path forward. So all of those things give me confidence that we can do what we said we're going to do but it's universal.

It's a tricky environment I think that it will be.

Thanks for that and then there was a survey done recently that we read about 1 of the large CPG brokers and it showed how I guess manufacturers, we're more optimistic about.

Sales trends in the back half of this calendar year compared to retail our expectations.

I didn't know if you've encountered this divide and expectations in your discussions with your key customers and if you have maybe why you think this gap exists with respect to the differential again expectations around maybe sales <unk> stickiness between manufacturers and retailers. Thank.

Thank you.

Yes, Andrew.

Just I wanted us to come off in the right way, but you know what I said, just a second ago that it's volatile I think this is every day when you have a group of 111 group thinking 1 thing. Another another just shows that there is a level of uncertainty and volatility that would be the first point. The second is that if you look at our guidance for the year, we said we'd be down modestly on.

On sales -1.1% to -3%.

Can tell you that.

We're lockstep with our retail customers and we have good partnerships with them and.

We're pretty well aligned with what they think and so but I can understand why there are differences because it is a volatile environment by varies by category, you know as well as geography. So.

We are very well aligned with our with our customers not only on the demand environment, but also the cost environment. They see the same cost pressures, we do and we.

We've instituted pricing and the vast majority of our categories in markets throughout the world and while no..1 wants to increase prices, we've had to do that because of the cost environment is what it is and we have found them to be understanding because theyre in the same kind of boat that we are okay.

Great. Thanks, so much.

Thank you.

Our next question comes from Robert Moskow with Credit Suisse. Please proceed.

Hey, thanks.

I was thinking about the terms that you're using Jeff.

To describe the environment is volatile, but I wanted to get a little tighter on it because I would say that the cost environment is very volatile and maybe the pricing as well, but your opening comments would indicate that demand has been.

Fortuitously strong had it has stayed strong so are you, saying demand is volatile too or are you just saying it's uncertain.

I describe it is uncertain because you just don't know how people will react in the fall when maybe to go back to school and go back to offices.

Yes, I would say.

Rob you know I appreciate the distinction I would say that what.

What we have seen in the recent past, but not very volatile and in fact, it's been pretty steady and then.

Honestly, it's kind of playing out as we thought it would which is our business was down in the last quarter versus where it was last year during the stock up but it's actually quite a bit higher than it was pre pandemic as our share.

We've been talking for quite some time that although in some corners people thought the man, but kind of fall off a cliff when when people start going back to the office and kind of returning to normal pre pandemic. We said, we think actually somebody's behaviors will be will be sticky and that's what we have seen so it has been it hasn't been volatile in the recent past us.

The question is what's going to happen for the remainder of the year as as pricing kicks in as we as kids go back to school as we hit the fall I think there'll be I think it will be in a volatile environment and we're calling it the best we can given our assumptions, but that'd be you are correct. It hasn't it hasn't been volatile in the recent past, but as we look ahead 3 months and 6 months.

That'll be the that'll be what we're going to be dealing with.

Okay.

No fair enough.

Yeah, and I would note during that period, Rob we still expect at home food consumption to be above pre pandemic levels, even if it's below slightly below a year ago.

Okay and then this question might be more in the weeds, but.

Our strategy and grow.

I guess division organization that Youre, creating internally is that just combining some corporate functions together like corporate insights and M&A together.

Or are you expanding the role in taking some of the responsibilities of the business units like revenue growth management, maybe in and pulling it into this this division like like <unk>.

How is this how big of a change is this.

This division your development.

Yeah, it's a.

No I would say, it's a decent sized change, but what we're not doing is taking operating responsibility out of the business is in fact, what we're doing us pushing operating responsibility for the near term and more closely aligned to the businesses, which is really important. So we are doing that in terms of the strategy area itself. We are centralizing some of the.

<unk> because you don't want US you don't want to do modeling for example in many different places you want to be able to do that 1 central location, but then it's up to the businesses themselves to us that modeling and then to decide what's best for their businesses. So you want some centralized capabilities you can develop scale and expertise, but then do you want to use the model to be in the businesses, who are responsible for the pn.

So that's where we're doing that the other thing we're doing I would say is that similar we've done with.

Strategic revenue management over time or.

At 1 point at 1 point in time, many years ago. It was.

Something we did periodically I would think about pricing and we turned into it always on kind of function. The same would be true of our strategy pumps, and we're kind of beefing up our strategy function as well as M&A as we as we look to the future and certainly what we need to do to hit our sustainable topline growth targets is we need to keep competing effectively but we also knew.

To do from a portfolio shaping and so in that sense. We have an always on strategy group that is maybe different than what we have done in the recent past.

Okay alright, thank you.

Thanks.

Our next question comes from La Grande with Guggenheim. Please proceed.

Yes.

Good morning, everyone and maybe if I can come back on 1 of those questions. So.

When you say absolute consumption, we'd be more intervention.

From them you can.

Christopher.

I think thats, what where do you get from some part everyone now by a much. It's related question. So could you maybe alpha I understand your thinking process.

Maybe by category, how you see ignite.

This morning that you did not.

Consumption plus from they make and that kind of what is triggering beside in your Q.

Alright, thank you.

For this call is probably not helpful for us to go category by category, but I think if I can give you a kiss whats under what's underlying the assumption as to why we think this is going to happen in our human food business and a separate pet, but then our human food business. What I would say is that there are a couple of factors underlying our belief that we'll continue to see demand us above pre pandemic levels. The.

The first is that more people are going to work from home more often than that go into the office every day and we're fairly certain that that is here to stay so there will be a new normal and where people work.

The second is that consumers. Many millennials have really gained cooking skills and baking skills and newfound confidence in the kitchen and they can find that they can save money by doing it and so while we're not saying people would want to still go out to eat we believe that theres a younger generation that maybe not have done this before.

Tracy David show that especially in the US that we have that we have a whole new group of consumers that have elevated demand.

Third it would be that our E. Commerce business has grown rapidly over time in fact, it's now 11% of our sales up from $5.18 months ago and while the continued growth may not be linear over the next period of time. Many people are out shopping and grocery started becoming much easier than it was before and anytime you got can be somewhat lives. It tends to stay so for all those reasons are.

Food business, we believe even if people go out to restaurants more you guys can start to go back to school there will be some there will be some of the demand that is that as sticky for our food at home.

The other thing I would say for pet is a little bit more straightforward than us frankly, they're more pass then there than there were before and that is certainly true here in the U S. It's true in other parts of the world as well, but particularly in the us at 85% of those new pads are are in homes that.

Already contained 1 pad and so these are people who are used to having pads and so the the <unk>.

Mount a pet food, that's going to be consumed over the next few years, we think there's going to be elevated in addition to the fact that the fastest growing part of pad continues to be the natural segment, where should where blue Buffalo competes so we.

We would anticipate.

The category itself will be about what it has been the last couple of years and that that natural will.

Remain ahead of the category in terms of growth.

Thanks, Matt.

I got the second question.

It's about plant based dairy we have seen I mean, there is something crazy insurance income based theory from.

Consumers.

So from investors as well so could you please update us where what what's the plan with your Yoplait brands in the U S and Canada.

Again that and so that's really enzyme and puts us really maybe update us about your pets.

Thanks.

He runs John Eudy dwell.

So the yogurt category in the US is really starting to accelerate so it was up 5% on day, 2.5% June really what's driving that.

Our health segment, so that was up 31%. So that's around products like ratio Quito, which is 1 of our products to go into a triple zero plant base from there as well so we're definitely seeing growth from that segment.

In terms of Yoplait, we launched E a.

Plant these product several years ago that quite.

Quite well question looking at launching these products in the coming years small so it's still relatively small in yogurt in the us growing quickly I really that's just a better health segment with you on.

Gary means to us.

Got it.

From Quito and conventional cigarettes from the Balkans since non base remains an area of focus for US I would tell you its not the biggest segment probably not with the bulk of the cost.

Sure.

Yeah.

Thanks, and internationally for Hagen Dazs any any plans there.

You know when it comes to the plant based ice cream I think is a very very very small part of the category, what I will say us our haagen Dazs business has been growing very very nicely and continues to do well all over the world, particularly strong growth in China and in Europe. This past year, and we've got some great innovation coming.

On Hagen Dazs, and so plant based is really small, but we are confident that we can continue to grow our haagen dazs business really well in key geographies and looking for a summer where more consumers are out and about.

Thank you. Thank you guys like I talked to you John.

Thank you Laura.

Our next question comes from Jason English with Goldman Sachs. Please proceed.

Thanks for stopping.

We've announced price increases into the us.

Jason.

But for the industry English or Youre cutting out I don't know if you can reestablish the connection.

How about I switch headset does better.

And much better thats great. Thank you.

Awesome, Okay, sorry about that.

So now that you've announced price increases and the vast majority of your categories and markets can you give us some clarity on how much net price realization you expect to realize in your down 1 to 3 full year organic sales outlook.

Yes, Jason this is Toby.

The question, let me, let me give you a.

Frame to think about this so as we gave guidance on inflation.

About 7%.

We would expect that our holistic margin management.

To register about 4 percentage points to cost of goods sold.

That would offset a good portion of the inflation and obviously in this environment, we would need some additional price realization more than that.

Quantifying it we would expect the combination of levers through strategic revenue management pulpwood pricing by and pack optimization.

Trade optimization, all of those things too to yield us enough to cover our inflation expectations.

Yeah.

Okay to take that remaining 3% of Cogs growth to revenue is probably a safe place to go right now I think I think I heard you say.

So switching gears, but still remaining kind of on the topic of offsetting inflationary pressures.

Your recent restructuring announcement.

You're going to have a lot more meat on the bone.

Just to give us today on this but there's not a lot can you give us more clarity.

Around the initiatives, including the expected cost savings and how much you expect to reinvest.

Well I will give you a frame to think about this and let me let me sort of touch on what we're getting at this is not simply a cost savings exercise as Jeff kind of alluded to some of this.

Really the answer.

Our sort of aligning resources to grow facing purposes.

Or is there anything here on the expectation that we will prioritize.

Areas like digital and data and analytics.

Yes.

Strategy and M&A as Jeff mentioned earlier, those things are all critical to sort of maintaining the growth engine our expectation. After this exercise is that.

Our admin costs as a percent of net sales will be roughly in line with our fiscal 'twenty..1 so they will keep pace with the sales decline.

That's helpful. Thank you I'll pass it on.

Our next question comes from Bryan Spillane with Bank of America. Please proceed.

Hey, good morning, everyone.

Okay, Brian Good morning, Hi.

I guess my question is just around us were.

Working through our models and thinking about and trying to factor it into place in Asia.

Any coping could you give us a little bit of a.

Some color on maybe which segments are going to.

Feel more inflation than others.

And maybe just how we could think of how we should be thinking about the potential volatility of inflation.

<unk> segment.

Then I guess tied to that question is if were.

Thinking about that.

The revenue management component covering inflation.

Is it is it more pronounced in some segments than others, just trying to get a sense of.

How we should be looking at that across segments or is it really generally the same across all of them.

I appreciate the question.

I don't want to get too specific at the segment level. What I will tell you is all of our segments are experiencing higher inflation.

We are addressing in all of our segments with the mix of holistic margin management.

In line with our historical average levels.

SRM using the entirety of the SRM toolkit.

All 5 of our segments.

Okay.

And then maybe just a follow up.

I know there's been a lot of talk about.

Frightening price increases as part of the the way to combat inflation, we've heard that across our full coverage universe.

What do we expect on the back side of that right, though.

Some of this inflation moderates hopefully.

<unk> would be expenses expectation would be that this pricing stock.

Or would there be the potential that some of it would have to be dealt back into the fleet from moderate just trying to understand how law.

Unusual this environment is.

We should be thinking about the stickiness of those price increases went in place with both of them.

Yes.

Well, probably we usually we don't give forward looking views on pricing and so I think that's probably the best plan to stick to that here.

Which is not to say your question is done a fair 1 I just think you know for us to talk about future pricing is probably not something we should do too much other than to say I think 1 of the 1 of the keys to our success as we look ahead as it has been recently is our agility and we've proven ourselves pretty agile during the last year, including including with recent price.

We've taken into the marketplace relatively quickly and I attribute that to the fact that we haven't always on capability and so.

In a volatile market trying to be certain us not.

Not a good place to be.

Need to be as thoughtful and you need to be fast and simple.

Same for both of those things and we're going to try to continue to do both of those things. So you raise a good question, we're not going to answer directly to get them you usually don't talk about pricing, but I do believe that the key challenge in a volatile environment is to be clear and to be to be agile and we'll certainly endeavor to do that and we feel good about our ability to do that.

Okay, great. Thank you.

Yes.

Our next question comes from David Palmer with Evercore ISI. Please proceed.

Thanks, Andrew.

Andrew mentioned that Mega Brokers Survey Index survey in the Q&A they cited.

As consumer and category insights that the food companies have us a reason why the food companies were more bullish about demand than the retail customers where in other words you had better.

Level of understanding about where things have been more sticky and for good reason.

What is your latest thinking about categories and brands that you think most benefited us in a semi permanent way from COVID-19 and perhaps because of consumers embracing new habits.

A quick follow up.

Hey, David It's John Doody as mills.

Look at our business, we think our meals a day businesses, particularly benefited joined depends on us.

Sales numbers.

It really day, either our consumer insights our consumers are changing their habits.

And a lot more blue.

So I'm gonna be sticky, it's more than just food as from returning to join the family and brings it sounds like John which is terrific and then Jeff mentioned.

I was wanting to click and its not something simple.

Let's take a small so all of our research would say it certainly were not cash.

And the elevated levels, we've seen in the pandemic.

Suez will eat at home margin environment.

These new skills to up to us.

With us on products more than entirely.

So we're spending a lot of time, we've got a lot of new insights from digital insights really leveraging first party data that we have with box.

Box us from education, Dot com or dot com, that's really rich abuses of consumers day in the journey and we think that again do you have that time.

So it takes us.

Sure.

Thanks for that answer 1 category that I am really confused by us cereal.

It is an at home category, but it's perhaps part that lives in the world of convenience that compressed morning day part in other words cereal has really lost a lot of share of at home breakfast. During COVID-19. If that's the way to think about it and non breakfast getting the benefit of people being at home, but perhaps cereal not being as much a part of that.

In other words cereals up 1% over last 2 years not really that impressive how are you thinking about zero going forward do you think it actually has a bit of a rebound as people get back to convenience or is it sort of just the new normal that we're the existing normal 1 of US 1 of the few categories that really didnt get affected by Covid at all.

Just sort of low growth and your thoughts there.

Yeah, absolutely David So for sure I think as consumers from our home.

I had more time to prepare rights and you saw things like eggs pancakes Cromorne cereal.

We do believe we will continue to grow into the future.

Again, as we look out over that 2 year period. The category did grow we grew even more in the rest of us from that so again, we should <unk>.

These points a share in fiscal 'twenty, 1 that's 31 consecutive months of share growth in consecutive quarters 4 consecutive years, and we believe materials important today it would be important in the future achieved non.

We see from practice and future snacking throughout the day, we got from them.

Innovation coming this past this coming year and at the same time, you know that our margin continues to work things like materials and our cost from our messaging can fund messaging around some interest.

From Lucky charms, we move the category will continue to grow.

Uh huh.

I'm not going to be high single digits, but we think a little bit of growth in that category.

Our future and I think us can come back to normal to your point from our norm.

Consumers are back to school and back to the office seats from the continued sort of buys from us challenged category.

That's helpful. Thanks very much.

Thank you.

Yeah.

Our next question comes from our Phase <unk> with Deutsche Bank. Please proceed.

Yes, hi, Thank you good morning.

I wanted to first just ask about you know your investment.

So I know you increased media spending and you've also sent to the critical capabilities and I'm curious how you were thinking about investments has been look at fiscal 'twenty 2.

Essentially I'm asking like are you expecting media spending to continue to increase that that you know double digit CAGR that we've seen over the last 2 years.

And then as well or should we see.

At the level that we're at.

And then how much more investment in capabilities do you need them from here on out.

So so let me let me take that 1 a little bit of non Coca if theres any background you wont give us well on we're not going to give specific guidance on our media spending for next year I would say.

When we when we talked at Cagny and before we had talked about you know as we look into the future. We would have media grow roughly in line with with sales over time, and we'll see what happens this coming year, but but that's what we said we would do over time in terms of investments.

Really pleased what we've seen out of our data and analytics capabilities and John Doody touched on box tops for a little while ago, we digitize that in our opening remarks, we talked about some of the things we're doing and you'll hear more a lot more about that this coming year, we've tied together an omnichannel approach in China with our shops, and our retail which is yielding some good insights great results with <unk>.

We are seeing there and even on the cost side as we look at our global sourcing efforts, we've tied data and analytics into that to help us with our costing and <unk> and so you can see it youll see us continue to invest in our data and analytics capabilities, because we really like what we have seen so far and some of that will be foundational and some of that will be.

On the analytics ourselves to drive growth in other parts will be on analytics to help us to save money, but no I think that'll be a big area of of.

Of investment as well our strategy in M&A area as we again look to further our accelerated strategy.

Okay, great. Thank you and then just a second question on Blue Buffalo in the Pet segment generally I know you talked about.

Growth in that segment I'm curious I mean, it sounds like you know the category growth is going to be strong.

Are there any specific plans beyond that.

The connected commerce initiatives that you talked about.

The innovation that we should look look out for.

And I know at Cagny, you talked about potentially taking blue Buffalo to international market. So I wonder if there's any any plans to do that this year.

So.

First of all we're really pleased with Blue Buffalo performance, including a fourth quarter, where our retail sales grew in the mid double mid teens and so even if it doesn't look like that on the P&L. What you have to remember we're lapping 4 month 4 months from last year and the stock up from the year before and so.

We're really pleased with Blue Buffalo, we see strong growth ahead that'd be my opening comment in terms of how we're going to grow.

The digital capability, we will certainly be a big piece of that but so will innovation, what we really like we've seen others tasteful launched and we're literally selling everything that you can make from from this new tasteful cat lineup, we under index in cat in the margin in that segment are good and we're highly confident blue Buffalo can play a role in that we've recently launched.

Some innovation in the snacking and the bone loss and we're excited about what that can be an addition, then to.

Clearly bringing online.

Tyson acquisition, which we hope to close shortly and so we were going to grow blue Buffalo organically continue to do that and we're bullish about our opportunity to do that as well as effectively bring on US. This new part of the portfolio has tightened treat business, where where we under index in Tysons done a nice job with that business, but we think combining what we can do with our capable.

<unk> met with the business. They already have we think theres good growth in that as well.

Great. Thank you so much.

Thank you.

Our next question comes from Michael Lavery with Piper Sandler. Please proceed.

Good morning, Thank you.

When I joined us.

I know you've you've called out the uncertainty and I think thats, all very clear, but can you give us sense.

Round out the last to see what kind of assumptions, you're making for your planning process.

Sure.

So as we as we are.

Built our plans they share 1 of the benefits of our SRM capability is we actually have very detailed demand elasticity models.

I'd say that and also given non to the uncertainty of this environment and the fact that inflation in the market is broad spread us cross industry is global and so with those factors.

<unk> Patel.

Potentially a setup for demand elasticity models that are buying it on backward looking to be.

Perhaps.

Overhaul the elasticity of pricing in this environment. So.

I'd make that note because this is an environment where that uncertainty becomes a relevant factor that we talked about demand elasticity.

And so does that net you out at greater elasticity from historical levels or do you expect it to be pretty consistent with what you've seen before like what what's that kind of net out there.

Yes.

Models are built on sort of.

Historical expectations, I think what I'm also giving acknowledgment to us that the environment itself.

It gives reason for us to be cautious about.

Certainly.

On the call demand elasticity, and that's certainly an environment where.

I think demand elasticity models could be could be launch just because of the breadth of inflation in the market.

Okay. That's helpful and just a follow up on the Thor and foodservice segment, you've called out how you expect the.

Lift to volumes or sales from from more demand or reopening, but can you touch on the impact from.

Pricing and specifically pass through pricing how much of a factor do you expect that to be for the sales lift and what should we be modeling an acceleration there.

But specifically on the pricing side because of the pass through costs.

So.

So Michael I would say that what we see with with our cost and costs going up is very broad I mean, it's broad across geographies, it's brought across product segments as broad a broad across channels and so.

That would include what we see in CNS or our cost for our products and our convenience and foodservice segment are going up as well and so we would anticipate pricing and our convenience and foodservice segment, because we see our costs going up and so.

In this environment, there's obviously not only inflation of food, but kind of everywhere and so there is no different and TNF and so we would anticipate.

You know prices going up in fact, we've already we've already increased prices in our foodservice segment, because our costs are going up and so but what I will also say is that we're very confident in our convenience and foodservice business have returned to growth this year as our schools reopen.

And as people get out a little bit more.

We're well positioned to capture growth that we're trying to that Margaret.

Okay, great. Thanks, so much.

Thanks.

Our next question comes from Chris Growe with Stifel. Please proceed.

Hi, good morning.

I just had just had a couple questions for you.

When you gave your guidance for the year like your constant currency EPS growth I am just curious it does not incorporate the acquisitions or divestitures and I didn't know if you have any kind of quick words on those.

We've modeled.

Estimated.

Kind of 1%, 2% dilution for the yogurt business and then slight accretion for the pet treats business would that be in the realm of expectations have you given any thoughts on that.

So Francisco Inc.

We don't we don't have new information that would change the perspective, we've already given.

We do expect the pet treats business to close shortly.

And I would say.

Until that point, we can't get too much more specific but it is probably important to give some parameters around was slightly accretive means.

It is important to note we will we will see a portion of earnings Contra.

Contribution for the year.

We will also see some some of the purchase accounting related amortization income.

Inventory step up.

Those factors will lead us to.

Expectations, probably in the range of a penny to 2 pennies.

Accretive from here.

On the pet treats business.

And then any comments so no changes on your expectations for yogurt, then when that closes correct.

And that set us further out and.

Okay, we'll give us color as we get closer.

Okay and then just 1 other question if I could on the international segments.

Asia Latin America had about a 5% operating margin for the year Europe, Australia about 7.5% are these sustainable margins could they grow from here.

Some pretty significant moves as we move through the year in terms of improvements in profitability I want to give us sense, how much of that was the benefit of COVID-19 in some cases in the pandemic and how much of it is potential to kind of stick if you will.

Based on changes you're making in those businesses.

Yes.

Okay.

Great.

That's a great question I think we've been very pleased with the progress we've made in and margins on both the both businesses in this environment, obviously, some of that us and related to the leverage benefits of operating in an elevated demand.

But we've also been making and continue to make business model changes in both businesses.

That meant that Andrew.

Moving margin improvements and actually we will continue to make them even contemplated as part of.

The restructuring actions that we've already announced so I would expect that we would hold onto us.

2 parts of these margin margin gains and continue to drive margin improvement.

And get to a much more competitive place on both of these businesses.

Okay. Thanks, so much for you John.

You bet. Thanks Kris thank.

Thank you.

Time for 1 more question Frank.

Our next question comes from Ken Zaslow with Bank of Montreal. Please proceed.

Hey, good morning, everyone.

Morning, Ken.

I have 2 questions..1 is you guys had been really early on the data analytics side.

As a specific new capabilities that you're <unk>.

Blue surprised that Youre not there I guess just kind of what I think you guys were very very early on that to what is the new learnings that you.

We're looking to explore and do more with and will be the returns on that and then I have a second question.

So we've been working on our data and analytics capability for a couple of years now.

I would note that the first thing we had to give us build a foundation and I won't get into the details of that in this answer but we had to build a foundation and then now we're building on top of that with some specific capabilities around around growth capability like strategic revenue management growth capabilities like addressing consumers sort of things like box tops for education, and what we're doing in that.

Personalization space as well as we're doing in Omnichannel and in China, and then on the.

And then on the cost side, what we're what we're doing with procurement, but theres a lot more we there are a lot more things that we can do using data analytics to drive our business and we'll continue to we'll continue to invest in order to drive those parts of the business. So it may seem like a while but we had to we had to build a foundation of first which is the right way to do it and now we're building on top of that with the spin.

<unk> capabilities.

Great Great and my second question is you put out the 3 year growth that you had keepers.

Keep us on sales, 2% operating income in the 5% EPS. When you think about the next 3 years beyond that does that seem like the right mix or do you think it changes that youre, having should accelerate that by a certain amount of basis points. How do you think about the next 3 years.

And again I'm not next year, but just thinking about them in 3 year clip I think that's a good way of thinking about it and how you're positioning and so I was just curious to see how you're thinking about relative to the last 3 years and I'll leave it there I appreciate it.

But again I'm going to us.

Trying to make it through.

This year on that.

And I will say, though on the but look I do respect the question.

As we look ahead, our goal is to get back to sustainable growth and to get the 2% to 3% growth and I mean, I'll probably reached day something I've said already that requires us to do 2 things 1 us compete effectively and I think we were similar to the past couple of years, we've really improved our game there to compete we're competing effectively pretty much everywhere around the world. So we'll continue to need to do that to get to 2 years.

The 3% growth.

We'll continue to have to reshape our portfolio and you see that through to the divestiture.

Yoplait and at least proposed divestiture of Yoplait in Europe, and you see that with the upcoming acquisition of Pluto and so we'll look to continue to reshape our portfolio as well as compete effectively to get to that 2% to 3% growth rate and so that'll be that'll be our plan. After this year and we will.

We have got a group that's focused on that and we've got another group that's focused on making sure. We can deliver what we said we're going to do this coming 12 months.

Great.

These things are you putting in place seems like it should fueled this growth.

You get the answer and I look forward to seeing what you guys. Thank you.

Thank you.

Okay.

Just after the end of our time here. This morning. So thank you everyone for your time and attention and I. Appreciate the good questions. Please reach out over the course of the day. If you have any follow ups and reported to talking to you again soon.

Jeff.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect. Your line have a great day everyone.

Yeah.

Right.

[music].

Okay.