Q2 2025 General Mills Inc Earnings Call

December 18, 2024

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Operator: Good morning and welcome to General Mills' second quarter Fiscal 2025 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you'll need to press star, followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and Treasurer. Thank you. Please go ahead.

Speaker Change: Good morning, and welcome to General Mills second quarter fiscal 2025 earnings Conference call.

Speaker Change: All participants are in a listen only mode.

After the Speakers' remarks, we will conduct a question and answer session.

Speaker Change: Can I ask a question at this time you all need to press star followed by the number one on your telephone keypad.

Speaker Change: As a reminder, this conference call is being recorded.

Speaker Change: I would now like to turn the call over to Jeff Siemon, Vice President of Investor Relations and Treasurer. Thank you. Please go ahead.

Jeff Siemon: Hi, good morning, everyone. Thank you, Julianne. We appreciate you all joining us today for our Q&A session on our Q2 fiscal 2025 results. I hope you all had time to review our press release, listen to the prepared remarks, and view our presentation materials, which we made available this morning on our Investor Relations website. It's important to note that in our Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. So please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which we may discuss on today's call. I'm joined this morning by Jeff Harmening, our Chairman and CEO, Kofi Bruce, our CFO, Dana McNabb, Group President of North America Retail, and Jon Nudi, Group President of our North America Pet, Foodservice, and our International segments.

Jeff Siemon: Hi, good morning, everyone.

Speaker Change: So julien.

We appreciate you all joining us today for our Q&A session on our second quarter fiscal 2025 results.

I Hope you all had time to review our press release and listen to the prepared remarks and view our presentation material.

Speaker Change: Which we made available this morning on our Investor Relations website.

Speaker Change: It's important to note that in our Q&A session. We may make forward looking statements that are based on management's current views and assumptions.

Speaker Change: So please refer to this mornings press release for factors that could impact forward looking statements and for reconciliations of non-GAAP information, which.

Which we may discuss on today's call.

Jeff Siemon: I'm joined this morning by Jeff Harmening, our chairman and CEO Kofi Bruce our CFO.

Speaker Change: Mcnabb group President of North America retail and.

And John Eudy Group, President of our North America patch foodservice and our international segments.

Jeff Siemon: Before we open for questions, I'm going to hand it over to Jeff Harmening for a few opening remarks.

Before we open for questions, I'm going to hand it over to Jeff Harmening for a few opening remarks.

Speaker Change: Before we open for questions I'm going to hand, it over to Jeff Harmening for a few opening remarks.

Jeff Harmening: All right. Thanks, Jeff. As he said, before we get into Q&A and a more detailed business discussion, let me lay out kind of an overarching perspective. If I go back to June, we laid out our plans for Fiscal 2025. Then we said our top priority for this year is to accelerate our organic sales growth and specifically our volume growth. We do that by leveraging a Remarkable Experience Framework to improve our market share. Through the first half of the year, we've executed that plan, and we're seeing good results with broad-based improvements in our volume and our share trends. We've done that by stepping up our investment in the business above our original plans in response to a more prolonged and, I would say, significant value-seeking behaviors on the part of consumers.

Speaker Change: Alright, Thanks, Jeff and as you said before we get into Q&A in a more detailed business discussion. Let me, let me lay out a kind of an overarching perspective, and if I go back to June we laid out our plans for fiscal 'twenty five and then we said our top priority for this year.

Speaker Change: To accelerate our organic sales growth and specifically our volume growth.

Speaker Change: And we do that by leveraging a remarkable experience framework to improve our market share.

So the first half of the year, we've executed that plan and we're seeing good results with broad based improvements in our volume and our share trends and we've done that by stepping up our investment in the business above our original plans in response to a more prolong and I would say significant value seeking behaviors on the part of consumers.

Jeff Harmening: We're bringing more value to consumers across all aspects of our total product offering, including increased product renovation news, increased brand building, and promotional support. And as I said, these investments are working. Leaning into our greening and superiority messaging, for example, on Blue Buffalo pet food business has led us back to growth. Strong brand campaigns and innovation have helped return our US cereal business to pound share growth. And we drove accelerated retail sales performance in some other really important US categories, including fruit snacks, Mexican foods, soups, snack bars, as well as food service channels in many of our international markets. But we do have other work to do in other places, like on US refrigerated dough. So we're adjusting our plans there and already have adjusted our plans there to ensure that Pillsbury brings more value to consumers across a broader portion of our portfolio.

We're bringing more value to consumers across all aspects of our total product offering, including increased product renovation news, increased brand building, and promotional support. And as I said, these investments are working. Leaning into our greening and superiority messaging, for example, on Blue Buffalo pet food business has led us back to growth. Strong brand campaigns and innovation have helped return our US cereal business to pound share growth. And we drove accelerated retail sales performance in some other really important US categories, including fruit snacks, Mexican foods, soups, snack bars, as well as food service channels in many of our international markets. But we do have other work to do in other places, like on US refrigerated dough. So we're adjusting our plans there and already have adjusted our plans there to ensure that Pillsbury brings more value to consumers across a broader portion of our portfolio.

Speaker Change: Are bringing more value to consumers across all aspects of our total product offering including increased product renovation news increased brand building and promotional support.

Speaker Change: And as I said these investments are working are leaning into our greening of superior messaging for example on Blue Buffalo Pet food business is let us back to growth strong brand campaigns in innovation have helped return our U S cereal business the pound share growth.

Speaker Change: And we drove accelerated retail sales performance and some other really important U S categories, including fruit snacks, and Mexican foods soup snack bars, as well as foodservice channels many of our international markets.

Speaker Change: But we do have other work to do in other places like on U S. Refrigerated dough. So we're adjusting our plans there and already have adjusted our plans are to ensure that pillsbury brings more value to consumers across a broader portion of our portfolio and so stepping back we are confident.

Jeff Harmening: And so stepping back, we are confident in our strategy and the investments we're making to further improve our momentum in the back half of the year. And while stepping up our investment is impacting our profit outlook for the back half of the year, I am very confident that it's the right choice to position us for stronger growth in fiscal 26 and beyond. And so with that, Jeff, I'll turn it back to you, and let's get started on the Q&A.

And so stepping back, we are confident in our strategy and the investments we're making to further improve our momentum in the back half of the year. And while stepping up our investment is impacting our profit outlook for the back half of the year, I am very confident that it's the right choice to position us for stronger growth in fiscal 26 and beyond. And so with that, Jeff, I'll turn it back to you, and let's get started on the Q&A.

Speaker Change: And our strategy and the investments, we're making to further improve our momentum in the back half of the year and while stepping up our investment is impacting our profit outlook for the back half of the year.

Speaker Change: I am very confident that it's the right choice to position us for stronger growth in fiscal 'twenty, six and beyond and so with that Jeff I'll turn it back to you and let's get started on the Q&A.

Jeff Siemon: Okay. That sounds good. Julianne, I think we can go ahead and get started with the first question, please.

Jeff Siemon: Okay sounds good Julian I think we can go ahead and get started with the first question. Please.

Operator: Certainly. Just as a reminder to ask a question, please press star, followed by the number one on your telephone keypad. Our first question today will come from Andrew Lazar from Barclays. Please go ahead. Your line is open.

Jeff Siemon: Certainly just as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Our first question today will come from Andrew Lazar from Barclays. Please go ahead. Your line is open.

[Analyst] (Barclays): Thanks so much. Good morning and happy holidays, everybody.

Andrew Lazar: Thanks, So much hi, good morning, and happy holidays everybody.

Jeff Harmening: Good morning.

Jeff Siemon: Morning, Andrew.

Speaker Change: Good morning, Good morning, Andrew.

[Analyst] (Barclays): I'm Jeff. As you mentioned, this fiscal year was always meant to be about sort of improving in-market competitiveness across the portfolio. And I guess now that we're halfway through, I'd still love to get a better sense on sort of what learnings you've taken away from maybe the initial efforts and how those learnings are kind of informing your back half expectations, particularly in light of sort of the planned incremental spend. Is it that you now see the consumer as just more ready to engage than before and maybe better adjusting their reference price points or simply just realizing that it requires more spend than it originally anticipated to drive sort of the requisite volume, even outside of refrigerated dough?

I'm, Jeff as you mentioned this fiscal year was always meant to be about sort of improving in market competitiveness across the portfolio and I guess now that we're halfway through I still have to get a better sense on sort of what learnings you've taken away from maybe the initial efforts and how those learnings are kind of informing your back half expectations, particularly in light of sort of the planned decree.

Speaker Change: Spend is it.

Speaker Change: You can see the consumer is just more ready to engage than before and maybe better adjusting their reference price points or simply just realizing that it requires more spend than it originally anticipated to drive sort of a requisite volume even even outside of refrigerated dough. So I guess I'm just trying to get a better sense on sort of where the consumer is at this point and maybe how.

[Analyst] (Barclays): I guess I'm just trying to get a better sense on sort of where the consumer is at this point and maybe how much of the incremental investment is specific to dough versus some of the other brands in the portfolio.

Speaker Change: A much of the incremental investment specific to go versus some of the other brands in the portfolio.

Jeff Harmening: Yeah. Thanks, Andrew. I think we've learned a couple of things. So we'll start with the consumer, as you said. I mean, it's clear that from the beginning of the year to now, the consumer is. We've seen more prolonged value-seeking behavior than we anticipated back in June. That manifests itself in a couple of ways. I mean, one is that consumers are eating more at home, which is good. You see our categories are growing. You see at-home consumption being about 87% of total consumption, which is quite high. That's because eating away from home is about four times more expensive than eating at home. We've seen this increased value behavior. So in the sense it benefits the growth of our categories, and you see our categories growing. But what it also does is it means within our categories, consumers are seeking behavior.

Andrew Lazar: Yeah. Thanks, Andrew I think we've learned we've learned a couple of things there. So we'll start with the consumer as you said I mean, it's.

Andrew Lazar: It's clear that from the beginning of the year to now.

Andrew Lazar: The consumer is we've seen more prolonged value seeking behavior than we anticipated back in June and that manifests itself in a couple of ways. I mean, one of the consumers eating more at home, which is which is good to see our categories are growing and you see at home consumption being about 87% of total consumption wishes, which is quite high and that's because eating away from home is about <unk>.

Andrew Lazar: Four times more expensive than eating at home. So so we've seen this increased value behavior and so in a sense it benefits the growth of our categories and you'll see our categories are growing but what it also does it means within our categories consumers are seeking behavior and that takes a lot of different forms and certainly price is one other thing.

Jeff Harmening: And that takes a lot of different forms. And certainly, price is one of those things. And so what we have seen this year on our businesses is we have increased our investments, broadly speaking, whether that's in innovation or whether it's in advertising, whether that's in promotional activity. The things that we're doing are working, and so we feel good about that. It's just going to take a little, honestly, it's just going to take a little bit more than we had anticipated. And I think what I would say, Andrew, you ask about how we see it on dough versus other things. What I would say is that as we look across the different categories, we've made investments across a wide variety of categories, including in value. But within those categories, we've done it in some pretty specific and targeted ways.

And that takes a lot of different forms. And certainly, price is one of those things. And so what we have seen this year on our businesses is we have increased our investments, broadly speaking, whether that's in innovation or whether it's in advertising, whether that's in promotional activity. The things that we're doing are working, and so we feel good about that. It's just going to take a little, honestly, it's just going to take a little bit more than we had anticipated. And I think what I would say, Andrew, you ask about how we see it on dough versus other things. What I would say is that as we look across the different categories, we've made investments across a wide variety of categories, including in value. But within those categories, we've done it in some pretty specific and targeted ways.

Andrew Lazar: And so what we have seen this year on our businesses as we have increased our investments broadly speaking whether that's renovation.

Advertising, whether that's in promotional activity.

Andrew Lazar: The things that we're doing are working and so we feel good about that it's just going to take a little bit obviously, its just going to take a little bit more than we had anticipated and I think the you know what I would say Andrew you ask about how we see it on DAU versus other things what I would say is that we have.

Andrew Lazar: As we look across the different categories. We've seen we've made the investments across a wide variety of categories, including in value, but within those categories. We've done it in some pretty specific and targeted ways and I think maybe it might be good at this point just to maybe jump in one and then Dana share a little bit off patent.

Jeff Harmening: I think maybe it might be good at this point just to have maybe Jon and then Dana share a little bit on Pet and then North America Retail in a couple of categories to get a flavor of what those kind of targeted investments look like. Jon, why don't we start with you and then pass it over to Dana?

I think maybe it might be good at this point just to have maybe Jon and then Dana share a little bit on Pet and then North America Retail in a couple of categories to get a flavor of what those kind of targeted investments look like. Jon, why don't we start with you and then pass it over to Dana?

Speaker Change: North America retail a couple of categories. So you get a flavor of what those.

Speaker Change: What those kind of targets must look like so John why don't we start with you and then pass over to Dana.

Jeff Siemon: Absolutely. Hi, Andrew. So we're really pleased with the progress we're making on pet. And if you think about our biggest businesses, it's Life Protection Formula as well as Wilderness. And really, it's not price investment. It's advertising investment that's driving our business. LPF is growing, high single digits. We love what we're seeing as we've gotten back to ingredient superiority advertising. It really works for us. And on Wilderness, we're not all the way home, but at this time last year in Q2, we were down 18%. This year, we're down mid-single digits. And every single week, we make progress. We really believe that we're going to bend the trend and get back to growth in the back half of the year. And that's really about approaching messaging. It's about bringing back grain-free SKUs and really making sure that we have sizes that really fit for consumers.

John: Yeah, absolutely hi, Andrew So we're really pleased with progress we're making pet.

John: Do you think about our biggest businesses at Sun life protection Formula as well as wilderness and really it's not price investments advertising investment whats driving our business is growing high single digits. We love what we're seeing is we've gotten back to ingredient superiority advertising.

John: It really works for us and on Wilderness, we're not all the way home, but at this time last year Q2.

John: 18%. This year were down mid single digits every single week, we make progress we really believe that what you have done to try to get back to growth in the back half of the year and Thats really about a protein messaging, it's about bringing back great free skus and really making sure that we have sizes that really stretch for for consumers if anything from a price standpoint, it's really been in dog wet gas wells.

Jeff Siemon: If anything, from a price standpoint in pet, it's really been in dog wet as well as dog treats where we've got adjusted a few price points. We're actually seeing that really pay off for us in terms of pound volume coming back and at the same time making progress from a dollar standpoint. So for us in Blue, really proud of the team, really proud of the progress. And it's probably more about advertising than it is about price investment at this point.

If anything, from a price standpoint in pet, it's really been in dog wet as well as dog treats where we've got adjusted a few price points. We're actually seeing that really pay off for us in terms of pound volume coming back and at the same time making progress from a dollar standpoint. So for us in Blue, really proud of the team, really proud of the progress. And it's probably more about advertising than it is about price investment at this point.

John: Dog treats where we've got adjusted a few price points, we're actually seeing that pay off for us in terms of pound volume coming back and at the same time, making progress from a dollar standpoint, so for us in Blue really proud of the team really proud of the progress was probably more about advertising than it is about price investment at this point.

Dana McNabb: From a North America retail perspective, morning, Andrew, what I would say is similar to what Jon said. We look at investment as broader than just price value. We use a framework called the Remarkable Experience Framework to try to assess where we are at relative to the competition across our total product offering, whether that's product, packaging, communications, price. From a price standpoint, we have had to make a few targeted investments, but it's not everywhere. It's on the refrigerated baked goods business, as we've talked about, a little bit fruit snacks, a little bit on our Totino's business. But I want to reiterate that this is, again, more than just investment in price. If we look at other areas in refrigerated baked goods where we're investing, we're really seeing them work. Look at our cookie line. That's about 1/3 of our business.

And from the North America retail perspective, good morning, Andrew what I would say, it's similar to what John said, we look at investment as broader than just price value.

John: We use a framework called the remarkable experience framework to try to assess where we are at relative to the competition across our total product offering whether that's product packaging communications price from.

John: From a price standpoint, we have had to make a few targeted investments, but it's not everywhere. It's on the refrigerated baked goods business and we've talked about a little bit fruit snacks, a little bit on our totino business, but I want to reiterate that this is again more than just investment in price if.

John: If we look at other areas in refrigerated baked goods, where we're investing we're really seen them work look at our Cookie line. That's about a third of our business is up high single digits behind new capacity that we've added are.

Dana McNabb: It's up high single digits behind new capacity that we've added. Our campaign where we brought back the dough boy really resonating with consumers. Our new products are up 10%. We're seeing our cereal campaigns work really well. So yes, we're having to invest in price and targeted areas, but we're also leaning in on areas that are really resonating with the consumer. We believe this investment will return for us in the back half of the year.

It's up high single digits behind new capacity that we've added. Our campaign where we brought back the dough boy really resonating with consumers. Our new products are up 10%. We're seeing our cereal campaigns work really well. So yes, we're having to invest in price and targeted areas, but we're also leaning in on areas that are really resonating with the consumer. We believe this investment will return for us in the back half of the year.

John: Our campaign, where we brought back the doughboy really resonating with consumers our new products are up 10%, we're seeing our cereal campaigns work really well. So yes, we're having to invest in price in targeted areas, but we're also lean in on areas that are really resonating with the consumer and we believe this investment will return for us in the back half of the air.

[Analyst] (Barclays): Thanks so much. Have a great holiday, everybody.

Speaker Change: Thanks, so much have a great holiday everybody.

Jeff Harmening: Thank you, Andrew. Thank you.

Speaker Change: Thank you Andrew Thank you.

Operator: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Peter Galbo from Bank of America. Please go ahead. Your line is open.

[Analyst] (Bank of America): Hey, guys. Good morning. Happy holidays. Thanks for the question. Dana, maybe just to pick up on the back of Andrew's question there, I think I heard you say that the incremental investment in the back half is targeted. I do think there's some concern this morning just that it's more broad-based. So just wanted to clarify on that. And just the part B of that question is really, how do you think about, is this enough? Obviously, you came into the year. You had certain plans. You're now accelerating that. How do you get confidence around the fact that the investments you're making now are going to be enough such that in three, six, nine months, we're not necessarily revisiting this again? Thanks very much.

Peter Galbo: Hey, guys. Good morning happy holidays. Thanks, Thanks for the question.

Speaker Change: Dana maybe just to pick up on the back of Andrew's question there.

Speaker Change: I think I heard you say that.

The incremental investment in the back half is targeted I do think there is some concern. This morning, just said it that it's more broad based so just wanted to clarify on that and just the part D of that question is really how.

Speaker Change: How do you think about it is this enough you know obviously you came into the year you had certain plans youre now accelerating that.

Speaker Change: How do we how do you get confidence around the fact that the investments you're making now are going to be enough such that in 369 months, we're not necessarily revisiting. This again, thanks very much.

Jeff Harmening: Yeah. So let me, you asked for Dana's stuff. Let me kind of provide a little context and then have Dana maybe provide some specifics. So there's this question about, is it broad-based or is it targeted? What I would say is that we're investing in value across different categories. So in that sense, it's broad. But then within particular categories, it's not as if we're increasing value on every single thing that we do. It's really targeted within categories and increasing investments in the place they matter most. So I know there's this question about targeted versus broad. I would say, across a few different categories, we're making investments, but within those categories, they're very targeted. I think Dana started already with Pillsbury, which was a good example on cookies where it's really advertising and capacity, but in some other places, it's more price.

Speaker Change: Yeah. So let me let me you asked for Dana So let me, let me kind of provide a little context, and then and then have Dana and maybe provide some specifics. So there's this question about is it broad based or is it targeted what I would say is that we're investing in value across different categories. So in that sense. It's broad, but then within particular categories. It's not as if were.

Speaker Change: Increasing value on every single thing that we do it's really targeted with that in categories.

Speaker Change: And and.

Speaker Change: And increasing investments in the places that matter. Most so I know there was a question about targeted versus broad I would say there is across a few different categories, we're making investments, but within those categories, they're very targeted.

Speaker Change: Dana started already with Pillsbury, which was a good example on cookies, whereas it's really average its really advertising in and capacity, but in some other places it's more price. So Dana but you might want to give a couple of examples of investments yeah. Good morning, Pete I mean, my answer is similar to what we just talked about with Andrew in the sense that the the price investments or Todd.

Jeff Harmening: Dana, you might want to give a couple of examples of investments.

Dana, you might want to give a couple of examples of investments.

Dana McNabb: Yeah. Good morning, Pete. I mean, my answer is similar to what we just talked about with Andrew in the sense that the price investments are targeted. They're in areas like we talked about with refrigerated baked goods, a little bit Totino’s, a little bit fruit snacks, but again, not everywhere. In terms of is it enough, I do believe that we put investment into the areas that our analytics show will provide the best return. We'll watch the response, and then we'll pivot as we learn more.

Speaker Change: They are in areas like we talked about with refrigerated baked goods, a little bit totino is a little bit fruit snacks, but again not everywhere and in terms of is it enough I do believe that we put investments into the areas that our analytics show will provide the best return and we'll watch the response and then we'll pivot as we learn more.

[Analyst] (Bank of America): Okay. No, that's helpful. Thank you. Maybe just a follow-up on pet as well. I think if you kind of remove the retailer lag from last year, you probably still would have been up on an organic basis in pet sales, which is encouraging. Just curious kind of how you think about the context of that underlying momentum into the back half. Thanks again.

Speaker Change: Okay. That's helpful. Thanks, Thank you.

Speaker Change: And maybe just a follow up on on pet as well I think if you kind of remove the retailer lap from last year.

Speaker Change: Probably still would've been up on an organic basis in pet sales.

Speaker Change: Encouraging and just curious kind of how you think about the.

Speaker Change: The context of that underlying momentum into the back half. Thanks again.

Okay.

Jeff Harmening: John, why don't you take that one?

Speaker Change: John why don't you take that one.

Jeff Siemon: Yeah, absolutely. So Pete, you're exactly right. So we did see sales exceed movement by about four points in the quarter. And you're right about fiscal 2024 Q2 and really fiscal 2023 Q2 as well. We saw the opposite. So we're really just getting back to average inventory levels. And importantly, as we really look at our key customers' inventory levels, they're right where we'd expect them to be. So again, we don't expect any inventory issues as we head to the back half of the year. And overall, we really like the trends that we're seeing on the business. The first quarter that we've been able to hold dollar share in 11 quarters, we're back to pound share growth for the year. Our biggest businesses are performing well, like I said.

Yeah, absolutely so pizza, you're exactly right. So we did see.

Speaker Change: Sales exceed moved up by about four points in the quarter.

Speaker Change: Youre right about fiscal 2000 for Q2 and really fiscal 'twenty three Q2 as well we saw the opposite so we're really just getting back to average inventory levels and importantly, as we really look at our key customers' inventory levels are right, where we would expect them to be so again, we don't expect any inventory issues as we head into the back half of the year and overall, we really like the.

Speaker Change: The trends, we're seeing on the business the first quarter that we've been able to hold dollar share in 11 quarters, we're back to pump share growth for the year. Our biggest businesses are performing well like I said I feel like we've got really strong plans to get treats performing better in the back half of the year, that's probably the last business, we want to see that inflection on as we move so we feel really good about where we're trending.

Jeff Siemon: I feel like we've got really strong plans to get treats performing better in the back half of the year. That's probably the last business we want to see an inflection on as we move. We feel really good about where we're trending, and don't anticipate any big inventory issues as we head to the back half of the year as well.

I feel like we've got really strong plans to get treats performing better in the back half of the year. That's probably the last business we want to see an inflection on as we move. We feel really good about where we're trending, and don't anticipate any big inventory issues as we head to the back half of the year as well.

Speaker Change: And don't anticipate any big inventory issues, we had in the back half of the year as well.

[Analyst] (Bank of America): Thanks very much.

Speaker Change: Thanks very much.

Operator: Our next question comes from Ken Goldman from JPMorgan. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Ken Goldman from Jpmorgan. Please go ahead. Your line is open.

[Analyst] (Barclays): Hi. Thanks very much. I wanted to ask a little bit just in light of Kofi, your comments about, I think, most of the benefits, the one-time benefits in terms of trade inventory and the timing of spend in Q2, that flipping into a reversal in Q3. Is there any more color you can provide us on kind of how you want us to think about the shape of the third quarter, either relative to last year or relative to Q2? Obviously, we can do some of the math, but just want to get a better sense for how that all flows into the bottom line.

[Analyst] (J.P.Morgan): Hi. Thanks very much. I wanted to ask a little bit just in light of Kofi, your comments about, I think, most of the benefits, the one-time benefits in terms of trade inventory and the timing of spend in Q2, that flipping into a reversal in Q3. Is there any more color you can provide us on kind of how you want us to think about the shape of the third quarter, either relative to last year or relative to Q2? Obviously, we can do some of the math, but just want to get a better sense for how that all flows into the bottom line.

Speaker Change: Hi, Thanks very much.

Speaker Change: Wanted to ask a little bit just in light of the of coffee your comments about I think the most of the.

Speaker Change: The benefits of the onetime benefits in terms of trade inventory and the timing of spend into <unk> that flipping into a reversal in <unk>.

Speaker Change: Is there any more color you can provide us on kind of how you want us to think about the shape of the third quarter relative to last year relative to <unk>, obviously, we can.

Speaker Change: Do some of the math, but just wanted to get a better sense for how that all flows into the bottom line.

Jeff Harmening: Sure. I will answer probably mostly through the lens of the second half and give you a little bit of shading and perspective on how that weighs in Q3. So, as I mentioned in my remarks, there's probably about an op profit, about a six-point benefit in the quarter for a variety of timing items. Thanksgiving holiday sitting in Q3 this year versus in the last week of Q2 last year. Additional pipeline build outside of Thanksgiving, and seasonal businesses in NAR. And then, phasing on trade in that fell into the quarter and benefited and provided tailwind in Q2. So the combination of those things are about six-point benefit. Now, as you move into the back half, right, and if you take our guidance, implied guidance midpoint, we'll give you about an eight-point decline in operating profit in the back half.

Speaker Change: Sure.

Speaker Change: Ill answer probably mostly two lines of the second half and give you a little bit of shading and perspective on how that how that weights in Q3. So as I mentioned in my remarks, Theres, probably about a on op profit about a six point benefit in the quarter for a variety of timing.

Speaker Change: Items. Thanks.

Thanks, giving holiday sitting in Q3 this year versus in the last week of Q2 last year additional.

Speaker Change: Pipeline build outside of Thanksgiving and seasonal businesses.

Speaker Change: And then phasing on trade an H M M that fell into the quarter benefited and provided a tailwind in Q2. So the combination of those things are about six points benefit and as you move into the.

Into the back half right and if you take our guidance.

Implied guidance midpoint, we will give you about an eight point.

Speaker Change: Decline in operating profit in the back half.

Jeff Harmening: About three points of that comes from the reversal of those timing benefits, most of which is going to hit in Q3. And then we've got about two points from the incentive reset, which we expected and flagged at the beginning of the year. And then there's about three points from additional investment as we layer in spending in the back half to shore up competitiveness, as we've mentioned earlier. So that gives you roughly the structure. Hopefully, that answers your question, Ken.

About three points of that comes from the reversal of those timing benefits, most of which is going to hit in Q3. And then we've got about two points from the incentive reset, which we expected and flagged at the beginning of the year. And then there's about three points from additional investment as we layer in spending in the back half to shore up competitiveness, as we've mentioned earlier. So that gives you roughly the structure. Hopefully, that answers your question, Ken.

Speaker Change: About three points of that comes from the reversal of those timing benefits most of which is going to hit in Q3.

Speaker Change: And then you've got we've got about two points from the incentive reset, which we expected and flagged at the beginning of the year.

Speaker Change: And then there is about three points from additional investment as we as we layer in spending in the back half to show up competitiveness as we as we mentioned earlier so that gives you roughly the structure.

Speaker Change: Hopefully that answered your question Ken.

[Analyst] (Bank of America): Okay. Thank you for that. Then a little more of a random question, but just seeing double-digit declines in your Häagen-Dazs business in China in stores. I appreciate that you're looking to sort of diversify the channels that you work with there, but how sustainable do you see that double-digit decline? What is your outlook there? And is there any chance, I guess I'm getting at, that you'll consider kind of the broader footprint of that retail store business that you have there?

[Analyst] (J.P.Morgan): Okay. Thank you for that. Then a little more of a random question, but just seeing double-digit declines in your Häagen-Dazs business in China in stores. I appreciate that you're looking to sort of diversify the channels that you work with there, but how sustainable do you see that double-digit decline? What is your outlook there? And is there any chance, I guess I'm getting at, that you'll consider kind of the broader footprint of that retail store business that you have there?

Speaker Change: Okay. Thank you for that.

Speaker Change: And then a little more of a random question, but just seeing double digit declines in your.

Speaker Change: Hagen Dazs business in China in stores.

Speaker Change: I appreciate that you are looking to sort of diversify the channels that you work with there, but how sustainable do you see that double digit decline.

Speaker Change: What is your outlook there and is there any chance I guess I'm getting at but youll consider kind of the broader footprint of that retail store business that you have there.

Jeff Siemon: Yeah, Ken, this is Jon. I'm going to take that. Yeah. Yeah. Absolutely, Jeff. So we're absolutely looking at our footprint of stores in China. In fact, over the last couple of years, we've actually closed quite a few underperforming stores. And clearly, our focus is really on retail as well as food service, where we see better margins and really the better opportunity for growth moving forward. So the macroeconomic backdrop is tough right now. Again, traffic is down, which is a challenge. But at the same time, we're actually growing our retail business in China. So we'll continue to want to make that switch, really focus on really our most profitable stores moving forward. And that's something that we've been working on for a period of time here. From a profit standpoint, you'll note that international is down quite a bit this quarter.

Speaker Change: Yeah, Ken This is John I'll take that.

Jeff Siemon: Yes, absolutely Jeff.

Jeff Siemon: So we're absolutely looking at.

Jeff Siemon: Stores in China talked over the last couple of years, we've actually closed quite a few underperforming stores and clearly our focus is really on retail as well as foodservice, where we see better margins and really the better opportunity for growth moving forward. So the macroeconomic backdrop is tough right now traffic is down we're still challenged but at the same time.

Jeff Siemon: We're actually growing our retail business in China. So you don't want to make that switch really focus on really where our most profitable stores moving forward and that's something that we've been working onshore for a period of time here.

Jeff Siemon: Profit standpoint, Youll note that international was down quite a bit in this quarter that was really awful first of all small number and then second we were lapping a.

Jeff Siemon: That was really off of, first of all, a small number. And then second, we were lapping an insurance recovery on Häagen-Dazs last year. So while the top line is down a bit, I would say that profit isn't as bad as what we're printing at this point. And we're very clearly focused on improving our trends coming out of China as well.

That was really off of, first of all, a small number. And then second, we were lapping an insurance recovery on Häagen-Dazs last year. So while the top line is down a bit, I would say that profit isn't as bad as what we're printing at this point. And we're very clearly focused on improving our trends coming out of China as well.

Jeff Siemon: <unk> recovery on Hagen Dazs last year. So what's top line is down a bit I would say that.

Jeff Siemon: Profit isn't as bad as what we're pretty at this point and so we're very clearly focused on improving our trends coming out of China as well.

[Analyst] (Barclays): Great. Thank you so much.

[Analyst] (J.P.Morgan): Great. Thank you so much.

Speaker Change: Great. Thank you so much.

Jeff Siemon: Thank you.

Speaker Change: Thank you.

Operator: Our next question comes from Leah Jordan from Goldman Sachs. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Brett Jordan from Goldman Sachs. Please go ahead. Your line is open.

[Analyst] (Goldman Sachs): Thank you. Good morning. Thanks for taking the question. It looks like you've raised your input cost inflation for the year to 4% from 3% to 4% last quarter. Just seeing if you could provide more color on the drivers behind that. Where are you seeing the most pressure across your portfolio? And how do you think about your ability to mitigate some of that going forward?

Speaker Change: Thank you.

Great question.

Speaker Change: Thank you.

Speaker Change: Cost inflation for the year to 4% from 3% to 4% quarter. You just see if you could provide more color on the drivers behind that where you're seeing the most.

Speaker Change: Your across your portfolio and how do you think about your ability.

Speaker Change: To mitigate some of that going forward.

Jeff Harmening: Thanks for the question, Leah. So that is absolutely a fair assessment of how we read the year. A couple of things that I'd give you just as framing. As we think about input costs, in particular, our ingredient costs and some of our toll manufacturing, there's a high conversion cost linked to labor that is passed through. That actually still remains sticky and a little bit more inflationary than we'd expect. In addition, we're lapping several large contracts, packaging, dairy in our EU, AU business, and sugar, where we had advantage prices that were kind of locked in right before the inflationary period. So as we step off those, we're seeing some pressure points there. Those are kind of the big ones.

Speaker Change: Thank you for the question Leah.

Speaker Change: So that is absolutely a fair assessment of how we read the year couple a couple of things that I'd give you just as framing.

Speaker Change: As we think about input costs in particular, our ingredient costs and such.

Speaker Change: Of our toll manufacturing, where theres a high conversion cost.

Speaker Change: Linked to labor.

Speaker Change: That is passed through and that that is actually still remains sticky and a little bit more inflationary than we said we would expect.

Speaker Change: In addition, we are lapping.

Several large contracts packaging Darien.

Speaker Change: Dairy in our EU EU business sugar, where we had advantage prices.

Speaker Change: We're kind of locked in right before the inflationary period, and so as we step off those.

Speaker Change: We're seeing some some pressure points there.

Speaker Change: So so those are those kind of the big ones and then in addition to that we do have a smaller exposure to the items, which have been much in the news in particular cocoa and fashion.

Jeff Harmening: And then in addition to that, we do have a smaller exposure to the items which have been much in the news, in particular, cocoa and fats and oils that remain pressure points. And then as you think about the second part of your question, how do we feel? Look, I think we're driving 5% this year. And we continue to have confidence in our ability to drive at least the 4% historical run rate we've been driving. We're getting benefits from digitization in our supply chain that's providing benefits in manufacturing and logistics, reducing waste, and providing better service. So I think we feel pretty good about our prospects of addressing inflation in roughly this range.

And then in addition to that, we do have a smaller exposure to the items which have been much in the news, in particular, cocoa and fats and oils that remain pressure points. And then as you think about the second part of your question, how do we feel? Look, I think we're driving 5% this year. And we continue to have confidence in our ability to drive at least the 4% historical run rate we've been driving. We're getting benefits from digitization in our supply chain that's providing benefits in manufacturing and logistics, reducing waste, and providing better service. So I think we feel pretty good about our prospects of addressing inflation in roughly this range.

Speaker Change: Fats and oils that remain pressure points.

Speaker Change: And then as you think about the second part of your question how do we feel okay. I think we're driving 5% H M. M. This year.

Speaker Change: And we continue to have confidence in our ability to to drive it at least to 4% historical run rate, we've been driving we're getting benefits from digitization in our supply chain.

Speaker Change: It's providing benefits in manufacturing and logistics reducing waste.

Speaker Change: And providing better service. So I think we feel pretty good about our prospects of addressing inflation in roughly this range.

[Analyst] (Goldman Sachs): Thank you. Just a step away from the quarter for a minute and just talk about the regulatory environment. So we have a combination of things here, let's see, issues. Just to discuss what you're thinking about any potential impacts to your business. And I've seen this coming today. If you'd like to flag, make sure there's been any dialogue yet.

Speaker Change: Okay.

Speaker Change: Alright.

Speaker Change: Separately.

Speaker Change: And just talk about the.

Speaker Change: Yes.

Speaker Change: No.

You're right.

Speaker Change: Matt just talked about.

Speaker Change: Bill back to you.

Speaker Change: Hmm.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: Yeah.

Speaker Change: Okay.

Jeff Harmening: Okay. Sorry, there was a bit of a bad connection there. I think what I heard was a question on a regulatory environment and any potential impact you see to the business. We'll go with that. Hopefully, Leah, I got that question. We get about one every two words. So if I don't answer the question, just know we're not trying to get around it. Just didn't hear all of it clearly. But look, I do appreciate the question. First, it's pretty early to talk about broadly what's going to happen in the regulatory environment. What I can tell you is that we have and we always will follow whatever regulations are in place, whether they're state regulations or whether they're federal regulations. The other thing I can tell you is that we've got a great R&D team and very agile.

Speaker Change: Okay.

Speaker Change: Sorry, there was a bit of a bad connection there I think what I heard was question on a regulatory environment in any any potential impact you see to the business.

Speaker Change: So with that hopefully I got that question right upfront, we got about about one every two words. So if I don't answer the question, just though without trying to get around it just didnt hear all of it clearly.

Look I do appreciate the question.

Speaker Change: First it is pretty early to talk about broadly whats going to happen in the and the regulatory environment.

Speaker Change: I can tell you is that we have and we always will follow whatever you brake shims are in place whether they're state regulations, whether they're federal regulations.

Speaker Change: The other thing I can tell you is that I mean, we've got a great R&D team and very agile and we've been we've been navigating regulatory environments for nearly 160 years and doing so really effectively and let me give you. Let me give you a couple of examples that I think might be helpful. As you think about our foodservice business, which you saw this quarter and for the last many.

Jeff Harmening: We've been navigating regulatory environments for nearly 160 years and doing so really effectively. Let me give you a couple of examples that I think might be helpful. As you think about our food service business, which you saw this quarter and for the last many quarters has been doing really well, a lot of that business is through K through 12 schools. The USDA has nationwide nutrition standards, which they change every 5 to 10 years or so. Coincidentally, they're going to change in the next school year in 2025 or 2026. In that environment, when those have changed, General Mills has grown and grown share. It's not an accident.

We've been navigating regulatory environments for nearly 160 years and doing so really effectively. Let me give you a couple of examples that I think might be helpful. As you think about our food service business, which you saw this quarter and for the last many quarters has been doing really well, a lot of that business is through K through 12 schools. The USDA has nationwide nutrition standards, which they change every 5 to 10 years or so. Coincidentally, they're going to change in the next school year in 2025 or 2026. In that environment, when those have changed, General Mills has grown and grown share. It's not an accident.

Speaker Change: <unk> been doing really well.

Speaker Change: You know a lot of that business is through K through 12 schools and the USDA.

Speaker Change: Has nationwide nutrition standards, which they change every five years to 10 years or so.

Speaker Change: And coincidentally, there theyre going to change in the next school year at 25 or 26 and <unk>.

Speaker Change: In that environment, when those have changed general mills has grown and grown share and it's not an accident and because we're able to reformulate, our products frankly, better and more effectively than our competitors and that provide nutritional value as well as great taste and values and brands the brands of the kids love and that the school operators like them.

Jeff Harmening: It's because we're able to reformulate our products, frankly, better and more effectively than our competitors and provide nutritional value as well as great taste, values, and brands that the kids love and that the school operators like. So as a result, for example, our cereal share in schools is more than twice what it is in retail. So as we think about the regulatory environment and our ability to navigate it, just know that we have been navigating regulatory environments. Even though it's tough to predict what's going to come, I'm confident in our ability to navigate through these things. The last thing I think might be helpful as we think about what might come to pass is kind of what already is.

It's because we're able to reformulate our products, frankly, better and more effectively than our competitors and provide nutritional value as well as great taste, values, and brands that the kids love and that the school operators like. So as a result, for example, our cereal share in schools is more than twice what it is in retail. So as we think about the regulatory environment and our ability to navigate it, just know that we have been navigating regulatory environments. Even though it's tough to predict what's going to come, I'm confident in our ability to navigate through these things. The last thing I think might be helpful as we think about what might come to pass is kind of what already is.

Speaker Change: As a result for example, our cereal share in schools is more than twice what it is in retail.

Speaker Change: And so as we think about the regulatory environment and our ability to navigate it but just know that we have been navigating regulatory environments and even though it's tough to predict what's going to come.

Confidence in our ability to navigate through these things over the last thing I think it might be helpful. As we think about what might come to pass just kind of what already is and that is what's happening in California, where.

Jeff Harmening: That is what's happening in California, where there's legislation that's been passed about certified colors in food that goes into effect in 2027. With that, about 85% of our cereal portfolio is already compliant. The rest of it will be compliant by 2027. So as we think about the regulatory environment, I mean, obviously, we take it seriously. Food safety, we take very seriously. We're going to follow all the regulations, but know that I'm wildly confident in our ability to pivot because we have been able to do that historically.

That is what's happening in California, where there's legislation that's been passed about certified colors in food that goes into effect in 2027. With that, about 85% of our cereal portfolio is already compliant. The rest of it will be compliant by 2027. So as we think about the regulatory environment, I mean, obviously, we take it seriously. Food safety, we take very seriously. We're going to follow all the regulations, but know that I'm wildly confident in our ability to pivot because we have been able to do that historically.

Speaker Change: There is legislation had been passed about certified colors and food that goes into effect in 2027 and end with that about 85% of our cereal portfolio is already compliant and the rest of it will be compliant by by 2027, and so as we as we think about the regulatory environment I mean, obviously, we take it.

Speaker Change: Food safety, we take very seriously and we are going to follow all the regulations, but know that I'm I'm wildly confident in our ability to pivot because we have been able to do that historically.

Speaker Change: Okay.

Speaker Change: Yeah.

[Analyst] (Goldman Sachs): Great. Thank you.

Speaker Change: Great. Thank you.

Hum.

Speaker Change: Hum.

Operator: Laura from BNP Paribas, please go ahead. Your line is open.

Speaker Change: Alright from BNP Paribas. Please go ahead your line is open.

Jeff Harmening: Hey, thanks for the question. It's nice to see the progress in your own pet food results with the return to growth and the continued progress on market share. And I think this is suggestive of the success you're having with the action plans that you've laid out and improving your own competitiveness. But I'm curious for any updated thoughts you have on the broader pet food industry, particularly given pet population growth appears to be muted right now, maybe following some normalization post-COVID. And then more recently, there's been news in New York State regarding banning the retail sales of dogs and cats. But just curious for broader thoughts on the pet food industry beyond your own success on competitiveness. Thanks very much. No, I'll let you take that one.

Hey, Thanks for the question, it's nice to see the progress in your own pet food results with that return to growth and the continued progress in market share and I think this is suggestive of the success you are having with the action plans that you've laid out and improving your own competitiveness I'm curious for any updated.

Speaker Change: Thoughts you have on the broader food industry, particularly given pet population growth appears to be muted right now maybe maybe following some normalization post COVID-19 and then more recently, there's been news in New York State regarding spanning the retail sales of dogs and cats, but just curious sure.

Speaker Change: Broader thoughts on the pet food industry beyond your own success on competitiveness. Thank you very much.

Speaker Change: No I'll, let you take that one and the comment on all that New York State. So that's that's the stubborn, but I'll leave you to answer the rest of it.

Jeff Harmening: The comment on about New York State, that's a stumper, but I'll let you answer the rest of it.

The comment on about New York State, that's a stumper, but I'll let you answer the rest of it.

Jeff Siemon: Yeah, you got it. So I think what we're seeing in the categories that really turned to more pre-pandemic type of trends. You're seeing dollars come back to the category. You're seeing segments like treats that have been a bit more challenged to get a bit better over time as well. So I think we're getting back to more normal levels of growth in the category. Will we see a surge in adoption like we did at COVID? Likely not. But again, I don't think we need to see a lot of pet population growth over time. I think getting back to where we were pre-pandemic led to a healthy category and healthy dynamics. Encouragingly for us, we're actually seeing premium bounce back a bit as well more recently.

Speaker Change: You got it so I think what we're seeing in the categories that really turned more pre pandemic type of trends.

Speaker Change: Youre seeing dollars come back to the category, you're seeing segments like treats would have been a bit.

More challenged you get a bit better over time as well. So I think we are getting back to more normal levels of growth in the category.

Speaker Change: We see a surge in adoption like we did at cobalt likely now, but again I don't think we need to see a lot of pet population growth over time, I think getting back to where we were pre pandemic led to a healthy category with healthy dynamics. Unfortunately for us we're actually seeing premium bounce back you all more recently so it does feel like we're getting back to some of the trends we saw.

Jeff Siemon: So it does feel like we're getting back to some of the trends that we saw pre-pandemic with humanization and premiumization really leading the way. And we like where we sit. The Blue Buffalo brand is incredibly strong. I think you're aware we announced the acquisition of Whitebridge Pet Brands. We're excited about getting bigger at Cat Wet, which is the fastest-growing segment in the category. So we like the category a lot, and we like our position as we move forward.

So it does feel like we're getting back to some of the trends that we saw pre-pandemic with humanization and premiumization really leading the way. And we like where we sit. The Blue Buffalo brand is incredibly strong. I think you're aware we announced the acquisition of Whitebridge Pet Brands. We're excited about getting bigger at Cat Wet, which is the fastest-growing segment in the category. So we like the category a lot, and we like our position as we move forward.

Speaker Change: Fall pre pandemic with utilization the previous issue really leading the way and we like where we sit with the Blue Buffalo brand is incredibly strong and secure where we announced the acquisition acquisition of White Bridge.

We're excited about getting bigger in cat, one which is the fastest growing segment in the category. So we like the category a lot and we like our position.

Speaker Change: We look forward.

Jeff Harmening: Great. And then a follow-up on the US cereal business. So you called it out in the prepared remarks. So in the last couple of quad weeks, you've definitely seen some improvement in trends in terms of your sales growth and particularly your dollar share. It sounds like you would attribute it to consumer news, advertising, and merchandising execution. But just any more color on what you're seeing in cereal, how you'd frame the competitive environment, and what you think about your back-half expectations there. Thanks very much. I'll leave it there.

Great and then a follow up on the U S cereal business. So you called it out in the prepared remarks.

Speaker Change: Last couple of Quad weeks, you've definitely seen some improvement in trends in terms of your sales growth and particularly your your dollar share. It sounds like you would attribute it to consumer news advertising and merchandising execution, but just any more color on what youre seeing in cereal.

Speaker Change: The competitive environment and what you think about your back.

Speaker Change: Back half expectations, there, thanks, very much I'll leave it there.

Dana McNabb: Great. Thanks for the question. As you noted, we did see an improvement in our retail sales trends on both dollars and pounds. We grew pound share. We've really been focused on bringing excitement back to the category and reminding people about our big brands. Two big activations that worked very well for us in Q2 were the Kelce Brothers promotion. This is where the Kelce Brothers spontaneously mentioned on their podcast their favorite cereals were Reese's Puffs, Cinnamon Toast Crunch, Lucky Charms. So we launched a new campaign with them to bring awareness to those brands that worked really well to improve unit growth. We also launched a new Kelce Mix new product, and we got great in-store activation from both and four times the media impressions that we did this time last year. So we're really encouraged by how that worked.

Speaker Change: Great. Thanks for the question as you noted we did see an improvement in our retail sales trends on both dollars and pounds. We grew pound share and we've really been focused on bringing excitement back to the category and reminding people about our big brands and two big Activations that works very well for us in Q2, where the calcium brothers.

Speaker Change: Promotion this is where the calcium brothers spontaneously mentioned on their part her favorite cereals, where our reese's puffs cinnamon toast Crunch Lucky charms. So we launched a new campaign with them to bring awareness to the brand that worked really well to improving unit growth. We also launched a new calcium mix new product and we got great in store activation from Boa.

Speaker Change: And four times the media impressions that we did this time last year. So we're really encouraged by how it works and then this is the time of year, where we also have our checks party next promotion where checks I felt a lot of cereal to make party Max and we focused on the style, Jeff we had a peanuts comic strip promotion or free tend on the pack big surround campaign and that also drove.

Dana McNabb: And then this is the time of the year where we also have our Chex Party Mix promotion, where Chex sells a lot of cereal to make party mix. And we focused on nostalgia. We had a Peanuts Comic Strip promotion, a free tin on the pack, big surround campaign, and that also drove share. So what we're learning is that when we get on our front foot and do what we're good at, we see growth. As we look to the back half of the year, we intend to take the same principles forward. We're the leader of the category, so we have to behave like the leader. We will bring our new game day campaign. We have Cheerios Protein launching, Cheerios Heart Health News. So we will keep progressing with remarkability across the mix. And I think we will continue to see progress in our market share.

And then this is the time of the year where we also have our Chex Party Mix promotion, where Chex sells a lot of cereal to make party mix. And we focused on nostalgia. We had a Peanuts Comic Strip promotion, a free tin on the pack, big surround campaign, and that also drove share. So what we're learning is that when we get on our front foot and do what we're good at, we see growth. As we look to the back half of the year, we intend to take the same principles forward. We're the leader of the category, so we have to behave like the leader. We will bring our new game day campaign. We have Cheerios Protein launching, Cheerios Heart Health News. So we will keep progressing with remarkability across the mix. And I think we will continue to see progress in our market share.

Speaker Change: Sure. So what we're learning is that when we get on our front foot and do what we're good at we see growth as we look to the back half of the year, we intend to take the same principles forward or the leader of the category. So we have to behave like the leader we will bring our new game day campaign, we have cheerios protein law change here I was heart health news.

Speaker Change: So we will keep progressing with the marketability across the mix I think we will continue to see progress in our on market share.

Jeff Harmening: Great. Thanks very much.

[Analyst] (Goldman Sachs): Great. Thanks very much.

Speaker Change: Great. Thanks very much.

Operator: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

[Analyst] (Wells Fargo): Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Chris Carey from Wells Fargo. Please go ahead. Your line is open.

Speaker Change: Okay.

[Analyst] (Wells Fargo): Hi, good morning, everyone. I have kind of like an M&A quick question, then a bigger picture follow-up. I know the guidance does not include the yogurt divestiture nor Whitebridge. But how do you see the two of these? Or perhaps can you provide any color on how the two of these deals together may impact the dilution? Yogurt was seen, I think, low single-digit percentage dilutive. Whitebridge, fairly de minimis. But will you be using any of the proceeds from yogurt to fund Whitebridge? How do these two deals work together to inform implications for the model over the next 12 to 18 months? If you have any incremental color on that, I'd be curious and have a quick follow-up.

Speaker Change: Hi, good morning, everyone.

Speaker Change: I have a.

Speaker Change: Hello, again M&A quick question then.

Speaker Change: Bigger picture follow up.

Speaker Change: I know the guidance does not include.

Speaker Change: The yogurt divestiture, nor white bridge.

But how do you see that two of these.

Speaker Change: Or perhaps can you provide any color on how the two of these deals together and may impact the dilution.

Speaker Change: Okay.

Speaker Change: Yogurt was seen low single digit.

That is dilutive.

Speaker Change: White bridge fairly de Minimis, but is it will you be using any of the proceeds from yogurt.

Speaker Change: White bridge, how do these two deals.

Speaker Change: Work together to inform implications for the model over the next 12 to 18 months. If you have any incremental color on that that'd be curious and I have a quick follow up.

Jeff Harmening: No, I think all very fair. I think your read of the dilution impact on both those is in roughly the right range. What I would tell you is, obviously, Whitebridge just closed. So we are right on that today. I think we are still, and it's an important point, waiting closure of both legs of the yogurt divestiture. And so there aren't proceeds in hand. And my expectation, though, is that there will still be a substantial amount of proceeds going back into share repurchase activity. We are generally comfortable with the leverage range we're running in, which is in kind of a low 3x net debt to EBITDA area. So I think that's going to give us flexibility to both return cash to shareholders as well as accommodate the modest amount of financing necessary for Whitebridge.

Speaker Change: Nope I think all very fair I think I think your read of the dilution impact on both those.

Speaker Change: And roughly the right range, what I would tell you is obviously white bridge just closed.

So where we are.

Speaker Change: On on that today.

Speaker Change: We are still.

Speaker Change: And it's an important point.

Speaker Change: Waiting closure of both legs of the yogurt divestiture and so there arent.

Speaker Change: And then.

My expectation, though is that there will still be substantial amount of proceeds going back into share repurchase activity.

Jeff Siemon: We are we are Jeff with Gen.

Jeff Siemon: Generally comfortable with the leverage range, we're running in which isn't kind of a low three.

Jeff Siemon: Time's net debt to EBITDA area.

So I think that's going to give us flexibility to both return cash to shareholders as well as accommodate the modest amount of financing necessary for wide bridge.

Jeff Harmening: We'll obviously provide you guidance once we have started closing either in both legs of the divestitures, which will have a much more material impact, obviously, on dilution expectations.

We'll obviously provide you guidance once we have started closing either in both legs of the divestitures, which will have a much more material impact, obviously, on dilution expectations.

We'll obviously provide you guidance, which we have started.

Jeff Siemon: Started closing either in both legs of the divestitures, which will have a much more material impact obviously on.

Jeff Siemon: <unk> dilution expectations.

Jeff Siemon: I'll just add, this is Jeff. That Kofi was able to give you the first glimpse. So we did actually get news that we were closing Whitebridge this morning. So you'll see a release coming out later today on that news. So that's good news for that deal.

Speaker Change: I'll just add.

Speaker Change: This is Jeff.

Speaker Change: Koby.

Speaker Change: Was able to give you the first glimpse. So we did actually good news that we were closing why brands. This morning, So youll see a release coming out later today on that news. So that's that's good news for that deal.

[Analyst] (Wells Fargo): Okay. Okay, great. A bigger picture question. If we go back over the, I don't know, many, many months at this point of sustained normalization in the broader packaged food space, Jeff has been vocal about the various things that would need to happen to drive an uptick in promotional activity. If you think about, I don't know how far that commentary goes back at this point. And anyway, and here we are with the sector trends getting better, but clearly, based on today, not getting better fast enough. And I realize there are caveats with Pillsbury and some other dynamics. But what do you think is your, I guess, bigger picture assessment of just the slow pace of recovery here?

Speaker Change: Okay, Okay great.

Speaker Change: A bigger picture question.

Speaker Change: If we go back over the I don't know.

Speaker Change: Many many months at this point.

Jeff Siemon: Sustained normalization in the broader packaged food space, Jeff has been.

Jeff Siemon: Vocal about the various things that would need to happen to drive an uptick in promotional activity. If you think about.

Speaker Change: I don't know how far that commentary goes back at this point.

And anyway and here, we are with the sector.

Speaker Change: Trends getting getting better, but but clearly.

Speaker Change: Based on today, not not getting better or fast enough and I realize there are caveats.

Speaker Change: With Pillsbury and some other dynamics.

Speaker Change: But.

Speaker Change: What do you think is your I guess bigger picture assessment of.

Speaker Change: Just the slow pace of recovery here.

[Analyst] (Wells Fargo): I know GLP-1s and all these other things are mentioned, which sometimes feel less tangible, but is it simply as simple as the consumer seeking value, our private label operators becoming a lot more aggressive, and going after consumers? How does this all kind of fit together to where we are today, with clearly things taking longer? And if we can diagnose that, maybe there's a chance to build a bit more confidence over the next 12 months. I know it's not an overly specific question, but if that incites any thoughts, I'd be curious. Thanks so much.

I know GLP-1s and all these other things are mentioned, which sometimes feel less tangible, but is it simply as simple as the consumer seeking value, our private label operators becoming a lot more aggressive, and going after consumers? How does this all kind of fit together to where we are today, with clearly things taking longer? And if we can diagnose that, maybe there's a chance to build a bit more confidence over the next 12 months. I know it's not an overly specific question, but if that incites any thoughts, I'd be curious. Thanks so much.

Speaker Change: GOP wasn't all these other things I mentioned, which sometimes pass tangible but if you can say.

Speaker Change: Simply as simple as simple as the consumers seeking value our private label operators, becoming a lot more aggressive in going after consumers. How does this all kind of fit together.

Speaker Change: Where we are today with clearly things taking longer.

Speaker Change: If we can diagnose that maybe it is.

Speaker Change: The chance to build a bit more confidence over the next 12 months I noticed that are overly specific question, but if that insights any any thoughts I'd be curious thanks, so much.

Jeff Harmening: Yeah, let me take a step back and answer that a little bit. I'm just going to take over the last five years or so. What I would say is we're getting back to an environment that is more normal, that is normalizing, but not yet all the way back to normal. You see that in the promotional environment, where the levels of promotion, whether it's frequency of discounting or depth of discounting, is about back to where it was in 2019. I would say the same for our margin structure. So if you look at our margins, whether gross margins or operating margins, given the guidance that we just gave, they're at the same level, about maybe a little higher than they were in 2019. There are ups and downs, as there always are.

Speaker Change: Yeah, Let me, let me take a step back and answer that a little bit as we.

Speaker Change: If we look at over the last well I'm just going to take over the last five years or so.

Speaker Change: What I would say is we're getting back we're getting back to an environment that is more normal.

Speaker Change: That is normalizing, but not yet all the way back to normal.

Speaker Change: And you see that in the promotional environment, where the levels of promotion or whether it's frequency of discounting or depth of discounting is is about back to where it was in 2019.

Speaker Change: And I would say the same for our margin structure. So if you look at our margins, whether gross margins or operating margins.

Speaker Change: The guidance that we just gave there they're at the same level.

Speaker Change: Maybe a little higher than they were.

Speaker Change: In 2019, and there are ups and downs as there always are but if you look versus five years ago. The margin structure is about the same and our business is actually quite a bit larger.

Jeff Harmening: But if you look versus five years ago, the margin structure is about the same. And our business is actually quite a bit larger. So the question, where do we go from here? And the answer is, really, where we go from here is making sure we're responsive to consumer needs. And Dana talked a little bit about that through the Remarkable Experience Framework and striving consumer view through promotional activity or whether it's through new products, which are up 10%, or small campaigns, which you just highlighted in cereal or Jon highlighted in pet food, is back to what consumers are looking for. So I think the environment, we think the environment will continue to normalize. As you say, there is inflation. Our inflation, we said 3% to 4%. It's about 4%, so it's slightly higher than it was before.

But if you look versus five years ago, the margin structure is about the same. And our business is actually quite a bit larger. So the question, where do we go from here? And the answer is, really, where we go from here is making sure we're responsive to consumer needs. And Dana talked a little bit about that through the Remarkable Experience Framework and striving consumer view through promotional activity or whether it's through new products, which are up 10%, or small campaigns, which you just highlighted in cereal or Jon highlighted in pet food, is back to what consumers are looking for. So I think the environment, we think the environment will continue to normalize. As you say, there is inflation. Our inflation, we said 3% to 4%. It's about 4%, so it's slightly higher than it was before.

Speaker Change: And so the question where do we go from here.

Speaker Change: The answer is really where we go from here is making sure we're responsive to consumer needs and Dana I talked a little bit about that through the remark ability framework.

Speaker Change: That's driving consumer do through through promotional activity or whether it's through new products, which are up 10% or more.

Speaker Change: Campaigns, which you just highlighted in cereal or John highlighted in and pet food.

Speaker Change: As.

Speaker Change: Back to what consumers are looking for and so.

Speaker Change: I think the environment, but we think the environment will continue to normalize as you say there is no inflation or inflation, we said, 3% to 4% is about four so it was slightly higher than it was before and our productivity as we said four to five years now five so our productivity is actually slightly higher than it was and so.

Jeff Harmening: Our productivity is. We said 4 to 5 is now 5. So our productivity is actually slightly higher than it was. So I want you to know we feel good about our increasing level of competitiveness and what we've done in the middle of our P&L to give us the ability to maintain margins and to accelerate our growth at the same time. The tail of the tape really is about growth. At the end of the day, it's about dollar growth. Our pound growth is growing slightly faster than our market share growth at the moment. But one of the things we see is that tends to catch up over time if we're taking the right activities. And we feel great about the activities we're taking and the things we're doing to drive increased consumption. And by the way, it started in the second quarter.

Our productivity is. We said 4 to 5 is now 5. So our productivity is actually slightly higher than it was. So I want you to know we feel good about our increasing level of competitiveness and what we've done in the middle of our P&L to give us the ability to maintain margins and to accelerate our growth at the same time. The tail of the tape really is about growth. At the end of the day, it's about dollar growth. Our pound growth is growing slightly faster than our market share growth at the moment. But one of the things we see is that tends to catch up over time if we're taking the right activities. And we feel great about the activities we're taking and the things we're doing to drive increased consumption. And by the way, it started in the second quarter.

Speaker Change: We feel good about our increasing level of competitiveness and what we've done in the middle of our P&L to get its ability to maintain margins and.

Speaker Change: To accelerate our growth at the same time the tale of the tape really is about growth and the other day its about dollar growth or <unk>.

Speaker Change: <unk> growth is growing slightly faster than our market share growth at the moment, but one of the things. We see is that tends to take that tends to catch up over time, if we're taking the right activities and we feel great about the activities, we're taking and the things we're doing.

Speaker Change: To drive.

Speaker Change: To drive increased consumption by the way it started in the second quarter doesn't start in the back half of it actually started in the second quarter looking at our market share gains in the second quarter, 60% volume gains and 40% on dollar significant increase from where we were in Q1. So we don't have to wait until the back half for our competitiveness to improve it's already started.

Jeff Harmening: It doesn't start in the back half. It actually started in the second quarter. Look at our market share gains in the second quarter, 60% volume gains and 40% on dollar, significant increase from where we were in Q1. So we don't have to wait until the back half for our competitiveness to improve, but it's already started. And that's what gives us confidence in that metric. Yes, the investments are a little bit higher, so that is acknowledged. But it is investments, which is to say it's not just spending, it's investments. And with investments, you get a return. And the return for us is our market share results, which are broad. And we're very encouraged by that, even if the investment levels are slightly higher than what we anticipated at the beginning of the year.

It doesn't start in the back half. It actually started in the second quarter. Look at our market share gains in the second quarter, 60% volume gains and 40% on dollar, significant increase from where we were in Q1. So we don't have to wait until the back half for our competitiveness to improve, but it's already started. And that's what gives us confidence in that metric. Yes, the investments are a little bit higher, so that is acknowledged. But it is investments, which is to say it's not just spending, it's investments. And with investments, you get a return. And the return for us is our market share results, which are broad. And we're very encouraged by that, even if the investment levels are slightly higher than what we anticipated at the beginning of the year.

Speaker Change: And Thats, what gives us confidence in that metric, yes. The investments are a little bit higher. So that has that is acknowledged but but it is investments which is to say, there's not just spending as investments and with investments you get a return and the return for US is our market share results, which are broad.

Speaker Change: And we're very encouraged by that even after the investment levels are slightly higher than what we anticipated at the beginning of the year.

Speaker Change: Yeah.

[Analyst] (Wells Fargo): Thanks for entertaining that. Good luck.

Speaker Change: Thanks for entertaining that good luck.

Speaker Change: Mhm.

Operator: Our next question comes from Steve Powers from Deutsche Bank. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Steve Powers from Deutsche Bank. Please go ahead. Your line is open.

[Analyst] (Deutsche Bank): Yes. Hey, everybody. Good morning. Two quick ones for me. The first one, just focusing on North American retail. If we look at the consumption data this quarter, the yogurt business has actually been doing well in terms of accelerating growth. I think it's contributed about 50 basis points to growth in the consumption data. I'm just curious if that's consistent with the impact on reported results, just as we think about the underlying kind of run rate of the business with that business set for divestment. That's question number one. And then question number two is actually for Kofi. You mentioned the incentive comp reset in the back half. And as you said, that was contemplated from the start. But the language changed a little bit this quarter. And I think it said something like partial reset. I'm assuming because of the guidance change today.

Steve Powers: Yes, hey, everybody good morning.

Steve Powers: Two quick ones from me.

Steve Powers: The first one just focusing on north American retail if I, if we look at the consumption data this quarter.

Steve Powers: The yogurt business is actually been doing well.

Steve Powers: Well in terms of accelerating growth that's actually I think it's contributed about 50 basis points to the.

Speaker Change: Growth in the consumption data I'm just curious if that's consistent.

Speaker Change: Consistent with the impact on reported results just as we think about the underlying kind of run rate of the business with that with that.

That business set for divestment.

Speaker Change: Number one my question number two is actually for coffee you mentioned the incentive comp reset in the back half and as you said that that was contemplated from the start but the language changed a little bit this quarter I think it said something like partial partial reset.

Speaker Change: Reset I'm, assuming because of the the guidance change today, then the incentive comp Bill may not be 100%. So is there any is there any kind of quantification of that.

[Analyst] (Deutsche Bank): The incentive comp build may not be 100%. So is there any kind of quantification of that, the relative change versus prior? That'd be helpful. Thank you.

Speaker Change: The relative change versus prior that'd be helpful. Thank you.

[Analyst] (Wells Fargo): Okay. I'll let Dana start, and then I'll pick up the second part of the question.

Jeff Siemon: Okay. I'll let Dana start, and then I'll pick up the second part of the question.

Speaker Change: Okay, all right I'll, let Dana start and then I'll pick up the second part of the question. So as you've rightly pointed out the yogurt category is growing in Q2, it's up about 10% year to date, but its in categories that we don't compete in but we're seeing it in.

Dana McNabb: Right. So as you've rightly pointed out, the yogurt category is growing in Q2. It's up about 10% year to date. But it's in categories that we don't compete in. We're seeing it in the weight management line, in the Greek protein line, the premium lines. The lines that we compete in, we're actually losing share in. So when I look at what you're seeing in terms of broad-based performance for North America retail overall, they're in our big businesses like cereal improving, soup improving, fruit snacks improving, chicken improving. So that's how we look at the total portfolio and consider the divestiture to come.

Speaker Change: Weight management line and greet protein line the premium lines the lines that we compete in we're actually losing Sharon So when I look at what Youre seeing in terms of broad based performance for North America retail overall, they're in our big businesses like cereal, improving soup, improving fruit snacks, improving I can't improve.

Speaker Change: Moving so that's how we look at the total portfolio and consider the divestiture to come.

Jeff Harmening: Your second question on the impact of the incentive comp, the partial reset is exactly the right read on that, which is we would have expected going into the year that we reset this to 100%. With the guidance adjustment, we now expect that we'll pay out a little less than 100%, but above last year's rate. So that's what the two points of drag I referenced is.

Speaker Change: And on your second question on the impact of the incentive comp.

Speaker Change: The partial reset is exactly the right read on that which is where we would have expected going into the year that we reset this to 100% with the guidance adjustment.

Speaker Change: We now expect that we'll pay out a little less than 100%, but above last year's rate. So that's what the.

Speaker Change: Two points of drag I referenced it is.

[Analyst] (Deutsche Bank): Okay. Great. Thank you very much on both.

Speaker Change: Okay, great. Thank you very much for both.

Jeff Harmening: You bet.

Speaker Change: You bet.

Speaker Change: Yeah.

Operator: Our next question comes from Tom Palmer from Citi. Please go ahead. Your line is open.

Speaker Change: Our next question comes from Tom Palmer from Citi. Please go ahead. Your line is open.

Jeff Siemon: Good morning. Thanks for the question. In past quarters, you've highlighted that your categories are growing 1% to 2%. I think share losses was really the focus that needed to be mitigated. You gave some helpful commentary on the share loss side. I wondered what you're seeing for aggregate category growth. Is that folding into the extent that you anticipated? Are there things you can do, especially in categories where you're a quite large share, to kind of stimulate the category as a whole?

[Analyst] (Citi): Good morning. Thanks for the question. In past quarters, you've highlighted that your categories are growing 1% to 2%. I think share losses was really the focus that needed to be mitigated. You gave some helpful commentary on the share loss side. I wondered what you're seeing for aggregate category growth. Is that folding into the extent that you anticipated? Are there things you can do, especially in categories where you're a quite large share, to kind of stimulate the category as a whole?

Tom Palmer: Hi, good morning, Thanks for the question.

Tom Palmer: In past quarters, you've highlighted that your categories are growing 1% to 2%.

Speaker Change: And I think share losses was really the focus that needs to be mitigated you gave some helpful commentary on the share loss side.

Speaker Change: But I wonder what youre seeing for aggregate category growth is that holding into the extent that you anticipated are there things you can do especially in categories, where you are.

Speaker Change: I'm quite large share to kind of stimulate the category as a whole.

Dana McNabb: Yeah. From a North America retail perspective, great question. What I would say is that the commentary we've provided is still consistent. We are seeing our categories normalize to pre-pandemic levels. They're still in that 1% growth range. And so the onus is on us to improve our competitiveness and make sure that we're bringing a total product offering that is more remarkable than the competition across our product packaging, in-store execution, and communication.

Speaker Change: Yes from a north American retail perspective, great question, what I would say is that the commentary. We've provided is still consistent we're seeing our categories normalize to pre pandemic levels. They are still in that 1% growth range and so the onus is on us to improve our competitiveness and make sure that we're bringing.

Speaker Change: A total product offering that is more remarkable than the competition across our product packaging.

In store execution and communication.

[Analyst] (Wells Fargo): Jon, you want to comment on pet? Maybe food service and international a little bit?

[Analyst] (Citi): Jon, you want to comment on pet? Maybe food service and international a little bit?

Speaker Change: And John you want to comment on pet, maybe maybe foodservice and international a little bit.

Jeff Siemon: Yeah. So on pet, as I mentioned earlier, we're seeing the category improve and start looking a lot more like it did pre-pandemic in terms of humanization and premiumization growing and the category getting back to growth overall, which is terrific. Foodservice, obviously, it's a huge world. We play in a pretty small part of it. And we're seeing a lot of growth, really, in non-restaurant types of outlets, things like schools, as well as away from home and airports, things like that. So that's growing nicely for us. We're growing a lot of share. And as Jeff mentioned, we've got quite a large share position in schools and like how that's trending. We also have a big frozen breads business. And we've got a couple of key retailers that are driving a lot of growth for us with double-digit growth.

Speaker Change: Yes, so on <unk> as I mentioned earlier, we're seeing the category improve and start looking a lot more like it did pre pandemic in terms of people.

Speaker Change: A few months of <unk> growing in the category getting back to growth overall, which is terrific.

Speaker Change: Obviously, it's a huge role we play in a pretty small part of it.

Speaker Change: We really like the place that we play in we're seeing a lot of growth really in.

Speaker Change: Non restaurant types of outlets screams like schools as well as away.

Speaker Change: Away from home and airports and things like that so that's growing nicely for us were growing a lot of share and as Jeff mentioned, we've got a quite a large share position in schools.

Speaker Change: All that stuff, that's trying to wrestle with big frozen breads and there's also we've got a couple of key retailers that are driving a lot of growth for us with double digits.

Jeff Siemon: The area that we play in the food service is probably different than what most folks are seeing in terms of trends. It's quite advantaged. We like our share positions there. International, obviously, a big world. We have parts of the world that we really like what we're seeing. In Europe, our team continues to deliver. The categories are starting to get back to pre-pandemic levels, similar to the US. We're growing share. Gems is our distributor markets. It's our fastest growing and most profitable part of our international business. That team's doing a great job driving mid-single-digit top-line growth and growing share in most of our markets as well.

Speaker Change: Growth so the area that we play in the foodservice is probably different than what most folks are seeing in terms of trends, it's quite advantaged, we like our share positions there.

The area that we play in the food service is probably different than what most folks are seeing in terms of trends. It's quite advantaged. We like our share positions there. International, obviously, a big world. We have parts of the world that we really like what we're seeing. In Europe, our team continues to deliver. The categories are starting to get back to pre-pandemic levels, similar to the US. We're growing share. Gems is our distributor markets. It's our fastest growing and most profitable part of our international business. That team's doing a great job driving mid-single-digit top-line growth and growing share in most of our markets as well.

Speaker Change: International obviously, a big World and we have parts of the world that we really like what we're seeing in Europe. Our team continues.

Speaker Change: Deliver the categories are starting to get back to pre pandemic levels similar to the U S and we're growing share.

Speaker Change: James as our distributor markets as our fastest growing and most profitable part of our international business and that team is doing a great job driving mid single digit top line growth and grow share in most of our markets as well so again a bit of a mixed picture around the world. The channel we like the way we're performing ex some of the headwinds that we're seeing in China from Hagen Dazs shops standpoint.

Jeff Siemon: So again, a bit of a mixed picture around the world, but generally, we like the way we're performing against some of the headwinds that we're seeing in China from a Häagen-Dazs shop standpoint.

So again, a bit of a mixed picture around the world, but generally, we like the way we're performing against some of the headwinds that we're seeing in China from a Häagen-Dazs shop standpoint.

Jeff Harmening: All right. Thanks for all that color. Also wanted to ask on expected margin trajectory for the pet segment. I know there were some timing benefits called out in North America Retail. It sounded like the inventory benefits that you had this year were less so about this year having an unusual sales level and more prior years being maybe artificially low with inventory cuts. So I guess with that, if I look at kind of the margin base that we've seen the past couple of quarters has been more favorable year on year, is that something that can continue as we move through the back half of the year? Or are there timing or investment considerations for pet in addition in North America?

[Analyst] (Citi): All right. Thanks for all that color. Also wanted to ask on expected margin trajectory for the pet segment. I know there were some timing benefits called out in North America Retail. It sounded like the inventory benefits that you had this year were less so about this year having an unusual sales level and more prior years being maybe artificially low with inventory cuts. So I guess with that, if I look at kind of the margin base that we've seen the past couple of quarters has been more favorable year on year, is that something that can continue as we move through the back half of the year? Or are there timing or investment considerations for pet in addition in North America?

Speaker Change: Alright, thanks for all that color.

Speaker Change: Also wanted to ask on expected margin trajectory for the pet segment.

Speaker Change: I know there were some timing benefit you called out in North America retail it sounded like the inventory benefit that you had this year were less so about this year, having an unusual sales level and more prior year's being maybe artificially low with inventory cuts. So.

Speaker Change: I guess with that if I look at kind of the margin base that we've seen in the past couple of quarters has been more favorable year on year is that something that can continue as we move through the back half would be here are there timing or invested considerations for pet. In addition in North America.

Jeff Siemon: Maybe I'll take that one as well. So I think two things are happening in pet, and both of them are really positive. And the team's doing a great job on the margin side. One, if you think about Blue Buffalo, it's only been a part of General Mills for six years. And we're starting to fully integrate all of our tools. And we're seeing outsized as a result of that. So again, the team's doing a really nice job taking our know-how and experience around and putting it to practice in Blue. And we're starting to see the full effects of that. I think that will continue as we move towards the back half. The thing that won't is that we've internalized quite a bit of volume over the last year. And we started doing that in the back half of last year. So we started lapping that.

Speaker Change: And maybe I'll take that one as well so I think two things are happening in patent both of them are really positive for the teams.

Great job on the margin side one.

Speaker Change: You think about Blue Buffalo, it's only been a part of general Mills for six years, we're starting to fully integrate all of our integrate Oliver HTML tools.

Speaker Change: Seeing outsized H M. As a result of that so again the team has done a really nice job ticket.

Speaker Change: Knowhow and experience from each mountain accrete to practice and have Blue shield.

Speaker Change: The effects of that I think that will continue as we move towards the back half.

Walmart is that we try and internalize quite a bit of volume over the last year and we started doing that in the back half of last year. So we start lapping that so I do believe that we'll continue to make good margin progress over time I don't think you should expect to see the kind of margin case, we've made more recently, but again, we're doing all the right things to keep tracking our margins as we go forward.

Jeff Siemon: So I do believe that we'll continue to make good margin progress over time. I don't think you should expect to see the kind of margin gains that we've made more recently. But again, we're doing all the right things to keep driving our margins as we move forward.

So I do believe that we'll continue to make good margin progress over time. I don't think you should expect to see the kind of margin gains that we've made more recently. But again, we're doing all the right things to keep driving our margins as we move forward.

Jeff Harmening: All right. Thank you.

Alright, thank you.

Jeff Siemon: Okay. Unfortunately, we're going to have to cut it off there. I know we didn't get to nearly as many people as we normally would like. I think our conversations probably went more in depth per question. So sorry for everyone still in the queue. Obviously, we'll follow up later today to make sure that we get everyone's questions answered. Thank you so much for the good engagement and for the time this morning. Happy holidays to everyone. We'll see you again in the new year.

Speaker Change: Okay. Unfortunately.

Speaker Change: We're going to have to cut it off there I know, we didn't get to nearly as many people as we normally would like I think our conversations probably wet winter.

Speaker Change: Per your question, so sorry for everyone's still in the queue. Obviously will follow up later today to make sure that we get everyone's questions answered.

Speaker Change: Thank you so much for the good engagements and for the time. This morning happy holidays to everyone that we will see you again in the new year.

Speaker Change: Yeah.

Operator: This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This will conclude today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Yeah.

Speaker Change:

Speaker Change: Yeah.

Q2 2025 General Mills Inc Earnings Call

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