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General Mills (GIS) Q3 Earnings Top Estimates, Sales Down Y/Y
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General Mills, Inc. (GIS - Free Report) posted third-quarter fiscal 2024 results, with the bottom line surpassing the Zacks Consensus Estimate and increasing year over year. The top line surpassed the consensus mark but declined from the year-ago quarter’s level. Management reaffirmed its fiscal 2024 guidance.
Quarterly Highlights
General Mills posted adjusted earnings of $1.17 per share, surpassing the Zacks Consensus Estimate of $1.04. The bottom line rose 22% year over year on a constant-currency (cc) basis. The upside can be attributed to increased adjusted operating profit, reduced net shares outstanding and reduced taxes. These were somewhat offset by increased net interest expenses.
GIS reported net sales of $5,099.2 million, surpassing the Zacks Consensus Estimate of $4,954.3 million. However, the top line inched down 1% from the year-ago quarter’s figure due to reduced pound volume. This was somewhat offset by positive net price realization and mix. Organic net sales also dropped 1%.
The adjusted gross margin expanded 20 basis points (bps) to 34%. The upside can be attributed to Holistic Margin Management (HMM) cost savings and positive net price realization and mix. These were somewhat offset by input cost inflation, increased other supply chain costs and supply chain deleverage. Our estimate for the adjusted gross margin was pegged at 34.1%, up 30 bps in the reported quarter.
General Mills, Inc. Price, Consensus and EPS Surprise
Adjusted operating profit came in at $914 million, up 14% at cc on the back of reduced compensation and benefit expenses. Adjusted operating profit margin expanded 220 bps to 17.9%. Our estimate for the adjusted operating profit margin was pegged at 16.8%, up 110 bps in the reported quarter.
Segmental Performance
North America Retail: Revenues in the segment came in at $3,242.1 million, unchanged year over year. Positive net price realization and the mix were offset by reduced pound volume. Organic net sales also remained unchanged year over year. The segment’s operating profit declined by 4% to $752.2 million.
International: Revenues in the segment came in at $680.1 million, down 3% year over year, thanks to lower pound volume. Organic net sales also fell 3% due to softness across China and Brazil. The segment’s operating profit slumped 57% to $18.2 million.
Pet: Revenues came in at $624.5 million, down 3% year over year. Revenues were hurt by reduced pound volume. A positive net price realization and mix offered respite. Segmental organic sales also declined 3%. The segment’s operating profit came in at $128.3 million, up 25% on a year-over-year basis.
North America Foodservice: Revenues came in at $551.7 million, up 1% year over year. Also, organic net sales improved 1% from the year-ago quarter’s level. The segment’s operating profit inched down 1% to $81.7 million due to increased other supply chain costs and SG&A expenses.
Image Source: Zacks Investment Research
Other Financial Aspects
General Mills ended the quarter with cash and cash equivalents of $588.6 million, long-term debt of $11,015.1 million and total shareholders’ equity of $9,691.3 million.
GIS generated $2,438.9 million in cash from operating activities in the nine months ended Feb 25, 2024. Capital investments amounted to $486 million during the same period.
The company paid out dividends worth $1 billion and bought nearly 23.5 million shares for $1.6 billion in the nine-month period.
Other Developments
Constant-currency sales from the joint ventures of Cereal Partners Worldwide increased 11%. In Haagen-Dazs Japan, sales went down 2% year over year at cc from the prior year’s figure.
Fiscal 2024 Guidance
General Mills expects that the biggest factors impacting its performance in the fiscal 2024 are likely to be consumers’ economic status, the moderating rate of cost inflation and the rising stability of supply-chain status.
For the fiscal 2024, organic net sales are anticipated to be down 1% to flat year over year. The adjusted operating profit growth at cc is anticipated at 4-5%. Management anticipates adjusted earnings per share (EPS) growth of 4% and 5% at cc. The company envisions a free cash flow conversion of at least 95% of adjusted after-tax earnings.
The Zacks Rank #3 (Hold) company’s shares have increased 6.9% in the past three months compared with the industry’s 5% rise.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 20.2% and 28.8%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 5.5% on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.
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General Mills (GIS) Q3 Earnings Top Estimates, Sales Down Y/Y
General Mills, Inc. (GIS - Free Report) posted third-quarter fiscal 2024 results, with the bottom line surpassing the Zacks Consensus Estimate and increasing year over year. The top line surpassed the consensus mark but declined from the year-ago quarter’s level. Management reaffirmed its fiscal 2024 guidance.
Quarterly Highlights
General Mills posted adjusted earnings of $1.17 per share, surpassing the Zacks Consensus Estimate of $1.04. The bottom line rose 22% year over year on a constant-currency (cc) basis. The upside can be attributed to increased adjusted operating profit, reduced net shares outstanding and reduced taxes. These were somewhat offset by increased net interest expenses.
GIS reported net sales of $5,099.2 million, surpassing the Zacks Consensus Estimate of $4,954.3 million. However, the top line inched down 1% from the year-ago quarter’s figure due to reduced pound volume. This was somewhat offset by positive net price realization and mix. Organic net sales also dropped 1%.
The adjusted gross margin expanded 20 basis points (bps) to 34%. The upside can be attributed to Holistic Margin Management (HMM) cost savings and positive net price realization and mix. These were somewhat offset by input cost inflation, increased other supply chain costs and supply chain deleverage. Our estimate for the adjusted gross margin was pegged at 34.1%, up 30 bps in the reported quarter.
General Mills, Inc. Price, Consensus and EPS Surprise
General Mills, Inc. price-consensus-eps-surprise-chart | General Mills, Inc. Quote
Adjusted operating profit came in at $914 million, up 14% at cc on the back of reduced compensation and benefit expenses. Adjusted operating profit margin expanded 220 bps to 17.9%. Our estimate for the adjusted operating profit margin was pegged at 16.8%, up 110 bps in the reported quarter.
Segmental Performance
North America Retail: Revenues in the segment came in at $3,242.1 million, unchanged year over year. Positive net price realization and the mix were offset by reduced pound volume. Organic net sales also remained unchanged year over year. The segment’s operating profit declined by 4% to $752.2 million.
International: Revenues in the segment came in at $680.1 million, down 3% year over year, thanks to lower pound volume. Organic net sales also fell 3% due to softness across China and Brazil. The segment’s operating profit slumped 57% to $18.2 million.
Pet: Revenues came in at $624.5 million, down 3% year over year. Revenues were hurt by reduced pound volume. A positive net price realization and mix offered respite. Segmental organic sales also declined 3%. The segment’s operating profit came in at $128.3 million, up 25% on a year-over-year basis.
North America Foodservice: Revenues came in at $551.7 million, up 1% year over year. Also, organic net sales improved 1% from the year-ago quarter’s level. The segment’s operating profit inched down 1% to $81.7 million due to increased other supply chain costs and SG&A expenses.
Image Source: Zacks Investment Research
Other Financial Aspects
General Mills ended the quarter with cash and cash equivalents of $588.6 million, long-term debt of $11,015.1 million and total shareholders’ equity of $9,691.3 million.
GIS generated $2,438.9 million in cash from operating activities in the nine months ended Feb 25, 2024. Capital investments amounted to $486 million during the same period.
The company paid out dividends worth $1 billion and bought nearly 23.5 million shares for $1.6 billion in the nine-month period.
Other Developments
Constant-currency sales from the joint ventures of Cereal Partners Worldwide increased 11%. In Haagen-Dazs Japan, sales went down 2% year over year at cc from the prior year’s figure.
Fiscal 2024 Guidance
General Mills expects that the biggest factors impacting its performance in the fiscal 2024 are likely to be consumers’ economic status, the moderating rate of cost inflation and the rising stability of supply-chain status.
For the fiscal 2024, organic net sales are anticipated to be down 1% to flat year over year. The adjusted operating profit growth at cc is anticipated at 4-5%. Management anticipates adjusted earnings per share (EPS) growth of 4% and 5% at cc. The company envisions a free cash flow conversion of at least 95% of adjusted after-tax earnings.
The Zacks Rank #3 (Hold) company’s shares have increased 6.9% in the past three months compared with the industry’s 5% rise.
Better-Ranked Staple Stocks
The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 20.2% and 28.8%, respectively, from the year-ago reported numbers.
Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 5.5% on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.