Other Income Statement Items
Unallocated corporate items totaled $56 million net expense in the first quarter of fiscal 2022, compared to $74 million net expense a year ago. Excluding mark-to-market valuation effects and other items affecting comparability, unallocated corporate items totaled $77 million net expense this year compared to $96 million net expense last year.
Restructuring, impairment, and other exit costs totaled a $4 million net recovery in the quarter and were an insignificant amount a year ago (please see Note 3 below for more information on these charges).
Net interest expense totaled $96 million in the first quarter compared to $111 million a year ago, primarily driven by lower rates and lower average debt balances. The effective tax rate in the quarter was 21.7 percent compared to 22.0 percent last year (please see Note 6 below for more information on our effective tax rate). The adjusted effective tax rate was 21.7 percent compared to 21.9 percent a year ago.
Cash Flow Generation and Cash Returns
Cash provided by operating activities totaled $370 million in the first quarter of fiscal 2022 compared to $584 million in the prior year, primarily driven by timing-related changes in accounts payable and accounts receivable. Capital investments totaled $104 million compared to $117 million a year ago. Dividends paid increased to $312 million. General Mills repurchased approximately 2.5 million shares of common stock in the first quarter for a total of $150 million. Average diluted shares outstanding decreased 1 percent to 615 million.
Fiscal 2022 Outlook
General Mills reaffirmed its key full-year fiscal 2022 targets:
| | • | | Organic net sales are expected to be toward the higher end of the company’s initial guidance range of down 1 to 3 percent, reflecting stronger-than-expected net sales performance in the first quarter. |
| | • | | Constant-currency adjusted operating profit and constant-currency adjusted diluted EPS are each expected to be toward the higher end of the company’s initial guidance ranges of down 2 to 4 percent and flat to down 2 percent, respectively, largely due to the impact of the pet treats acquisition, which is estimated to add approximately 2 cents to fiscal 2022 adjusted diluted EPS. |
| | • | | Free cash flow conversion is expected to be approximately 95 percent of adjusted after-tax earnings. |
| | • | | The above targets exclude the impact of the European Yoplait divestiture, which is scheduled to close by the end of the calendar year. |
General Mills will issue pre-recorded management remarks today, September 22, 2021, at approximately 6:30 a.m. Central time (7:30 a.m. Eastern time) and will hold a live, webcasted question and answer session beginning at 8:00 a.m. Central time (9:00 a.m. Eastern time). The pre-recorded remarks and the webcast will be made available at www.generalmills.com/investors.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations and assumptions. These forward-looking statements, including the statements under the caption “Fiscal 2022 Outlook,” and statements made by Mr. Harmening, are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. In particular, our predictions about future net sales and earnings could be affected by a variety of factors, including: the impact of the coronavirus (COVID-19) pandemic on our business, suppliers, consumers, customers, and employees; disruptions or inefficiencies in the supply chain, including any impact of the coronavirus (COVID-19) pandemic; competitive dynamics in the consumer foods industry and the markets for our products, including new product introductions, advertising activities, pricing actions, and promotional activities of our competitors; economic conditions, including changes in inflation rates, interest rates, tax rates, or the availability of capital; product development and innovation; consumer acceptance of new products and product improvements; consumer reaction to pricing actions and changes in promotion levels; acquisitions or dispositions of businesses or assets; changes in capital structure; changes in the legal and regulatory environment, including tax legislation, labeling and advertising regulations, and litigation; impairments in the carrying value of goodwill, other intangible assets, or other long-lived assets, or changes in the useful lives of other intangible assets; changes in accounting standards and the impact of significant accounting estimates; product quality and safety issues, including recalls and product liability; changes in consumer demand for our products; effectiveness of advertising, marketing, and promotional programs; changes in consumer behavior, trends, and preferences, including weight loss trends; consumer perception of health-related issues, including obesity; consolidation in the retail environment; changes in purchasing and inventory levels of significant customers; fluctuations in the cost and availability of supply chain resources, including raw materials, packaging, energy, and transportation; effectiveness of restructuring and cost saving initiatives; volatility in the market value of derivatives used to manage price risk for certain commodities; benefit plan expenses due to changes in plan asset values and discount rates used to determine plan liabilities; failure or breach of our information technology systems; foreign economic conditions, including currency rate fluctuations; and political unrest in foreign markets and economic uncertainty due to terrorism or war. The company undertakes no obligation to publicly revise any forward-looking statement to reflect any future events or circumstances.
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