General Mills, Inc.

Greetings and welcome to the General Mills fiscal 2021 Q4 earnings call. During the presentation, all participants will be in the listen only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded on Wednesday, June 30th, 2021. I will now like to turn the conference over to the VP of Investor Relations, Mr. Jeff Seaman. Please go ahead. Thank you, Frank, and good morning. Thanks, everyone, for joining us today for our Q&A session on fourth quarter results. I hope you had time to review our press release, listen to our prepared remarks, and view our presentation materials, which were 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, including facts and assumptions related to the potential impact of the COVID-19 pandemic on our results in fiscal 22. Please refer to this morning's press release for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which may be discussed on today's call. I'm here this morning with Jeff Harmoning, our chairman and CEO, Kofi Bruce, our CFO, and John Newdy, group president of our North America retail segment. Let's go ahead and get to the first question. Frank, can you get us started, please? Thank you. If you would like to register a question, please press the 1-4 on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the 1 followed by the 3. One moment, please, for the first question. Our first question comes from Ken Goldman with JP Morgan. Please proceed. Hey, good morning. Thank you. Two for me. The first is, can you give us a sense of what to expect for the cadence of the cost inflation this year? And then the second one is the street, I think, is looking for maybe about 40 basis points in your gross margin in terms of the decline year on year in fiscal 22. I know you're not guiding to this, but given what you've said about inflation, HMM and pricing and nearly net pricing, Is it kind of reasonable to expect something in this range, or is that far off from what you're looking for? Thank you. Hey, Ken. This is Kofi. Thanks for the question. So as we look at the year, I think it's important for us to just get some perspective, and I'll address it maybe through the lines of the flow of margin. We would expect our back half to deliver significantly. higher margins than the front half, particular pressure on Q1, where we would see the combination, obviously, of inflation and pricing that starts later in the quarter, the benefits of pricing flowing through later in the quarter. So as for the flow of those, that guidance on margins would reflect roughly, you know, relatively balanced flow on our expectations for the full year for inflation. And then obviously with the pricing really kicking in as we step into Q2. All right, thank you. And then just the second question, is that 40 basis points for the year that the street is looking for? Is that far out of line with what you're thinking, Kofi? Well, we're not going to give guidance at gross margin, but obviously our guidance on operating profit and sales would indicate something in the range of a modest decline in operating profit margin. Okay. Thanks so much. You bet. Our next question comes from Andrew Lazar with Barclays PCC.

Thanks for the question. Good morning, everybody. Good morning, Andrew. Jeff, I know you use the words dynamic and uncertain a bunch of times in your prepared remarks. And even though the consumer side of things may be getting maybe a little bit more visible, obviously the cost and comparison side of the equation are still pretty challenging. So I guess my question is, how much flexibility do you think you've left yourselves in the FY22 guidance in light of the industry challenges, also knowing how the timing of pricing and other actions tends to work to offset costs?

Yeah, Andrew, I think your observation is a good one. We use dynamic and we use uncertain. I'd also say volatile, so we can throw that one in too. And it is, from a demand perspective, it still is volatile. And even if mentally many consumers are getting beyond COVID, the demand environment is volatile, not only with respect to at-home versus away-from-home conditions, but also, you know, what is the impact of pricing going to be and what does that mean for elasticity? So I would say the demand environment is still volatile, and as is the cost environment. And so whether that's input costs on manufacturing or whether that's transportation or whether those are commodities, you know, it is a pretty volatile environment. You know, what I'm proud of is, you know, over the past year, you know, we've been able to navigate that well and do what we said we were going to do. In fact, you know, each of the last three years, we've done what we said we were going to do. And now we still have to face this year. But I feel good about our guidance. I don't think it's so conservative, and I don't think we're out over our skis. We're trying to tell you here's what we think we will do. And is it easy in this kind of environment? No. But I feel good about our capabilities and how we're executing right now, and we're very clear on our path forward. So all of those things give me confidence that we can do what we said we're going to do. But it's a tricky environment. I think that it will be.

Thanks for that. And then there was a survey done recently that we read about one of the large CPG brokers, and it showed how, I guess, manufacturers were more optimistic about sort of sales trends in the back half of this calendar year compared to retailer expectations. And I didn't know if you've encountered sort of this divide in expectations in your discussions with your key customers, and if you have, maybe why you think this gap exists with respect to the differential, again, in expectations around maybe sales and or stickiness between manufacturers and retailers. Thank you.

Yeah, Andrew, you know, and I want this to come off in the right way, but you know what I said just a second ago that it's volatile? I think this is exhibit A when you have a group of one group thinking one thing, another another, just shows that there is a level of uncertainty and volatility. That would be the first point. The second is that, you know, if you look at our guidance for the year, you know, we said we'd be down modestly on sales, minus 1% to minus 3%. And I can tell you that we're lockstep with our retail customers, and we have good partnerships with them, and we're pretty well aligned with what they think. But I can understand why there are differences because it is a volatile environment by category as well as geography. So we're very well aligned with our customers, not only on the demand environment, but also the cost environment. They see the same cost pressures we do. And, you know, we've instituted pricing in the vast majority of our categories and markets throughout the world. And while no one wants to increase prices, you know, we've had to do that because the cost environment is what it is. And we have found them to be understanding because they're in the same kind of boat that we are. Okay. Thanks so much. Thank you.

Our next question comes from Robert Moscow with Credit Suisse. Please proceed. Hey, thanks. I was thinking about the terms that you're using, Jeff, to describe the environment as volatile. But I want to get a little tighter on it because I would say that the cost environment is very volatile and maybe the pricing as well. But your opening comments would indicate that demand has been – fortuitously strong. It has stayed strong. So are you saying demand is volatile too, or are you just saying it's uncertain? Because I would describe it as uncertain because you just don't know how people will react in the fall when maybe they go back to school and go back to offices.

Yeah, Rob, I appreciate the distinction. I would say that what we have seen in the recent past is not very volatile. In fact, it's been pretty steady. And honestly, it's kind of playing out as we thought it would, which is our business was down in the last quarter versus where it was last year during the stock up. It was actually quite a bit higher than it was pre-pandemic as our shares and We've been talking for quite some time that although in some corners people thought the man would kind of fall off a cliff when people started going back to the office and kind of returning to normal pre-pandemic, we said we think actually some of these behaviors will be sticky, and that's what we have seen. So it hasn't been volatile in the recent past. The question, you know, what's going to happen for the remainder of the year as pricing kicks in, as kids go back to school, as we hit the fall? I think it will be a volatile environment. We're calling it the best we can given our assumptions. But you are correct. It hasn't been volatile in the recent past, but as we look ahead three months and six months, I think that will be what we're going to be dealing with. Okay. And I would note during the – Yeah, and I would note during that period, Rob, we still expect at-home food consumption to be above pre-pandemic levels, even if it's below, slightly below a year ago. Right.

Okay. And this question might be more in the weeds, but the strategy in GROW, I guess, division or organization that you're creating internally, is that just combining some corporate functions together, like corporate insights and M&A together, or Or are you expanding the role and taking some of the responsibilities of the business units, like revenue growth management maybe, and pulling it into this division? How big of a change is this division you've developed?

Yeah, I would say it's a decent-sized change, but what we're not doing is taking operating responsibility out of the businesses. In fact, what we're doing is pushing operating responsibility for the near term and more closely aligned to the businesses, which is really important. We are doing that. In terms of the strategy area itself, we are centralizing some of the capabilities because you don't want to do modeling, for example, in many different places. You want to be able to do that in one central location, but then it's up to the businesses themselves to use that modeling and then to decide what's best for their businesses. So you want some centralized capabilities so you can develop scale and expertise, but then you want the use of those models to be in the businesses who are responsible for the P&L. So we're doing that. The other thing we're doing, I would say, is that similar to what we've done with strategic revenue management over time, where, you know, at one point in time, many years ago, it was, you know, something we did periodically was think about pricing and we turned it into an always-on kind of function. The same would be true of our strategy function. We're kind of beefing up our strategy function as well as M&A as we look to the future and certainly what we need to do to hit our sustainable top-line growth targets is is we need to keep competing effectively, but we also need to do more portfolio shaping. And so in that sense, we have an always-on strategy group that is maybe different than what we have done in the recent past. Okay. All right.

Thank you.

Thanks.

Our next question comes from Laurent Grandet with Guggenheim. Please proceed. Yes. Good morning, everyone. And maybe if I can come back on one of those questions. So when you say at-home consumption would be more elevated than post-pandemic, I mean, I think that's probably what the assumption for everyone. Now, by how much, it's really a question. So could you maybe help us understand your thinking process, maybe by category, how you see, I mean, those more elevated assumptions post-pandemic and what is triggering these in your view?

You know, Laurent, I think, you know, for this call, it's probably not helpful for us to go category by category, but I think if I can give you, you know, what's underlying the assumption as to why we think this is going to happen. In our human food business, and I'm a separate pet, but in our human food business, what I would say is that there are a couple of factors underlying our belief. that will continue to see demand that's above pre-pandemic levels. The first is that more people are going to work from home more often than going to the office every day. And we're fairly certain that that is here to stay. So there will be a new normal and where people work. The second is that consumers, many millennials, have really gained cooking skills and baking skills and newfound confidence in the kitchen, and they can find that they can save money by doing it. And so while we're not saying people won't want to still go out to eat, we believe that there's a younger generation that maybe not have done this before. Our penetration data would show this, especially in the U.S., that we have a whole new group of consumers that have elevated demand. The third would be that, you know, our e-commerce business, you know, has grown rapidly over time. In fact, it's now 11% of our sales up from five 18 months ago. And while the continued growth may not be linear over the next period of time, many people have found shopping at grocery stores become much easier than it was before. And anytime you add convenience to someone's lives, it tends to stick. So for all of those reasons in our food business, We believe even as people go out to restaurants more, even as kids start to go back to school, there will be some of the demand that is sticky for food at home. The other thing I would say for pet is a little bit more straightforward, and frankly, there are more pets than there were before. And that is certainly true here in the U.S. It's true in other parts of the world as well, but particularly in the U.S. And 85% of those new pets are in homes that already contain one pet. And so these are people who are used to having pets. And so the amount of pet food that's going to be consumed over the next few years, we think is going to be elevated. In addition to the fact that the fastest growing part of pet continues to be the natural segment, which is where Blue Buffalo competes. we would anticipate that the category itself will be above what it has been the last couple of years and that natural will remain ahead of the category in terms of growth.

Thanks. And if I may, I've got a second question. It's about plant-based dairy. We have seen recently an increase in interest in plant-based dairy from consumers and actually also from investors as well. you please update us where what what's the plan with your your play brand in uh in the us and canada as well as again that internationally and uh and potentially maybe update us about your cat as well thanks uh hey lauren it's john needy uh hope you're well um so the yoga category in the us is really starting to accelerate so it's up to

June. And really what's driving that is the Simply Better Health segment. So that was up 31%. So that's products like Ray Shield Keto, which is one of our products, Too Good, and Triple Zero. And we put plant-based in there as well. So we're definitely seeing growth in that segment. In terms of the yield plan, we launched a WE plant-based product several years ago that's in the U.S., growing quickly. Really, that's simply better health segment with the dairy-based products like Racial Keto, Tuga, and Triple Zeros with the bulk of the growth. So plant-based remains an area of focus for us. I'll tell you, it's not the biggest segment and probably not with the bulk of the growth coming here.

Thanks. And internationally for Haagen-Dazs, any plan there?

When it comes to plant-based ice cream, I think it's a very, very small part of the category. What I will say is our Haagen-Dazs business has been growing very, very nicely and continues to do well all over the world, particularly strong growth in China and in Europe this past year. And we've got some great innovation coming on Haagen-Dazs. And so plant-based is really small, but we are confident that we can continue to grow our Haagen-Dazs business really well in key geographies and looking for a summer where more consumers are out and about. Thank you. Thank you, guys.

I appreciate it. Thanks. Thank you, Laurent. Thanks. Our next question comes from Jason English with Goldman Sachs. Please proceed. Jason English. Mr. English, you're kidding out. I don't know if you can reestablish the connection. How about I switch headsets? Is this better? Much better.

That's great. Thank you.

Awesome. Okay. Sorry about that. So now that you've announced price increases in the vast majority of your categories and markets, can you give us some clarity on how much net price realization you expect to realize in your down one to three, four-year organic sales outlook? Yeah, Jason, this is Kofi. Appreciate the question. Let me give you a frame to think about this. So as we get guidance on inflation of about 7%, We would expect our holistic margin management to register about four percentage points of cost of goods sold. So that would offset a good portion of the inflation. And obviously, in this environment, we would need some additional price realization while we're not quantifying it, we would expect the combination of levers through strategic revenue management, both list pricing, price pack optimization, you know, trade optimization, all of those things to yield us enough to cover our inflation expectations. Okay. So take that remaining 3% of COGS and gross it up to revenue is probably a safe place to go right now. I think that would be safe. Switching gears, but still remaining kind of on the topic of offsetting inflationary pressures, your recent restructuring announcement, I thought you were going to have a lot more meat on the bone to give us today on this, but there's not a lot. Can you give us more clarity around the initiatives, including the expected cost savings and how much you expect to reinvest? Well, I will give you a frame to think about this, and let me sort of touch on what we're getting at. There is in here an expectation that we will prioritize areas like digital and data and analytics, SRM strategy, and M&A, as Jeff mentioned earlier. Those things are all critical to sort of maintaining the growth engine. Our expectation after this exercise is that our admin cost as a percent of net sales will be roughly in line with our fiscal 21. So they will keep pace with the sales decline. That's helpful. Thank you. I'll pass it on. Our next question comes from Brian Spillane with Bank of America. Please proceed. Hey, good morning, everyone. Hey, Brian. Hi. So I guess my question is just around is we're working through our models and thinking about and trying to factor in inflation. Maybe, Kofi, could you give us a little bit of a some color on maybe which segments are going to, you know, feel more inflation than others and maybe just how we could think of how we should be thinking about the potential volatility of inflation just within segments. And then I guess tied to that question is just as we're, you know, thinking about the, you know, the revenue management component of covering inflation, you know, you know is it is it more pronounced in some segments than others just trying to get a sense of you know how we should be looking at across segments or is it really generally the same across all of them now i appreciate the question and that well i don't want to get too specific at the segment level what i will tell you is all of our segments are experiencing higher inflation we are addressing in all of our segments with the mix of holistic margin management in line with our historical levels and SRM. I mean, using the entirety of the SRM toolkit in all five of the segments. Okay. And then maybe just to follow up, as, you know, I know there's been a lot of talk about, you know, pricing, price increases as part of the way to combat inflation. We've heard that across, you know, our whole coverage universe. What do we expect on the backside of that, right? So, you know, as some of this inflation moderates, hopefully, would the expectation be that this pricing has stuck? Or would there be the potential that some of it would have to be dealt back as inflation moderates? Just trying to understand just how unusual this environment is, how we should be thinking about the stickiness of those price increases if and when inflation rolls over.

You know, we usually don't give forward-looking views on pricing, and so I think that's probably the best plan to stick to that here. Which is not to say your question is not a fair one. I just think for us to talk about future pricing is probably not something we should do too much. Other than to say, I think one of the keys to our success as we look ahead, as it has been recently, is our agility. And we've proven ourselves pretty agile during the last year, including with recent pricing we've taken into the marketplace relatively quickly. And I attribute that to the fact we have an always-on capability. And so in a volatile market, trying to be certain is not a good place to be. What you need to be is thoughtful, and you need to be fast. And I think we're both of those things, and we're going to try to continue to be both of those things. So Yuri is a good question. We're not going to answer directly because we usually don't talk about pricing, but I do believe that the key challenge in a volatile environment is to be clear and to be agile, and we will certainly endeavor to do that, and we feel good about our ability to do that.

Okay, great. Thank you. Our next question comes from David Palmer with Evercore ISI. Please proceed. Thanks. Andrew mentioned that mega broker survey and in that survey in the Q&A, they cited consumer and category insights that the food companies have as a reason why the food companies were more bullish about demand than the retailer customers were. In other words, you had better demand level of understanding about where things have been more sticky and for good reason. What is your latest thinking about categories and brands that you think most benefited in a semi-permanent way from COVID and perhaps because of consumers embracing new habits? And I have a quick follow-up.

Hey, David. It's John Doody. As we look at our business, we think our real sites, consumers changed their habits, you know, obviously baked a lot more. We believe that some of that will be sticky. It's more than just food. It's really bringing joy to the family and bringing the family together, which is terrific. And then Jeff mentioned Melania was learning to cook, and that's something that's going to stick as well. So all of our research would say certainly we're not going to go, you know, stay in the elevated levels that we've seen in the pandemic, but consumers will eat at home more than they did prior to the pandemic, and they'll use these new skills to, you know, prior to the pandemic as well. So we're spending a lot of time. We've got a lot of new insights, really digital insights, really leveraging first-party data that we have with Box Office for Education and Pillsbury.com, BettyCrocker.com. That's really giving us some rich views into a consumer's day and their journey. And we think, again,

You know, thanks for that answer. One category that I am really confused by is cereal. It's an at-home category, but it's perhaps part that lives in that world of convenience, that compressed morning day part. In other words, cereal has really lost a lot of share of at-home breakfast during COVID. if that's a way to think about it, you know, at-home breakfast, getting the benefit of people being at home, but perhaps cereal not being as much a part of that. You know, in other words, cereal's up 1% over the last two years, not really that impressive. How are you thinking about cereal going forward? Do you think it actually has a bit of a rebound as people get back to convenience, or is this sort of just the new normal or the existing normal, one of the one of the few categories that really didn't get affected by COVID at all. It's just sort of low growth. Any thoughts there?

Yeah, absolutely, David. So for sure, I think as consumers were home, they had more time to prepare breakfast. So you saw things like eggs and pancakes grow more quickly than cereal. We do believe cereal will continue to grow into the future. And again, as we look over that two-year period, the category did grow a week consecutive years. And we believe that cereal is important today. It'll be important in the future. It's used, obviously, for breakfast. It's used for snacking throughout the day. We've got some great innovation coming this coming year. And at the same time, we know that our marketing continues to work. Things like Cheerios and our cholesterol messaging, our kid fun messaging around some of those crunch and lucky charms. We believe the category will continue to grow. We hope, you know, it's probably not going to be high single digits, but we think a little bit of growth in that category the consumer provides, providing a bit of a tailwind for the category.

That's helpful. Thanks very much.

Thank you.

Our next question comes from Faiza Alwi with Deutsche Bank. Please proceed.

Yes, hi, thank you. Good morning. I wanted to first just ask about, you know, your investments. So I know you've increased media spending and you've also spent to build critical capabilities. And I'm curious how you're thinking about investments as we look at fiscal 22. You know, essentially, I'm asking, like, are you expecting media spending to continue to increase at that, you know, double digit CAGR that we've seen over the last two years? And then where or should we stay at the level that we're at? And then how much more investment in capabilities do you need, you know, from here on out?

So let me take that one a little bit, and then, Koki, if there's any background you want to give as well. You know, we're not going to give specific guidance on our media spending for next year. You know, I would say when we when we talked to cagney before we had talked about you know as we look into the future we'd have media grow roughly in line with with sales over time and and you know we'll see what happens this coming year but but that's what we said we would do over time in terms of investments i you know we're really pleased what we've seen out of our data and analytics capabilities and John Newdy touched on box tops a little while ago. We digitized that. In our opening remarks, we talked about some of the things we're doing, and Pat, you'll hear a lot more about that this coming year. We've tied together an omni-channel approach in China with our shops and our retail, which is yielding some good insights, some great results. We like what we're seeing there. And even on the cost side, as we look at our global sourcing efforts, we've tied data and analytics into that to help us with our costing and HMM. And so you'll see us continue to invest in our data and analytics capabilities because we really like what we have seen so far. And some of that will be foundational, and some of that will be on the analytics themselves, which I have growth, and other parts will be on analytics to help us save money. But I think that will be a big area of investment, as will our strategy and M&A area as we move Again, look to further our accelerate strategy.

Okay, great. Thank you. And then just a second question on blue buffalo and the pet segment generally. I know you talked about growth in that segment. I'm curious, I mean, it sounds like category growth is going to be strong. Are there any specific plans beyond the connected commerce initiative that you talked about? Is there any innovation that we should look out for? And I know at Cagney, you talked about potentially taking Blue Buffalo to international markets. So I wonder if there's any plans to do that this year.

So, you know, first of all, we're really pleased with our Blue Buffalo performance, including the fourth quarter, where our retail sales grew in the mid-teens. And so even if it doesn't look like that on the P&L, you have to remember we're lapping four months from last year and the stock up from the year before. And so we're really pleased with Blue Buffalo. We see strong growth ahead. That would be my opening comment. In terms of how we're going to grow, this digital capability will certainly be a big piece of that, but so will innovation. We really like what we've seen out of this Tasteful launch, and we're literally selling everything we can make from this new Tasteful's cat line. We under-index in cat, and the margins in that segment are good, and we're highly confident Blue Buffalo can play a role in that. We've recently launched some innovation into snacking in the Bones launch, and we're excited about what that can be. In addition then to clearly bringing online this tyson acquisition which we hope to close shortly and so we we're going to grow blue buffalo organically continue to do that we're bullish about our opportunity to do that as well as effectively bring on this this new part of the portfolio this tyson tree business where where we under index and tyson's done a nice job with that business but we think you know combining what we can do with our capabilities and that with the business they already have we think there's good growth in that as well great thank you so much thank you

Our next question comes from Michael Lavery with Piper Sandler. Please proceed. Good morning. Thank you. I know you've called out the uncertainty, and I think that's all very clear, but can you give a sense around the elasticity, what kind of assumptions you're making for your planning process? Sure. So as we... built our plans this year. One of the benefits of our SRM capability is we actually have very detailed demand elasticity models. I would say that and also give a nod to the uncertainty of this environment and the fact that inflation in the market is broad spread, it's cross-industry, it's global. And so those factors all are potentially a setup for demand elasticity models that are by design backward looking to be, you know, perhaps, you know, overhaul the elasticity of pricing in this environment. So I'd make that note because this is an environment where that uncertainty becomes a relevant factor as we talk about demand elasticity. And so does that net you out at greater elasticities than historical levels, or do you expect it to be pretty consistent with what you've seen before? What's that kind of net out to? Yeah, well, our models are built on sort of historical expectations. I think what I am also giving acknowledgement to is that the environment itself is reason for us to be cautious about being certain on the call that it will Okay, that's helpful. And just a follow-up on the C-Store and food service segment. You've called out how you expect the lift to volumes or sales from more demand or reopening, but can you touch on the impact for pricing and specifically pass-through pricing? How much of a factor do you expect that to be for the sales lift, and should we be modeling an acceleration there? specifically on the pricing side because of pass-through costs.

So, Michael, I would say that what we see with our costs going up is very broad. I mean, it's broad across geographies. It's broad across product segments. It's broad across channels. And so, that would include what we see in CNF. So, our costs for our products and our convenience and food service segment are going up as well. And so, we would anticipate pricing in our convenience and food service segment because we see our costs going up. And so, And in this environment, there's obviously not only inflation in food, but kind of everywhere. And so it's no different in CNF. And so we would anticipate prices going up. In fact, we've already increased prices in the food service segment because our costs are going up. But what I will also say is that we're very confident in our convenience and food service business to return to growth this year as schools reopen. And as people get out a little bit more, we're well-positioned to capture growth and returning to that market.

Okay, great. Thanks so much. Thanks. Our next question comes from Chris Grohe with Stiefel. Please proceed.

Hi, good morning. Hi, just had a couple questions for you. You gave your guidance for the year, like your constant currency EPS growth. I am just curious. It does not incorporate the acquisitions or divestitures, and I didn't know if you had any kind of quick words on those. We've modeled or have estimated kind of 1% to 2% dilution for the yogurt business and then slight accretion for the pet treats business. Would that be in the realm of expectations? Do you have any thoughts on that?

So Chris, this is Kofi. So we don't have new information that would change the perspective we've already given. Obviously, we do expect the pet treats business to close shortly. And obviously, until that point, we can't get slightly accretive means. I think it's important to note, you know, we will see a portion of earnings contributions for the year. We will also see some of the purchase accounting-related amortization, including inventory step-up. And those factors will lead us to expectations probably in the range of a penny to two pennies accretive for the year on the pet treats business.

Any comments, no changes then on your expectations for yogurt then when that closes, correct?

No, no. And that's further out, and we'll give small colors as we get closer.

Okay. And I had just one other question, if I could, on the international segments. Asia, Latin America hit about a 5% operating margin for the year. Europe, Australia, about 7.5%. Are these sustainable margins? Could they grow from here? There have been some pretty significant moves as we move through the year in terms of improvements in profitability. I just want to get a sense of how much of that was the benefit of COVID in some cases and the pandemic and how much of it is potential to kind of stick, if you will, based on changes you're making in those businesses.

Chris, that's a great question. I think we've been very pleased with the progress we've made in margins on both of those businesses in this environment. Obviously, some of that is related to the leverage benefits of operating in elevated demand. But we've also been making and continue to make business model changes in both businesses that are driving margin improvements and actually will continue to make them. I'm even contemplating as part of the restructuring actions that we've already announced. So I would expect that we would hold on to portion these margin gains and continue to drive margin improvement and get to a much more competitive place on both of these businesses.

Okay. Thanks so much for your time.

Thanks, Chris.

Thank you.

I think we have time for one more question, Frank. Our next question comes from Ken Zaslow with Bank of Montreal. Please proceed. Hey, good morning, everyone. Good morning, Ken. I have two questions. One is you guys have been really early on the data analytics side. What are the specific new capabilities that you need? I mean, I'm a little surprised that you're not there, I guess, is kind of what I think. You guys were very, very early on that. So what are the new learnings that you have?

are looking to explore and do more with and and what will be the returns on that and then have a second question so we we've been working on our data analyst capability for a couple of years now um you know i would i would note that you know the first thing we had to do is build a foundation and i won't get into details of that in this answer but we had to build a foundation and then and then now we're building on top of that with some specific capabilities around around growth capabilities like strategic revenue management growth capabilities like addressing consumers through things like box tops for education and you know what we're doing in the personalization space as well as what we're doing on the channel and uh in china and then on the on then on the cost side what we're what we're doing with procurement but there's a lot more we there are a lot more things that we can do using data analytics to drive our business so we'll continue to we'll continue to invest in order to to drive those parts of the business so It may seem like a while, but we had to build a foundation first, which is the right way to do it, and now we're building on top of that with specific capabilities.

Great. My second question is you put out the three-year growth that you had, you know, 2% sales, 2% operating. income and 5% EPS. When you think about the next three years beyond that, does that seem like the right mix, or do you think the changes that you're having should accelerate that by a certain amount of basis points? And how do you think about the next three years? And again, not next year, but just thinking about it in a three-year clip, I think that's a good way of thinking about it and how you're positioning it. So I was just curious to see how you think about relative to the last three years, and I'll leave it there, and I appreciate it.

Again, I'm going to try to make it through this year. You know what I will say, though, but I do respect the question. As we look ahead, our goal is to get back to sustainable growth and to get to 2% to 3% growth. And, I mean, I'll probably restate something I've said already. That requires us to do two things. One is compete effectively, and I think we've shown over the past couple years we've really improved our game there to compete effectively. we're competing effectively you know pretty much everywhere around the world so we'll continue to need to do that to get to two to three percent growth And we'll continue to have to reshape our portfolio. And you see that through the divestiture of Yoplait and at least the proposed divestiture of Yoplait in Europe. And you see that with the upcoming acquisition of Pluto. And so we'll look to continue to reshape our portfolio as well as compete effectively to get to that 2% to 3% growth rate. And so that'll be our plan after this year. And we've got a group that's focused on that. We've got another group that's focused on making sure we can deliver what we said we're going to do this coming 12 months.

Great. I just think that all these things that you're putting in place seems like it should fuel this growth. But I appreciate the answer, and I look forward to seeing what you guys can do. Thank you.

All right. Thank you. Okay.

I think that gets us to the end of our time here this morning. So thank you, everyone, for your time and attention, and appreciate the good questions. Please reach out over the course of the day if you have any follow-ups, and we look forward to talking to you again soon.

Bye-bye.

That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your line. Have a great day, everyone.