General Mills Aktie

Okay. Good morning, everybody. Welcome to day 3 of the Deutsche Bank Global Consumer Conference. To kick things off this morning, I'm thrilled to welcome back General Mills to our conference. And with us today, welcoming back both Dana McNabb, newly assuming her role as Chief Operating Officer; and Kofi Bruce, who you all know as Chief Financial Officer. Which is not to diminish your role as...

Keep moving.

So we're going to use the entirety of our time for Q&A. And I guess just to start off, maybe if you want to each offer sort of just the key messages, key overarching messages and then we can dive into details.

Sure. You want me to go. I would say our ultimate goal is to get back to delivering long-term shareholder value. And the way that we're going to do that is 3 ways. First, we're going to restore profitable organic growth. We are going to continue to manage our cost efficiency, and we are going to continue to be disciplined in how we're managing capital. So why don't I take growth and then you can follow up with the other 2. As you think about returning to organic sales growth, we've been focused on improving the remarkability of our brands. That's about making sure that we're delivering what the consumer values across our proposition. And we have been very invested in making sure that we improve. Our first investment was against price, and we're seeing that work. As we close this fiscal year, we are improving our base volume. We are improving our competitiveness, and we are back to household penetration for the first time in 3 years.

So now as we turn to this next fiscal year, it is really about building on that foundation. We know we still have work to do. It's going to be a tough consumer environment. But having that stronger foundation and then being able to continue to invest in remarkability is what we're going to do. And the focus will be on product, it will be on packaging and it will be on communications. So let's talk product. We are going to have meaningful innovation and renovation on all 8 of our $1 billion brands. That's about delivering against the benefits the consumer value. So think functional nutrition, think clean label, bold flavors, the humanization of pets is still a trend. So we'll have meaningful news there. In this fiscal year, we increased new products by 25%. They're working. That gives us a really good foundation, and we'll have a step change on that again this year. So think things like we're going to bring protein, which works to our biggest brand, Honey Nut Cheerios. We are going to scale businesses like Annie's and EPIC and Tiki Cat that have a real right to win right now.

We are going to launch new brands into growing categories. So think GHOST performance nutrition bars, La Tiara in the Mexican segment. We're going to bring Wanchai Ferry to dumplings. So I think product innovation that the consumer values and is willing to pay for, that's going to work. Then we have packaging innovation, 40% more price pack architecture on meaningful benefits, new sizes, new formats, new functionalities. And then communications is incredibly important right now. We invested in digital tools, and we also brought influencers in. We really changed how we approach marketing, and our comps are returning double digits. So we'll make another step change in that again this year. So really building out the foundation that we've developed and leaning into the things that we know the consumer values, that's how we'll get back to grow.

Yes. And so you just heard Dana talk about the pivot we're making off of fiscal '26, where a lot of our investment focus was on ensuring that we had the right price value equation for consumers. And now that's freeing up capacity for the rest of the remarkability framework and levers to work. And that's what you're hearing in terms of what's going to drive the structure of our growth for fiscal '27. But in addition to that, as you step back, we are very focused as well as we move through this cycle on ensuring we create the flexibility in the business model to fund and support the business and the growth agenda of the business.

First, I would point to our continued and ongoing ability to drive industry-leading cost of goods productivity through our holistic margin management program, which over a 20-year period has averaged about 4%. The last 3 years, 5%, aided by investments we've made in our data stack and our digital tools. And we would expect that to contribute roughly in the same range again in fiscal '27. We'll give a little bit more specific guidance here in a couple of weeks as we set and release our earnings for fiscal '26. But on top of that, we are in the middle of a multiyear transformation initiative, which we started in fiscal '26, where we delivered $100 million of additional savings on top of that holistic margin management.

We would expect at least that level in fiscal '27, and there will be more as we move into fiscal '28 and beyond. So I think those things are going to be critical both to helping us move through the cycle, fund the growth investments that we need to get the top line moving again. And then over the long term, will help us drive the leverage in the P&L we need to help restore earnings and cash flow and all of which will be incremental support for driving down leverage, creating strategic flexibility in the balance sheet. And then to that point, we continue to drive really strong free cash flow conversion off of our earnings even in an environment where we've seen a lot of disruption and challenge.

Almost [ $100 ] on every dollar of after-tax earnings, we're able to convert to free cash flow. That free cash flow feeds our 4 core capital allocation priorities. First of which is to make sure that we're investing in the base business for growth and cost savings and capital spending. Second, to support our dividend at its present rate and over the long term, generally to grow that in line with our after-tax earnings. And then third and fourth priorities sit between M&A and share repurchase. And then obviously, in this environment with our debt leverage elevated, we would expect to put a little bit more focus on bringing down leverage with that incremental cash flow after the dividend.

Okay. Perfect. Very good framing. So before we get into some of the details underneath those elements, I guess, Dana, just as you move into day 4?

Day 4.

Day 4. So I guess, how do you see your role evolving to support all of what we just talked about?

Yes. Well, I think -- first, it's a privilege to take on this role and to be able to lead operations for our company and to really take the remarkability framework across the enterprise. I would say my #1 priority hasn't really changed. It is to restore profitable top line growth for the enterprise. And so I know we'll talk about that throughout this conversation. But I would say the other area I'm focused on and will lead are the transformation efforts that Kofi talked about.

And transformation really just at the end of the day is about making us a simpler, a faster and a more effective company. What we're trying to do is really reimagine how we work so that we can get faster, we can improve our cost structure, we can get to decision speed in a better way. And so if we take that and you combine it with what we're really good at, which is HMM is the cost efficiency Kofi talked about and our strategic revenue management, I think that will create the fuel to offset inflation, to invest in our brands and to get back to margin growth over time. And so we started this last year. We delivered $100 million, and now it's about taking another step change and where I'm going to focus is on our supply chain.

If you think about it, we're so proud of our supply chain, best-in-class, really strong, but it was built for a different time. And context has changed. You need faster innovation cycles, different packaging for channels. Volume is not what it used to be. And so rethinking that network in order to be able to get at growth is important. We've just started some of that work, and we'll come back and talk at a later time when we have more to share.

Okay. On that piece and transformation overall, can you -- I can definitely see how it's a lever to offset inflation over time, but there's also upfront cost of putting in place those improvements. So what is the ROI quick enough to offset this inflation cycle? Or is it more of a medium- to longer-term investment?

Well, I would expect, given the phasing and the focus of the efforts for fiscal '27, we will see benefits in fiscal '27 from a lot of the activity. Supply chain transformation to Dana's point, and reimagining supply chain is going to require a multiyear phased approach to really see the benefits. And I expect there'll be probably some cash investment as there normally is as you start to reimagine a pretty intricate supply chain network. So that will take a little bit longer to return the cost savings. But I feel good about what we've got lined up for fiscal '27 being able to contribute and help offset some of the headwinds.

Okay. Okay. Let's pivot back to that -- the objective of restoring profitable growth because I think that is probably the key debate. So maybe a little bit of retrospective on the efforts you made in '26 in terms of the price investments and where that's positioned you as you move forward. And then how things change as you move the remarkability investments to product and packaging and communication.

So I think first, if you think about fiscal '26, we made the bold choice to invest. And the first place that we invested was price. And that was really about getting our prices at the shelf right, the base prices right. It was about coming under key cliffs and closing gaps relative to the competition. And as we closed this fiscal year, it worked. We really did see our base volume improved. So if you think about fiscal '25, our base volume was down 10%. We're closing this fiscal year, it's up 1% on the brands that we invested in.

If I look to our Pillsbury business, which is our biggest and where our problems were the most acute, if you look at fiscal '25 on base volume, it was down 10%. Pillsbury is finishing the year up 3% on base volume. And the real test as we came through Q4 and started to lap the price investment was, is this going to translate into dollar share gains. And we're in a place now where Pillsbury has grown pound share by 1 point, is back to household penetration growth and has gained dollar share. So we really believe that, that investment has worked and provided us the right foundation. And then I've talked about the other areas that we strengthened, 25% increase in new products, that's working. We invested in omnichannel execution. Our e-commerce share is now for human food at 20% for pet at 30%. And we're better at how we execute within that channel with our shares outperforming bricks and mortar.

You think about the communications I talked about, our ROI is on that up double digits. So I feel, again, it's so important that we got the foundations right and not everything worked. We have 2 businesses that have been a real struggle for us all year long, Totino's, where we did a price pack architecture. It just didn't work. We got outinnovated. I feel like we've diagnosed those problems correctly now and are coming with some really good innovation and renovation. And we don't need that to get back to growth. We just need to stabilize those declines. And then our Wilderness business on pet, where we really just had to focus on, okay, this proposition in terms of remarkability across the board is not good enough, and we're going to have to invest from an innovation and renovation standpoint to get that back to growth.

So really good progress on the base where we invested. We know what didn't work. We have plans to fix it. And then as I talked about in the beginning, as we pivot to what's next, I really do think there's benefits out there that the consumer values and is willing to pay for if you're talking functional nutrition, bold flavors, nostalgia. And so it's really about if we step up the innovation and the renovation on these $8 billion brands and lead our categories, that's what will drive the next step change.

Yes -- and so is the metric -- I mean there are lots of metrics of success, but is the metric of success in '27 pound -- I'm sorry, dollar share...

In FY '26, it was pound share. It has to be because we're investing in price. Now what I would watch for is the measure of now as we flip and start to lap that price investment, it's dollar share. You'll see it come on Pillsbury, then cereal, Mexican and some snacks. And I do just want to reiterate, we are a growing dollar share on Life Protection Formula on our cat feeding in international and North American food service. So that's the goal.

Okay. And how does that -- I mean, as you watch the -- maybe a little bit of perspective on what you're seeing in the consumer environment and how that -- I think the epicenter of debate this week has really been in North America, the bulk of your business. So how you're watching and monitoring the consumer and how that's impacting your planning process into '27?

Well, I think you probably heard all week long, the U.S. consumer is stressed. They are already stressed going into this new fiscal year that we have with just everyday inflation on everyday items. But then you add to that the SNAP reductions, you add gas prices and it's tough. And so as we just closed our fiscal year in our Q4, we saw our categories slow down by about 1 point. And as we turn to this next fiscal year, we're not assuming that's going to improve. We're assuming categories will stay soft, and our goal is to gain share in those categories and to be the leader and to improve them. But I do want to say that there are places the consumer will spend money on and that are growing.

And so again, if you focus your efforts on delivering value in those areas, there's growth to get. So again, functional nutrition, bold flavors, nostalgia and then making sure you might not get a lot of list price, although we'll keep watching that, but you can get mix. If you look at our Cheerios protein example, consumers are willing to pay for that benefit. It's price accretive to our core. The price pack architecture where we're bringing 40%, that will be an opportunity for us to have opening price points that consumers can access and pay for large sizes. So while it's going to be tough, there's growth to get, and it's just about being focused.

Yes. Can you talk a little bit about how your initiatives and your innovations are focused on delivering value to the consumers that are most stressed, the lower end of the K, if you will. And then -- but also going after those premiumization opportunities for consumers who are able and willing to trade up.

Well, I think, first, just getting the foundations of our business right. So making sure that the prices on our core are in the right place for consumers to access was a great start. So having that as a foundation going into next fiscal year is important. If you think about price pack architecture, I think that's critical in today's environment. You have to have the right sizes at lower price points that consumers can access. Larger families are looking for more value. And so it's really just making important that your proposition delivers across all of that, different formats, functionalities, et cetera. We want to understand that the consumer is struggling right now. And so making sure that how we layer in coupons and incentives is matching pay times and that we're helping them get through this. And then obviously, where you have benefits that they're willing to pay for, it's making sure that you price them in the most accessible way. So premium price to the core, which is, again, price accretive to our business, but still accessible to the consumer every day.

Great. Maybe we'll go through a couple of key categories that are topical, some of which you've already mentioned. But you mentioned protein Cheerios was successful. Maybe if you kind of pan out and think about the entire cereal portfolio, which is always topical when we talk about General Mills. How that overall is trending? Dana I'm watching it progress, but we're seeing those value shares still lag. So how do we bend that trend?

Yes. Well, I can't answer a cereal question without reminding everyone that it is a $10 billion category that 8 out of 10 consumers have it in their household. It's really important to our retailers. So we're not looking for this category to drive outsized growth for us. We just need to gain a little bit of share and make sure we're behaving as a leader in improving the trends in that category. So as I think about cereal, I'm proud of our performance this year. We've gained pound share. We're back to household penetration for the first time in a really long time. And the places that we're focusing for future growth are 2. First is protein. I mean people have left cereal because they feel that it doesn't keep you fuller for longer. There's no satiety.

And this protein benefit has been really strong. The Cheerios protein has been highly incremental to the business. It's going to be $100 million. We're going to have over $200 million of cereal offerings in next fiscal year, and that's working really well. We'll keep doubling down there. And then there's the granola segment of cereal, which is what's growing the fastest. It's $1 billion, growing double digits. We are gaining share in that segment. In fact, we launched a lot of different granola offerings in January of this year. We've gained 20% distribution. So I really believe that as we go into next fiscal year with the foundation stronger, focusing and leading in protein and granola will be how we get the value share back.

Okay. Great. So I mean that seems -- so that falls more under the functional benefit bucket, maybe a little bit of clean label, but that's the focus there. If we move to snacks and Totino's, is -- what's the focus there? Is it bold flavors? Is it packaging? Where are we going to really stabilize that business?

I mean it's a few things. That Totino business has been an acute challenge for us this year. It's 50% of North America retail pound declines. And so I do think we've diagnosed the issues. Again, we had this price pack architecture. We launched a box, replaced a bag for a box at a time when a consumer just didn't see any value in that. And so it didn't sell. We've fixed that now. We're back to the bag. And then we got out innovated. And so being back in bags, we're able to add some merchandising back again, which is important. We have brought a lot stronger innovation. So we have bold flavors as everything for Totino's, right? And so we have blasted rolls that are coming with flavor on the outside. They're fantastic.

And then in the frozen snacking category, 2 areas that are growing incredibly fast are Asian and Mexican. And so we're launching Old El Paso Mexican snacks, and we're bringing Wanchai Ferry over from China, which is a really high-quality dumpling in order to get at those growth trends. So this isn't going to turn overnight. But I do think what we're seeing, we've put some actions in place in our last quarter. We're seeing those declines stem, and I think you'll see that continue into next fiscal year.

Okay. Let's dive into pet because there's a lot of moving parts in pet. Let's start on the cat business, which is I mean the cat category, very strong. Your performance within cat has been very strong. I guess how do you lean into that and keep that going? Are there incremental initiatives you can -- you plan to make to accelerate trends?

Yes. I mean my team always loves to say to me, Dana, cat is where it's at. So as I think about that, the cat -- pet owners of cat population is growing. It's an easier pet to take care of. It's more affordable. We expect those trends to continue. And as you mentioned, we have 3 brands within cat, and they're all performing really well. They're all gaining dollar share. And I think that's because within my portfolio, they have some of the strongest work against the remarkability framework.

So if you start first with just with our BLUE Tastefuls brand, this business is growing dollar share, has taste superiority, cats are picky, 9 out of 10 cats prefer the taste of this brand, and we have some really good gravy innovation that we'll lean into. Then we have our Wilderness Cat business, which is protein Forward, so protein-forward innovation messaging, that's working. We'll lean into that. And then we have this Tiki Cat business that's been growing double digits, still has a ton of headroom on household penetration. That's where we'll focus, bring some really good premium innovation exclusive to different channels. And then for the first time ever, we will launch a social-first national campaign to build that penetration.

With Tiki.

With Tiki. So I think the team has some really good plans coming that will continue that growth trend.

Okay. Okay. So what does your team say about dog?

We still love dog too. We're BLUE Buffalo. So love them like family, feed them like family. So I think our dog business is a tale of 2 brands. And I think they sometimes get brought together, and that -- it's not where we're at. Our biggest brand is Life Protection Formula. And even though the dry dog segment has slowed a bit, we are gaining share within that segment. And it's behind us really focusing on what is the consumer value, getting back to benefit-led communication. We've got some really premium benefit-led new products coming in the back half of the fiscal year, getting our sizing right in e-commerce, 30% of our sales is on e-commerce. We've got to be strong there. And then making sure that those benefits show up in the packaging because it's a base business and that will help us a lot. So that is the focus for life...

When you say back half of the fiscal year, that mean -- you mean...

Fiscal '27.

Yes. Just making sure.

Yes. And then in terms of Wilderness, that has just been -- it's been a problem for a few years. And we've been trying to fix it around the edges, and we finally just said, let's assess where we're at across remarkability relative to the competition, and it wasn't good. And we've had to really lean in and fix the product, look at the packaging, look at the communication, bring new products. And so you'll see a real step change in all of that as we go into this next fiscal year. The reality is on that one, again, we're looking to stem the declines, not get back to growth in 1 quarter, stem the declines, which will help us a lot.

Okay. A year ago, when we were talking about General Mills, we were talking about those -- that price gap management, price cliff management. We're also talking about Love Made Fresh. That was a big initiative a year ago within pet. A year later, I guess, what have you learned from that launch? What's worked? What's impressed you? What are you going to lean into? And then maybe what is left to correct?

Well, we're really -- we continue to be really proud of this launch. And what I've been really encouraged about is over the last several weeks, we have seen our retail sales increase 50% versus 2 months ago. And what we've had to fix is, first, on-shelf availability. We had to get more reps into the stores to make sure the coolers were full of product, and that is working. We tweaked some of our brand communications. We've done a great job of building broad awareness, but we need to come down the funnel and really focus on conversion. That's working.

And then we launched the standup resealable pouch. And that pouch is already 50% of our sales. So I think in this learning, we're on the right stuff. And again, the sales trends are encouraging. And so as I look ahead, we're really focused on looking at what is our repeat, what are our turns, making sure we continue to get on-shelf availability while also making sure we have a business model that's productive and profitable as we scale. So that will be the focus. We continue to learn. We remain agile. We'll pivot, but we still really believe that BLUE has a right to win in fresh and that our participation in this segment can help it grow overall.

Kofi, in terms of your observations on the launch in terms of the early returns versus the amount of upfront investment, how does that -- I guess, where does Love Made Fresh and the Fresh initiative in general rank a precise number, but like how much of a priority is that as we think about '27?

Yes, it remains a high priority for us. And I think to Dana's point, we're really focused on getting it right where we've built out distribution, improving the turns profile of the business. And we do see this as a multiyear investment, right? We embarked on it, eyes wide open that building distribution, sustaining distribution and then driving consumer trial and awareness was going to take a couple of years to build.

So we would expect to be investing heavily in marketing. I think in the near term, obviously, the gross margin structure is going to remain challenged as we're scaling up the business. We would expect that as we hit the right sweet spot in national scale, it actually will be easier for us to either build out a more stable and sustainable supply chain structure either internally or through our partner network. And I think that line of sight will put us on a path to a profitable growth profile for the business.

Is there a revenue level? Or is there -- how do we think about the crossover point when that business for you can turn profitable and cash flow generative?

Yes. I think we're -- I would think about it in terms of a couple of actions. Certainly, distribution will be part of it, but a bigger part is going to be ensure that we have sustainable turns where we have distribution, that the consumer acceptance and the in-store performance is on par with the competitive set. And then I think that's the signal that gives us the space to go out and make the next tranche of investment and really turn the corner in terms of the profit profile of the business.

Okay. Go back to -- let's go back to the operating side of your role and the transformation that you talked about and just the overall kind of evolution revamping of capabilities. It seems what you were after was the real change in the way that General Mills works essentially, which we're hearing from a lot of companies. I think the perception from the outside, my perception is that General Mills is -- was already ahead on a lot of those things in terms of technology investments and we talked about SRM. Where do you guys -- or both of you, I guess, is where do you see the most opportunity? Are there places where you feel you're behind that you're trying to close the gap? Or are you trying to extend the lead?

I'll start and turn it over to you. I really think that if you're going to -- if your goal is to get back to sustainable organic top line growth, then you have to invest in making sure that you understand the consumer, that you're the best at that, that you are eyes wide open about what you offer and if it's better than the competition and that you get there and serve that consumer at pace. We've always considered our competitive advantage to be brand building. But as you go through that COVID period, you're so focused on service and then inflation and we were getting through pricing, it was just not something that we could prioritize at that time. And I really think getting back to that and using this remarkability framework as a tool to help everyone understand what is it the consumer values, where is the growth, where to play and then how to win through remarkability is going to help us get back. That's the foundation, I would say, of our strategy going forward, the capability we're trying to build.

And then as you mentioned, we were behind 10 years ago in data and analytics and just data investment overall or tech investment. We made a play there. We invested. It's working. We have a really strong foundation right now, and it's about how do you leverage that to get ahead and stay ahead, using that to improve and be leaders in strategic revenue management and making sure that we are always ahead on our holistic margin management, which is our cost efficiency and then just how we reach consumers. I find it exciting right now with AI and with just how marketing works in the social influencer space and leaning in and testing and moving fast and learning, I think that's going to be key. How you reach enough consumers with the right message is what will make that remarkability framework pay out.

And I think what I would add in terms of additional focus areas as we talk about transformation, I think to Dana's point, we already have a really strong supply chain. This is about fitting supply chain for the future of what demand looks like and how we're going to need to drive growth differentially in a very competitive environment, right? So if you think about our supply chain, it's built to run hyper efficiently at scale. The competitive domain requires us to actually run with faster cycle times and more innovation. And that requires a different footprint, both in terms of physical assets, but in terms of the thought on partnerships and the broader network of external suppliers. So you'll see us be looking at supply chain through the lens of what's actually going to unlock the next 5 to 10 years of growth.

Yes. And you mentioned suppliers and the partnership there. But what about -- how integrated are -- is the transformation with your leading retailers, both in terms of the use of data and digital -- I mean, if you can link that with retailer information and sync up initiatives, all the more powerful. And the same with the supply chain, you're trying to service an evolving retail landscape. So can you talk a little bit about the partnership between yourself and your leading retailers as you embark on these initiatives?

Well, I really think -- I mean, us and retailers who want the same thing, which is to serve the consumer and to grow the category. And so I don't think any of these transformation initiatives work if you don't approach it with partnership with the retailers. And so that's the way we've done it. It's about what are they trying to achieve, what are we trying to achieve and what can we do together for the greater good. And that's really how we've gone about it.

Absolutely. Great. I want to hit a little bit on international and maybe food service because those have been areas of relative strength both in terms of the business trends, but then also -- and maybe this shifts into a larger conversation on portfolio optimization. But in recent months, you've both divested the Brazil business and then this past week, divested the ice cream shop business in China. Maybe a little bit on the state of that business and then what you're trying to accomplish with those divestitures.

Yes. So I think international has performed exceptionally well this year for us. It's actually probably a strong portfolio -- strongest performer in our segment lineup. A couple of key markets. China has seen a really strong recovery driven by strong Wanchai Ferry growth and store or retail store sales of Häagen-Dazs Ice Cream. On our shops business, that has been sort of a long simmering opportunity for efficiency. We've closed a fair number of shops over the past 4 years. And this latest transaction was really about stepping back from running shops.

Most -- everywhere else we sell Häagen-Dazs, we have franchised the shops business. That's not our core capability and our core competence. We found a partner who can do that better. We've seen really strong performance in Brazil, but that has also been a market where, to your point, we've made the decision to exit largely because we found a portfolio that is well suited to regional taste, but we have struggled to drive scale and efficiency off of the platform. So we put that in the hands of a Brazilian company that's going to be better able to extract value. And we see all of those things as being marginally accretive to operating profit next year. All things equal, our goal in international is to get to a place of sustainable top line growth. The promise is there. We can clearly see that in some of the categories and certainly in some of the markets, but getting at that growth in the most efficient way is really kind of top of the focus for Dana and her new role.

Okay. Kofi, while we got you talking here, maybe you alluded to the -- those actions as being marginally operating profit accretive into next year. There's -- we've talked about this in the past. You've done this in the past, but maybe just an updated version of your pluses and minuses ledger into '27 because there are a lot of moving parts?

Yes, there are a lot of moving parts, and apologies in advance. I would say, first, Dana referenced the consumer environment. We're not building our fiscal '27 plans on any real improvement in the consumer environment. We expect the value-seeking behaviors we've seen kind of hang over fiscal '26 to continue and extend into fiscal '27. We are very focused on turning our performance to dollar share outperformance in our key categories in North America retail. We do see HMM as being critical to both tentpole profitability, but also support reinvestment in the business. I expect that to be around at least 4%. That will also help us offset inflation, which we would see base inflation somewhere in the 3% to 4% range with some pressure from oil prices maybe being a question mark depending on the duration of the conflict in Iran.

So I think that's probably the modest pressure point. We are expecting to use a more -- a broader set of our SRM toolkit, both to optimize and ensure that we're getting leverage in the right places from our investment. But I would expect that to be potentially a place where we will be looking to offset some of that inflationary pressure as well. Transformation, we talked about being an additional contributor, at least at the level we saw in '26. And then I don't want to leave without mentioning a couple of mechanical items. We will see -- this year, we had a 53rd week, which is as a week of essentially a relatively unlevered profit. So that will be a drag as we lap that 53rd week next year. We had a month of yogurt earnings in fiscal '26. So that will be a headwind as well as -- and the one that I'm really very, very happy to take on, which is ensuring that we can pay our people at full incentive, which incentive normalization. Combination of all of those is about 8 to 9 points of profit headwind. So that's kind of structurally what I'd expect to see and then we'll...

You mean mechanical items?

Yes, mechanical items. So I would say we'll fill out the picture on -- with a little bit more precision in 3 weeks.

Okay. I was -- I followed that mostly. I just want to make sure I didn't miss anything. So when we go back to like the incremental investments in remarkability, was that part of that bridge? Or is that...

Yes. So I would expect that -- to Dana's point, we have made significant investments in fiscal '26 on pricing, getting base prices in the right spot. The opportunity that, that creates is for the other 4 levers of the remarkability framework to do a lift, and that's what we're expecting to see. So you will see more price mix as a driver of the top line performance as we move into fiscal '27.

Very good. Very good. Okay. And then I guess on capital, you hit this at the top, but there's been a lot of focus on it. Your confidence in being able to generate enough cash to deliver all this and support the dividend, just maybe elaborate on what you said at the start?

Yes. I think we're in a position right now where we're fully funding all of the growth needs of the business and capital spending, which is our first priority, growth and cost savings and the cost savings is important as well. Second, supporting the dividend at the present rate is -- we're very comfortable. We're obviously not in an environment where either earnings growth or dividend yields or earnings payouts would warrant an increase in the dividend rate, but we are very focused on maintaining it at the current level. And then as I mentioned, after we pay the dividend, the remaining free cash flow will go to pay down debt.

Okay. We just got a couple of minutes left. So Dana, I'm going to give you the final word just to maybe hammer home kind of the 1 or 2 main takeaways and maybe the 1 or 2 things that investors should be most focused on to gain confidence in increasing momentum.

Well, I'll end where I began, which is we are focused on restoring our business back to profitable top line sales growth. The markers that I would look for are first dollar share. You should continue as we go into this next fiscal year to see strong dollar share performance in North America food service and International on Life Protection Formula and cat feeding. And then in North America retail, as we start to lap the price investments, you'll see us start to improve dollar share first with Pillsbury and cereal, then the snacking businesses will come along. So that will be the indication that this remarkability investment is resonating with consumers. And then the other area I'd watch for is, are we doing what we said we'd do in delivering our cost efficiency with HMM and the transformation that Kofi and I have been talking about. Those would be the 2 areas I'd focus on.

Okay. Great. With that, we're right just about out of time. So I will leave it there. Thank you very much for your time. Thank you all for joining us.

Good morning, and welcome to General Mills' Third Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] 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 Corporate Finance. Thank you. Please go ahead.

Thank you, Julian, and hello, everyone. Thank you for joining us today for a live Q&A session on our third quarter fiscal '26 results. I hope everyone 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. 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 with Jeff Harmening, our Chairman and CEO; and Kofi Bruce, our CFO; and Dana McNabb, Group President of North America Retail and North America Pet.

And before we get to Q&A, I'll turn it over to Jeff for some opening remarks.

Thanks, Jeff, and good morning, everybody. We'll turn to Q&A here in a couple of minutes, but I thought I'd just take a minute or 2 to provide some context on what we've been through the first 3 quarters of this year. And then based on the progress we've been able to demonstrate, how we're positioned to deliver a significant step-up in financial performance, which will start in our fourth quarter, which is why we reaffirmed our guidance for fiscal '26.

As a reminder, as we entered this fiscal year, we made a proactive and strategic decision to reinvest to improve the remarkability of our brands with full awareness that this is way our near-term results as we sharpened our competitiveness. So now 3 quarters into that plan, we're seeing strength and momentum on critical building blocks for sustainable growth, namely household penetration, improved baseline volume, distribution and market shares. And this progress only reinforces our conviction that this strategy is the right one for General Mills.

In North America Retail, our investments and remarkability are resonating with consumers. We're rebuilding household penetration and baseline growth, which are the key indicators of future growth. In Pet, we're adding households as well and fueling our fast-growing cat feeding portfolio and also taking steps to accelerate our growth through Love Made Fresh. And we're continuing to be competitive in North America foodservice and international. We know there's still more work ahead. We know that. But with most of reinvestment phase behind us, we expect to deliver meaningful better top line and bottom line performance in Q4 and beyond.

I also want to talk briefly about the other piece of news you may have seen yesterday, which was our agreement to sell our Brazil business. And this builds on a strong track record we have of portfolio shaping, both in acquisitions and divestitures, nearly 1/3 of our portfolio once this is complete over the last number of years. And Brazil includes our Yoki and Kitano brands. And while it's not on the scale of Pet or the [indiscernible] transactions, it's the sme disciplined approach we've consistently taken to reshape our portfolio. And namely, our desire to prioritize our resources and investments on brands and platforms where we have the strongest opportunity to generate profitable growth.

This deal will enhance our margins and increases the International segments focus on our key global platforms, including super premium ice cream, Mexican foods, snack bars and pet food, where we have stronger margin and excellent growth prospects. So with this transaction, as I said, we've turned over nearly 1/3 of our net sales [indiscernible] fiscal 2028. As we look to fiscal '27 as well, as we said in our press release, our #1 goal is going to be to continue to improve our organic sales results, while at the same time, maintaining our industry-leading HMM as well as the transformation initiatives we have to make sure we're maintaining efficiency. In 2026, we're really pleased with the pound share competitiveness we've had in NAR as well as dollar share in the other segments. As we look at fiscal '27, we'll aim to improve our dollar share performance in NAR really, as we've lapped a lot of these price investments and the rest of our markability framework elements take hold.

So with that, we're confident in the strategy we have and we know we're making progress. We will continue to do that in Q4 and into fiscal '27. And with that, let's open it up for Q&A.

[Operator Instructions] Our first question comes from Andrew Lazar from Barclays.

Great. Maybe Jeff, by the end of this fiscal year, General Mills will have the bulk of the pricing investments behind it, along with a lot of the remarkability work. You mentioned in your prepared remarks your expectation for more stable pricing next year. as you lap the pricing. So I guess the key metric will be right on general return to some level of volume growth in fiscal '27 even in the context of category growth that remains for now anyway, below the longer-term level. I was hoping really for whatever you can share on expectations along these lines at this point, knowing you're not obviously going to get into like specific '27 guidance yet.

Yes. I mean, Andrew, you're on the right track in terms of our thinking. What I would say is that we look at fiscal '27 or our goal really is going to be to increase our competitiveness in NAR and dollar terms. And this year, we certainly did in pound terms as a result of all the pricing actions to be more competitive there. And then 27, we'll try to maintain the pound as well as we can. And at the same time, let our innovation and the renovation on our core and our improved marketing and ROIs on our marketing campaigns do the job of increasing our dollar sales results. And so the -- what we feel good about is that we've got the building blocks in place. And look, we've taken a step up on new product innovation and renovation this year from where we were before. I would look for us to take another step forward as we look at next year, bolt-on innovation and renovation, particularly in NAR and in Pet.

And so that will be our goal. It's a very volatile world. So what exactly that yields, we'll talk about in June. We talked about at CAGNY, our category is growing about 1%. But as I said, it's volatile, we'll come back with a revised view of what we think our categories will grow. But I can tell you definitively that our goal will be to increase our dollar share competitiveness across NAR as we have done in the other 3 segments.

Got it. Okay. And then price mix, obviously, in your categories, I think, has continued to be positive despite some of your price investments. I guess what are you seeing competitively in your key categories sort of along these lines following your own price investments?

Andrew, thanks for the question. What I would say from a price/mix standpoint is we have seen price mix in our categories up a little bit. That is behind some small brand innovation. But predominantly in terms of our price mix this year, as you know, in the front half, it was about investing to get our base shelf prices right. It was not about promotion activity, adding frequency or depth. It was about getting below key clips and gap to the competition getting that right, which is why our price/mix is down. As we start to lap that, we lap it a little bit in the back half of this fiscal year, but really the full lapping will occur in the beginning of next fiscal year. We're starting, and we expect to see that price gap close, starting first with our Pillsbury business, then cereal and then we'll start to see some of our fruit snacks come along. And we do expect to get back to price mix growth in fiscal '27.

Our next question comes from Leah Jordan from Goldman Sachs.

Just kind of building on some of that. You called out the step-up in innovation this year. Just can you talk about how that's been resonating so far? How is the growth tracking for new products versus the 25% goal that you had stated previously. And as we look ahead, I know you called out strong seasonal vents, what should we be looking for? Any early commentary on '27 as well.

Overall, I would say we're really pleased with our innovation, and we're tracking at about 25%, maybe a little higher in North America Retail and between 20% and 25% for the portfolio in aggregate. And I'm really pleased with what we've seen out of NAR, maybe I have Dana, to kind of give a little bit of color on kind of what's resonating.

Yes. From AR perspective, I think we'll land a little bit higher than the 25% growth from new products. We have really leaned into mainstream premium benefits such as and fiber, better tasting, news on some of our snacks items and that is restating really well. I'll use Curios protein as an example. The best and getting a protein benefit. That's going to be $100 million by the end of this year, some of the taste renovation that we've done in our salty snacks and our fruit snacks that is resonating incredibly well.

And then, of course, big businesses like Pillsbury and grain where we've been able to bring great tasting, bigger news or protein news, it's resonating really well. So we're getting really good trial and repeat on our new products this year, which, of course, is encouraging for next year because it means year 2 on those items will be helpful to us next year. And then I think the plans next year are even better. We're going to see another step change in new products, again, Better For You, functional nutrition. We're bringing protein to the #1 cereal, honey niterios. Our ghost protein bars, which we've just started to launch are turning very well. We're going to scale that nationally. We make fiber taste great. So we've got Annie's fruit snacks coming with fiber, LARABAR, protein and fiber, ratio granulin fiber and protein. And then as I look to some of the bold flavors we're launching, we are launching a new authentic Mexican brand called La Tiara. We've got Hot Honey coming on Pillsbury biscuits. We've got Tabasco, Old El Paso kits and protein shells and Chimichanga kits. So you name it. We have got really good innovation coming that's starting to ship this quarter, and we will support that with double-digit media investment, seasonal events, and really good in-store and online execution. And I feel confident that now that we've got the shelf prices right, and we've got pounds somewhat stabilized. When we lean into the rest of the remarkable experience framework, we'll be able to improve our performance next year.

Okay. Great. And then just a follow-up on Love Made Fresh. You called out an acceleration in recent weeks after some of the changes that you planned to make that you highlighted previously at CAGNY. Just any more color on the detail of the magnitude of that acceleration, how we should think about further distribution growth from here? And then also an update on how your on-shelf availability tracking. I know that's been an area of focus for you guys.

Yes. Thank you for the question. I think I'll just reiterate that we are pleased with where we see the Love Made Fresh launch so far. We've made really good progress in a lot of areas. We like our execution. We're above the 5,000 mark on coolers right now. We think our marketing execution has been strong, and we are getting great product reviews from retailers and from consumers. As we pointed out, the place that we needed to focus was strengthening our turns at shelf.

And so the #1 place was you mentioned our on-shelf availability. And what we realized is we needed to have our store reps go to the stores every week actually to make sure that the coolers were full. And we've had that happen now for about 3 weeks. And we have seen a step-up in terms in those stores. But again, it's only 3 weeks. So I wouldn't want to lean into any specific number there, but we have seen a step up. The other 2 items that I think are going to be really important to improving our turns are we didn't have a standup resealable pack. And that pouch format is 55% of fresh sales. That is launching now, and we have that coming into the marketplace. And that's 2x the dollar range of roles. So that's going to really help us from a turn standpoint.

And then from building awareness, we're really pleased with how we've built broad awareness, but we got to come down a little bit more in the marketing funnel and reach consumers and pet parents, tell them where we can find the product and do more to convert to trial. So where we're at the next month is we are definitely going to be adding more coolers. We're going to make sure our shelf availability in those coolers is better with reps visiting the store once a week, and we're confident that we will see our turns improve.

Our next question comes from David Palmer from Evercore ISI.

I wanted to ask you about just the results you're getting from not just the remarkability framework, but just the levels of spending, the kinds of spending that you're making and maybe juxtapose it to what you did pre-COVID, a lot of -- 5% of sales and innovation is the activity the rate that you had pre-COVID and you've kind of gotten back there. Promotion spending has been restored and our and you're investing -- leaning in on marketing as well. So I'm just wondering in that immediate pre-COVID period, you stabilized your organic sales. I'm wondering what is different today versus then? Just in terms of the responses you're getting from each of these sort of growth spending activities? And I have a quick follow-up.

The -- a, what's been different in the last 3 quarters is that we've been investing a lot more in our base pricing, as Dana talked about, to maintain our competitiveness and improve our competitiveness. And you're right, the level of new product innovation we have is approaching pre-COVID levels, which we feel good about. Our marketing is approaching pre-COVID feel good about. And now kind of our price gaps relative to competition will be approaching pre-COVID levels, which it hasn't been for the last couple of years, so which is why we made this change in pricing.

And so it's also why it gives us confidence as we look forward to Q4 and next year that our level of competitiveness in terms of dollars will improve because, as you said, we're getting back to the level of activity, whether it's on the marketing side and innovation and media spending or whether it's our price competitiveness that we saw before. I would actually say Dana and her team have done a great job or level of renovation on our core is actually probably better than it was pre-COVID. And so that's what gives us confidence that having gotten past the bulk of this pricing activity now on base price that the rest of the elements of our marketing framework will work a lot harder for us. So you've kind of hit on our thinking, which is that's what we see. The only other difference I would say externally is the consumer is a little bit more stressed than they were in 2019. And so that's why we see our level of promotion activity up a little bit higher. Even if the depth isn't higher, even if the frequency isn't higher, consumers are taking a little bit more are taking a little bit more away on promotion, which is why you see only a little bit of price mix in our categories. That's probably the one thing that hasn't bounced back all the way yet. But that's a structural thing that is clearly cyclical. And as the economy improves, we would anticipate the consumers would improve with it.

That's very helpful. Just one quick question, maybe this one is for Kofi. Just in terms of the gross margin, this quarter, it was relatively low, maybe lower than what we typically see in fiscal 3Q versus your overall fiscal year. And I'm just I'm wondering where you think -- if you can have a stable organic sales in fiscal '27, where do you think gross margins can live for this company? And I'm really wondering about maybe something in the low 30s versus the mid-30s, the streets near 34% for fiscal '27. And then just wondering if you do have a stable organic sales can you get back to mid-30s in terms of gross margins?

Yes, David, thanks for the question. I think you're starting with the kind of the right frame as we see it. We do see stable-to-growing volume as an enabler for returning and restoring our margins. We're not ready yet to maybe go on record on where we expect them to be for '27. But I think the path to improvement is certainly paved and aided by volume stability. What we find is when we have that, leverage improves, obviously, across the enterprise. We get more leverage out of our HMM cost savings, which is always a significant contributor to stability and margin expansion in the middle of the P&L as well supporting reinvestment in the business.

As a reminder, we are in the middle of a multiyear transformation initiative, which I would expect next year on top of this year will add meaningfully to productivity. And as Jeff referenced, we would expect to see improvement in price/mix and be able to leverage more of the full suite of our SRM levers as we step into next year. So I think the combination of all those things will help us start moving back. In terms of where we'd like to be for '27, I'll go on record as we get out of Q4 and into the first quarter of next year.

Our next question comes from Michael Lavery from Piper Sandler.

Just maybe following up on that and drilling in a little bit more to the inflation piece of it. You cited some inflation pressure this quarter already. Maybe for looking ahead, can you give a sense of what you see for fiscal '27, maybe both with and without potentially elevated oil or diesel or oil derivative costs and just an early sense of kind of how it's shaping up. And I know you've got the HMM savings, you've given some color on, but how hard does that have to work to offset some of the inflation you might be looking at?

Yes. No, appreciate the question, and obviously, I'm not prepared to give you sort of the full suite of our assumptions for '27 yet. But our best estimate right now on range of inflation is roughly in line with this year, inclusive of maybe on margin at the far end of the range, some more modest pressure from for the macro basket. Labor probably still remains one of the biggest inflationary components of our cost structure, just as we think about it, either embedded cost or whether it's in logistics or manufacturing or pass-through even in our transformed commodities. So I'd share that as a reminder.

I think the other critical tent poles are we would expect another year of industry-leading HMM at least 4% and then as I referenced in my last answer, some significant contributions on top of this year's significant contributions from our transformation initiatives to help round out the picture. I think it's important, before I leave this point on '27, just to make sure that I give you maybe some of the other sides of the ledger. There will be obviously lapping the 53rd week, which is a tailwind this year, we'll turn into a headwind next year. We've got 1 month of U.S. Yogurt results reflected in this year's results. And as a reminder, that closed at the end of June. And so we'll expect to see that as some headwind and then incentive comp, we would expect to normalize next year. So those are kind of 3 things on the other side of the lender as we look at the next year's tent pole assumptions.

Okay. That's really helpful. And just as you look at finishing fiscal '26, early in the year, you had indicated you'd expect positive organic revenue growth in fiscal now the language is just improved trends. Could you maybe be specific if positive organic revenue growth is off the table? Or is that still something that you think is in region? And if so, would that be a total company for NAR, maybe both? Or what's the right way to think about how the rest of the year unfolds?

Sure. Sure. So you take -- if you kind of track from the midpoint of our guidance, implied in the annual guidance is probably about 75 basis points, 80 basis points at the midpoint of organic sales growth. We're not -- while we're expecting continued competitiveness so pound share, NAR, dollar share in the rest of our business to hold, we're not banking in this guidance on a dramatic turn in market performance in Q4. In Instead, we're expecting a lot of this come from some mechanical factors. So we referenced in our remarks, significant retailer inventory headwind in Q3 that we would expect to flip to a tailwind in Q4. And that's, on its own, probably worth about 200 basis points of benefit to organic growth in Q4. And we'd expect the rest of the improvement to come from the reversal of trade expense timing, which was a headwind in Q3 and will become a pretty healthy tailwind as we lap last year's Q4.

Our next question comes from Alexia Howard from AllianceBernstein.

Can I ask about the foodservice weakness this time around. You mentioned bakery flour volumes. Is that something that's likely to persist. And what does it tell us about some of those category [indiscernible] dynamics in that segment?

Yes. I think, Alexia, for Foodservice overall, let me take a step back and then we'll get the flower here eventually. The as we think about food service, the eating occasions at home are about 86%, and that's been pretty stable. Over the last few months or so, commercial traffic is down about 0.5 point and noncommercial traffic is up about 1 point. As a reminder, we over-index in the noncommercial space. And as we look at the third quarter, you see our volume decline a little bit and you see the profitability decline. I would remind you on the profit side, about half of the decline is the yogurt divestiture. So when you see that big number for that decline, know that about half of it is yogurt. And about another -- about 30%, 35% is flour. So those are the 2 biggest items. As I think about the fourth quarter, we're not thinking that our flour business will come back in the fourth quarter of this year. We'll see what happens because of the complex nature of distribution and food service, the movement is a little bit slower one way or the other. I am really proud of our competitiveness in K-12 schools. The fact that we've changed to natural colors ahead of when we said we were going to do and we're competing quite effectively outside of flour.

So outside of that one piece of our Foodservice business, pretty pleased with our performance and our level of competitiveness. And this forecast we have for the rest of this year wouldn't contemplate becoming more competitive on flour for the next 3 months.

Got it. And then can I follow up on Love Made Fresh, you obviously had the 5,000 cooler goal for the end of January, which I think you hit and probably a little bit above that now. Is there another milestone a few months down the road in terms of additional distribution that you can share? Or at the moment is the focus on getting the terms up before you have another big move forward on the distribution side?

Yes. On the -- Alexia, on the distribution side, I think there are the number of coolers and then there are kind of the distribution within those coolers. To the extent we just allow us to stand up receivable pots that will add distribution, but it may not have the number of stores. It will just add the number of SKUs we have in the store we're currently in. And we think that's going to be the most productive. So our focus really is on enhancing the turns where we are. And to the extent we get a little more distribution, that's okay, too.

But as Dana talked about, making sure that availability has increased significantly and that our marketing is taking place at the kind of the lower end of the funnel, closer to the point versus, that's going to be our focus. We know we have a great product. And now we have good distribution. And so now the job to do is make sure we keep improving the turns where we are. As Dana said, 3 weeks in to having more people at the shelf more often, we're seeing positive benefits to that. And we'll look to see that continue as well as redoing our marketing mix so that we have more kind of at the point of attack, if you will.

Our next question comes from Robert Moskow from TD Cowen.

Dana and Jeff, I was hoping to dive into the high single-digit decline in snacks. The salty snacks segment of the market has become much more competitive with price cuts and innovation. And I wanted to know if some of that's just adjacent to you, but do you think that's carving into your brands at all? And what gets us back to growth in that segment?

Thanks for the question, Rob. I think starting first with Vault. We in the categories we compete in are not seeing the same trends as some of the other salty competitors. One of the things that we're seeing in salty actually is that this is a business where we've had 3 consecutive quarters of pound and dollar share growth. We're seeing consumers respond to our price investments. We've had really good price pack architecture. And then those -- the product renovation that we did to just improve the flavor, that's resonating really well. So our salty business has performed incredibly well, and we think that will continue into next year.

The challenge that we have seen is really on our hot snacks business. That has what's driven the deceleration that you're seeing in snacks. And as I've talked about before, on hot snacks, one of the main drivers of that with Totino's is that we did a price pack architecture conversion. We changed a bag to a box. And in today's economic times, when the consumers are stressed, they just didn't see any value in that box, and we thought sales declined significantly. And so we're in process of converting that back now. The retailers have been really supportive. We think we've got the price rate and we've really got to up the product quality and how we're talking about the product to consumers, which you'll see go into marketplace this year. And so that's our main focus for snacks going forward.

On our grain snacks and our fruit snacks, it is about making sure we taste great and we have enough better-for-you innovation with protein and fiber, which we really do, and we're leaning into the Annie's business in our snacking categories, which we also think will work incredibly well for us.

So ex Totino's, is snacks stable? Or how -- or can you tease it out for us?

Ex Totinos, snacks overall for us would still be down slightly. That is driven by our grain business. Our Nature Valley business is performing pretty well. We've got our protein is doing really well. Our wafers business doing really well. And actually, fiber One is on the come back with GLP-1 users, but it's still down. So what we see in grain is that consumers are moving towards performance nutrition. And so that's why you've really seen us ramp up this [indiscernible] innovation that, again, is performing really well, high protein, low sugar. We're going to scale that nationally right now. We'll continue to lean into everything that's working well on Nature Valley, and we will double down with GLP-1 users on our Fiber One and Protein One business.

Yes. As Dana said, the biggest challenge really is Totino's a little bit in bars as well. barges about innovation. We think we have a good story there. Unlike what you might have heard from others on salty snacks, our salty snacks business was up double digits in the third quarter. And I'm really pleased with Dana and her team, what they've done in salty snacks, I mean, really good price pack architecture. [indiscernible] mix is flying and our fruit retail sales are flat. And so as you decomp the whole thing, we're really strong in salty snacks and holding our own fruit, and the job to do really is primarily on Totino's with a little bit in bars as well.

Our next question comes from Scott Marks from Jefferies.

First thing I wanted to ask about is some of the inventory -- the retailer inventory adjustments that you called out. Could you just help us understand a little bit what parts of the NAR and Pet business were impacted? And then how we should be thinking about the reversal in each of those segments for fiscal Q4.

Yes. Thank you for the question. We definitely have seen some quarter-to-quarter fluctuations as it relates to retailer inventories. I would say from a NAR perspective, we typically see our net sales and our retail sales track trends track relatively consistently. They were a little bit off in Q3, and we think that will revert back in Q4. It's pet where we see the more significant gap. That's about 3 points. And as we look to Q4, our current guidance does not really contemplate a headwind or a tailwind from Pet in Q4.

Historically, it has been really important for us to predict shipment timing and retailer inventory impact. So we just think that the best planning assumption is to assume that it's going to be neutral in Q4.

Understood. And then I just wanted to ask a little bit about the guide. Obviously, holding the guide implies maybe a fairly wide range for Q4. So just wondering if you can help us understand maybe the swing factors that could push results towards one end or the other?

Sure. And certainly, the guide on profit is maybe even appreciably wider than on the top line. But obviously, on the top line, as I referenced earlier, we're expecting sort of the mechanical factors of the retailer inventory reset, which we expect to be to improve our organic growth rate about 200 basis points over Q3, so about 50 basis points in the quarter, and then our trade expense timing to kind of carry the rest on the top line. On the bottom line, as Dana just referenced in her remarks, we saw some additional pressure on top of some things that we had already anticipated going in. So specifically, going into the quarter in Q3, we would have expected remarkability investments, divestiture headwinds and trade expense timing comparisons to be a drag, those kind of accounted for 2/3 of the decline in Q3. And then the other remaining factor that was frankly still variable and wide as we came into CAGNY and reset guidance were around the shipment time -- the weather-related factors that impacted shipment timing and supply chain disruptions for us, and those added additional pressure to the results and largely account for the width of the range on profit.

So our ability to recover fully from some of the cost overhang from the supply chain disruptions. We are making progress, but maybe at the low end of our guidance, that would maybe not be able to fully recover. And then at the more positive end of our guidance or the more benign end of our guidance, we'd see a more full recovery in those costs as well as, obviously, the factors around trade, supply chain retailer inventory flipping to tailwinds in the quarter.

So the last thing I would just leave you with is a reminder that we do expect to see obviously a significant contribution from the 53rd week in Q4 and that's baked into our guidance as well as the mechanical factor. But really the variability around supply chain and retail inventory recovery would probably account for the width of the range on profit.

Next question comes from Peter Galbo from Bank of America.

Kofi, just back to the question around inflation for next year. I know it's probably still a little too early to know fully. But a couple of your peers have called out freight as a potential headwind, and I think freight even outside of what's happened in diesel. So maybe you can just comment on what you're seeing in terms of driver tightness or anything that might be a potential hiccup on that side?

Yes. I think broadly, I don't know that we would call out different factors. We're tracking those. Obviously, we're not done with our fiscal year. So we don't expect those to be material in this year, given we're largely hitting at our contracted rates. It is a variable that we're factoring into the range that I gave you earlier in the call on our expected inflation for next year, and we'll be prepared to give you a more full picture here in, call it, 2 more months as we close the quarter and the year.

Okay. Fair enough. And Jeff, maybe just -- I didn't get a lot of airtime, but the decision on Brazil I don't think it comes as a huge surprise. So maybe you can just provide a few more details into just the thinking to kind of exit the market and what drove the decision at this time.

Yes. It stems from our strategy to really focus on our core global brands outside the U.S. And there we have a great right to win with our core global brands. They are fast growing, and they're quite profitable. And as we looked at our Brazilian business, our Brazilian team has done a really nice job. But the challenge for us in Brazil is that not only we under scale, but also our portfolio there is not really our global brands. It's some good local brands. But the combination of having these local brands as well as not having the scale means that our Brazilian business has not been very profitable for quite some time. And so the idea to divest of our Brazilian business really is a factor of our focusing on our core global brands, which will enable us in our International segment to improve our margin profile, which we've done a really nice job of this year, but there's another step came to go and divesting this business will help us do that while maintaining our growth and increasing our margin profile. So that's -- in doing that, what we'll be able to do is shift our resources to place where we have -- we think we have a longer-term right to win is going to be more profitable for us.

I think that's all the time we have this morning. So I think we should wrap there. Thanks, everyone, for the good questions and discussion, and we look forward to speaking with you over the course of the coming quarter.

This concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning. This is Jeff Siemon, Vice President of Investor Relations and Corporate Finance. Thank you for listening to General Mills prepared remarks for our fiscal 2026 third quarter earnings. Later this morning, we will hold a separate live question-and-answer session on today's results, which you can hear via webcast on our Investor Relations website. Joining me for this morning's presentation are Jeff Harmening, our Chairman and CEO; and Kofi Bruce, our CFO.

Before I hand things over to them, let me first touch on a few housekeeping items. On our website, you will find our press release that posted this morning, along with a copy of the presentation and a transcript of these remarks. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause our future results to be different than our current estimates. And with that, I'll turn it over to Jeff.

Thank you, Jeff, and good morning, everyone. Let me start with today's key messages. We entered fiscal 2026 with a bold strategy to increase investment to improve the remarkability of our brands and restore organic sales growth. While we expected this reinvestment approach along with the impact of divestitures and timing headwinds, would pressure our sales and earnings through our first 3 quarters, we also expected it to drive stronger competitiveness and set the stage for a return to growth once we move past the reinvestment phase. And that's what we are seeing: Clear signs of progress on key fundamentals, including household penetration, baseline sales, distribution and market share. These are important metrics to give us confidence that better results are ahead for General Mills. We see progress across our operating segments, as we'll tell you about in detail today. For example, in North America Retail, our investments in innovation, product renovation, advertising and base prices have resonated with consumers.

In fact, we restored household penetration growth and driven significant improvement in our baseline volume trends, both of which are important leading indicators for overall growth. In North America Pet, we've grown households, improved our dollar share trend and continued to fuel our fast-growing Cat Feeding business while launching a new growth pillar with Love Made Fresh. And in North America Foodservice and International, we've competed effectively, particularly in our biggest global brands like Pillsbury, Haagen-Dazs and Nature Valley. While there is still more work to do, this progress gives us confidence that our focus on remarkability is working and will lead to stronger profitable growth for our brands over the long term. With 3 quarters of difficult financial results behind us, we are poised to deliver stronger performance going forward. We reaffirmed our fiscal '26 guidance in our press release this morning, and we expect favorable timing comparisons, benefits from the 53rd week, and our continued market share momentum to translate into improved top and bottom line results in Q4. And as we look ahead to fiscal '27 with the headwind from base price adjustments behind us, and with plans to further advance the remarkability of our brands, we're confident that we can deliver improved organic sales growth while continuing to generate industry-leading cost efficiency.

Our third quarter results are summarized on Slide 5. Importantly, our progress on strengthening our remarkability helped deliver a second consecutive quarter of sequential improvement in our global retail sales trends. However, our organic net sales performance at down 3%, trailed Nielsen-measured retail sales by nearly 1.5 points, driven primarily by retailer inventory headwinds in North America Retail and North America Pet that we had called out at CAGNY last month, a portion of which we expect to reverse in Q4. On the bottom line, our Q3 adjusted operating profit and adjusted EPS results were both down by more than 30%. Nearly 2/3 of that decline was driven by our reinvestment, divestitures and unfavorable trade expense timing comparisons with your items that have been part of our expectations since the start of the year. The remainder of the decline was due to headwinds from retailer inventory changes and weather-related supply chain disruptions that were new in Q3 and that we expect to largely reverse in Q4.

In addition to those Q4 benefits, we expect the headwinds from trade expense timing in the first 3 quarters to turn to a tailwind in Q4. And with the added benefit of the 53rd week, we expect to deliver a significant sequential improvement in our top and bottom line results in the fourth quarter. We started the year by highlighting 3 priorities that are critical to improving our underlying momentum and setting our business up for a stronger fiscal '27. They are investing in remarkability to strengthen pound share and household penetration within NAR, accelerating North America Pet by growing our core and expanding into new growth spaces and driving efficiencies through best-in-class holistic margin management productivity savings as well as our global transformation initiative. We've made strong progress against each of these priorities year-to-date, and we remain committed to controlling all that is within our control. We are confident that these strategic pillars will drive acceleration across our business moving forward, leading to value creation for our shareholders.

To achieve these priorities, we are leaning on a remarkable experience framework as our guide. By advancing 5 key pillars: product, packaging, brand communications, omnichannel execution and value, we're positioning our brands for greater consumer affinity and long-term growth. Let me share a few examples of how our focus on investing in remarkability delivered results in the third quarter. Our plan for North America retail this year has been focused on winning with consumers by investing to strengthen all elements of remarkability. We made an important move to adjust base prices across 2/3 of our NAR portfolio to get below key price cliffs and ensure gaps to competition were in a sustainable range. We're confident these actions are working. At the same time, we've been investing in the other key elements of the framework to further improve our position of our brands with consumers.

On superior product, we're continuing to see great results from innovation in fiscal '26 with successes like Cheerios protein cereal, Progresso Pitmaster soup, and Mott's filled bars keeping NAR on track to deliver a roughly 25% increase in net sales from new products this year. We've also brought consumer-relevant renovation across each of our top 10 U.S. categories focused on the right combination of product benefits, great taste, convenience and affordability and like "Bakes Up Bigger" news on Pillsbury and bolder flavors of Chex Mix. And we have more news and innovation launching in the fourth quarter against the largest consumer trends. On Remarkable Packaging Design, we're winning at the shelf by providing options that give consumers genuine choice. This includes doubling our sales from price pack architecture initiatives from entry price points for wallets are stretched, to small sizes of the deliver for GLP-1 diets, to more premium trade-up formats for consumers seeking value beyond just price. For example, our Chex Mix tubs have been more than 60% incremental to our salty snacks business. On Brand Communication, we increased investment behind stronger creative ideas, and our media ROIs are up double digits on our biggest brand this year, including both Cheerios and Cinnamon Toast Crunch.

On Omnichannel Execution, we're leveraging our portfolio of scale and compelling events to deliver differential retail execution. And we continue to invest in retail media to win online with consumers who are seeking convenience in addition to value. By partnering closely with retailers, we have tripled our e-commerce growth across our top 5 e-commerce retail partners in recent months. Our investments to strengthen remarkability have generated broad-based improvement in key fundamental business measures across NAR. This can be seen most clearly in our baseline volume, which reflects everyday consumer purchases. By investing to adjust base prices, we've driven a 6-point improvement in base volume in our top 10 categories and a 5-point improvement overall, compared to our fiscal 2025 trend. This is an encouraging indicator for our ability to drive profitable growth going forward. We're also driving improvement in other key fundamental metrics. NAR grew or held total pound share in more than 70% of our priority businesses in Q3 and in 8 of our top 10 categories so far this fiscal year. And we've attracted new consumers with our household penetration up in 7 of our top 10 NAR categories through Q3. We're maintaining this strong competitiveness even as we start to lap the initial price investments we made a year ago.

NAR's Nielsen measured price mix improved from down 3 points in Q2 to down 1.5 points in Q3. We expect this price mix headwind to stabilize in fiscal '27 when we fully lap our price investments. Through 3 quarters, NAR's Nielsen measured pounds in the U.S. are down a bit more than 1% despite slowing modestly in Q3, when we saw significant weather-related volatility in January and February. The 1% decline represents a notable improvement from our fiscal '25 result, which was down 3%, and we're working hard to continue improving from here, including building plans to step up our performance in Pizza and Flour, 2 categories that make up half of the segment's year-to-date pound decline. More broadly, we're continuing to enhance our remarkability across NAR to further strengthen our momentum heading into fiscal '27 that includes product news and innovation against the largest consumer trends like bold flavors on Old El Paso, La Tiara and Gushers, protein and fiber benefits on Cheerios, Annie's and Ghost, and familiar and fun offerings on Fruit by the Foot and Nature Valley. By combining this news with increased distribution on our core and new products, higher media support and strong seasonal events in Q4, we're strengthening NAR's foundation to better position the business to drive profitable growth in the future.

Shifting to Pet, we remain a leader in the category, and we see a long runway for growth behind continued humanization and premiumization. We made further progress in North America Pet in Q3 with our all-channel retail sales up more than 2%, outpacing our deliveries by nearly 5 points due largely to the retailer inventory headwinds I mentioned earlier. Importantly, we drove household penetration growth, advancing our mission to help more pet parents feed and treat their pets like family. On dry dog feeding, we continue to drive low single-digit growth on our Life Protection Formula line and we are actively advancing plans to improve trends on Wilderness as we discussed last month at CAGNY. And on our new Love Made Fresh launch, we've been in the market for about 5 months, and we're continuing to learn and adapt in the fast-growing fresh feeding segment. We executed a successful launch with distribution reaching more than 5,000 coolers and our new advertising campaign driving early consumer awareness and trial helping us reach a mid-single-digit market share position in some of our initial customers. And we're taking a few important steps to accelerate our performance from here.

First, we're getting sales reps in the stores more frequently to help improve our in-store availability. Second, we're adjusting our marketing communications to drive more conversion and trial. Third, we're continuing to expand distribution, including starting to ship in Q3 to the largest e-commerce retailer in the pet food category. And last and most importantly, we recently launched a new standup resealable pouch which is a format that drives more than half of retail sales in the fresh feeding segment. We've seen an acceleration in retail sales for Love Made Fresh in recent weeks after beginning to execute these initiatives and we remain bullish about our opportunity to build a profitable, fast-growing business and fresh over the long term. Shifting to cat feeding. We continue to execute well, driving 6% retail sales growth in Q3 behind innovation and strong brand communication. Our Tastefuls brand continues to win with retail sales up mid-single digits in Q3 behind investment in head-to-head advertising, stronger retail execution and a new gravy innovation that is driving expanded distribution. And Tiki Cat generated double-digit retail sales growth in the quarter, driven by expanded distribution and innovation.

Turning to our North America Foodservice segment. We continue to execute well against our strategic priorities of leading in breakfast through nutrition and expanding our frozen baked portfolio. That focus has helped us to hold or grow dollar share in nearly 90% of our priority businesses so far this year, including maintaining our leadership on cereal and K-12 schools. And we're proud to have recently announced that our entire portfolio of K-12 school foods is now made without certified colors, successfully achieving this milestone ahead of our summer 2026 commitment. Turning to our international business. We remain well positioned and continue to drive good growth on our global platforms, which contributed to total segment retail sales up 3% in the quarter. Haagen-Dazs continues to delight consumers with new flavor launches in Europe, renovation on core products like cookies and cream and new stick bar innovation, resulting in mid-single-digit retail sales growth in the quarter. And we drove high single-digit retail sales growth for snack bars in Q3, led by continued double-digit growth in France, where our Nature Valley protein bars are helping drive incremental sales for our snack portfolio.

For our third priority, we're maintaining a sharp focus on efficiency to help fund our investments in remarkability through our holistic margin management productivity program, we remain on track to generate 5% gross savings in our cost of goods sold in fiscal 2026, driven by our digital advancements within our supply chain, particularly in logistics and manufacturing. And we continue to expand the impact of our multiyear enterprise global transformation initiative. Combined, these and other efficiency efforts are expected to contribute $600 million in total savings this fiscal year extending our long track record of rigorous cost discipline. And we'll continue on this path moving forward. As we said at CAGNY, we have a strong pipeline of initiatives to continue delivering best-in-class efficiency in the years ahead. In fiscal '27, we expect to deliver HMM savings of at least 4% of cost of goods sold as we accelerate the returns from our digital investments in our supply chain and will generate incremental savings from our transformation initiative as we leverage the continuous improvement practices we've honed in our HMM program and apply them more broadly to our structure and our ways of working.

We'll share more on our Q4 earnings call about our plans to continue to drive cost savings to fuel our growth investments in fiscal '27. With progress on our priorities in Q3 and plans to continue our strong execution in Q4, we reaffirmed our fiscal 2026 guidance earlier today. Despite the dynamic operating environment, we are controlling all the remains within our control and living those stone unturned to maximize efficiency and drive improvement across the business. And we remain sharply focused on free cash flow generation, which has been a hallmark of General Mills for more than a decade and supports our disciplined approach to capital allocation. With that, let me turn it over to Kofi to go into more detail on our third quarter results and key assumptions for the remainder of the year.

Thanks, Jeff, and hello, everyone. Our third quarter financial results are summarized on Slide 18. As Jeff mentioned, our Q3 top and bottom line results reflect the actions we've taken to improve our long-term growth profile. Most notably our increased remarkability investments in our North American yogurt divestitures as well as the impact of trade expense timing comparisons. These items contributed roughly 2/3 of the adjusted operating profit decline in the quarter.

In addition, during the quarter, we experienced retailer inventory headwinds and weather-related supply chain disruptions that further pressured our Q3 results, though we expect these items to largely reverse in Q4. Reported net sales in the third quarter totaled $4.4 billion and were down 8%, including a 6-point headwind from the net impact of divestitures and acquisitions. Organic net sales were down 3%, and which trailed our Nielsen-measured retail sales by roughly 1.5 points. On the bottom line, adjusted operating profit of $547 million was down 32% in constant currency, driven by higher input costs and lower volume, including the impact of North American yogurt divestitures, partially offset by favorable product mix. Q3 adjusted diluted earnings per share totaled $0.64 and were down 37% in constant currency, driven primarily by lower adjusted operating profit and a higher adjusted effective tax rate, partially offset by lower net shares outstanding.

Moving to the components of total company net sales growth in the quarter. Organic net sales declined 3% in the quarter, driven by lower pound volume and unfavorable price mix. For inorganic items, the net impact of divestitures and acquisitions was a 6-point headwind to net sales in Q3 and foreign currency exchange was a 1 point benefit. Shifting to segment results. We saw significant weather-related volatility in Q3 that had a meaningful impact on both consumer purchases as well as our shipments to customers in January and February. In fact, winter storms contributed to a fourfold increase in the volatility of our weekly U.S. Nielsen consumer volume in January and February, including a week where our Nielsen volume was down almost 14% from the prior year and another week where increased 21%. With the backdrop of this heightened volatility, we saw short-term changes in customer order patterns that resulted in a reduction in retailer inventory in the quarter and storm disruptions in our supply chain network drove lower service and higher costs in Q3.

As we've entered Q4, our plants are back online we're restoring our service levels, and we expect these disruption-related headwinds from Q3 to flip to a tailwind in Q4. Moving to North America Retail. Third quarter organic net sales were down 4% driven by lower volume and unfavorable price mix. Organic volume growth trailed Nielsen-measured retail volumes in the quarter by about 1 point due in part to the demand volatility I just mentioned. About half of that was a normalization of Q2 favorability, and we expect the other half to reverse to a tailwind in Q4. As Jeff noted, we've strengthened our retail sales performance fiscal year-to-date holding or growing pound share in 8 of our top 10 U.S. categories and growing household penetration in 7 out of 10. On the bottom line, constant currency segment operating profit was down 33% in the quarter, driven primarily by lower volume, including the impact of North American yogurt divestitures and higher input costs, partially offset by favorable product mix and lower SG&A expenses.

Third quarter reported net sales for our North America pet segment were up 3%, including the impact of the Whitebridge acquisition, with double-digit growth in cap fee mid-single-digit growth in pet trading and mid-single-digit decline in dog fee. Organic net sales were down 3%, which trailed retail sales by roughly 5 points due largely to changes in retailer inventory. Our all-channel retail sales were much stronger at more than 2% growth in the quarter, resulting in the segment holding dollar share. On the bottom line, Third quarter North America pet segment operating profit essentially matched year-ago results in constant currency. North America Foodservice organic net sales were down 3% in the quarter, driven primarily by a decline in bakery and flour, including a 1 point headwind from index pricing. Though away-from-home industry growth slowed in Q3 due in part to storm-related shutdowns, we continue to drive strong market share performance. In fact, we held or gained dollar share nearly 90% of our priority businesses so far this year, driven by positive results in our noncommercial channels, including health care, colleges and universities, lodging and cereal and K-12 schools.

On the bottom line, North America Foodservice segment operating profit was down 32% in Q3, driven by unfavorable price mix and lower volume, including the impact of the older divestitures as well as higher input costs. Moving to our International segment. Third quarter organic debt sales were up 1%, including the reversal of favorable timing benefits we experienced in the first half. Growth in India and China was partially offset by a decline in Europe. Fiscal year-to-date, we grew or held dollar share in nearly 40% of our priority businesses, led by good results in Haagen-Dazs ice cream and Nature Valley snack bars with more work to do to improve competitiveness on Old El Paso Mexican food. Third quarter International segment operating profit was up 82% in constant currency, driven by favorable price mix, lower SG&A expenses and higher volume, partially offset by higher input costs. Slide 25 summarizes our joint venture results. In Q3, Cereal Partners Worldwide net sales were down 4% in constant currency, driven by a decline in Europe due in part to supply chain disruptions. Constant currency net sales for Haagen-Dazs Japan were up 3%, led by strong core renovation. Third quarter combined after-tax loss from joint ventures was $6 million compared to after-tax earnings of $14 million a year ago, driven primarily by our share of transaction costs related to certain assets held for sale at CPW.

Turning to margin results. Our Q3 adjusted gross margin of 30.6% of net sales were down 280 basis points versus last year, driven primarily by higher input costs partially offset by favorable product mix, including the impact of North America yogurt divestitures. Our adjusted operating profit was down 420 basis points to 12.3% in Q3, driven by lower adjusted gross margin and higher SG&A expenses as a percentage of net sales due to fixed cost deleverage. Moving to other noteworthy Q3 income statement items. Adjusted unallocated corporate expenses increased $32 million in the quarter, driven primarily by an increase in certain compensation and benefit expenses. Third quarter net interest expense was down $8 million, driven by lower average debt balances. The adjusted effective tax rate was 24% compared to 21% a year ago, due to certain nonrecurring discrete tax benefits in fiscal 2025 and unfavorable earnings mix by jurisdiction in fiscal 2026. And average diluted shares outstanding in the quarter were down 3% to $537 million reflecting net share repurchases. Our financial results through 9 months are summarized on Slide 28. Net sales of $13.8 billion were down 3% on an organic basis. Adjusted operating profit of $2.1 billion was down 23% in constant currency, while adjusted diluted earnings per share totaled $2.60 and were down 25% in constant currency.

Turning to the balance sheet and cash flow, 9-month operating cash flow decreased year-over-year to $1.6 billion, driven primarily by lower net earnings, excluding the pretax gain on divestitures, partially offset by changes in deferred taxes, after-tax joint venture earnings and restructuring, transformation, impairment and other exit costs. Capital investments through 9 months totaled $356 million, and we paid $987 million in dividends and returned $500 million in cash to shareholders through net share repurchases through the first 9 months of fiscal 2026. Before I close, let me share some of the key financial assumptions on the remainder of the year that underpin our guidance. In Q4, we expect to deliver significant sequential improvement in organic net sales, adjusted operating profit and adjusted diluted earnings per share growth driven by several factors that are mechanical in nature. In other words, we are not betting on a major step-up in our underlying business in order to meet our current annual guidance. And we feel good about how we're positioned heading into Q4.

In terms of our assumptions, we have the benefit of a 53rd week in fiscal 2026, which will be a significant contributor to profit and earnings per share growth. We expect to benefit from a partial reversal of the retailer inventory headwind we experienced in Q3 and we will have a meaningful tailwind from the comparison against significant unfavorable trade expense timing in last year's Q4. We expect to see a reduction in our adjusted effective tax rate compared to last year, driven by certain nonrecurring discrete tax benefits this year, and we expect to continue our strong year-to-date market share performance. With those assumptions in mind, we're reaffirming our fiscal 2026 outlook, which you can see on Slide 31. Organic net sales are expected to be down 1.5% to down 2%. Adjusted operating profit and adjusted diluted earnings per share are expected to be down 16% to down 20% in constant currency. And we expect free cash flow conversion to be at least 95% of adjusted after-tax earnings. With that, let me turn it back to Jeff for some closing remarks.

Thanks, Kofi. As I said upfront, we entered fiscal 2026 with a deliberate strategy to reinvest behind brand remarkability recognizing it would create near-term pressure on our financials as we sharpened our competitiveness. We continue to see clear signs that this approach is gaining traction with improving fundamentals across the business from household penetration and baseline volume in North America retail, to stronger share trends and a successful launch of new growth platforms like Love Made Fresh in North America pet to solid execution on our global platforms and foodservice and international.

With 3 quarters of challenging results behind us, we expect to deliver a much stronger performance in Q4 and driven by the gains we made on those underlying business fundamentals as well as a few mechanical factors that will turn in our favor. And as we look ahead to fiscal 2027, with strengthening momentum and our price investments behind us, we're confident in our ability to deliver improved organic sales while continuing to generate strong cost efficiency, all in service of driving strong returns for our shareholders.

And now, in good keeping with CAGNY tradition that spans more than 4 decades, we begin with the conference with General Mills.

Today, we are pleased to welcome Chairman and CEO, Jeff Harmening; and CFO, Kofi Bruce. This is an important moment for General Mills as the company continues to make solid progress in improving organic growth, improving its affordability to the consumer and thoughtfully reshaping its portfolio.

Please join me in thanking General Mills for sponsoring this morning's breakfast and in welcoming Jeff and Kofi to the stage to officially kick off CAGNY 2026.

Thanks for that introduction, Steve, and greetings to everyone here and on the webcast. I'm pleased to be joined today by Kofi Bruce, our CFO; and Dana McNabb, our Group President for North America Retail and North America Pet.

Before we begin, I'll remind you that our remarks today include forward-looking statements that reflect our current views and assumptions. This slide as well as a supporting presentation on our Investor Relations website list factors that could cause our future results to be different than our current estimates.

There are three messages that I hope you'll take away from our presentation this morning. First, we are executing against our Accelerate strategy and investing behind remarkability as the primary lever to restore organic sales growth for our business.

Second, we've made progress improving our growth trends in North America Retail and North America Pet, our top two focus areas within our portfolio. And while we still have more work to do to reach our goals, we know that we are moving in the right direction. Dana will go deeper into these two businesses in a moment.

And third, as you saw in our press release earlier this morning, we've updated our outlook for fiscal 2026 to reflect a challenging and still volatile consumer environment, which is driving a slower volume recovery at a higher cost than we had initially expected.

While the recovery may take longer than we previously anticipated, we remain confident that enhancing the remarkability of our brands is the best path to restoring consistent and profitable organic sales growth. And by pairing stronger growth with our long track record of cost efficiency, free cash flow generation and capital discipline, General Mills will drive attractive shareholder value over the long term. Kofi will share more on this at the end of our remarks.

At our Investor Day last fall, I talked about how for nearly 160 years General Mills has been innovating to deliver on consumer needs and make food the world loves. Over that time, we've grown into a $19 billion company with a portfolio featuring 8 billion-dollar brands, and we've established leading positions across our categories, all backed by a world-class team committed to our purpose and values.

Our Accelerate strategy remains the playbook for how we create value. With our purpose as our North Star, Accelerate guides both where we play including our core markets, global platforms, local gem brands and our commitment to portfolio reshaping as well as how we win by boldly building our brands, relentlessly innovating, unleashing our scale and standing for good.

At the center of how we bring Accelerate to life is the Remarkable Experience Framework. We use this framework to assess and improve each of our brands across five key areas: product, packaging, brand communication, omnichannel execution and value. It's how we translate our strategy into specific actions in the marketplace that will drive consumer preference for our brands and, ultimately, result in long-term growth for our business.

At our core, we lead by staying relentlessly focused on the consumer. We actively anticipate their changing needs and desires and we adapt our brands to meet them in meaningful ways. As we think about evolving consumer needs, we see several megatrends that we expect to impact our industry over the long term. Let me walk you through how we are thinking about a few of them.

Changing demographics are playing a critical role in consumer values and lifestyles. The U.S. population is aging with more than 40% of food and beverage sales coming from households over 55. It's also becoming more multicultural. In fact, Hispanic consumers make up nearly 1 in 5 Americans and are uniquely shaping our food culture. We see a heightened focus on value, particularly for middle and lower-income consumers. Cost of living and housing pressures are reshaping spending patterns and value is a core expectation that is here to stay.

Health, wellness and weight management priorities continue to evolve with consumers looking for food that delivers functional benefits. We expect GLP-1 and other anti-obesity medications to have a lasting influence in the food and nutrition landscape, nudging some consumers toward smaller portions and more nutrient-dense protein and fiber forward foods.

The humanization of pet food is a continued megatrend with pet parents increasingly viewing pets as members of the family. This continues to be a tremendous opportunity for our portfolio of pet brands, including Blue Buffalo, Tiki Cat and Edgard & Cooper.

And lastly, AI and digital integration will continue to be powerful drivers of innovation. E-commerce and omnichannel shopping are standard, and AI is reshaping product discovery through agentic commerce, where AI-powered tools help consumers discover, choose and purchase food and pet products.

Our goal is to ensure that our innovation agenda, portfolio choices and capability investments align to these macro trends. At the same time, we will continue to respond to near-term value pressures in remarkability and precision, category by category and brand by brand.

Our work to respond to the consumer and amplify remarkability has resulted in encouraging improvement in our competitiveness through fiscal '26. However, this improved competitiveness has come against a challenging operating backdrop, characterized by historically low consumer sentiment, heightened uncertainty and significant volatility. The cumulative impact of inflation, SNAP benefits reductions, geopolitical uncertainty and other factors have led to significant consumer stress, especially for the middle and lower income groups.

These factors have translated into year-to-date category growth that has been below our initial expectations, most notably in cereal, snacks and dog feeding, though we have seen some improvement in each of these categories in our Q3. Additionally, we said on our Q2 earnings call, we are seeing financially stressed consumers buying more of their products on promotion and less at everyday prices despite the fact that our frequency and depth of promotion are broadly in line with a year ago. This has led to a more costly mix of volume this year.

At the same time, we continue to manage what we can control with a sharp focus on cost discipline. We remain on track to deliver industry-leading Holistic Margin Management cost savings this year, and we're continuing to advance our global transformation initiatives to streamline our end-to-end processes, modernize the way we work and create more organizational agility and efficiency. We expect the combination of HMM transformation and other efficiency efforts will generate $600 million in total cost savings in fiscal '26, which we are using to offset input cost inflation and reinvest in growth.

With these factors in mind, we've adjusted our full year outlook for fiscal '26. We now expect organic net sales to be down between 1.5% and 2%; adjusted operating profit and adjusted diluted EPS are now expected to be down between 16% and 20% in constant currency; and we still continue to expect free cash flow conversion to be at, at least 95% of adjusted after-tax earnings.

As I said, we remain confident that our focus on enhancing the remarkability of our brands is the best path to restoring consistent and profitable organic sales growth. We are focused on what's within our control to navigate the current macro backdrop, even if the current environment results in a slower pace and higher cost of top line recovery than we initially anticipated.

The prevalence of financially stressed consumers only reinforces our view that working to bring consumers more value is the right approach. And it's important to reinforce that price is just one aspect of how consumers define value. Our approach is more holistic, delivering value through all five elements of our remarkability framework.

One of the most significant ways we're driving remarkability for consumers this year is through innovation. And that doesn't just mean launching new products. It also means innovating on how we innovate, by investing in our capabilities to deliver bigger, more impactful ideas that resonate with consumers.

For example, we're now leveraging artificial intelligence to support new product development: from using digital personas to better understand consumers and customer problems, to image generation that creates prototypes in seconds, to conversation tools that can get real human consumer feedback faster than ever. Our teams are now moving from generating hundreds of potential consumer solutions to thousands, helping improve the quality of our ideas while increasing our speed of idea generation.

In fiscal '26, we expect our net sales from new products to be up roughly 25% with strong contributions across each of our billion-dollar brands. Our innovation slate is specifically targeted at three trends that are driving growth in food today. We know consumers are looking for bold flavors with more than 60% of U.S. consumers being more likely to buy food with spice or heat. And we're delivering that on trend with new products across Totino's, Old El Paso, Chex Mix and more.

Consumers and pet parents are also driving strong demand for better-for-you functional benefits, especially for protein and, increasingly, for fiber. And we're responding with launches across brands like Cheerios, Blue Buffalo, Progresso, Annie's and GHOST. Finally, we're seeing increased demand for familiar and fun food experiences that help consumers find joy and comfort amid ongoing uncertainty. We're launching innovation on brands like Pillsbury, Haagen-Dazs, Gushers and Mott's to meet this growing trend.

To make our remarkability investments work harder, we're leaning into three scaled capabilities we highlighted at our Investor Day that are built on top of our best-in-class digital infrastructure.

First, we are accelerating our advancements in data-driven marketing by shifting to an audience-first model and using data and AI tools to determine which brands and messages within our portfolio should be targeted to which consumer audiences. This portfolio-based targeting approach is helping us drive a nearly 40% improvement in the cost of acquiring incremental households and a 14-point increase in the share of buyers that are new to our brands, ultimately resulting in higher incremental sales for General Mills.

Second, we've continued to advance our Strategic Revenue Management, or SRM, capabilities since we first launched it more than 5 years ago. Our SRM tools help us determine where to use price pack architecture, where to adjust base prices and where to make changes to promoted prices or promotional frequency, all at the product and customer level. As Dana will share, we've been encouraged by the results of our SRM execution, resulting in volume elasticities running at or ahead of our expectations across roughly 90% of the business where we have made investments.

And third, we're continuing to further digitize our supply chain. We built a connected data foundation, deployed autonomous planning and implemented AI-enabled execution in logistics and manufacturing. These tools have helped us optimize throughput, reduce waste and improve service. In fact, bringing these digital capabilities to our supply chain has resulted in significant acceleration of our Holistic Margin Management productivity program from a 4% historical annual savings run rate to an industry-leading 5% HMM savings level in recent years.

As I mentioned, our work to improve remarkability is gaining traction in fiscal '26 with improved competitiveness, which we measure through volume growth and market share across our businesses. In North America Retail, or NAR, we're gaining or holding pound share in 8 of our top 10 categories year-to-date. Our retail volume has consistently improved over the past 18 months from down 4% in the first half of fiscal '25 to down just 0.5% thus far in Q3 of fiscal '26.

Equally importantly, we started to see the pound-to-dollar gap narrow as we begun to lap initial price investments we made last year with our Nielsen-measured price/mix improving by 1 point from Q2 to Q3. We've also delivered good competitiveness in our other three segments in fiscal '26 with 80% of our North America Pet business growing or holding dollar share, 88% of our North America Foodservice and 38% in International.

While we are pleased to see the step-up in our competitiveness, we know we have more work to do to fully return our business to growth. We expect to drive continued improvement in our retail sales trends in the second half of fiscal '26, supported by increased innovation, stronger media support, compelling product and packaging renovation and improved in-store and digital execution. And while it's early, we're bullish about the plans we're building to take our remarkability to the next level in fiscal '27.

With that, I'll turn it over to Dana to walk you through how we're bringing this to life in North America Retail and North America Pet.

Thank you, Jeff, and good morning, everyone. General Mills is a leader in North American human food and pet food. And with that comes a responsibility to lead growth for our categories. To do that, we're focusing on what we can control, and that is how our brands show up for consumers.

Despite a softer consumer and macro backdrop and categories growing a bit slower than we expected, I am proud of the way that we are executing in both North America Retail and North America Pet. We're making real tangible progress against our strategy. While we're not yet at the finish line, I have high confidence that the actions we're taking now and the progress we're seeing in the short term are building a foundation for growth in the long term.

This progress is evident in North America Retail, where 8 of our top 10 categories are gaining pound share year-to-date. We're starting to see the gap between pounds and dollars narrow with Nielsen-measured price/mix improving by 1 point from Q2 to Q3 as we begin to lap our initial price investments last year. And critically, we're growing household penetration in 7 of our top 10 NAR categories with a focus on winning with key multicultural and 55-plus consumers.

This progress is also evident in North America Pet, where we're gaining or holding share in 80% of our business. We can link this progress directly to the work we've done to enhance the remarkability of our brands. We're investing in what matters most to our consumers using the Remarkable Experience Framework as our guide.

Let me dive a little further into how this is working in North America Retail. We knew heading into this fiscal year that one of our biggest opportunities was to address price cliffs and gaps across our portfolio to help keep our brands in the consideration set of today's financially stretched consumers. After careful and significant research, we acted with conviction to adjust base prices on roughly 2/3 of the NAR portfolio, allowing us to get below key price cliffs and narrow gaps to the competition.

And we are seeing measurable positive results from these investments. Where we have invested, our nonpromoted volume has improved by 8 points and 90% of our business has elasticities pacing at or ahead of our expectations. Refrigerated dough is a great example here. We identified key price cliffs across 6 critical SKUs using our Strategic Revenue Management analytics. After investing to move those items below the price cliffs, we've seen nonpromoted volume trends improved by 23 points compared to the pre-investment period.

But price alone does not make consumers prefer our brands. We also need to make sure our product offerings are remarkable. We are not making small incremental moves on product this year. We are making big bets in areas that matter most to our consumers. This includes strong innovation plans with NAR's net sales from new products expected to be up roughly 25% this year. We saw great results in the first half on new items like Cheerios Protein, Progresso Pitmaster soup, Pillsbury Big Cookies and new bold flavors of Chex Mix.

We're bringing more big innovation in the second half against the largest consumer trends. This includes the launch of our new La Tiara Mexican products and providing familiar and fun offerings, like Fruit by the Foot Splitz and Nature Valley PB&J bars. We're also leaning into better-for-you benefits and GLP-1-friendly products with innovation focused on protein and fiber, including Honey Nut Cheerios Protein, GHOST performance nutrition bars, Annie's Nature Pals with fiber and multiple new lines of granola.

But we're not just launching new products. We're also stepping up our product superiority with a broad slate of renovations across our portfolio. We're improving taste, nutrition, ingredients and packaging in ways consumers can see and feel, like Protein One and Fiber One GLP-1 renovation, Cheesier Annie's Mac & Cheese, improved flavors on Chex Mix and our Pillsbury refrigerated dough that bakes up noticeably bigger. And you'll see more renovations launching later this year as we make progress against our commitment to remove certified colors from our portfolio by the end of 2027.

Packaging is one of the most powerful levers we have to strategically drive volume growth and price/mix appreciation. To do that, we're providing options that give consumers genuine choice. From entry price points when wallets are stretched to small sizes to deliver for GLP-1 diets to more premium trade-up format for consumers seeking value beyond just price, whether it's Chex Mix tubs, which have been more than 60% incremental to the salty snacks category or new Gushers packaging, which brings the brand into new occasions and helped drive high single-digit volume growth this year. In total, we're doubling our net sales from price pack architecture changes in fiscal '26, delivering new pack sizes, format and seasonal items that make our brands easier to find and to shop.

Better price, products and packaging, combined with improved AI capabilities, are amplifying the impact of our communications and omnichannel execution. Our media ROIs are up double digits on our biggest brands this year, and we've tripled our growth in e-commerce across our top 5 e-commerce retail partners in recent months. We're also putting a sharp focus on optimizing our offerings at shelf, expanding distribution on our most productive 300 items and rationalizing the tail of our portfolio.

So what does this look like when we bring it all together? Let me share how remarkability is strengthening two key platforms for General Mills, cereal and pet food.

The U.S. cereal category generates roughly $10 billion in annual retail sales, and we are the clear market leader. However, the category has been challenged recently with increased competition from protein offerings at breakfast. And while we have gained pound and dollar share from the prepandemic period through fiscal '25, we knew coming into this year that we needed to lean into our leadership position, adapt to the consumer and help drive improved trends for the category and our business.

To do this, we've been focused on improving our remarkability across three main areas: product, value and communications. On product, we've increased our innovation in the fastest-growing spaces in cereal, which are also driving positive price/mix. Our protein-forward cereal portfolio will soon reach $200 million in retail sales, having nearly doubled in size over the past year. And we have two great new products, Honey Nut Cheerios Protein and GHOST Cinnamon Toast Crunch Protein cereals launching in the second half.

We've also recently launched 11 new granola items to build on our leading position in the granola segment, which has seen double-digit retail sales growth this year. As we innovate into growth segments, we're also optimizing our cereal portfolio by removing approximately 20% of our least productive SKUs and expanding distribution of our more profitable core items.

On value, we're delivering for cereal consumers by ensuring we have the right price points and pack sizes, being mindful of key price cliffs and serving a wide range of needs and occasions. Our cups and small boxes provide variety and attractive entry price points in key channels while larger boxes and bagged formats deliver compelling value for larger households.

And on communications, we're investing behind our biggest cereal brands across TV, digital and social. And we're leveraging culturally relevant collaborations like KPop Demon Hunters to drive buzz and reach for our brands. By pairing strong consumer messages with our data and analytics capabilities, we've driven double-digit increases in lift and ROI on both Cheerios and Cinnamon Toast Crunch.

This focus on remarkable experiences has driven encouraging improvement in our cereal performance recently with our Nielsen-measured pounds up 1% and dollars down modestly so far in Q3. And we're helping drive improved category results too, with category pounds and dollars roughly flat during that same period. Importantly, household penetration for our cereal business is up in fiscal '26, indicating consumers are responding to our improvement in remarkability. While there is still more work to do, we're encouraged by the progress we're seeing and excited about our plans to further strengthen our leadership in this category going forward.

Now let me show you how remarkability is working for our pet business. Pet food is a $56 billion category in the U.S. and $142 billion category worldwide, representing one of our largest opportunities for secular long-term growth. In fact, the premium portion of the category, which is where our brands play, has historically grown at a mid-single-digit rate. And that's the growth opportunity we see for our pet business over time. Today, our strong brands generate nearly $4 billion in U.S. retail sales, which equates to 7% of the total U.S. pet food category.

Our ambition is to be the growth leader in pet, and we're encouraged by our improved competitiveness this fiscal year. We're growing household penetration and we're holding or gaining dollar share in 80% of our U.S. pet portfolio. While that has translated to 1% all-channel retail sales growth so far this year amid a slower-than-expected category backdrop, we are confident that as the category returns to more historical levels of growth and as we continue to leverage remarkability to drive share gains, this business will be a differential growth driver for our portfolio.

And here's why. The humanization of pets and premiumization of their food has been the key driver of category growth over the past 2 decades. And our portfolio is built for this environment. Blue Buffalo has been at the forefront of humanization for more than 20 years, founded on the promise to love them like family and feed them like family. With our recent acquisitions of Tiki Cat and Edgard & Cooper, we further expanded our portfolio of premium humanized products.

Our playbook for strengthening pet is similar to North America Retail: invest in the remarkability of our brands. So far this year, we've made notable progress with room for continued improvement across our core and our new fresh growth platform. We're bullish on the long-term growth opportunity we see from our core, which includes Blue Buffalo, Tiki and Edgard & Cooper.

Within the core, dog feeding represents roughly 55% of our total retail sales, led by the Blue Buffalo Life Protection Formula line. LPF is a brand that was built on ingredient superiority and educating pet parents on why quality ingredients matter. We're reinforcing that message through remarkability initiatives focused on product, packaging and brand communications.

Beginning with superior product. We're expanding our support behind our new LPF salmon innovation, which is our biggest launch in 3 years and the third largest new product in the entire dog feeding segment. We've also expanded the assortment on our LPF senior dog food line. On packaging, we're introducing new sizes to better position LPF within the e-commerce channel, which is driving the majority of pet category growth. And on communications, we're leaning into compelling campaigns and pet parent education, highlighting LPF's ingredient superiority.

These efforts are driving results with household penetration growing and LPF retail sales up 2%, which is outpacing the dog feeding segment that is down 1% so far this year. While we're encouraged by our results on LPF, we know we have more work to do to stabilize our performance on Wilderness, our more premium dog feeding line. Following the same playbook, we're strengthening our brand proposition by rebuilding every element of remarkability across product benefits, packaging, communications and omni execution with new initiatives rolling out in fiscal '27.

Shifting to cat feeding. It's a $17 billion market in the U.S. and is growing faster than dog feeding. Cat parents are increasingly viewing their cats as family members and they're increasingly willing to spend more on premium, high-quality food. Today, cat feeding makes up roughly 25% of our pet retail sales, and we continue to drive strong growth with retail sales up 6% and market share increasing so far in fiscal '26.

Our Blue Buffalo Tastefuls line is driving growth behind investment in brand communications, focus on ingredients and taste superiority. Our latest product innovation, Tastefuls Gravy, provides pet parents with a versatile product that can be served wet or dry. We're excited about this unique offering, which will roll out later this spring. And Tiki Cat is accelerating our performance, delivering double-digit retail sales growth behind strong omnichannel execution in pet specialty and e-commerce, growth on our Tiki Baby and Tiki Silver life stage lines and good early performance on our latest innovation, Tiki Solutions.

Finally, on Love Made Fresh, we're proud of how we've executed the launch, rolling out nationally into 5,000 coolers, building awareness at scale and delivering pet parents a line of high-quality, all-natural products from a brand they trust. We're still just a few months in and we're learning more every week. Based on our learnings so far, we're sharpening our remarkability in a few different ways.

We're ensuring our communications are working hard to drive conversion to purchase. We're improving our in-store execution by increasing our team's frequency of touch points in stores to ensure we're optimizing our availability for pet parents. And next month, we'll launch a third packaging format, a stand-up resealable pouch, which is a format that makes up more than half of fresh sub-category retail sales.

We remain committed to the opportunity for Love Made Fresh over the long term, and we believe Blue Buffalo has a strong right to win in the fresh segment that is expected to continue to grow double digits well into the future.

Putting it all together, it's clear we're making meaningful improvements across all levers of remarkability. And we're seeing this played out with improved household penetration, market share and retail sales trends for our North America Retail and North America Pet businesses. And while there is certainly more work to be done and we know it won't happen overnight, we are confident that we are on the right things, pivoting where needed and making the right choices to drive consistent, profitable growth for General Mills and our shareholders.

Thank you. And with that, I'll turn it over to Kofi.

Thanks, Dana, and hello, everybody. I'll echo Jeff and Dana in that I am proud of how we've utilized our Remarkable Experience Framework to position our brands to offer the right product at the right place and at the right price point. But as Jeff mentioned, we know that we are not where we need to be today. The consumer is pressured, particularly at the lower end, and our category growth has lagged our own expectations. However, we continue to remain competitive, investing in our brands, driving significant innovation and giving the consumer exactly what they are looking for.

Now let me share how we think about delivering shareholder value, what we've seen over the past few years and how we create value for our shareholders over the long term. Our strategy for maximizing shareholder returns is grounded in four key areas: sustainable sales growth, margin expansion, high cash conversion and cash returns to shareholders.

When looking over the long term, we expect our portfolio to generate 2% to 3% organic net sales growth based on our current mix of categories and geographies. This sales growth, when coupled with modest margin expansion, will produce mid-single-digit adjusted operating profit growth. We then aim to convert at least 95% of adjusted net earnings into free cash flow, returning approximately 80% to 90% of that to shareholders through dividends and share repurchases, leading to mid- to high single-digit adjusted diluted earnings per share growth and attractive total shareholder returns.

Consistent organic sales growth is the linchpin of our operating model. While our long-term expectation is for our categories to grow between 2% and 3%, what we're seeing in the current environment is aggregate category growth that is a little bit less than 1%. We think about 1 point of that difference has been driven by reduced price/mix stemming from the current consumer value-seeking behavior, and we estimate that about 0.5 point is from consumption-related headwinds, including lower population growth in the U.S. as well as increased adoption of anti-obesity medications.

While these factors are creating headwinds for our categories in the short term, we continue to believe our long-term organic sales growth opportunity is between 2% and 3%. That expectation is underpinned by the mix of our portfolio, including the premium segment of the pet food category growing mid-single digits. Our international and foodservice market is growing roughly 3%, and our aggregate North America Retail categories are continuing to grow about 1% in the medium term.

We strengthened our capacity for growth by taking an "Always On" approach to portfolio reshaping. We're proud of our long-term track record, having turned over 30% of our net sales base since fiscal 2018. Bolting on in faster categories of growth and divesting growth-dilutive businesses has increased our underlying growth exposure by more than 1 full point over time horizon, and we'll continue assessing long-term accretive inorganic opportunities to improve our growth profile over the longer term.

With a long-term expectation of 2% to 3% organic net sales growth, we only need to drive modest margin expansion to generate mid-single-digit operating profit growth. And we see a few key levers that support our ability to expand margins over time: our Holistic Margin Management productivity program to generate efficiency in our supply chain, our Strategic Revenue Management capability to drive positive price/mix, our transformation efforts to generate efficiency in our processes and ways of working and a small amount of volume growth to drive fixed leverage through the P&L.

Our Holistic Margin Management program is at the center of our margin expansion efforts. For a decade and a half, General Mills has built a culture of HMM that has generated 4% average annual savings in our cost of goods sold, which benchmarks at the top of our industry. In recent years, we've accelerated our HMM savings by leveraging our investments to digitize our supply chain. We have good visibility to delivering 5% HMM savings in fiscal '26. And with a robust pipeline of supply chain projects further bolstered by digital and AI initiatives, we have a line of sight to generating at least 4% savings again in fiscal 2027.

Beyond HMM, we remain dedicated to finding cost savings through our multiyear global transformation initiative. We expect this and other efficiency efforts to generate $100 million in cost savings in fiscal '26, which we're reinvesting in our remarkability initiatives. And we see opportunity to drive incremental transformation savings in fiscal '27 and beyond.

The third lever in our shareholder return model is converting earnings to free cash flow. General Mills has a tremendous track record of driving working capital efficiency, generating nearly $1 billion in cash between fiscal '19 and '25 through reducing core working capital. This has enabled us to achieve an average free cash flow conversion rate of more than 100% over that time frame. Looking forward, we see further opportunities to drive working capital efficiencies in both accounts payable and inventory, which will help us continue delivering our long-term 95% or better conversion target.

Anchored in cash generation, our capital allocation priorities thoughtfully deploy capital to deliver attractive returns for our shareholders. Our first priority for cash is reinvesting into the business with high ROI capital expenditures expected to be approximately 4% of net sales over the long term. Our next priority is our dividend. General Mills has paid a dividend without interruption for 127 years, and we are committed to it, expecting to grow our dividend in line with earnings over time.

Following dividends, we aim to deploy cash for strategic acquisitions that enhance our growth profile, maintaining a high bar and strict returns criteria for all our deal assessments. And our final priority is share repurchases. We expect to drive 1% to 2% average annual reduction in our net share count over a multiyear time frame. At the same time, we are dedicated to upholding our strong investment-grade credit rating. We're committed to reducing our leverage ratio over the next few years as we work towards our long-term target of approximately 3x net debt to adjusted EBITDA.

The final lever in our model is returning cash to shareholders. Between fiscal '19 and '25, we've returned $14 billion in cash to shareholders through dividends and net share repurchases. And we're confident that our model of profitable, sustainable growth and disciplined capital allocation will continue driving strong cash returns to our shareholders over the long term.

So let me close by reiterating our key messages for today. First, we are executing against our Accelerate strategy and investing behind remarkability as the primary lever to restore organic sales growth for our business. Second, we've made progress in improving our growth trends in North America Retail and North America Pet, our top two focus areas within our portfolio. And while we still have more work to do to reach our goals, we know we are moving in the right direction. And third, while we've updated our outlook for fiscal '26 to reflect short-term macro headwinds, we remain confident in our ability to drive profitable growth and strong returns over the long term.

With that, I think we have time for a few questions. And I'll turn it over to Jeff Siemon.

Let's see. Can we start over here on the side with Andrew Lazar?

Andrew Lazar, Barclays. Jeff, I guess, what gives you the confidence that the pricing adjustments that you've made this past year, a, were the right call and are delivering the kind of results that you'd expect? And how do you know the changes are sort of enough and won't ultimately need to be deeper?

Yes. Thanks, Andrew. Yes. We're highly confident that the changes we made have positioned us better had we done nothing at all. And we have a couple of reasons for that. First, if you just looked at the elasticities and how they've played out, I mean, 90% plus have played out at or better than what we had anticipated. We've also done quite a bit of modeling on the elasticities, but also the effect of the P&L even recently to say, okay, what would the results have been?

And what I can tell you, had we not taken the pricing actions we have taken in a market where consumers really are interested in value, I mean, our net sales would have been the same or a little bit worse on a sales line. The volume would have been a lot worse. And our profitability would have been the same this year. But the reason why we're better off taking the path that we've taken is, even if the financials would have looked similar for this current year, I mean, our household penetration is up for the first time in 3 years. And we're growing pound share in 8 of our top 10 categories.

And so as we look into the future, we're confident that we've got the foundation set to go from here. And I will add as an aside. We had a competitor a decade ago who tried a program where they maximized short-term profitability and didn't do anything with sales. And I'm pretty sure they recently announced that they're going to start investing back in the sales of their business again. So I've seen that entire movie. Andrew, I know that you have, too. And I'm looking across the audience. I'm sure a few of you have as well.

And so we're confident that we've got the right strategic approach. I'm also confident we're executing well against it. It also is fair to say that sometimes the change in trajectory is not what you had anticipated due to the context that is beyond your control, and that is certainly the case with us. But I want you to hear, we are no less confident in the approach we're taking in fiscal '26 than we were when we started, and I would say, actually more confident because of the way the elasticities have played out the way we had anticipated.

But I think it's a fair question. I think it's a really important question. But I want you all to know that we are fully dedicated to the path we're on and confident that it is the right approach.

We'll go to Pete Galbo here in the middle, get the mic down.

Pete Galbo, BofA. Kofi, you opened the door, I think, a little bit on fiscal '27 with the HMM commentary. So I know you don't want to give formal guidance today, but maybe you could give us some of the other building blocks of the knowables today on '27 inflation. Any kind of one-time laps, that sort of thing would be helpful.

Sure, sure. You're absolutely right. You read it well. I don't want to get too specific, but I can give you some of the framing. So if you step back, I mean, our job remains heavily focused on getting organic sales growth moving in the right direction through the remarkability framework. I think no change to our posture with respect to that.

As you peel it back and kind of look at the structure of kind of what we see, I would say, our outlook on inflation as we look ahead looks roughly similar to the base inflation we saw this year with an expectation of at least 4% HMM as a partial to offset that and then additional savings contribution, incremental savings contribution on top of the $100 million we delivered on transformation this year.

There are a few mathematical components to next year's comps that are probably important to call out, one of which will be the 53rd week and the other of which will be about a month's worth of earnings from Yoplait, which we divested in June of this year. So those are kind of the key building blocks for next year.

I think with about one minute left, I think we'll go ahead and take all these questions over to the breakout room, if that's all right.

Hello, and welcome to the General Mills Inc. Second Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions].

I would now like to turn the conference over to Jeff Siemon, Vice President, Investor Relations and Corporate Finance. You may begin.

Thank you, Sarah, and hello to everyone. Thanks for joining us today for our Q&A session on our second quarter fiscal '26 results. I hope everyone had time to review our press release, listen to our prepared remarks and view our presentation materials, which we made available this morning on our Investor Relations website.

Please note that in our Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. 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 today with Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Dana McNabb, Group President of North America Retail and North America Pet.

Now let me turn it over to Jeff for some opening remarks.

Thanks, Jeff, and good morning, everybody. When we started this year, our primary goal was to increase organic sales, and to do that in conjunction with continuing to outperform on holistic margin management and our transformation initiatives. And those are all reflected in our 3 priorities for the year. And as you look at our Q2 results, I'm pleased to say that we're really executing well against all of those. And we continue to see improvement in organic sales and continue to do that very efficiently through our HMM efforts and our transformation efforts.

And in particular, I look at North America Retail. And we said we would improve our North America Retail volumes through the remarkability framework, and that's exactly what we've done. And part of that is pricing. We set strategic base price adjustments on base pricing and to get under price cliffs. And 90-plus percent of what we've done in pricing, that we started talking to you about a year ago, has worked as well or better than what we had thought. So we're pleased with that. But importantly, the remarkability framework doesn't just stop with pricing actions. And our new product innovation is better. We expect it to be up about 25% this year. We've got a good lineup in the second half.

Our product news is really good. Our events have worked harder for us, and our media ROIs are up. And so as I think about our North America Retail business, it's not really an accident that we're growing pound share in 8 of our top 10 categories so far this year. And so I'm really pleased with the way North America has improved its momentum this year, in particular, how we've seen improved momentum in the second quarter.

Then on North America Pet, we said we had to do a couple of things. We need to improve our core business at the same time incorporate Love Made Fresh. I know there's a lot of emphasis on Love Made Fresh and rightly so. But I'm pleased with our base business performance. As I look at our Life Protection Formula, we're back to share growth on that. Our cat business is growing mid-single digits. We're up in pound share on our treats business. We have some more work to do on Wilderness. But otherwise, our pet core business has gained a little momentum, too, and we're pleased with that. And so as we look at Love Made Fresh, I'm just exceptionally pleased with the way we've started on Love Made Fresh.

And we're executing very well. We said we'd be in about 5,000 coolers by the year-end. I heard yesterday morning that we're in 4,658. So we're well on our way to that 5,000, and we'll get there by the end of January. And our Love Made Fresh launch has reached about 5% market share in our earliest first wave customers. And so we're pleased with that. We prioritize having plenty of inventory across our business in Love Made Fresh, because we know the trial is so important for our business.

And even if that trial costs a little bit more because we've got too much inventory in one place or another, it's well worth it to make sure that consumers can try our product. And when they try it, they like it. 4.8 out of 5 star ratings on our products. We know that is the case. And so we're really pleased with the way we've started. We'll put on additional customers in distribution in the third quarter, as well as launch a new format of the stand-up resealable pouch. And so pleased with Blue Buffalo. And then as we talk about HMM, we're tracking another 5% of HMM this year. So pleased with that as well as our transformation efforts.

And so as we look to the second half, the job to do really is to keep the momentum on the top line, and we plan to do that as well as then turn the corner on profitability. And as we look ahead, we expect top line improvement in the second half and then profit growth in the fourth quarter, thanks in part to favorable trade timing and the 53rd week.

So with that, open it up to questions that you all have.

Great. Sarah, so let's go ahead, and you can start the Q&A.

[Operator Instructions] Your first question comes from Peter Galbo with Bank of America.

Jeff, I just wanted to pick up on maybe some of your commentary just now in terms of the sustainability of the volume growth in North America Retail. I think there was mention of a bit of maybe some shipment timing benefit in the quarter. But just want to get a sense as we start to look at the comps and looking in the back half of the year, how you're thinking about maybe the sustainability of that positive volume trajectory in North America Retail.

I've got Dana McNabb here next to me, so I'll have her talk about North America Retail specifically.

All right. We're really encouraged by the progress that we've made in North America. As Jeff said, 8 of our 10 categories are growing pound share. Our pounds grew. But as you mentioned, we did have a little bit of shipment timing benefit. Our Nielsen pounds are about flat. And so we do expect that to unwind a little bit in the back half. So as we look to the second half of this year, we expect to continue to drive category improvement and competitiveness, which is really, I think, all we'll mention about back half to avoid giving any forward statements.

Okay. No, helpful. And, Jeff, I think the discussion around price cliff management and solving some of the price gaps has grown even louder in the past week with one of your largest peers also announcing some pretty dramatic price reductions. Just curious kind of how you're viewing the competitive environment, what you're expecting from some of your other peers. Just are we in a phase of the cycle where others are going to have to follow? Kind of what's been a first-mover advantage for General Mills?

Yes. I think it's a good question. What I would say is that we haven't really seen an increase thus far in the competitive levels within our category, which is to say that levels of discounting are about the same as they were a year ago, broadly speaking, across our categories. We haven't really seen that. I think when you think about what we have done, there are a couple of things I would say. Going first is fine, but doing it well is even better. And our team has executed the pricing really well. If you think about being in 26 different categories across lots of different customers, it takes a lot to get the pricing reflected in a manner that is consistent with what you're looking for. So we've done that really well.

But also, I mentioned the innovation and the marketing improvements and the product news, because those are really important too. The reason for the pricing is to make sure that the other elements of your marketing mix work as well as you want. And so as we look ahead, we feel great about the other elements of our marketing mix. And so we've got great product news coming in the second half, we shared some of those in the slides, and our marketing keeps getting better and better. And as we think about it, we're not too concerned about the competitive environment based on what we've seen thus far.

And importantly, on our pricing, we're not getting down to the levels of private label or something like that. We're just kind of getting under price cliffs and kind of getting within a certain range. And if you look at our price/mix in North America Retail, it's down maybe about 3% or so, so far this year. That's after 30-plus percent increases over prior years where we had a lot of inflation. So anyway, we feel good about where we're competitively positioned and feel really good about the way that we are executing.

The next question comes from Andrew Lazar with Barclays.

Jeff, in your current quarter, so fiscal 3Q, General Mills starts to lap some of the pricing moves from last year. And I think you've talked about how you anticipate the -- sort of the gap between volume share, which has been improving, and value share, right, to begin to narrow, which is ultimately necessary to get to overall organic sales growth. So I guess my question is like what specifically should our expectations be in sort of fiscal 3Q and 4Q as to sort of how quickly this gap can narrow as we all kind of assess the scanner data moving forward? And like where would you hope to be on this score as General Mills enters fiscal '27?

It sounds like you expect sustained year-over-year volume growth in the back half. How do we think about sort of price/mix, particularly in light of your comments regarding the cost of volume rising a bit? Just trying to get a sense of how to set expectations for how quickly that gap can narrow and when the expectation is to get to sort of absolute organic sales growth, if you will?

Yes, Andrew, I appreciate the question. I would start by saying, I mean, it's a pretty volatile environment. So I'm going to refrain from getting too specific only because there are a lot of things that can come our way. I didn't really see the government shutdown coming in the second quarter or SNAP being reduced. So I mean there are a lot of things that can come our way.

Having said that, we do expect improvement in the second half, and it will be based on price/mix as we start to lap some of our initial pricing from last year, although it won't fully be reflected until fiscal '27. So I think it's important to keep that in mind as well.

The other thing is just based on timing. I talked a little bit in my opening remarks about positive mix in the fourth quarter due to some trade phasing timing, and that will be positive in the fourth quarter. That will be a little bit negative in the third quarter. So there's a trade-off between those 2 quarters. So what you see in Nielsen may or may not be exactly reflected as what we see in the P&L by quarter, but it will all work itself out by the end of fiscal '26.

As you look at entering the next fiscal year, I think we're going to see momentum on our core sales business. How high that momentum will be, we will see. But we feel good about where our pricing is and where the remarkability is kind of across our business, not only in North America Retail, which is getting a lot of attention, and rightfully so, but we grew in pet this quarter, and foodservice. But for index pricing, we would have grown in 3% in our North America Foodservice business. We grew in international. And so the gains we are seeing are across the board, and I don't think it's coincidental that we're using the remarkability frameworks across all of our businesses.

I know you're seeing some momentum, obviously, in progress in core pet. I'm just curious what you're seeing in just the overall, let's call it, like dog feeding category. I know you've been probably hoping for that broader category to be a little bit stronger than it has been, but what are you seeing there in terms of consumer behavior?

Andrew, this is Dana. I'll jump in and answer that question. If we look at the pet category, what we'd say is the category was up about 1% in Q2. Pounds were down modestly. That was relatively in line with Q1 and with fiscal '25. It continues to be cat feeding that is growing the fastest, and the treats segment has also gotten back to growth.

What we're seeing in dog feeding is that it continues to lag a little bit on both pounds and dollars. And there's really 3 reasons for that. The first is that we do estimate that there's still a shift to unmeasured channels, that's about 50 basis points. We're seeing a shift towards smaller dogs, and that's weighing down pounds a bit as dogs that are smaller consume fewer pounds.

And then also, we are seeing a little bit of pullback from consumers in discretionary segments such as wet dog food, which happens when the consumer is stretched. When we look to the long term, though, we still think that this is a segment that is going to continue to grow. The humanization trend will continue to accelerate that growth, and we think Blue is well positioned to win in the category. And as Jeff said, we are really pleased with our Q2 performance.

The next question comes from Max Gumport with BNP.

It's nice to see volumes turning positive in the quarter on the back of your investment [indiscernible] Retail and also to hear the continued confidence you have in this continuing in the back half. I guess, what I'm trying to get a sense for is, one, if you have an update on your thinking on the ability for volumes to stay positive after you lap these price cuts? And then two, as you look at the investments you've got in the business through the first half, whether you think it's been enough or you might go back to the well next year as well given that they are working? So getting a sense for whether having these investments in the base is enough or if you might need to do more again next year?

Well, as I think about the North America price investments, again, we are really pleased with the progress. We are seeing pounds improve. What we had said is that we are going to adjust prices on 2/3 of our portfolio, and that would be done by the end of Q2. And as we look at performance, almost 90% of where we've added that price investment is at or ahead of what we modeled. So we're really encouraged by how it's performed.

Of course, we'll continue to monitor the environment. If we think we need to add more, we'll consider it. But at this point, we believe that our price is at the right place where it needs to be. And again, it was about getting those prices at shelf to be at the right spot under key cliffs and manageable gaps to the competition.

And now as we turn to the back half, it's about once your prices are in the right place, is the rest of your remarkability framework strong? And we really like our plans and how they're working when these prices are right. So as Jeff said, our new products are performing very well. We're on track to be up 25% versus last year. We have strong news. Our advertising content and ROIs are significantly improved, and they're up. And we have strong advanced plan to get good in-store and online support. So again, winning in the back half is not just about price, it is about remarkability, and I think we're well positioned to continue to improve.

Great. And then just one follow-up with regard to the overdelivery on profit in 2Q. So it sounds like you would say it's essentially going to unwind in 3Q, given the timing benefits you laid out in the prepared remarks, versus consensus, you had about $0.08 of outperformance in the quarter. So would it be fair to say there could be $0.08 coming out of 3Q and EPS might be down, roughly speaking, 20% or so year-over-year? And any way to better frame how we should be thinking about 3Q EPS?

Yes. I appreciate the question, and I will try to give you clarity. I think the underlying for us is that against our own internal expectations, we saw favorability due to the 3 factors I mentioned in my prepared remarks. North America saw supply chain favorability, primarily driven by inventory absorption in the quarter, stronger international performance on both top and the bottom line, a portion of which was [indiscernible] timing related, and a modest, about 0.5 point of shipment timing benefit in NAR, which Dana covered earlier. We do expect all of those to reverse. So that favorability that we saw in the quarter against our expectations, we do expect to reverse in Q3.

The next question comes from John Baumgartner with Mizuho.

Maybe Jeff or Dana, in the prepared comments, you noted the inclination of consumers to buy more on promo. And I'm curious if you can elaborate on that. Just given the mention of the higher cost of volume, are you finding that you need to embed some wiggle room for larger promo to cater to that shopping dynamic? And I'm also curious, I guess, bigger picture, how you're seeing the balance between EDLP versus maybe a high-low strategy in this kind of an environment relative to past periods of economic weakness?

Let me start with that and then maybe turn it over to Dana for some commentary. But what I would say is that in general, we're seeing -- I mean this is no surprise, I don't think, but continue to see consumer weakness, particularly for those making under $100,000 a year. So those in the kind of middle and lower income range. We continue to see that consumer being stretched even as consumers in the higher end of the range are faring a lot better with the current stock market.

And so that plays itself out in a few different ways. One is that people continue to eat at home quite a bit. So 86% or so of eating occasions are still at home and 14% away from home. And we haven't really seen a change in that for a couple of quarters, but it's still at a very high level of eating at home.

We see people switching some categories. We see consumers switching where they purchase, switching channels and that kind of thing. But we also see it reflected in how much gets purchased on discount when we have it on display or what have you. And so we haven't really been displaying more. It's just that when -- what we see is that consumers, when there is a discount, we see them buying more because they're financially strained.

So Dana, anything you want to add to that?

No, I would just reiterate that we continue to categorize the promo environment as being quite rational. As Jeff said, the frequency and the depth is similar to last quarter. It's similar to last year. We did see promo activity come up a little bit in November, but we think that's largely related to manufacturers reacting to some of the SNAP changes. But overall, we'd characterize the environment as rational.

The next question comes from Tom Palmer with JPMorgan.

First, just wanted to ask on inflation and tariff. Previously, 4% to 5% of COGS was the outlook. The bakery index pricing would suggest the costs are favorable and then maybe there was a small amount of tariff relief to consider. So just any update on that outlook and kind of maybe as we think about the back half of the year, if there's any sort of favorability.

Sure. So as a reminder, our original guidance included an expectation of about 1 to 2 points of additional headwind to base inflation of about 3%. Our base inflation forecast, despite puts and takes, remains roughly around that 3% mark. Tariffs certainly comfortably within that range. And as we look at kind of the phasing impact, I would just remind that our expectation was that we'd be able to mitigate some but not all of the tariffs with the tariff headwind within the year. And the tariff phasing was pretty minimal in Q1, stepped up in Q2, and we'd expect in the second half for that to step up a little further. So in aggregate, 3% base, we're still comfortable with the 1% to 2% guide on the tariff additional headwind.

Maybe, Tom, I'd just add, this is Jeff, that you also have to consider our coverage. And so we tend to be covered at least 6 to 9 months across some of our biggest inputs and wheat would be one of those. So while you see it play through in the sales line on our P&L, the cost line would be delayed. And so what you see from wheat prices being down in the short term is probably more going to impact '27 than it is '26 on the cost side.

Fair point.

Okay. And just a follow-up on international. I think in the first quarter, you called out a 3% timing benefit that you expected to unwind in the second quarter, and you kind of noted some timing headwinds in 2Q as well. I just wanted to confirm, were there incremental tailwinds? Or was it more this 3% timing benefit did not unwind as we think about the second quarter and becomes more of a factor in the back half?

Yes. Yes, certainly. And it is mostly the latter, to your question.

The next question comes from Steve Powers with Deutsche Bank.

Jeff, pivoting back to pet, you talked in your opening remarks about positive delivery against Love Made Fresh, but also progress on the base business. And, I guess, I'm curious as to what degree you think Love Made Fresh has, in some ways, contributed to that base business progress, even though it's still early. I guess, any evidence as to whether you're seeing favorable interplay between the Fresh initiative and/or Blue Buffalo?

Yes. It's a good question and an important one. I would say we're still a little bit early to really know that, that's the case. I mean we're only 8 weeks into the launch and probably 5 weeks into advertising. So I think it's too early to see if the Love Made Fresh advertising, which, by the way, is really good, is going to rub off on the rest of the core [ or not ]. We may be able to tell you a little bit more after Q3 or Q4 once we get some more time in market.

So it wasn't really that. It was really kind of sharpening up our kind of go-to-market on Life Protection Formula and doing a really good job on the advertising on that and continuing to grow our Tiki Cat business, which we acquired 9 months ago, that's growing solidly. And then adding some more marketing to our Tastefuls line in cat is doing really well and getting the price points right.

It's really -- we probably used all the elements of the [ remarkable ] experience framework in pet this quarter and saw a nice lift back to positive growth. But so far, I wouldn't say that the Love Made Fresh efforts have had a positive impact on the base, although I wouldn't be shocked to see that in later quarters as we continue to market it.

Fair enough. Kofi, if I could, just a little bit more in the back half. Just anything to call out in terms of how much HMM impact is yet to come? And any phasing considerations in terms of how that's likely to layer in 3Q versus 4Q?

Yes. Let me frame the comments just and kind of root them in our profit expectations for the back half, Q3, Q4. We do expect, as we've referenced earlier, continued organic sales improvement in the second half. And we, as a reminder, always expected our Q3 to be down just because of the overhang from our divestiture, the level of investment that we baked into the year behind the remarkability framework and in particular, getting value right in NAR, and then trade expense timing, which, as we've referenced before, is going to be a drag on the first 3 quarters of the year.

As you step into Q4, you have 2 big factors to keep in focus. We'll see about $100 million favorable tailwind from that trade expense timing due to the phasing impact of last year's investment and the 53rd week, which will also be a pretty significant tailwind. So together, those 2 items alone are about 30% profit growth in Q4.

The next question comes from Megan Clapp with Morgan Stanley.

I wanted to ask about the higher cost of volume that you called out in the prepared remarks. And Kofi, I think in your prepared remarks, you talked about how you expect that to pressure margins in the third quarter. You obviously still reaffirmed the full year guidance. So can you just help us understand how that's embedded into the full year outlook? And is there incremental flexibility in other lines that's kind of offsetting that incremental margin pressure? And how should we think about whether there's further flexibility should that continue to evolve as you called out something you're watching?

Sure. Let me answer it maybe in the context of where we left guidance. So you will probably note we left our annual guidance unchanged with effectively half of the year to go. That was a big part of the reason along with, obviously, the volatility that continues to hang about the sector, whether it's the tariffs, shutdown, SNAP benefits for challenges to the consumer environment and the consumer sentiment. So I think for us, as we look forward to the back half, the cost of volume and the pace of volume recovery are probably the 2 biggest determinant of where we land within that range. And that is broadly why we left the range unchanged.

Okay. That makes sense. And maybe just as a follow-up, last quarter, you talked about how your category pounds were lagging your full year expectations a bit driven by a few discrete categories. I was just curious if you could give us an update on how the category growth within the quarter trended, just particularly given there was a lot of noise around SNAP and the government shutdown. So understanding, again, there might be noise kind of embedded within that, but just how you're thinking about the category growth and kind of your confidence in the full year, what's embedded in the full year outlook?

So maybe I'll start. Just from a number standpoint, our category volumes in fiscal '25 for General Mills categories were flat. They were down about 1% in Q1. So we talked about that last quarter. Cereal was one of those, which had seen a little bit more pressure. That improved to down about 0.5 point in Q2. So still not quite back to where they were in '25, but an improvement.

So maybe, Dana, if you want to talk about just the overall category dynamic and consumer?

Yes. I mean, as Jeff said, we did see categories improve, and we outperformed the categories. The one category that still lagged a little bit of our expectations was cereal. Cereal pounds are down about 3%. Typical historical, they're down in the down 1%, down 2% range. And the reason for the category being down is we're really seeing consumers move to more high-protein alternatives. So the good news for us is that as category leader, our plans are very focused on capturing those growth trends going into the back half. And as a leader, we have a job to improve the category's growth.

The 2 areas that we're probably the most excited about for the back half or if we look at our innovation, we are really leading there. Cheerios Protein is already a 0.9% share. That business is on track to be $100 million by the end of our fiscal year. And when you take how that's performing in combination with some really good news and advertising on the core Cheerios franchise, in Q2, Cheerios grew dollars and pounds for the first time in 3 years.

And then if you look at the granola segment, which is what's driving growth in cereal right now, we have the biggest brand. We're the category leader, and it's growing double digits. But granola is only about 6% of our business. It's 12% of the category. So we're coming in January with 10 new granola SKUs, really great tasting products, really good nutrition benefits. And so we think focusing on the areas that are growing the faster and leaning into our leadership role, we'll see both the category and our performance improved in the back half.

The next question comes from Chris Carey with Wells Fargo Securities.

Can you just expand a bit on the percentage of your portfolio where you've taken or initiated pricing investments? Just to get a sense of the percentage of portfolio where you haven't done it. And connected, say this cost to compete environment sustains or it gets worse, can you just talk about visibility on savings initiatives that would give you an ability to respond to some of these changes in the backdrop, specifically once some of the anomalies in inflation like tariffs start to lap going into next year?

Well, that's a great question. Why don't I take the first part and then, Kofi, pass it to you for the second part. If we think about our price investments, as we said, we were going to have 2/3 of our business have price investments and we would be completed with that investment by the end of Q2. And we're encouraged that in almost every case where we've made investments, we've seen the volume response that we are expecting.

And those categories, to answer your question, were refrigerated dough, fruit snacks, salty snacks and soup. I'd also call out our snack bars, which pounds are down a little bit due to a key competitor comping a period of lower distribution, but the elasticities that we've seen on our snack bars are at or ahead of model. So we're really encouraged by the performance we've seen.

There is one business where we're still working on it, and that's Totino's hot snacks, where you've seen our pound performance take a little bit of a step back. Now we are managing through a price pack architecture conversion from a bag to a box to improve our shelf visibility, and we're still working through that and need a little bit more time to really understand if these price investments are working. But overall, on our biggest businesses, this base price investment is on or ahead of model.

And then to your point about leverage and flexibility in the middle of the P&L, I would reiterate, we have really good visibility to HMM delivery at the 5% plus mark this year, and we are delivering every cent of the transformation savings we outlined at the beginning of the year. As we play forward, while I won't give you a specific guide on HMM for next year yet, we continue to remain confident in our ability to deliver at least above 4%. And the transformation initiatives continued and ongoing in multiyear as a reminder. So I would expect additional savings to come from that as well.

Okay. Just a quick follow-up is on Wilderness. Can you just expand on where we're at with Wilderness, the current strategy with Wilderness, and how you could envision potential tweaks or just thought process on how to improve the performance of the business if current strategy isn't delivering the results that you'd like in the coming quarters?

Yes, it's a really great question. If I look at our Q2 performance, it was similar to Q1, business is down, and we don't find that performance acceptable. What we know about Wilderness is the total product offering across all the levers of remarkability needs to be improved. So the team is really working on a new positioning. As we turn to the back half, we're going to be bringing protein new -- some strong protein first new products. We've got new comparative advertising that we'll be launching in the market, and we've got to improve our in-store execution. So we have a good plan in place. I'm confident that we're on the right things, but there's definitely more work to do.

The next question comes from David Palmer with Evercore ISI.

Down to one sort of big picture question. Fiscal '26, it's been about return to volume growth and understandable that would be step one. But I'm thinking about consensus expectations for some profit growth, particularly lapping the extra week as we look out in fiscal '27. So I'm wondering maybe you could help us -- coach us how we should be reviewing your consumption data in North America Retail and pet to really inform us about whether profit growth might be in the cards for fiscal '27. What sort of specifics maybe in terms of price/mix and promotion effectiveness or the level of volume recovery? Any sort of clues that you would provide to us would be helpful.

Sure. I will start by just affirming we are pleased with the progress we've made on improving our growth trajectory. That work is not yet done. So it would be premature for me to get on record and start building too heavily for F '27. I think you're right to call out the 53rd week as a comparison factor that will definitely just be a built-in structural -- mathematical headwind next year. But beyond that and underlying, our expectations are to continue to build on momentum that we've started this year. So we'll come back to that. Obviously, we've got a touch point at CAGNY, and that's probably a better place for us to start having discussions about the road ahead.

The next question comes from Matt Smith with Stifel.

Dana, you talked about a high hit rate where you have the price adjustments and remarkability framework in place, I think, 90% or so. But there's, obviously, 10% that's still lagging your expectation. You talked about Totino's a bit, but is there a common thread that needs to be addressed around some of the areas where you've seen less effectiveness?

I wouldn't say that there's a common thread. I mean it really is Totino's. Maybe a few SKUs in Old El Paso on our kits business. But for the most part, again, on the Totino's business, it's really about this conversion and price pack architecture. So the data isn't clean, and it's hard to see exactly how things are performing and diagnose it correctly. So I need a few more weeks to really be sure.

And I would say on that business, once we feel like we're through the conversion and we've got a better sense of the price investment, I really like the advertising that we've got going. We are talking about 10 rolls for $1. That's resonating really well. And we just launched our Ultimate Pizza line, which is this really great tasting pizza, probably the best we've launched maybe ever. And at an affordable price point that people expect, we know we've got that right. And so I think the combination of a more clean read and focusing on the other levers of remarkability, we'll be able to talk with more precision on Totino's next quarter.

Yes. And I would just build on Dana's comments by just reinforcing the fact that 90-plus percent, as good or better than what we anticipated. I would take that kind of on any forecast, but particularly on something as important as these price adjustments that we have made. And so just from my seat, I am really pleased with the way the team has not only modeled out the pricing, but also executed against it. And so it's fair to ask, and I get the question. I just want you all listening to know that, that kind of accuracy on something this big and complicated and important over a period of time, I'm really thrilled with the work that the team has done.

And as a follow-up question, as it relates to the channel shift you mentioned in pet, it's been ongoing that consumers are moving towards unmeasured channels. But what channels are you currently seeing take share from traditional channels? And what do you think is driving the consumer behavior there?

It's a great question. The place that we're seeing the shift go to is definitely e-commerce. So pet purchases overindex in the e-commerce channel, and that's the place where we're seeing the dollars go to.

This concludes the question-and-answer session and we will conclude today's conference call. We thank you for joining. You may now disconnect.

Good morning. This is Jeff Siemon, Vice President of Investor Relations and Corporate Finance. Thank you for listening to General Mills prepared remarks for our fiscal 2026 second quarter earnings. Later this morning, we will hold a separate live question-and-answer session on today's results, which you can hear via webcast on our Investor Relations website.

Joining me for this morning's presentation are Jeff Harmening, our Chairman and CEO; and Kofi Bruce, our CFO.

Before I hand things over to them, let me first touch on a few housekeeping items. First, on our website, you'll find our press release that posted this morning, along with a copy of the presentation and a transcript of these remarks. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause our future results to be different than our current estimates.

And with that, I'll turn it over to Jeff for some prepared remarks.

Thank you, Jeff, and good morning, everyone. Let me kick off by summarizing our key messages for today. Our primary focus this year is investing to strengthen the remarkability of our brands. because we know that delivering greater remarkability to consumers is the key to restoring organic sales growth for our business.

During Q2, our team continued to execute exceptionally well against that goal while navigating a volatile operating environment. We finalized base price adjustments across 2/3 of our North America Retail business. Launched into the fresh segment of the pet food category with Love Made Fresh and drove another quarter of strong market share gains in our North America Foodservice and international businesses. And we did this all while continuing to deliver world-class levels of holistic margin management cost savings, transitioning 2 divestitures and 1 acquisition, advancing our digital and AI initiatives and expanding our enterprise transformation efforts.

Our good progress on our remarkability agenda led to improved volume and sales trends from Q1 to Q2. And with strong second half plans and continued confidence in our executional ability, we expect to drive further improvement over the remainder of the year. As a result, we are reaffirming our fiscal 2026 guidance today.

Our second quarter results are summarized on Slide 5. Organic volume was flat, and organic net sales were down 1%, representing a 1-point and 2-point improvement, respectively, relative to our first quarter results. Importantly, we posted organic volume growth in NAR for the first time in more than 4 years, and we returned our North America Pet segment to organic sales growth in the quarter.

On the bottom line, our Q2 adjusted operating profit and adjusted EPS results were both down double digits, driven primarily by our investments in remarkability the impact of our North America yogurt divestitures and unfavorable trade expense timing. These results were ahead of our expectations, and we expect that profit favorability to unwind in the third quarter, as Kofi will describe in more detail shortly.

We remain focused on 3 priorities that are critical to our success in fiscal '20. First, we are working to return North America retail to volume growth by investing in remarkable experiences to strengthen pound share and household penetration for our brands. Second, we will accelerate our North America Pet growth, including improving our core Blue Buffalo business and driving new opportunities with our Love Made Fresh launch, our recently acquired Tiki Cat business and the rollout of Edgard & Cooper in the U.S.

And third, to help fund these investments will drive efficiencies to reinvest in growth. This means continuing to deliver best-in-class holistic margin management or HMM productivity and transforming how we work to free up our teams to focus on growth.

To achieve these priorities, we're lean on our remarkable experience framework as our guide. Remarkability, at its core, is how we compete and win by advancing 5 key pillars: product, packaging, brand communications, omnichannel execution and value, we're positioning our brands for greater consumer affinity and long-term growth. We are laser-focused on leveraging our remarkable experience framework across the enterprise to guide our brand investment decisions.

Let me share a few examples of how our focus on remarkability deliver results in the second quarter. In North America Retail, we're encouraged by the progress we've made to improve our competitiveness. As we've shared before, we're on a multiyear journey to improve the remarkability of our brands gathered by our framework. During Q2, we completed our work to improve consumer value through base price adjustments across roughly 2/3 of NAR's portfolio. This is allowing our investments in remarkable product news, innovation, brand building and in-store events to work even harder for us.

We saw that play out with another quarter of strong competitiveness in Q2., holding or growing pound share in 8 of our top 10 U.S. categories. In fact, within those top 10 categories, which is where we focus on our base price investments, our Nielsen-measured pounds were up 1% in the quarter, representing a 3-point improvement on our performance in fiscal '25, and we grew household penetration for the second consecutive quarter.

While we're encouraged by the progress we're making in improving volume, we've seen a change in consumer behavior this year that is driving an increase in the cost of volume across our categories. More specifically, with lower and middle end kind of consumers continuing to feel significant economic pressure, we've seen them make a greater proportion of their food purchases on promotion rather than at everyday prices. And this has not been driven by increased frequency or depth of promotions by General Mills or our competitors.

Those metrics are essentially unchanged from a year ago. It's simply a reflection of stressed consumers finding ways to stretch their dollars further. This is a phenomenon we watched closely as we move through the rest of this year. And it gives us even more confidence that our focus on delivering more value to consumers along with amplifying the other elements of our marketability framework is the right one in the current environment.

I'm proud of the way our team has strengthened all 5 elements of remarkability across the biggest brands in our North America Retail portfolio this year. For example, our superior product, our first half innovation and renovation news delivered the right combination of product benefits; great taste, convenience and affordability that resonate with consumers and drive results ahead of our expectations, including strong performance from Cheerios Protein, Pillsbury's Bakes Up Bigger news, Mott's snack bars and Annie's Super! Mac. With early success on our lineup of bigger and better new product launches we remain on track to deliver a 25% increase in sales from new products in fiscal '26.

Our remarkable package design, we're winning in the shelf by bringing consumers new sizes and formats to deliver the right price points or meet new occasions. For example, our Chex Mix tubs are proving to be highly incremental to our core bag line. And we've added a unique car cup format to deliver consumers value and convenience, helping drive high single-digit retail pound growth for our salty snacks in Q2. And on fruit snacks, our Price Pack Architecture works help us win new distribution and deliver holiday offerings that drove high single-digit retail pound growth this quarter.

On brand communication, we've seen a double-digit increase in media ROI so far this year on new social first media campaigns on many of our largest brands, such as Cinnamon Toast Crunch, Progresso, Old El Paso and many more. We've leveraged digital tools to efficiently reach consumers with the right messages, and we supported these new campaigns with a double-digit increase in media investment in the first half.

On omnichannel execution, we drove stronger brand growth through cross-portfolio omnichannel events during key shopping seasons, leveraging the power of our portfolio of brands to spotlight our remarkable mealtime solutions. And as I mentioned earlier, during Q2, we brought more compelling value to consumers by adjusting base prices to address key price cliffs and gaps across roughly 2/3 of our NAR portfolio. Encouragingly, we've seen elasticities in line or ahead of our expectations across roughly 90% of those investments.

We look to build on this momentum with strong plans for the second half of the year. This includes a great seasonal lineup with news and new offerings across Pillsbury, Betty Crocker, Chex, Nature Valley and our Toast Crunch Cereal franchise. We're also launching a slate of remarkable innovation in North America Retail in the second half of fiscal '26 focused on the fastest-growing consumer trends in food, including better-for-you benefits like protein, bold flavors and products that deliver familiar and fun experiences for stressed consumers.

On Protein, we're highlighting 50% more chocolate news and our new line of Nature Valley creamy protein snack bars. We're introducing new indulgent flavors of our fast-growing Nature Valley protein granola line, which generated Nielsen-measured pound growth of nearly 20% in Q2. We're expanding availability of our GHOST protein cereal line, and we'll start to scale up a remarkable line of GHOST performance nutrition bars that deliver 20 grams of protein, only 2 grams of sugar and exceptional taste.

On Bold Flavors, we're launching new Old El Paso chimichanga and Mexican pizza offerings. We'll roll out of our new Totino's Ultimate Pizza line to national distribution, and we're expanding availability of our renovated bolder flavored Chex Mix varieties.

On Familiar & Fun, we're introducing a new line of Cheerios granola, bringing the biggest brand of the category to the fastest-growing cereal segment. with familiar flavors that families will love. In fact, across our entire granola business, we're launching 10 new items in the second half that will help strengthen our position as the leader in the U.S. granola segment, which is growing double digits in Nielsen-measured outlets. We're also launching a new line of Fruit Roll-Ups and Fruit by the Foot that are made without colors from artificial sources.

Stepping back, the NAR team has done fantastic work to strengthen remarkability across our portfolio. and we saw that translate into encouraging improvement in retail sales through the first half. We have great plans to build on this momentum, continue to drive strong pound share and improve our dollar share performance over the remainder of fiscal '26.

Shifting to North America Pet. Our focus in fiscal '26 is to strengthen our core Blue Buffalo business while driving differential growth across our accelerators, including the successful launch of Blue Buffalo's Love Made Fresh. We made good progress improving our competitiveness in Q2, accelerating our all-channel retail sales growth and holding dollar share. This was led by mid-single-digit growth on Cat Feeding with Tastefuls and Tiki Cat continuing to drive strong results.

Our dog feeding results were mixed with positive retail sales acceleration on Life Protection Formula and continued challenges on Wilderness. As we mentioned at our Investor Day, we are working all elements of our Remarkable Experience Framework to ensure we improve the total product offering on Wilderness to better deliver for today's pet parent needs. And on treats, we delivered low single-digit pound growth driven by strong promotional execution on nudges and health bars.

Turning to our Pet accelerators. I'm tremendously proud of the work our team has done to successfully execute the national launch of Love Made Fresh, Blue Buffalo's new line of refrigerated fresh food for dogs. Our distribution is approaching 5,000 coolers after a little more than 2 months in the market. The products have received great ratings and reviews thus far, and we're seeing sales ramp up as we continue to build awareness, supported by strong levels of brand investment. We'll continue accelerating the growth of Love Made Fresh through the second half of fiscal '26, expanding to additional customers and introducing a third product format to further round out our offering.

On Tiki Cat, we've continued to drive double-digit retail sales growth so far this year, leveraging expanded distribution in pet specialty and strong performance in pure-play e-commerce. And we have an exciting innovation pipeline to continue the momentum on this differentiated brand.

And on Edgard & Cooper, we're continuing to support the U.S. launch of the super premium dog food brand, including recently launching a new direct-to-consumer website to further broaden the brand's availability. Between our core Blue Buffalo business and our accelerators, we're confident in our plans across North America Pet and we expect them to drive further acceleration in our organic sales growth in the second half of fiscal '26.

Turning to our North America Foodservice segment. We continue to compete exceptionally well in the second quarter with a continued focus on leading and breakfast through nutrition and expanding our frozen baked goods portfolio. We held or grew share and nearly 90% of our priority businesses in Q2, led by cereal and biscuits. On cereal, we continue to expand our leadership in K-12 schools with great tasting, convenient and regulatory compliant offerings across our leading brands. This helped us drive 8% retail sales growth on cereal and K-12 schools, resulting in 1.5 points of 0 share growth in this quarter.

We're also delivering strong momentum on our category-leading Pillsbury biscuits within K-12 schools and commercial restaurants, contributing to more than 2 points of share growth in biscuits in the second quarter, further strengthening our position as the category leader. As we look ahead, we're doubling down on our nutritional leadership in schools by bringing remarkable breakfast solutions that deliver for students and school operators. For example, we recently launched a new Pillsbury Pancake Puff innovation that combines easy-prep with great taste, all while meeting school nutrition requirements.

Turning to our international business. we drove another quarter of strong growth, led by results on our global brands. Haagen-Dazs continues to delight consumers with new flavor launches in Europe and renovation on core products like cookies and cream, helping drive low single-digit retail sales growth in the quarter. We're looking to build on that with a new brand campaign launching in Q3 to further elevate the brand and drive consumer engagement.

On Old El Paso, we continue to see healthy category growth and plenty of competitive activity from new entrants. As the market leader, we're working to bring more remarkable product news and brand campaigns to attract new households and encourage more repeat purchases for existing Old El Paso consumers.

And on Nature Valley, we grew dollar share across our core geographies, and led by France and Mexico, where our brand building investments and expanded distribution reinforced our leading position in the snack bar category.

For our third priority, we're continuing our strong track record of driving efficiencies across our business so we can reinvest in growth. Our industry-leading holistic margin management program remains on track to deliver 5% savings in cost of goods sold in fiscal '26, driven by our digital advancements, particularly in logistics and manufacturing with more opportunities ahead in sourcing. And we continue to expand the impact of our global transformation initiative, embracing new ways of working that match today's evolving business environment.

With strong execution in the first half of the fiscal year and plans to deliver further improvements in the year ahead, we remain on track to deliver our fiscal 2026 guidance.

Now let me turn it over to Kofi to go into more detail on our second quarter results and key assumptions for the remainder of the year.

Thanks, Jeff, and hello, everyone. Our second quarter financial results are summarized on Slide 19. As a reminder, these results included our price and other remarkability investments. The impact of our North American yogurt divestitures and unfavorable trade expense timing, which, as we expected, were significant sales and profit headwinds in Q2.

Reported net sales of $4.9 billion were down 7%, including a 6-point headwind from the net impact of divestitures and acquisitions. Organic net sales were down 1%. On the bottom line, adjusted operating profit of $848 million was down 20% in constant currency, driven by lower volume and higher input costs, partially offset by the favorable impact of price mix on margins including the product mix benefit from the North American yogurt divestitures.

As Jeff mentioned, this profit result finished ahead of our expectations. This was driven by timing benefits in our supply chain stronger-than-expected sales growth in international and a modest amount of shipment timing benefit in North American retail. We expect these items will unwind in the third quarter. Q2 adjusted diluted earnings per share totaled $1.10 and were down 21% in constant currency, driven primarily by lower adjusted operating profit and a higher adjusted effective tax rate, partially offset by lower net shares outstanding.

Moving to the components of total company net sales growth in the quarter. Organic net sales declined 1% in the quarter, driven by unfavorable price mix. Organic pound volume was flat in the quarter, which represented sequential improvement from Q1. In terms of inorganic items, foreign exchange was immaterial to net sales, and the net impact of divestitures and acquisitions was a 6-point headwind to net sales in Q2.

Shifting to segment results. Second quarter organic net sales for North America Retail were down 3%, driven by unfavorable price/mix, partially offset by growth in organic volume. Organic volume growth modestly outpaced Nielsen-measured retail volume growth in the quarter, driven largely by shipment timing differences. As Jeff noted, we strengthened our retail sales performance in NAR in the second quarter, with 8 of our top 10 U.S. categories holding or growing pound share. In addition, Nielsen measured pound and dollar trends both improved by a full point from Q1 to Q2. On the bottom line, constant currency segment operating profit was down 21% in the quarter, driven primarily by lower volume, including the impact of the North American yogurt divestitures.

Second quarter net sales for our North American Pet segment were up 11%, including the impact of the Whitebridge acquisition, with double-digit growth in cat feeding and pet treating and the low single-digit decline in dog feeding. Organic net sales were up 1%, driven by favorable price/mix, partially offset by lower volume. We estimate that all channel retail sales were up 1% in Q2, which translated into the segment holding dollar share in the quarter. On the bottom line, second quarter North America Pet segment operating profit was down 12% in constant currency, driven by higher input costs and higher SG&A expenses, including investments supporting the launch of Love Made Fresh, partially offset by favorable price mix and higher volume.

North America Foodservice organic net sales were flat in the quarter with growth in frozen baked goods, cereal and frozen meals offset by a decline in bakery flower, including a 3-point headwind from index pricing. We continue to drive improved competitiveness in NAV in Q2 and with nearly 90% of our priority business is holding or growing dollar share in the quarter, led by strong performance in health care, technologies and universities and lodging channels. On the bottom line, North America Foodservice segment operating profit was down 12% in Q2, reflecting the headwind from our North American yogurt divestitures, partially offset by growth on the remaining business.

Moving to our International segment. Second quarter organic net sales were up 4%, driven by growth in Brazil, China, India and North Asia. Our focus on remarkability is driving positive share performance for our global platforms and local gem brands in international markets. We held all grew dollar share in 54% of our priority businesses in Q2, led by Haagen-Dazs ice cream and Nature Valley snack bars. Second quarter international segment operating profit was up 30% in constant currency, driven by favorable price/mix and higher volume partially offset by higher SG&A expenses.

Slide 25 summarizes our joint venture results. In Q2, Cereal Partners Worldwide net sales were down 1% in constant currency, driven by a decline in Latin America, partially offset by growth in Asia. Constant currency net sales for Haagen-Dazs Japan essentially matched year ago levels. Second quarter combined results from joint ventures totaling an after-tax loss of $60 million compared to after-tax earnings of $30 million in the same period a year ago, driven by our $85 million pretax share of a noncash goodwill impairment charge at Cereal Partners Worldwide.

Turning to margin results. Our Q2 adjusted gross margin of 34.8% of net sales was down 150 basis points versus last year, driven primarily by higher input costs, partially offset by the favorable mix impact from the North American yogurt divestitures. Our adjusted operating profit margin was down 290 basis points to 17.4% in Q2 driven by lower adjusted gross margin and higher SG&A expenses as a percent of net sales. The higher rate of SG&A expenses were due to a double-digit increase in media investment in the quarter.

Moving to other noteworthy Q2 income statement items. Adjusted unallocated corporate expenses increased $11 million in the quarter, driven primarily by a normalization of corporate incentive compensation after last year's below average payout. Second quarter net interest expense was up $1 million. The adjusted effective tax rate was 23.3% compared to 20.1% a year ago. due to unfavorable earnings mix by jurisdiction in fiscal 2026 and certain nonrecurring discrete tax benefits in fiscal 2025. And average diluted shares outstanding in the quarter were down 4% to $537 million, reflecting our continued net share repurchase activity.

Our first half financial results are summarized on Slide 28. Reported net sales of $9.4 billion were down 2% on an organic basis. Adjusted operating profit of $1.6 billion was down 19% in constant currency, while adjusted diluted earnings per share total of $1.96 and were down 21% on a constant currency basis.

Turning to the balance sheet and cash flow. First half operating cash flow decreased year-over-year to $1.2 billion, driven primarily by lower net earnings, excluding the pretax gain on divestitures, partially offset by the change in after-tax joint venture earnings and a change in restructuring, transformation, impairment and other exit costs. Capital investments in the first half totaled $253 million, and we paid $659 million in dividends and return in cash to shareholders through net share repurchases in the first half of fiscal 2026.

Before I close, let me share some of our key assumptions on the remainder of fiscal '26 and that underpin our guidance. We continue to expect to deliver improved organic net sales in the second half, driven by the expanded impact of our remarkability investments and amplified by the trade timing benefits in the fourth quarter. On the bottom line, we expect Q3 operating profit to be down more than we previously anticipated, driven by the unwind of Q2 outperformance drivers as well as the higher cost of volume that Jeff mentioned earlier. As we move to Q4, we expect to drive strong profit growth, thanks to favorable trade timing comparisons, the benefits of the 53rd week and the continued improvement in organic sales trends.

I'll wrap up my comments by summarizing our reaffirmed fiscal 2026 outlook that is outlined on Slide 30. Organic net sales are expected to range between down 1% and up 1%, adjusted operating profit and adjusted diluted earnings per share are expected to be down 10% to 15% on a constant currency basis, and we expect free cash flow conversion to be at least 95% of adjusted after-tax earnings.

With that, let me turn it back to Jeff for some closing remarks.

Thanks, Kofi. Let me wrap up with a few closing thoughts. I'm proud of our execution and encouraged by the improved top line performance we delivered in Q2 driven by our continued focus on remarkability and I'm confident in the strength of our plans to further improve our momentum in the second half.

I want to thank the entire General Mills team who continue to deliver exceptionally well amid a volatile external environment. with remarkable brands and remarkable people, General Mills is well positioned to deliver on our goals and drive strong returns for our shareholders.

Good morning. I'm Tom Palmer, the food analyst at JPMorgan. With me today is the CEO of General Mills, Jeff Harmening. General Mills is a leading packaged food company in the U.S. It produces and markets a wide range of products, including General Mills cereal, Pillsbury doughs and Blue Buffalo pet food. Jeff has been with General Mills since 1994 and CEO since 2017. Jeff, thanks for joining us today.

Yes. Thanks for having me.

It's been a dynamic environment in the food space over the past few years, including over the past month or so. Maybe we could just start off with an update on trends and expectations as you see them for General Mills.

Yes. Thanks. I've been CEO for 8.5 years. I think it's been dynamic for the last 8.5 years or so. And as you say, the last month or so is no different. As I think about the current environment and reflect back a couple of years before the current environment, I think as I think about it, we started with kind of record levels of inflation and to the extent of more than 30% over 2 years. And with consumer wages not keeping up with that inflation and not only for food for a whole number of industries. And so I think that's the backdrop for what we're seeing today, which is consumers that have struggled over the past few years on a whole variety of fronts to keep their wage growth growing with prices.

And so there's -- consumers are price sensitive now, especially for making less than $200,000 a year and especially if you don't have money in the stock market. If you're making more money and you have money in the stock market, which has been growing, that may be a different factor. But for everybody else, which is the vast majority, it's been a challenging economic environment. And we'll see if that gets better. Certainly, the shutdown of the federal government recently and everything with the SNAP program hasn't helped with that. But I think those are going to be relatively short-term effects relative to what we see macro.

But importantly, what I would say is that as we saw the turn just about a year ago with -- in our business, we had some really good marketing on our Pillsbury business, but it wasn't working the way we thought it would. And so it really caused us to reevaluate our approach and going to market and what we needed to do. And so one of the things we decided on Pillsbury was that we needed to kind of get pricing back to within a certain zone, not that it would be equal to our competition, but just kind of within a range where consumers would consider Pillsbury again and let our marketing work. And so we made the decision to take some prices down on Pillsbury and Totino's as well, literally about a year ago. And we saw that start to work. And so we decided, hey, look, it's working on these businesses, maybe we ought to be a little bit more broad with this approach. And so we have been, over the last year, looking at our whole remarkable experience framework, what consumers value and getting our prices in line has been important.

But the other thing we know is that, that's only part of the story. The rest of the story is making sure the rest of your marketing mix works. And so we've increased our level of new product innovation. We've increased the news we have our core brands. And as we sit here today relative to a year ago, in North America retail, we're growing our volume share in 8 out of our top 10 categories. A ninth category, we're 0.07 points away from share growth, but I'm not allowed to count that. So it's 8 out of 10. And so that's working as we anticipated, but that's only the first step to getting back to dollar share growth. And we're holding share in pet food. We're growing share in international, we're growing share in Foodservice.

And so I would say we're certainly cautiously about optimistic, and we feel as if -- we're increasingly convicted, I would say, that the steps that we have taken are the right steps for us to take. We've executed them quite well. I'm quite pleased with the way that our team has executed. And yet our dollars are still down for the time being because we've made these investments in price. So the next step then over the coming few quarters, we will be seeing a narrowing of that price gap so that we can eventually get back to dollar growth.

Maybe sticking to some of the actions you've taken. If we go back a couple of years ago, it seems like private label was the bigger source of market share pressure broadly for larger brands. More recently, in certain categories, we've seen more share gains from maybe perceived better-for-you brands. And do you think the response needs to be different when you consider the potential pressure from kind of the -- I guess, the private label side tends to be maybe a more value-oriented response, better-for-you brands, perhaps a bit different of a decision-making process for consumers?

Yes, really insightful question. And it really depends on the category you're talking about and the brands you're talking about, and we compete in 26 different categories. But you're right in saying that we have felt pressure on the value side and private label is a part of that pressure because consumers are feeling stressed as well as some smaller brands. And you say health and wellness, I would say protein. I mean it's actually not -- it's protein. That's what consumers are wanting. And yes, that's part of health and wellness, but it really is protein. And so that's why we have a remarkable experience framework because what you do in cereal, for example, might be different than what you do in Pillsbury. And so I'll give you a couple of examples.

So in cereal, what we realized is that we needed to have some protein offerings to compete with some of the people who are growing in the marketplace. And so we introduced Cheerios Protein, which is now a $100 million business and bigger than any of the small competitors. And we introduced some granola varieties, including granola varieties with protein. Now we're the #1 producer of granola in the cereal category. And so we did that. But at the same time, we realized that our advertising was not as good as it needed to be on Cinnamon Toast Crunch. And so we improved that advertising. And actually, that business has started growing. By the way, as has Lucky Charms. And so as we look at that category, that's what we need to do. Whereas in Pillsbury, our marketing was really good. Our new products were really good, but the price point wasn't where we needed.

So those are two different categories where we have done slightly different things because what we needed to do to respond to consumer trends were different in those categories. That's one of the reasons why you'll hear us talk about a remarkable experience framework because it allows us to attack the right problems in the right place at the right time, and that will vary across different brands and different categories.

I think one way that you've noted product changes is on an ingredient basis. And we've seen -- and you showed a lot of this at your recent Investor Day. But in some areas such as artificial dyes, it's taking maybe the core of the portfolio and changing some ingredients. And then in other areas, such as adding protein content, it seems to be a bit more of introducing a new version of a product. How do you kind of make that decision of what needs to change at the core of the portfolio versus introducing new products that might have these attributes?

Yes. So as we think about how to grow, I mean, we think about the whole spectrum to innovating on our core to new products, to licensing products to making acquisitions. I mean we think about all those things, and there are different pathways depending upon our right to win in a category for the right to the brand to take ownership of certain benefits. And so we're willing to play all the keys of the piano, and we have over time. Obviously, we got into pet food with Blue Buffalo because didn't have any pet food. So we needed to buy our way into that category with a leading brand. You see us doing Cheerios Protein where we launched a whole new variety of Cheerios with the health benefit that people are looking for in protein. In other cases, we'll make Cinnamon Toast Crunch taste better and that's just on the Cinnamon Toast Crunch brand itself. And so -- and we recently just launched GHOST bars, which is into the high-protein bars category, which we think is going to be really well received.

And so as we think about it, we really think about across the whole spectrum of how we innovate. We call it innovation with a big eye, how do you innovate? And again, it takes into account our right to win as well as what the brand can and cannot do. And we're open to all those different alternatives, and they work in different ways.

Maybe tying in with this, there is a bit of a question with some of the shifts we're seeing, right, secular...

I've heard that. I heard that question, yes.

Right? GLP-1, maybe some of the preferences towards protein and others, more scratch cooking, more price-sensitive consumers following such high inflation, especially, you've seen a lot over the years. I mean, I guess your view of what portions of this might be more cyclical in nature and which more enduring?

Yes, sure. The -- I mean there might be a little bit of a mix of each. I mean, as you think about fads and points of time versus trends, I mean that's how we think about these things. The humanization of pet food, for example, is a trend. I mean it's like a 20-year trend. Snacking is a trend. It's not a fad. Demographics are trends. I mean they're kind of knowable. It's just mostly just math. You see things like the economy and consumers feeling really pinched. That's clearly cyclical. I mean you go through periods where consumers feel more stretched and they go through periods where they're more robust and -- so that's -- I mean, honestly, that's clearly cyclical. I mean if it's not cyclical, then there's a whole different number of questions that one must ask oneself, but that's clearly cyclical.

You get into something like GLP-1s, but I think is actually more interesting. What I would say is that the idea of weight loss has been around since the beginning of time. People wanted to lose weight since the beginning of time. GLP-1s is -- but however, GLP-1s is a completely new phenomenon within that and people -- consumers are reacting that in a way that's differential to what they have before. Will there be a structural change due to GLP-1s? Probably. But we've already seen some of that pass already. About 12% of adults are using GLP-1s. Now about 50% to 60% of those get off of GLP-1s within the first 6 months. So there's a rotation through that. It's pretty clear that GLP-1 usage will grow. And it may even -- it may double, and it may go by 2.5 points. And that will increase the need for protein. That will increase the need for fiber and macronutrients and different pack sizes and all of that sort of thing.

But the question is, at the end of the day, how much does it impact growth? And it hasn't impacted food growth by multiple percentage points so far, probably fractions of a percentage point. So even if that doubles, okay, so you say it's a structural change, but maybe it's 1 point, maybe it's 1.5 points, okay? And that's not nothing, but it's not 5 points. It's not 3 points. And so I would suggest that GLP-1 usage will continue, but we will also adapt and we are adapting. And that's why we've been around for 160 years because we'll adapt. If we stood still and did nothing, that would probably be problematic. But we're not going to do that. And so I dare say that in some cases, people -- even if the impact that GLP-1s will have on society is not overblown, the impact it will have on us is it's overblown because assuming we don't react.

You noted high protein being maybe one of the key food trends we're seeing right now. Are there other health trends that you're watching or perhaps starting to see emerge?

Yes, and yes. So let me talk about protein for a second. Protein has been -- and it's a trend. People have been wanting more protein for like the last 10 to 15 years. But even that trend in itself is starting to -- has been changing, which is really interesting. It follows a path where you start with -- and we saw this kind of with organic where people -- there are people at the tip of the spear wanting protein. They'll eat more protein no matter how bad it tastes and no matter how much it costs. They just want more and they'll do anything to get it. And then over time, the more it gets into the mainstream, the more people go, hang on a minute. I want more protein, but I actually want it to taste good. And if it were affordable, that would be even better. And so we're starting to see that shift right now. And so you see that in like Cheerios Protein. It costs a lot less than some alternatives. It has 8 grams of protein versus 20, but people are okay with that. And it tastes a lot better than alternatives, it's a lot less expensive.

And so one of the things that we think will happen -- we see happening with protein. We don't think we know what's happening with protein is that people would be increasingly unwilling to make trade-offs between how something tastes, the price and the efficacy. That's our sweet spot. I mean we made Fiber One taste good. I mean we can make anything taste good. And so we see that trend.

But Americans get 1.5x more protein than they actually need. That doesn't mean they don't want more because people want more. And so you can't tell consumers they're wrong. You just keep giving them -- you make sure that they're getting what they want. 9 out of 10 Americans don't get enough fiber, 9 out of 10. And we know that with GLP-1 usage and as populations age, 55-plus in that category myself now, people need more fiber to make sure everything works its way through the system the way that it should. And so we're starting to see an increase in interest in fiber, and I think that will continue. People wanted to not taste bad. They wanted to do what it's supposed to do, but also macro nutrients. Again, if you're going to be consuming fewer calories, you still need the same number of macronutrients. And so we think that, that -- with those 2 trends will actually start to pick up as well.

Last one before moving on from North American retail. I wanted to ask on cereal. It has been a category that seems to be facing -- and this is a category level, I think, more so than General Mills specific, a bit more pressure on the volume side than maybe we're used to seeing. What's happening specifically in cereal that maybe is contributing to that? And it does seem like you're taking some action to address share trends. Is there something that can be done at a category level to help shore up some of these trends, too?

Yes. So as you say, we've done well on the share front and are doing pretty well now because we've taken some action. But let's back up a little bit to the category itself. We saw for a number -- for a few years, the household penetration of cereal was declining, which is never a positive indicator for the health of a category. We've actually seen that stabilize. So household penetration has stabilized, which actually is positive. And so -- but the category is still declining in terms of pounds by a little bit. And so that's all buy rate. And so then you ask yourself, okay, why would that be the case? And people are going -- they're finding alternatives to what they have in cereal. And a lot of those are like protein drinks, you're going to sense a trend here, protein drinks, yogurt with protein, other things with protein.

And so in order to address that kind of challenge, then you need to introduce your own things like Cheerios Protein and granola, and granola protein, which we have done, which is why we're doing relatively well. So what we need to keep doing those things, but also recognizing that, I mean, Lucky Charms pounds are growing, and Cinnamon Toast Crunch is growing. And so -- and Reese's is growing. And so Reese's Puffs is growing. So there is -- there's also an opportunity for stuff that tastes good and making sure you keep marketing those and keep developing those brands even as you're going to the protein side, realizing not everybody wants all that. Sometimes people just want to test that tastes really good. And so making sure we keep marketing those well as well.

That's going to be the key to our success. And look, I think even having a new competitor in the cereal category will probably help the category. Ferrero just bought WK Kellogg, and they're known for their innovation. And I think that will help the category to the extent that they invest in the growth of the category, which I suspect that they will.

Hope to spend a few minutes discussing fresh pet food. You recently rolled out Love Made Fresh, fresh pet food in retail. Could you maybe give us some update on the rollout itself, stores, SKUs available and how this might evolve as we look out over the next couple of quarters?

Yes. So we just launched Love Made Fresh, which is Blue Buffalo's entry into fresh pet food. We decided to go with our brand because Blue Buffalo has a right to win. Consumers are telling us they really love -- they love the idea of Blue Buffalo getting into fresh pet food. We did a test a couple of years ago. We found that out. We found out we could make good product, but it was going to be more daunting than we thought to generate awareness. And so having learned that lesson, we're kind of -- we're back in it now. It's not a hobby. It's not a test market. We're kind of all in and investing on the growth. And I would say so far, so good. It's too early to declare victory by like a lot. But so far, so good. And we've executed really well.

I would start with -- you asked about like where is it? Refrigerators. We said we'd be in 5,000 stores in the first 3 months. We're about 6 weeks in. I just had a review with the team last week. And I can tell you specifically that we're in 4,531 stores already, which is slightly more than 90% of what we said we're going to do in 1.5 months, and we said it would take us 3 months. 1.5 months in, we're 90% of the way there. So I think that's actually quite good.

The reviews online qualitatively are very good for our pet food offering. Pet parents really like it. Jeff Siemon, our Head of IR, is here and his dog Teddy, will not stop standing in front of the refrigerator looking for this. So we know that pet parents like it. We know their pets like it. We have 12 SKUs right now. Some are in a tube format, some are in a resealable tub and -- which is a new format to the segment, if you will.

And so that's kind of where we are. We're executing well. We're getting good feedback from our retail customers. They're thrilled we're in this category. They think we can help build the category and grow it even faster. We think so, too. And kind of -- so that's kind of our -- kind of getting through this executional phase through the beginning of the year is our focus. After that, what I would also say is that we'll continue to grow the number of stores we're in. We have a line of sight to doing that. We have a lot of customers asking us to do that, retail customers. So that's good. We're bringing some more SKUs and in the first quarter of next calendar year in a standup resealable pouch, again, another format, and that's being well received by customers and consumers. And so -- and we've got an innovation pipeline, which we're really pleased with.

And so again, we're going to have to invest for a couple of years. So far, so good. More coming this calendar year, we're going to look to continue to build momentum, but it's too early to declare victory. We're only like 6 weeks into this.

What about the economics of fresh pet food? I think one concern you noted when you did the trial, or one question maybe was whether there was a viable path to profitability. I think your message at the Investor Day last month was there is, and you do see it being more comparable to the pet segment margin over time. What's that path look like? Does that require internal manufacturing capabilities? Can you do it at current pricing levels? Or as it scales, would you look for driving margin through that? Just any update on that margin path?

Yes. So first, I'll confirm what you heard at Investor Day, which is right, which is we have a path to making this a profitable endeavor. I think our shareholders would ask us to do that. I mean selling product is one thing, but we're really paid to make money, selling it, so we can reinvest back in innovation and brand building and all the things that we do. We would not have gone into this again had we not had a path. So from the beginning, we told ourselves we're only going to get back into this if we feel as if we have a path to economics that make sense for us. And that's true of the income statement and also the balance sheet.

But as I talk about the income statement first, it really is -- the key really is gaining scale. And a lot of good things come with scale, whether it's manufacturing or logistics or sourcing. And I'm not going to get into specifics only to say that there are a lot of good things that come with scale as well as some technology that we think that we can bring to the table, by which I mean I know that we can bring to the table. And so all those things on the income statement side have us feeling as if to the extent we generate awareness and trial and sales and scale that we can make a gross margin and income statement work for us.

Then when it comes to the balance sheet, we're all -- because I get this question a lot, too, what about capital expenditures? I mean, there will be capital expenditures, but we're highly confident that we can keep capital expenditures within our current capital spending envelope, if you will, of 3% to 4%. And so we don't anticipate coming back and telling shareholders that we need to spend more capital than we had initially anticipated for the enterprise in order to get into this endeavor. So we feel good that the economics work there because if you have a great income statement, but it's eaten up by capital, that's not incredibly helpful in the long run. But to the extent you can have an income statement that works with capital that is manageable, you can have a business model that works. And then it's just a matter of do you have the right brand and the product and the branding, and we feel as if we do.

And another portion of the pet food portfolio. You're closing in on a year since the Whitebridge pet food acquisition, which most notably brought you the Tiki Cat brand. Its growth has been impressive. But similar to Blue several years ago, the brand has, I think, clear distribution opportunities underpenetrated as we look towards maybe more traditional retail channels. How do you view the brand's growth potential and distribution opportunity? And where do we stand in kind of integrating this business into the broader pet food portfolio?

Yes. So the Whitebridge acquisition, as you said, especially Tiki Cat, which is the crown jewel. I mean, it's been growing well. And it's been going well. We have a great team, but also Tiki Cat is a really good brand and the product is differential and something cats really like and the cat population is growing. So all good things.

And so what I would say is relative to when we bought Blue Buffalo, there are similarities that are important that are also -- there's also a difference that's important. The similarities, as you noted, is that there's certainly room to grow in channels and distribution and all that kind of thing. And so we feel good about that. But the other differential growth is when we bought Blue Buffalo, there was actually quite a bit of awareness because Blue Buffalo had done a lot of branding over time, and they had actually gotten into the food, drug and mass channel before we acquired them. They were in 4 accounts already in food, drug and mass before we acquired them. Tiki Cat is in no food drug and mass accounts and their awareness, even though the brand is really good for the people who -- the consumers that know them, the brand awareness is a lot lower.

So I would submit to you that the runway for growth on Tiki Cat is actually greater than it was for Blue Buffalo in percentage terms. Because just generating awareness, staying where we are and just generating awareness will generate growth and the cat population is growing pretty quickly. And then if you add on top of their over time, distribution growth, it's very clear to me that the opportunity in front of us on Tiki Cat on a percentage basis is actually higher than it was for Buffalo.

And maybe just an update on kind of integrating this business into the...

Integrating business...

You've got the Joplin facilities and...

Yes, so far, so good. I mean, again, we inherited a really good team, which is always helpful when making an acquisition. And we're largely through integrating our systems. And we had a couple of plants in Joplin that we got with the acquisition. We already have a manufacturing plant in Joplin. And so we're closing a couple of the ones we bought with Whitebridge, but a lot of those employees are transferring to the current -- it's almost across the street. And so we anticipated that we would probably do this when we made the acquisition. So it's good to have some synergies in addition to the growth, makes the models work out better. And we get to keep the vast majority of our employees employed as they go to our other facility in Joplin. So I would say on the integration, honestly, it could not have gone better so far.

We've touched on a couple of areas of the pet food portfolio, but ultimately, the biggest portion is Blue brand and it does seem like share trends have stabilized for dog food at this point. Maybe this is a bit more of an open-ended question than on the other two brands. But what excites you about the pet food portfolio when you look at Blue and the opportunity that still exists within that?

Yes. I am very excited about our growth potential in Blue. As you said, we have stabilized the business. That's not the ultimate goal. The ultimate goal is to get back to really strong growth, which we're confident we can do. And I think across Blue, we have more things working for us than working against us. If you look at Tastefuls, our cat brand, that is growing. The Life Protection Formula, we've gotten back to growth. And so we've got, obviously, fresh pet food, which we're very bullish about. Wilderness has been more of a challenge, but that's kind of our biggest challenge. The other thing is we've gotten our pricing right on treats, and we're seeing that rebound in terms of volume.

And so now what it takes is going from having stabilized the core into growing the core, and that's kind of where we are. And I'm really bullish. We have a good pipeline of innovation. And we brought one of our big customers in just really recently here and you always think you do, but you test yourself whether you're in front of retail customers. If they feel the same way, then you're probably on the right track. I think they were, I would say, pleasantly surprised by the level of innovation we have on the way for our Blue Buffalo brand, and that gives us even more confidence.

So I would say, yes, we've stabilized it for now, but that's not the goal. The goal is getting the core brand and all of our pet food back to strong growth, and we can see a path to do it. Now we need to do it.

On the -- I wanted to ask on the International segment. thinking through the growth opportunity, both from a sales and margin standpoint, it seems like you've addressed some of the challenges in ice cream with both innovation and rationalizing your store print -- your store footprint, sorry. As we look out, what becomes kind of the key growth drivers here? And I think the margin opportunity has been discussed for several years. When do we maybe see a broader inflection there?

Yes. So on our International, we've been on quite a journey over time. And we've said, look, the key to our growth is going to be growing our big global brands. And that is still the key. In the process, we have divested a number of smaller brands, La Salteña in Argentina, yogurt in China and in Brazil and in Europe, a dough business in Europe. And so we've kind of gotten rid of things that have been, frankly, a distraction and have been not helpful when it comes to margin.

And so having said that, one of the things we've done is as you've seen over the last couple of quarters, and long may this continue, we've strung together a couple of quarters of really nice growth on the top line with outsized profit growth on the bottom line. And that's because we are really putting all of our focus back on our core brands. And there are 3 brands that will drive the majority of our growth in international. You're seeing that today. You mentioned Häagen-Dazs. And I'm really pleased what the team has done on Häagen-Dazs, introducing stick bars as a new format, but even more importantly, growing our core, whether that's in Europe or whether that's in China, in particular, growing our core alongside the stick bars and through product renovation and really good advertising.

So again, using the remarkable experience framework in that brand, we've seen great growth on Nature Valley. I think it's up double digits so far year-to-date. And the Nature Valley bar outside the U.S., we started -- we kept -- we kind of got back to the basics on focusing on Nature Valley and the original bar, but also protein. Protein is big outside the U.S. as well. So Nature Valley is growing nicely. And the third pillar of that growth will be Old El Paso, which is also a high-margin brand, a good brand for us outside the U.S.

So growing those 3 brands will account for the majority of our growth. We have seen some the last couple of quarters progress being made toward that and more progress to do, but I'm highly confident that we'll increase the profitability of International, and that will outstrip the sales growth that we see, which we think will also improve.

All right. And then on Foodservice, it's been more attractive sales and profit growth within the broader Mills portfolio. When you look out, maybe just an update on the key growth drivers. And secondarily, if we are heading into maybe a more challenging economic period, maybe discuss how exposed or perhaps insulated this business might be to those imaginations?

Yes. So imaginations, that's good. So the -- our Foodservice business, we have a really good -- as you know, we have a really good Foodservice business. It's got good margins. It's got good growth, and it's been sustained over time, and we compete effectively. It's because we're kind of structurally advantaged in a couple of really important ways. One is that we have good brands, which we sell through K-12 schools. So think about cereal or bars or that kind of thing. And we have really strong shares in that, and that's a growth sector. And actually, as the economy gets tougher, more kids tend to eat at school. So that is a growth business for us, and we've got really good shares, which is one of the reasons we have been growing.

The second reason is we have a dedicated sales organization. And so we have a lot of dough business and flour business and that sort of thing, but we have our own sales organization, and we can really cover a lot of ground. And the third is that we have a lot of culinary expertise, which we showed off during our Investor Day, which you got a chance to see, particularly as it relates to all kinds of dough. If it's dough, we can -- we do it really well.

And so because of those things and because of all those factors, we've seen consistent growth over time and good margins over time because we do have some structural advantages. A lot of times, when people think of Foodservice, they automatically go to a quick service restaurant. And for good reason, that's the biggest part of away-from-home eating. That is probably the smallest part of our away-from-home eating. The biggest part for us is in what they call noncommercial channels. So think K-12 schools and universities, and that part has been the growth part. And then we sell to a lot of smaller restaurants, and that business has been doing well for us.

I wanted to ask on cost controls. And it's really been impressive the level of HMM productivity savings we've seen over the past few years. For this year, you've announced $100 million in plant savings on top of that. And then -- and maybe this was part of the $100 million, but there was a recent restructuring announcement and a plant closure. How much more is there to go on the cost savings side relative to what we've seen so far?

Yes. So I mean, we pride ourselves on not only driving innovation, but being efficient with how we do it. And the more efficient we are, the more money we can put back into innovating and sales growth. And so as I think about -- you mentioned 3 things, and I'll put them in 3 different buckets in order of magnitude of importance over time. HMM, so productivity, HMM. The second would be this transformation and the third would be the manufacturing restructuring. By far, that is the order of importance. And you mentioned the $100 million we'll save in transformation. I'll get back to that.

But just by order of magnitude, this year, we'll generate $500 million in HMM. And so -- and by the way, we've kept at a level of roughly 4%, now 5% over the last 15 years. That is the main engine of our productivity. It's well grooved. We have a line of sight into keeping our productivity efforts where it has been historically. It may not be 5%, it may be 4 out, but it will be industry-leading for the foreseeable future. And the more we look at it, the more we see opportunities. Now we're doing a lot of digitization and using artificial intelligence and that sort of thing to reduce waste, and we talked about that during our Investor Day.

So HMM is by far the most important. When it comes to transformation, yes, we're going to save money, but I would tell you, we're just changing the way we do work. And we talk about the fact we're having machines do a lot more of our forecasting now than we did before, and that will save a little bit of money. But the big unlock is that helps our marketers focus on growth because it's hard to focus on, okay, what's the forecast for next month and try to generate new ideas for a brand. And so to the extent the machines do it, by the way, they're doing it as well as people. They're not nearly as biased. And our people are good, but we all bring our biases to the table. And so what we found is that we're taking our -- the time it takes for forecasting down by 75%. That leaves us more time to generate ideas to generate growth.

And so as we look at our transformation, it really is using technologies and processes to make the work we do more efficient, yes, to save cost. I think even more importantly, particularly as it relates to marketing, is it will allow our marketers' time and energy to do what they need to do to generate growth. That's the real unlock is growth.

And the plants -- sorry, I just got excited about that. The plants -- I mean, we closed 3 plants and all 3 of those plants came with acquisitions. And so there's not something broader at foot here really. It really is in Joplin, as I said, we saw an opportunity with Whitebridge to move capacity into our current facility. And then the acquisition we made in Foodservice, we will outsource some of that to a third party while keeping one of our manufacturing plants. And so it really was kind of a -- it's a tactic. It's a nice tactic. It will generate a little bit of savings, but it's not going to be nearly as much as the other things we talked about.

Historically, General Mills has been acquisitive, had some pretty successful acquisitions looking at Blue Buffalo and Whitebridge more recently. Maybe an update on current appetite for M&A and areas perhaps where you might see more opportunity from a category standpoint?

Yes. So I'll start the M&A discussion with there's nothing more important that we can do right now than generate organic growth. And that's where the M&A come -- by the way, it starts internally that way. So it's not just something I say to you. Anybody -- you -- any member of our leadership team, they would tell you the same thing without prompting or hesitation because no amount of M&A can make up for a lack of organic growth itself. And I know that's obvious, but sometimes we can tend to get ahead of ourselves. So that's -- it's also important as we look at M&A, we won't do any acquisitions or divestitures, which will prohibit us from growing organically. And so as we think about what we might do, it has to be with an eye toward making sure that we have not only the financial bandwidth, but also the organizational bandwidth to make an acquisition. So I don't need to come tell you and all of our investors that we can't grow organically because our attention has been diverted to acquisitions.

So we really haven't changed our stance about how we view acquisitions. Over time, a number of studies have shown that companies that do both acquisitions and divestitures, both over time and kind of in a fair amount of sequencing do have a better total shareholder return. And that's certainly the way that we feel. And we've changed 30% of our portfolio. So far, we've made some big acquisitions, as you say, Blue Buffalo and Whitebridge and so forth. But we've also made some big divestitures, think about yogurt.

And so as we look into the future, our stance toward M&A really hasn't changed. We have an always-on capability. We'll look for assets that are growthy in nature, things where we are competitively advantaged, where we think that we can create value. If it comes with some synergies, all the better. And -- but we'll also look for chances to divest. We think that somebody else might be a better shareholder than we are, and we can focus our attention the things that we are growing.

And so again, it's probably a boring answer, but it's the same as we've thought about it for the past few years. Only you may hear more emphasis on organic growth because during the pandemic, we were basically selling as much as we can make and inflation, we're just kind of keeping our supply chain and pricing in line. And now we need to generate the growth ourselves. But our stance toward M&A and capital allocation in general has not changed because making money is important, but what you do with that money is as important. And we're really good at making -- we're really good with free cash flow conversion, like really good. And so we'll continue to pay our dividend and grow our dividend in line with earnings and do M&A. And if not, we'll give money back to shareholders in the form of share repurchases and pay down some debt in the process.

Great. Well, we're getting late in the quarter. And maybe just an update both on anything quarter-to-date related you want to provide. But also as we think about moving through the duration of this fiscal year, what do you see as kind of the key swing items that might send your reported results maybe to the high or low end of your current guidance ranges?

Yes. I mean the -- let me start with the year, and I can back into the near term a little bit, although there's only so much I can say about that. But on the -- as the year progresses, we said, look, we made a lot of price investments. We were lapping that in the first half of the year and that our profitability would be challenged in the first half, but it would get better in the second half as would our sales as we start to lap those price investments. That is exactly the way we -- I look at it and think about it exactly the same today as we did when we gave guidance at the very beginning of the year. And because we're seeing things play out roughly in line with how they would.

Our pounds -- we're growing pound share in 8 of our top 10 categories in NAR, and we're maintaining or growing share in our other 3 segments. And so that's not to say there's not more work to do. Pound share is one thing. Dollar growth is another. So if you looked at our dollars in North America retail, you'd see those are down, but we think those will get better and the gap between pounds and sales will decrease over the course of the year, and that's still the way we feel with the biggest impact in the fourth quarter.

But again, gradual improvement as we move throughout the year. That's what we saw at the beginning of the year and what we thought we'd do. That's still what we see, which is why we reiterated guidance at the end of the first quarter. As we look at the quarter-to-date, there's not much -- there's really not much commentary. You all can read Nielsen data as much as I can. And so you can see that North America retail has gotten a little bit better over the course of the last little while. We're holding share in pet food or International is holding share as well. And so there's not really much to report.

In the short term, I get asked about SNAP and federal shutdowns and all that. I mean, look, your guess is as good as mine. Where I think -- what I would say about all that is there -- you may see a week or 2 of data because of SNAP being restricted, that's not as robust as it was before. But we believe -- and by the way, our retailers we talk to believe that the minute the funds are reinstated that, that will come growing back. And so there is certainly no long-term dislocation. There is no medium-term dislocation. I'm not positive there'll be a short-term dislocation. We'll see. The key is that because some spending has been restricted to make sure you have enough inventory with your retailers so that when the funding gets restored, that you're actually on the shelf and that you're there -- and we're in a great place to do that and have well alignment with our retailers. So that's probably as much in the short term that I can talk about.

Thanks for that. We have a couple of minutes. So if anyone in the room would like to ask if there's a mic right at the front. If not...

We stun them in silence.

Thanks for your time today, Jeff.

Yes. Thank you.

Appreciate it.

Yes, appreciate it.

Please welcome Vice President, Investor Relations and Corporate Finance, Jeff Siemon.

All right. Hello, everyone. It's great to have you all here. Thank you all for joining us on the webcast. I just have a couple of quick housekeeping things before we get the content in motion here. So on behalf of the entire General Mills team, I want to thank you for joining us today for our 2025 Investor Day event. We really are thrilled to have you here at our headquarters. For those of you in person, thrilled to have you joining us online.

Before we begin, let me remind you that our presentations and Q&A discussion today may include forward-looking statements that are based on management's current views and assumptions. So please refer to the materials that -- on our Investor Relations website this morning for factors that could impact forward-looking statements and for reconciliations of non-GAAP information, which we may discuss on today's presentation. Throughout today's presentation, you'll hear from a wide range of General Mills senior leaders, beginning with Jeff Harmening, our Chairman and CEO. For those of you joining online, you can find bios for each speaker accompanying the webcast and presentation materials. And for those here in the audience, you have the same information in your programs. We have a really full day planned. So let's go ahead and get right into it.

Please join me in welcoming Chairman and CEO, Jeff Harmening.

Thank you, Jeff, and good morning, everybody. Good morning, everybody. Yes. Welcome to all of you joining us today, both live and virtually. We are thrilled to have you with us for Investor Day, especially excited to host those of you here at our General Mills world headquarters.

This is the first time in many years, we've held this event at our corporate office. And for those of you who made the trip we really appreciate your coming. Our theme today is remarkability, and in particular, how we're driving remarkability across our business to accelerate growth. We've designed this day to give you a better picture of how General Mills is bringing remarkability to life. You'll get a look inside each of our businesses, time to connect with our leaders, and of course, enjoy sampling some of our remarkable products along the way. You can see our agenda behind me. We've got a great lineup of business presentations, multiple Q&A sessions and a panel discussion with leaders from supply chain, digital and technology and innovation and quality. To show you how we are modernizing our capabilities that fuel growth and sharpen our competitive advantage.

Then for those of you here in person, we'll move into the interactive stations this afternoon. Immersive exhibit showcasing our businesses in North America Retail, North America Pet, foodservice and international as well as our work on sustainability and on supply chain. And you'll get a tour of our global R&D facility where we'll show you how we're leveraging our capabilities to shape the future of food. It is a pack-day and one, we hope you'll find both valuable and engaging.

Before we get into the presentations, I just want to set the stage. As I said, our theme today is driving remarkability to accelerate growth. And throughout today's remarks, you'll hear how we are stepping up our remarkability across all aspects of our strategy and our execution.

You'll hear how we are making bold choices to deliver more remarkable experiences from investing to bring consumers more value in North America Retail to launching nationally into the fresh Pet segment of the Pet food category, to building a world-class digital and technology capability. And you'll hear how we are working to deeply understand our ever-changing consumers and adapting to ensure that our total product offerings meet their needs in remarkable ways. And this is exactly where our accelerate strategy comes in. With our purpose to make food the world loves as our North Star, the accelerated strategy guides how we prioritize resources to capitalize on our competitive advantage, deliver for our consumers and drive top-tier shareholder returns.

It's about making choices on where to play, focusing on the product platforms and the geographies where we have clear competitive advantages, and a right to win. And that includes our a core markets where we have the scale to compete. And our five global platforms and local gem brands where we see the best opportunities to drive profitable growth.

It's about clearly defining how to win by boldly building our brands, relentlessly innovating, unleashing our scale and standing for good. It's worth taking a step back and assessing the volatility that our industry and General Mills in particular, has weathered over the past half dozen years, including COVID lockdowns, supply chain disruptions, sharply elevated inflation and geopolitical uncertainty.

Fast forward to today, I think we can safely say that we've proven our ability to effectively navigate the evolving world and positioning General Mills for future success. We've doubled our investment in digital and technology, building new capabilities that are helping us to stay on top of evolving consumer behaviors and external trends, all the while seeing returns in the form of efficiencies, innovation speed and greater agility. And the good news is we are just getting started.

You'll hear more later today from our talented leaders who are guiding our teams and advancing these digital capabilities, with more detail on how we're deploying them to adapt and win in a fast-changing environment. We've also delivered industry-leading levels of holistic margin management cost savings for more than 15 years, and we've outperformed our long-term trend more recently with a very good visibility to our HMM pipeline, we have high confidence that we can keep delivering strong savings to fuel our growth investment for years to come.

And we've proved that we can effectively reshape our portfolio through M&A and through divestitures, making bold choices that change 30% of our net sales base. These changes strengthen our position in the categories and platforms where we have the right to win and created shareholder value along the way.

We've acquired and grown a Pet food portfolio that is approaching $3 billion in net sales with strong margins, including Blue Buffalo, Edgard & Cooper and Whitebridge Pet brands. We've divested businesses like yogurt, where we didn't see a path to profitable growth. And we built a successful always-on M&A capability that gives us real confidence in our ability to pursue more portfolio-shaping actions in the future when the opportunities arise. With this strong foundation, we are well equipped to keep adapting to market realities, because we know that the landscape continues to shift. On one side, we're managing uncertainty around tariffs and global conflicts, shifting food regulations. And of course, we continue to see consumers seeking value as they contend with a historic level of inflation in recent years.

And on the other hand, technology adoption from AI to new diet solutions like GLP-1s is rapidly reshaping consumer behaviors and expectations. At the core, our job is actually quite simple, follow the consumer. And when we look at long-term trends, several stand out. In the U.S., multicultural consumers, particularly Hispanic households are reshaping the consumer landscape and influencing food culture in powerful ways, led by millennial and now Gen Z households. At the same time, consumers are aging and with that comes new needs around health and wellness and convenience.

Weight management and holistic health are increasingly top of mind, particularly with the influence of GLP-1 drugs. And Pet humanization continues to accelerate with Pet parents prioritizing premium nutrition and treating pets more and more like family. We are working hard to position our businesses to capture opportunities that these trends present. Our brands have built trust and relevance and scale, and we've proven our ability to adapt and evolve. As the marketplace changes, we are confident in our ability to keep following the consumer and to drive organic growth while also managing near-term challenges along the way.

Our remarkable experience framework is at the center of how we adapt our brands to follow a consumer. So what is the remarkable experience framework? Simply, it's how we make every touch point with our brands more remarkable across product and packaging, brand communication, omnichannel execution and consumer value. And why does that matter? Because remarkability is a competitive advantage. In a crowded marketplace, it's what makes consumers choose our brands, stay loyal to them and recommend them to others.

Our plans in fiscal '26 are all about investing to improve our remarkability, and while price is one place where we're investing, it is really important to understand that our investments across this framework go well beyond price. And so let me give you a couple of examples. First, our product news is bolder and bigger than it's been in many years. This includes core renovation news, premium innovation and seasonal offerings across both human and Pet food. We expect net sales from new products in fiscal '26 to increase significantly from about 3.5% last year to around 5% of total net sales this year.

We've also sharpened our brand communications, making sure we're top of mind that the exact moment consumers are making buying decisions. We're breaking through today's noise in a few important ways. First, we're executing bigger, better ideas like this year's Pillsbury Bakes Up Bigger news, Blue Buffalo's product superiority messaging and our work to remind consumers outside the U.S., just how remarkable are Haagen-Dazs offerings are.

Dana, Liz and Ricardo will unpack these initiatives further this morning. Second, we're building stronger capabilities. Like, for example, we launched an iconic brands growth lab bringing our science back proprietary. It's easy for me to say, proprietary brand building approach to all of our $8 billion brands. And we're creating exciting new digital marketing capabilities, helping our teams generate and scale creative content in fresh and innovative ways.

All of this is supported with increased media and omnichannel investment, giving our brands more reach, more visibility and more consumer engagement. Now we're building momentum, and our plans are geared to further accelerate our growth. You'll hear about many initiatives today across our business, like Cheerios, Ghost Protein bars and Pillsbury refrigerated dough in North America retail. Yes, you'll hear more about Blue Buffalo's, new Love Made Fresh dog food in North America Pet, Haagen-Dazs stick bars and Nature Valley snack bars in international and frozen baked goods and our North America foodservice business. These are places where we're leaning in with even greater focus to drive acceleration. Executing this playbook also requires making bold choices. That means rethinking and rewiring how we operate, being mindful of risk, but unafraid to take decisions and actions when we see opportunities. Driving remarkability is about investing with conviction.

On fiscal '26, we're taking a big step forward, doubling down on investments across our priority businesses. We're able to do this because of the enablers we put in place, like our industry-leading holistic margin management productivity program and our recently announced global transformation initiative. Collectively, our efficiency efforts are expected to deliver $600 million in savings, free up capacity and creating new ways of working that will enable our teams to increase their focus on demand generation.

That efficiency allows us to reinvest more in meaningful growth. It's about discipline, it's about adaptability and it's about boldness, all working together to enable growth. So let me close with this. In fiscal 2026, our focus is on demonstrating our ability to restore organic sales growth as the first step toward our long-term ambitions. We are seeing progress and we have confidence in our fiscal 2026 plans, which will create the right foundation for continued acceleration. We believe that the best path forward is to drive long-term value for shareholders is through consistent profitable organic sales growth. We'll achieve it by continuing to invest in consumer value and product news and innovation and in brand building, guided every step of the way by a remarkable experience framework. We are making significant investments with strong ROI discipline and building on momentum we've already seen strengthen in the second half of last year and into today. Above all, we remain squarely focused on the consumer, because we know that if we lead with remarkability we can accelerate growth, despite challenge, despite change and despite volatility.

With that, let's dig into the remarkable experience framework, and how we're bringing it to life. And who better to walk us through what that means then our leader of our North American Retail and North America Pet business. Please welcome Group President, Dana McNabb, to the stage. Dana?

Well, good morning, everyone. My name is Dana McNabb and I have the privilege of leading our North America Retail and our North America Pet business. North America Retail and North America Pet play very different, but important roles for our company. North America Retail or NAR, as we call it, is fueled by beloved iconic brands like Cheerios and Pillsbury which have been in part of the fabric of General Mills for nearly 160 years. It's our largest and most profitable business segment, and our goal is clear. We need to return the NAR segment to consistent, profitable sales growth.

For North America Pet, we see tremendous growth potential, for brands like Blue Buffalo and Tiki Cat behind the multi-decade pet food trend towards humanization and premiumization. Our job in pet is to leverage our portfolio of trusted beloved brands to tap into that humanization trend and accelerate our company's growth. When you look at our total combined portfolio in North America, we are the only food company with leading share positions across all meal occasions for humans and for pets.

We take this access to 95% of American households seriously. And we know that to continue to be consumers, brands of choice, we need to deliver remarkable experiences for our consumers which leads to remarkable growth for our brands. With my time today, I'll share with you how we're investing in remarkability to ignite growth in NAR, which represents a $11 billion in net sales across snacks, meals and baking and cereal categories. Later in today's presentation, you'll hear from Liz Mascolo, who will share how we're leveraging remarkability to accelerate growth for North America Pet. It's impossible to talk about how we're going to drive growth if we don't start with who we need to drive growth with. As you heard from Jeff, our consumers are at the center of all our decisions. To build remarkable brands, we need to deeply understand our consumers and the choices they're making and how that translates into growth opportunities for our business.

We know that consumers' pockets continue to be stretched, and they're looking for value in every aspect of their lives. And while price is important, it's just one of the many factors consumers consider when they're assessing the value of their choices. Now more than ever, our consumes are looking for easy access to quality food they trust to beat themselves or their family at affordable prices. And meeting our consumers where they are with the products and experiences they're looking for is simply nonnegotiable. Grounded in our accelerate strategy, our NAR ambition is to build the most remarkable brands in food. Because consistently delivering brand remarkability day in and day out is how we'll return NAR to consistent, profitable growth.

Today, I'm going to walk you through two ways we'll do this. First, by investing in the remarkability of our brands and then by leveraging the power of our portfolio to capture new avenues of growth. Our ability to restore profitable growth to NAR will depend on our success in improving the remarkability of our brands. As Jeff shared we're using the remarkable experience framework as our guide to measure our superiority to the competition across all five measures. Based on our own experience as well as benchmarking with other leading CPG peers, we know that when we deliver superior scores to our competition across the majority of these metrics, there's a strong correlation with sustainable market share and household penetration gains.

Let's take a look back at last year. As we entered fiscal 2025, we had a plan that was focused on improving remarkability in NAR, largely in the areas of product, communications and omni execution. But we soon realized that we had underestimated how much economic pressure our consumers were continuing to feel. And it became clear that price sensitivity had become too much of a barrier in certain categories, keeping the rest of our investments from breaking through.

So we quickly moved to address the price challenge on a couple of big businesses like Pillsbury Refrigerated Dough and Totino's hot snacks, and encouragingly, when our price investments were combined with great product news and relevant messaging, we saw those businesses respond, inflecting to volume growth in the second half of the year.

This increased our confidence that our focus on remarkability is the right one. And as we did an honest assessment of where each of our brands stood on all five metrics versus the competition, we knew that there was more work we needed to do. This is what led to our decision to significantly increase our investments to improve our remarkability in fiscal '26 across our portfolio, starting with price value. Because the truth is we can have the best product with the most compelling brand campaign, but if we're priced too high, the consumer simply won't put us in the consideration set.

With consumers under significant economic pressure, we're investing to narrow price gaps on some of our biggest product lines or get under key price clips with the goal of addressing price value on about 2/3 of our NAR portfolio. And we've been smart about how we're deploying these investments, leveraging our strategic revenue management toolkit and using mechanisms that allow us to quickly pivot if KPIs are not being met.

For example, our SRM analytics helped us identify the price clip we needed to get below on our Totino's Pizza Rolls large pack. When we invested to get our shelf price right, our business responded, and the large pack has grown pounds over 20% since we made the investment. We've made significant progress on our planned price value adjustments in Q1 and will complete the work in Q2, which will put us in a strong position to allow the rest of our remarkability levers to work harder for consumers going forward.

And that includes great product. As I said earlier, we know our consumers are seeking great tasting, high-quality products. They feel good about feeding their families. This year, each of our top 10 categories and core brands has product quality news. That is up from three categories having news last year. This includes product renovation news like Cheesier, Annie, Mac&Cheese, Old El Paso soup with 30% more chicken and taste improvement on our core checks mix varieties. We also have strong innovation plans in F26 and expect NAR's net sales from new products to be up 25% versus last year. This innovation is centered on three growing consumer trends, bold flavors, better-for-you benefits like protein and products that deliver familiar and fun experiences for stressed consumers.

We know consumers are looking for bolder flavors with 62% of U.S. consumers being more likely to buy food if it's spicy. To lean into this trend, we're launching products like Progresso Pitmaster, barbecue inspired soups, new spicy varieties of Chex Mix and a new line of Totino's ultimate pizza and pizza roles that delivers an elevated taste while still bringing consumers the value that they've come to expect from Totino's.

On protein, we believe we're uniquely positioned to deliver great tasting, affordable protein for families and we're making significant investments to broaden our protein lineup this year. This includes expanding our Cheerios protein line, the top new cereal launch last year, with a great new tasty cookies and cream flavor. We're also rolling out new varieties of Annie's Supramax with 14 grams of protein and 5 grams of fiber along with oatmeal crisp protein cereal in Canada and Nature Valley creamy protein snack bars. Finally, we're continuing to deliver our familiar and fun by leveraging our iconic brands with new products from Betty Crocker, Pillsbury, Cheerios and more. Importantly, we're already seeing success with this innovation lineup with Q1 customer acceptance, distribution and new product volume tracking ahead of our expectations.

Let's move on to packaging. We're doubling the amount of price pack architecture, we're launching in fiscal '26. To ensure we have the right sizes to meet the needs of our consumers at the right prices across the right channels. From a pack size perspective, we're seeing bifurcated growth driven on one side of the spectrum by larger value sizes. And on the other, by smaller affordability sizes.

Our strategy is to meet our consumers on both sides of the spectrum. For example, on Chex Mix, we launched new larger tubs, and smaller car cut formats to deliver both value and affordability as well as bringing new benefits in freshness and convenience. Beyond pack size, we're also accelerating our seasonal offering, like Halloween packs and fruit snacks and partnerships and equities like Wednesday and [indiscernible] with 50% more seasonal offerings planned year-over-year.

These efforts help drive Nielsen-measured retail count growth for both our salty snacks and fruit snacks businesses in Q1. And we think there's more growth potential ahead as we continue to adapt our packaging to meet evolving consumer needs. With these investments in the remarkability of our products, packaging and price, we're building a stronger portfolio to bring to the physical and digital shelf. This gives us an opportunity to step our omnichannel execution by partnering with our retailers to help grow our categories.

In fiscal '26, we are increasing the number of scaled portfolio events and seasonal events that we bring to the market. This includes launching cross-category events that hit critical windows for our customers and consumers, like back-to-school, football game day and New Year's. We're already seeing positive retailer engagement with these initiatives. In fact, incremental pounds, display support and merchandising lift are all outpacing our categories so far in fiscal '26 behind our strong event plan. And as we continue to drive omnichannel execution, we know that e-commerce integration is increasingly critical part of the mix.

We already have a lead here. With our online market shares typically higher than in bricks and mortar outlets. We plan to capitalize on that by partnering with our customers to drive future e-commerce growth. And we have dedicated teams who work with our biggest omnichannel retailers to build effective growth plans. For example, at one key retailer, our back-to-school event integrated our Box Tops for Education program into the platform using a full funnel marketing approach. This drove improved sales and led to a 400% increase in connected Box Tops users who spend nearly 3x more on General Mills products.

The final element is investing in remarkable brand communications with better partners, better ideas and better investments. We recently brought in three new creative agencies who are partnering with us to deliver modern social-led brand campaigns across all our top categories. And while early, initial reads on the campaigns that hit the market in Q1 have been promising, including Cinnamon Toast Crunch's new Must Cinnadust campaign that has already driven a 25% increase in brand consideration, helping drive increase pound and dollar share for that brand.

In addition to improving the quality of our ideas, we're focused on improving our marketing capabilities and ROIs by leveraging AI tools. We recently stood up a new content studio called Studio G, with a partner we believe will be highly transformational for us in months. Together with our own internal growth lab capabilities, we will leverage AI across the entire communications chain from ideas, to content creation to publication.

AI is helping us test ideas, increase the efficiency of production with digital twins, evaluate content before it launches and create at speed with versioning tools. We expect these and other AI-based tools will help us continue to optimize our media investments going forward. Beyond our AI capabilities, we're increasing our use of social media influences this year, with plans to expand going forward. And we're supporting all of these efforts with a double-digit increase in media investment in our fiscal '26 plan. Okay. So that's a lot.

Let me now walk you through a great brand level example of how we're bringing these remarkability investments to life with Pillsbury. So for context, within the Refrigerated Dough category, our Pillsbury canned dough line, which includes products like cinnamon rolls, biscuits, crescent and breads, generates $1.5 billion in retail sales for General Mills. And Pillsbury holds a strong leadership position with roughly 80% share of the canned dough segment.

We drove tremendous growth on this business during the pandemic as we out-executed the competition to keep our product on the shelf. In fact, we had to pull back on our marketing investments to manage demand as we reach the limits of our manufacturing capacity. But by fiscal '25, we were seeing demand slow down. Without a strong marketing push, we weren't as top of mind for consumers and our prices, which had increased to match the record level of inflation we experienced in the previous years, had simply become too much of a barrier for consumers. When we got to key baking season last year, it became clear that our total product offering was not where it needed to be.

Through the first half of fiscal '25, our household penetration was down by a full point. Nielsen measured pound volume on our canned dough was down 4%, and our pound share was down almost 1.5 points. Simply put, we needed to deliver more remarkable experiences to consumers to get back to growth. So we took a comprehensive approach investing across all elements of the framework to address the challenges we were seeing and bring consumers back to the category and to Pillsbury.

We started first by investing to ensure our offerings were below key price clips and had manageable gaps to the competition. But it had to be about more than just price. We knew our product experience needed to be truly remarkable. And thanks to the technical expertise of our R&D team, we were able to renovate our biscuits, crescents and cinnamon rolls to bake up noticeably bigger. This is real value for consumers that they can see, giving them more of what they loved about our products.

We brought this news to life in a compelling way in our packaging turning our shelf-ready trays into a true marketing billboard to share the news at the in-store shelf. And we invested to revamp our e-commerce presence and highlight Bakes Up Bigger on the digital shelf as well. And to share this product news with consumers, we enlisted the help of influencers, media and social channels, along with the iconic Pillsbury Doughboy.

Through our partnership with our new creative agency, we developed a creative campaign to spread the word. Let's go ahead and roll that ad.

[Presentation]

Loved that doughboy. The icing on the top of the cake is that we are now using the doughboy across our social channels to engage with consumers and culture in real time, rapidly accelerating our social engagement. In fact, through Q1, we already saw more social engagement than we had in all of fiscal '25. It's early, but the results so far are encouraging. We're seeing the brand engaging with new consumers with growth in household penetration.

We also restored volume growth for the Refrigerated Dough business and our pound share was up 2 points in Q1. And we are just getting started. As we enter key baking season, we'll be getting behind this news in a big way with an increase in media support and strong visibility in-store and online. Be on the lookout for everything, from an integration with Jimmy Fallon's new on-brand reality show on NBC, to crescent dog Halloween costumes to keep the bigger buzz going. As you can see from that example, when we invest in our brand remarkability, it works.

And as we strengthen our remarkability, we can better leverage the power of our portfolio to drive growth. R&R portfolio allows us to achieve broad reach and satisfy more consumer needs, bring our scale to activations in-store and online, maximize cross-branding opportunities and provide offerings across the value spectrum. We're the #1 or #2 player in all our top categories. And with that comes a responsibility to drive category growth. By using the breadth of our portfolio to our advantage, we can drive more growth for our categories and increase the competitiveness of our brands. One way we're doing this is through our portfolio events that I mentioned before.

We're also leveraging our brand awareness and category expertise to extend our hardest working brands into new verticals and across categories. For example, on Old El Paso soup line has been additive to our soup portfolio, and it's driving incremental consumers to the rest of the Old El Paso product line. In fact, of the Old El Paso soup shoppers who are new to the brand, nearly 40% of them also purchased another Old El Paso product for the first time, whether that was kits, shelves or seasonings. And we're pleased to announce the introduction of a new line of Ghost protein bars, which will start hitting shelves later this month. We have utilized our technical capabilities to create a performance bar that delivers 20 grams of protein with only 2 grams of sugar and it's delicious. It's a truly remarkable tasting performance nutrition combination in the snack bar space.

In addition to portfolio events and cross-category innovation, we're also leveraging our portfolio to accelerate growth with key consumer targets, including Hispanic families, 55-plus households and GLP-1 users. We know Hispanics are the fastest-growing U.S. segment, with 1 in 3 Americans projected to identify a Hispanic by 2060.

And we've recently started to make good progress with these consumers. In fiscal '25, we grew our Hispanic household penetration. And in fiscal '26, we have even stronger plans in place to continue this momentum. We're doubling down on priority brands such as Cinnamon Toast Crunch and Annie's that we know have a right to win because of their cultural relevance and growth potential.

Leveraging these brands, we're driving strong brand creative rooted in Hispanic insights, and we're increasing our Hispanic dedicated consumer investment by 40%. We're also bringing product news we know will resonate, including unique seasonal items and flavor profiles, and we're leveraging both national and hyperlocal events to reach these consumers. 55-plus consumers make up almost half of the U.S. households have unparalleled spending power and drive almost half of total food and beverage spend.

We have numerous categories and brands within our portfolio that over-index with 55-plus households, and we're leaning into this advantage in three ways. First, our fiscal '26 innovation slate has a strong emphasis on Tasty Protein, which we know is a key need with this consumer group. Second, we're expanding smaller packs and portions, and we're leaning into our frozen formats like Pillsbury brands that are better suited to small households. And third, we're investing in more relevant media and joint activations across key brands such as Cheerios and Progresso that will better resonate with our consumer group.

Finally, we are working to get ahead of the continued scaling of consumer adoption of GLP-1s. The latest research indicates GLP-1 usage among U.S. adults is around 12%, and it's expected to grow. And our own studies indicate that users are generally split into two groups. One group that largely eats the same foods they always did, just in smaller quantities and portion sizes; and one group that makes more significant changes to their diet.

They look for specific product attributes such as protein, for muscle mass and fiber for digestion. In fiscal '26, we're taking action to help address the most critical GLP-1 user needs, leaning into categories that over-index with these consumers like soup, snack bars and cereal. A positive is that many GLP-1 user needs overlap with the needs of our 55-plus consumers. This means the protein innovation and the portion-controlled offerings I just mentioned are going to benefit us with GLP-1 users as well. On top of that, we are also planning more specific activations including new targeted messaging via digital media.

We're already seeing positive early traction on key brands with buy rates for GLP-1 consumers up 5% on Progresso soup and up 20% on our Ratio and Fiber One bars. It's early days. But we'll continue to learn and adapt to ensure we're leveraging the power of our portfolio to maximize our success in these growth basis. So I've walked you through how we're investing in our brand remarkability to increase superiority to the competition and how we're leveraging the power of our portfolio to drive growth.

But most importantly, is it working? In short, yes. We are seeing broad-based improvement across our portfolio and clear signs that our investments are working. We held or grew pound share in 8 of our top 10 NAR categories in Q1. We strengthened pound volume trends across 7 of these top 10 categories, and we grew household penetration for the first time in three years. And while our NAR operating margin will be down this year due to our investment profile, the strength of our HMM and strategic revenue management capabilities has enabled us to maintain a margin profile that is roughly in line with our pre-pandemic margin and remains among the top of our peer set.

Let me be clear. We have more work to do. And we won't get everything exactly right. But I am confident that we're on the right things. We're listening to our consumers, and we're making the bold choices and necessary investments to fuel our growth. By staying focused on the remarkability of our brands and leveraging the power of our remarkable portfolio, we will build the most remarkable brands in food and return NAR to consistent profitable growth.

With that, I will hand it off to Pankaj Sharma, our Segment President of North America Food Service, and I look forward to answering your questions at the Q&A session. Thank you.

Thanks, Dana. Hello, everyone. It's wonderful to be here and see so many of you in person. Building on what Jeff and Dana shared, our North America foodservice team is committed to providing solutions through the remarkable experience framework. We are focused on helping our operators and customers solve their biggest problems. Today, I will focus on how we are delivering remarkable products across two of our key growth areas that we expect to further accelerate our performance.

Before we get into it, I'll start with some grounding on our business. North America Foodservice or NAF, generated $2.3 billion in net sales last year with attractive operating profit margins. This is a business that's exposed to growth with away from home food in the U.S., outpacing at-home food over the past decade apart from the pandemic period. Our NAF business spans a variety of categories such as cereal, snacks, frozen baked goods, baking mixes and bakery flour. Our portfolio includes retail brands like Pillsbury and Cheerios and Nature Valley as well as foodservice brands, including [ Bonichi ] and All Trumps, which are loved and trusted within the food service industry. Our products serve operators across all dayparts and include a full spectrum of prep formats focused on solutions. For example, our biscuits can be used across all dayparts, including breakfast sandwiches, biscuits and gravy and even dessert applications like Shortcake.

We sell our products to distributors and operators across all channels. This includes commercial channels like restaurants, vending and supermarket bakeries and noncommercial channels where food is not the primary offering like K-12 schools, universities, health care and lodging.

Our channel breadth is differential and allows us to capture multiple points of growth regardless of the industry dynamics. For example, our business has strong noncommercial exposure, which has experienced sustained traffic growth over the last several years. The scale of our noncommercial business differs from many of our large competitors that are more heavily exposed to the commercial channel.

In the commercial channel, the traffic performance has been mixed. Quick service and fast casual restaurants are seeing increased traffic. However, the rest of the commercial channel is facing traffic challenges largely due to the slow recovery of away-from-home eating since the pandemic and continued consumer economic pressure.

Beyond the strong solutions-oriented portfolio and channel breadth, we have advantaged R&D capabilities. This includes our in-house culinary team who provide operator-first solutions focused on product innovation, back-of-house labor efficiencies and how to most effectively leverage the versatility of our portfolio through training and consultation.

We also have our own sales organization which most food service companies don't have. Our team has a direct relationship with our operators enabling us to provide tailored solutions to solve their problems. Taken together, our portfolio of great products, channel breadth, differentiated R&D capabilities and sales capabilities sets us apart from the competition. It's truly a win-win for our operators when they choose General Mills. And in turn, our performance story is one of winning.

The NAF segment has been on a journey of sales acceleration following the pandemic, growing organic sales for each of the past four years and delivering market share leadership for three consecutive years. This continued in fiscal '26 with 68% of our priority businesses having grown or held dollar share fiscal year-to-date. This includes growing to an unprecedented 55 share position in cereal and a 51 share in biscuits by driving all aspects of remarkability.

Now let me share how we'll continue this momentum by highlighting two focused areas: leading breakfast through nutrition and expanding frozen baked goods. Beginning with leading in breakfast through nutrition. We are the undisputed leader in school breakfast. And we take this leadership really seriously.

We believe students who eat better, learn better, we are proud of the positive impact we are making by providing schools with a strong portfolio of nutritious products that students love. We currently have 84 share of K-12 cereal, and we are the leader in frozen breakfast with a 28 share in individually wrapped items. We also know there is a significant room to expand our impact today, breakfast participation is far lower than lunch participation. Our operators indicate that participation rates of breakfast are growing more than other dayparts. We capture this growth opportunity by investing in remarkable innovation, renovation and value.

This is a big year in K-12 schools as new reduced sugar regulations on certain products such as cereal were implemented. Our portfolio has historically included many low sugar options. And in this year, all our K-12 cereals meet the new regulations. By ensuring our portfolio was ready in advance of the regulation change, we were in a competitively advantaged position, which allowed us to extend our share leadership, gaining more than 2 full points of cereal share and K-12 schools over the last 12 months.

Now as we look ahead, we'll remain focused on meeting the evolving needs of our operators. This includes offering the strongest portfolio of gluten-free cereals and removing certified colors from our entire K-12 portfolio by the summer of 2026. Additionally, we're reformulating products like Pillsbury Mini Cinnis and Mini Bagels to meet reduced sugar requirements coming in the 2027 school year. Finally, we have a strong innovation lineup featuring new Pillsbury branded Muffins and pancake puffs that meet regulations can be prepared easily and most importantly the taste [indiscernible].

Now moving to our frozen baked goods business. This category represents more than $18 billion in retail sales in away-from-home channels. And it's expected to continue to grow at a compound annual rate of 4% over the next three years. This category growth is driven by operators seeking affordable solutions and greater convenience as they continue to face limited skilled labor, rising costs and growing consumer expectations.

We'll capture that growth by bringing remarkable product innovation and renovation across three big goods categories. First, we are investing in our flagship biscuit portfolio, which has grown volume and share over the last two years. Our unbaked biscuits are truly remarkable in the marketplace and operators know they can count on Pillsbury biscuits for a consistent high-quality product experience.

They also solve operator problems through their versatility as I highlighted earlier. We have a suite of recipes and applications that are truly differential for our operators. Now we do have an opportunity in big biscuits where we are bringing more remarkable products that solve operator problems, like our recent renovation that extended whole time which drives enhanced product quality and reduces waste for operators.

Next, we are investing in frozen desserts. This is one of the fastest-growing subcategories of frozen baked goods, and we are delivering double-digit growth year-on-year on our full and half sheet brownies and blondies. These products are consistent, delicious and versatile. They can be sliced to whatever size the operator desires and served stand-alone or talk to be a signature or a seasonal item. We are building on a strong portfolio in the growing brownie space with our latest sheeted dessert innovation, the chocolate chip blondie. This product is providing operators with a new offering to expand their bakery and dessert portfolios and at a great value.

For those in the room, you will have a chance to sample them later today. Finally, croissants is a growing category where we are gaining share, led by the strength of our customer partnerships across the portfolio. We offer the continuum of croissants that can meet the need of any back-of-house operation from frozen baked croissants, which are frequently used for breakfast carriers, to freezer to oven which are often used as a signature or a bakery case item. We are providing operator-first solutions. We'll be building on this momentum by bringing in additional flavor innovation.

Now to summarize. Our North America foodservice business is a unique differentiator for General Mills, and we are committed to building on our strong performance track record. From cereal and snacks to flour mixes and frozen baked goods, we deliver remarkable solutions that are innovative, nutritious and value additive. With an industry-leading portfolio, Channel Breadth and competitively advantaged capabilities, I'm confident that North America Foodservice is well positioned to continue driving profitable growth for this year and beyond. Okay. That wraps up our first portion of today's prepared remarks.

I'm now going to invite Jeff, Jeff and Dana, back to the stage for our first Q&A session. Thank you.

Okay. Hands already up. That's great. Why don't you take off our Q&A session. For those of you in the room when I call on you, I just ask you to stand so the mic runners can find you and then state your name and your firm and then we'll make sure that you get your question answered. So let's go ahead and get started. Maybe we'll start with Nik Modi here in the front.

I swear I'm standing. You knew it was coming. So just, I guess, two quick questions. Just when you think about the price adjustments, how did you make the decision in terms of price clips, like where exactly you're going to go? And if you can just give us some contexts on how much of this is a function of narrowing gaps with private label versus the proportion that is relative to your branded competitors? So that's the first question.

And then the second question is really on protein. How do you think about putting protein in existing brands versus new brands when you think about an offering? Because sometimes, I feel like the packaged food universe is just kind of sprinkling protein everywhere. And sometimes it may be off brand because it may alter the taste of a product that people like as an indulgent versus something that has a health and wellness angle. So those two questions would be great.

Thanks for the question, Nik. In terms of pricing and how we figured out what to do, we have a really good strategic revenue management toolkit, and we evaluated every business line by line in every geography and every retailer to try to understand, do we need to look at the gap to private label? Do we need to look at Cliffs or do we need to do both?

I think initially, when we started out, we thought it was going to be more gap to private label, and what we saw is, we use that Pillsbury as an example, that majority of the challenge was really getting under key cliffs. And that was -- we used our data over time to develop that. And we have a really surgical answer for every brand, every scoop. So that's how we went about it for the price. And as you saw, we believe it's working. We've been really presently surprised with the results that we're seeing. We're either at or we're exceeding performance targets that we set. Our pound growth on our top 10 SKUs is up 1.5 points. And so, so far, so good.

When it comes to protein, I can understand why you think it looks like we're sprinkling protein everywhere. And I'm sure you would expect me to say this, but I really believe our R&D team has a proprietary advantage in how to make protein taste good. And how we determine where to put it is all based on the consumer first. So I'll use Cheerios Protein as an example. We actually had a new brand developed that we thought might work better with protein innovation. And over time, we saw that the consumer said, "No, we really like Cheerios. We would just like it to have a little more protein and be an accessible price and taste great." And every time we got this offering in front of consumers is scored better than everything else. So again, we just come back to the consumer, we test concept and product. We make sure that we do that in home over a period of time and whatever wins with the consumer will launch.

Great. Let's go to Michael Lavery here in the front.

Michael Lavery, Piper Sandler. Just two questions related to the marketing and brand approach. One is you talked about listening to the consumer. And it does feel like that's maybe happening a little differently than it used to. So what maybe changed there? Or how do you maybe feel closer to what the consumer needs are? And then how do you determine what the right level of spending is looking at a price gap or a price cliffs, it's got a bit more straightforward element to it. What gets you to the right level of brand spend and how do you know when you're there?

So I'll start first with we know when we're there. It really is about looking at the brand, who we're trying to reach, where we can reach them best and then we determine how much spend we need to put into the marketplace in order to reach them effectively to deliver the household penetration that we need.

It is not a lot more complicated than that. That's how we go about it. In terms of listening to consumers and learning from them, it has changed a lot. When you think about social media, the impact of Tiktok, the impact of the fact that you get real-time feedback almost instantaneously from consumers and that you can use AI to understand quickly what they're saying, what they like, what they don't like, how to pivot.

We have launched what we call this growth lab. It's a brand accelerator lab that uses AI to scan all of those social media network to get real-time consumer feedback and we've been able to pivot really fast using those in order to say, "Hey, I think we've got something here that consumer is going to like. Let's try it." Or "Hey, this is really not going to work today, and we put it on the shelf and go for something else."

Great. We go to Chris Carey here in the front.

Chris Carey, Wells Fargo. The first question, Dana, you mentioned in the presentation you've got new quality news in 10 categories or core categories in the U.S. Last year, you had 3. I was more surprised by the fact that last year, there was just 3. What was the impediment last year to bringing new product news? I think there's a debate in the market about the retailers are saying maybe there's value issue in food, maybe there's an innovation issue. So why wasn't there the innovation over the last year?

And then maybe if we take a step back on these price adjustments. Yes, it's about the consumer. But can you just talk about -- how do I say this? The partnership that you have with retailers about how to grow these categories together over time relative to this becoming a bit of a more of a competitive relationship if you will take that.

Can you remind me the first part of the question again?

Why wasn't there enough quality?

Why wasn't there enough quality? All right.

3 Categories versus 10 this year. What was the impediment?

So in terms of us determining where to add product quality news, last year, as we developed our F26 plans was really the first year that we brought the use of this remarkable experience framework toolkit to all 10 of our categories. We hadn't been using it across every category prior to that. And what's really good about this tool is it forces you to measure your product quality against private label, against small brands, against branded manufacturers, and really understand where you sit in terms of the consumer mindset.

And so it was a really great tool to point to us where we weren't good enough. And we saw an opportunity where we needed to improve the product quality or we could bring news that consumer would really value more than someone else in all 10 of those categories. So that's why you saw that step up from 3 to 10. And now we use this remarkable experience framework, and we're disciplined in how we measure against the competition in everything that we do.

And I think you'll see us getting better and better at this. So that's the first. In terms of -- in terms of the customer, what I would say about retailers is they are partnering with us. They want us to help grow the categories. And they have the same goal as we do, which is to serve the consumer, and they value brands. So they've been a great partner in this in terms of helping us to understand what is the right gap, what is the right cliff to be under, because again they want to grow the categories. They want to serve the consumer and they want the consumer to have the best value proposition across the total mix.

Great. We go to Dave Palmer here in the front.

Thanks. To some degree, I'm asking sort of a lateral question about you guys versus the competition when it comes to the margin, again you said the North America retail would get to roughly this -- or could be sustained at roughly the pre-COVID level of margin. A lot of the competitors out there the North America businesses are 200 to 250 basis points worse this year than where they were pre-COVID, maybe you have some perspective about why that is reasonable that you would be at pre-COVID levels of margin and maybe why you'd be doing better than what we see elsewhere.

And then also I just wonder about pricing and the answer to each mega category that you're in. So for example, dough, 80% share, private label is your major competitor, it seems like that would be a pricing oriented solve, whereas we see some of the smaller premium brands winning in cereal right now, it's not as obvious that price is the solution there. So maybe you can give us a sense of the spectrum of pricing is the answer of your major categories.

So you ask a question, I'm going to speak to give Dana break, plus let you know I'm capable of speech. And so, the reason is why our margins have held up, and we're really, really proud of this is that our productivity leads the industry. I mean we don't just talk about it, we do it, we have been doing it for a long, long time, even during COVID when many people were having trouble keeping their factories up and running. We were generating 3% productivity. We've averaged 4 over 15 years, and now we're at 5.

So it really is quite helpful when you're able to generate industry-leading levels of productivity and you have strategic revenue management tools, which are amongst the best in the industry as well. So those are a couple of things that have allowed our margins to stand the test of time or last little while where a lot of our competitors, they either don't have the SRM tools or they don't have the HMM tools or they actually they don't have both. So I think that would be the answer to our productivity. In terms of pricing, it always varies by category. I mean, we competed more than 20 categories. And the answer is always different by category. But I can assure you, at the end of the day, it's always about brand building and innovation.

At the end of the road, once we get past pricing and lapping kind of what we're currently doing, it is all about innovation and leading that voice, whether it's in Pillsbury or something else. But you are correct in that some of our categories that were the big leaders like in Pillsbury, Private Label is the bigger competition and cereal, not nearly so much. And those things all dictate different solutions. But at the end of the day, they all dictate following the consumer and making sure we innovate whether that's on our core or whether that's with new product innovation.

Good. If we go to Alexia here in the front.

Alexia Howard from Bernstein. So the first question I have is whether you can help us interpret what we're seeing in U.S. measured channels, which seems weaker. You've obviously accomplished a lot in the North American Retail segment getting to the price points you want to be, but the volume trends in there do still look fairly lackluster. Are there things that are going on in non-measured channels that we don't see, whether that's Costco or e-commerce or Trader Joe's rolling out different channels. And therefore, should we expect to see your reported results consistently doing better than what we're seeing in those -- that measured channel data that we see coming out that becoming less relevant? And then I have a follow-up for Jeff.

I'll start with. I think as we think about measured channel data versus our own data, we would expect that, that will track pretty similarly. So I think that yes, when you can talk about channels like club and others that are growing well, but I'd would say we still have 90 plus percent coverage from measured channels, so I think by and large that will track the same, but may we are going to talk about some of the other headwinds and tailwinds we're seeing from a volume standpoint in our categories.

Right. I mean from a volume standpoint for us we are pleased with the point growth progression that we are seeing and we're up 1.5 points on our top 10 categories versus what we saw in Q4. But you are right, the categories in general aren't improving as fast. We think that's largely due to the fact that the consumer is still adjusting to this once-in-a-lifetime inflationary period and trying to find their footing. So what you're seeing is that we're not getting the same amount of price mix into the categories as that we've been able to in the past.

And I just think we need to adjust to some of that. There is a little bit of pound volume that is moving. People are cooking more at home, they're stressed. You're seeing staples increase a little bit. And obviously, GLP-1s are impacting volume a little bit. But largely, we think it's due to this economic stress. The fact there's no price mix or just a little bit of price mix and that the consumers are still adjusting, that's what we think is leading to the categories. We are controlling what we can control which is our competitiveness in those categories and taking seriously that we have the job to do to get those categories back to growth.

Great. And as a quick follow-up for Jeff. M&A has become a much bigger theme across the industry in the last year or so. We've had a couple of companies announced separations. You've obviously been working at portfolio change since fiscal '18. Can you talk about your priorities on that front on the acquisition and maybe the divestment side, what you imagine going forward over the next few years?

Yes. Well, there has been quite a discussion in the industry. When it comes to M&A, our first priority is organic growth. That's what I would say about M&A. And you look at the year squared on your stock valuation return to shareholders, and I can guarantee you the biggest thing you can do is grow organically. And so that's our #1 priority. And that's why we have pound growth this year in North America retail is #1, and our growth in pad is #2 for our priorities.

Having said that, we're really proud of what we've done in M&A and it's one thing to do M&A is another thing to do it successfully. And we've been able to do it successfully without damaging our core business, which is the trick. And so we -- obviously, it's been 30% over the last few years. This combination of looking at growth assets and divesting businesses which aren't a big priority. We feel like that has worked well for us.

We feel like it's worked well for all shareholders, and so our approach to that hasn't really changed at all even though we understand the narrative going around the whole industry, but our job to do to take care of our shareholders, not worry about what other people are doing in the industry, and that's what we look to do. So we're going to keep the hammer down on our organic growth, and we'll look at growth assets when they become available, if we think that we can create shareholder value, and we'll continue to look at divestitures if they no longer fit our portfolio.

Great. We go to Andrew Lazar here in the second row.

I'm Andrew Lazar, Barclays. Jeff, you talked about how some of your categories more recently have weakened a bit, consumer has to adjust to some of the higher the price points. I guess, historically, it's been like 12 to 18 months that the consumers needed to sort of better adjust, right, to some higher price points at various points. Why do you think it's taken longer this time? Is it simply the magnitude of pricing that was taken. I guess the question I'm asking is the hard one to answer is how long is this going to take?

The -- I'll give you a theory on why it's taken longer, and I'm not going to be nostradamus on how long it's going to take. But I think it's taken longer because we haven't seen inflation like we saw for about 3 years in a row and 40 years. So when we talk about precedence for what we saw, there actually isn't much precedence in the United States at least for how long it's taken. I think -- I believe that it's the magnitude of inflation we saw, plus we saw it year after year after year for 3 years in a row.

And so the combination of the length of the inflation that we have seen and inflation is still running at or ahead of wage growth. And so consumers, if you're making $200,000 a year or less, you are really feeling that pinch even still today. And so that's what I believe is the magnitude of the inflation that we saw is the reason why it has taken longer for for the value consciousness of consumers to kind of abate.

How long will that take? I don't know the answer to that. What I feel great about is the work that Dana and her team have done on getting our prices aligned as well as the rest of the elements of the marketing mix and the remarkability framework. And I'm convinced I saw this in cereal in 2008. Many of you were not around in 2008, but I was, and I saw it in cereal. And what I saw at that time, we did right size, right price, was that when we got our prices in line, suddenly, every lucky charms was more magically delicious and the Cheerios marketing worked a lot better on cholesterol messaging.

And so we're starting to see that same thing in some of our business here. And there's no reason, in my view, why we won't see the same thing in our categories to the extent that we do the job we have to do. Dana showed the Pillsbury Doughboy. We talk about more [indiscernible]. We do that kind of work with prices in the right frame. It's not clear to me why we wouldn't see the same kind of growth that we did then. And we saw growth in cereal for 5 years in a row and took market share 5 years in a row. I think it started with pricing, but it finished with great marketing and innovation.

Great. We are going one more here. Tom Palmer In front here?

Tom Palmer, JPMorgan. You've noted some of the, I guess brand extensions in terms of offering different attributes such as higher protein. I wonder about kind of the core of the portfolio and to what extent just given consumer preferences involving, they might be the need to perhaps change ingredients, obviously, there's headlines about dies, but maybe even more broadly than just that.

I think the answer to that question always comes back to the consumer and what do they value in the product in terms of quality news. And so I think Cheerios is a great example where when we talk to the consumer, there was a group of them that would say we would like a little bit more protein at a good price, that's something that we'd be interested in. But at the same time, we're talking about the great taste of our honey nut Cheerios and both are growing. So again, I think it comes back to what consumers say and what they do with food isn't always the same thing. You have to stay really close to them. You have to listen to what they want and adjust quickly. I think that we're one of the best at doing that. And if we stay focused on this remarkability, we'll like the growth that comes with it.

Yes, I completely agree with Dana, and I know we need to wrap up here, but this is important. I mean our Cheerios Protein offer has really taken off. So that innovation has taken off. Our granola offerings, in particular, protein granola has really taken off. And over the last 6 months, the performance of Tricks and Lucky Charms and Cinnamon Toast Crunch has also taken off. And so as we think about consumers are one way or the other, but as Dana said, there are lots of things that are important to them. They always care about value, taste, health and convenience. That's what they care about. And sometimes they care about one more than the other, and they usually care all about the same time. And so as we think about the jobs to do, it really is following what the consumer is wanting, not what they say or not what somebody's headlines say we should be doing, but what our consumers is really looking for. And I can tell you, it's possible to grow Cheerios Protein and Lucky Charms at the same time, and that's what we're doing. And that's why this remarkable experience framework is so powerful.

Good. Okay. So we'll close this first Q&A session here. We'll have a second later on after a second set of presentations. One announcement before we go to break. Dana talked about the great partnerships that we have with -- is working on things like back-to-school and Game Day here in fiscal '26. I'm excited to announce for those of you in person, you're going to get an opportunity to meet and get photos with one of our partners this year. The Minnesota Vikings, all Pro wide receiver, Justin Jefferson, will be here for lunch with us. So I'll share more when we get past the break and past the session here, but just make sure you've got your game face on for Justin. So with that, I think we'll go ahead. We're going to take a 15-minute break here in the room. We're going to pause the webcast. So for those of you online, we'll pause the live stream, and we'll come back in 15 minutes. And with that, I think we'll wrap up this first session.

[Break]

Please welcome segment President, North America Pet, Liz Mascolo.

Good morning, everyone. Hope you had a good break. I have the pleasure of talking to you today about our North America Pet segment and the work that we are doing to love, feed and treat more pets like family. But first, let's start with a little bit of context. For the last several years, humanization has been the key growth driver for the pet food category. And what I mean by humanization is that pet parents increasingly consider their pets as kids. And they are making food choices for them based on how they would feed the rest of their family. Millennials and Gen Z make up the largest segment of pet parents, and they are leading the humanization of this category. They are also having fewer kids. So pets play a larger role in their lives. We expect this humanization trend to continue to drive outsized growth for the category.

Today, Pet food is a $56 billion category in the U.S. It is a $142 billion category worldwide. That's the equivalent of global ice cream, cereal and snack bar categories combined. As a company, this is the biggest category that we compete in, and it is our largest opportunity for growth. In 2018, we entered the pet category with the acquisition of Blue Buffalo.

Since then, we have grown the North America pet segment to roughly $2.5 billion in net sales, spanning dog feeding, cat feeding and treating with very attractive margins. We have done that by driving significant organic growth and by bolting on additional pet assets, which are helping us to stay at the forefront of humanized innovation, yet our pet business represents only a 7% share in total North American pet food. Clearly, we still have tremendous opportunity for growth. So what are we doing to capture it? The short answer is a lot.

Fiscal '26 is a critical year for us as we continue to pursue more share of the pet food category. To deliver we are differentially investing in remarkable experiences across our core and in new growth vectors that we call accelerators. Both need to grow, and that is exactly what we intend to do. Blue Buffalo dog feeding, cat feeding and treating these businesses represent our core. Today, Blue Buffalo is the most loved and trusted natural pet food brand in the U.S. All of our Blue businesses are grounded in brand purpose, which is to help more pet parents love their pets like family and feed them like family.

Blue was the first brand to teach pet parents to flip over the bag and read the ingredient labels and ensure that everything on that label was something that they would feel good about feeding to one of their family members. All of our products abide by the same nutritional philosophy that we call our True Blue Promise, which assures pet parents that real meat is the first ingredient and that our products do not contain poultry byproduct meals, corn [indiscernible] soy or any artificial flavors or preservatives. Our focus on ingredient superiority and premiumization has positioned Blue Buffalo as the leader in premium pet feeding. And it's what we're continuing to amplify this year through the remarkable experience framework.

Beginning with our dog feeding business. It is the largest part of our total portfolio, spanning dry and wet feeding. Life Protection Formula, or LPF, as we call it, accounts for more than 70% of our dog feeding business. We have grown pound share in this business for 7 consecutive quarters, led by our LPF dry kibble. We've grown LPF dog dry behind our ingredient superiority strategy. Our brand communications highlight the quality of our all-natural ingredients, and they help convince pet parents to trade up from lower quality food they may be feeding.

We are not afraid to take our competitors head on. And in fact, our head-to-head advertising comparisons are the most effective way to build our LPF brand. This year, we are expanding our head-to-head advertising and we'll give pet parents new compelling reasons to trade up their puppy and senior food to LPF, puppy and senior formulas. We will do this by talking about superior quality ingredients and the benefits that those ingredients deliver versus the competition.

From a product standpoint, we are also continuing to invest in our latest dog dry feeding innovation, LPF salmon. Salmon is the fastest-growing protein in the category, and we are seeing strong performance in its first few months in market. [ Weed ] and wilderness. It's our more premium line and admittedly has been our most challenged Blue Buffalo business. To address this challenge, we are working all elements of the remarkable experiences framework.

This includes adjusting our packaging, accelerating innovation behind higher protein offerings, and continuing to invest in brand communications to ensure that pet parents understand the value of our products compared to the competition. We have recently repositioned Wilderness to focus on superior protein-packed nutrition that provides energy for a more active lifestyle. Wilderness has 30% more protein than our leading competitor, which we know is a benefit that protein is seeking dog parents value.

Switching gears, let's talk about the cats. The cat segment of the category is outpacing growth that we're seeing in dog. Cat parents are finally beginning to view their cats as family members and are increasingly willing to spend more on premium, high-quality food that caters to their cats specific needs and preferences. Retail sales for our cat feeding business grew low single digits in fiscal '25, and our momentum has accelerated this year.

With retail sales up mid-single digits in the first quarter, including our newly acquired Tiki Cat business. Like in dog food, taking competitors head on has proven to be successful in cat feeding. But for cats, we must focus on the taste advantage that we deliver from these high-quality ingredients. We know that 7 out of 10 cats prefer to eat blue taste [ float over items ].

And the more cat parents who know that, they choose Blue too. Our taste comparison brand communications have been in market for about a year and are driving growth. And we will continue to increase investment behind this campaign. Additionally, we've got exciting taste news behind a big product innovation, Tasso's gravy, which launches this month. This game-changing innovation features gravy coated kibble. You can serve it dry or wet. When you serve it wet just by adding a little bit of water in a quick stir, the water is turned into delicious gravy that cats love. We will continue to accelerate our innovation in cat feeding to expand this important growing segment of our business.

Now on to treats. Pet parents seek a lot of variety when it comes to treats, particularly across products and packaging. They also make purchase decisions by relying on their human snacking intuition. Blue Buffalo has the most humanized treating formats. And we will continue to advance remarkable brand communications and our product innovation to highlight our highly humanized portfolio. New this year, we're launching a game day campaign promoting our most humanized products like state drillers. More than 70% of payers watch sports with their pets.

And we are excited to remind pet parents this year that while they're preparing snacks for game day, it's game day for their pets, too. Finally, we have an exciting seasonal lineup with nearly 2x the offerings versus last year. We're bringing pet parents refreshed seasonal packaging and a fun new peanut Snoopy treat, which will launch in time for the holiday season. This now brings me to the investments that we're making behind our accelerators. These are the new growth vectors that we're focused on to drive outsized growth and to complement our North America core Blue Buffalo business.

Let's start with Blue Buffalo's entry into the fresh space. The Fresh segment is more than $3 billion in retail sales today. And we expect it could reach as much as $10 billion in the next 10 years. Fresh is significantly outpacing overall pet category growth driven by you guessed it, millennials and Gen Z. They are prioritizing pet spending over things like dining out and home improvement.

No one understands this more than Blue Buffalo. And we know from our initial Fresh test that pet parents believe we have a right to win in this space. We heard loud and clear in our test that we had a product that pets and pet parents loved. We also learned that you have to drive awareness at scale to win. And winning is what we intend to do with our nationwide launch of Love Made Fresh. We are putting differential investment behind this launch, with a remarkable product, packaging and brand communications.

Today, the biggest players in Fresh are focused on kibble shaming. They're either doing it right with Fresh, are you doing it wrong with kibble. The reality is we know that 80% of pet parents are using both Fresh and kibble. And we know through our research that most of them would prefer to buy their kibble and fresh food from the same brand. Blue Buffalo is the largest brand to offer both, and we believe Love Made Fresh is going to strongly resonate with pet parents. Our formula is another reason our product is remarkable.

Love Made Fresh adheres to our True Blue Promise. And relative to the leading players in the Fresh segment, Blue Buffalo is the only brand that's fully all natural. And it's packed with a unique blend of the highest quality vitamins and nutrients that help dogs absorb all the goodness from fresh, real meat and vegetables. In September, we launched two packaging formats, a role which is the biggest format in the category and a tub, which is a completely new format and unlike anything currently on the market.

What makes the tub differential is it provides pet parents an easy-to-close no mess experience. And the product looks and smells just like a stew. We'll launch another format later this year that gives pet parents an added way to serve the best to their pets. So I hope you stop by our station upstairs later if you're in the room and check it out. Another key difference in our Fresh launch is our omnichannel experience. We're installing new custom-branded coolers at many retailers, and we have secured distribution across a broad array of customers within food, drug and mass.

Between our coolers and our retailers' coolers, we expect to be in about 5,000 coolers by the end of this calendar year. And we anticipate this distribution will grow in calendar 2026 and as we expand two additional retailers. Our brand communications include a dedicated and comprehensive national plan that will reach pet parents through TV, digital and social media, and we will leverage the power and the spend of our Blue Buffalo master brand to maximize the impact. And now I'm excited to give you a sneak peek of one of our new Love Made Fresh ads which will be in market starting next week. So let's roll that.

[Presentation]

So in addition to launching in Fresh, we are also bringing pet parents remarkable product differentiation in fiscal '26 by launching Edgard & Cooper in the United States. This brand, which we acquired in Europe a little over a year ago, features products that are made with only fresh or frozen meat and healthy fruits and vegetables. With this launch, we're extending our U.S. portfolio into the super premium segment, which is the fastest-growing price segment in the market today. .

In July, we launched Edgard & Cooper's dog portfolio exclusively at PetSmart. The brand is really resonating with pet parents with strong engagements we're seeing on many of our social assets. We have a robust in-store influencer and digital plan, along with a new direct-to-consumer site that will not only help drive sales, but also help us better understand pet parents in their shopping habits. This brings me to our last accelerator, which is Whitebridge Pet Brands. We acquired Whitebridge Pet Brands' North America cat feeding and treats business a little less than a year ago, and we are actively working to integrate the business while not slowing down its strong growth trajectory.

The Whitebridge portfolio complements our Bluecore in both product formats and in channel distribution. Through an emphasis on humanized innovation, Whitebridge will help us accelerate growth across all of North America Pet. Whitebridge's Tiki Cat brand is a gem of a business and has consistently grown retail sales at a strong double-digit rate over the last 10 years. Tiki Cat's remarkable products are specially made to give cats who are natural meat eaters, the right nutrients to keep them happy and healthy.

Tiki is a cat first high-protein, minimally processed brand with visually remarkable products. It has an extensive variety with over 400 SKUs, multiple textures and more than 10 sub-lines. Cats love the shredded chicken in the whole chunks of real fish, and they go crazy for the after-dark subline, which has a quail egg on top. We expect Tiki Cat to lead our North America pet growth in both cat feeding and cat treating.

What I've hope you've seen is that North America pet has exciting opportunities ahead and our portfolio is built to support the continued humanization trend. We are confident that we're positioned to drive growth on our core and amplify that growth with our accelerators. We think that this is a business that should grow mid-single digits over time, in line with the growth that we expect to see with the premium segment of the category. I have no doubt in North America pets ability to deliver long-term sustainable growth for General Mills and ultimately, to help more pet parents love, feed and treat their pets like family.

Thank you very much. And now please join me in welcoming Ricardo Fernandez to the stage.

Good morning, everyone. You've heard a lot about our businesses in North America, and now I have the pleasure to talk to you about our international segment. The segment represents one of General Mills most remarkable opportunities for long-term growth. We serve consumers in more than 50 countries, generating $2.8 billion in net sales across 4 operating units. Our portfolio includes global and local brands that can be found in more than 140 million households. Yet, there's more than 7 billion consumer across our markets, and we play in large, growing categories.

So this gives us tremendous headroom for growth. To capture, we're applying the remarkable experiences framework on our brands around the world. This includes global platforms like ice cream, snacking, Mexican food and pet food, and local gems like Wanchai Ferry dumplings in China or Yoki and kitano meals and snacks and seasonings in Brazil. Today, I'm going to focus my comments on our global platforms which we expect are going to drive more than 75% of our growth over the next 3 years. These platforms provide leading brands, global growth potential and strong margins that will help improve the segment's profitability today and into the future.

Let's start with Ice Cream and our largest brand outside of the United States, Haagen-Dazs. Ice Cream is a $90 billion global category that's growing 7%. And Haagen-Dazs is a world-class brand that represents the definition of super premium Ice Cream. We own the brand globally and independently operate in our international markets, where it generated roughly $750 million in net sales in fiscal '25 through a combination of retail channels and our Haagen-Dazs shops network.

We've been competing well recently, including growing retail sales mid-single digits in fiscal '25 and holding or growing market share in 75% of our priority markets. This was offset somewhat by a more challenging backdrop and performance in China where the consumer pressure is pressured and especially impacted our shops business. We continued to deliver solid performance in the first quarter of fiscal '26 with retail sales growing double digits, improvement in our shops traffic and maintaining our positive momentum in our foodservice channels. And we're really proud about how far the brand has come, and we have more space to grow. We're improving the remarkability of an already remarkable product through renovation, innovation and investment.

Let's start with our core, which includes awesome flavors like vanilla, Belgian chocolate and Strawberry. These flavors account for about 50% of our Haagen-Dazs retail sales and yet we've only reached about 76% of our fair share of distribution. In fiscal '26, we're driving omnichannel excellence with increased distribution and shelf availability. We're also bringing remarkable product renovation news, most notably to cookies and cream. We've added 50% more cookies and compelling advertising that highlights our superiority. Consumers are loving it. In our first quarter, we saw a growth of more than 50% on these SKUs since we launched the renovation.

Next, let's talk about stick bars, which is an accelerator for our Ice Cream business. More than 60% of global ice cream consumption is in a portable handheld format. Handheld ice cream is growing a full point faster than the global category at roughly 8%, and Haagen-Dazs has historically under-indexed here, and we've been especially underrepresented and stick bars. So in fiscal '26, we're taking a multi-geography approach to capture more growth in a consumer-first way. In Europe, we renovated our portfolio, giving consumers more of the remarkable product experience they expect by providing a thicker chocolate shell and more of the indulgent crunch.

We also conducted our first dedicated brand communication on stick bars, helping drive more than 30% retail growth in Europe over our summer months. In China, we improved our retail execution and unlock manufacturing solutions to get us closer to the consumer at a more accessible price point, and with all the remarkable product quality that consumers expect from Haagen-Dazs. We've more than doubled stick bar distribution while increasing our investment in superior brand communications helping drive strong retail sales growth in the first quarter in China.

And in places like Korea, Hong Kong and Taiwan, where we are leaders. We continue to lead the category with remarkable product innovation and omnichannel execution. And if you're wondering how good these renovated stick bars are, I invite you to save some space after lunch and stop by the international station, because we have some samples for you.

Now let me shift to our second global platform, Mexican food. It's our second largest business in international and accounts for more than 15% of total sales for us as a segment. Mexican food is a growing $2 billion category and plays in the broader world food space, which is on trend in our largest markets. Consumers want more access to foods from around the world, including Indian, Chinese, Thai, and Mexican. What makes Mexican food special is it's a unique combination of a meal that can be customized to taste, textures and proteins while also being casual and fun, and no brand does Mexican better than Old El Paso.

We've helped build this category in many markets around the world, supported by our investment in innovation, advertising and in-store execution to help consumers make Taco Tuesday or Fajita Friday, a regular part of their routine. In fact, Old El Paso have earned a leadership position in many of our priority markets, with market shares at or above 50% in place like Australia, France and the U.K.

We're excited about Old El Paso's growth potential, and our biggest opportunities are to maintain growth and strength with households with kids and capitalizing the emerging opportunities with young households with no kids. Leveraging the remarkable experiences framework, we're emphasizing our product superiority, bringing consumers mealtime solutions for flavors they're seeking and investing more in brand communication. In our third quarter, we're bringing exciting news to the category with remarkable product renovation, a crunchier Taco show. Consumers highly value Taco texture and flavor and our new crunchy tacos are amazing and are providing consumers with what they want.

This next to our preservative-free tortilla puts us in a very strong position to continue to grow this category in the spaces outside of kits. When it comes to growing with young no kid households, we need to deliver alternative solutions, including smaller portions and exciting flavors. In fiscal '26, we're building on last year's launch of our street [ vibes ] food kits, which drove 3 points of household penetration growth for Old El Paso with new flavors, including al pastor, Barbacoa, and Birria Tacos. Yet the biggest barrier to Mexican food consumption globally is remaining top of mind for consumers.

We're increasing our media investment by double digits on a high-return campaign. We're also activating in-store through partnerships with complementary ingredients and beverages. This takes us to our third global platform, snack bars. Across our international markets, better-for-you snacks are a $3 billion category, growing high single digits. The snack bar category has a more expansive set of markets that the -- where they're available. And like the U.S., it's a very competitive category.

Brands that are gaining share are delivering on specific consumer benefits like protein, elevated taste and permissible indulgence. Nature Valley is our leading brand in snack bars. And as you heard at the most recent earnings call, have been driving both dollars and pounds. Utilizing the remarkable experiences framework, we also have strong plans to drive more growth. We're leveraging the expertise and capabilities of our North America retail business with new product formats and varieties to expand distribution and helping us reach new channels. And we're bringing new flavors like our recent chocolate and coffee protein bar launch. We're also increasing brand investment by double digits here, and we'll shift more of our media, sampling and display support to help our fast-growing protein portfolio.

The last platform I'll talk about is the one Liz left with, which is Pet Food. As you heard from Liz, Pet food is our largest growth opportunity at General Mills, and it's a $142 billion global category. We'll keep building on the momentum we have across our portfolio by growing our newest international brand Edgard & Cooper and by continuing to establish Blue Buffalo across key markets around the world.

Edgard & Cooper is a fast-growing super premium pet food brand loved by more than 1 million pets across Western Europe. The brand is known for using fresh meat, whole fruits and vegetables to provide maximum nutrition to dogs and cats. This business is capturing remarkable growth backed by strong digital-first brand communications, focused on real ingredients and taste with a fun, playful approach.

A portion of Edgard & Cooper's sales are also through a direct-to-consumer model which allows the brand to personalize marketing communications and promotions to individual pet owners. We'll look to leverage and scale those insights as we expand the business into the U.S. With Blue Buffalo, we're focused on building trial and awareness in markets including China, Taiwan and South Korea. We're leveraging the same playbook that's made Blue Buffalo successful in the U.S. We're investing in brand communications that highlights our ingredient superiority and gives pet parents a compelling reason to trade up to blue.

Later this month, in fact, this week, we've launched the brand into Mexico and are excited about its potential there. As I mentioned at the beginning, Ice Cream, Mexican food, snack bars and pet food are expected to deliver more than 75% of International segment's growth over the next 3 years. And we're looking forward to continuing to build momentum across each platform and our broader business in fiscal '26. By applying the remarkable experiences framework across our brands, we're making every consumer touch point more remarkable.

We're also making bold choices to ensure we're prioritizing outsized opportunities for growth. With a beloved portfolio of global brands and focused plans, we have confidence in our ability to capture the growth opportunities in international. And we continue to build scale across our global platforms will deliver more profitable growth, helping drive stronger value creation for the company this year and into the future. Thank you.

Please welcome Chief Supply Chain Officer, Paul Gallagher; Chief Innovation Technology and Quality Officer; Lanette Shaffer Werner; Chief Digital and Technology Officer, Jaime Montemayor; and moderator, Jeff Siemon.

All right. Thank you. Thank you, everyone. We are going to set up here a fireside chat. So you're going to hear a little bit more about how we, as General Mills are advancing our digital transformation. And I'm proud to have Paul Lanette and Jaime here to talk a little bit about that. So let's just dive into it. Jaime, let's start with you. So could you start by sharing a bit of context on our digital journey and where we've come -- where we've been and where we've come from since we launched the Accelerate Strategy 5 years ago?

Thank you, Jeff. I'll be glad to do that. So 2025 marks 5 years since the launch of the Accelerate Strategy. And since that year, General Mills has doubled the investment in data, digital and technology, all of it in service of the Accelerate Strategy. And for us to execute on this strategy, we have focused on 3 key pillars. So just let me elaborate on each 1 of them.

The first pillar is technology. The second pillar is process and the third one is talent. So on technology, we've done 3 things. The first thing that we have done in technology is that we strategically prioritize the move to the cloud. And since 2021, every technology solution that we have delivered is running on the cloud. This cloud foundation that we have built has given us the opportunity to change the physics in how we deliver technology solutions across General Mills.

On top of this cloud foundation, we have now built a, what we call, a connected data foundation. In fact, Paul Gallagher was my partner in crime when we launched the first Connected Data Foundation in service of his supply chain digitization strategy, and he'll talk more about that. But with this Connected Data Foundation, we're now able to accelerate our investments in advantaged capabilities that are built using data, analytics and AI. And you will hear more about that from my peers in a minute.

So that's the second pillar or second element of that technology pillar. The third element is the move to upgrade our core SAP systems. We've completed the upgrade of SAP into S4, and thankfully, you didn't have to hear that from me or anybody in the company because the program went as planned with no disruption to our business or any of our customers. So that's the pillar number one, technology.

The second pillar is process. And we can spend a lot of time talking about process change, but I'd like to focus on a couple of big changes that we have made. The first one is the adoption of Agile ways of working in the company. Again, I have enjoyed the partnership with my peers in adopting this way of working, which has greatly accelerated the way in the speed to market to some of these capabilities that we're building.

The second thing I'd like to highlight in process is also the strong focus on data governance and ethical systems, and you will see how that investment that we made since the beginning of 2020 is paying off today because our data is perhaps is as clean as it needs to be for us to accelerate AI investments.

And then the third pillar of our digital transformation has been our talent. And we're very proud of our talent. We have a global team in nature. We maximize the use of our own resources and our own talent to drive our capabilities. But we also use our extensive ecosystem of suppliers that we have globally.

I'd like to say just a couple of things about our talent. First, our leadership is obviously has significant expertise in the CPG space, but it also has multi-industry expertise, and our engineering teams are remarkable. We have amazing engineering teams focused on cloud, data, AI and SAP. So in a nutshell, that is the transformation that we have driven over the last 5 years. Jeff?

Great. Thanks, Jaime. So maybe from there, as we built a digital foundation, maybe Paul and Lanette, you can share how are we applying that foundation in your respective functions.

Yes. Thank you, Jeff, and good morning to all. I want to come back to a point that Jaime mentioned, which is around our connected data foundation and the importance of that. It's not just been a critical first step. It's been the true enabler of our unlock as we looked at our digital transformation. And we all know the importance of data, but there's 2 things that I'd call out is that, one, data has to be accurate. And we put enormous governance in around that. And it's not just the master data that goes into our SAP system. It's also our operational and our transactional data. And to bring that to life for you across our supply chain, we sit at about 96% to 97% data accuracy.

So therefore, not just do we have it in one location in the cloud, but we've got one version of the truth. It's great to have the data, but the second part to that is you got to use the data. And there's many means for it to use that, and you can use it through dashboards, but what we've really leaned into is let the data make the decision. And that's the capability that we've been building over the last few years. And it's also why that you see us outsize our HMM delivery because we've delivered over $300 million of savings over the last 3 years because of our digital transformation. And maybe I'll bring that to life with a few examples, and it's across the entirety of our supply chain, whether it be through smart contract management with our suppliers to the amazing work that Jaime's team and Lanette's team have done in our manufacturing facilities, where we're getting waste out of our process streams.

We've got proprietary algorithms that run on top of the data dynamic set through sensing that's allowing us to realize dynamic opportunity across our manufacturing. And we've really only started in that space. And where we've actually driven it across a number of our facilities, it's generated over $40 million so far. So we think there's a healthy pool of opportunity in that space going forward.

In addition to that and what really excites me is where we get an opportunity for to see it across the entirety of our supply chain and right through from our suppliers to ultimately then working with our customers. And one of our biggest retailers, we've actually got ourselves talking system to system in our customer order taking and optimizing in around our truck utilization, which was a healthy pool of opportunity for us, and we affectionately call that Project ELF, which is end-to-end logistics flow, where we're using not just machine learning and AI and GenAI, but facilitating Agentic AI on top of the opportunity to drive not just millions of dollars out of that supply chain, but also it's taken over to date 15,000 tons of carbon because we have less trucks on the road. It's enabling us to actually deliver a better service offering. And what used to take us 18 hours to go through those orders and optimize those orders to get truckloads is now taking us less than 30 minutes.

So it's bringing time back in, in order for it to be able to drive added value. And now we're going to roll that across our other 7 key top customers to drive value across their networks as well. So hopefully, that gives you some examples of the areas where we see opportunity.

Lanette?

Awesome. Love that. Well, good morning, investors. It's great to see all of you. In ITQ, which is the function that I lead, we aspire to deliver remarkable experiences by transforming possibilities into reality through science. And that includes our work in data and digital, including AI. We also aspire to be a digital-first organization and its simplest embodiment, what we mean is how do we digitize, how we experiment first and then validate physically when needed.

I thought I'd hit on a couple of areas today of where we're using digital tools and capabilities in both innovation and technology. In innovation, we are literally innovating how we innovate, not only in developing new products, but on our core. I know you heard both Jeff and Dana mentioned, this new capability called Growth Labs. And what this does is help our teams through a facilitated process, generate growth ideas, leveraging the remarkable experience framework. But what I love about this is that we are leveraging our digital innovation, best practices and tools to fuel that flywheel.

This includes using visualization tools to create and iterate literally hundreds of visual prototypes so that we can understand consumer desirability before we even make one physical prototype. This has substantially increased our learning velocity. We are also using digital personas to gain feedback on all those great ideas that we're generating. And this year, we partnered with our sales organization to create buyer customer personas to really supplement our learning and get these teams learning in real time on what we might expect from our customers.

We can also do this with our consumers. And this is now a great part of our body of evidence toolbox to augment real-world learning with both our customers and consumers. We are also leveraging AI moderated research platforms to literally conduct hundreds of consumer interviews overnight. And we're doing this with always-on chatbot interviewing, really helping us to drive new insights at the pace of learning and integrate those into our learning plan so that we can be testing the next iterations as we learn.

For those of you that are coming, I hope you do to our technical center this afternoon, you're going to see these tools in action on how we use them in new product development with a feature case on our Pitmaster soup that Dana highlighted earlier. But we are not done there. So we are deploying digital capabilities also for technology development. A few examples. In our oat breeding program, we are using advanced machine learning to really accelerate our breeding program. This allows us to predict traits before one seed even goes into the ground. And I know all of you know how important our oats are to one of our biggest brands, Cheerios.

We are also leveraging it in regenerative agriculture. We are using satellite imagery to understand adoption and effectiveness of our programs, helping us to really understand, are we driving the outcomes that we are investing in and measuring and modeling things like greenhouse gas emissions to make sure those outcomes are impactful. Many of you that are covering the tech sector also are probably aware of deep research. And this area is fundamentally transforming how we think about technical knowledge acquisition. We can now harvest the volumes of technical data that are available to us, not in months, but in weeks and days and hours to use those to help foster and forward our thinking on how we apply said technology to our applications.

And finally, in the area of packaging, we are leveraging our data capabilities to do real-time tracking on our sustainability commitments. We can also use modeling here to understand future regulatory changes and potential fees for things like EPR. So I hope this just give you a smattering of some of the ways that we are leveraging the great data foundations and digital tools to drive both innovation and technology to develop and launch remarkable experiences.

Awesome. Okay. So for this next question, I'd like to hear from all 3 of you and maybe share where has General Mills digital capabilities created competitive advantage for us relative to our peers. So maybe, Paul, we can start with you then Lanette and Jaime.

Sure. Maybe to not call on some of the examples that I've referenced earlier, but one that was raised in a recent earnings call was in around the demand space and what are we doing in demand spaces that we feel that we're advantaged with. And I'll speak more to our forecast accuracy, our demand forecast accuracy and the opportunities that we're realizing there. It's probably fair to say that we've been in the leading pack anyway as regards our forecast accuracy.

But a number of years ago, we said that, well, how do we make that easier on -- across the organization because it's a heavy lift, requires a lot of human capital in order for it to fine-tune those signals. And we embarked on a journey with Jaime and his team to build algorithms that allows us to be able to get to those insights early and be able to be no touch. And where we've rolled this across the business units, we have seen a remarkable improvement in the signal, but also freeing up enormous time. Actually, it's reduced the time that people are spending in the system by over 50%, and we see a way to 75%. And it's probably no surprise as now that we're spending more time fine-tuning the signal, actually, our demand forecasting has actually improved.

And the other benefit of that is that it's driving value in our supply chain and bringing a better rhythm of performance to what we do in our supply chain. And we're seeing that in lower cost. We're also seeing it in less waste and ultimately, a better customer service to our consumers and our customers as well.

Excellent. Lanette?

I really think our differentiation is in our how. And what I mean by that is how we partner across our functions and segments to really drive value and getting our digital systems and data more connected.

So maybe a couple of quick examples. One, partnering with my buddy, Paul here and our supply chain organization, using predictive models and real-time data to optimize things like serial line speeds. And in our first runs at this, we've actually been able to drive more throughput as well as reduce waste, which is just remarkable. We are combining a physics-based twin model with our control systems and some in-line sensors really to create a foundation that we know we can redeploy across other platforms such as pet, where we're actually using it on and to understand our dryer operations.

Probably the other area that I'll highlight is a great partnership with Jaime's team on modernizing our product life cycle management system or what we call PLM. And this is really helping to help streamline, product formulation changes and to improve data accuracy and traceability. It's really helping to get more of our data connected end-to-end. And it's resulted in about a 25% reduction in touches when we go in and have to make a change and also time savings in our conversion of specs and specifications that come from my world and how we translate those into bill of materials at our plants.

So I think just a couple of great examples of how when we partner and get our systems and data talking, we can drive great value.

Jaime, how about you?

Well, from my perspective, I just talked to you about how the investments that we have made in technology, process and talent have allowed us to change the physics in terms of how we deliver solutions. And the way I think about it is time to market and predictability in terms of our ability to go from an idea to a real solution that not only solves the problem or the opportunity, but delivers the value.

And -- so I'd like to reinforce the point that Lanette made. I would say a key competitive advantage of ours is our ability to collaborate. We hold tech summits with our most trusted tech partners every year. And I'll tell you, 100% of those tech summits in 100% of those, we have joint business and tech teams coming together. And we go there not just to learn about what's the latest and greatest in the technology landscape, but we also bring in our own opportunities or business problems. And we collaborate right from that moment to identify those areas of opportunity where we can make a difference through the application of technology to drive the business forward.

And so with that, we come back and we use this amazing tech foundation that we have built to go quickly from idea to a solution. And that's why you see my peers here committing to significant levels of HMM and significant levels of efficiency because we are able to make those things happen in a shorter time frame that I want to believe versus the rest of the industry.

Excellent. So maybe before we wrap here, maybe one last question for each of you. Can you share something you're excited about or something your organization is working on as we continue to become more future-ready. So maybe, Lanette, let's start with you.

We're so I get to go first. I want to share with you that we recently broke ground on a significant capital investment at our largest technical center, what we call James Ford Bell. I hope you recognize that name or what we refer to as JFB. I love this project. It is called Building for Growth, and it is a testament to our continued investment in growth in the company. This will increase our available pilot plant space by nearly 25%, and we are aligning the space to be much more flexible and agile with unit operations that can move around and really orienting it towards capabilities, not to business units.

So really excited. Look forward to seeing you all there this afternoon, and you'll see construction is already well underway.

Great. Jaime, how about you?

Well, as you have heard today, many, many examples where our business is taking technology and driving the business forward. And so I'm most excited about just continuing that path. Many of the examples that you heard about today were delivered using what we call core AI, machine learning or even generative AI capabilities, and that's all great.

But now as we speak at this moment, we're expanding that tech foundation, those capabilities by adding Agentic AI architectures. And with that, we hope to accelerate delivery of value to the business because we will be introducing bots that can help our business, not just make faster decisions, but many times, not actually have to make the decision because the technology will make it for you.

For us, that's the dream to move from a world where we enable the business through descriptive analytics to a world where we enable the business to prescriptive analytics. That's the next frontier for us. I'm very, very excited. I think we have the foundation. We have the partnership in place, and we have the business opportunities identified with our partners to make that a reality.

Awesome. Paul, how about you?

Yes. I'm very excited because I think we've only scratched the surface of the opportunity as part of our digital transformation. And for me, Jaime mentioned it earlier about the triad that we have, which is that we've got amazing technology that we do feel that we're advantaged with, but also we're bringing some process agility to how we get that done.

And you can see from the interaction with us right down through the organization, the engagement that we have with all of our work and the talent in order for it to make that happen. And that for me is the sweet spot of being able to add more value, aka, HMM, which we know will help fuel the growth of the organization.

Perfect. More HMM is a good way to finish this conversation. So Jaime, Lanette, Paul, thank you very much for talking and sharing about our digital journey and excitement about what's ahead.

So with that, we'll wrap up this fireside chat, and please join me in welcoming to the stage, Kofi Bruce, our CFO, for the last part of our presentation.

Good morning, everyone. It's great to be here with you. Thank you all for coming in. I hope what you've heard so far clearly demonstrates our focus on returning to organic growth by delivering more remarkable experiences and the investments we're making to support that goal.

As we near the end of our webcasted session, I want to share more details on our financial commitments. How we think about driving shareholder value, how our financial performance has played out in recent years and how we plan to deliver consistent profitable growth and returns over the long term.

Our long-term strategy for maximizing shareholder return centers on 4 key levers; sustainable sales growth, margin expansion to turn sales into profit and earnings, disciplined capital management to convert earnings into cash and returning that cash to shareholders via dividends and share repurchases. Most importantly, our strategy starts with volume-driven organic net sales growth, which fuels the rest of the flywheel.

We know that organic sales growth is, over time, most highly correlated to valuation and shareholder value creation. Profit growth generated by organic sales growth and supported by reinvestment creates capital flexibility, fuels future growth and allows us to return cash to shareholders. When led by top line growth, HMM is stronger, growth investments are more sustainable, cash flow growth is easier and value creation accelerates.

Over the long term, we aim to deliver 2% to 3% organic net sales growth. When combined with modest margin expansion, this will generate mid-single-digit adjusted operating profit growth. We strive to convert at least 95% of adjusted net earnings into free cash flow, returning approximately 80% to 90% to shareholders through dividends and repurchases. We expect this approach to deliver mid to high single-digit adjusted diluted EPS growth and ultimately, top-tier shareholder returns.

Now before I dive into where we're going, let me quickly take a step back and talk about where we've been. As we look at the period from fiscal '19 through pandemic lockdowns and the post-pandemic inflation cycle, General Mills significantly outpaced its long-term growth targets. We executed exceptionally well with performance differentiated from our peers and shareholders were rewarded as a result. More recently, however, consumers have felt the lingering effects of what in retrospect has been nearly 10 years' worth of inflation that they experienced between fiscal '22 and fiscal '23 with food prices up almost more than 25%.

This was a level of inflation we hadn't seen in almost 50 years, and it resulted in a significant increase in value-seeking behaviors by consumers that has remained with us over the past 2.5 years, creating top line headwinds for many companies, including our own. Amid this extended period of stabilization, we believe it is more important than ever that consumers see the value and quality of our brands and products. As you've heard earlier today, we are intentionally investing across all aspects of remarkability to increase our competitiveness and return organic sales to our long-term growth rate.

So that brings us to where we are today. The midpoint of our fiscal 2026 guidance, which we reaffirmed earlier this morning, assumes we stabilize organic sales this year, which will be a 2-point improvement over last year's result. On the bottom line, we expect constant currency adjusted operating profit and adjusted diluted EPS to be down 10% to 15% in fiscal '26. As a reminder, this includes a 5-point headwind from the net impact of divestitures and acquisitions and a 3-point headwind from the normalization of corporate incentive expense. The remainder of this year's profit decline after accounting for cost savings and inflation reflects the significant growth investments we're making to amplify our remarkability.

Finally, we continue to expect free cash flow conversion of at least 95% of adjusted after-tax earnings, which is in line with our long-term goal. So as we shift from where we are to where we're going, I mentioned that our fiscal '26 organic sales guidance assumes about a 2-point improvement over our fiscal '25 result. Looking beyond fiscal '26, to return General Mills to organic sales growth in line with our long-term 2% to 3% goal, we need to drive another 2 to 3 points of improvement in the future. And we see 3 primary ways we can achieve that top line acceleration, improving our competitiveness, reshaping our portfolio and seeing our categories return to their long-term growth rates.

First and most importantly, we're working to improve our competitiveness and capture more of the growth we currently see in our categories. You've heard and seen many examples of how we're doing this throughout this morning's presentation. From Pillsbury and Cheerios protein in NAR to breakfast and frozen baked goods in NAF to core Blue Buffalo and Love Made Fresh in North America Pet to Häagen-Dazs, Old El Paso and Nature Valley in our international business.

Overall, we think the current mix of geographies and categories is growing around 1% based on our latest category estimates. While that's 1.5 points below our long-term expectation, it still means that improving our competitiveness and holding share more consistently across our enterprise could deliver another point of growth relative to the midpoint of our fiscal '26 guidance. In fact, the competitive improvement we have baked into our fiscal '26 plans would have us exiting this year with positive organic sales growth in Q4.

Second, our portfolio-shaping efforts continue to strengthen our growth profile. As Jeff mentioned, we've turned over 30% of our net sales base since fiscal '18, adding a full point to our long-term growth exposure. Over that time, we've built a strong track record of integrating new businesses successfully into our operations and divesting businesses where we did not have a clear right to win. We consider M&A an always-on capability, and we will continue to look for inorganic opportunities to improve our organic growth profile over the long term.

Third, we expect our aggregate category growth to return to its long-term historical growth rate of 2% to 3% over time. Now the biggest gap we see today is price/mix, which is not surprising given the historic level of inflation consumers have experienced over the past couple of years. As consumer economic situations around the globe stabilizes, we do expect to see price/mix return to our categories while volumes grow roughly in line with population. And as the category leader in many of our priority businesses around the world, we know we have an important role to play in improving our category growth by delivering on all elements of remarkability.

Now with 2% to 3% organic sales growth, our long-term model requires we effectively manage the middle of the P&L to deliver mid-single-digit operating profit growth and modest margin expansion over time. And we have shown our ability to do this over time with our HMM and cost discipline. From fiscal '19 to fiscal '25, we successfully maintained our margin profile despite unprecedented input cost inflation, leaning on our HMM productivity program and our strategic revenue management capabilities. We expect our fiscal '26 margins to be down year-over-year, driven largely by the reinvestments we're making to restart growth as well as the impact from yogurt stranded costs and net tariffs that we won't be able to fully offset within the fiscal year.

Longer term, the keys to driving margin expansion in line with our model will be consistent volume growth and strong contributions from HMM and strategic revenue management that offset inflation and create fixed leverage even while we're reinvesting for growth. One way our adjusted gross margins remain competitive is through industry-leading HMM productivity. General Mills has leveraged HMM to average 4% annual gross savings in cost of goods sold for more than a decade plus. We consider this a discipline and a capability, which is led by our business teams across many functions. It's rooted in continuous improvement tools that help us identify and eliminate waste.

And as you've heard from Paul, in recent years, we've accelerated our HMM savings above that historical level by leveraging investments we've made to digitize our supply chain. With a strong HMM pipeline bolstered by digital supply chain initiatives, we have good visibility to generating 5% HMM savings again in fiscal 2026. The third lever of our shareholder return model is converting earnings to cash. We've delivered tremendous performance on core working capital for more than a decade, generating nearly $1 billion in additional cash between fiscal '19 and fiscal '25 by reducing our core working capital balances, primarily driven by payment terms optimization.

This capital discipline has enabled General Mills to deliver free cash flow conversion that has averaged more than 100% over the past 7 years. Looking ahead, we see further opportunities to drive efficiency in core working capital, both in accounts payable as well as inventory, which will help us continue to deliver on our long-term 95% cash conversion target in the future. With strong cash generation as a backdrop, we are very disciplined about prioritizing the use of that cash in shareholder-friendly ways. Our first priority is investing back in the business for growth with capital expenditures expected to be about approximately 4% of net sales over the long-term.

Our next cash priority is our dividend. And as a reminder, General Mills has paid a dividend without interruption for 127 years, and we expect to grow our dividend roughly in line with earnings over time. After dividends, we'll look to deploy our cash for strategic acquisitions that enhance our growth priorities and our growth profile over time. And our final capital allocation priority is share repurchases. We expect to drive a 1% to 2% average annual reduction in net share count over a multiyear time frame. At the same time, we remain committed to maintaining our strong investment-grade credit rating, and we continue to target leverage of roughly 3x net debt to adjusted EBITDA over time. As we've done in the past, including as recently as this year, we will toggle back on our share repurchase activity following acquisitions to enable debt paydown.

The final lever in our model is cash returns to shareholders. Between fiscal '19 and fiscal 2025, we paid nearly $9 billion in dividends and deployed nearly $5 billion in net share repurchases for a total of almost $14 billion in cash returned to General Mills shareholders. And we're confident our model of high-quality, sustainable growth and disciplined capital allocation will drive strong returns for our shareholders over the long-term.

Before we move to our second Q&A session, let me summarize delivering consistent and profitable organic sales growth is at the foundation of our long-term shareholder return model. While our investments in remarkability are pressuring our margins in the near term, they are critical to restoring volume-driven organic sales growth and putting us in a stronger position to generate growth in line with our model over the long-term. We have a strong history of delivering on our margin expansion, cash conversion and cash return goals, thanks to industry-leading HMM and SRM capabilities, our core working capital management and capital allocation discipline.

Finally, we are confident that our strategic focus on remarkability and our unique combination of leading brands, differentiated capabilities and world-class people puts General Mills in a strong position to deliver on our ambitions and drive top-tier returns for our shareholders over the long-term.

With that, I want to thank everybody for your time, and let's get set up for the final Q&A session.

Okay. So we'll go ahead and get the second Q&A session started. I think you all know the drill out in the room. So let's start Pete Galbo in the second row here.

My first question is for Liz. Just on the TAM analysis, I think in the slide you gave, we're at $3 billion today on fresh going to $10 billion over the next 10 years. Just can you help us understand the buckets of the incremental $7 billion, what underlies how you kind of get there in your TAM assumptions even just for the category? Because I think there's maybe some skepticism even given what some of your competitors are seeing already before you even really enter the category in full that, that might be aggressive. So I would love to just understand the from to in the assumptions.

Yes. So to reach that TAM that assumes ongoing double-digit growth in the Fresh segment, and that would assume channel expansion, greater online presence. We could be right, we could be a little high. We could be a little low. I'm not -- 10 is what we have sized the market at. What I would say, though, is that we really believe that with us coming in with Love Made Fresh, we have the chance to grow this segment. You see segments that have a couple of major competitors in doing better, and we're going to be bringing investment in driving this segment as well.

And so it also assumes other people coming into the market, helping to grow the segment. And we believe we're going to help do that with Love Made Fresh coming in.

Great. And maybe just a second held out of the mind. I had to get 2 in. Just your message today, and this could be either for Jeff or for Kofi, your message today is very clear, right? We need to get the price points to a level that meets our consumers. And I think there's a view that you're moving in one direction, while some of your peers are actually going to take pricing up this year, which, again, I think the view is starting to change that maybe you have the right view of the category.

But with that in mind, Kofi, as we start to normalize kind of this, I don't know, negative price/mix environment, you talk about the category needing to be able to get back to 1.5 points of, I think, price/mix growth over the long-term to kind of hit the algorithm, which would seemingly be the most outside of your control of all the factors you've listed.

So what just gives you the confidence that as we normalize this, maybe your peers follow you, maybe they don't, that we can get back to that environment of a point or 2 of price/mix over the long-term?

Sure. Appreciate the question. Certainly, as we started to make the pivot last fiscal year, about midyear, we saw a really good response, as Dana shared in her presentation to first removing the gate on price and then allowing the rest of the remarkable experience levers to really do their work, which is a lot of what gave us the confidence to underwrite a fiscal year plan this year that has us investing heavily not only in addressing those price cliffs and gaps where we have them, but also in innovation and marketing spending.

I would expect that as we start to lap some of the first round of investments, we would want to see evidence that the marketing is driving the lift. And I would expect, based on our continued progress so far that we like what we're seeing. So you're right, long-term that we do need the consumer to kind of settle into a different sentiment for a full price/mix to return to levels that would support a 2% to 3% growth. We think part of our responsibility is to help create those conditions by inviting them back not only with price value address, but also with the ideas that remind them why our brands are relevant and matter in their lives.

So I think that's why you hear us talking consistently about the remarkability framework because we see that as a path through. And the path through this environment candidly is best viewed towards organic sales growth.

Go to Max Gumport back here.

Kofi, turning to the levers you laid out, I think 2 of them stand out to me because on the first, with regard to organic sales, it's been a few years now of below expected results, which you've acknowledged. I'm wondering how you see the company positioned to navigate through an environment if this difficult environment does persist.

And then on the other hand, with regard to working capital and then turning your profit and the cash, you've done quite well over this last decade. But I'm also wondering how much continued room do you see on accounts payable, most notably, but then also on inventory? And I have a follow-up.

Yes. So I would expect to see us continue to drive improvement on accounts payable in places where we still have gaps against the competitive set. Some of our businesses outside of NAF and North America retail continue to show opportunity. I think some of the digital tools will also enable us to do a better job of managing inventory. And then I think to your point on the environment, we obviously don't control it. We would prefer a much better consumer sentiment.

But the near-term focus for us and the things that we do control and that are within our sphere of influence are around the competitiveness of our products. And I think we will do the job that is necessary to ensure that we can ultimately set ourselves up to outrun our peers even if it takes a little longer for the consumer and the consumer environment to come back to a place where we see that normal price/mix equation.

We'll go to Rob Moskow here on the side.

I wanted to know if there was any thought process, Kofi and Jeff, to maybe tamping down the long-term growth algorithm. There's some real changes over the past few years, more evidence that population growth in the U.S. is slowing. Your platform in emerging markets is smaller than it used to be. And there's all these questions about whether pricing can come back, not to mention distrust, rising consumer distrust to process foods more broadly.

So given all that, like is 2% to 3% equally in your mind, what you're capable of doing? Or is there maybe more risk that it might be a little slower?

Yes, Rob, I mean, look, we give a lot of thought to what our future growth prospects are. And we still believe that 2% to 3% is the right place for us to be because that's what we believe our categories will grow to. The key really is going to be getting some price mix because if we look at volume and price/mix over time, we think that is going to be the key. I mean you noted a lot of changes. It sounds kind of dire.

But what I will tell you is we've been around for 160 years, not because we've been afraid to change, but because we have. And the key is for us to keep changing with consumers and where they're going. And whether that's GLP-1 usage or whether that's a rising Hispanic population, whatever that may be, that's our job to do. And what we've done it really, really well over the course of time, and that's how we've gotten to be a $20 billion company. And so whenever someone talks about change to me, I see opportunity. Do I see threats? Of course. The threat is we don't change. But we've shown ourselves time and time again that we're more than capable of changing, whether it's our capabilities, which you heard about earlier, how we're generating cash with Kofi talked about or how we're generating demand with consumers.

And so yes, we've given a lot of thought to our long-term algorithm, and we fully believe over time that we can get back to that. We don't think it will be as high as it was during the pandemic because 3 years ago, you would have been asking me, are you sure you can't grow 5% because that's what you've been growing in the last couple of years. But I don't think this recency bias should have an effect on us either. I mean it really is what do we think the long-term growth is, and that's what we believe. Time will be the final judge, but that's what we believe.

Can I ask a follow-up just for Kofi. I noticed CapEx as a percentage of sales at 4%. It's averaged in the low 3% for the past 5 years. Is this because of the commitment to spending more on digital and technology? Is there a higher need for spending going forward? It's about -- it's like $200 million a year. So I just wanted to know.

Yes. We start our annual long-range capital budgeting process with that kind of as a targeted headroom. And obviously, we have a hard filter on capital deployment in terms of return, especially on growth-facing projects, which comprise the bulk of the budget. I would expect that even with that, we've been able to accommodate pretty significant investments in digital capabilities largely because we're now at a space where we've moved from making a lot of the foundational investments necessary to get started, which really, for us, was a journey that started in earnest in 2022, to a place where most of those have their own returns attached to them.

Some of those will show up in our admin, our SG&A spending; and obviously, some of them also end up getting capitalized as a result of some of the changes in accounting treatment for that type of expense.

Great. Can we go to Scott Marks here in the front?

Scott Marks from Jefferies. You've highlighted today how your remarkable experiences framework is impacting some brands and categories. Wondering if you can talk about where you think it's been working well, where you think it hasn't been working as well and where you see the room for improvement?

First of all, one of the great things in my view about the remarkable experience framework is that there's always room for improvement. It really has spoken like a true CEO, I know. But there is always room for improvement. And that's one of the great things about it, and we have 5 different categories.

And unless you're green on all 5, you have not arrived yet. And there are very, very few businesses that are green on all 5. If you get to 3 or 4, you're doing pretty well. So that's the most important thing I can tell you actually is that I think there's always room for improvement.

Where are things working particularly well? I'm particularly proud of Liz's team and what they have done on Tastefuls, for example. And we talk about Wilderness, we get lots of questions on Wilderness and as we should because it hasn't worked as well as we want. But we don't get a lot of questions on Tastefuls, that's because it's working.

And we changed the pack size, we changed the brand, we changed the advertising. It went from declining to actually growing mid-single digits. So I think that's a place where it's worked really well. It's worked really well on Pillsbury, which is another $1 billion brand. I'm really proud of the work that Dana and her team have done on Pillsbury and bringing the Doughboy back. And we talk about the pricing on Pillsbury, just as remarkable, the advertising is remarkable.

And we're doing a lot with the product quality on our core as well as with new product innovation. So I think what we've done on that is remarkable. The other is Haagen-Dazs and StickBar. I mean international doesn't get a tremendous amount of attention because it's relatively small relative to NAR, for example, the attention that pet gets.

But we have really grown our Haagen-Dazs business. I think it was 7% in the first quarter behind our core renovation. It was really focusing on our core flavors and these new StickBar, and particularly in China, and Ricardo was very humble and he didn't have a chance to go into it, but we shifted production to China for StickBar.

We lowered the cost of it. We actually made the product incredibly remarkable. And not only did we gain distribution on that, but we gained distribution on our core as well. And so the growth on Haagen-Dazs is no accident. And then finally, I would highlight maybe Nature Valley in Europe. France is our highest share of market of Nature Valley in the world at 53%. And a decade ago, people told us we couldn't sell Nature Valley there.

So I could give lots and lots of examples of where it works really well. Foodservice, I'll give you another, foodservice. I mean, I think we have an 84% market share of cereal in schools. And as I've reminded Pankaj, that means there's 16 to go. But the reason why we've done it is we've been remarkable.

We have taken out sugar from our cereals. We made them taste good. We've added different sizes and varieties. And so the great thing about remarkable experience framework is not only does it -- is it something you can keep changing over time, but it also applies to all of our businesses. So anyway, there are a few examples. Catch the segment leaders later on. I'm sure they'd be happy to give you more that I have not covered here.

Matt Smith, here in the back.

Matt Smith from Stifel. Kofi, just wanted to ask about the level of investment behind the business as you exit this year. If you see that as being sufficient to balance the needs as you look forward, especially given the launch in fresh pet food. Should we think about that multiyear support associated with fresh food as being kind of a reallocation of the level that you set exiting this year or if you see more incremental spending requirements ahead?

Yes. Great question. I think let me back up and tell you kind of how we thought about this year. As we exited fiscal '25 and we're setting expectations for fiscal '26, we saw a real need to make a dramatic step change to allow our brands to do the work. And that required us kind of addressing one of the primary gates, which was price value.

The quantum of investment this year is significant size, I wouldn't expect to have to make that level of sort of investment step change again as we move forward, especially if it continues to show signs of working as it does. Specifically on fresh pet, though, we do see that as a multiyear project. It is going to take more than 1 fiscal year for us to build to national scale. And until we get to a point where we start to hit full scale, I think there will be margin headwinds as we're investing in supporting that brand ahead of building the kind of awareness that we need to hit that scale window.

I think once we hit that inflection point, then obviously, we would expect to see a path from there to improving margins and ultimately to at least margin parity with the rest of the company.

Can we go to Megan back here in the second row?

Megan Clapp, Morgan Stanley. Kofi, maybe just a follow-up on the NAR side of things, as it relates to that question. Clearly, controlling what you can control. The consumer environment is not one of them. Price/mix, it seems like it's a bit of a wait and see. But the volume recovery has maybe been, as talked about today, a bit slower.

So as we think about as we get to the back half of this year, if volumes have taken a bit longer to recover, how do you think about balancing the need for continued reinvestment versus some of those near-term ROI and margin implications?

I guess, maybe said differently, how do you think about potentially having to thread what seems like a pretty challenging needle between sustaining the volume momentum you're seeing and your competitiveness and protecting profitability?

Yes. Great question. And I think the way we view it, first, I would just kind of recalibrate on we are seeing roughly what we expected at this point in the year. So it's -- I'm certainly not in the camp where I'm throwing in a towel or kind of at the point where I need to make those trade-offs, which is my way of saying we're getting the return and the ROI out of the investment that we need to see in order to justify continuing the investment.

Obviously, this is an environment where, I think to your point, we don't control the pace of the consumer recovery. We do control maybe the levers of influence over how they experience and interact with our products and the competitiveness of our products on shelf and the visibility and impact of our packaging, those things are all within our control.

And where we see and have measured gaps, we're going to continue to address those. And if there's return there, we will be comfortable making that investment. I'm -- at this point, I think we reaffirm guidance because I think the path we see right now would tell us even as we make these investments in NAR that we will be able to deliver profit within the range even if we have to make some modest adjustments to investment throughout the year.

Good. I think we're going to have to wrap it up there for the formal Q&A time. So maybe before we close, Jeff, I'll turn it to you for some closing remarks.

Okay. Well, first of all, thanks to the team here, everybody who set this up and also the team General Mills, who hopefully are listening online for not only a good conference so far, but also driving the results that we have.

And I want to thank all of you here today for spending some time with us. We started our presentation by covering objectives for the day, the chance to hear directly from our leaders and to anchor our theme of remarkability, how we're leveraging it to drive growth and the bold choices we're making to enable that.

And as we know, and what we just talked about, the world around us isn't standing still. I mean it continues to change. Consumers are, markets are shifting, technologies like AI are reshaping how we work. But we're not standing still either, and I want you to hear that directly from me.

We're adapting, and we're investing to stay ahead. And the message you've heard from us today has been clear. It sounds like it's been clear. Good is not good enough. To truly stand out in this place, you must be remarkable. And remarkable on how we -- and what we know and how we serve our consumers, remarkable in the bold choices we make, remarkable in the way we invest in our brands and our portfolio and our people.

And remarkable in the discipline we bring to the execution, whether it's on our core or through M&A. And as I said before, our #1 focus is on restoring consistent organic sales growth, enabled by investment to deliver remarkable experiences for our consumers. And with this improving momentum and disciplined execution, General Mills is well positioned to continue accelerating our growth and creating long-term value for our consumers, for our customers and our shareholders.

So again, thank you for spending time with us today. We'll now break from the presentation portion and transition to the in-person programming for the remainder of the day. So thank you all.

Good morning, and welcome to General Mills' First Quarter Fiscal 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Jeff Siemon, Vice President, Investor Relations and Corporate Finance. Thank you. Please go ahead.

Thank you, Julian, and good morning, everyone. Thanks for joining us today for this Q&A session on our first quarter fiscal '26 results. I hope everyone had time to review our press release, listen to our 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 this Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. 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 with Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Dana McNabb, Group President of North America Retail and North America Pet.

Now let me turn it over to Jeff for some opening remarks. Jeff, go ahead.

Yes. Thanks, and good morning, everybody. Before we start the call today for questions, I'd just like to share a few thoughts summarizing some of our key messages. And I think it's pretty evident. There's a lot of change in the world, a lot of uncertainty. I mean the same could be said of the food category. And there's been a lot of change within our business [ as you ] impact the first quarter results and the Yoplait divestiture, which we're executing well, as well our [ White Bridge ] acquisition, which we're also executing well. So there's a lot of change.

But what I want you to hear from me is that amidst all of this we are staying laser focused and clear on our strategy, which is returning to profitable organic growth as the best way to create value for our shareholders. And importantly, we are increasingly confident that our approach is working. And I'll take you back as a reminder to Q3 of last year. When we told you we're going to make some significant investments to address price cliffs and gaps. And we said we're going to do that on Pillsbury and Totino's, and we saw really good results. And that gave us more confidence.

So that in Q3 of last year, we told you that we would expand that to the Cereal category, as well as soup and fruit snacks. And again, we saw a pound share growth on that in line, or ahead of, what we expected. And so coming into this year, we had a heightened degree of confidence that our approach is working.

And -- at the same time, while addressing price is important, I mean, especially in this environment where consumers are looking for value, it's not sufficient to generate long-term growth. And so coming this year, we also said we're going to invest significantly in innovation and new product news, new brand campaigns and renovation across all of our top categories. And then we're going to support this with industry-leading HMM cost savings and transformational benefits.

And so the other question is, how is that playing out? And the reason we're increasingly confident is playing out the way we thought that it was. So, so far, so good. We strengthened our pound share in 8 of our top 10 categories and now we're holding pound share in Pet. And we're continuing strong competitiveness in food services. As you probably saw, we've increased our growth and competitiveness in international at the same time.

On the P&L, we expect our profit results in Q1 will be pressured significantly by our increased investment profile, but also by the impact from the [ yogurt ] divestiture and a few phasing comparisons. And we think that will continue into Q2, but importantly, it will improve in the back half of this year, certainly in Q4, but throughout the back half of the year.

So I want you to know, from my perspective, just stepping back, just a little bit, we're really encouraged by the early signs of improvements we're seeing. And we have great initiatives for Q2. I'm sure we'll talk about fresh pet food. But that's not the only thing. I mean, our new product volumes are already up 25%. We have some other good new products coming in the second quarter, also backed up by really strong plans in baking and soup, and the fall and winter are key seasons for that. And we plan to improve -- continue our positive momentum in [ foodservice ] and international.

And so again, with Q1 now in the rearview mirror and in line with what we expected and increased confidence, we reaffirmed our fiscal '26 guidance. So with that, Jeff, let's open it up for Q&A.

Great. Thanks, Julian. I think we can go ahead with the first question. Thank you.

[Operator Instructions] Our first question comes from Andrew Lazar from Barclays.

Jeff, maybe picking up on your comments. The ongoing debate in the food space, right, continues to be whether or not the current sort of challenging volume environment is more structural this time around than it has been in the past, or whether more of it is just a result of the significant pricing the industry was required to take combined with sort of a consumer that's under pressure?

And I realize it's super early in your efforts. But as you've gotten some of the key price points in the right place and the other marketing levers can kind of start to work, as you said, you're starting to see some volume share improvement in a bunch of categories more recently. Yet I guess, if we look at NAR, right? Volume did not yet improve sequentially from fiscal 4Q.

So I guess what I'm wondering is, do you think recent results sort of support the thesis that while there are some external factors for the industry, maybe some of them are a little bit structural. There's still a lot more that in the industry's control and your control in terms of getting sort of volume back to [ bright ]?

Yes, Andrew, I think it's a really good question, a really fair question. And we believe it's largely in our control. I mean if you look at -- if you look at the last year or so, volumes in our category are about flat, which is about 50 basis points below what we've seen historically, but not too far behind. And -- and we -- there are a number of factors for that.

Probably the most important, we believe, is that we saw in decades worth of inflation in a couple of years. And so consumers are still recovering that as wages have not yet caught up with all that inflation. And so we think that's the biggest driver.

I mean GLP-1s has a -- we think, has had a small impact so far. And consumers seeking value [ and a stress ] consumer may be a little bit. But again, it's a [ 50-point ] gap versus what we have seen historically. The bigger gap is actually on price/mix. And historically, we see some price and mix. But in this environment, we -- where the consumers are feeling the way they are, that's actually the more difficult piece rather than the volume piece. So volumes are pretty stable.

And as we look at our year, we don't -- we need to be able to hold share in our categories to achieve the results we suggested for the year. But we don't need to gain massive amounts of share to hit the guidance that we already said and get back to flat, or a little bit of growth. And so we think it's mostly up to our control.

Look, consumers [ they haven't ] changed over time, and we've been really good at changing with them. [indiscernible] give you an example, like I mentioned GLP-1s was a little bit of a headwind. But as a result of consumers looking for that, they want more protein. And there's a reason why [indiscernible] Protein is off to such a great start. Or [ Progresso Pitmaster ], which is high-end protein is off to a really good start. We introduced Nature Valley creamy protein, and we like what we've seen with that so far. Or at our granola business is doing well.

And so even though you can see something in a structure -- you can make is that a structural headwind, there are companies who are focused on the consumer, we are right now have means to seek opportunities in that, and that's what we're doing.

Our next question comes from Robert Moskow from TD Cowen.

So a couple of questions. One is, I just want to make sure I understand the path back to volume growth. Are you still expecting that to happen by fourth quarter of this year?

And I'm trying to reconcile. So if your category volume is flat, but you're holding or gaining share in 8 out of 10 categories, why is your volume reported down negative 1. It would seem just [ optically ] that you would be a little bit above category volume growth, not a little bit below? That's my question.

Yes. So let me -- let me have Dana McNabb take that math question from you, which is probably an important one.

All right. Well, Rob, thanks for the question. It is true what you're saying in terms of our volume. But if you look at our top 10 categories, the volume improved by about 1 point in Q1 versus Q4. The total didn't, and that is because flower and desserts were down, and they significantly over-index on pound, not on dollars.

What's important, I think, is that where we're putting the price investments, we're encouraged in almost every case that we're getting the volume response we expected. And this is particularly on categories in Q1 like refrigerated dough, on fruit snacks, on salty snacks.

And I'd also call out snack bars. Even though we're comping a period where our competitor lost distribution, the elasticities we've seen on the investments are at, or ahead, of model. So we, again, are feeling very confident that these investments are working.

Now there's a few places where we still have work to do. Our Totino's business, volume was down a little bit in Q1, but we are in the middle of a price pack architecture change right now, where we're moving from a bag to a box. And so we need a little time to sort through that. And then, of course, our Cereal business, we did see an improvement, second consecutive quarter of pound share growth. Really good momentum behind [ Materials ] protein, our granola business up double digits. Our Cinnamon Toast Crunch business, when you get remarkability right and have great advertising and great product news, it works. But the pounds in that category were down. Our performance was still down, and we have a little more work to do.

But again, what we're encouraged is that in our top 10 categories, pounds have improved. And we believe our plans get better each quarter through the year.

Maybe, Rob, I'd just add one more point. If you get beyond North America Retail, we did see a shipment timing headwind in Pets to the tune of about 4 points. That's worth a little bit -- almost a full point to the company, about a little bit more than 0.5 point to the company. So that also weighed on total company pounds in the quarter.

Our next question comes from Leah Jordan from Goldman Sachs.

Just if you could provide more detail on your trends in dog food. I guess what can you attribute the slowdown in wilderness to? And how are you thinking about your ability to drive an improvement there?

And then I was just also curious, on trends on [ Pet's rates ], just excluding [ White Bridge ] acquisitions there, just given the discretionary nature?

Yes. So if I think about -- thanks for the question, our Blue Pet business, our core pet business, our results in Q1 were generally in line with where we were last year. We held our pound share in Q1. Our dollar share is down just a little bit, about 15 basis points.

In terms of what is working, we're really encouraged by our Blue Life Protection Formula business. This is our biggest business. It grew dollars and pounds. We have the value right. We have really good comparative advertising and strong in-store execution. Our cat feeding business is actually doing really well. So Blue [ Tasteful ], mid-single-digit growth. Again, we have a really good taste preference claim, and the [ cable and gravy ] new product. That's working well for us.

And then our Tiki Cat retail sales, they were up double digits. We've got good nutrition, a science formula that's launched across different cat life stages, really good omnichannel excellence. So these big businesses are working really well for us. And then our Treats business, that has been a challenge, that inflected to some positive volume growth in Q1. So there are some things that we're really encouraged are working well on our Blue business.

The two areas that you rightly referenced that we need to see improvement on our Wilderness business. In this business, we have to improve our total product proposition. So we're coming with protein news and new products, comparative advertising, stronger in-store execution, we have to get better there, and we believe our plans are much stronger this year, but again, more work to do.

And then our pet specialty channel continued to be a challenge. And this year, we're bringing [ EDGAR and Cooper ]. So that's the super premium business that we had in Europe. We're launching an exclusive partnership with PetSmart, and that's already in market in Q1, and our turns are in line or a little bit ahead of expectations.

So there's a lot that we like about our pet business that's working. And two areas that we know we need to get better, and we're encouraged by the plans that we have in place.

That's very helpful. And then I just wanted to step back and I have a higher-level question. There just seems to be a bigger debate around the industry scale versus complexity, and what's the right balance? I mean -- and you guys, you sound confident in the plan that you're putting forward today, but you've been battling a number of fronts over the last few quarters.

So just maybe how do you think about what's the right balance? And as you go through driving better remarkability across your portfolio, what have been advantages, or disadvantages, with your portfolio mix today?

Yes, Thank you. The -- well, I'm going to turn the question a little on its side. So which is to say the most important thing is to focus on the consumers, and what they're looking for, and what they want, and then delivering that to them. And whether that's through better advertising, or product news, or new products, or whatever the case may be. That is the most important thing. Whether you're in one category or 15, that's the most important thing to do.

Scale has some advantages for us. It's allowed us to invest in our capabilities like digital technology, digitizing our supply chain and SRM, and doing bundling consumer offerings across categories of stores, especially in the fall and back-to-school are really important for us. So we do see some scale advantages from that. Especially working across categories. When we kind of understand the consumer, I think more deeply than many others can, who are only in one category because we see the consumer from many different angles.

Having said that, we've never been a believer in scale just for the sake of scale. And I don't think that just because you have scale it automatically accrues benefits. You have to be able to have [indiscernible] scale that you have to advantage and to make sure you're -- through all of the complexity that you have that you're staying focused on what the consumer wants in that particular occasion and that particular demand space, if you will.

Our next question comes from David Palmer from Evercore ISI.

Thanks for the great commentary in the prepared remarks. It looks like you continue to expect very strong growth from innovation and contribution to growth from innovation, but it also looks like there's a little bit more of an elongated timetable of the price promotion investments stretching into the second half of fiscal '26, perhaps more than you might have thought a few months ago.

Perhaps where are the biggest changes in your reality when it comes to certain categories where the price promotions or investments are sticking around a little longer? And perhaps what are the categories where you're, perhaps, seeing what you would hope to see where you can, perhaps, get a little bit more balanced with price versus volume? And I have a quick follow-up.

Thank you for the question. I think I'll start first with the price investment. And I think it's important to understand that initially, as Jeff said in his opening remarks, last year when we knew we had to improve value for the consumer, we had to move fast. And so the way we did that was we adjusted depth and frequency of promotion. And we are encouraged by the positive response that we saw.

And as we shifted to this fiscal year, our focus has been on adjusting our base shelf price. Trying to get below key cliffs, or to make sure that we have a gap that's manageable to the competition. We need to do this across 2/3 of our portfolio, and we got the majority of that done in Q1, and again, results are ahead of what we expected. And we saw really good results on bars, on fruit snack, on salty snacks.

We will complete the remainder of the base price adjustments in Q2, and that's going to make sure that we have the right market leading execution on our baking and on our soup season. And all of this gives us a guidance that we're on the right track. But as you pointed out, when you started the question, price is just one element of remarkability. Once we get the price rate, we're really focused on elevating our work on new products. We're moving from about 3.5% of net sales on new products to 5%. We feel really encouraged about the performance that we're seeing on things like Cheerios protein, our [indiscernible] We have a lot of really good new products coming through the remainder of the year. And this just gives us confidence that this focus on remarkability and getting the total proposition right is the right thing to do.

Great. And then just a follow-up on pet. You mentioned the 5,000 coolers going into initially some -- a big competitor out there as well over 30,000. What -- how does that work where you get past this first step? I mean is it in the plans that this will continue to ramp? Or are you digesting this first sleeve of coolers, seeing how it goes, and will modulate the growth from there? And I'll pass it on.

Well, we are excited to be moving from the planning phase of the fresh launch to the execution phase. And the plant production has started up really well. Our initial products are looking really strong. And as you mentioned, we're in the middle of installing coolers as we speak. So we'll have 1,000 coolers in place by the end of this month. 5,000 coolers by the end of our fiscal Q2. And our plan is to ramp up that distribution into the next calendar year in 2026.

So again, so far, everything is going really well. We are encouraged by what we're feeling with cooler distribution. And I should remind you that we have over 50 years experience in the refrigerated channel. When you think about our Pillsbury business and our yogurt business, and so we feel like we have a very strong product and a measured plan for getting coolers that will increase. And again, we're feeling very good about this launch right now.

Our next question comes from Matt Smith from Stifel.

Kofi and Jeff. Kofi, I wanted to talk about the margin performance in the quarter. It was above your expectations. Can you provide a little more detail on the gross margin composition? I believe you called out the international timing benefit was about 3 points of that segment's net sales, or is that like 50 basis points to the overall company?

And then how we should think about the phasing of inflation investment through the year from here?

Sure. Sure. I appreciate the question, Matt. So I think as you rightly pointed out, we did flag that our profit performance in the quarter was a little bit better than expected on operating profit and EPS. Some of that coming through gross margin.

The first factor, probably in a slightly heavier measure, was that our inflation phasing was a little bit lighter than we expected in the quarter. Probably closer to 2%, a little bit below the annual run rate of 3% that's sitting in our annual guidance. So that factor first, followed by the trade expense timing benefit in international, which would put it at about $20 million on the top and the bottom line.

We expect both of these to kind of unwind largely in Q2. So given that these are timing-related items, as we see them unwind in Q2, I'd expect our operating profit to be down more in Q2 than in Q1. And I expect that, that doesn't change our outlook for the sort of first half aggregate profit looking roughly in line with Q4 of fiscal '25.

We do think, kind of just as we look at the Q2 profit decline, it's important to think the supply chain phasing costs on inflation. I'd expect Q2 to be a little bit higher, probably maybe even above the annual run rate as we step into some of the inflationary pressure plus some inflation or some inventory absorption headwinds.

It's important to note we won't have any contributions from yogurt in the quarter as well. This quarter, we had 1 month of sales and profit in our results from the recently divested U.S. yogurt business. We'll start to see normalization of our comp and incentive comp benefits in Q2. And obviously, the international trade expense timing benefits are online. So there is a bit of a transitory effect here, both on margin and profit growth as you think about how [indiscernible]

And as a follow-up, you called out the trade expense phasing in North America retail was about a point of drag in the first quarter.

Is that similar as we get into the second quarter, and then normalize as we get into the second half?

Yes. You have it largely right. I would expect it to be a big drag in Q1 -- in Q2 as we're comping last year where we had Q1 and Q2 was effectively no trade expense. So it was a benefit relative to the other quarters in last year. And modest headwind in Q3 last year, and a huge headwind in Q4. So we expect those comps to turn favorable as we step into Q3, modestly and then a pretty significant tailwind in Q4.

Our next question comes from Michael Lavery from Piper Sandler.

Can you touch on what categories or brands drove the household penetration gains? And maybe how broad that was? And how much you feel like was driven maybe by pricing adjustments versus innovation or other factors?

Thanks for the question. As you stated, we did see our household penetration grow overall for [indiscernible] the first time since fiscal '22, really encouraged by that result. In terms of where we saw penetration improvement, we saw it on bars, root snacks, on salty snacks, on our Cereal business. And we do believe that getting our price value, and again, this is about getting below key clicks on the shelf, making sure we have manageable gaps relative to the competition that was a driver of that penetration improvement. But also it's not a coincidence that where we had a great remarkability approach, where we had good advertising, really good new product innovation or product quality, price-back architecture, that is where we saw the best results.

We called out in the presentation, Cinnamon Toast Crunch is a really good example. Really good product news, great advertising. We have the price right on that business, and we gained pad dollar share and penetration. So again, we still have more work to do, but we believe that we are on the right track with these investments, and we're confident in what we're seeing so far.

Okay. That's helpful. And I just wanted to follow up on some of the comments in the prepared remarks around demand planning. I think it can be maybe an underappreciated challenge. But it sounds like you've got improvement there.

Can you maybe elaborate on kind of how that worked and what some of the benefits are? And it's maybe a little surprising the human touch seems unhelpful. Can you just kind of bring that to life a little bit?

So let me take that one a little bit, Michael. The -- I would start by saying, I mean, we have a phenomenal supply chain as you well know. I mean during COVID we showed that, we continue to show. We showed in the Q1 this year, whether it's productivity, or service, or low cost. I mean our supply chain is fantastic, and we've got a great marketing team, too.

And over time, our forecasting has been pretty good. It's just taken us a lot to get to an accurate forecast. And so what you see us doing now is that we're having -- we were using AI and leveraging technology to get to good forecasting much more efficiently. And the importance of that then is it frees up our marketing team to do better demand generation. And I think that's why you're seeing some of these better ideas that we're talking about right now. Because our [ market ] are having more time doing marketing than forecasting.

And then our supply chain people, they're not double checking numbers that people give and spending all their times and meetings looking at forecast. They're just trying to figure out [indiscernible] making the right stuff at the right time in the right place. And you see our waste elimination improve.

And so really what we wanted to highlight that it seems small, but it's actually quite large, and it's a great way for technology to enable a little bit better accuracy, but a lot more efficiency. And that frees up the talented people we have. We have a really talented team, really talented people to do what they do best. And that's what we wanted to highlight in this particular case.

Our next question comes from Alexia Howard from Bernstein.

Can I ask about your efforts on reformulation. You're obviously ahead of the game on the elimination of the artificial dyes, getting rid of those by next summer. But there are other state-level legislations that have been approved, for example, in Texas, I think there's something that's already been ratified by the governor. It's gone through, that's about 44 additive. So it's a broader list.

First of all, I guess, as you've gone through your remarkable efforts with some of these brands, are the ingredient list and additives coming up as concerns for some group of consumers? And is that something that you're working through the portfolio to actively drive out not just the dyes, but maybe other additives that people are concerned about?

Or are you going to wait until the regulations and the legislation settles, which could be a year or 2 down the line, and then you'll do it once everything is very, very clear? Just trying to get a sense for how aggressive you're going after that, or whether it's really not something beyond the artificial dyes that you're focused on at the moment?

Yes, Alexia, I would start by saying we're always -- we always do our best when we follow what the consumers are looking for. And that's kind of our North Star and why we have this remarkability framework. And as you know, 10 years ago, we took some certified colors out of tricks and that didn't work so well here in the U.S. By the way, it worked really well in Canada. And Canadian [indiscernible] didn't work as well here. And that's because consumers in the U.S. weren't quite ready for it yet.

10 years later, the reason why we made the commitments we have is that consumers are more ready for this. An increasing number of consumers don't want to certify colors and some of their food. And so that's why we look to remove those. And we have better technology now than we did 10 years ago. And we can get customers what they want. Whether it's the colors they want, or the shapes they want it, the texture, or what have you. And so that's why we're undertaking our efforts.

When it comes to the regulatory environment, I'll start with a couple of things. One is that, I mean, we've been around for 160 years, and now getting global federal and state regulation for more than a century. And so I have high confidence we can do that now. When it comes to things like colors, I mean, 98% of our [indiscernible] school offerings don't have certified colors now, and 85% of our retail doesn't. So we're talking about a relatively small sample.

What I will say without commenting on any particular state is that there are a lot of state regulations being brought up now. And I think there's a challenge in that. And it's a challenge really for consumers because there's a cost associated with trying to do something state by state, rather than a federal level. And ultimately, consumers will pay the cost for that. As well as confusion, how can something be good in one state and not good in another state?

And so the -- we've always been a believer working at a federal level, working with health and human services as we have been, working with the FDA and the USDA to work on federal legislation and regulation that really makes sense for consumers. And we believe that's the best approach that we have right now. And so we're confident we can navigate this environment. We're making really good changes, really good progress. And -- but I think there's a challenge for the whole industry with a state-by-state approach. And it's certainly not just our challenge. And ultimately, I think it's better if we can get to something that's consistent on a federal level.

Great. As a quick follow-up, you mentioned that the pace of innovation is stepping up, I think, 25%, I believe that was in North America Retail. Are you able to say what percentage of sales are now coming from new products introduced over the last year, or over the last 3 years? Where are you at in absolute terms on that front?

Yes, I'm glad you asked. Really, I'm really proud of the way our entire team is innovating. And we're at about -- we're roughly 5% of new products coming from new product innovation where we were at 3.5% a year ago. But I think there are a couple of important things that lie beyond that, which I want you to know.

First, it's not that we're introducing more things. Its that really that what we're introducing, we think, has our bigger and better ideas with more staying power, which is not only good for this year, but in years to come. And that's true in North America retail. When you look at Cheerios Protein, for example, some of the granolas that we are bringing to market. Some of the [indiscernible] fruit snacks that we're bringing to market, really good new product innovation. It's true in our pet food business, bringing fresh pet food to the market and investing behind that.

It's true in international, where I mean, look, we grew Haagen-Dazs retail double digits in China in the first quarter. And the reason we did that was because we introduced stick bars. And so now we're taking that all over China, and it's really working well. And in food service. We have -- we -- again, we picked up share in foodservice have continued great momentum there behind some biscuit innovation.

And so what I'm pleased with is not just one part of the company that's innovating better. We have all of the segments innovating better and by better, I mean I think bigger more on consumer trend ideas, and we're supporting those with investment. And so that's what's exciting to me.

Our next question comes from Megan Clapps from Morgan Stanley.

I have a quick follow-up and then another question for Kofi, if that's okay. So the first is just following up on some of the earlier line of questioning.

Jeff, I think you mentioned you don't need massive share gains to hit the guide. But based on some of the things I think Dana mentioned later, it sounds to me like maybe some category trends are softer than you expected. So could you just clarify how category performance has evolved thus far year-to-date relative to your initial expectations? And whether we need to see improvement in areas like cereal, for instance, to deliver on the guide?

And just related as well, since you brought it up, Jeff, can you maybe just expand a little bit on the GLP-1 comment in terms of what you're seeing in the data that you track?

Okay. I'm going to try to get to all your questions. You have a lot of good ones [indiscernible] I just forgot.

But I would say that the year so far has played out as we thought it would and the consumer environment is what we thought it would be. In terms of how our progress looks in [ Nielsen ], our top 10 -- our top 10 categories in North America retail are about a point better than what we expected. And so -- it's when you get beyond that like [ Flower ] and [ Betty Crocker ] desserts and things like that, where you see a little bit softer. And look for those key baking season starts in September. So we'll see when the weather gets colder.

But the -- but our top 10 are performing at or a little bit better, actually a little bit better than what we anticipated. So I would say broadly, consumer sentiment is what we anticipated. The growth in our categories is about what we anticipated. And certainly, our performance within those categories, growing share in our and foodservice and international holding that is kind of what we anticipated. So I would say so far so good as kind of as we expected, with the GLP-1s, there's been some impact on our categories but not significant yet.

I would expect GOP much and usage will continue to grow. Everything I read says that it will continue to grow. And -- and with that comes to reduced calories, [indiscernible] clearly, for those who are using GLP-1, but also there's opportunity because we know that people taking those medications. We know a couple of things.

One is that they are looking for more protein because people tend to lose muscle mass when they they're reducing their calories and they need more macro nutrients, things like fiber. And things like breakfast cereal are our high-end, [indiscernible] that's why [indiscernible] protein, I think, is doing so well. It's good in protein. It's high-end fiber. By the way, oats is also high in fiber. And so even though a macro trend that GLP-1 uses that we think will continue, and we'll put some macro pressure on some categories over time. There's also a lot of opportunity in that. And I want you to make sure that you hear that for us as well.

And -- and one of the things we're introducing a lot of new products that we think will meet this demand. So we feel good about that.

Great. That's super helpful. And then just a follow-up for Kofi as we think about pet phasing into the second quarter just because there seems to be a lot of puts and takes. Can you just help us understand a little bit what these -- how to frame these puts and takes? Just to keep in mind, there was lumpiness in 2Q last year. Wildernesses may be a bit softer. You also have the [ Freshpet ] launch. I also think maybe the shipment headwind was a bit bigger in the first quarter than you had talked about last quarter.

So just with all those things in mind, if you could just help us think about how to frame phasing in 2Q, that would be helpful.

Sure. I think it's fair to say we expected the shipment timing issue at Q4. It might be modestly larger than we expected. We're not expecting a change to the overall outlook for the year, and I'm not going to get in the business of making quarterly predictions on pet just because I've failed at that multiple times. There is some volatility quarter-to-quarter in that business just inherently in shipment timing.

I think broadly, you have the contours right. We will start to see a modest contribution in revenue as we ramp up behind shipments on [ Freshpet ]. I think we're expecting some modest improvement as we step into Q2 and then into the back half of the year.

Our last question will come from Peter Galbo from Bank of America.

Kofi, maybe just one clarification. I think you said based on the puts and takes on operating profit in the first half of this year would be down kind of similar to Q4. I think that lands Q2 operating profit down like 25-ish percent, but I just wanted to make sure that my math on that was correct.

Yes. I think your math largely works.

Okay. Super. And Jeff, maybe just a broader question, and this probably goes back to Andrew's first question. Dana spent a lot of time talking about getting below certain price clips, driving value. And I guess what we haven't really talked about is your competition, not so much on the shelf at retail, but the away-from-home channel is getting a lot sharper in terms of price points, in terms of trying to drive value in their messaging and even in the pricing that they're charging. Whether it's $5 boxes, $8 boxes.

Just -- is the industry, or is the retail packaged food industry adapting fast enough in your mind to be able to compete effectively against away from home that, again, seems to be much more focused on driving a value price point? And whether you've noticed just any share shift there that's become more pronounced as we've gotten just a plethora of kind of these offerings?

Yes. The -- as far as speaking for the -- I probably won't speak for the whole packaged food industry, but I would like us to go faster rather than slower. But I would say that the -- if I look at away-from-home eating, just the traffic has been pretty -- has been quite stable and despite all the efforts of quick-serve restaurants and all. The traffic has been stable over time. And if you look at it, what the trends that we see here that low- and middle-income consumers are -- traffic is declining in what we call the commercial channel, or restaurants, and high-income consumers, call it, $200,000 or more a year is growing. And so it nets out to flat.

And the challenge that, that particular portion of the business has with the value meals is that the inflation is growing faster than food at home. And quite a bit faster than food at home, driven by labor. And so even though you may see a lot of advertising about value deals and so forth, just note the traffic and commercial remains very flat. There is growth in the noncommercial channel, which is where General Mills over indexes in its food service business. And so we're very well positioned to capture the growth there. In the noncommercial. I mean things like K-12 schools and hospitality, and business, and industry where people are going back to work. And those channels are growing about 2% or so, and we're gaining share. And so any growth you would see would really be in that place, and we're very well positioned through our foodservice business to take advantage of that growth than we are, and that's one of the reasons why you see our food service business continue to perform well.

Okay, Julienne, I think we'll have to wrap it up there. Thanks, everyone, for the good questions and the good engagement. And the IR team is available all day for follow-ups. We look forward to talking to you next quarter. Thanks.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Perfect. Thanks so much. Good morning, everybody. I'm looking forward to kicking this off. Welcome to the 34th Annual Barclays Global Consumer Staples Conference. Given I just passed my 30-year anniversary at Lehman/Barclays, this conference even predates me, although increasingly, it seems not much else does. That said, it's truly awesome to see so many familiar faces once again, and we also welcome some of the new faces that have joined our Staples family this past year.

I'm Andrew Lazar and I cover the U.S. packaged food space here at Barclays. As usual, we've got a full complement of Barclays Global Staples coverage here, including Lauren Lieberman on U.S. Beverages and Household Personal Care; Warren Ackerman, European Food and HPC; Alex Sloane, European Ingredients; Patrick Folan, European Beauty; Ben Toyer, Americas Agribusiness and Fertilizers; Laurence Whyatt, European Beverages; Gaurav Jain, Global Tobacco; and of course, Rupert Trotter, Global Consumer Staples Industry specialist.

As I mentioned, this conference is on its 34th year. I won't try to guess the number of inflationary or emerging markets growth or commodity cycles that we've discussed over those years. But surely, it's the enduring nature of the staples industry that has allowed our conference to remain as relevant as it has, keeping its annual placeholder on everyone's calendars, but also to grow as it has. This is a team effort, and we appreciate all the hard work that our management teams have put in to make these on-stage sessions and meetings possible year after year. The same goes for our incredible Barclays events team.

So we hope everyone is well rested and well caffeinated as we're pleased to host another year with a great lineup and really look forward to all the listening, questioning and thinking that is to come over the next few days. In keeping with tradition, our entire team will be easy to find over the next 2 nights at the hotel bar -- lobby bar Fellini. Also tomorrow, once the content concludes for the day, we'll be hosting a reception at Matria, private dining room and terrace on the first floor of the hotel. And on Thursday at the close of the conference, Boston Beer will host their annual reception.

So plenty of opportunities outside of the more formal conference sessions to catch up, compare notes and engage in the fun and healthy debate that makes what we do so much fun. And as always, we appreciate any feedback about what you like about the conference and what can be improved going forward.

And with that, I'd like to introduce our first fireside chat with the management of General Mills. With us today are CFO, Kofi Bruce; and Dana McNabb, President of both the North America Retail and Pet segments. Welcome to you both, and thanks for joining us today.

I'm going to hand it over to Kofi first for just a couple of opening remarks, and then we'll jump into sort of the Q&A. Over to you, Kofi.

All right. Thank you, Andrew, and thank you, Barclays team for hosting this event. We're pleased to kick off. It is obviously an interesting time in packaged food despite valuations. As I take note of where we've been, we've seen 5 years of really strong growth through fiscal '23, part of which was punctuated by once-in-50-year inflation. And so where we encounter the consumer now over the past 2 years is a consumer who is feeling more constrained and a lot more value focused. So as we think about our fiscal '26 priorities, we remain laser-focused on organic sales growth.

With the overriding belief that in the long term, the most sustainable way to drive value in packaged food and to create value for shareholders is through organic sales growth. It is the most highly correlated driver of long-term value creation in our space. And when aided with modest portfolio shaping, leads to long-term value accretion. So our focus, as we step into '26 is restarting volume-driven organic sales growth in our North America Retail business, driving dollar share growth and dollar growth in our pet business. And creating the resources and flexibility to fund that growth.

Now part of that requires us addressing the consumers' needs on value. So we are investing to make sure that our prices are accessible, that we address price gaps to private label and get them more in a sustainable range, address price cliffs places. But that is not the sufficient work necessary to restart growth. We also fundamentally are seeing a step change in investment in innovation. We have product news on all 10 of our major categories in North America retail, significant news coming in our pet business. And we're doing the work underneath our remarkable experience framework on the core execution of demand driving which fundamentally is the terrain, which will differentiate winners and losers in the environment ahead.

So where do we find ourselves we are approaching the end of -- we will be reporting earnings here at the end of our Q1 here in a few weeks. While I can't characterize those, I will say, if you look at our Nielsen-measured results, we are seeing pound share growth in 8 of our 10 categories in North America retail. 7 of our 10 key categories have seen improvement since Q4 in pounds. And those signs give us confidence the work we're doing is paying off. In addition, we saw real good progress on some of the price correction and price investment we made as well as investment in marketing ideas and halfway through our last fiscal year. And in combination with the progress we're seeing here in this quarter on our measured results, we reaffirmed our guidance for the year.

So with that, I'll turn it back over to you, Andrew.

Perfect. Thanks, Kofi. So I know many in the audience are going to be heavily focused obviously on the current environment, and we'll have plenty of time to talk about that. I want to take a step back a bit first, talk about your long-term goals. You've mentioned in the past you believe holding share across your current mix of categories and geographies. We'll generate organic net scales growth squarely in the middle of your 2% to 3% long-term target. I guess what gives you the confidence in the ability to grow in line with that top line algorithm moving forward and what's still obviously a very dynamic operating environment in the past few years? And I guess, how is that confidence different today than maybe where it was a few years ago. based on what we've added in terms of capabilities, portfolio changes and brand support?

Well, good morning, Andrew, and thanks to your team for hosting us today. I would say our confidence in being able to get to that 2% to 3% growth rate stems from 3 things. First, it's the work that we've done to reshape our portfolio towards more growth orientation. Second, it's the work that we've done to amplify our brand focus through the remarkable experience framework. And third, it's really investing in capabilities to secure our future, and I'll talk a little bit about each one of those. I'd say on portfolio shaping, we have made tremendous progress over the last 8 years. We've turned over 30% of sales through acquisitions and divestitures.

You know that we have acquired into the fast-growing Pet segment with Blue Buffalo, Edgard & Cooper, Whitebridge, and we've divested businesses like yogurt and our side meals business that were dilutive to our ability to grow. And the result of all of that work is that we've added a point of growth orientation to our portfolio, which gives us confidence that we can get back to the 2% to 3%. Even though at this time, candidly, our categories aren't where they need to be. And I know we'll talk about that later in this discussion.

So reshaping the portfolio towards more growth orientation, that is working for us. Then we're focused on amplifying our brand building through what we call the remarkable experience for remark. We want to drive category growth and capture our fair share of that growth. And I am convinced that we can hold or grow share in our categories by focusing on remarkability.

And what we've done is we've benchmarked our peers, P&G being one of them, and develop what we call the remarkable experience framework. And it's really simple. We measure how our brands perform against the competition across 5 key measures: product quality, packaging, omnichannel execution, communications and of course, price value. And what we know in using this framework is brands that consistently beat the competition in 3 or 4 of those measures will deliver sustainable penetration and share growth over time. And so we have work to do. When we measured against the competition, we weren't winning in enough areas, and that's been a place we've been focusing on to get back to organic growth.

The last area that we are investing in is strengthening our capabilities. And I am convinced that those companies that invest in a world-class digital capability will be winning in this environment going forward. And that's not investing in digital just to say it is a buzzword for digital sake. It is about really strengthening our digital foundations and using those foundations across the value chain. So supply chain, marketing, strategic revenue management, our business processes.

We've invested significantly in digital since about 2019, and we're in a place now where we're really starting to see some return from that investment. So I'll give you a few examples. Where we've been able to deploy AI and digital across our supply chain, we've been able to increase our cost savings from HMM, our holistic margin management program to 5% of cost of goods. That's up from 4% historically. We've invested to have a leading position in e-commerce. And when I look at our North America retail business right now, our e-commerce sales are about 18% of our total sales. That's up from 4% pre-pandemic.

And then, of course, AI and digital innovation is critical in terms of how you market, having better insights in order to target consumers, get to personalized experience, have social-first marketing where the consumers are talking about our brands for us. I think the combination of this focus is going to allow us to get at growth -- both growth and efficiencies better than others. And so when I think about portfolio shaping, I think about our iconic brands, our capabilities that we're developing are great team. I think we're poised to be one of the winners going forward and get back to that 2% to 3% growth.

Sticking with the industry environment for a moment. I think it's pretty well understood at this point, right? The industry volume recovery has been both longer and more expensive, I think, than was initially expected. And your fiscal '26 outlook, outlook is consistent with this theme. I guess, first off, I know this is a harder question to answer, but to what do you attribute that weakness from an industry volume perspective? How do you compartmentalize to what extent, if at all, right, some of this has been driven by more structural factors versus things that are maybe either more one-off or cyclical in nature?

Yes. So I think first, let's start with just giving some context on our categories. If I look at our categories, our volume is flat. We have a little bit of dollar growth due to price mix, and that's below expectations for the long term. If I look at volume growth being flat, we expect in our category volume growth to be about 0.5% and keep in line with population growth. So we have work to do to improve them, but we're not far off.

When I think about the industry and what's happened to volume, I think we have to acknowledge the fact that we had a hyperinflation period. And when you look at the fact that if we were here talking 2 years ago in 2023, we were talking about the fact that commodities were up 30%. We increased prices 25% and but we're only seeing volumes decline 5%. We kept talking about why. And I think in retrospect, what we've seen is that the consumer is struggling with value, and we're starting to see those volumes unwind, because they're ingesting to that hyperinflation period.

Now there are a couple of other things that are impacting our industry. I'd say, whenever the consumer is struggling with value, we do see a shift back to cooking from scratch. So we are seeing some of the perimeter protein and vegetables increase. We're seeing beans and rice increase, broth because you're making meals from home. And we're seeing people make those meals last longer than just one occasion. They're typically stretching it to 3 meals.

And then it also would be remiss of me not to mention GLP-1. We know 12% of adult consumers are on GLP-1s. We do think that will have an impact on food. But really, at the end of the day, we think the biggest driver of the volumes slowing down is the fact the consumer is still adjusting to inflation and is in a value-conscious period. Now that doesn't mean that there isn't growth everywhere, though. So I want to really talk about the fact that in almost all of our categories, we see a couple of benefit areas that are driving growth.

So we're seeing better for you, focus on protein. That is growing really fast. Bold flavors, if you can bring more flavor intensity to your products, that's growing, and it's tough out there for consumers. So anything that's nostalgic and brings a little bit of comfort, that's growing. So what you'll see us focusing on is every innovation we're bringing to the marketplace will deliver against one of those benefit areas because there is growth to get.

Dunkaroos is my -- go-to. We're talking nostalgia. You stated your main objective this year or this fiscal year is to restore volume-driven organic sales growth. However, taking a complement with your '26 guidance, which looks for an operating profit decline of 10% to 15%. One of my question, whether you're aiming to sort of drive volume at any cost, so to speak, or instead investing responsibly in areas where you feel the consumer is sort of ready to be engaged. I guess can you remind investors of some of the puts and takes that are driving that expected decline in profitability? I mean, which of those drivers you view is more temporary versus maybe somewhat more structural?

Sure, sure. And I appreciate the question and I always have the opportunity to put that in context. I think the first important thing to note is we have some unusual factors weighing on this year's profitability. Investment is a much smaller portion of that on a net basis. Our divestiture of Yoplait, which we just completed the U.S. portion of that divestiture in the end of June. It was about a 5-point drag on operating profit. In addition, we have a 3 percentage point drag from the reset of our incentive compensation off of last year's much lower-than-planned performance.

So those 2 factors will be more transitory in nature. Included in that 5% for Yoplait is about half of the stranded costs, which will not come out this year, which I'd expect to work out in the following year. And then kind of as you work through it, that leaves you kind of a low to mid-single-digit decline in profit taking out those factors, which includes a significant amount of cost savings as a partial offset to fund that. $100 million at a minimum of transformation initiatives, in addition to 5% industry-leading cost of goods sold HMM.

So we are, to your point, being responsible, measured and targeted. And at the same time, recognizing the environment realistic about the level of reinvestment needed to restart organic sales growth. Over the long term, I would expect that restarting our organic sales growth led by volume with a stable top line, will bring leverage and stability back into the business and also help us put ourselves back in a position to start clawing back margin.

Great. Kofi, sticking with you for a minute, given there are quite a few moving parts that you'd noted on your fiscal fourth quarter call, I think it might be helpful, as a reminder, maybe for the audience. If you could just remind everyone, how you're thinking about the phasing of this fiscal year?

Yes. So on our fourth quarter call, you may recall, we outlined that we expected to see volume improve ahead of dollars largely reflecting the fact that in addition to investments we've made in reducing prices last year, we were making additional investments on sort of up to 2/3 of our North America retail portfolio. There's a phasing impact as we work our way through that the -- lapping the investment from last year, which, as we recognize the trade last year, late at the end of last year, we will see that be a drag on the front part of the year, first half of our year on the top line as well as the bottom line. And then I would expect, as you work your way into the second half of the year and in particular towards year-end, we would see the impact of the 53rd week, lapping that trade phasing impact, which we saw -- the bulk of which we saw in Q4 really boosting the tail end of our second half. So those are kind of the big drivers.

I guess, what do you view some of the more significant risks or opportunities, right, that you see that would allow General Mills to either outperform or on the other hand, underperform where your full year guidance is, which, at the midpoint, calls for flat year-over-year organic sales?

Yes. I appreciate that. I would put at the top of that list volume. That is the single biggest probably determinator between the low end and the top end of our range. Obviously, in this environment, we'd expect the investments we're making to pay off, but we're also measured about the fact that some of those may take a little bit more time to realize or the risk and the consumer response might be a little slower than we projected. So that would be kind of a driver number 1.

Second area, I put in a category, we see stability in our overall core inflation. Tariffs, as a reminder, we flagged as an additional kind of 1% to 2% drag on top of the 3% core inflation. And there's been a little bit of volatility at the risk of maybe understating in the tariff picture. So our expectation contained within our guidance is that we have enough net levers to kind of offset a portion of that. But to the extent that we can't offset all of that, that would provide some modest additional risk and volatility that might push us to the lower end of our range.

So those are kind of the core drivers. We're feeling really good about our HMM delivery at 5%. We likewise see really good line of sight to the $100 million of transformation-related benefits. So that part of the guidance, we feel very, very confident about. It's those other factors that drove the width a little wider than we might normally give guidance.

For the better part of the past year or so, you've been very open about the fact that you've seen categories pretty close in your key North America retail segment to where you'd want them to be and have stabilized on volume. But your own level of competitiveness in terms of market share has not been up to par. I guess what's been the reason for the more challenging competitiveness this past year outside of -- and outside of simply price investments? What else are you doing to improve the competitiveness and better deliver the value that the consumer is looking for?

Well, you're right, we weren't competitive enough last year. And I think the reason why it really comes back to this remarkable experience framework where we simply weren't good enough relative to the competition in many of our categories. And so we've really focused on that. We're making a meaningful step change in our investment in product quality, in advertising, in everything that we're doing really across the framework. And so yes, price investment was one of those things.

What we saw that we had to do was really look at our shelf prices and we had to adjust our gaps relative to competition. And in most cases, we had to look at cliffs, where we exceeded key cliffs, we had to get back under that. We invested in about 1/3 of our portfolio price value in fiscal 2025. And our goal is to have about 2/3 of our portfolio covered. We'll have that by the end of our Q2.

So we've made those investments. But as Kofi said multiple times, price just isn't enough. It's not just about price. and we are investing in all the other areas of the remarkable experience framework. So let's talk first about product quality. Every single one of our top 10 categories will have product news this year. We will have Pillsbury biscuits that bake up bigger and provide more value. We have more intense flavors on our top 3 brands per check. We have 35% more chicken in our Old El Paso soups. So news that we know will resonate with consumers. We're making a meaningful step change in our new products.

So our new product sales will be up 25% this year. These are products like Cheerios Protein is a runaway hit, Pitmaster soups that are high protein, tastes great barbecue flavored, Mott's fruit filled bars, we're launching a Totino's Ultimate pizza that's fantastic. So really stepping up investment there. Price pack architecture is very important in our environment right now. We're going to have double the price pack architecture we had in the plan last year. And our seasonals are up 50%.

Because what we know is parents just won't give up on fun and nostalgia for their kids during the holidays. So 50% more seasonal. We've increased our advertising across all of our biggest businesses and refreshed our campaigns. We have stronger in-store events, and we keep investing to maintain our lead in e-commerce. So what I hope you're hearing from us is that we really believe that focusing on being better than the competition is the way to get back to organic sales growth. Where we did this in the back half of our last fiscal year, we saw a strong return on investment. And the early part of our F '26 in Nielsen is proving out the way we thought, and so we'll continue this focus.

The big news on the last earnings call was certainly about your planned entry into the Fresh pet food category. We got a number of questions here, hopefully you'll indulge us since that was a hot topic. But obviously, preceding this launch, you dipped your feet into the Fresh category with some testing about 2 years ago. I guess, what were some of the key learnings from those tests that you're sort of addressing or that have helped inform how you address this launch this time around?

You are right. There is a lot of excitement about our Fresh launch. I do feel obligated to mention that returning our core $2.5 billion business back to growth is also a priority in addition to launching Fresh. So I hope we will talk about that later on in this discussion. But you're right, we did do a test in Fresh 2 years ago, and we learned a lot. What we learned is that the Blue Buffalo brand has a right to win in Fresh and can succeed there. And we learned that pet parents really like our products. We had great quality products.

And we also had some challenges that we learned from. You need to be able to build trial and awareness and it's hard to do that when you don't have scale. And then when you don't have that awareness, you don't have scale, it's hard to get efficiencies in your supply chain. So we did the test to get real-world learnings and we did get that, and we've used it in order to strengthen our proposition that we are launching now coming in Q2.

Great. In the past, I know General Mills have been somewhat hesitant to jump into the Fresh arena in any sort of meaningful way. And I think the company has been uncertain about what it would take to compete in the space profitably. What level of investment might be required in terms of capital and marketing to achieve the proper scale, all in light of other uses of capital in categories in which the company could likely generate a greater level of profit dollars, much more quickly. I guess what's changed such that now is the right time to make this leap?

Well, I think first and foremost, the Fresh segment has continued to grow double digits. It's a $3 billion category right now. We project that to be $10 billion within the next 10 years. And so obviously, we want to participate in that growth. We think Blue Buffalo has a right to win and capture our fair share of that growth. So it's an exciting segment. As we've talked about, we really believe the Blue Buffalo brand has a right to win in this category. It is the most loved and trusted natural pet food brand in the U.S.

We know humanization and premiumization of pet is going to continue, and we know Blue Buffalo has a right to win in this segment. And then we also think it's going to really help our kibble business. What we know about consumers who use Fresh today is they also use it with kibble, 80% use it with kibble. They either mix it or they use it in a topper. And then half of those consumers are looking -- they'd like to buy both the Fresh and the kibble from the same brand. So when we put all those factors together, we think the time is now for us to launch into this segment.

I think the big difference between some of the testing you've done in the past, as you mentioned, and the launch this time around is the scale that you're coming to market with. Can you elaborate a bit about what that's going to look like in terms of product variety, retailer and geographic breadth and the level of investment that you'll be putting behind in support of the launch?

Well, you're right. We're launching in this segment to be a real competitor, and that means scale. And so this is a national launch for us. It's not a test. We have secured distribution in food, drug and mass retailers across the country. We plan to be in about 5,000 coolers by the end of our Q2, and then we'll continue to build distribution into calendar year 2026. But it's not just distribution that's different in terms of scale this year. If I look at the products that we're bringing, we're bringing in a better breadth of products. We're going to have tubs and we're going to have roles that we bring in. And we have a great product pipeline that's going to be coming over the long term.

We are going to have very strong in-store activation, leveraging the Blue Buffalo equity and blocking at shelf and having really good in-store presence. And we're going to invest in national advertising for the launch at the start of Q2. So we really believe that we have improved this proposition. We are coming with scale and that we can have success. We have just started to produce the product. Kofi and I saw products a couple of weeks ago. They're fantastic. We're starting to install coolers now, and we'll start to ship nationally, and we're getting great reception from retailers and pet parents about the product.

And how will the distribution of coolers work? Will you own the coolers in stores? Or would the retailers own the coolers and allocate space as they see appropriate or will it sort of be a hybrid approach depending on the customer?

I mean it really depends on the retailer. So we have been partnering with each retailer to come up with solutions that meet what their long-term vision is for this Pet segment. So in some cases, we own and install the coolers and in others, the retailers own and install the coolers and we'll be in their coolers. So it really depends.

Yes. I guess one concern around the launch into Fresh, just given the breadth of the launch, right, and the fact that this is a new product type that might require different manufacturing processes from what you currently do, and your ability to mass produce the product consistently meet demand without a hitch. How are you ensuring this does not become an issue? And how much of the fresh product is produced internally versus through co-packers, I guess, both initially and then your expectation further out?

Well, we have a tremendous team. We have really strong internal expertise combined with strong external strategic partnerships for supply chain. And I think what we can forget sometimes when we talk about pet is that General Mills has expertise in refrigerated with all of the -- these big businesses we have like yogurt and Pillsbury, and so we're able to leverage that expertise in this segment really well. Initially, when we launch, we're going to be using external supply chain, strategic partnerships there in order to make the product, and we'll evaluate that over time as we start to get to scale.

Two more on Fresh and then we're going to get to a broader path, I promise. Given a lot of the investment behind the launch is going to be incorporated in the P&L this fiscal year, and I know it's a multiyear investment time horizon, whereas the payoff might take certainly a bit longer to be reflected. How should we think about the impact this is could have on Pet segment profitability closer in versus how accretive or dilutive you'd expect the Fresh product to be to the Pet segment profitability over a longer period of time?

Sure, sure. I'll take that. And as you think about it, I would expect a couple of years of investment as we build to national scale. Part of our assessment post our first test was what does the business model look like at scale? And we do see a line of sight on a national scale business to profitability and profit margins that would be at least in line with the company average and potentially over time may be higher.

Got it. I know we're still in the very sort of preliminary stages of the launch. But I'm wondering what success would look like from your vantage point in this business? What metrics will we be tracking most closely over the next, call it, year or 2 that would indicate whether things are going according to plan? And then if we were to zoom 5 years out at a high level, what do you hope to have accomplished by then within the Fresh subsegment?

So as I think about our Fresh business, we really believe that the initial metrics that we're going to focus on are trial, they're repeat and their penetration. And so simply put the more households that we can bring into this Blue Buffalo brand, the more we'll have confidence in the scale and the profitability of this business. Over the long term, what I expect is that we are a business that can help drive this segment growth and that we'll capture our fair share of that segment that will have a really strong share position. And we believe that this can help grow our dry kibble business. So we expect over time that as Fresh grows, so will drive kibble. And we'll have a really good position in dry pet feeding, in wet pet feeding and in Fresh.

Outside of the launch into Fresh, there's obviously been a lot going on in your existing pet portfolio over the last couple of years. With Pet segment organic sales having declined about, I think, 4% in fiscal '24 and then slightly up in fiscal '25. Dana, this is obviously a part of the business that you've more recently been named the Group President of, maybe you can share your initial perspective on the current shape of the segment, where you might see some opportunities for improvement, and I guess how you'd frame the long-term growth potential of the segment, how it might look in the years ahead?

Well, I think that there's huge growth potential and I am really thrilled to be part of this team. I think, Andrew, as you rightly pointed out, we did return our pet business to moderate growth last year. And that was largely behind our life protection formula business, where we regained share behind focusing on our ingredient superiority messaging. But moderate sales growth is not the goal for this business. We need pet to be leading growth for General Mills, and we expect to get this back to mid-single-digit growth. And so where we're focused, if we look at our business now, we're seeing that our cat business behind Tastefuls is growing really well. We're seeing life protection formula continues to perform the way it did last year. And we've seen our Trix business start to inflect in growth moderately.

The 2 areas that we have to improve are our Wilderness business, and also how we're performing in Pet Specialty. And so to bend the curve on those 2 businesses, it's really about focusing on superiority, like I have been talking about. We've got meaningful product news coming into the marketplace. We're increasing our advertising, and we're going to improve our in-store execution.

And then in addition to the Fresh accelerator, we have a couple of other accelerators that we're excited about. So as you know, we've acquired Whitebridge, the Tiki brand in cat, that is wet cat food, that is growing double digits. And then we also acquired the super premium brand, Edgard & Cooper in Europe, and we're going to bring that to the United States in an exclusive partnership with PetSmart in order to strengthen in the pet specialty channel. So I think the focus on the core business and news that is relevant to consumers in addition to these accelerators will help us get back to that mid-single-digit growth, and I'm confident in what the team is working on.

On productivity, you've stated that you have good visibility of delivering another year of 5% HMM as a percent of COGS in '26, which is higher than your 4% long-term trend. You recently launched a global transformation initiative that's expected to generate an incremental $100 million in cost saves on top of that. I think for those of us that have covered the industry for a longer period of time, these types of figures sometimes bring back concerns around the potential risk that overly aggressive cost saves can cut into demand-building efforts or worse yet quality. Can you maybe shed some light around what sort of cost savings initiatives you're pursuing with these efforts? And how you ensure, right, that the brands are giving the proper support?

Yes. Let me start first with the recognition of what's at the core of our HMM discipline. This is a capability in the organization built around the idea of eliminating waste in places that don't impact the consumer experience, right? So that is the first and inviable rule of how we seek our productivity through HMM. The key thing is, as I look at kind of my 16-year tenure with the company, for most of that period, we've been asked kind of are you going to run out of orchards to pluck new ideas and won't you have to start degrading product to find them? And the reality is the discipline and the capability built around continuous improvement has led us to find 4% year-over-year.

Digital and data investment has actually allowed us to accelerate the past 2 years and onto our third year in the ways that we find waste. We've been able to optimize production, optimize our network and placement within our network through AI-enabled tools in ways that none of that impacts the consumer experience and with the product.

And then more importantly, you asked a little bit about our cost savings initiative. That is really more focused on -- a big chunk of that is focused on end-to-end processes, things that impact the way we work behind our functions and how we connect them up with the business. And all of that is done with a focus on ensuring that we free up resources to invest back into product, into messaging, into promotion and all the things that fundamentally are going to differentiate winners from losers in this environment.

Okay. Turning to capital allocation. You finished fiscal '25 a bit above your long-term leverage target of 3x, but we've seen some increased M&A activity in the space of late. How are you thinking about prospective M&A moving forward? Are there certain categories or geographies that appeal to you more so than others? And are you more inclined to do more bolt-ons? Or are you more open to more transformative deals?

Well, sure. I will first give the caveat I always give, which is I would never rule anything out, but I think if you look at our always on portfolio capability, we have generally been doing M&A transactions in the range of $1 billion to $2 billion, mostly managing the leverage impact of that by pulling back a little on share repurchase to allow leverage to reduce over a relatively short period of time. That's actually one of the goals we have this year, we would expect we've already deployed some portion of the proceeds from our Yoplait divestiture. In fact, most of the proceeds from our Yoplait divestiture towards debt repayment in order to bring leverage down.

So we do see the balance sheet as a source of strategic flexibility. I can't get too specific about categories other than to say, if you look at kind of where the focus has been, we've -- we found growth, a significant amount of growth opportunity within Pet and the expansion of that platform. We've continued to look at opportunities around our foodservice perimeter. And our job at the end of the day is to reshape the company's growth exposure.

Over the 7-plus years since we acquired Blue Buffalo, we've taken a growth exposure, meaning if we grow in line with the long-term projections of our categories from about 1% to the 2% to 3% that Dana referenced earlier through -- as a result of reshaping about 30% of our sales. So this, we view as an always-on capability. This is an environment where we're absolutely not turning it off. But at the same time, we're hyper focused on ensuring that we drive organic sales growth improvement on the core.

Great. Okay. All right. I think we're out of time here in the fire side. It's a good point to close it out here. Please join us over in the breakout. And join me in thanking Dana and Kofi for being here today. Thank you.

Thank you.

Thank you.

Good morning, and welcome to General Mills' Fourth Quarter Fiscal 2025 Earnings Conference Call. [Operator Instructions] 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 Corporate Finance. Please go ahead.

Thank you, Julienne, and good morning to everyone. Thanks for joining us today for our Q&A session on our fourth quarter fiscal '25 results. I hope everyone had time to review our press release, listen to our prepared remarks and view our presentation materials, which we made available this morning on our Investor Relations website.

Please note that in this morning's Q&A session, we may make forward-looking statements that are based on management's current views and assumptions. 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 today with Jeff Harmening, our Chairman and CEO; Kofi Bruce, our CFO; and Dana McNabb, Group President of North America Retail and North America Pet.

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

Yes. Thanks, Jeff. And I thought I'd start this morning, there's a lot going on up and down our P&L within our business and then certainly a lot going on in the broader world. So I thought I'd just take a couple of minutes to summarize what we're trying to accomplish.

The first and most important thing is really returning to volume growth, specifically in NAR, and we're really encouraged by what we've seen. We started to invest in value in Q3 of last year, with Pillsbury in those -- top by really good advertising. And we like the results of that so much that we decided that we'd expand the value of investments we made in soup and cereal and fruit snacks in the fourth quarter.

And we saw the results there that we expected. And so as we go into this year, we're kind of just continuing the formula that we had in the fourth quarter, which is we said to expand some of the value investments on targeted businesses that we saw, but also really importantly, backing that up by a significant consumer news.

In fact, I think our new product news and our core renovation news is the best that I have seen since I've been a CEO. And we use our remarkable experience framework. We talked a lot about these in our prepared remarks. Certainly, our launch into fresh pet food, all the protein innovation we've seen in our portfolio, renovating Haagen-Dazs stick bars and so forth gives us confidence that we can get our business back to the kind of growth we're looking for.

Importantly, as we're doing all this work in NAR, we did see share growth in our internal businesses this past year as well as foodservice and health care and pet. And so that gives us a lot of confidence. We're backing up all of this investment with record levels of holistic margin management and also productivity initiatives. So we're not sitting still on that front.

But we know that it's an investment year, but we're very confident that these investments will pay off given what we've seen over the last couple of quarters.

So with that, let's open the floor to questions.

Great. Julienne, you can go ahead.

[Operator Instructions] Our first question comes from Kenneth Goldman from JPMorgan.

It's certainly exciting to see Blue go national from a refrigerated standpoint. One of the things you had talked about previously in the past, to paraphrase is you were always, I think, confident in the revenue opportunity. It was a little more on the margin and cash story that was less tested.

So I'm trying to get a better sense, if possible, if something has changed or you've learned a little bit more about the margin potential there. And then as the corollary to that, just trying to get a little bit of sense for your merchandising strategy for that, just given the obviously limited shelf space for that particular category.

Yes. So let me talk a little bit about this is, Jeff. Let me talk a little bit about the past. And Dana, if you have any follow-on comments to follow on a little bit about our marketing plans. But the -- we're very excited about this launch, this big national launch. We learned a couple of important things within our last test market. One was that the Blue Buffalo brand really resonated.

The second, we can make great products. So our repeat rates were really good. I mean, we had dogs standing on in front of refrigerators because they were so excited to eat this stuff. So we know that, that works.

What we didn't -- because we launched regionally, we really didn't have the scale to market the way we need it to, to generate trial. And so as we go into this national launch, this gives us the opportunity to launch at scale.

You asked about the financials. We have learned a lot, and it's been many years since we tried that test. And we've actually been studying the market ever since. And one of the things we've grown quite a bit more comfortable with is that, over time, I mean, this investment will take a couple of years and generating trial. That's the most important job to do.

But having done that and achieve this scale, we are confident that we can build a profitable and growing business. If we weren't, we wouldn't get involved in this endeavor. But it will take a little bit of investment, but we believe that we have the right activities to do it.

Dana, do you want to give any insights into that?

Yes. Well, as you said, the learning really helped us to build a stronger consumer proposition, and we really think that we have a path to attractive financial model for a fresh business at scale.

What we are coming with is launching Love Made Fresh nationally. It will be in all 50 states. We have a wide variety of formats and flavors to drive appeal, and these formats have been designed for maximum flexibility. And why that's important is we know that 80% of pet parent use Fresh. They use it with other food formats. So they'll top it, they'll mix it. They'll sometimes use it our own.

And then 55% of those users, they want to use kibble and fresh from the same brand. So we're really confident that Blue Buffalo has the right to win here, that we've got a unique proposition. As Jeff said, we have improved our go-to-market approach, and we're committed to investing in building quality trial and awareness.

We have had really strong reception from retailers. And as we come to market, we're going to be the biggest pet brand that's across dry, across wet, treats and fresh. So we're still early days, but we're excited to share more about this launch as we get closer to the date.

Our next question comes from Andrew Lazar from Barclays.

Great. Jeff, I think the level of reinvestment plan for fiscal '26 is certainly deeper, right, than most than anticipated. And I understand the organic top line growth priority and the investment behind fresh. My question is, how do you ensure that the margin profile that comes with this reinvestment is being done in a sort of a responsible way, rather than giving up too much margin that may be tougher to ultimately rebuild?

I guess, are there certain aspects of the reinvestment that maybe you see as one-off or temporary in nature that give you confidence that you can rebuild this margin in a reasonable time frame versus being maybe at a structurally lower level sort of going forward, if you will?

Sure. Andrew, this is Kofi, and thanks for the question. Let me give you just a few thoughts. I think we see a few of the factors. There's certainly a lot going on underneath the hood, and we provided -- firm on that detail in the prepared remarks.

But underneath the hood, there are a couple of factors that we would see as maybe more temporary in nature. First, as Jeff alluded to, the fresh investment, well, a multiyear investment, we would expect that once we build scale and we'll be at a point of profitability and return on that investment.

Second, as we think about the nature of tariffs, we expect to be able to mitigate some of the effects of tariffs, but not all within the year. So that will put a little bit of drag from a timing perspective. But again, not something that we see as structural necessarily long term.

And then third, just a reminder that on the divestiture of Yoplait, we expect there to be a little bit of a stranded cost drag as we are getting at some costs and eliminating some of those costs this year, but we'll have a tail end of fiscal '27.

So those are the factors that I think are important to take in, even as you measure what is an important and significant investment behind getting growth restarted.

Our next question comes from Peter Galbo from Bank of America.

Maybe just a quick clarification and then a question. Kofi, I think on Pet specifically in Q4, you talked about the inventory build at retail that you're expecting to reverse. So is that a full reversal in Q1? I just want to kind of understand the magnitude there.

And then Jeff, like, there's been obviously a lot of lumpiness, I think, in the reported figures on Pet. So maybe you can just give us a broader sense from your prepared remarks on just the state of underlying Pet and how you're thinking about the different verticals within that, just, again, given some of the lumpiness that we've seen quarter-to-quarter.

Yes. Thanks for the question. You asked Kofi the first one and me the second, but I'm going to take one for the team here and answer both of those.

The -- as we look at inventory levels, first, our inventory levels in Pet are in good place, kind of broadly speaking. As we look throughout all of last year, there was relatively any -- very little movement as you look across here in our levels of inventory at retail for our Pet food business.

Our Pet food business since we bought it has really had a lot more lumpiness, as your term, and the levels of retail inventory, and that's really largely due to the fact that it has a high proportion of e-commerce sales, which tend to be more volatile than to things going through grocery stores and mass merchants and so forth.

And so I would expect that, that the lumpiness quarter-to-quarter will continue. And to the extent, we will reverse in the next quarter or not, maybe. And we just want to be transparent about last quarter and that we saw 3 points of inventory build last quarter as we head into this quarter and whether that will dissipate at the end of this quarter or not, we'll see.

One thing I have decided to do is to not predict what's going to happen with Pet inventory from quarter-to-quarter, having been fooled a couple of times. So it's a fair question, but I want you to know there's -- our inventory is in a good place, both on our retail business, the human food business and our pet food business. And there's always going to be some level of variability as we go quarter-to-quarter.

And just anything on the underlying Pet kind of performance, how you're...

Yes, sorry. So I get so excited about that answer. Yes. The -- what -- I'm really excited -- I'm really encouraged that we got our Pet business back to stability. And we grew it a little bit this past year, and our share held. And some of the things we've done have really worked well, like the advertising on life protection formulas work well.

Our cat business is back to mid-single-digit growth. And the cat population is growing, so that's important. We've integrated Teeki Cat effectively, and that's growing well. Edgard and Cooper is growing well in Europe on bringing back that to the U.S.

So we have a lot of things that are working really well. I think, pointed in the right direction, our marketing is quite good in the Pet food business now.

There's some things we still have to work on. Wilderness improved, but it's not all the way back to bright. And certainly, our Treats business would be the same. But I like the direction of travel, of our Food business, even without this launch of fresh pet food. And it's important because our goal this year is to grow the core of our Blue Buffalo business and add this new fresh launch on top of that.

And we're encouraged by what we see. There's still more work to do. But we've gone from a business that had declined in the prior year to one that we grew a little bit, and now we're looking to build on the successes and continue to work on the things that aren't working exactly the way that we had thought.

Our next question comes from Peter Grom from UBS.

I was just hoping to get an understanding on just kind of the organic revenue phasing for the year, just in the context of the down 1% to plus 1%, and kind of starting off, I think, in kind of this down 3% range. So just curious how you're thinking about the phasing of growth as we move through the year.

And I guess, specifically, do you expect to see a return to growth at some point in time? And then just related in the prepared remarks, you outlined an expectation for category growth to be similar. And not to get too specific, are you simply assuming what we're seeing today continues? Or do you expect to see some sequential improvement, but where you win for the year ultimately is similar to what we saw in '25?

Yes. So I think it's important to note that as we exit this year, we had about 2 points of trade expense phasing in our organic sales number as we exit the quarter. So as you think about kind of the setup for next year, we will have trade expense phasing comps as we work our way through the first half of the year. And obviously, as we've made investments in the second half of this year, those comps will ease. So I would expect that to be reflected in the progression of our top line. So I think that's a critical point.

And then the second is, as we think about categories, we are laser-focused on what we can control, which is our competitiveness. So we're not counting on a significant rebound in categories as we work our way through the year.

Our next question comes from Chris Carey from Wells Fargo.

I think kind of a holistic question and more of a quantitative follow-up. From the more holistic side, you're probably the most intentional when it comes to pricing reinvestments in the space. And I think it's really a couple of questions related to that.

First, what are you seeing from a competitive response to some of these early actions? And then secondly, how do you ensure that this isn't a race to the bottom with branded competitors or private label?

And then the more quantitative question is, in the context of really strong HMM, 5%, you've got the incremental $100 million of savings, but obviously, like substantial pricing investments. Can you just frame kind of like gross margins versus SG&A, how you see those line up -- stacking up through the year?

Let me take the first part of that question. And then when it comes to margin versus SG&A, I'll pass it on to Kofi, and he can tackle that.

On the pricing, it's a really good question, and I appreciate it. The things -- I think there are a couple of things to keep in mind is that the first is that even in the fourth quarter, as we looked at our price mix, it was down 3% in North America retail and down 1% as -- and we talk about pricing actions. And is it going to be race to the bottom? It's not going to be a race to the bottom.

And the order of magnitude is about that much. We're also investing a lot in advertising this coming year on new products and all the rest. So it's not just about pricing. It's about investment and making sure that we get trial on all of our good marketing initiatives.

The other is that in every category, it is not as if we are leading pricing actions down across the board. We're taking targeting actions in specific categories. I've talked about this before, but just to really give another example. For example, in Pet Food, we were over a price cliff on our wet pet food, and we got under that price cliff back in line with competition. And -- but we didn't have any pricing action on life protection and pharma because that was in a good place. The -- and the same with our Cat Food business.

And so as you -- as we look across our categories, the axis really are targeted to specific items, specific areas and specific categories. And really, just to get us back in the zone of where our marketing is going to be effective. And so our brands are generally premium brands, and they should be because we've got great brands. But the marketing works really well when the price is kind of in the zone. And kind of getting that in the zone is the first step. But even more important than that really is that once having done that, how good is our marketing, how good are our new products, how good is our core news, and that's what we're really excited about because it's that combination of getting the pricing in, but then also making sure that your marketing is great on top of that, that's going to lead to better outcome.

And we saw that with Pillsbury. We saw that with Totino's. We're confident we'll see that with many of our other businesses as we head into this year. In fact, we already have. I mean, if you look at North America retail, it's just -- we're just 3 weeks into the year, but I think about 80% of our North America retail business is gaining -- share already in this quarter.

And then on your question on SG&A, we would expect SG&A to grow a little faster than our top line as a result of reinvestment, a portion of the reinvestment going back into increased media behind our Fresh Pet launch and certainly behind our brands and innovation in North America retail.

In addition, just as a reminder, the incentive reset will be a big drag as you look at the corporate unallocated line and SG&A. So those factors will be the primary drivers of the increase.

I'll just add. This is Jeff Siemon. I had one clarification. As Jeff said, our price mix in the quarter North America retail and Nielsen was down about 3 points. And for the quarter at the company level, excluding the trade timing, price mix was down 1%. So I think that was the point, down 3% in total, 2% of that was trade timing. So excluding trade timing, price mix was down about 1% in the quarter.

Our next question comes from Robert Moskow from TD Cowen.

Jeff, I wanted to know if you think pricing can get back into positive territory at some point during the course of the year. It's hard to get the algorithm to work without having some pricing power to some degree. So maybe you could talk about your philosophy in that regard.

And then secondly, I wanted to ask about the assumptions on how big the Fresh business can get in Pet. When you started working on this, the category was probably growing at around 25%, but our channel checks indicate that it's more like 12% to 13% now, including DTC. So does that have any impact on your expectations for how big this business can get longer term?

Yes. So Rob, a couple of questions -- a couple of answers to those really, really important questions. Look, I'm about to tell you things I know that you already know because you've been doing this a long time as I have, but over the long term, to get an algorithm to work in the food space, what you need is about half your growth from volume and half your growth from pricing. I, mean you get pricing and mix and all that. So you need both of those things over time.

There's a period of time when we saw record in -- there's a dog in the background. I'm sure thing he's being fed Blue Buffalo, is probably asking for Blue Buffalo. The -- but if you look over time, you need a mix of price, mix and volume. We saw when we had record inflation for a period of about 3 years, all we had was pricing, and there was no volume. Now we're a little bit of a period where there's a lot more volume than there is price/mix given the consumer sentiment kind of where we are.

But over time, those things [ came ] to level out. So you're right. Over the course of time, to get the P&L to really work the way you want it to, you need a mix of pricing and you need a mix -- price/mix and a little bit of volume as well. But this is a period where we're going to lean more on volume just as we did more on price/mix when we had record inflation a few years ago. And so you're right, but we're in a period of time where we know what we need to do.

In terms of what comes next and tariffs and inflation, I mean, your guess is kind of as good as mine. I mean, what's going to happen without -- we're not really sure. I mean, all of our options are still open as to how we deal with the inflation we see in front of us. If inflation continues to pick up, then, yes, we go to productivity, HMM and all those things, but we have a great strategic revenue management toolkit.

And so we'll be very willing to work with that as well to the extent that we need to. And so -- but it's a pretty unpredictable environment right now. So we're not really sure how that's going to play out. But know that we're agile enough with enough of the capabilities to make that work.

Your second question about Fresh Pet Food, you talked about the growth rates and how they've slowed to 12%, I might add, and how we think about that. The first, I would say, vis-a-vis where we started looking at Fresh Pet Food a few years ago, the category is [ buying ] twice the size. So the pool of the -- on to which we'll be fishing in will be about twice the size as it was a few years ago. So that would be the starting point, which gives us reason to believe that our fresh offering has a chance to be a really big offering. And growing 12% is nothing to sneeze at.

And the continuation of humanization of pets is an ongoing trend. It's a 20-year trend. And it manifests itself in a lot of different ways versus how treating works, to wanting natural pet food, which Blue Buffalo serves, wanting fresh offerings, which we're about to get into.

And so we're confident that the humanization of pet food is going to continue, especially because it's particularly relevant among Gen Z and millennial consumers. And so as they form households more and more and they buy pets, we're confident that this trend will continue.

And the only thing I'd add to that is that the first segment is a $3 billion segment now. And our data indicates it will be $10 billion in 10 years. And so there's still significant growth in this segment to get. We believe Blue Buffalo has a right to win here, and it can help spur on that category growth.

Our next question comes from David Palmer from Evercore ISI.

First, a quick one and a clarification off of a line in Slide #38. You said category growth below long-term expectations and similar to fiscal '25, reflecting lower price/mix. What was your category growth all in for fiscal '25?

And I asked that because it looks like, lately, the category growth on a weighted basis for mills would be over 2% lately, just looking at the [ MULO plus ] data, which would be in line with -- so it looks like the -- hearteningly, the categories that you're in are doing pretty well. So just curious about what sort of category growth assumptions you are seeing.

Dave, it's Jeff Siemon. Yes, that references our global growth exposure, kind of take our categories and geographies combined. And yes, in the U.S. human food, I'd say our categories are a little bit shy of maybe where we would expect our long-term growth to be, with volume in line and price/mix not quite maybe to the level that we would have expected normally based on our go-forward category mix.

Pet category-wise is growing, but modestly less than what we would expect long term. Maybe it's about 1% today. We'd expect 3-plus percent long term.

And then some of our international categories, China, in particular, and even Europe growing a bit less, China down, and Europe maybe a bit less than long term. So when you take that in aggregate, that was the remark about overall category growth across our enterprise being a bit below where we would expect long term that 2% to 3% growth rate.

So if we were to kind of keep it simple and thinking about your business in terms of getting your sales trends in line or better than your categories, '26 versus '25, for all of us look -- trying to think about whether -- how you're thinking about the must get rights for this year, what categories and brands perhaps will get the most improved awards? What are going to be those?

It looks like from your slides, you have a lot in snacks, Totino's, maybe even cereal. You mentioned Pets on firmer footing. But what are really going to be the must get rights from a total sales perspective that you're looking for improvement into '26?

Yes. So let me take that. I'm kind of looking for improvement across the board, to be honest with you. The -- and I think we can get there because our marketing is better. Our new products are better. Our value is going to be in the right place. And I mean, we win when our biggest, most important categories get better.

And so as you look across our global brands and our local gems, that's where we expect to see the improvement. I mean, you can't really get the growth we're kind of looking at by growing your small businesses really well. You really need to grow your biggest, most important business as well. That's where I would expect to see improvement, but I would also expect it to see it broad-based.

And I think we have the initiatives to back that up. And we're -- we feel good about the start of the year, and we'll see how it progresses. But so far, I would say that, importantly, what we have to do is grow in line with our categories. We think if we do our job right, we can hopefully get our categories to grow a little faster, but we're not counting on that.

What we're counting on is just being more competitive within our categories. But because we're the leader in so many categories, to the extent that our marketing efforts really stick well, hopefully, we can drive a little bit more improvement in category growth as well, but we're not counting on that.

Our next question comes from Scott Marks from Jefferies.

I have 2 quick ones. The first, I guess, on the innovation front, I guess, we saw a lot of products that are putting protein front and center. So just wondering how those are performing thus far in kind of initial launches and markets where you're getting into.

And then secondly, on the price investment front. We've heard some of your competitors investing around key events and key seasons as opposed to more kind of steady-state investment. So just wondering how you're thinking about that and whether you see different consumer responses throughout the year at different points in time.

Yes. So I think from a new product standpoint -- or a new standpoint, you're absolutely right. Protein is a trend that people are really looking for right now. We see mid-single-digit growth across the grocery store from protein items. And while I'm biased, we make protein taste incredibly good.

So what you're going to see in the plan coming this year is almost $100 million worth of ideas. We have really strong protein across most of our big categories. I'll use Cheerios Protein as an example. That's only been in the marketplace for 6 months and has far exceeded our expectations. So we are bringing new SKUs into the marketplace starting now.

So we really believe that this is a trend that is here to stay and that we are well positioned to win with this trend. So that is how we're thinking about new products.

And then price steady state versus kind of seasonal.

Right. I mean, as Jeff has said, the plan for this year is really to make sure that we have really the right price value and a very strong news, innovation and advertising across the entire year. But we also know that when the consumer is struggling, parents won't sacrifice spending in the season.

They want their families to have a good Halloween or a good Valentine. And so we will make sure that we are leveraging seasons where appropriate. We have about 50% more seasonal innovation in our plan this year. And I think that will be important to complement the innovation and news that we have throughout the entire 52 weeks.

Our next question comes from Max Gumport from BNP Paribas.

You're clearly stepping up your investment posture as you're prioritizing, turning volumes positive. And it's nice to see that in the platforms that you started investing earlier like refrigerated dough and Totino's and dog food. You're seeing that improved volume performance.

The question is, though, taking refrigerated dough as an example, the improved volume, it is not outpacing the price decline. So even though refrigerated dough is a great example of the place where you've turned volumes positive, dollar sales really are still struggling at least in the Nielsen data we're looking at.

And given the midpoint of your guidance calls for flat organic sales growth, I'm trying to get a sense for what's giving you the confidence that in these -- as you roll out these investments more fully, you'll see a more favorable relationship between volume and price.

Yes. So you're right, Max. The fact that our volumes have increased ahead and our volume shares have increased ahead of our dollar share is certainly true, and it's something that we expected and something that we had modeled. In fact, the modeling that we did has turned out to be very, very accurate to what has actually transpired.

But the modeling doesn't always -- didn't just end with how you invest in price. The -- what we would expect is that over the course of the first half of this coming year that our volume shares will outpace our dollar shares for the very reasons that you talked about.

That's why, though, it's so important that as we get into the second half of the year, particularly the fourth quarter, but starting in the second half of the year, that we keep our marketing investment up, that we've improved our new product profile. Our new products are up 25%. That would be our expectation in North America retail and 30% overall as a company.

And why we have more core news because once we lap the pricing, our assumption is that our dollar shares would then begin to grow. And that really happens when you get your investments in the right zone on value. But then when you add on top of that, really good marketing, which we have.

And so the first half of the year, we would expect that our volume growth will outpace our value growth, our sales growth and -- but then, that will start to reverse as we continue to invest in new product marketing and great advertising and core business news.

Great. And your guidance, it is clearly embedding a pretty big step-up in investment spend in FY '26. And it feels like a portion of that is around the national expansion into Fresh Pet Food. Is there's any way you could quantify just how much investment is going behind that national expansion into Fresh Pet Food? And I'll leave it there.

It's a fair question, but we're going to pass on that for now. Just know that there's another test market. It's a national launch, and we fully intend to make pet parents aware of this launch with our marketing investment. We're going to spend the money required to get the trial because we know the repeat is going to be really good.

And so we're not going to give a number on that, but just know that it's important to get the trial, and that really comes with good marketing, but significant levels of marketing investment.

Our last question today will come from Michael Lavery from Piper Sandler.

Two quick ones. Maybe just following up on the launch spending comment. Can you give a sense of how you evaluate and balance organic innovation versus acquiring a Fresh Pet business? And obviously, the consideration set is extremely limited to acquire. But how do you just think about which is the better way to go? Or what drove you to come back after a test a couple of years ago to launch now?

Yes. The -- look, in general, the ways to grow your own brands organically, to buy -- and to grow through M&A, which we've also done successfully or use equities that other people have, to enter categories that we have with -- and cereal, for example, on the -- for protein. And we've done all 3 of those things effectively.

And so as we think about what profile it will take, we ask ourselves, do we have the right to win to do this organically? And with Blue Buffalo, the answer is a resounding yes. We found that out during the first phase of the trial.

The second is, do we have the capabilities in order to win? And we've been doing refrigerated products since like the beginning of time. I think since the '50s. And so this idea of getting refrigerated, we know how to run a refrigerated network. And so we certainly know how to do that.

And then we look at the investment profile and do we think we have the investment profile to be able to enter a category successfully. And in this case, we think we do. And so we -- that's what we evaluate as we look at all of our growth opportunities. We'd like to be able to grow organically. That's the most important thing for us to do, but we're really pleased that we think we have an offering in this case that will be significant, that will be innovative, that ties really well with the Blue equity.

But in other areas, you've seen us do M&A over time because we felt like we needed to enter a category like we did with Blue Buffalo originally and thrilled that we did that.

That's helpful. And can I just come back to one other comment you said about hoping for improvement across the board? Where does salty snacks fit into that? It didn't really get much mentioned. I know it's a smaller piece of the portfolio, but is that just more challenged because of a discretionary component or some reason that it isn't maybe getting some of the same investments? Or how does that just fit into your thinking and strategy for the year?

Yes. So thanks for the question. What I would say for snacks broadly overall in a tough economic environment, we see that it's a bit more of a discretionary spend. And so our categories and our businesses have had a tougher time this year.

And the onus us is really to do what Jeff talked about, which is to get our value proposition right across all our snacks portfolio and then make sure that we have the best marketing new products and news to make sure that we're worth it for the consumers to buy.

From a salty snack standpoint, it didn't have a great year this year because we just had undersized participation in some of the largest growth trends. So what's working in salty snacks right now is really bold flavors, having the right value sizes and then, of course, making sure that you use that news to ground merchandising and display. And I think we're all really excited about the salty plans that are coming this year.

We renovated 3 of our top flavors, significantly increasing flavor intensity. We've spicy innovation coming -- spicy dill and checks mix and hot-and-spicy check mix, and we've got a partnership with Tabasco and Bugles. We've got value coming in tubs for checks. So we just got really good salty innovation. And I think you'll see our performance improve significantly in the upcoming fiscal year.

Okay. I think we're going to go ahead and wrap there. Appreciate the time and attention. And as always, we'll be available for follow-up calls today. Julienne, I'll pass it back to you.

This concludes today's conference call. You may now disconnect.

Good morning. This is Jeff Siemon, Vice President of Investor Relations and Corporate Finance. Thank you for listening to General Mills prepared remarks for our fiscal 2025 fourth quarter and full year earnings. Later this morning, we will hold a live question-and-answer session on today's results, which you can hear via webcast on our Investor Relations website.

Joining me for this morning's presentation are Jeff Harmening, our Chairman and CEO; and Kofi Bruce, our CFO. Before I hand things over to them, let me first touch on a few housekeeping items. First, on our website, you will find our press release that posted this morning, along with a copy of the presentation and a transcript of these remarks. Please note that today's remarks include forward-looking statements that are based on management's current views and assumptions. The second slide in today's presentation lists several factors that could cause our future results to be different than our current estimates. And with that, I'll turn it over to Jeff.

Thank you, Jeff, and good morning, everyone. Let me start with today's key messages. First and most importantly, the investments we made in the second half of fiscal 2025 and greater consumer value, product news and innovation have worked as we expected, driving improved volume and pound share across our portfolio in the fourth quarter. Second, our fourth quarter financial results finished in line with our expectations and our updated guidance. And third, we're clear on the job to do in fiscal '26, which is to restore volume-driven organic sales growth by investing to deliver greater remarkability in our products and packaging, our messaging, our omnichannel execution and value for our consumers.

Our full year results are summarized on Slide 5. Organic net sales finished down 2% and adjusted operating profit and adjusted diluted EPS were down 7% in constant currency. These results were consistent with our revised guidance, reflecting the decision we made during the year to step up investment in response to more prolonged value-seeking consumer behaviors and greater volatility in the operating environment. That investment helped us deliver flat organic volume for the year, which was a 3-point improvement on our fiscal '24 result. We entered fiscal 2025 with 3 priorities for the year: accelerate organic sales growth, create fuel for investment and drive strong cash generation. Our results against these 3 priorities were mixed with challenges on the top line, yet strong performance on efficiency and cash. Let me share a few highlights.

On our first priority of accelerating organic growth, our full year sales trends did not meet our expectations, driven in part by continued value-seeking orientation and weaker consumer sentiment. This was particularly true in our North America Retail segment. As a result, we've made important changes to adapt to the evolving consumer environment and put our business on a path back to growth. We reassessed our strategy at the midpoint of the year, pivoting our plans and making the decision to invest in greater value for consumers, narrowing price gaps and moving below price cliffs on several North America retail businesses. We believe that getting our value into the right zone would allow for our product news, innovation and marketing to resonate more clearly for consumers, leading to improved volume and household penetration.

Importantly, we expected volume trends to improve first with dollars lagging until we lap the investment in price. And that's what we saw play out with a significant improvement in North America Retail's competitiveness in the fourth quarter. We held or grew pound share across more than 60% of our top 10 U.S. priority businesses, including cereal, refrigerated dough, fruit snacks, hot snacks and soup, 5 categories where we had made specific investments in a combination of value, product news, innovation and advertising. And we stabilized household penetration across North America retail for the first time in 3 years. We expect these investments to continue to pay off in stronger NAR competitiveness as we move into fiscal 2026.

We also drove improved competitiveness on our other 3 segments in fiscal '25 with North America Pet, North America Foodservice and International each holding or growing dollar share in more than 50% of the priority businesses and each representing an improvement on their fiscal '24 results. On our second priority, we delivered another strong year of industry-leading productivity with holistic margin management cost savings of 5% of cost of goods sold. This strong performance helped us fund investments in remarkability, sustain our gross margin performance and generate cash for our shareholders. In fact, we exceeded our free cash flow conversion target in fiscal '25, achieving a 97% conversion rate. And we continue to deploy that cash in shareholder-friendly ways, including making further progress on reshaping our portfolio.

With the Whitebridge acquisition and the U.S. and Canada Yogurt divestitures, we have now turned over roughly 30% of our net sales base since 2018. And we continue to return meaningful cash to shareholders in fiscal '25 with $2.5 billion returned through dividends and net share repurchases. As we head into fiscal '26, we expect the operating environment will remain volatile with consumers pressured by widespread uncertainty from tariffs, global conflicts and changing regulations. Amid this uncertainty, we expect consumers to remain cautious and continue seeking value, prioritizing their spending on benefits that matter most to them like protein, bold flavors and the comfort of familiar and fun brands and experiences. And we expect consumers won't just focus on benefits for themselves. Pet parents will continue to prioritize spending on their pets, driven by the broader macro trend toward pet humanization.

With these consumer dynamics in mind, we've set 3 clear priorities for the year ahead, maintaining a thoughtful balance of reinvesting for long-term growth and driving cost savings to support these investments. First, we plan to return North America retail to volume growth by continuing to invest in remarkable experiences to strengthen pound share and household penetration for our brands. Second, we plan to accelerate our North America pet growth with an expanded portfolio. This means growing our core Blue Buffalo business and launching several exciting category expansion plans. And third, to help fund these investments, we will drive efficiency to reinvest in growth. This means continuing to deliver best-in-class HMM productivity and transforming how we work to free up our teams to focus on growth.

Our remarkable experience framework will be key to how we deliver on our priorities this year. This framework outlines how we assess our brands across 5 key areas: product, packaging, brand communication, omnichannel execution and value to identify where we are superior to competition and where we have gaps to close in our current product offerings. Applying this consistent rigorous approach allows us to determine the type of investments required for each brand, ensuring we are tailoring the right solution for each brand's competitive context. Let me provide a few examples of how we're applying this framework in fiscal '26 across our 4 segments. Our team is on a multiyear journey to improve our brand remarkability and our plans for North America Retail in fiscal '26 include investment to strengthen all aspects of our remarkable experience framework.

We have significant product news across each of our top 10 U.S. categories compared to news in just 3 categories last year, and we expect to drive a 25% increase in sales from new products. Our plans include twice the amount of price pack architecture as last year, leveraging our packaging capabilities to deliver new sizes and bring more value across growing sales channels. We will support this product news with increased media investment, leveraging stronger media ROIs enabled by our data-driven marketing capabilities. We'll leverage our portfolio scale to deliver more impactful in-store events, and we'll continue to invest in retail media to strengthen our leading share position online. And we'll invest in value this year across 2/3 of our NAR portfolio, addressing price gaps and cliffs on selected product lines within our top categories.

This includes continuing the investments we made in fiscal '25 in many areas and extending to targeted additional product lines in fiscal '26, ensuring that we consistently deliver on the value consumers are seeking across our brands. As I just mentioned, NAR has relevant product news across each of our top 10 categories in fiscal '26. This news is focused on the benefits most relevant for consumers today, protein, bold flavors and familiar and fun favorites. General Mills is uniquely suited to deliver great-tasting protein at an affordable price with iconic brands our consumers know and love. Our plans in fiscal '26 include expansion of Cheerios Protein, Annie's SuperMac and Nature Valley Protein Granola as well as a new line of Nature Valley Creamy Protein bars.

On bold flavors, we're delivering exciting taste-first news in fiscal '26, including Progresso Pitmaster soups, Totino’s Ultimate pizza and rolls, Old El Paso Birria tacos, and renovated bold Chex Mix flavors. We'll also deliver on consumers' desire for familiar and fun moments meant to be enjoyed by the whole family like Pillsbury Big cookies, new Mott’s fruit-filled bars and Betty Crocker soft baked cookies, all delivering great taste and great value.

Let me briefly share a few examples of how we're leveraging a remarkable experience framework to bring improved value, innovation and core news to our biggest businesses in fiscal '26, starting with refrigerated dough. We were encouraged by Pillsbury's strong improvement in volume in the second half of fiscal '25, driven by improved value, great product news and increased media support featuring the Doughboy. We're continuing that playbook in fiscal '26, bringing consumers more value by addressing key price gaps and by advertising behind our Bakes up Bigger news on cinnamon rolls, crescents and biscuits. And we'll build on our cookie platform's double-digit retail sales growth in fiscal '25 with the launch of our new Big cookies, bringing even more indulgence through refrigerated dough case.

On Totino's, we drove improved volume trends in Q4 by addressing value at the shelf and investing in value-oriented advertising, highlighted by our 10 pizza rolls for about $1 ad that was the most shared Super Bowl commercial this year. As we look to fiscal '26, we will continue driving value for Totino's consumers by delivering the right price and formats at the shelf, investing in remarkable advertising and building on our successful game day activation. And we have a remarkable innovation launching this year with Totino's Ultimate rolls and Ultimate Pizza, redefining the experience consumers can expect from a value pizza. Our plans on cereal in fiscal '26 strengthen our remarkability across the category's best loved brands. We'll communicate value by highlighting for consumers that Nature Valley and Cheerios deliver great-tasting protein at an affordable price. In fact, with Nature Valley Protein, Cheerios Protein and Ghost Protein, we now have a portfolio of protein cereals that generates more than $100 million in annual retail sales.

We will ensure we have the right sizes and price points to deliver remarkable value for consumers. We have strong core news and new brand campaigns on Cheerios, Cinnamon Toast Crunch and Lucky Charms. And we plan to lead category innovation again in fiscal '26 with compelling new products like a new cookies and cream variety of Cheerios Protein. On soup, we closed fiscal '25 with Nielsen-measured pounds growing 4% in Q4 and household penetration up almost a full point versus the prior year, driven by value investments, product news and innovation that delivers on what consumers want, both flavors and protein. In fiscal '26, we'll continue to focus on value for consumers, including launching new pack sizes and formats that allow us to meet consumers in the right channels with the right packages at the right price point.

We have core news on our highly successful Old El Paso soup line, bringing consumers 30% more chicken on these great-tasting, bold flavored high-protein soups. And we're doubling down on both flavors with the recent launch of a new line of Progresso Pitmaster soups. Inspired by grilling culture and delivering 20 grams of great-tasting protein, Pitmaster is already off to a great start in limited distribution and helping expand General Mills share in the soup category. On fruit snacks, our business was challenged in fiscal '25 by slower snacking category growth as well as increased competition from fruit flavored candy, but we drove encouraging improvement in Q4, including pound share growth by narrowing price gaps on key product lines while continuing to bring news to our differentiated portfolio.

As we look to fiscal '26, we'll maintain our focus on value by addressing value of the shelf and by expanding our sizes and formats, leveraging our price pack architecture toolkit. We'll invest in messaging, including a new campaign on our differentiated Gushers, Fruit by the Foot and Rollups brands. And we'll launch exciting new items, including all-blue Gushers, Fruit by the Foot Splitz, and a new line of Harry Potter fruit snacks in partnership with Warner Brothers Discovery. Overall, I'm encouraged by the strength of our plans in North America retail, and I'm confident that our investment in more remarkable offerings will return this business to volume growth in fiscal '26.

Our second priority for fiscal '26 is to accelerate growth for our North America pet business. We'll do that by continuing to build on our improving momentum on our core Blue Buffalo lines and by investing to expand into new fast-growing spaces. Our plans in fiscal '26 start with strong news on our Life Protection Formula and Wilderness dog feeding lines, which are the heritage of the Blue Buffalo business. Having ensured our value is in the right zone, we're increasing investment behind ingredient superiority advertising on both LPF and Wilderness, building on the success those campaigns drove in fiscal '25, and we'll expand support behind our new salmon innovation, which brings a fast-growing protein option to Life Protection Formula line. And to accelerate our growth in dog feeding, we'll launch Edgard & Cooper in the U.S. this July through an exclusive national retail partnership with PetSmart. This super premium brand has driven outstanding growth across its European markets since we acquired it a year ago.

Our U.S. launch will maintain Edgard & Cooper's fresh take on pet nutrition with dry food, wet food and treat recipes made with real recognizable ingredients like fresh chicken, venison and duck, combined with nutritious fruits and vegetables. The National PetSmart launch will leverage Edgard & Cooper's digital-first and social-led marketing approach, a proven driver of the brand's rapid growth in Europe.

Shifting to cat feeding. We plan to build on our strong momentum on our core Tastefuls line, which delivered mid-single-digit retail sales growth in fiscal '25. Our plans in fiscal '26 include increased media investment, highlighting Tastefuls ingredient quality and taste preference versus the leading brand in the category. And we'll accelerate our growth in cat feeding with our recently acquired Tiki Cat brand, which has enjoyed strong double-digit retail sales growth in pet specialty and e-commerce channels in recent years. In fiscal '26, we're focused on growing Tiki Cat through increased core news, including a new Tiki Solutions subline as well as a double-digit increase in e-commerce investment. To round out our pet acceleration plans, you heard from us earlier this week that we are expanding into the U.S. fresh pet food segment later this year with the national launch of Blue Buffalo's Love Made Fresh.

This new line of fresh dog food adheres to Blue Buffalo's trusted True Blue nutritional philosophy and superior ingredients with fresh offerings across multiple product formats and a variety of flavorful recipes. The Love Made Fresh portfolio gives Blue Buffalo a remarkable differentiated offering in U.S. fresh pet food, a $3 billion subcategory today and one which we project will grow to $10 billion in the next 10 years. Our Love Made Fresh refrigerated products are designed to be perfect companions to Blue Buffalo's portfolio of dry dog food or a stand-alone solution. In fact, with this launch, Blue Buffalo will be the largest U.S. pet brand to offer solutions across dry, wet and fresh feeding. And with more than 80% of fresh food usage occasions involving a mix of fresh food and kibble, we think the combined Blue Buffalo portfolio will be well positioned to deliver remarkable feeding solutions that capture the whole bowl.

We're planning for significant investment in fiscal '26 behind this launch, including strong media support to drive trial and awareness, and we've already seen significant early retail customer acceptance. We'll plan to share more details on Love Made Fresh products, messaging and distribution as we get closer to the launch this fall. Moving now to our North America Foodservice business. We'll leverage our category leadership in fiscal '26 to continue driving breakfast growth in K-12 schools with our regulation-ready portfolio and commitment to nutrition. We'll lean in with remarkable innovation across the biggest categories in K-12 while continuing our share momentum on our important cereal business. We'll also expand our frozen baked goods leadership across foodservice channels by accelerating bread growth and bringing new innovation like our new Pillsbury blondie bars.

And in international, our team is focused on delivering remarkable experiences and accelerating our growth in fiscal '26 on our biggest global platforms. We have significant acceleration plans this year on Häagen-Dazs behind core flavor news and expansion of our Häagen-Dazs stick bars. This includes remarkable product renovation and relaunch of our European stick bar business as well as increased investment behind our stick bar business in China that delivers a superior product at a remarkable value for the local market. And on Old El Paso, we'll build on momentum from fiscal '25 with increased investment and product news across the portfolio. Our fiscal '26 plans include higher media support behind our Make Some Noise campaign and innovation that delivers solutions to win with smaller households, and we'll amplify this product news with double the amount of in-store partnership activations throughout the year.

To help fund these compelling growth plans, we are working aggressively to drive efficiency throughout our cost structure. As always, this starts with holistic margin management, our industry-leading productivity program. We have good visibility to delivering another year of 5% HMM cost savings in fiscal '26, which is in line with our strong performance in fiscal '24 and '25 and higher than our 4% long-term trend. And we recently launched a global transformation initiative designed to further accelerate our growth.

This initiative is focused on streamlining our end-to-end business processes and identifying new ways of working that match today's evolving business environment. We look to deploy new tools, technologies and operating models to enable greater agility throughout the organization. By optimizing how work gets done, our teams will be able to spend more time focused on driving growth. In addition to streamlining how we work, we expect this initiative to generate $100 million in cost savings, which we plan to reinvest in growth. Having outlined our priorities and plans for returning to growth in fiscal '26, let me turn it over to Kofi to go into more details on our fiscal '25 results and share our guidance for fiscal '26.

Thanks, Jeff, and hello, everyone. Our fourth quarter financial results are summarized on Slide 27. The quarter finished in line with our expectations with reported net sales of $4.6 billion, down 3% and organic net sales also down 3% from the prior year. As we previewed on last quarter's earnings call, our Q4 organic net sales and price/mix results included 2 points of headwind from trade expense timing related to additions to our trade plans made in previous quarters. As Jeff mentioned, we delivered organic volume roughly in line with last year, and we improved our pound competitiveness with 63% of our priority businesses holding or growing pound share in the fourth quarter, representing an acceleration versus the first 3 quarters.

Adjusted operating profit of $622 million was down 22% in constant currency, in line with our forecast last quarter. This included a 13-point headwind from unfavorable trade expense timing as well as increased commercial investments. Adjusted diluted earnings per share totaled $0.74 in the quarter and were down 27% in constant currency. Turning to the components of total company net sales growth in the quarter. Organic net sales decreased 3% in the quarter, driven by unfavorable price/mix, including the trade expense timing headwind I mentioned earlier. Organic pound volume was flat in the quarter. Both foreign exchange and the net impact of acquisitions and divestitures were not material to net sales in Q4.

Shifting to segment performance. Our North America Retail results are summarized on Slide 29. As a reminder, these results reflect the closure of our Canada Yogurt divestiture in late January, while the U.S. Yogurt divestiture is expected to close later this month. Fourth quarter organic net sales for North America Retail were down 7%. This lagged our Nielsen-measured U.S. retail sales by approximately 3 points, driven primarily by trade expense timing headwinds. Our investments in value, product news and brand support resulted in stronger competitiveness in Q4 as we expected, with pound share stable or growing on 64% of our top 10 U.S. categories, including cereal, refrigerated dough, hot snacks, fruit snacks and soup. On the bottom line, fourth quarter North America Retail segment operating profit was down 29% in constant currency, driven primarily by unfavorable price/mix, including a 17-point profit headwind from trade expense timing as well as input cost inflation and lower volume, partially offset by HMM cost savings.

For the full year, organic net sales were 3% below a year ago results, driven by lower volume and unfavorable price/mix. These results lagged Nielsen-measured retail sales by roughly 1 point. On the bottom line, constant currency segment operating profit in NAR was down 11%, driven primarily by lower volume and higher input costs. For our North America Pet segment, fourth quarter organic net sales were up 3%, driven by higher volume. Our net sales outpaced all channel retail sales by roughly 3 points in the quarter, driven primarily by an increase in retailer inventory ahead of first quarter in-market activations. Including the Whitebridge acquisition, reported net sales in the quarter were up double digits for wet food and treats and up mid-single digits for dry food.

On the bottom line, fourth quarter North America Pet segment operating profit was down 3% in constant currency, driven by higher input costs and increased media investment, partially offset by favorable price/mix and higher volume. For the full year, the Pet segment posted modest organic net sales growth with results rounding to flat. Positive organic volume was partially offset by unfavorable price/mix. Our competitiveness in pet food improved in fiscal 2025 with dollar share growth on dog feeding, which represented 60% of our Pet U.S. retail sales. Full year Pet segment operating profit was up 3% in constant currency, driven primarily by HMM cost savings, partially offset by a double-digit increase in media investment and unfavorable price/mix. We expect to accelerate full year organic net sales growth in North America Pet in fiscal '26. However, first quarter growth is expected to be pressured by the unwind of the Q4 retailer inventory build.

North America Foodservice organic net sales were down 1% in the quarter, driven by declines on bakery flour and breads. On the bottom line, fourth quarter North America Foodservice segment operating profit was up 5% in constant currency, driven by HMM cost savings, partially offset by input cost inflation. For the full year, organic net sales grew 2%, driven by higher volume and positive price/mix despite a 1 point headwind from index pricing on bakery flour. We continue to compete well within away-from-home channels, holding or growing market share in 71% of our measured business, led by strong performance in K-12 schools and health care. Constant currency segment operating profit was up 13% for the full year, driven primarily by HMM cost savings and favorable price/mix, partially offset by input cost inflation and higher SG&A expenses.

Moving to Slide 32. Fourth quarter organic net sales for our International segment were up 9%, driven by strong growth in Brazil and our distributor markets. Fourth quarter segment operating profit totaled $34 million compared to $22 million a year ago, driven by positive price/mix, partially offset by higher input costs and higher SG&A expenses. For the full year, the International segment posted modest organic net sales growth with results rounding to flat. Net sales growth in our distributor markets and Europe and Australia were partially offset by declines in China. We were pleased with our strong competitiveness with 59% of our priority businesses growing or holding share for the full year. Full year segment operating profit totaled $96 million compared to $125 million a year ago, driven primarily by input cost inflation, higher SG&A expenses and unfavorable price/mix, partially offset by HMM cost savings and higher volume.

For our joint ventures, fourth quarter Cereal Partners Worldwide net sales were down 6% in constant currency, driven primarily by declines in Latin America and Europe. Häagen-Dazs Japan net sales were up 1% in constant currency, reflecting strong core renovation. Full year combined after-tax earnings from joint ventures totaled $58 million compared to $85 million a year ago, driven by noncash asset impairment charges related to supply chain simplification at Cereal Partners Worldwide. Moving on to other noteworthy Q4 income statement items. Adjusted unallocated corporate expenses decreased $7 million in the quarter. Fourth quarter net interest expense increased $17 million, driven by higher average long-term debt balances largely related to Whitebridge acquisition financing.

The fourth quarter adjusted effective tax rate was 19.2% compared to 20% a year ago, driven primarily by certain nonrecurring discrete benefits in fiscal 2025. And average diluted shares outstanding in the quarter were down 4% to $550 million, reflecting our continued net share repurchase activity. Our fiscal 2025 results are summarized on Slide 35. Net sales of $19.5 billion were down 2% as reported and on an organic basis, driven by unfavorable price/mix. Adjusted operating profit of $3.4 billion was down 7% in constant currency, driven by lower net price realization and unfavorable product mix. Adjusted diluted earnings per share totaled $4.21 and were down 7% in constant currency, driven primarily by lower adjusted operating profit and higher net interest expense, partially offset by lower net shares outstanding.

Turning to margin results. Our fiscal '25 adjusted gross margin decreased 30 basis points to 34.5%, driven by input cost inflation, unfavorable price/mix and volume deleverage, partially offset by HMM cost savings. Our fiscal '25 adjusted operating profit margin decreased 90 basis points to 17.2%, driven by lower adjusted gross margin and higher SG&A expenses as a percent of net sales. Moving to cash flow. Fiscal '25 operating cash flow declined to $2.9 billion, driven primarily by lower net earnings, excluding the impact of the divestiture gain in fiscal 2025 and changes in restructuring transformation, impairment and other exit costs. Capital investments totaled $625 million or 3% of net sales for the year, and we returned $2.5 billion in cash to shareholders in fiscal '25 through dividends and net share repurchases.

As we turn to fiscal '26, this is admittedly a complicated year with many moving pieces. We've outlined some of the most important financial assumptions on Slide 38. On the top line, we expect dollar growth in our categories to be below our long-term expectations and generally in line with fiscal 2025 trends, reflecting less benefit from price/mix amid a continued challenging consumer backdrop. We expect our organic sales growth to improve in fiscal 2026 behind stronger competitiveness in response to our investments in remarkability with contributions from volume outpacing price/mix. Moving down the P&L, we expect a number of headwinds and tailwinds to impact our operating profit growth in fiscal '26. In terms of headwinds, we expect input cost inflation of roughly 3% of cost of goods sold before the impact of tariffs. We expect the gross impact of newly enacted tariff represents an additional risk of 1% to 2% of cost of goods sold, though we are working aggressively to mitigate the impact through product reformulation, ingredient substitution and potential strategic revenue management actions.

Our full year guidance includes our forecast for tariff impact, net of our mitigation efforts. As Jeff noted, we're planning for meaningful investments in value, news and innovation in fiscal '26, including a significant investment in our national launch into fresh pet food. In terms of M&A, as we've previously communicated, we expect the net impact of the U.S. and Canada Yogurt divestitures, and the North American Whitebridge Pet Brands acquisition will reduce fiscal '26 operating profit growth by approximately 5 points. And we expect a reset of incentive compensation to be a 3-point headwind to operating profit. In terms of profit tailwinds, we expect to deliver another year of strong HMM cost savings of 5% of cost of goods sold. We expect to generate $100 million in savings from our global transformation initiative and other related efficiency efforts, and we'll have the benefit of a 53rd week in fiscal '26.

Moving below operating profit. We expect net interest expense to increase to approximately $575 million. Our adjusted effective tax rate is expected to be roughly in line with fiscal '25 at approximately 21%, and we expect to reduce our net share count by roughly 3% for the full year, including the impact of using a portion of our divestiture proceeds for share buybacks. With these assumptions in mind, Slide 39 summarizes our outlook for fiscal 2026. Organic net sales are expected to range between down 1% and up 1%. Adjusted operating profit and adjusted diluted earnings per share are expected to be down 10% to 15% in constant currency, and we expect free cash flow conversion to be at least 95% of adjusted after-tax earnings.

Note that we expect significant variability in our quarterly results in fiscal '26 with organic net sales and adjusted operating profit declining more than our annual outlook in the first half of the year, driven by the phasing of our price investments and trade expense timing in fiscal '25. Our fourth quarter is expected to benefit as we lap more significant investment and unfavorable trade timing in Q4 of fiscal 2025, and it will have the added benefit of a 53rd week. Looking specifically to the first quarter of fiscal '26, our organic net sales and adjusted operating profit growth rates are expected to be similar to the results we posted in the fourth quarter of fiscal '25. As we shared earlier this month, the regulatory review for our U.S. Yogurt divestiture is complete. This guidance assumes the transaction closes at the end of June, which is in line with our current expectations. With that, let me turn it back to Jeff for some closing remarks.

Thanks, Kofi. Let me wrap up with a few closing thoughts. As I said upfront, we are clear on the job to do in fiscal '26, which is to restore volume-driven organic sales growth. We'll do that by investing in consumer value, product news, innovation and brand building, guided by our remarkable experience framework. These investments are significant, and we're keeping a strong focus on ROI, building on that improved volume momentum we delivered in the second half of fiscal '25. We know that restoring sustainable, profitable organic sales growth is the key to long-term value creation, and we look forward to advancing our plans, delivering on our priorities and driving strong shareholder returns in fiscal '26.