# GENERAL MILLS INC (GIS) FY 2026 MD&A Verbatim Item 7 Management's Discussion and Analysis from GENERAL MILLS INC's 10-K for fiscal year 2026. SEC filing source: https://www.sec.gov/Archives/edgar/data/40704/000162828026046466/gis-20260531.htm Accession: 0001628280-26-046466 Filing date: 2026-07-01 Report date: 2026-05-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Company profile: /company/GIS/ All MD&A years: /company/GIS/mda/ Previous year: /company/GIS/mda/fy2025/ (FY 2025) ITEM 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations EXECUTIVE OVERVIEW We are a global packaged foods company. We develop distinctive value-added food products and market them under unique brand names. We work continuously to improve our core products and to create new products that meet consumers’ evolving needs and preferences. In addition, we build the equity of our brands over time with strong consumer-directed marketing, innovative new products, and effective merchandising. We believe our brand-building approach is the key to winning and sustaining leading share positions in markets around the globe. Our fundamental financial goal is to generate competitively differentiated returns for our shareholders over the long term. We believe achieving that goal requires us to generate a consistent balance of net sales growth, margin expansion, cash conversion, and cash return to shareholders over time. Our long-term growth objectives are to deliver the following performance on average over time: •2 to 3 percent annual growth in organic net sales; •mid-single-digit annual growth in adjusted operating profit; •mid- to high-single-digit annual growth in adjusted diluted earnings per share (EPS); •free cash flow conversion of at least 95 percent of adjusted net earnings after tax; and •cash return to shareholders of 80 to 90 percent of free cash flow, including an attractive dividend yield. Guided by our purpose to make food the world loves, we are executing our Accelerate strategy to drive sustainable, profitable growth and top-tier shareholder returns over the long term. The strategy focuses on four pillars to create competitive advantages and win: boldly building brands, relentlessly innovating, unleashing our scale, and standing for good. We are prioritizing our core markets, global platforms, and local gem brands that have the best prospects for profitable growth and we are committed to reshaping our portfolio with strategic acquisitions and divestitures to further enhance our growth profile. Our consolidated net sales for fiscal 2026 decreased 5 percent to $18.4 billion. On an organic basis, net sales decreased 2 percent compared to year-ago levels. Operating profit of $886 million decreased 73 percent. Adjusted operating profit of $2.8 billion decreased 16 percent on a constant-currency basis. Diluted loss per share decreased 104 percent to $(0.16). Adjusted diluted EPS of $3.55 decreased 16 percent on a constant-currency basis (See the “Non-GAAP Measures” section below for a description of our use of measures not defined by generally accepted accounting principles (GAAP)). Net cash provided by operations totaled $2,166 million in fiscal 2026, with a conversion rate that was not meaningful as a percent of net loss, including earnings attributable to noncontrolling interests. This cash generation supported capital investments totaling $540 million, and our resulting free cash flow was $1,626 million at a conversion rate of 85 percent of adjusted net earnings, including earnings attributable to noncontrolling interests. We returned cash to shareholders through dividends totaling $1,315 million and net share repurchases totaling $500 million (See the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). In fiscal 2026, while we made meaningful progress in strengthening the remarkability of our brands to position the business for long- term sustainable growth, this progress came amid a more challenging category and competitive backdrop than we initially expected. Weak consumer sentiment, heightened uncertainty, and significant volatility weighed on category growth and impacted consumer purchase patterns, resulting in a slower pace and higher cost of volume recovery than we originally anticipated. We delivered mixed performance against the three priorities we established at the beginning of the year: On our priority of returning North America Retail to volume growth, we did not achieve our objective. Organic pound volume in North America Retail declined 1 percent for the year, driven in part by Nielsen-measured pound volume in our categories slowing by 1 point versus fiscal 2025. Even so, we grew household penetration and we delivered improved pound competitiveness, with 65 percent of our U.S. categories holding or growing pound share. On our priority of accelerating North America Pet growth, we partially achieved our objective. Our Nielsen-measured retail sales growth improved by 1 point versus our fiscal 2025 trend. However, our organic net sales growth slowed by 3 points, driven largely by changes in retailer inventory. On our priority of driving efficiencies to reinvest in growth, we successfully achieved our objectives to generate Holistic Margin Management (HMM) savings of 5 percent of cost of goods sold and deliver more than $100 million in additional savings from our global transformation initiative and other efficiency efforts. A detailed review of our fiscal 2026 performance compared to fiscal 2025 appears below in the section titled “Fiscal 2026 Consolidated Results of Operations.” A detailed review of our fiscal 2025 performance compared to our fiscal 2024 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended May 25, 2025, under the caption “Management’s Discussion and 17 Analysis of Financial Condition and Results of Operations – Fiscal 2025 Results of Consolidated Operations,” which is incorporated herein by reference. In an effort to help address input cost inflation, fund growth investments, and deliver accelerated profit and cash flow growth, we expect to generate $3 billion in cumulative cost savings in the four years through fiscal 2030. Roughly $2 billion of this target is expected to be generated through our ongoing HMM productivity program, equating to annual savings of approximately 4 percent of cost of goods sold. The remaining $1 billion is expected to be generated by our global transformation initiative and other cost efficiency efforts, including redesigning the supply chain network, further streamlining business processes, and driving improvement across other elements of its cost base. These efforts will create a more agile and efficient structure that is better fit for future growth. In fiscal 2027, we plan to continue advancing our Accelerate strategy and improving the remarkability of our brands. Our key priorities are to strengthen our organic net sales growth, accelerate our enterprise transformation efforts, and drive disciplined capital allocation and returns. Amid a continued challenging macroeconomic backdrop for consumers, we expect category growth to be consistent with recent trends and below our long-term growth projections. With our price investments completed in fiscal 2026, our plans in fiscal 2027 are focused on delivering product innovation and renovation news centered on the benefits that matter most to today’s consumers, including better-for-you benefits like protein and fiber, bold flavors, and fun and indulgence, all of which should help support stronger topline growth. We expect to generate at least $750 million in total savings toward the $3 billion target from HMM, our global transformation initiative, and other cost savings actions, which will help offset our forecast for 4 to 5 percent input cost inflation as well as our investments in brand remarkability. In addition to these factors, we expect headwinds of approximately 9 points on operating profit and 11 points on EPS in fiscal 2027 from lapping the 53rd week in fiscal 2026, normalizing corporate incentive expense, and the impact of fiscal 2026 divestitures. Based on these assumptions, our key full-year fiscal 2027 targets are summarized below: •Organic net sales are expected to range between down 1.5 percent and up 0.5 percent. •Adjusted operating profit is expected to be down 8 to 13 percent in constant-currency from the base of $2.8 billion reported in fiscal 2026. •Adjusted diluted EPS is expected to be between $3.00 and $3.20 per share, including an immaterial impact from foreign currency exchange. •Free cash flow conversion is expected to be approximately 95 percent of adjusted after-tax earnings. See the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP. Certain terms used throughout this report are defined in a glossary in Item 8 of this report. FISCAL 2026 CONSOLIDATED RESULTS OF OPERATIONS Fiscal 2026 had 53 weeks compared to 52 weeks in fiscal 2025. In fiscal 2026, net sales decreased 5 percent compared to fiscal 2025, including the net impact of the divestitures of our North American yogurt businesses (Divestitures) and the acquisition of Whitebridge Pet Brands (Acquisition). Organic net sales decreased 2 percent compared to fiscal 2025. Operating profit of $886 million decreased 73 percent compared to fiscal 2025, primarily driven by impairments of goodwill and other brand intangible assets, a valuation loss related to our held for sale business in Brazil, higher input costs, and a decrease in contributions from volume growth, partially offset by a divestiture gain related to the sale of our United States yogurt business and favorable net price realization and mix. Operating profit margin of 4.8 percent decreased 1,220 basis points. Adjusted operating profit of $2,812 million decreased 16 percent on a constant-currency basis, including the net impact of the Divestitures and Acquisition, primarily driven by higher input costs and a decrease in contributions from volume growth, partially offset by favorable net price realization and mix and lower selling, general & administrative (SG&A) expenses. Adjusted operating profit margin decreased 190 basis points to 15.3 percent. Diluted loss per share of $(0.16) decreased 104 percent compared to diluted earnings per share in fiscal 2025. Adjusted diluted earnings per share of $3.55 decreased 16 percent on a constant-currency basis (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). 18 A summary of our consolidated financial results for fiscal 2026 follows: [[GREPCENT_TABLE]] [["Fiscal 2026","In millions, except per share","","Fiscal 2026 vs. Fiscal 2025","Percent of Net Sales","","Constant-Currency Growth (a)"],["Net sales","$18,424.6","","(5)","%"],["Operating profit","885.8","","(73)","%","4.8%"],["Net loss attributable to General Mills","(87.6)","","(104)","%"],["Diluted loss per share","$(0.16)","","(104)","%"],["Organic net sales growth rate (a)","","","(2)","%"],["Adjusted operating profit (a)","2,811.5","","(16)","%","15.3%","","(16)%"],["Adjusted diluted earnings per share (a)","$3.55","","(16)","%","","","(16)%"]] [[/GREPCENT_TABLE]] (a)See the “Non-GAAP Measures” section below for our use of measures not defined by GAAP. Consolidated net sales were as follows: [[GREPCENT_TABLE]] [["","Fiscal 2026","","Fiscal 2026 vs. Fiscal 2025","Fiscal 2025"],["Net sales (in millions)","$18,424.6","","(5)","%","$19,486.6"],["Contributions from volume growth (a)","","","(8)","pts"],["Net price realization and mix","","","2","pts"],["Foreign currency exchange","","","1","pt"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a) Measured in tons based on the stated weight of our product shipments. Net sales in fiscal 2026 decreased 5 percent compared to fiscal 2025, driven by a decrease in contributions from volume growth, partially offset by favorable net price realization and mix and favorable foreign currency exchange impacts, and includes the net impact of the Divestitures and Acquisition. Components of organic net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["Fiscal 2026 vs. Fiscal 2025"],["Contributions from organic volume growth (a)","(1)","pt"],["Organic net price realization and mix","(1)","pt"],["Organic net sales growth","(2)","pts"],["Foreign currency exchange","1","pt"],["Divestitures and acquisition","(6)","pts"],["53rd week","2","pts"],["Net sales growth","(5)","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. Organic net sales in fiscal 2026 decreased 2 percent compared to fiscal 2025, driven by a decrease in contributions from organic volume growth and unfavorable organic net price realization and mix. Cost of sales decreased $525 million in fiscal 2026 to $12,229 million. The decrease was primarily driven by a $1,009 million decrease due to lower volume, partially offset by a $506 million increase attributable to product rate and mix. We recorded a $48 million net decrease in cost of sales related to mark-to-market valuation of certain commodity positions and grain inventories in fiscal 2026, compared to a net decrease of $16 million in fiscal 2025 (please refer to Note 8 to the Consolidated Financial Statements in Item 8 of this report for additional information). We also recorded $19 million of restructuring charges in fiscal 2026 compared to $9 million of restructuring charges in cost of sales in fiscal 2025 (please refer to Note 4 to the Consolidated Financial Statements in Item 8 of this report for additional information). Gross margin decreased 8 percent in fiscal 2026 compared to fiscal 2025. Gross margin as a percent of net sales of 33.6 percent decreased 100 basis points compared to fiscal 2025. SG&A expenses decreased $57 million to $3,388 million in fiscal 2026 compared to fiscal 2025, primarily driven by lower other administrative costs, including the net impact of the Divestitures and Acquisition, partially offset by increased media and advertising expenses. SG&A expenses as a percent of net sales in fiscal 2026 increased 70 basis points compared to fiscal 2025. 19 Divestitures gain, net totaled $1,049 million in fiscal 2026 primarily related to the sale of our United States yogurt business. In fiscal 2025, we recorded a $96 million divestiture gain related to the sale of our Canada yogurt business (please refer to Note 3 to the Consolidated Financial Statements in Item 8 of this report). Restructuring, transformation, impairment, and other exit costs totaled $2,971 million in fiscal 2026 compared to $78 million in fiscal 2025. In fiscal 2026, we recorded a $1,500 million non-cash goodwill impairment charge related to our North America Pet reporting unit and $303 million of non-cash impairment charges related to our Nudges, Uncle Toby’s, and True Chews brand intangible assets (please refer to Note 6 to the Consolidated Financial Statements in Item 8 of this report for additional information). We recorded a $1,032 million non-cash pre-tax valuation loss related to the planned divestiture of our Brazil business (please refer to Note 3 to the Consolidated Financial Statements in Item 8 of this report for additional information). Additionally, we recorded $95 million of restructuring charges related to the multi-year organizational initiative to increase the competitiveness of our supply chain and $60 million of restructuring and transformation charges related to actions previously announced. In fiscal 2025, we approved a multi-year global transformation initiative to drive increased productivity by enhancing end-to-end business processes, enabled by targeted organizational actions, and as a result, we recorded $70 million of charges in fiscal 2025. Please refer to Note 4 to the Consolidated Financial Statements in Item 8 of this report for additional information. Benefit plan non-service income totaled $58 million in fiscal 2026 compared to $54 million in fiscal 2025, primarily reflecting lower interest costs, partially offset by lower expected return on plan assets (please refer to Note 14 to the Consolidated Financial Statements in Item 8 of this report for additional information). Interest, net for fiscal 2026 totaled $539 million, $14 million higher than fiscal 2025, primarily driven by a 53rd week of interest expense. Our effective tax rate for fiscal 2026 was 102.2 percent compared to 20.2 percent in fiscal 2025. The 82.0 percentage point increase was primarily driven by a non-deductible goodwill impairment charge and unfavorable earnings mix by jurisdiction in fiscal 2026, partially offset by certain nonrecurring tax benefits in fiscal 2026. Our adjusted effective tax rate was 21.1 percent in fiscal 2026 compared to 20.6 percent in fiscal 2025 (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). The 0.5 percentage point increase was primarily due to unfavorable earnings mix by jurisdiction in fiscal 2026, partially offset by certain nonrecurring tax benefits in fiscal 2026. The impacts of the One Big Beautiful Bill Act (OBBBA) are reflected in our results for the fiscal year ended May 31, 2026, and there was no material impact to our income tax expense. As of the fiscal year ended May 31, 2026, certain provisions of the OBBBA have impacted the timing of cash tax payments (please refer to Note 15 to the Consolidated Financial Statements in Item 8 of this report for additional information). After-tax (loss) earnings from joint ventures was a $76 million after-tax loss in fiscal 2026 compared to $58 million of after-tax earnings in fiscal 2025. The change primarily reflected our $85 million pre-tax share of a non-cash goodwill impairment charge related to CPW, driven by downward revisions of future sales and profitability estimates in the Australian market, as well as our share of losses on the sale of certain assets, also related to CPW. On a constant-currency basis, after-tax loss from joint ventures decreased 231 percent (see the “Non-GAAP Measures” section below for a description of our use of measures not defined by GAAP). The components of our joint ventures’ net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["Fiscal 2026 vs. Fiscal 2025","CPW","","HDJ","","Total"],["Contributions from volume growth (a)","(5)","pts","Flat"],["Net price realization and mix","3","pts","4","pts"],["Net sales growth in constant currency","(3)","pts","5","pts","(1)","pt"],["Foreign currency exchange","5","pts","(1)","pt","4","pts"],["Net sales growth","2","pts","4","pts","2","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. Net earnings attributable to noncontrolling interests decreased to $2 million in fiscal 2026 compared to $24 million in fiscal 2025. Average diluted shares outstanding decreased by 20 million in fiscal 2026 from fiscal 2025 primarily due to share repurchases. 20 RESULTS OF SEGMENT OPERATIONS Our businesses are organized into four operating segments: North America Retail, International, North America Pet, and North America Foodservice. The following tables provide the dollar amount and percentage of net sales and operating profit from each segment for fiscal 2026 and fiscal 2025: [[GREPCENT_TABLE]] [["","Fiscal Year"],["","2026","","2025"],["In Millions","Dollars","Percent of Total","","Dollars","Percent of Total"],["Net Sales"],["North America Retail","$10,571.8","57%","","$11,907.0","61%"],["International","3,043.8","17","","2,797.8","14"],["North America Pet","2,613.3","14","","2,470.8","13"],["North America Foodservice","2,169.5","12","","2,300.9","12"],["Total","$18,398.4","100%","","$19,476.5","100%"],["Segment Operating Profit"],["North America Retail","$2,189.0","68%","","$2,729.9","73%"],["International","188.7","6","","96.4","3"],["North America Pet","498.8","16","","501.0","14"],["North America Foodservice","333.0","10","","355.4","10"],["Total","$3,209.5","100%","","$3,682.7","100%"]] [[/GREPCENT_TABLE]] Net sales of $26 million in fiscal 2026 and $10 million in fiscal 2025 related to businesses managed by our Strategic Growth Office are included within corporate and other net sales, which is reported separately from segment net sales. Segment operating profit as reviewed by our executive management excludes unallocated corporate items, net gain or loss on divestitures, and restructuring, transformation, impairment, and other exit costs that are centrally managed. NORTH AMERICA RETAIL SEGMENT Our North America Retail operating segment reflects business with a wide variety of grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, convenience stores, and e-commerce grocery providers. Our product categories in this business segment include ready-to-eat cereals, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, snack bars, fruit snacks, savory snacks, and a wide variety of organic products including ready-to-eat cereal, frozen vegetables, meal kits, fruit snacks and snack bars. North America Retail net sales were as follows: [[GREPCENT_TABLE]] [["","Fiscal 2026","","Fiscal 2026 vs. 2025 Percentage Change","Fiscal 2025"],["Net sales (in millions)","$10,571.8","","(11)","%","$11,907.0"],["Contributions from volume growth (a)","","","(16)","pts"],["Net price realization and mix","","","5","pts"],["Foreign currency exchange","","","Flat"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. North America Retail net sales decreased 11 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions from volume growth, partially offset by favorable net price realization and mix, both of which include the impact from the Divestitures. 21 The components of North America Retail organic net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["","Fiscal 2026 vs. 2025 Percentage Change"],["Contributions from organic volume growth (a)","(1)","pt"],["Organic net price realization and mix","(2)","pts"],["Organic net sales growth","(3)","pts"],["Foreign currency exchange","Flat"],["Divestitures (b)","(9)","pts"],["53rd week","1","pt"],["Net sales growth","(11)","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. (b)Divestiture of the United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal 2025. Please refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report. North America Retail organic net sales decreased 3 percent in fiscal 2026 compared to fiscal 2025, driven by unfavorable organic net price realization and mix and a decrease in contributions from organic volume growth. Net sales for our North America Retail operating units are shown in the following table: [[GREPCENT_TABLE]] [["In Millions","Fiscal 2026","","Fiscal 2026 vs. 2025 Percentage Change","","Fiscal 2025"],["Big G Cereal & Canada (a)","$3,153.4","","(27)%","","$4,311.8"],["U.S. Snacks","3,212.6","","(4)%","","3,356.3"],["U.S. Meals & Baking Solutions","4,205.8","","(1)%","","4,238.9"],["Total","$10,571.8","","(11)%","","$11,907.0"]] [[/GREPCENT_TABLE]] (a)Upon completion of the United States yogurt business divestiture in fiscal 2026, the former U.S. Morning Foods and Canada operating units were combined into a new Big G Cereal & Canada operating unit. Please refer to Note 17 to the Consolidated Financial Statements in Part II, Item 8 of this report. Segment operating profit decreased 20 percent to $2,189 million in fiscal 2026, including the impact of the Divestitures, compared to $2,730 million in fiscal 2025, primarily driven by a decrease in contributions from volume growth and higher input costs, partially offset by favorable net price realization and mix and lower SG&A expenses. Segment operating profit decreased 20 percent on a constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP). INTERNATIONAL SEGMENT Our International operating segment consists of retail and foodservice businesses outside of the United States and Canada. Our product categories include super-premium ice cream and frozen desserts, meal kits, salty snacks, snack bars, dessert and baking mixes, shelf- stable vegetables, and pet food products. We also sell super-premium ice cream and frozen desserts directly to consumers through owned retail shops. Our International segment also includes products manufactured in the United States for export, mainly to Caribbean and Latin American markets, as well as products we manufacture for sale to our international joint ventures. Revenues from export activities are reported in the region or country where the end customer is located. 22 International net sales were as follows: [[GREPCENT_TABLE]] [["","Fiscal 2026","","Fiscal 2026 vs. 2025 Percentage Change","Fiscal 2025"],["Net sales (in millions)","$3,043.8","","9","%","$2,797.8"],["Contributions from volume growth (a)","","","3","pts"],["Net price realization and mix","","","2","pts"],["Foreign currency exchange","","","4","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. International net sales increased 9 percent in fiscal 2026 compared to fiscal 2025, driven by favorable foreign currency exchange impacts, an increase in contributions from volume growth, and favorable net price realization and mix. The components of International organic net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["","Fiscal 2026 vs. 2025 Percentage Change"],["Contributions from organic volume growth (a)","2","pts"],["Organic net price realization and mix","1","pt"],["Organic net sales growth","3","pts"],["Foreign currency exchange","4","pts"],["53rd week","2","pts"],["Net sales growth","9","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. International organic net sales increased 3 percent in fiscal 2026 compared to fiscal 2025, driven by an increase in contributions from organic volume growth and favorable organic net price realization and mix. Segment operating profit increased 96 percent to $189 million in fiscal 2026 compared to $96 million in 2025, primarily driven by favorable net price realization and mix and an increase in contributions from volume growth, partially offset by higher input costs and higher SG&A expenses, including increased media and advertising expenses. Segment operating profit increased 90 percent on a constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP). NORTH AMERICA PET SEGMENT Our North America Pet operating segment includes pet food products sold primarily in the United States and Canada in national pet superstore chains, e-commerce retailers, grocery stores, regional pet store chains, mass merchandisers, and veterinary clinics and hospitals. Our product categories include dog and cat food (dry foods, wet foods, fresh foods, and treats) made with whole meats, fruits, and vegetables and other high-quality natural ingredients. Our tailored pet product offerings address specific dietary, lifestyle, and life-stage needs and span different product types, diet types, breed sizes for dogs, life stages, flavors, product functions, and textures and cuts for wet and fresh foods. North America Pet net sales were as follows: [[GREPCENT_TABLE]] [["","Fiscal 2026","","Fiscal 2026 vs. 2025 Percentage Change","Fiscal 2025"],["Net sales (in millions)","$2,613.3","","6","%","$2,470.8"],["Contributions from volume growth (a)","","","Flat"],["Net price realization and mix","","","5","pts"],["Foreign currency exchange","","","Flat"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. North America Pet net sales increased 6 percent in fiscal 2026 compared to fiscal 2025, driven by favorable net price realization and mix, which includes the impact of the Acquisition. 23 The components of North America Pet organic net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["","Fiscal 2026 vs. 2025 Percentage Change"],["Contributions from organic volume growth (a)","(5)","pts"],["Organic net price realization and mix","2","pts"],["Organic net sales growth","(3)","pts"],["Foreign currency exchange","Flat"],["Acquisition (b)","6","pts"],["53rd week","2","pts"],["Net sales growth","6","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. (b)Acquisition of Whitebridge Pet Brands business in the third quarter of fiscal 2025. Please refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report. North America Pet organic net sales decreased 3 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions from organic volume growth, partially offset by favorable organic net price realization and mix. North America Pet operating profit was essentially flat at $499 million in fiscal 2026, including the impact of the Acquisition, compared to $501 million in fiscal 2025. Segment operating profit was essentially flat on a constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP). NORTH AMERICA FOODSERVICE SEGMENT Our North America Foodservice segment consists of foodservice businesses in the United States and Canada. Our major product categories in our North America Foodservice operating segment are ready-to-eat cereals, snacks, frozen meals, unbaked and fully baked frozen dough products, baking mixes, and bakery flour. Many products we sell are branded to the consumer and nearly all are branded to our customers. We sell to distributors and operators in many customer channels including foodservice, vending, and supermarket bakeries. North America Foodservice net sales were as follows: [[GREPCENT_TABLE]] [["","Fiscal 2026","","Fiscal 2026 vs. 2025 Percentage Change","Fiscal 2025"],["Net sales (in millions)","$2,169.5","","(6)","%","$2,300.9"],["Contributions from volume growth (a)","","","(4)","pts"],["Net price realization and mix","","","(2)","pts"],["Foreign currency exchange","","","Flat"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. North America Foodservice net sales decreased 6 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions from volume growth and unfavorable net price realization and mix, both of which include the impact from the Divestitures. 24 The components of North America Foodservice organic net sales growth are shown in the following table: [[GREPCENT_TABLE]] [["","Fiscal 2026 vs. 2025 Percentage Change"],["Contributions from organic volume growth (a)","(2)","pts"],["Organic net price realization and mix","1","pt"],["Organic net sales growth","(1)","pt"],["Foreign currency exchange","Flat"],["Divestitures (b)","(7)","pts"],["53rd week","2","pts"],["Net sales growth","(6)","pts"]] [[/GREPCENT_TABLE]] Note: Table may not foot due to rounding. (a)Measured in tons based on the stated weight of our product shipments. (b)Divestiture of the United States yogurt business in the first quarter of fiscal 2026 and the Canada yogurt business in the third quarter of fiscal 2025. Please refer to Note 3 to the Consolidated Financial Statements in Part II, Item 8 of this report. North America Foodservice organic net sales decreased 1 percent in fiscal 2026 compared to fiscal 2025, driven by a decrease in contributions from organic volume growth, partially offset by favorable organic net price realization and mix. Segment operating profit decreased 6 percent to $333 million in fiscal 2026, including the impact from the Divestitures, compared to $355 million in fiscal 2025, primarily driven by a decrease in contributions from volume growth and higher input costs, partially offset by favorable net price realization and mix. Segment operating profit decreased 6 percent on a constant-currency basis in fiscal 2026 compared to fiscal 2025 (see the “Non-GAAP Measures” section below for our use of this measure not defined by GAAP). UNALLOCATED CORPORATE ITEMS Unallocated corporate items include corporate overhead expenses, variances to planned domestic employee benefits and incentives, certain charitable contributions, restructuring initiative project-related costs, gains and losses on corporate investments, results from certain businesses managed by our Strategic Growth Office, and other items that are not part of our measurement of segment operating performance. These include gains and losses arising from the revaluation of certain grain inventories and gains and losses from mark- to-market valuation of certain commodity positions until passed back to our operating segments. These items affecting operating profit are centrally managed at the corporate level and are excluded from the measure of segment profitability reviewed by executive management. Under our supply chain organization, our manufacturing, warehouse, and distribution activities are substantially integrated across our operations in order to maximize efficiency and productivity. As a result, fixed assets and depreciation and amortization expenses are neither maintained nor available by operating segment. Unallocated corporate expense totaled $402 million in fiscal 2026, compared to $396 million last year. In fiscal 2026, certain compensation and benefits expenses increased compared to fiscal 2025, including the impact of the 53rd week. We recorded $19 million of restructuring charges in cost of sales in fiscal 2026, compared to $9 million of charges in cost of sales in fiscal 2025. Additionally, we recorded a $48 million net decrease in expense related to the mark-to-market valuation of certain commodity positions and grain inventories in fiscal 2026, compared to a $16 million net decrease last year. In fiscal 2026, we also recorded $31 million of transaction costs, primarily related to the Divestitures and the definitive agreement to sell our Brazil business, compared to $49 million of transaction costs related to the Divestitures and the Acquisition last year. IMPACT OF INFLATION We experienced broad-based global input cost inflation of 4 percent in fiscal 2026 and 4 percent in fiscal 2025. We expect approximately 4 percent to 5 percent input cost inflation in fiscal 2027. We attempt to minimize the effects of inflation through HMM, Strategic Revenue Management (SRM), planning, and operating practices. Our market risk management practices are discussed in