SPARKS, Md., June 29, 2017 /PRNewswire/
-- McCormick & Company, Incorporated (NYSE: MKC), a
global leader in flavor, today reported financial results for the
second quarter ended May 31, 2017 and
provided its latest financial outlook for fiscal year 2017.
- Sales rose 5% in the second quarter from the year-ago
period. In constant currency, the company grew sales 7%, with
increases in both the consumer and industrial segments.
- Operating income was $133
million in the second quarter compared to $125 million in the year-ago period. Adjusted
operating income was $137 million, a
7% increase from $129 million in the
second quarter of 2016, and a 9% increase in constant
currency.
- Earnings per share was $0.79
in the second quarter compared to $0.73 in the year-ago period driven by higher
operating income. Adjusted earnings per share rose 9% to
$0.82 from $0.75.
- For the 2017 fiscal year, the company updated its financial
outlook to reflect a lower impact from unfavorable foreign currency
on net sales and a higher impact from special charges. Excluding
these impacts, the company reaffirmed its expected constant
currency growth rate for sales, adjusted operating income and
adjusted earnings per share.
Chairman, President & CEO's Remarks
Lawrence E. Kurzius, Chairman,
President and CEO, stated, "Our strong second quarter financial
results reflect the effectiveness of our sales and profit growth
strategies driven by the engagement of our employees around the
world. Both our consumer and industrial segments contributed
to our constant currency sales growth of 7%. Our consumer
segment delivered base and new product sales growth from the year
ago period, with solid performance in the Americas and strong
momentum in China, partially
offset by the impact of challenging environments in Europe, Middle
East and Africa
(EMEA). Our industrial business delivered excellent sales
growth driven by new products, expanded distribution, and customer
intimacy. In addition to our strong base business and new
product growth, the acquisitions of Giotti and Gourmet Garden
contributed to higher sales as valuable additions to our global
portfolio of flavors. Through the second quarter, we have
grown sales 6% in constant currency within our 2017 constant
currency sales growth objective of 5 to 7%.
"McCormick is a global leader in flavor - a growing and
advantaged business platform. We are continuing to capitalize
on the global and growing consumer interest in healthy, flavorful
eating, the source and quality of ingredients, and sustainable and
socially responsible practices. We are aligned with the
increased demand for great taste and healthy eating and are
confident in our plans to drive growth through new products across
both of our segments, through our strong brand marketing programs
and with our opportunities to expand distribution. We are
balancing our resources and efforts to drive sales with our work to
lower costs, and are on-track to achieve at least $100 million of cost savings in 2017 led by our
Comprehensive Continuous Improvement (CCI) program. We have
embarked on our McCormick Global Enablement (MGE) initiative and
will be changing our global processes, capabilities and operating
model over the next three years to build a scalable platform for
future growth.
"I want to recognize McCormick employees around the world for
their efforts and engagement. With our vision to bring the
joy of flavor to life and our steadfast focus on growth,
performance, and people, we are well-positioned to deliver strong
financial results in 2017 and build value for our
shareholders."
Second Quarter 2017 Results
McCormick reported a 5% sales increase in the second quarter
from the year-ago period, including a 2% unfavorable impact from
currency. Consumer segment sales grew by 2%, including a 2%
unfavorable impact from currency. The consumer segment sales
increase was primarily driven by solid U.S. base business and new
product growth in the Americas, strong momentum in China, and the incremental impact of Gourmet
Garden, acquired in April 2016.
These sales increases for the consumer segment were offset in
part by the impact of a challenging retail environment in the U.K.
Industrial segment sales grew by 9%, including a 3% unfavorable
impact from currency. Industrial sales growth was driven by
increased sales across all three of our regions, including the
incremental impact of the acquisition of Giotti, acquired in
December 2016. Across both
segments, acquisitions contributed 3% to the sales growth in the
second quarter of 2017. In constant currency, the company
grew sales 7%.
Operating income was $133 million
in the second quarter compared to $125
million in the year-ago period. This increase was due
to higher sales, a shift in the portfolio to more value added
products and CCI-led cost savings, offset in part by the
unfavorable impact of currency and an increase in special charges.
The company recorded $5 million
of special charges in the second quarter of 2017 related to
organization and streamlining actions versus $4 million in 2016. Excluding special
charges, adjusted operating income was $137
million compared to $129
million of adjusted operating income in the year-ago
period. In constant currency, the company grew adjusted
operating income 9%.
Earnings per share was $0.79 in
the second quarter of 2017 compared to $0.73 in the year-ago period. Special charges
lowered earnings per share by $0.03
and $0.02 in 2017 and 2016,
respectively. The increase in earnings per share was driven
primarily by higher operating income. Excluding the impact of
special charges, adjusted earnings per share was $0.82 in the second quarter of 2017 compared to
$0.75 in the year-ago period.
The company continues to generate strong cash flow.
Year-to-date net cash provided by operating activities
through the second quarter of 2017 was $177
million compared to $213
million through the second quarter of 2016, with the
decrease mainly due to the timing of income tax payments and
incentive compensation payments related to 2016's financial
performance.
2017 Financial Outlook
For the 2017 fiscal year, McCormick updated its financial
outlook to reflect a lower impact from unfavorable foreign currency
exchange rates on net sales and a higher impact of special
charges. Excluding this impact, the company reaffirmed its
expected constant currency growth rates for sales, adjusted
operating income and adjusted earnings per share.
In 2017, McCormick expects to grow sales 4% to 6% compared to
2016. Excluding the impact of unfavorable currency rates, the
projected growth remains 5% to 7%. The company expects to
drive sales growth with new products, brand marketing, expanded
distribution and the incremental sales impact of acquisitions
completed in fiscal year 2016 and from Giotti, acquired in December
2016. Sales growth is also expected to be driven by pricing
actions that are intended to offset an anticipated mid-single digit
increase in material costs. The company has plans to achieve
at least $100 million of cost savings
and intends to use these savings to improve margins, fund a mid to
high-single digit increase in brand marketing, and as a further
offset to increased material costs.
Operating income in 2017 is expected to grow 8% to 10% from
$641 million of operating income in
2016. The company's three year MGE initiative will generate
savings of approximately $30 million to $40
million annually once fully implemented. While the
company is still finalizing the details of its operating model, the
expected cost to implement MGE will be approximately $55 million to $65 million of special charges
over the course of the three year initiative. The impact of
MGE is the primary driver for the increased 2017 special charge
projection to approximately $20
million from $11 million.
Excluding the impact of special charges in 2017 and 2016, the
company expects to grow adjusted operating income 8% to 10% from
adjusted operating income of $657
million in 2016. Excluding the estimated impact of
unfavorable currency rates, the expected year to year increase in
adjusted operating income remains 9% to 11%.
McCormick projects 2017 earnings per share to be in the range of
$3.94 to $4.02 compared to
$3.69 of earnings per share in
2016. Excluding an estimated $0.11 impact of special charges in 2017, the
company reaffirms projected adjusted earnings per share of
$4.05 to $4.13. This is an
increase of 7% to 9% from adjusted earnings per share of
$3.78 in 2016. This range of
growth includes an estimated unfavorable impact of 2 percentage
points from unfavorable currency rates. For fiscal year 2017,
the company projects another year of strong cash flow, with plans
to return a significant portion to McCormick's shareholders through
dividends and share repurchases, absent any acquisitions.
Business Segment
Results
|
|
Consumer
Segment
|
|
(in
millions)
|
|
Three months
ended
|
|
Six months
ended
|
|
|
5/31/2017
|
|
5/31/2016
|
|
5/31/2017
|
|
5/31/2016
|
Net sales
|
|
$
|
656.4
|
|
|
$
|
641.8
|
|
|
$
|
1,295.0
|
|
|
$
|
1,275.6
|
|
Operating
income
|
|
88.3
|
|
|
82.9
|
|
|
183.7
|
|
|
175.9
|
|
Operating income,
excluding special
charges
|
|
91.3
|
|
|
86.4
|
|
|
189.2
|
|
|
180.7
|
|
The company grew consumer segment sales 2% when compared to the
second quarter of 2016. In constant currency, sales rose
4%.
- Consumer sales in the Americas rose 5%, with minimal impact
from currency. In the U.S., the company increased sales driven by
new products, expanded distribution, and strength in McCormick
Grill Mates and the Gourmet spices and seasonings product line.
Incremental sales from the acquisition of Gourmet Garden
contributed 2 percentage points to sales growth.
- Consumer sales in EMEA decreased 9%. In constant currency,
sales decreased 5% from the year-ago period mainly due to weak
sales in the U.K. where the competitive retail environment has been
challenging.
- Second quarter consumer sales in the Asia/Pacific region rose 10% and in constant
currency, sales rose 15%. Sales of Gourmet Garden added 4
percentage points of the increase in this region. The company
achieved strong sales growth in China as well as in India.
Consumer segment operating income, excluding special charges,
rose 6% to $91 million compared to
$86 million in the year-ago
period. In constant currency, adjusted operating income rose
7%. The favorable impact of higher sales and CCI-led cost
savings, more than offset the unfavorable impact of increases in
material costs.
Industrial
Segment
|
|
(in
millions)
|
|
Three months
ended
|
|
Six months
ended
|
|
|
5/31/2017
|
|
5/31/2016
|
|
5/31/2017
|
|
5/31/2016
|
Net sales
|
|
$
|
457.9
|
|
|
$
|
421.5
|
|
|
$
|
863.0
|
|
|
$
|
817.9
|
|
Operating
income
|
|
44.3
|
|
|
42.1
|
|
|
83.1
|
|
|
78.2
|
|
Operating income,
excluding special
charges
|
|
46.0
|
|
|
42.5
|
|
|
85.9
|
|
|
78.9
|
|
Industrial segment sales increased 9% from the second quarter of
2016. In constant currency sales rose 12% with increases in
each of the company's three regions.
- Industrial sales in the Americas grew 6% from the year-ago
period. In constant currency, the increase was 8%. This was led by
double-digit increases in sales of both savory flavor products and
snack seasonings as well as strong branded foodservice growth,
offset in part by weaker demand from quick service
restaurants.
- In EMEA, industrial sales grew 22% in the second quarter. In
constant currency, sales rose 33%, with sales from Giotti
contributing 23% to this growth. Sales to both quick service
restaurants and packaged food companies increased during the
period. Industrial sales in this region were unfavorably impacted
by the discontinuation of a lower margin business.
- Industrial sales in the Asia/Pacific region were comparable to the
year ago period and rose 3% in constant currency as a result of
higher volume and product mix.
Industrial segment operating income, excluding special charges,
rose 8% to $46 million from
$43 million in the year-ago
period. In constant currency, adjusted operating income rose
13%. The favorable impact of higher sales, product mix and
CCI-led cost savings, more than offset the unfavorable impact of
increases in material costs and an increase in brand marketing.
Non-GAAP Financial Measures
The tables below include financial measures of adjusted
operating income, adjusted net income and adjusted diluted earnings
per share, each excluding the impact of special charges for the
periods presented. These represent non-GAAP financial
measures which are prepared as a complement to our financial
results prepared in accordance with United States generally accepted accounting
principles. In our consolidated income statement, we include
a separate line item captioned "special charges" in arriving at our
consolidated operating income. Special charges consist of
expenses associated with certain actions undertaken by the company
to reduce fixed costs, simplify or improve processes, and improve
our competitiveness and are of such significance in terms of both
up-front costs and organizational/structural impact to require
advance approval by our Management Committee, comprised of our
Chairman, President and Chief Executive Officer; Executive Vice
President and Chief Financial Officer; President Global Industrial
Segment and McCormick International; President Global Consumer
Segment and North America; and
Senior Vice President, Human Relations. Upon presentation of
any such proposed action (including details with respect to
estimated costs, which generally consist principally of employee
severance and related benefits, together with ancillary costs
associated with the action that may include a non-cash component or
a component which relates to inventory adjustments that are
included in cost of goods sold; impacted employees or operations;
expected timing; and expected benefits) to the Management Committee
and the Committee's advance approval, expenses associated with the
approved action are classified as special charges upon recognition
and monitored on an on-going basis through completion.
We believe that these non-GAAP financial measures are
important. The exclusion of special charges provides
additional information that enables enhanced comparisons to prior
periods and, accordingly, facilitates the development of future
projections and earnings growth prospects. This information
is also used by management to measure the profitability of our
ongoing operations and analyze our business performance and
trends.
These non-GAAP financial measures may be considered in addition
to results prepared in accordance with GAAP, but should not be
considered a substitute for, or superior to, GAAP results. In
addition, these non-GAAP financial measures may not be comparable
to similarly titled measures of other companies because other
companies may not calculate them in the same manner that we do.
We intend to continue to provide these non-GAAP financial
measures as part of our future earnings discussions and, therefore,
the inclusion of these non-GAAP financial measures will provide
consistency in our financial reporting. A reconciliation of
these non-GAAP financial measures to the related GAAP financial
measures is provided below:
(in millions except
per share data)
|
Three Months
Ended
|
|
Six Months
Ended
|
|
5/31/2017
|
|
5/31/2016
|
|
5/31/2017
|
|
5/31/2016
|
Operating
income
|
$
|
132.6
|
|
|
$
|
125.0
|
|
|
$
|
266.8
|
|
|
$
|
254.1
|
|
Impact of special
charges
|
4.7
|
|
|
3.9
|
|
|
8.3
|
|
|
5.5
|
|
Adjusted operating
income
|
$
|
137.3
|
|
|
$
|
128.9
|
|
|
$
|
275.1
|
|
|
$
|
259.6
|
|
% increase versus
prior period
|
6.5
|
%
|
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
100.0
|
|
|
$
|
93.8
|
|
|
$
|
193.5
|
|
|
$
|
187.2
|
|
Impact of special
charges above (1)
|
3.4
|
|
|
2.7
|
|
|
5.9
|
|
|
4.0
|
|
Adjusted net
income
|
$
|
103.4
|
|
|
$
|
96.5
|
|
|
$
|
199.4
|
|
|
$
|
191.2
|
|
% increase versus
prior period
|
7.2
|
%
|
|
|
|
4.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
|
0.79
|
|
|
$
|
0.73
|
|
|
$
|
1.53
|
|
|
$
|
1.46
|
|
Impact of special
charges above
|
0.03
|
|
|
0.02
|
|
|
0.04
|
|
|
0.03
|
|
Adjusted earnings per
share - diluted
|
$
|
0.82
|
|
|
$
|
0.75
|
|
|
$
|
1.57
|
|
|
$
|
1.49
|
|
% increase versus
prior period
|
9.3
|
%
|
|
|
|
5.4
|
%
|
|
|
|
(1) Special
charges of $4.7 million and $8.3 million for the three and six
months ended May 31, 2017 and $3.9 million and $5.5 million for the
three and six months ended May 31, 2016 are net of taxes of $1.3
million, $2.4 million, $1.2 million and $1.5 million,
respectively.
|
Because we are a multi-national company, we are subject to
variability of our reported U.S. dollar results due to changes in
foreign currency exchange rates. Those changes have been
volatile over the past several years. The exclusion of the
effects of foreign currency exchange, or what we refer to as
amounts expressed "on a constant currency basis", is a non-GAAP
measure. We believe that this non-GAAP measure provides
additional information that enables enhanced comparison to prior
periods excluding the translation effects of changes in rates of
foreign currency exchange and provides additional insight into the
underlying performance of our operations located outside of the
U.S. It should be noted that our presentation herein of
amounts and percentage changes on a constant currency basis does
not exclude the impact of foreign currency transaction gains and
losses (that is, the impact of transactions denominated in other
than the local currency of any of our subsidiaries in their local
currency reported results).
Percentage changes in sales and adjusted operating income
expressed in "constant currency" are presented excluding the impact
of foreign currency exchange. To present this information for
historical periods, current period results for entities reporting
in currencies other than the U.S. dollar are translated into U.S.
dollars at the average exchange rates in effect during the
corresponding period of the prior fiscal year, rather than at the
actual average exchange rates in effect during the current fiscal
year. As a result, the foreign currency impact is equal to
the current year results in local currencies multiplied by the
change in the average foreign currency exchange rate between the
current fiscal period and the corresponding period of the prior
fiscal year. Constant currency growth rates follow:
|
|
|
Three Months Ended
May 31, 2017
|
|
|
|
Percentage Change
as Reported
|
|
Impact of Foreign
Currency Exchange
|
|
Percentage Change
on Constant Currency
Basis
|
Net
sales
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
|
|
|
|
|
Americas
|
|
|
4.8%
|
|
(0.3)%
|
|
5.1%
|
EMEA
|
|
|
(9.2)%
|
|
(4.4)%
|
|
(4.8)%
|
Asia/Pacific
|
|
|
10.0%
|
|
(4.6)%
|
|
14.6%
|
Total consumer
segment
|
|
|
2.3%
|
|
(1.8)%
|
|
4.1%
|
Industrial
segment
|
|
|
|
|
|
|
|
Americas
|
|
|
6.4%
|
|
(1.4)%
|
|
7.8%
|
EMEA
|
|
|
22.4%
|
|
(10.6)%
|
|
33.0%
|
Asia/Pacific
|
|
|
(0.1)%
|
|
(3.0)%
|
|
2.9%
|
Total industrial
segment
|
|
|
8.6%
|
|
(3.3)%
|
|
11.9%
|
Total net
sales
|
|
|
4.8%
|
|
(2.4)%
|
|
7.2%
|
Adjusted operating
income
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
5.7%
|
|
(1.3)%
|
|
7.0%
|
Industrial segment
|
|
|
8.2%
|
|
(5.2)%
|
|
13.4%
|
Total adjusted
operating
income
|
|
|
6.5%
|
|
(2.6)%
|
|
9.1%
|
|
|
|
Six Months Ended May
31, 2017
|
|
|
|
Percentage Change
as Reported
|
|
Impact of Foreign
Currency Exchange
|
|
Percentage Change
on Constant Currency
Basis
|
Net
sales
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
|
|
|
|
|
Americas
|
|
|
3.5%
|
|
—%
|
|
3.5%
|
EMEA
|
|
|
(8.2)%
|
|
(3.5)%
|
|
(4.7)%
|
Asia/Pacific
|
|
|
8.3%
|
|
(5.3)%
|
|
13.6%
|
Total consumer
segment
|
|
|
1.5%
|
|
(1.6)%
|
|
3.1%
|
Industrial
segment
|
|
|
|
|
|
|
|
Americas
|
|
|
4.3%
|
|
(1.4)%
|
|
5.7%
|
EMEA
|
|
|
11.5%
|
|
(11.4)%
|
|
22.9%
|
Asia/Pacific
|
|
|
3.1%
|
|
(3.1)%
|
|
6.2%
|
Total industrial
segment
|
|
|
5.5%
|
|
(3.5)%
|
|
9.0%
|
Total net
sales
|
|
|
3.1%
|
|
(2.4)%
|
|
5.5%
|
Adjusted operating
income
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
4.7%
|
|
(1.1)%
|
|
5.8%
|
Industrial segment
|
|
|
8.9%
|
|
(6.4)%
|
|
15.3%
|
Total adjusted
operating
income
|
|
|
6.0%
|
|
(2.7)%
|
|
8.7%
|
To present the percentage change in projected 2017 sales,
adjusted operating income and adjusted earnings per share on a
constant currency basis, projected sales and adjusted operating
income for entities reporting in currencies other than the U.S.
dollar are translated into U.S. dollars at the company's budgeted
exchange rate for 2017 and are compared to the 2016 results,
translated into U.S. dollars using the same 2017 budgeted exchange
rate, rather than at the average actual exchange rates in effect
during fiscal year 2016. This calculation is performed to
arrive at adjusted net income divided by historical shares
outstanding for fiscal year 2016 or projected shares outstanding
for fiscal year 2017, as appropriate.
Fiscal year 2016 actual results and 2017 projections
(in millions except
per share data)
|
|
|
Twelve Months
Ended
|
|
|
|
2017
Projection
|
|
11/30/16
|
Operating
income
|
|
|
|
|
$
|
641.0
|
Impact of special
charges
|
|
|
|
|
16.0
|
Adjusted operating
income
|
|
|
|
|
$
|
657.0
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
|
$3.94 to
$4.02
|
|
$
|
3.69
|
Impact of special
charges, including special charges
attributable to non-controlling interests
|
|
|
0.11
|
|
0.09
|
Adjusted earnings per
share - diluted
|
|
|
$4.05 to
$4.13
|
|
$
|
3.78
|
|
|
|
|
|
|
Percentage change in
sales
|
|
|
4% to 6%
|
|
|
Impact of foreign
currency exchange rates
|
|
|
(1)%
|
|
|
Percentage change in
sales on constant currency
basis
|
|
|
5% to 7%
|
|
|
|
|
|
|
|
|
Percentage change in
adjusted operating income
|
|
|
8% to 10%
|
|
|
Impact of foreign
currency exchange rates
|
|
|
(1)%
|
|
|
Percentage change in
adjusted operating income on
constant currency basis
|
|
|
9% to 11%
|
|
|
|
|
|
|
|
|
Percentage change in
adjusted earnings per share
|
|
|
7% to 9%
|
|
|
Impact of foreign
currency exchange rates
|
|
|
(2)%
|
|
|
Percentage change in
adjusted earnings per share
on constant currency basis
|
|
|
9% to 11%
|
|
|
Live Webcast
As previously announced, McCormick will hold a conference call
with analysts today at 8:00 a.m. ET.
The conference call will be webcast live via the McCormick web
site. Go to ir.mccormick.com and follow directions to listen
to the call and access the accompanying presentation materials. At
this same location, a replay of the call will be available
following the live call. Past press releases and additional
information can be found at this address.
Forward-looking Information
Certain information contained in this release, including
statements concerning expected performance such as those relating
to net sales, earnings, cost savings, acquisitions and brand
marketing support, are "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of
1934. These statements may be identified by the use of words
such as "may," "will," "expect," "should," "anticipate," "intend,"
"believe" and "plan." These statements may relate to: the
expected results of operations of businesses acquired by the
company, the expected impact of raw material costs and pricing
actions on the company's results of operations and gross margins,
the expected productivity and working capital improvements,
expectations regarding growth potential in various geographies and
markets, expected trends in net sales and earnings performance and
other financial measures, the expectations of pension and
postretirement plan contributions and anticipated charges
associated with such plans, the holding period and market risks
associated with financial instruments, the impact of foreign
exchange fluctuations, the adequacy of internally generated funds
and existing sources of liquidity, such as the availability of bank
financing, the ability to issue additional debt or equity
securities and expectations regarding purchasing shares of
McCormick's common stock under the existing repurchase
authorization.
These and other forward-looking statements are based on
management's current views and assumptions and involve risks and
uncertainties that could significantly affect expected
results. Results may be materially affected by factors such
as: damage to the company's reputation or brand name; loss of brand
relevance; increased private label use or other competitive
products; product quality, labeling, or safety concerns; negative
publicity about our products; business interruptions due to natural
disasters or unexpected events; actions by, and the financial
condition of, competitors and customers; the company's inability to
achieve expected and/or needed cost savings or margin improvements;
negative employee relations; the lack of successful acquisition and
integration of new businesses; issues affecting the company's
supply chain and raw materials, including fluctuations in the cost
and availability of raw and packaging materials; government
regulation, and changes in legal and regulatory requirements and
enforcement practices; global economic and financial conditions
generally, including the availability of financing, and interest
and inflation rates; the investment return on retirement plan
assets, and the costs associated with pension obligations; foreign
currency fluctuations; the stability of credit and capital markets;
risks associated with the company's information technology systems,
the threat of data breaches and cyber attacks; fundamental changes
in tax laws; volatility in our effective tax rate; climate change;
infringement of intellectual property rights, and those of
customers; litigation, legal and administrative proceedings; and
other risks described in the company's filings with the Securities
and Exchange Commission.
Actual results could differ materially from those projected in
the forward-looking statements. The company undertakes no
obligation to update or revise publicly, any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by law.
About McCormick
McCormick & Company,
Incorporated is a global leader in flavor. With $4.4 billion in annual sales, the company
manufactures, markets and distributes spices, seasoning mixes,
condiments and other flavorful products to the entire food industry
– retail outlets, food manufacturers and foodservice
businesses. Every day, no matter where or what you eat, you
can enjoy food flavored by McCormick. McCormick Brings the
Joy of Flavor to Life™.
For more information, visit www.mccormickcorporation.com.
For information contact:
Investor Relations:
Kasey Jenkins (410) 771-7140 or
kasey_jenkins@mccormick.com
Corporate Communications:
Lori Robinson (410) 527-6004 or
lori_robinson@mccormick.com
(Financial tables follow)
Second Quarter
Report
|
|
McCormick &
Company,
Incorporated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Income Statement (Unaudited)
|
|
|
|
|
|
|
|
|
(In millions except
per-share data)
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
|
May 31,
2017
|
|
May 31,
2016
|
|
May 31,
2017
|
|
May 31,
2016
|
Net sales
|
|
$
|
1,114.3
|
|
|
$
|
1,063.3
|
|
|
$
|
2,158.0
|
|
|
$
|
2,093.5
|
|
Cost of goods
sold
|
|
669.7
|
|
|
630.5
|
|
|
1,300.4
|
|
|
1,255.7
|
|
Gross
profit
|
|
444.6
|
|
|
432.8
|
|
|
857.6
|
|
|
837.8
|
|
Gross profit
margin
|
|
39.9
|
%
|
|
40.7
|
%
|
|
39.7
|
%
|
|
40.0
|
%
|
Selling, general and
administrative expense
|
|
307.3
|
|
|
303.9
|
|
|
582.5
|
|
|
578.2
|
|
Special
charges
|
|
4.7
|
|
|
3.9
|
|
|
8.3
|
|
|
5.5
|
|
Operating
income
|
|
132.6
|
|
|
125.0
|
|
|
266.8
|
|
|
254.1
|
|
Interest
expense
|
|
14.9
|
|
|
13.7
|
|
|
29.4
|
|
|
27.6
|
|
Other income,
net
|
|
1.2
|
|
|
0.7
|
|
|
1.3
|
|
|
1.8
|
|
Income from
consolidated operations before
income taxes
|
|
118.9
|
|
|
112.0
|
|
|
238.7
|
|
|
228.3
|
|
Income
taxes
|
|
27.3
|
|
|
25.9
|
|
|
60.6
|
|
|
57.2
|
|
Net income from
consolidated operations
|
|
91.6
|
|
|
86.1
|
|
|
178.1
|
|
|
171.1
|
|
Income from
unconsolidated operations
|
|
8.4
|
|
|
7.7
|
|
|
15.4
|
|
|
16.1
|
|
Net income
|
|
$
|
100.0
|
|
|
$
|
93.8
|
|
|
$
|
193.5
|
|
|
$
|
187.2
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
|
0.80
|
|
|
$
|
0.74
|
|
|
$
|
1.55
|
|
|
$
|
1.47
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
|
0.79
|
|
|
$
|
0.73
|
|
|
$
|
1.53
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding - basic
|
|
124.7
|
|
|
126.9
|
|
|
125.0
|
|
|
127.0
|
|
Average shares
outstanding - diluted
|
|
126.4
|
|
|
128.3
|
|
|
126.7
|
|
|
128.3
|
|
Second Quarter
Report
|
McCormick &
Company, Incorporated
|
|
|
|
|
|
Consolidated
Balance Sheet (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
May 31,
2017
|
|
May 31,
2016
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
130.0
|
|
|
$
|
131.5
|
|
Trade accounts
receivable, net
|
|
429.7
|
|
|
399.6
|
|
Inventories
|
|
779.8
|
|
|
739.6
|
|
Prepaid expenses and
other current assets
|
|
86.4
|
|
|
81.4
|
|
Total current
assets
|
|
1,425.9
|
|
|
1,352.1
|
|
Property, plant and
equipment, net
|
|
703.8
|
|
|
637.1
|
|
Goodwill
|
|
1,894.8
|
|
|
1,837.1
|
|
Intangible assets,
net
|
|
489.0
|
|
|
410.2
|
|
Investments and other
assets
|
|
358.6
|
|
|
371.1
|
|
Total
assets
|
|
$
|
4,872.1
|
|
|
$
|
4,607.6
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Short-term borrowings
and current portion of long-term debt
|
|
$
|
906.8
|
|
|
$
|
513.7
|
|
Trade accounts
payable
|
|
453.1
|
|
|
366.2
|
|
Other accrued
liabilities
|
|
441.5
|
|
|
389.6
|
|
Total current
liabilities
|
|
1,801.4
|
|
|
1,269.5
|
|
Long-term
debt
|
|
804.3
|
|
|
1,054.0
|
|
Other long-term
liabilities
|
|
457.0
|
|
|
510.6
|
|
Total
liabilities
|
|
3,062.7
|
|
|
2,834.1
|
|
Shareholders'
equity
|
|
|
|
|
Common
stock
|
|
1,103.2
|
|
|
1,074.4
|
|
Retained
earnings
|
|
1,074.2
|
|
|
1,069.8
|
|
Accumulated other
comprehensive loss
|
|
(379.3)
|
|
|
(387.7)
|
|
Non-controlling
interests
|
|
11.3
|
|
|
17.0
|
|
Total shareholders'
equity
|
|
1,809.4
|
|
|
1,773.5
|
|
Total liabilities and
shareholders' equity
|
|
$
|
4,872.1
|
|
|
$
|
4,607.6
|
|
Second Quarter
Report
|
|
McCormick & Company, Incorporated
|
|
|
|
|
|
Consolidated Cash
Flow Statement (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
May 31,
2017
|
|
May 31,
2016
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
|
193.5
|
|
|
$
|
187.2
|
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
58.1
|
|
|
53.0
|
|
Stock based
compensation
|
|
14.4
|
|
|
15.8
|
|
Income from
unconsolidated operations
|
|
(15.4)
|
|
|
(16.1)
|
|
Changes in operating
assets and liabilities
|
|
(85.1)
|
|
|
(43.7)
|
|
Dividends from
unconsolidated affiliates
|
|
11.7
|
|
|
16.5
|
|
Net cash flow
provided by operating activities
|
|
177.2
|
|
|
212.7
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Acquisition of
businesses (net of cash acquired)
|
|
(124.0)
|
|
|
(118.1)
|
|
Capital
expenditures
|
|
(66.2)
|
|
|
(54.8)
|
|
Proceeds from sale of
property, plant and equipment
|
|
0.4
|
|
|
1.5
|
|
Net cash flow used in
investing activities
|
|
(189.8)
|
|
|
(171.4)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Short-term
borrowings, net
|
|
264.0
|
|
|
373.8
|
|
Long-term debt
repayments
|
|
(3.6)
|
|
|
(201.8)
|
|
Proceeds from
exercised stock options
|
|
24.0
|
|
|
25.4
|
|
Taxes withheld and
paid on employee stock awards
|
|
(5.4)
|
|
|
(3.5)
|
|
Purchase of minority
interest
|
|
(1.2)
|
|
|
—
|
|
Common stock acquired
by purchase
|
|
(135.8)
|
|
|
(100.8)
|
|
Dividends
paid
|
|
(117.4)
|
|
|
(109.3)
|
|
Net cash flow
provided by (used in) financing activities
|
|
24.6
|
|
|
(16.2)
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
(0.4)
|
|
|
(6.2)
|
|
Increase in cash and
cash equivalents
|
|
11.6
|
|
|
18.9
|
|
Cash and cash
equivalents at beginning of period
|
|
118.4
|
|
|
112.6
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
$
|
130.0
|
|
|
$
|
131.5
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/mccormick-reports-strong-sales-and-profit-growth-in-second-quarter-300481524.html
SOURCE McCormick & Company, Incorporated