HUNT
VALLEY, Md., March 28,
2023 /PRNewswire/ -- McCormick & Company,
Incorporated (NYSE:MKC), a global leader in flavor, today reported
financial results for the first quarter ended February 28, 2023 and reaffirmed its financial
outlook for fiscal year 2023.
- Sales increased 3% in the first quarter from the year-ago
period. In constant currency, sales increased 5%. Both comparisons
include a 2% unfavorable impact from the Company's Kitchen Basics
divestiture, the exit of the Company's Consumer business in
Russia, and lower China consumption due to COVID-related
disruption.
- Operating income was $199
million in the first quarter compared to $207 million in the year-ago period. Adjusted
operating income of $227 million was
comparable to the first quarter of 2022. In constant currency,
adjusted operating income increased 2% from the year-ago
period.
- Earnings per share was $0.52
in the first quarter as compared to $0.57 in the year-ago period. Adjusted earnings
per share was $0.59 as compared to
$0.63 in the year-ago
period.
- For fiscal year 2023, McCormick reaffirmed its sales,
operating income, and earnings per share outlook.
Chairman and CEO's Remarks
Lawrence E. Kurzius, Chairman and
CEO, stated, "We delivered solid first quarter results which
reflect strong demand and early results from our actions to
increase our profit realization in 2023. Our first quarter record
sales performance reflects the strength of our broad global
portfolio and the effective execution of our strategies. Our Global
Operating Effectiveness (GOE) program is yielding results with
first quarter cost savings in line with our expectations. The
progress we are making on gross margin improvement reflects the
level of urgency with which we are addressing the pressure points
from last year. These results, combined with the strong demand we
continue to expect across our portfolio and our diligent approach
to optimizing our cost structure, bolster our confidence in
delivering our 2023 full year outlook.
"In the first quarter, we drove 5% constant currency sales
growth with strong underlying business performance tempered by the
impacts of our Kitchen Basics divestiture, COVID-related disruption
in China, and the exit of our
Consumer business in Russia. Our
Flavor Solutions segment sales growth was outstanding with
continued momentum across all three regions. The underlying
performance of our Consumer segment, excluding the Kitchen Basics,
China, and Russia impacts, reflects strong growth led by
the Americas region. Importantly, beginning in the second quarter,
as we lap the exit of our Consumer business in Russia and the impact of last year's
COVID-related shutdowns in China,
we expect an acceleration of our Consumer segment
growth.
"We drove considerable improvement in our gross margin
performance in the first quarter, despite experiencing the highest
cost inflation we expect for the year as well as continued elevated
costs in our Flavor Solutions segment to meet high demand. Our
gross margin reflects the continued recovery of the cost inflation
our pricing lagged last year as well as cost savings from our CCI
and GOE programs. The optimization of our costs through our GOE
program is progressing as planned. We expect the impact of our GOE
program to scale-up as the year progresses and we remain on track
to realize $75 million of cost
savings in 2023 resulting from our actions to normalize our supply
chain costs and to streamline our organization.
"As we look ahead to the balance of the year, we will continue
to focus on capitalizing on strong demand, optimizing our cost
structure, and positioning McCormick to deliver sustainable growth
and long-term shareholder value. We have strong growth plans in
place, including building momentum with our new products and heat
platform, and are delivering on our commitment to increasing our
profit realization. We are confident, with the successful execution
of our proven strategies, we will drive profitable growth in
2023.
"I want to recognize McCormick employees around the world as
they drive our momentum and success. I want to also thank all our
customers, suppliers and investors for their collaboration and
patience as we move beyond the unique environment we have been
operating in since the onset of the pandemic. The fundamentals that
drove our historical financial performance remain strong and we are
confident we will continue to not only deliver strong sales growth,
but also drive total shareholder return at an industry-leading
pace."
First Quarter 2023 Results
McCormick reported 3% sales growth in the first quarter from the
year-ago period, or 5% in constant currency. Constant currency
sales growth reflected an 11% increase from pricing actions
partially offset by a 2% volume decline from the Kitchen Basics
divestiture, lower China
consumption due to COVID-related disruption, and the exit of the
Consumer business in Russia, as
well as a 3% decline in all other volume and product mix.
Gross profit margin declined 80 basis points versus the first
quarter of last year. This decline was driven by higher cost
inflation and other supply chain costs partially offset by pricing
actions and cost savings led by the Company's Comprehensive
Continuous Improvement (CCI) and GOE programs. Selling, general,
and administrative expenses were comparable to the year-ago period
with higher distribution costs offset by CCI-led and GOE cost
savings as well as lower brand marketing and employee benefit
expenses. Operating income declined to $199
million in the first quarter of 2023 compared to
$207 million in the first quarter of
2022 driven by higher special charges. Excluding special charges,
as well as integration expenses in 2022, adjusted operating income
of $227 million was comparable to the
year-ago period. In constant currency, adjusted operating income
increased 2% in the first quarter from the year-ago period driven
by the favorable impact of higher sales partially offset by gross
margin compression.
Earnings per share was $0.52 in
the first quarter of 2023 compared to $0.57 in the first quarter of 2022. Special
charges lowered earnings per share by $0.07 in the first quarter of 2023 compared to
$0.06 in the year-ago period.
Excluding these impacts, adjusted earnings per share was
$0.59 in the first quarter of 2023
compared to $0.63 in the year-ago
period. This decrease was driven by higher interest expense and a
higher adjusted effective tax rate.
Net cash provided by operating activities in the first quarter
of 2023 was $103 million compared to
$18 million in the first quarter of
2022. The increase was primarily driven by lower incentive
compensation payments.
Fiscal Year 2023 Financial Outlook
For fiscal year 2023, McCormick reaffirmed its financial outlook
which was previously issued with the Company's fourth quarter 2022
results on January 26, 2023.
McCormick's broad and advantaged global flavor portfolio enables
the Company to meet the rising demand for flavor around the world.
The Company is capitalizing on the growing consumer interests in
healthy and flavorful cooking, digital engagement, valuing trusted
brands, and purpose-minded practices. This, coupled with the
breadth and reach of McCormick's portfolio and its proven
strategies, positions the Company to sustainably continue its
growth trajectory.
McCormick expects strong underlying business performance in 2023
driven by sales growth. The Company also expects a favorable impact
to operating income from its GOE program and the lapping of the
negative impact of the COVID-related disruptions in China in 2022, partially offset by the Kitchen
Basics divestiture and an expected increase in employee incentive
compensation expenses given the expected improvement in underlying
business performance. In addition, the Company expects earnings per
share growth will be tempered by higher interest expense and a
higher projected effective tax rate compared to 2022. Excluding
this interest and tax headwind, McCormick's operating performance
growth is expected to be strong. The Company expects minimal impact
on net sales, operating income, and earnings per share from
currency rates in 2023.
In 2023, McCormick expects to grow sales by 5% to 7% compared to
2022. The Company expects sales growth to be driven primarily by
pricing actions, which in conjunction with cost savings, are
expected to offset inflationary pressures. McCormick also expects
to drive continued growth through the strength of its brands, as
well as brand marketing, new products, category management, and
differentiated customer engagement plans.
Operating income in 2023 is expected to grow by 10% to 12% from
$864 million in 2022. The Company
anticipates approximately $50 million
of special charges in 2023 that relate to previous organizational
and streamlining actions. Excluding the impact of special charges
and integration expenses in 2023 and 2022, adjusted operating
income is expected to increase 9% to 11%.
McCormick projects 2023 earnings per share to be in the range of
$2.42 to $2.47, compared to $2.52 of earnings per share in 2022. The Company
expects special charges to lower earnings per share by $0.14 in 2023. Excluding these impacts, the
Company projects 2023 adjusted earnings per share to be in the
range of $2.56 to $2.61, compared to $2.53 of adjusted earnings per share in 2022,
which represents an expected increase of 1% to 3%. This reflects
strong operating performance, partially offset by an 8% headwind
from higher interest expense due to the higher interest-rate
environment and lapping the impact of an optimization of the
Company's debt portfolio last year, as well as a 1% headwind from
an anticipated increase in the Company's projected adjusted
effective tax rate. For fiscal 2023, the Company expects strong
cash flow driven by profit and working capital initiatives and
anticipates returning a significant portion of cash flow to
shareholders through dividends.
Business Segment Results
Consumer
Segment
|
|
(in
millions)
|
|
Three months
ended
|
|
|
2/28/2023
|
|
2/28/2022
|
Net sales
|
|
$
909.5
|
|
$
926.1
|
Operating income,
excluding special charges, transaction and
integration expenses
|
|
173.4
|
|
167.0
|
Consumer segment sales declined 2% from the first quarter of
2022. In constant currency, sales increased 1% reflecting a 9%
increase from pricing actions partially offset by a 3% volume
decline from the Kitchen Basics divestiture, lower China consumption due to COVID-related
disruption and the exit of the Consumer business in Russia, as well as a 5% decline in all other
volume and product mix. Consumer segment growth was driven by the
Americas region.
- Consumer sales in the Americas increased 3% from the first
quarter of 2023, or 4% in constant currency. The increase was
driven by pricing actions partially offset by lower volume and
product mix, including a 2% decline from the Kitchen Basics
divestiture.
- Consumer sales in Europe,
Middle East and Africa (EMEA) declined 9% compared to the
year-ago period. In constant currency, sales decreased 2% with
lower volume and product mix partially offset by pricing actions.
The sales decline includes a 4% unfavorable impact from lower sales
in Russia.
- Consumer sales in the Asia/Pacific region declined 15% compared to
the year-ago period. In constant currency, sales declined 8% driven
by a decline in volume partially offset by pricing actions. The
combination of lower volume in China due to COVID-related disruptions and the
exit of lower margin business in India drove an 11% reduction in volume.
Consumer segment operating income, excluding transaction and
integration expenses, as well as special charges, increased 4% in
the first quarter of 2023 compared to the year-ago period. In
constant currency, operating income increased 6%. Pricing actions,
CCI-led and GOE cost savings more than offset the impact of higher
cost inflation and distribution expenses as well as lower
volume.
Flavor Solutions
Segment
|
|
(in
millions)
|
|
Three months
ended
|
|
|
2/28/2023
|
|
2/28/2022
|
Net sales
|
|
$
656.0
|
|
$
596.3
|
Operating income,
excluding special charges, transaction and
integration expenses
|
|
53.4
|
|
60.1
|
Flavor Solutions segment sales increased 10% from the first
quarter of 2022. In constant currency, the outstanding sales growth
of 12% reflected a 13% increase from pricing actions and a 1%
decline in volume and product mix. Flavor Solutions growth was led
by the Americas and EMEA regions.
- In the Americas, Flavor Solutions sales rose 13% compared to
the first quarter of 2022. In constant currency, sales increased
12% with pricing actions offset by lower volume and product
mix.
- The EMEA region's Flavor Solutions sales increased 7% compared
to the first quarter of 2022. In constant currency, sales increased
17% with pricing actions partially offset by lower volume and
product mix.
- The Asia/Pacific region's
Flavor Solutions sales declined 1% compared to the first quarter of
2022. In constant currency, sales increased 5%. This increase was
driven by pricing actions partially offset by lower volume and
product mix.
Flavor Solutions segment operating income, excluding transaction
and integration expenses, as well as special charges, was 11% lower
in the first quarter of 2022 compared to the year-ago period, with
minimal impact from currency. The decrease was driven by higher
cost inflation, elevated costs to meet high demand, and spending
related to supply chain investments. These impacts were partially
offset by higher sales, pricing actions, and CCI-led and GOE cost
savings.
Non-GAAP Financial Measures
The tables below include financial measures of adjusted
operating income, adjusted operating income margin, adjusted income
tax expense, adjusted income tax rate, adjusted net income and
adjusted diluted earnings per share. 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. These financial measures exclude the impact, as
applicable, of the following:
Special charges – 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 and income 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. Expenses associated with the approved action
are classified as special charges upon recognition and monitored on
an on-going basis through completion.
Transaction and integration expenses – We exclude certain costs
associated with our acquisitions and their subsequent integration
into the Company. Such costs, which we refer to as "Transaction and
integration expenses", include transaction costs associated with
each acquisition, as well as integration costs following the
respective acquisition, including the impact of the acquisition
date fair value adjustment for inventories, together with the
impact of discrete tax items, if any, directly related to each
acquisition.
Gain on sale of Kitchen Basics - We exclude the gain realized
upon our sale of the Kitchen Basics business in August 2022. As more fully described in note 17
in our Annual Report on Form 10-K for the year ended November 30, 2022, the pre-tax gain associated
with the sale was $49.6 million and
is included in Other income, net in our consolidated income
statement for the year ended November 30,
2022.
We believe that these non-GAAP financial measures are important.
The exclusion of the items noted above 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 they 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
|
|
2/28/2023
|
|
2/28/2022
|
Operating
income
|
$
199.0
|
|
$ 206.9
|
Impact of transaction
and integration expenses
|
—
|
|
0.7
|
Impact of special
charges
|
27.8
|
|
19.5
|
Adjusted operating
income
|
$
226.8
|
|
$ 227.1
|
% decrease versus
year-ago period
|
(0.1) %
|
|
|
Adjusted operating
income margin (1)
|
14.5 %
|
|
14.9 %
|
|
|
|
|
Income tax
expense
|
$
34.4
|
|
$
34.4
|
Impact of transaction
and integration expenses
|
—
|
|
0.2
|
Impact of special
charges
|
6.5
|
|
4.9
|
Adjusted income tax
expense
|
$
40.9
|
|
$
39.5
|
Adjusted income tax
rate (2)
|
21.8 %
|
|
19.7 %
|
|
|
|
|
Net income
|
$
139.1
|
|
$ 154.9
|
Impact of transaction
and integration expenses
|
—
|
|
0.5
|
Impact of special
charges
|
21.3
|
|
14.6
|
Adjusted net
income
|
$
160.4
|
|
$ 170.0
|
% decrease versus
year-ago period
|
(5.6) %
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
0.52
|
|
$
0.57
|
Impact of special
charges
|
0.07
|
|
0.06
|
Adjusted earnings per
share - diluted
|
$
0.59
|
|
$
0.63
|
% decrease versus
year-ago period
|
(6.3) %
|
|
|
|
|
(1)
|
Adjusted operating
income margin is calculated as adjusted operating income as a
percentage of net sales for each period presented.
|
|
|
|
(2)
|
Adjusted income tax
rate is calculated as adjusted income tax expense as a percentage
of income from consolidated operations before income taxes
excluding transaction and integration expenses and special charges
of $187.3 million and $200.2 million for the three months ended
February 28, 2023 and 2022, 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 on a constant currency basis 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 comparative 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
comparative year. Rates of constant currency growth (decline)
follow:
|
|
|
Three Months Ended
February 28, 2023
|
|
|
|
Percentage Change
as Reported
|
|
Impact of Foreign
Currency Exchange
|
|
Percentage Change
on
Constant Currency
Basis
|
Net
sales
|
|
|
|
|
|
|
|
Consumer
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
3.3 %
|
|
(0.5) %
|
|
3.8 %
|
EMEA
|
|
|
(8.8) %
|
|
(6.7) %
|
|
(2.1) %
|
Asia/Pacific
|
|
|
(15.1) %
|
|
(7.0) %
|
|
(8.1) %
|
Total Consumer
segment
|
|
|
(1.8) %
|
|
(2.6) %
|
|
0.8 %
|
Flavor Solutions
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
12.7 %
|
|
0.5 %
|
|
12.2 %
|
EMEA
|
|
|
6.8 %
|
|
(10.0) %
|
|
16.8 %
|
Asia/Pacific
|
|
|
(1.1) %
|
|
(6.2) %
|
|
5.1 %
|
Total Flavor Solutions
segment
|
|
|
10.0 %
|
|
(2.3) %
|
|
12.3 %
|
Total net
sales
|
|
|
2.8 %
|
|
(2.5) %
|
|
5.3 %
|
Adjusted operating
income
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
3.8 %
|
|
(2.3) %
|
|
6.1 %
|
Flavor
Solutions segment
|
|
|
(11.1) %
|
|
(0.4) %
|
|
(10.7) %
|
Total adjusted
operating income
|
|
|
(0.1) %
|
|
(1.8) %
|
|
1.7 %
|
|
|
|
|
|
|
|
|
To present "constant currency" information for the fiscal year
2023 projection, 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
rates for 2023 and are compared to the 2022 results, translated
into U.S. dollars using the same 2023 budgeted exchange rates,
rather than at the average actual exchange rates in effect during
fiscal year 2022. To estimate the percentage change in adjusted
earnings per share on a constant currency basis, a similar
calculation is performed to arrive at adjusted net income divided
by historical shares outstanding for fiscal year 2022 or projected
shares outstanding for fiscal year 2023, as appropriate.
The following provides a reconciliation of our estimated
earnings per share to adjusted earnings per share for 2023 and
actual results for 2022:
|
Twelve Months
Ended
|
|
2023
Projection
|
|
11/30/22
|
Earnings per share -
diluted
|
$2.42 to
$2.47
|
|
$
2.52
|
Impact of transaction
and integration expenses
|
—
|
|
0.01
|
Impact of special
charges
|
0.14
|
|
0.14
|
Impact of after-tax
gain on sale of Kitchen Basics
|
—
|
|
(0.14)
|
Adjusted earnings per
share - diluted
|
$2.56 to
$2.61
|
|
$
2.53
|
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 website.
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, gross margin, earnings, cost savings, special
charges, acquisitions, brand marketing support, volume and product
mix, income tax expense and the impact of foreign currency rates
are "forward-looking statements" within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. These
statements may be identified by the use of words such as "may,"
"will," "expect," "should," "anticipate," "intend," "believe" and
"plan" and similar expressions. These statements may relate to: the
impact of the COVID-19 pandemic on our business, suppliers,
consumers, customers, and employees; disruptions or inefficiencies
in the supply chain, including any impact of COVID-19; the expected
results of operations of businesses acquired by the company; the
expected impact of the inflationary cost environment, including
commodity, packaging materials and transportation costs on our
business; the expected impact of pricing actions on the company's
results of operations and gross margins; the impact of price
elasticity on our sales volume and mix; the expected impact of
factors affecting our supply chain, including transportation
capacity, labor shortages, and absenteeism; the expected impact of
productivity improvements, including those associated with our
Comprehensive Continuous Improvement (CCI) program, streamlining
actions, including our GOE program, and global enablement
initiative; the impact of the ongoing conflict between Russia and Ukraine, including the potential for broader
economic disruption; expected working capital improvements;
expectations regarding growth potential in various geographies and
markets, including the impact from customer, channel, category, and
e-commerce expansion; expected trends in net sales and earnings
performance and other financial measures; the expected timing and
costs of implementing our business transformation initiative, which
includes the implementation of a global enterprise resource
planning (ERP) system; the expected impact of accounting
pronouncements; the expectations of pension and postretirement plan
contributions and anticipated charges associated with those 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
anticipated sufficiency of future cash flows to enable the payments
of interest and repayment of short- and long-term debt, working
capital needs, planned capital expenditures, as well as quarterly
dividends and the ability to obtain additional short- and long-term
financing or issue additional debt 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: the
company's ability to drive revenue growth; the company's ability to
increase pricing to offset, or partially offset, inflationary
pressures on the cost of our products; damage to the company's
reputation or brand name; loss of brand relevance; increased
private label use; the company's ability to drive productivity
improvements, including those related to our CCI program and
streamlining actions, including our GOE program; product quality,
labeling, or safety concerns; negative publicity about our
products; actions by, and the financial condition of, competitors
and customers; the longevity of mutually beneficial relationships
with our large customers; the ability to identify, interpret and
react to changes in consumer preference and demand; business
interruptions due to natural disasters, unexpected events or public
health crises, including COVID-19; issues affecting the company's
supply chain and procurement of raw materials, including
fluctuations in the cost and availability of raw and packaging
materials; labor shortage, turnover and labor cost increases; the
impact of the ongoing conflict between Russia and Ukraine, including the potential for broader
economic disruption; government regulation, and changes in legal
and regulatory requirements and enforcement practices; the lack of
successful acquisition and integration of new businesses; global
economic and financial conditions generally, including stability of
financial institutions, availability of financing, interest and
inflation rates, and the imposition of tariffs, quotas, trade
barriers and other similar restrictions; foreign currency
fluctuations; the effects of increased level of debt service
following the Cholula and FONA acquisitions as well as the effects
that such increased debt service may have on the company's ability
to borrow or the cost of any such additional borrowing, our credit
rating, and our ability to react to certain economic and industry
conditions; risks associated with the phase-out of LIBOR;
impairments of indefinite-lived intangible assets; assumptions we
have made regarding the investment return on retirement plan
assets, and the costs associated with pension obligations; the
stability of credit and capital markets; risks associated with the
company's information technology systems, including the threat of
data breaches and cyber-attacks; the company's inability to
successfully implement our business transformation initiative;
fundamental changes in tax laws; including interpretations and
assumptions we have made, and guidance that may be issued, and
volatility in our effective tax rate; climate change;
Environmental, Social and Governance (ESG) matters; infringement of
intellectual property rights, and those of customers; litigation,
legal and administrative proceedings; the company's inability to
achieve expected and/or needed cost savings or margin improvements;
negative employee relations; 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 over $6 billion in
annual sales across 170 countries and territories, we manufacture,
market and distribute spices, seasoning mixes, condiments and other
flavorful products to the entire food industry including e-commerce
channels, grocery, food manufacturers and foodservice businesses.
Our most popular brands with trademark registrations include
McCormick, French's, Frank's RedHot, Stubb's, OLD BAY, Lawry's,
Zatarain's, Ducros, Vahiné, Cholula, Schwartz, Kamis, DaQiao, Club
House, Aeroplane and Gourmet Garden. Every day, no matter where or
what you eat or drink, you can enjoy food flavored by
McCormick.
Founded in 1889 and headquartered in Hunt Valley, Maryland USA, McCormick is guided
by our principles and committed to our Purpose – To Stand Together
for the Future of Flavor. McCormick envisions A World United by
Flavor where healthy, sustainable and delicious go hand in hand. To
learn more, visit www.mccormickcorporation.com or follow McCormick
& Company on Twitter, Instagram and LinkedIn.
For information contact:
Investor Relations:
Kasey Jenkins -
kasey_jenkins@mccormick.com
Corporate Communications:
Lori Robinson -
lori_robinson@mccormick.com
(Financial tables follow)
First Quarter
Report
|
|
McCormick &
Company,
Incorporated
|
|
|
|
|
|
Consolidated Income
Statement (Unaudited)
|
|
|
|
|
(In millions except
per-share data)
|
|
|
|
|
|
|
Three months
ended
|
|
|
February 28,
2023
|
|
February 28,
2022
|
Net sales
|
|
$
1,565.5
|
|
$
1,522.4
|
Cost of goods
sold
|
|
1,002.6
|
|
962.0
|
Gross profit
|
|
562.9
|
|
560.4
|
Gross profit
margin
|
|
36.0 %
|
|
36.8 %
|
Selling, general and
administrative expense
|
|
336.1
|
|
333.3
|
Transaction and
integration expenses
|
|
—
|
|
0.7
|
Special
charges
|
|
27.8
|
|
19.5
|
Operating
income
|
|
199.0
|
|
206.9
|
Interest
expense
|
|
50.6
|
|
33.1
|
Other income,
net
|
|
11.1
|
|
6.2
|
Income from
consolidated operations before income taxes
|
|
159.5
|
|
180.0
|
Income tax
expense
|
|
34.4
|
|
34.4
|
Net income from
consolidated operations
|
|
125.1
|
|
145.6
|
Income from
unconsolidated operations
|
|
14.0
|
|
9.3
|
Net income
|
|
$
139.1
|
|
$
154.9
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
0.52
|
|
$
0.58
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
0.52
|
|
$
0.57
|
|
|
|
|
|
Average shares
outstanding - basic
|
|
268.2
|
|
267.8
|
Average shares
outstanding - diluted
|
|
269.8
|
|
270.5
|
First Quarter
Report
|
McCormick &
Company, Incorporated
|
|
|
|
|
|
Consolidated Balance
Sheet (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
February 28,
2023
|
|
November 30,
2022
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
356.8
|
|
$
334.0
|
Trade accounts
receivable, net
|
|
571.0
|
|
573.7
|
Inventories
|
|
1,344.6
|
|
1,340.1
|
Prepaid expenses and
other current assets
|
|
138.9
|
|
138.9
|
Total current
assets
|
|
2,411.3
|
|
2,386.7
|
Property, plant and
equipment, net
|
|
1,225.2
|
|
1,198.0
|
Goodwill
|
|
5,229.7
|
|
5,212.9
|
Intangible assets,
net
|
|
3,381.7
|
|
3,387.9
|
Investments and other
assets
|
|
957.5
|
|
939.4
|
Total
assets
|
|
$
13,205.4
|
|
$
13,124.9
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Short-term borrowings
and current portion of long-term debt
|
|
$
1,586.0
|
|
$
1,507.3
|
Trade accounts
payable
|
|
1,124.3
|
|
1,171.0
|
Other accrued
liabilities
|
|
610.7
|
|
754.1
|
Total current
liabilities
|
|
3,321.0
|
|
3,432.4
|
Long-term
debt
|
|
3,619.8
|
|
3,642.3
|
Deferred
taxes
|
|
866.7
|
|
866.3
|
Other long-term
liabilities
|
|
510.2
|
|
484.7
|
Total
liabilities
|
|
8,317.7
|
|
8,425.7
|
Shareholders'
equity
|
|
|
|
|
Common stock
|
|
2,152.1
|
|
2,138.6
|
Retained
earnings
|
|
3,155.1
|
|
3,022.5
|
Accumulated other
comprehensive loss
|
|
(437.1)
|
|
(480.6)
|
Total McCormick
shareholders' equity
|
|
4,870.1
|
|
4,680.5
|
Non-controlling
interests
|
|
17.6
|
|
18.7
|
Total shareholders'
equity
|
|
4,887.7
|
|
4,699.2
|
Total liabilities and
shareholders' equity
|
|
$
13,205.4
|
|
$
13,124.9
|
First Quarter
Report
|
|
McCormick & Company, Incorporated
|
|
|
|
|
|
Consolidated Cash
Flow Statement (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
February 28,
2023
|
|
February 28,
2022
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
139.1
|
|
$
154.9
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
47.8
|
|
49.0
|
Stock-based
compensation
|
|
11.8
|
|
11.1
|
Income from
unconsolidated operations
|
|
(14.0)
|
|
(9.3)
|
Changes in operating
assets and liabilities (net of businesses
acquired and disposed)
|
|
|
|
|
Trade accounts
receivable
|
|
9.7
|
|
33.2
|
Inventories
|
|
(0.2)
|
|
(49.9)
|
Trade accounts
payable
|
|
(54.8)
|
|
5.2
|
Other assets and
liabilities
|
|
(49.9)
|
|
(185.5)
|
Dividends from
unconsolidated affiliates
|
|
13.9
|
|
9.2
|
Net cash flow provided
by operating activities
|
|
103.4
|
|
17.9
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital expenditures
(including software)
|
|
(61.5)
|
|
(43.7)
|
Net cash flow used in
investing activities
|
|
(61.5)
|
|
(43.7)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Short-term borrowings,
net
|
|
67.9
|
|
97.3
|
Long-term debt
repayments
|
|
(3.6)
|
|
(3.5)
|
Proceeds from exercised
stock options
|
|
5.2
|
|
30.3
|
Taxes withheld and paid
on employee stock awards
|
|
(6.1)
|
|
(12.0)
|
Common stock acquired
by purchase
|
|
(3.5)
|
|
(8.7)
|
Dividends
paid
|
|
(104.6)
|
|
(99.0)
|
Net cash flow (used
in) provided by financing activities
|
|
(44.7)
|
|
4.4
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
25.6
|
|
8.1
|
Increase (decrease) in
cash and cash equivalents
|
|
22.8
|
|
(13.3)
|
Cash and cash
equivalents at beginning of period
|
|
334.0
|
|
351.7
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
$
356.8
|
|
$
338.4
|
View original
content:https://www.prnewswire.com/news-releases/mccormick-reports-first-quarter-performance-and-reaffirms-2023-outlook-301783195.html
SOURCE McCormick & Company, Incorporated