HUNT VALLEY, Md.,
Jan. 25,
2024 /PRNewswire/ -- McCormick & Company,
Incorporated (NYSE:MKC), a global leader in flavor, today reported
financial results for the fourth quarter and fiscal year ended
November 30, 2023 and provided its
financial outlook for fiscal year 2024.
- For the fourth quarter, sales increased 3% from the year-ago
period and, in constant currency, sales increased 2%. Earnings per
share was $0.81 compared to
$0.69 in 2022 and Adjusted earnings
per share was $0.85 compared to
$0.73 in 2022.
- For fiscal year 2023, sales increased 5% from the prior year
and, in constant currency, sales grew 6%. Earnings per share of
$2.52 was comparable to 2022.
Adjusted earnings per share was $2.70
compared to $2.53 in 2022.
- Cash flow from operations grew to a record $1.2 billion for fiscal year 2023. In November,
the Board authorized an 8% increase to the quarterly dividend,
marking the 38th consecutive year of dividend increases.
- The Company's 2024 outlook reflects its commitment to
strengthen volume trends and prioritize investments to drive
profitable results and return to differentiated volume-led growth
as the year progresses.
President and CEO's Remarks
Brendan M. Foley, President and
CEO, stated, "As I reflect on our results for 2023, I am proud of
the progress we made to advance our business. For the better part
of the year, we drove sequential improvement in volume trends and
while the fourth quarter was impacted by a pressured consumer
exhibiting more value-seeking behavior, our prioritized investments
drove volume improvements in several key areas within our
portfolio. In areas that were below our expectations, we understand
the challenges, are addressing them, and are confident we will
drive improved volume trends in 2024.
"For the full year, we meaningfully strengthened our gross and
operating margins while also significantly investing with a focus
on returning to sustainable volume growth. Our margin performance
reflects the cost savings from our CCI and GOE programs as well as
effective price realization. We ended 2023 meeting the cost
recovery plans we had in place as we entered the year.
Additionally, we significantly improved our cash flow, paid down
debt, and reduced our leverage ratio. Our improved profitability
and cash generation will help fuel continued business investments
early in 2024 to drive improved volume performance, which will
build throughout the year.
"We have a strong foundation with powerful brands, effective
strategies, and continued demand for flavor. With our flavor
leadership and continued investments, we are committed to
vigorously fueling category growth with our differentiated
portfolio. In 2023, we refined our plans and prioritized our
investments in key areas. The initiatives within our growth levers,
including targeted price gap management, increased brand marketing,
new products, and packaging renovation have already proven to
strengthen our volume trends and drive momentum in these areas.
"As CEO, I plan to drive an ambitious growth agenda that
capitalizes on our strong business fundamentals as well as the
value of our brands and proven capabilities with a renewed sense of
urgency and speed to deliver on our strategic priorities. I fully
expect that the initiatives we have in place will position us to
return to long-term differentiated growth and our cost optimization
efforts will support our investments as well as drive enhanced
profit realization. For 2024, we appreciate the uncertainty in the
consumer environment and we are taking a more cautious view in our
outlook. Importantly, we remain committed to our long-term
financial algorithm and driving sustained value creation through
top line growth and margin expansion.
"Lastly, I want to recognize our global team's commitment,
dedication, and engagement to enable McCormick to bring joy to
millions of consumers around the world. I am proud of our
people-first culture, and we will continue to further elevate this
culture and build our next generation of leaders and capabilities.
This is one of our most important commitments, as our teams around
the world drive our momentum and success, and I am grateful for and
energized by both their ongoing contributions and the results that
they are driving. Our business fundamentals remain strong, and we
are confident we will continue to not only deliver profitable
growth, but also drive total shareholder return at an
industry-leading pace."
Fourth Quarter 2023 Results
McCormick reported a 3% sales increase in the fourth quarter
from the year-ago period, or 2% sales growth in constant currency.
Constant currency sales growth reflected a 5% increase from
pricing actions partially offset by a 3% volume decline. As
expected, the benefit from lapping prior year COVID-related
disruption in China was fully
offset by the impacts of Company's strategic decisions to
discontinue low margin business and divest a small canning business
in the Flavor Solutions segment. Underlying volume performance was
impacted in both segments by a pressured consumer exhibiting more
value-seeking behavior, which resulted in lower consumption.
Gross profit margin expanded 320 basis points versus the fourth
quarter of last year. This expansion was driven by favorable
product mix, cost savings led by the Company's Comprehensive
Continuous Improvement (CCI) and Global Operating Effectiveness
(GOE) programs and pricing actions that were partially offset by
cost inflation. Selling, general and administrative expenses
increased from the year-ago period driven by an increase in
employee incentive compensation expense as well as higher
brand marketing costs partially offset by CCI-led and GOE cost
savings.
Operating income was $297 million
in the fourth quarter of 2023 compared to $264 million in the fourth quarter of 2022.
Excluding special charges, adjusted operating income was
$311 million compared to $278 million in the year-ago period. In constant
currency, adjusted operating income increased 11% from the year-ago
period. This increase is primarily attributable to gross profit
margin expansion partially offset by higher selling, general, and
administrative expenses.
Earnings per share was $0.81 in
the fourth quarter of 2023 compared to $0.69 in the fourth quarter of 2022. Special
charges lowered earnings per share by $0.04 in both the fourth quarter of 2022 and
the fourth quarter of 2023. Excluding these impacts, adjusted
earnings per share was $0.85 in the
fourth quarter of 2023 compared to $0.73 in the year-ago period. This increase was
driven by higher operating income and higher income from
unconsolidated operations driven by strong performance in our
largest joint venture, McCormick de Mexico.
Fiscal Year 2023 Results
McCormick reported a 5% sales increase in 2023 as compared to
2022, or 6% in constant currency. Sales growth reflected an 9%
increase from pricing actions partially offset by a 3% decrease in
volume and product mix. The volume decline included a combined 1%
unfavorable impact from the Kitchen Basics divestiture, the canning
business divestiture, the exit of the Consumer business in
Russia, and the Company's
strategic decisions to discontinue low margin business.
Gross profit margin expanded 180 basis points versus 2022. This
expansion was driven by cost savings led by the Company's CCI and
GOE programs and pricing actions that were partially offset by cost
inflation. Selling, general and administrative expenses increased
from the year-ago period driven by an increase in employee
incentive compensation expense as well as higher distribution and
brand marketing costs partially offset by CCI-led and GOE cost
savings.
Operating income was $963 million
in 2023 compared to $864 million in
2022, with minimal impact from currency. Excluding
transaction and integration expenses, as well as special charges,
adjusted operating income was $1.02
billion compared to $917
million in the year-ago period. In constant currency,
adjusted operating income increased 12% from the year-ago period.
This increase is primarily attributable to gross profit margin
expansion partially offset by higher selling, general, and
administrative expenses.
Earnings per share was $2.52 in
2023 compared to $2.52 in the prior
year. The net unfavorable impact of special charges lowered
earnings per share by $0.18 in 2023.
The net unfavorable impact of special charges, transaction and
integration expenses, and the gain on the sale of the Kitchen
Basics business lowered earnings per share by $0.01 in 2022. Excluding these impacts, adjusted
earnings per share was $2.70 in 2023
compared to $2.53 in 2022. This
increase was driven by higher operating income and higher income
from unconsolidated operations driven by strong performance in our
largest joint venture, McCormick de Mexico.
Net cash provided by operating activities was $1.2 billion in 2023 compared to $652 million in 2022. The increase was primarily
due to higher operating income and working capital improvements,
including lower inventory.
Fiscal Year 2024 Financial Outlook
McCormick's 2024 outlook reflects the Company's commitment to
strengthen volume trends and prioritize investments to drive
profitable results and return to differentiated volume-led growth
as the year progresses. The Company's CCI and GOE programs are
fueling growth investments while also driving operating margin
expansion. Currency rates are expected to unfavorably impact sales,
adjusted operating income and adjusted earnings per share by
approximately 1%.
In 2024, McCormick expects sales to range between (2)% to 0%
compared to 2023, or (1)% to 1% on a constant currency basis. The
Company expects a favorable impact from the prior year's pricing
actions. Through the power of its brands and its targeted
investments, the Company expects to improve volume trends as the
year progresses and return to volume growth, notwithstanding any
new macroeconomic headwinds. The Company's strategic decisions in
2023 to discontinue low margin business and divest a small canning
business will impact volume growth in 2024.
Operating income in 2024 is expected to grow by 8% to 10% from
$963 million in 2023. The Company
anticipates approximately $15 million
of special charges in 2024 that relate to previous organizational
and streamlining actions. Excluding the impact of special charges
in 2024 and 2023, adjusted operating income is expected to increase
3% to 5%, or in constant currency 4% to 6%, driven by gross margin
expansion partially offset by a significant increase in brand
marketing investments.
McCormick projects 2024 earnings per share to be in the range of
$2.76 to $2.81, compared to $2.52 of earnings per share in 2023. The Company
expects special charges to lower earnings per share by $0.04 in 2024. Excluding these impacts, the
Company projects 2024 adjusted earnings per share to be in the
range of $2.80 to $2.85, compared to $2.70 of adjusted earnings per share in 2023,
which represents an expected increase of 4% to 6%, or in constant
currency 5% to 7%. For fiscal 2024, 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
|
|
Year
ended
|
|
|
11/30/2023
|
|
11/30/2022
|
|
11/30/2023
|
|
11/30/2022
|
Net sales
|
|
$ 1,048.6
|
|
$ 1,037.8
|
|
$ 3,807.3
|
|
$ 3,757.9
|
Operating income,
excluding special
charges, transaction and integration expenses
|
|
235.2
|
|
235.2
|
|
735.5
|
|
710.7
|
Consumer segment sales increased 1% from the fourth quarter of
2022. In constant currency, sales were comparable to the year-ago
period, reflecting a 4% increase from pricing actions, fully offset
by a 4% decline in volume. The benefit from lapping the
COVID-related disruptions in China
was offset by the Company's strategic decision to discontinue low
margin business.
- Consumer sales in the Americas declined 4% from the fourth
quarter of 2022, with minimal impact from currency, and included a
2% unfavorable impact related to the discontinuation of business to
drive margin improvement. The remaining decline was attributable to
lower volume and product mix in several areas of the portfolio
driven by a pressured consumer, partially offset by pricing.
Notably, spices and seasonings grew driven by both pricing and
volume.
- Consumer sales in Europe,
Middle East, and Africa (EMEA) increased 18% compared to the
year-ago period. In constant currency, sales increased 9% with
pricing actions partially offset by lower volume and product
mix.
- Consumer sales in the Asia
Pacific (APAC) region grew by 28% compared to the year-ago
period. In constant currency, sales increased 31% including an
expected benefit from lapping the impact of China's prior year COVID-related disruption as
well as strong volume and product mix growth outside of
China and pricing actions across
the region.
Consumer segment operating income, excluding special charges,
was comparable to the fourth quarter of 2022, with minimal impact
from currency. Pricing actions and cost savings were offset by
lower volume, higher inflation, and brand marketing costs as well
as an increase in employee incentive compensation.
Flavor Solutions Segment
(in
millions)
|
|
Three months
ended
|
|
Year
ended
|
|
|
11/30/2023
|
|
11/30/2022
|
|
11/30/2023
|
|
11/30/2022
|
Net sales
|
|
$
704.2
|
|
$
657.9
|
|
$ 2,854.9
|
|
$ 2,592.6
|
Operating income,
excluding special
charges, transaction and integration expenses
|
|
76.1
|
|
42.7
|
|
288.7
|
|
206.7
|
Flavor Solutions segment sales increased 7% from the fourth
quarter of 2022. In constant currency, the sales growth was 5%,
reflecting a 7% increase from pricing partially offset by lower
volume of 2%. Included in the volume decline is a 1% impact from
the canning business divestiture.
- In the Americas, Flavor Solutions sales rose 7% compared to the
fourth quarter of 2022. In constant currency, sales increased 6%
driven by pricing with volume comparable to the prior year.
- The EMEA region's Flavor Solutions sales increased 9% compared
to the fourth quarter of 2022. In constant currency, sales grew 2%
with pricing actions partially offset by lower volume and product
mix. Included in this increase is a 3% decline from the canning
business divestiture and a 1% decline related to the pruning of low
margin business.
- The APAC region's Flavor Solutions sales increased by 3%
compared to the fourth quarter of 2022. In constant currency, sales
grew 5% reflecting a 6% increase from pricing actions partially
offset by a 1% volume decline.
Flavor Solutions segment operating income, excluding special
charges, grew by 78% in the fourth quarter of 2023 compared to the
year-ago period, or 73% in constant currency. Pricing
actions, cost savings, favorable product mix, and lapping
elevated supply chain costs in the fourth quarter of last year more
than offset higher inflation and an increase in employee incentive
compensation.
Non-GAAP Financial Measures
The tables below include financial measures of adjusted gross
profit, adjusted gross profit margin, 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. Upon presentation of any such proposed action
(generally including details with respect to estimated costs, which
typically consist principally of employee severance and related
benefits, together with ancillary costs associated with the action
that may include a non-cash component, such as an asset impairment,
or a component which relates to inventory adjustments that are
included in cost of goods sold; impacted employees or operations;
expected timing; and expected savings) 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. Special
charges for the year ended November 30,
2022 include a $13.6 million
gain associated with the sale of the Kohinoor brand name. We exited
our Kohinoor rice product line in India in the fourth quarter of fiscal year
2021.
Transaction and integration expenses associated with the
Cholula and FONA acquisitions – We
exclude certain costs associated with our acquisitions of
Cholula and FONA in November and
December 2020, respectively, 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 our Kitchen Basics business in August 2022. The pre-tax gain associated with the
sale was $49.6 million 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
|
|
Year Ended
|
|
11/30/2023
|
|
11/30/2022
|
|
11/30/2023
|
|
11/30/2022
|
Operating
income
|
$
297.2
|
|
$
264.3
|
|
$
963.0
|
|
$
863.6
|
Impact of other
transaction and integration expenses
|
—
|
|
—
|
|
—
|
|
2.2
|
Impact of special
charges (1)
|
14.1
|
|
13.6
|
|
61.2
|
|
51.6
|
Adjusted operating
income
|
$
311.3
|
|
$
277.9
|
|
$
1,024.2
|
|
$
917.4
|
% increase versus
year-ago period
|
12.0 %
|
|
|
|
11.6 %
|
|
|
Operating income
margin (2)
|
17.0 %
|
|
15.6 %
|
|
14.5 %
|
|
13.6 %
|
Impact of transaction
and integration expenses and special charges (2)
|
0.7 %
|
|
0.8 %
|
|
0.9 %
|
|
0.8 %
|
Adjusted operating
income margin (2)
|
17.7 %
|
|
16.4 %
|
|
15.4 %
|
|
14.4 %
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
57.1
|
|
$ 53.2
|
|
$
174.5
|
|
$
168.6
|
Impact of transaction
and integration expenses
|
—
|
|
—
|
|
—
|
|
0.6
|
Impact of special
charges (1)
|
3.5
|
|
2.6
|
|
14.5
|
|
13.3
|
Impact of sale of
Kitchen Basics
|
—
|
|
—
|
|
—
|
|
(11.6)
|
Adjusted income tax
expense
|
$
60.6
|
|
$ 55.8
|
|
$
189.0
|
|
$
170.9
|
Income tax rate
(3)
|
22.2 %
|
|
23.3 %
|
|
21.8 %
|
|
20.7 %
|
Impact of transaction
and integration expenses, special charges, and sale of Kitchen
Basics (3)
|
0.1 %
|
|
(0.2) %
|
|
0.2 %
|
|
0.2 %
|
Adjusted income tax
rate (3)
|
22.3 %
|
|
23.1 %
|
|
22.0 %
|
|
20.9 %
|
|
|
|
|
|
|
|
|
Net income
|
$
219.3
|
|
$
185.7
|
|
$
680.6
|
|
$
682.0
|
Impact of transaction
and integration expenses
|
—
|
|
—
|
|
—
|
|
1.6
|
Impact of special
charges (1)
|
10.6
|
|
11.0
|
|
46.7
|
|
38.3
|
Impact of after-tax
gain on sale of Kitchen Basics
|
—
|
|
—
|
|
—
|
|
(38.0)
|
Adjusted net
income
|
$
229.9
|
|
$
196.7
|
|
$
727.3
|
|
$
683.9
|
% increase versus
year-ago period
|
16.9 %
|
|
|
|
6.3 %
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
$
0.81
|
|
$ 0.69
|
|
$
2.52
|
|
$ 2.52
|
Impact of transaction
and integration expenses
|
—
|
|
—
|
|
—
|
|
0.01
|
Impact of special
charges (1)
|
0.04
|
|
0.04
|
|
0.18
|
|
0.14
|
Impact of after-tax
gain on sale of Kitchen Basics
|
—
|
|
—
|
|
—
|
|
(0.14)
|
Adjusted earnings per
share - diluted
|
$
0.85
|
|
$ 0.73
|
|
$
2.70
|
|
$ 2.53
|
% increase versus
year-ago period
|
16.4 %
|
|
|
|
6.7 %
|
|
|
|
|
(1)
|
Special charges for the
year ended November 30, 2022 include a $10.0 million non-cash
intangible asset impairment charge associated with our exit of our
business operations in Russia. Special charges for the year ended
November 30, 2022 include a $13.6 million gain associated with the
sale of the Kohinoor brand name. We exited our Kohinoor rice
product line in India in the fourth quarter of fiscal
2021.
|
|
|
|
(2)
|
Operating income
margin, impact of transaction and integration expenses and special
charges, and adjusted operating income margin is calculated as
operating income, impact of transaction and integration expenses
and special charges, and adjusted operating income as a percentage
of net sales for each period presented.
|
|
|
|
(3)
|
Income tax rate is
calculated as income tax expense as a percentage of income from
consolidated operations before income taxes. 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,
and for 2023, the gain on a sale of a business, of $271.8 million
and $859.9 million for the three months and year ended November 30,
2023, respectively, $241.9 million and $817.0 million for the three
months and year ended November 30, 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
November 30, 2023
|
|
|
|
Percentage Change
as Reported
|
|
Impact of Foreign
Currency Exchange
|
|
Percentage Change
on
Constant Currency
Basis
|
Net
sales
|
|
|
|
|
|
|
|
Consumer
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
(4.5) %
|
|
(0.1) %
|
|
(4.4) %
|
EMEA
|
|
|
18.5 %
|
|
9.3 %
|
|
9.2 %
|
APAC
|
|
|
28.0 %
|
|
(3.3) %
|
|
31.3 %
|
Total Consumer
segment
|
|
|
1.0 %
|
|
1.0 %
|
|
— %
|
Flavor Solutions
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
7.1 %
|
|
1.6 %
|
|
5.5 %
|
EMEA
|
|
|
8.7 %
|
|
6.6 %
|
|
2.1 %
|
APAC
|
|
|
3.5 %
|
|
(1.6) %
|
|
5.1 %
|
Total
Flavor Solutions segment
|
|
|
7.0 %
|
|
2.2 %
|
|
4.8 %
|
Total net
sales
|
|
|
3.4 %
|
|
1.5 %
|
|
1.9 %
|
Adjusted operating
income
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
— %
|
|
0.2 %
|
|
(0.2) %
|
Flavor
Solutions segment
|
|
|
78.2 %
|
|
4.8 %
|
|
73.4 %
|
Total adjusted
operating income
|
|
|
12.0 %
|
|
0.9 %
|
|
11.1 %
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended November 30,
2023
|
|
|
|
Percentage Change
as Reported
|
|
Impact of Foreign
Currency Exchange
|
|
Percentage Change
on
Constant Currency
Basis
|
Net
sales
|
|
|
|
|
|
|
|
Consumer
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
0.4 %
|
|
(0.4) %
|
|
0.8 %
|
EMEA
|
|
|
7.1 %
|
|
0.9 %
|
|
6.2 %
|
APAC
|
|
|
(1.1) %
|
|
(6.2) %
|
|
5.1 %
|
Total Consumer
segment
|
|
|
1.3 %
|
|
(0.8) %
|
|
2.1 %
|
Flavor Solutions
Segment
|
|
|
|
|
|
|
|
Americas
|
|
|
10.7 %
|
|
1.1 %
|
|
9.6 %
|
EMEA
|
|
|
10.3 %
|
|
(1.9) %
|
|
12.2 %
|
APAC
|
|
|
5.6 %
|
|
(5.4) %
|
|
11.0 %
|
Total Flavor
Solutions segment
|
|
|
10.1 %
|
|
(0.2) %
|
|
10.3 %
|
Total net
sales
|
|
|
4.9 %
|
|
(0.6) %
|
|
5.5 %
|
Adjusted operating
income
|
|
|
|
|
|
|
|
Consumer
segment
|
|
|
3.5 %
|
|
(0.9) %
|
|
4.4 %
|
Flavor
Solutions segment
|
|
|
39.7 %
|
|
1.2 %
|
|
38.5 %
|
Total adjusted
operating income
|
|
|
11.6 %
|
|
(0.4) %
|
|
12.0 %
|
To present "constant currency" information for the fiscal year
2024 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 2024 and are compared to the 2023 results, translated
into U.S. dollars using the same 2024 budgeted exchange rates,
rather than at the average actual exchange rates in effect during
fiscal year 2023. 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 2023 or projected
shares outstanding for fiscal year 2024, as appropriate.
|
Projections for the
Year Ending November 30, 2024
|
Percentage change in
net sales
|
(2)% to 0%
|
Impact of unfavorable
foreign currency exchange
|
1 %
|
Percentage change in
net sales in constant currency
|
(1)% to 1%
|
|
|
Percentage change in
adjusted operating income
|
3% to 5%
|
Impact of unfavorable
foreign currency exchange
|
1 %
|
Percentage change in
adjusted operating income in
constant currency
|
4% to 6%
|
|
|
Percentage change in
adjusted earnings per share - diluted
|
4% to 6%
|
Impact of unfavorable
foreign currency exchange
|
1 %
|
Percentage change in
adjusted earnings per share - diluted
in constant currency
|
5% to 7%
|
The following provides a reconciliation of our estimated
earnings per share to adjusted earnings per share for 2024 and
actual results for 2023:
|
Year Ended
|
|
2024
Projection
|
|
11/30/23
|
Earnings per share -
diluted
|
$2.76 to
$2.81
|
|
$
2.52
|
Impact of special
charges
|
0.04
|
|
0.18
|
Adjusted earnings per
share - diluted
|
$2.80 to
$2.85
|
|
$
2.70
|
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 also
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:
general economic and industry conditions, including consumer
spending rates, recessions, interest rates, and availability of
capital; expectations regarding sales growth potential in various
geographies and markets, including the impact from brand marketing
support, product innovation, and customer, channel, category, heat
platform and e-commerce expansion; expected trends in net sales and
earnings performance and other financial measures; 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 the inflationary cost
environment on our business; the expected impact of factors
affecting our supply chain, including the availability and prices
of commodities and other supply chain resources including raw
materials, packaging, labor, energy, and transportation; the
expected impact of productivity improvements, including those
associated with our CCI and GOE programs and Global Business
Services operating model initiative; the ability to identify,
attract, hire retain and develop qualified personnel and develop
the next generation of leaders; the impact of the ongoing conflicts
between Russia and Ukraine and Israel and Hamas, including the potential for
broader economic disruption; expected working capital improvements;
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, quarterly dividends and our 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; 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 and Israel and Hamas, 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, 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 our amount of
outstanding indebtedness and related level of debt service as well
as the effects that such 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; 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 Instagram and LinkedIn.
For information contact:
Investor Relations:
Faten Freiha -
faten_freiha@mccormick.com
Global Communications:
Lori Robinson -
lori_robinson@mccormick.com
(Financial tables follow)
Fourth Quarter
Report
|
|
McCormick &
Company, Incorporated
|
|
|
|
|
|
|
|
|
|
Consolidated Income
Statement (Unaudited)
|
|
|
|
|
|
|
|
|
(In millions except
per-share data)
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
|
November 30,
2023
|
|
November 30,
2022
|
|
November 30,
2023
|
|
November 30,
2022
|
Net sales
|
|
$
1,752.8
|
|
$
1,695.7
|
|
$
6,662.2
|
|
$
6,350.5
|
Cost of goods
sold
|
|
1,051.5
|
|
1,071.3
|
|
4,159.7
|
|
4,076.0
|
Gross profit
|
|
701.3
|
|
624.4
|
|
2,502.5
|
|
2,274.5
|
Gross profit
margin
|
|
40.0 %
|
|
36.8 %
|
|
37.6 %
|
|
35.8 %
|
Selling, general and
administrative expense
|
|
390.0
|
|
346.5
|
|
1,478.3
|
|
1,357.1
|
Transaction and
integration expenses
|
|
—
|
|
—
|
|
—
|
|
2.2
|
Special
charges
|
|
14.1
|
|
13.6
|
|
61.2
|
|
51.6
|
Operating
income
|
|
297.2
|
|
264.3
|
|
963.0
|
|
863.6
|
Interest
expense
|
|
52.7
|
|
44.4
|
|
208.2
|
|
149.1
|
Other income,
net
|
|
13.2
|
|
8.4
|
|
43.9
|
|
98.3
|
Income from
consolidated operations before income taxes
|
|
257.7
|
|
228.3
|
|
798.7
|
|
812.8
|
Income tax
expense
|
|
57.1
|
|
53.2
|
|
174.5
|
|
168.6
|
Net income from
consolidated operations
|
|
200.6
|
|
175.1
|
|
624.2
|
|
644.2
|
Income from
unconsolidated operations
|
|
18.7
|
|
10.6
|
|
56.4
|
|
37.8
|
Net income
|
|
$
219.3
|
|
$
185.7
|
|
$
680.6
|
|
$
682.0
|
|
|
|
|
|
|
|
|
|
Earnings per share -
basic
|
|
$
0.82
|
|
$
0.69
|
|
$
2.54
|
|
$
2.54
|
|
|
|
|
|
|
|
|
|
Earnings per share -
diluted
|
|
$
0.81
|
|
$
0.69
|
|
$
2.52
|
|
$
2.52
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding - basic
|
|
268.4
|
|
268.3
|
|
268.4
|
|
$
268.2
|
Average shares
outstanding - diluted
|
|
269.6
|
|
269.9
|
|
269.8
|
|
270.2
|
Fourth Quarter
Report
|
McCormick &
Company, Incorporated
|
|
|
|
|
|
Consolidated Balance
Sheet (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
November 30,
2023
|
|
November 30,
2022
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
166.6
|
|
$
334.0
|
Trade accounts
receivable, net of allowances
|
|
587.5
|
|
573.7
|
Inventories
|
|
1,126.5
|
|
1,340.1
|
Prepaid expenses and
other current assets
|
|
121.0
|
|
138.9
|
Total current
assets
|
|
2,001.6
|
|
2,386.7
|
Property, plant and
equipment, net
|
|
1,324.7
|
|
1,198.0
|
Goodwill
|
|
5,260.1
|
|
5,212.9
|
Intangible assets,
net
|
|
3,356.7
|
|
3,387.9
|
Other long-term
assets
|
|
919.2
|
|
939.4
|
Total
assets
|
|
$
12,862.3
|
|
$
13,124.9
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Short-term borrowings
and current portion of long-term debt
|
|
$
1,071.5
|
|
$
1,507.3
|
Trade accounts
payable
|
|
1,119.3
|
|
1,171.0
|
Other accrued
liabilities
|
|
908.1
|
|
754.1
|
Total current
liabilities
|
|
3,098.9
|
|
3,432.4
|
Long-term
debt
|
|
3,339.9
|
|
3,642.3
|
Deferred
taxes
|
|
861.2
|
|
866.3
|
Other long-term
liabilities
|
|
478.8
|
|
484.7
|
Total
liabilities
|
|
7,778.8
|
|
8,425.7
|
Shareholders'
equity
|
|
|
|
|
Common stock
|
|
2,199.6
|
|
2,138.6
|
Retained
earnings
|
|
3,249.7
|
|
3,022.5
|
Accumulated other
comprehensive loss
|
|
(388.6)
|
|
(480.6)
|
Total McCormick
shareholders' equity
|
|
5,060.7
|
|
4,680.5
|
Non-controlling
interests
|
|
22.8
|
|
18.7
|
Total shareholders'
equity
|
|
5,083.5
|
|
4,699.2
|
Total liabilities and
shareholders' equity
|
|
$
12,862.3
|
|
$
13,124.9
|
Fourth Quarter
Report
|
|
McCormick & Company, Incorporated
|
|
|
|
|
|
Consolidated Cash
Flow Statement (Unaudited)
|
|
|
|
|
(In
millions)
|
|
|
|
|
|
|
Year
Ended
|
|
|
November 30,
2023
|
|
November 30,
2022
|
Operating
activities
|
|
|
|
|
Net income
|
|
$
680.6
|
|
$
682.0
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
199.3
|
|
200.6
|
Stock-based
compensation
|
|
63.4
|
|
60.3
|
Loss (gain) on sale of
businesses and intangible assets
|
|
1.2
|
|
(63.2)
|
Asset impairment
charge included in special charges
|
|
—
|
|
10.0
|
(Gain) loss on sale of
assets
|
|
0.2
|
|
(0.5)
|
Deferred income tax
expense (benefit)
|
|
(5.4)
|
|
21.8
|
Income from
unconsolidated operations
|
|
(56.4)
|
|
(37.8)
|
Changes in operating
assets and liabilities (net of businesses disposed)
|
|
|
|
|
Trade accounts
receivable
|
|
3.4
|
|
(45.8)
|
Inventories
|
|
225.0
|
|
(205.3)
|
Trade accounts
payable
|
|
(68.1)
|
|
125.3
|
Other assets and
liabilities
|
|
109.0
|
|
(129.9)
|
Dividends from
unconsolidated affiliates
|
|
85.1
|
|
34.0
|
Net cash flow provided
by operating activities
|
|
1,237.3
|
|
651.5
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Proceeds from sale of a
business
|
|
1.0
|
|
95.2
|
Proceeds from sale of
intangible asset
|
|
—
|
|
13.6
|
Capital expenditures
(including software)
|
|
(263.9)
|
|
(262.0)
|
Other investing
activities
|
|
2.4
|
|
6.8
|
Net cash flow used in
investing activities
|
|
(260.5)
|
|
(146.4)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Short-term borrowings
(repayments), net
|
|
(964.6)
|
|
698.3
|
Proceeds from issuances
of long-term debt
|
|
496.4
|
|
—
|
Payment of debt
issuance costs
|
|
(1.1)
|
|
—
|
Long-term debt
repayments
|
|
(268.1)
|
|
(772.0)
|
Proceeds from exercised
stock options
|
|
16.6
|
|
41.4
|
Taxes withheld and paid
on employee stock awards
|
|
(10.8)
|
|
(19.4)
|
Common stock acquired
by purchase
|
|
(35.7)
|
|
(38.8)
|
Dividends
paid
|
|
(418.5)
|
|
(396.7)
|
Other financing
activities
|
|
1.6
|
|
—
|
Net cash flow used in
financing activities
|
|
(1,184.2)
|
|
(487.2)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
40.0
|
|
(35.6)
|
Decrease in cash and
cash equivalents
|
|
(167.4)
|
|
(17.7)
|
Cash and cash
equivalents at beginning of period
|
|
334.0
|
|
351.7
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
$
166.6
|
|
$
334.0
|
View original
content:https://www.prnewswire.com/news-releases/mccormick-reports-2023-financial-results-and-provides-2024-outlook-302044565.html
SOURCE McCormick & Company, Incorporated