Sign in

    McCormick & Company Inc (MKC)

    CEO Change
    Board Change

    Business Description

    McCormick & Company, Incorporated is a global leader in flavor, specializing in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products for the food and beverage industry . The company operates through two main business segments: Consumer and Flavor Solutions, catering to retailers, food manufacturers, and foodservice businesses . McCormick's product offerings include a wide range of spices and seasonings, condiments and sauces, and culinary-inspired flavor solutions .

    1. Consumer Segment - Sells a variety of products under brands like McCormick, French’s, Frank’s RedHot, OLD BAY, and Cholula through retail channels such as grocery stores, mass merchandise, and e-commerce.

      • Spices and Seasonings - Offers a diverse range of spices and seasonings, which are a significant part of their sales.
      • Condiments and Sauces - Provides a selection of condiments and sauces to enhance culinary experiences.
      • Recipe Mixes - Supplies convenient recipe mixes for home cooking.

    2. Flavor Solutions Segment - Provides culinary-inspired flavor solutions to food manufacturers and the foodservice industry, enhancing the taste profiles of various food products.

    Q3 2024 Summary

    Initial Price$70.71May 31, 2024
    Final Price$80.03August 31, 2024
    Price Change$9.32
    % Change+13.18%

    What went well

    • Strong performance in the Flavors business in the Americas region, with good results across high innovator growth customers, outperforming the category in areas like performance nutrition beverages, alcoholic and nonalcoholic beverages.
    • Expectations of sequential improvement in sales and gross margin from Q3 into Q4, with improvements in both the Consumer and Flavor Solutions segments.
    • Growing share in spices and seasonings in the U.S., focusing on both unit and volume measures, and increasing total distribution points across core categories, indicating strong competitive positioning.

    What went wrong

    • Weaker-than-expected QSR traffic is negatively impacting McCormick's Flavor Solutions volumes, particularly in the EMEA and Asia Pacific regions.
    • Increased SG&A expenses due to investments in digital transformation and IT are expected to pressure Q4 operating profit, which is projected to be only comparable to last year despite these investments.
    • Growing competition from smaller brands in the U.S. spices and seasonings category may impact McCormick's market share and growth prospects.

    Q&A Summary

    1. 2025 Outlook and Growth Algorithm
      Q: Any reason to think you won't be on algo in 2025?
      A: Management isn't ready to discuss 2025 guidance but is confident in their plans and investments driving volume growth into next year. They acknowledge economic uncertainties but feel well-positioned and will share more at the upcoming Investor Day.

    2. China Market Challenges
      Q: How is stimulus in China affecting consumer demand?
      A: They expect China's environment to remain challenging, anticipating a slight decline in 2024. While unable to predict the impact of recent stimulus measures, past actions didn't materially affect their business consumption.

    3. Hot Sauce Category Competition
      Q: Can you update on U.S. hot sauce challenges and plans?
      A: The hot sauce category is attractive but faces increased competition. They're impacted by a competitor recovering from supply issues and by trial-sized offerings boosting unit volumes. Their own mini trial sizes launched in Q3 are performing well, and they expect sequential improvement.

    4. Gross Margin Outlook
      Q: Why not raise gross margin guidance despite improvements?
      A: Gross margin is improving sequentially, but factors like normalized product mix in Flavor Solutions, supply chain investments, and slight negative pricing in the consumer segment are impacting Q4 margins.

    5. Flavor Solutions Margin Sustainability
      Q: Is there more runway for Flavor Solutions margin improvement?
      A: Management is positive about Flavor Solutions margins, driven by shifts to higher-margin products like Branded Foodservice. They expect continued improvement through CCI initiatives and leveraging growth for operating efficiency.

    6. SG&A Increase in Q4
      Q: What's driving the SG&A step-up in Q4?
      A: SG&A investments shifted from Q3 to Q4, particularly in IT and digital transformation, including digital marketing, data analytics, and manufacturing efficiencies, affecting both segments.

    7. Pricing Power and Long-Term Strategy
      Q: Is there room for additional pricing in 2025?
      A: Pricing remains a lever in their long-term algorithm, though future inflation and pricing are challenging to predict. They emphasize their CCI program and holistic P&L management to fund growth investments.

    8. Working Capital and Cash Flow
      Q: Will working capital be a source or use of cash this year?
      A: They expect a strong cash flow year with the fourth quarter being the strongest. Year-to-date working capital was used to mitigate risks like the port strike, but they anticipate normalization.

    9. Spices & Seasonings Competition
      Q: How is McCormick faring amid competition in spices and seasonings?
      A: They're growing share in volume measures and expanding distribution points. While acknowledging competition from smaller brands, they feel confident in their broad offering and category performance.

    10. Impact of Dock Workers' Strike
      Q: How could the dock workers' strike affect operations?
      A: They've been contingency planning since April, coordinating with suppliers to mitigate risks. They believe they're broadly covered but are monitoring the situation daily.

    11. Brand Investment Levels
      Q: Did brand investment increase high single digits in Q3 as guided?
      A: Investments are discussed in halves rather than quarters. They confirm that investments are moving up in both Q3 and Q4 as planned.

    12. FX and Tax Benefit Impact
      Q: Do FX and tax benefits account for the guidance raise?
      A: Due to tax and FX factors, the guidance reflects these adjustments but they didn't quantify an exact benefit.

    13. Timing Shifts Between Quarters
      Q: Should we model customer activity shifts reversing in Q4?
      A: Positive impacts from timing shifts in Q3 will normalize in Q4, particularly affecting Flavor Solutions in the Americas.

    14. Prepared Foods and Customer Trends
      Q: Are trends improving in sales to packaged food manufacturers?
      A: They saw improvement in Flavor Solutions, with good results in high-growth customer categories and branded foodservice, despite weak QSR traffic. Sequential improvement is expected in Q4.

    15. Marketing and Advertising Ramp-Up
      Q: Is the marketing ramp in Q4 focused on holidays or long-term ROI?
      A: Increased investment in Q4 includes ongoing programs driving current results, strong holiday season plans, and everyday marketing initiatives like Frank's hot sauce.

    16. Unconsolidated Operations Earnings
      Q: Any notable factors affecting earnings from unconsolidated operations?
      A: Strong performance is noted, but they mention a tougher comparison in Q4 due to strong prior-year results and FX impacts, particularly with the peso.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Consumer909.5912.1937.11,048.63,807.3921.5904.5937.4
    - Spices & Seasoning----1,578.3---
    - Recipe Mixes----430.5---
    - Condiments & Sauces----921.0---
    - Regional Leaders----877.5---
    Flavor Solutions656.0747.1747.6704.22,854.9681.2738.7742.4
    - Flavors----1,585.7---
    - Branded Foodservice----598.4---
    - Custom Condiments----317.1---
    - Coatings, Bulk Spices & Herbs----353.7---
    Total Revenue1,565.51,659.21,684.71,752.86,662.21,602.71,643.21,679.8
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Americas1,094.71,177.91,203.31,2814,756.91,117.11,166.41,209.3
    EMEA283.9310.6304.4313.91,212.8306.7307.3295.4
    APAC186.9170.7177.0157.9692.5178.9169.5175.1
    - United States----4,083.8---
    - Other Countries----1,365.6---
    - Americas (Consumer)--------
    - Americas (Industrial)--------
    Total Revenue1,565.51,659.21,684.71,752.86,662.21,602.71,643.21,679.8

    Executive Team

    NamePositionStart DateShort Bio
    Brendan M. FoleyPresident & Chief Executive OfficerSeptember 2023Brendan M. Foley has been with McCormick since 2014, serving in various leadership roles including Chief Operating Officer and President (2022 to 2023), President, Global Consumer, Americas & Asia (2020 to 2022), and President, North America (2015 to 2016). He will also assume the role of Chairman of the Board effective January 1, 2025 .
    Lawrence E. KurziusExecutive ChairmanSeptember 2023Lawrence E. Kurzius has been a director since 2015 and previously served as Chairman and Chief Executive Officer from 2016 to 2023. He will retire as Chairman on December 31, 2024, but will remain on the Board as a non-executive director until the company's annual shareholder meeting in March 2025 .
    Michael R. SmithExecutive Vice President & Chief Financial Officer2016Michael R. Smith has been serving as the Executive Vice President & Chief Financial Officer since 2016. He will continue in his role as Executive Vice President until his retirement on February 28, 2025 .
    Sarah J. PiperChief Human Relations OfficerDecember 2022Sarah J. Piper has been with McCormick since 2017, holding various roles including Vice President of Total Rewards and Vice President, Human Relations for the Americas. She became Chief Human Relations Officer in December 2022 .
    Jeffery D. SchwartzVice President, General Counsel & Secretary2014Jeffery D. Schwartz has been serving as the Vice President, General Counsel & Secretary since 2014 .
    Andrew D. FoustPresident, AmericasDecember 2021Andrew D. Foust has been with McCormick since 2018, serving in roles such as President of the U.S. Consumer Products Group and Vice President of Marketing for the U.S. Consumer Products Group before becoming President, Americas .
    Katherine A. JenkinsChief Growth OfficerJune 2023Katherine A. Jenkins has been with McCormick since 2017, serving in roles such as Chief Strategy Officer & Senior Vice President, Investor Relations, and Vice President, Investor Relations before becoming Chief Growth Officer .
    Ana G. SanchezPresident, EMEAFebruary 2022Ana G. Sanchez has been with McCormick since 2018, serving in roles such as Vice President Consumer, EMEA and Vice President Marketing, EMEA before becoming President, EMEA .
    Marcos GabrielExecutive Vice President & Chief Financial OfficerDecember 1, 2024Marcos Gabriel has over 25 years of experience in the consumer products industry and has served in key senior leadership roles at McCormick, contributing significantly to the company's profitable growth and improved productivity .

    Questions to Ask Management

    1. Given your expectation of a slight decline in your China business for 2024 due to ongoing macroeconomic challenges, what specific strategies are you implementing to drive growth in that market, and how do you anticipate the recent stimulus policies may impact your results?

    2. With the dock workers' strike now officially occurring, can you elaborate on the extent to which your contingency planning is sufficient, and at what point a prolonged strike could materially impact your operations and financial results?

    3. Your gross profit margin expanded by 170 basis points this quarter, driven by favorable mix and cost improvements, including lower employee-related benefit expenses; can you discuss the sustainability of these margin gains and whether cost reductions could impact your ability to invest in growth?

    4. Working capital was a significant source of cash last year but has been a decent-sized use of cash year-to-date; can you clarify your expectations for working capital's impact on cash flow for the full year and how you plan to manage it, especially in light of your contingency planning related to the port strike?

    5. While you cite positive total company volume growth as an inflection point, what risks do you see that could derail this momentum, particularly given consumer trends toward value-seeking behaviors and economic pressures, and how are you adjusting your strategies accordingly?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateNovember 2019
    End Date/DurationN/A
    Total additional amount$600 million
    Remaining authorization$472 million
    DetailsMitigate the effect of shares issued upon the exercise of stock options

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Sales: Constant currency net sales expected to range between a decline of 1% to growth of 1%, with results anticipated to be at the mid to high end of this range.
      2. Pricing: A 1% increase in pricing is anticipated for the year.
      3. China Consumer Sales: Expected to be down slightly compared to 2023 for the full year.
      4. Adjusted Operating Income: Expected to grow 4% to 6% in constant currency.
      5. Gross Margin: Projected to range between 50 to 100 basis points higher than 2023.
      6. SG&A: Benefits from cost savings will be partially offset by investments to drive volume growth, including brand marketing.
      7. Brand Marketing Spend: Expected to increase high single digits for the year.
      8. Tax Rate: Expected to be approximately 21% for the year.
      9. Income from Unconsolidated Operations: Expected to see a mid-teens increase.
      10. Adjusted EPS: Projected to be between $2.85 to $2.90, reflecting a 5% to 7% increase compared to 2023 .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Currency Impact: Expected to unfavorably impact sales, adjusted operating income, and adjusted EPS by approximately 1%.
      2. Net Sales: Constant currency net sales expected to range between a decline of 1% to growth of 1%.
      3. Pricing: Total pricing expected to be flat relative to the prior year in the second half.
      4. Volume Growth: Expected to return to total volume growth during the second half.
      5. Gross Margin: Projected to range between 50 to 100 basis points higher than 2023.
      6. Adjusted Operating Income: Expected to grow by 4% to 6% in constant currency.
      7. Brand Marketing Spend: Expected to increase by high single digits.
      8. Adjusted Effective Income Tax Rate: Projected to be approximately 22%.
      9. Income from Unconsolidated Operations: Expected to see a mid-teens increase.
      10. Adjusted EPS: Projected to be between $2.80 to $2.85, reflecting a 4% to 6% increase compared to 2023.
      11. Interest Expense: Expected to be up slightly versus the prior year.
      12. Cash Flow: Expected to be strong, driven by profit and working capital initiatives .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Sales Growth: Constant currency net sales expected to range between a decline of 1% to growth of 1%.
      2. Gross Margin: Projected to expand by 50 to 100 basis points compared to 2023.
      3. Adjusted Operating Income: Expected to grow by 4% to 6% in constant currency.
      4. Brand Marketing Spend: Anticipated to increase by high single digits.
      5. Adjusted Effective Income Tax Rate: Projected to be approximately 22%.
      6. Income from Unconsolidated Operations: Expected to increase by mid-teens.
      7. Adjusted EPS: Projected to be between $2.80 to $2.85, reflecting a 4% to 6% increase compared to 2023.
      8. Currency Impact: Expected to unfavorably impact sales, adjusted operating income, and adjusted EPS by approximately 1%.
      9. Volume Growth: Expected to return to volume growth during the second half.
      10. China Consumer Sales: Expected to be comparable to 2023 .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Adjusted EPS: Projected to be between $2.80 to $2.85, reflecting a 4% to 6% increase compared to 2023.
      2. Operating Margin Expansion: Expected to expand by approximately 80 basis points.
      3. Net Sales: Constant currency net sales expected to range between a decline of 1% to growth of 1%.
      4. Gross Margin: Projected to expand by 50 to 100 basis points.
      5. Adjusted Operating Income: Expected to grow by 4% to 6% in constant currency.
      6. Brand Marketing Spend: Anticipated to increase by high single digits.
      7. Effective Income Tax Rate: Projected to be approximately 22%.
      8. Income from Unconsolidated Operations: Expected to see a mid-teens increase.
      9. Pricing: Expected to be around 1% for the full year.
      10. Volume Growth: Expected to return to volume growth during the second half .

    Latest news

    Recent developments and announcements about MKC.

    Corporate Leadership

      Board Change

      ·
      Nov 25, 2024, 1:50 PM

      Lawrence E. Kurzius will retire as Executive Chairman of McCormick & Company and as Chairman of the Board of Directors, effective December 31, 2024. He will remain on the Board as a non-executive director until the 2025 Annual Meeting of Stockholders, at which he will not stand for re-election. Brendan M. Foley, currently President and CEO, has been appointed to succeed Mr. Kurzius as Chairman of the Board, effective January 1, 2025 .

      Leadership Change

      ·
      Nov 25, 2024, 1:50 PM

      Lawrence E. Kurzius is leaving his role as Executive Chairman of McCormick & Company, effective December 31, 2024. He will remain on the Board as a non-executive director until the 2025 Annual Meeting of Stockholders, where he will not stand for re-election. The reason for his departure is his decision to retire, aligning with the company's succession plan and his personal retirement plans . Brendan Foley, currently the President and CEO, will step up to succeed Mr. Kurzius as Chairman of the Board, effective January 1, 2025. Mr. Foley has been with McCormick for 10 years and has held various leadership roles .

      CEO Change

      ·
      Nov 25, 2024, 1:50 PM

      Brendan Foley, the current President and Chief Executive Officer of McCormick & Company, will succeed Lawrence E. Kurzius as Chairman of the Board, effective January 1, 2025. Mr. Kurzius, who has been serving as Executive Chairman, will retire from his role as Chairman on December 31, 2024, but will remain on the Board as a non-executive director until the 2025 Annual Meeting of Stockholders .