MCCORMICK & CO INC (MKC) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 delivered volume-led organic growth (+2%) but modest headline softness from FX; net sales were $1.606B (flat YoY) and diluted EPS was $0.60, with adjusted EPS also $0.60 .
Versus Wall Street, MKC modestly missed consensus on both EPS ($0.60 vs $0.64*) and revenue ($1.606B vs $1.614B*) despite reaffirming FY25 sales, adjusted operating income, and EPS guidance; currency was an ~2% EPS headwind and unconsolidated JV income declined due to MXN/USD moves .
Segment mix: Consumer was flat on sales ($919M) with strong volume offset by price investments; Flavor Solutions rose to $686M with 3% organic growth, and adjusted operating income +28% YoY on mix, pricing, and CCI savings .
Management emphasized brand marketing and technology investments, tariff mitigation via CCI and targeted pricing, and margin expansion building through the year; reiterated adjusted EPS $3.03–$3.08 for FY25 .
Near-term stock narrative: slight headline miss but guided margin build and reaffirmed FY25 outlook; catalysts include continued volume momentum, CCI-driven savings, and tariff mitigation plans .

What Went Well and What Went Wrong

What Went Well

Volume-led organic growth (+2%), with Consumer volume +3% and Flavor Solutions volume +2%; global share gains across core categories and strong QSR innovation in APAC and Americas .
Gross margin expanded +20 bps YoY to 37.6%, driven by CCI cost savings, supporting planned margin expansion through FY25 .
Flavor Solutions adjusted operating income up 28% YoY (33% constant currency) on product mix, pricing, and CCI savings; management highlighted wins with high-growth, health-focused customers and QSR LTOs .

Management quote: “Our continued volume-driven performance reflects the success of our prioritized investments... We achieved share gains in core categories across key markets and delivered volume growth in both the Consumer and Flavor Solutions segments.” — Brendan Foley, CEO .

What Went Wrong

Headline EPS and revenue modestly below Street; FX was a ~$0.03 per share headwind and unconsolidated JV income declined YoY due to currency .
Consumer segment adjusted operating income down 17% YoY (16% constant currency) from pricing investments (price gap management), elevated brand marketing and technology spend, and SBC timing .
EMEA Flavor Solutions softness persisted (QSR traffic), creating regional drag despite sequential improvement; management expects quarterly fluctuations tied to customer timing .

Financial Results

Headline Financials vs Prior Periods and Estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$1.680	$1.798	$1.606
Gross Margin (%)	38.7%	40.2%	37.6%
Operating Income ($USD Millions)	$286.5	$306.2	$225.2
Operating Margin (%)	17.1%	17.0%	14.0%
Diluted EPS ($)	$0.83	$0.80	$0.60
Adjusted EPS ($)	$0.83	$0.80	$0.60

Estimates comparison (S&P Global):

Q1 2025 EPS: Actual $0.60 vs Consensus $0.64* → miss
Q1 2025 Revenue: Actual $1.606B vs Consensus $1.614B* → miss
Values retrieved from S&P Global.*

Segment Breakdown

Segment	Q3 2024 Net Sales ($MM)	Q4 2024 Net Sales ($MM)	Q1 2025 Net Sales ($MM)	Q1 2025 Adjusted Operating Income ($MM)
Consumer	$937.4	$1,085.0	$919.0	$147.0
Flavor Solutions	$742.4	$713.0	$686.0	$79.0

Regional sales dynamics (reported vs organic vs drivers, Q1 2025):

Area	Reported % Change	Organic Volume/Mix	Organic Price	Organic % Change
Total Net Sales	+0.2%	+2.2%	-0.2%	+2.0%
Consumer – Americas	-0.4%	+2.9%	-2.8%	+0.1%
Consumer – EMEA	-0.2%	+1.5%	+2.1%	+3.6%
Consumer – APAC	+0.4%	+2.0%	+0.7%	+2.7%
Flavor Solutions – Americas	+0.8%	+0.8%	+2.8%	+3.6%
Flavor Solutions – EMEA	-5.2%	-1.9%	-2.0%	-3.9%
Flavor Solutions – APAC	+12.7%	+15.7%	-0.4%	+15.3%

KPIs (Q1 2025)

Gross profit $604.0MM; gross margin 37.6% (+20 bps YoY) .
Cash from operations $115.5MM; capex $37.1MM .
Tax rate 22.3% (adjusted) vs 25.5% prior-year .
Net debt (balance sheet excerpt): Total debt $4,307.7MM (ST + LT) at 2/28/2025; cash $102.8MM .

Guidance Changes

Metric	Period	Previous Guidance (1/23/2025)	Current Guidance (3/25/2025)	Change
Net Sales Growth (Reported)	FY 2025	0% to 2%	0% to 2%	Maintained
Net Sales Growth (Constant FX)	FY 2025	1% to 3%	1% to 3%	Maintained
Adjusted Operating Income Growth (Reported)	FY 2025	3% to 5%	3% to 5%	Maintained
Adjusted Operating Income Growth (Constant FX)	FY 2025	4% to 6%	4% to 6%	Maintained
EPS (Reported)	FY 2025	$2.99 to $3.04	$2.99 to $3.04	Maintained
Adjusted EPS	FY 2025	$3.03 to $3.08	$3.03 to $3.08	Maintained
FX Impact	FY 2025	Sales -1%, Adj OI -1%, Adj EPS -2%	Sales -1%, Adj OI -1%, Adj EPS -2%	Maintained
Special Charges	FY 2025	~$15MM; EPS impact $0.04	~$15MM; EPS impact $0.04	Maintained
Tax Rate	FY 2025	~22%	~22%	Maintained
Tariffs	FY 2025	Not explicitly in Jan; general trade risks	Plan to offset U.S. China import tariffs via CCI and price actions; no additional potential 2025 tariffs assumed	Clarified mitigation

Earnings Call Themes & Trends

Topic	Q-2 (Q3 2024)	Q-1 (Q4 2024)	Current (Q1 2025)	Trend
Volume-led growth	Total global positive volume growth milestone; Consumer volume up; FS branded foodservice strength	FY24: returned to differentiated volume-led growth	Sustained volume-led organic growth (+2%); share gains in core categories	Improving, sustained
Margin expansion (CCI)	GM +170 bps; AOI +15% YoY on lower SG&A	FY24 GM +90 bps; AOI +5% adj	GM +20 bps; AOI down on SG&A timing; margin to build through year	Building through 2025
Consumer pricing/investments	Price declines offset volume in Americas; price gap mgmt	Price mix managed; brand marketing up	Americas targeted promos (recipe mixes), price gap mgmt; expect flat price contribution ahead	Investments front-loaded; normalizing
QSR dynamics	FS APAC/EMEA mixed; EMEA QSR soft	FS mix/pricing gains; APAC growth	APAC and Americas QSR volume up via innovation/LTO; EMEA traffic soft	Mixed; APAC strong
China	APAC Consumer demand challenged	Gradual recovery assumed in FY25	Gradual recovery evident; Consumer APAC +3% organic	Gradual improvement
Tariffs/macro	General trade risks noted	Risk disclosures	Plan to offset current tariffs with CCI and targeted price; outlook excludes potential new tariffs	Managed via mitigation
Digital/data & tech	Proprietary tech cited	Increased technology costs	Accelerating digital transformation and analytics; tech investments continued	Ongoing investment

Management Commentary

“We are pleased to start the year with solid first quarter results that are in line with our expectations... We achieved share gains in core categories across key markets and delivered volume growth in both the Consumer and Flavor Solutions segments.” — Brendan Foley .
“Gross margin expansion reflects favorable product mix and cost savings from our CCI program… build throughout the year.” — Marcos Gabriel .
“We plan to offset costs related to U.S. import tariffs on China with our CCI savings and some very targeted price adjustments… outlook does not include any additional impacts from tariffs.” — Marcos Gabriel .
“In the Americas, price declined due to price gap management… targeted incremental promotion related to seasonal recipe mixes.” — Brendan Foley .

Q&A Highlights

Operating profit decline drivers and outlook: SBC shifted from Q2 to Q1; elevated brand marketing/tech investments; Consumer OI down 16% constant currency with ~two-thirds rolling off next quarter; confidence in FY guide maintained .
Pricing and shipment/consumption dynamics: Targeted Q1 promo in recipe mixes (chili, gravy) aligned with cold weather; expect Consumer price to be flat ahead; shipment vs consumption seasonality and later Easter timing explained .
Flavor Solutions mix: Wins with high-growth health-focused customers and QSR innovation offset large CPG softness; APAC volume supported by promotions/LTOs and lapping geopolitical boycotts .
Tariffs risk monitoring: Current China tariffs embedded; mitigation through CCI and targeted pricing; outlook excludes unknown new actions .
SG&A phasing: Q1/Q2 to be viewed together; Q1 negative timing becomes Q2 tailwind; continued brand marketing/tech spend .

Estimates Context

Q1 2025 EPS: $0.60 vs consensus $0.64* → modest miss despite guidance reaffirmation; FX and JV income pressure cited .
Q1 2025 revenue: $1.606B vs consensus $1.614B* → slight miss on currency and Consumer pricing investments .
FY 2025 consensus EPS: ~$3.02*; Company reaffirmed adjusted EPS $3.03–$3.08 (reported $2.99–$3.04) with margin build expected .
Values retrieved from S&P Global.*

Where estimates may need to adjust: modest downward tweaks to near-term EPS/Revenue for FX/unconsolidated income; offset by stronger Flavor Solutions margins and reaffirmed full-year trajectory .

Key Takeaways for Investors

Reaffirmed FY25 outlook amid slight Q1 miss; watch for margin expansion to build sequentially (gross +50–100 bps for FY) as CCI savings and mix flow through — supportive of medium-term EPS trajectory .
Consumer pricing investments are front-loaded; expect normalization and flat price contribution, with volume momentum and share gains driving the top line .
Flavor Solutions is the earnings lever: double-digit OI growth on mix/pricing/CCI; continued APAC and Americas QSR innovation mitigates large CPG softness .
FX remains a headwind (EPS ~-2%); monitor MXN/USD impact on McCormick de Mexico JV and potential translation drag on reported results .
Tariffs: current China-related tariffs embedded with mitigation via CCI and targeted pricing; any incremental tariff actions would be addressed but are not in guidance — a policy risk to track .
Cash generation intact; Q1 operating cash flow $116MM with continued dividend return; capex focused on capacity, digital, and cost optimization .
Near-term trading lens: limited downside from modest miss given reaffirmed guide; upside hinges on visible margin build and sustained volume-led growth through 2H .