MCCORMICK & CO INC (MKC) Q3 2025 Earnings Summary

Executive Summary

Q3 delivered volume-led growth and modest beats: revenue $1.72B vs S&P Global consensus $1.71B (+0.8% surprise)* and adjusted EPS $0.85 vs $0.82 (+4.2% surprise)*. Sequentially, adjusted EPS rose from $0.69 in Q2 to $0.85, while gross margin remained pressured year over year .
Guidance trimmed on profitability: sales growth reaffirmed (0–2%), but adjusted operating income and adjusted EPS ranges were lowered to 2–4% and $3.00–$3.05 (from 3–5% and $3.03–$3.08) to reflect higher commodity costs and incremental tariffs .
Tariffs are the key swing factor: 2025 gross tariff costs now ~$70M (prior ~$50M); annualized exposure ~ $140M (prior ~$90M). Management is offsetting via sourcing, CCI savings, and targeted pricing; more mitigation expected in Q4 and into 2026 .
Stock catalysts: EPS and revenue beats, but margin compression and lowered profitability guidance vs June create a mixed setup; tariff transparency and Q4 gross margin trajectory are near-term debate points .

What Went Well and What Went Wrong

What Went Well

Fifth consecutive quarter of volume-led growth, underpinned by brand investments, distribution, and innovation; “our third quarter results marked our fifth consecutive quarter of volume-led growth” — CEO Brendan Foley .
Consumer segment strength: net sales +4% to $973M; operating income (ex-specials) +4% to $194M, driven by higher sales and lower SG&A, partly offset by commodity and tariff costs .
Flavor Solutions underlying momentum in APAC and QSR; health & wellness project wins and reformulation pipelines building; “win rate in health and wellness-related briefs is strong across our regions” — Foley .

What Went Wrong

Gross margin contracted 130 bps YoY in Q3 (adjusted -120 bps) on higher commodity costs, tariffs, and capacity support, partially offset by CCI savings; gross margins ran below internal expectations .
China Consumer softness in foodservice channels weighed on APAC Consumer results; gradual recovery still expected, aided by retail and channel diversification .
Flavor Solutions operating income (ex-specials) declined 2% YoY to $100M amid commodity/tariff pressure and mix, despite pricing and SG&A efficiencies .

Financial Results

Quarterly performance (sequential trend)

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Billions)	$1.606	$1.660	$1.725
Gross Profit Margin %	37.6%	37.5%	37.4%
Operating Income ($USD Millions)	$225.2	$245.8	$288.7
Operating Margin %	14.0%	14.8%	16.7%
Adjusted Operating Income ($USD Millions)	$225.2	$258.6	$293.6
Adjusted Operating Margin %	14.0%	15.6%	17.0%
Diluted EPS (Adjusted)	$0.60	$0.69	$0.85

Q3 results vs prior year and vs estimates

Metric	Q3 2024	Q3 2025 Actual	YoY Δ	S&P Global Consensus	Surprise
Revenue ($USD Billions)	$1.680	$1.725	+2.7%	$1.71198*	+$0.013B / +0.8%*
Adjusted EPS ($)	$0.83	$0.85	+2.4%	$0.816*	+$0.034 / +4.2%*
EBITDA ($USD Millions)	—	$356.0*	—	$355.6*	+$0.4 / +0.1%*

Note: Asterisks denote values retrieved from S&P Global; consensus and EBITDA actuals sourced from S&P Global data.*

Segment detail (Q3 2025)

Segment	Net Sales ($USD Millions)	YoY %	Operating Income ex-specials ($USD Millions)	YoY %
Consumer	$973.2	+3.8%	$193.8	+3.7%
Flavor Solutions	$751.7	+1.2%	$99.8	-1.8%

Sales mix and KPIs (Q3 2025)

Category	As Reported % Δ	FX Impact	Organic % Δ	Volume/Mix	Price
Total Company	+2.7%	+0.9%	+1.8%	+1.2%	+0.6%
Consumer	+3.8%	+1.2%	+2.6%	+2.2%	+0.4%
Flavor Solutions	+1.2%	+0.6%	+0.6%	-0.3%	+0.9%

Guidance Changes

Metric	Period	Previous Guidance (June 2025)	Current Guidance (Oct 2025)	Change
Net Sales Growth	FY25	0%–2% (1%–3% cc)	0%–2% (1%–3% cc)	Maintained
Reported Operating Income Growth	FY25	2%–4%	1%–3%	Lowered
Adjusted Operating Income Growth	FY25	3%–5% (4%–6% cc)	2%–4% (3%–5% cc)	Lowered
EPS (Reported)	FY25	$2.98–$3.03	$2.95–$3.00	Lowered
Adjusted EPS	FY25	$3.03–$3.08 (5%–7% cc)	$3.00–$3.05 (4%–6% cc)	Lowered
Tax Rate	FY25	~22%	~22%	Maintained
Special Charges (EPS impact)	FY25	~$0.05	~$0.05	Maintained
FX Impact	FY25	NS -1%, AOI -1%, EPS -2%	NS -1%, AOI -1%, EPS -2%	Maintained
Dividends	Quarterly	$0.45 declared 9/30/25	$0.45 declared 9/30/25	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs/Macro	Plan to offset tariffs via CCI and targeted pricing; guidance did not include potential further actions	2025 gross tariff costs now ~$70M; annualized ~$140M; mitigation via sourcing, CCI, targeted pricing; monitoring elasticities; more detail in Q4	Headwind intensifying; targeted mitigation scaling
Supply chain/capacity	Costs to support increased capacity for future growth pressured margins Q1–Q2	Capacity support and mix weighed on gross margin; expecting Q4 improvement as mitigations land	Q4 sequential margin improvement expected
Consumer volumes & pricing	Volume-led growth, price gap management investments in Americas	Positive volumes continued; surgical tariff pricing in Q4; aim to maintain affordability and volume momentum	Sustained volume focus with surgical pricing
Product performance	Spices/seasonings, hot sauce momentum; balanced by mix	Spices/seasonings strong across regions; GrillMates packaging relaunch; Frank’s/Cholula innovation	Continued brand-led momentum
Regional trends (China)	Gradual improvement in China Consumer assumed	China retail solid; foodservice softer from austerity in high-end dining; gradual full-year recovery expected	Mixed; gradual recovery intact
Digital/analytics	Technology & digital investments ongoing	Revenue growth management and advanced analytics guiding surgical pricing/tariff mitigation; continued digital transformation	Increasingly embedded in execution
Reformulation/regulatory	—	Rising reformulation (natural colors, reduced sugar/salt, eliminating ingredients of concern); health & wellness wins; private label momentum	Growing pipeline and demand

Management Commentary

“Our third quarter results marked our fifth consecutive quarter of volume-led growth… our gross margin was further pressured by rising costs; however, we continued to drive operating profit growth through… cost savings” — Brendan Foley, CEO .
“Adjusted operating income increased 2%… driven by decreased SG&A… partially offset by lower gross margin, sustained brand marketing investments, and increased technology investments” — Release narrative .
“Current gross tariff costs for 2025 are now expected to be approximately $70 million… total gross annualized tariff exposure… approximately $140 million… we’ve begun implementing targeted tariff pricing” — Marcos Gabriel, CFO .

Q&A Highlights

Elasticities and Q4 volume: Management confident in positive Q4 Consumer volumes despite targeted tariff pricing; using robust analytics to maintain affordability and volume momentum .
2026 mitigation balance: Skewed more toward savings/productivity and alternative sourcing, with residual surgical pricing; weekly monitoring of opportunities .
Gross margin cadence: Q4 gross margin expected flat to modestly up YoY; Q3 below plan due to accelerated commodity inflation and early tariff impacts .
Scanner data vs reported: Strength in unmeasured channels (e-commerce, club) and Canada helps explain deltas vs U.S. scanner data .
China outlook: Foodservice softness from austerity in high-end dining offset by retail expansion and channel diversification; gradual recovery intact .

Estimates Context

Q3 delivered beats vs S&P Global consensus: revenue $1.725B vs $1.712B (+0.8%); adjusted EPS $0.85 vs $0.816 (+4.2%); EBITDA $356M vs $356M (+0.1%). EPS estimates based on 9 estimates; revenue on 8 estimates.
FY25 Street vs guidance: Street EPS ~ $3.02*; company’s adjusted EPS guide $3.00–$3.05 implies in-line at midpoint (~$3.025). Revenue consensus ~$6.83B* aligns with reaffirmed 0–2% sales growth (1–3% cc) framework .
Note: Asterisks denote values retrieved from S&P Global; consensus and EBITDA actuals sourced from S&P Global data.*

Key Takeaways for Investors

Price/volume balance remains disciplined; Q3 was volume-led with modest pricing — a positive signal for elasticity management heading into tariff pass-throughs .
Profitability guide cut reflects discrete tariff/commodity headwinds, not demand; mitigation levers (CCI, sourcing, surgical pricing) should support sequential margin improvement in Q4 .
Tariff path is the debate: 2025 gross costs ~$70M and annualized ~$140M create 2026 earnings risk; watch pricing elasticity and velocity through the holiday season .
Category momentum (spices/seasonings, hot sauce, mustard) and health & wellness innovation underpin share gains and pipeline, partially insulating against macro softness .
China Consumer is mixed (foodservice softer), but retail/channel shifts and easier comps support gradual improvement; monitor trajectory into Q4 .
Cash returns steady (dividend $0.45/qtr) and balance sheet/liquidity remain solid for ongoing brand and capacity investments .
Near-term trading: EPS/revenue beats vs lowered profitability guide sets up for “show-me” Q4 gross margin delivery; tariff clarity and elasticity data points are key incremental catalysts .

Appendix: Cross-References and Additional Data

Q3 reported financials and reconciliations (income statement, balance sheet, cash flow, non-GAAP) .
8-K Item 2.02 and full press release content, including outlook and non-GAAP reconciliations .
Segment details and regional sales growth from 10-Q (Q3 2025) .
Prior quarters’ press releases for trend analysis: Q2 2025 ; Q1 2025 .
Dividend declaration (Sep 30, 2025): $0.45 per share .

Footnote: Consensus/estimates and EBITDA actuals marked with an asterisk (*) are values retrieved from S&P Global.