Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q1 2021 Earnings Presentation
40 slides from Mccormick &'s earnings presentation, Mar 30, 2021
Slide 1: 1st Quarter 2021 Financial Results and Outlook
MCCORMICK & COMPANY, INC. 1ST QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK The following slides accompany a March 30th, 2021, earnings release conference call. This information should be MARCH 30, 2021 read in conjunction with the press release issued on that date.
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION Certain information contained in this presentation, including statements concerning expected performance, such as those relating to net sales, volume and product mix, gross margins, earnings, cost savings, brand marketing support, transaction and integration expenses, spe
Slide 3: Lawrence Kurzius, Chairman, President and CEO
Lawrence Kurzius Chairman, President and Chief Executive Officer 3
Slide 4: Outstanding First Quarter 2021 Performance
OUTSTANDING FIRST QUARTER 2021 PERFORMANCE Double-digit growth ‒ Sales ‒ Adjusted operating income ‒ Earnings per share Well positioned to deliver another year of differentiated growth following an extraordinary 2020 Confident in an even stronger 2021 outlook 4
Slide 5: Our Broad and Advantaged Global Portfolio
OUR BROAD AND ADVANTAGED GLOBAL PORTFOLIO U.S. Spices & Seasonings Flavors STRENGTH AND DIVERSITY OF International Spices & OUR OFFERING Seasonings $5.8 Billion Branded Foodservice Pro-Forma Compelling products for every retail and 2020 Custom Condiments customer strategy across all channels Recipe
Slide 6: Fiscal Quarter 2021 Financial Results
FISCAL QUARTER 2021 FINANCIAL RESULTS GREW NET SALES 22% Constant currency increase of 20% Growth from base business, new products and acquisitions Both segments contributed to increase GREW ADJUSTED OPERATING INCOME 35% Constant currency increase of 32% Higher sales, favorable mix and CCI
Slide 7: Consumer Segment Update
CONSUMER SEGMENT UPDATE AMERICAS Over shipped U.S. branded portfolio consumption growth of 15% Continued household penetration and repeat buy rate increases Category management capabilities to optimize shelf-sets Cholula momentum outpacing category growth EMEA Broad based volume growth acr
Slide 8: Flavor Solutions Update
FLAVOR SOLUTIONS UPDATE AMERICAS FONA and Cholula acquisitions drove growth Base business and new product growth with packaged food customers Portfolio shift to more value-added flavors Demand declines from branded foodservice and restaurant customers EMEA New product and base business gro
Slide 9: Cholula and FONA Integrations on Plan
CHOLULA AND FONA INTEGRATIONS ON PLAN Integrated all functions as of March 1st Optimizing our operating model during integration Servicing customers from McCormick U.S. distribution Yielding quick wins and identifying long-term strategic centers opportunities through commercial collaboration
Slide 10: Global Demand for Flavor Is the Foundation of Sales Growth
GLOBAL DEMAND FOR FLAVOR IS THE FOUNDATION OF SALES GROWTH CAPITALIZING ON ACCELERATED SUSTAINABLY POSITIONED FOR LONG-TERM CONSUMER TRENDS CONTINUED GROWTH Healthy and flavorful cooking Alignment with consumer trends Trusted brands Breadth and reach of portfolio Digital engagement Curre
Slide 11: Consumer Segment Current Conditions
CONSUMER SEGMENT CURRENT CONDITIONS Sustained elevated consumer demand in all regions Proprietary survey data indicates consumers: ̶ Enjoy cooking as a creative outlet, stress reducer and family connector ̶ Feel home prepared meals are safer, healthier, better tasting and cost less Consumers “
Slide 12: Consumer Segment Category Management and Brand Marketing
CONSUMER SEGMENT CATEGORY MANAGEMENT AND BRAND MARKETING CATEGORY MANAGEMENT INITIATIVES BRAND MARKETING INVESTMENTS Reinventing U.S. shopping experience Frank’s Super Bowl It’s Gonna Be Great Merchandising to improve navigation and drive inspiration Investing in E-Commerce Festive Holiday Half-py B
Slide 13: Consumer Segment New Products
CONSUMER SEGMENT NEW PRODUCTS HEALTH & WELLNESS HEAT PORTFOLIO EXPANSION CONVENIENCE WITH FLAVOR PACKAGING INNOVATION 13
Slide 14: Flavor Solutions Growth Plans
FLAVOR SOLUTIONS GROWTH PLANS COLLABORATING DRIVING NEW PRODUCT STRENGTHENING OUR MIGRATING OUR ON BIGGER BET WINS WITH FLAVOR DIFFERENTIATED PORTFOLIO TO VALUE- INNOVATION FORECAST INSIGHTS CUSTOMER ENGAGEMENT ADDED CATEGORIES Coatings & Ingredients Flavors Custom Low to high Condiments value-added
Slide 15: Purpose-Led Performance
PURPOSE-LED PERFORMANCE RECOGNIZED FOR DOING WHAT’S RIGHT REDUCING OUR ENVIRONMENTAL FOOTPRINT WITH RENEWABLE ENERGY World’s #1 most sustainable 100% 11% renewable reduction in corporation in packaged and electricity our global processed foods and for all US greenhouse ingredients and 6th overall Mi
Slide 16: Strong Fundamentals and Growth Continue into 2021
STRONG FUNDAMENTALS AND GROWTH CONTINUE INTO 2021 Consumer momentum, Flavor Solutions recovery and Cholula and FONA acquisitions bolster confidence in 2021 growth Confidence in strong 2021 performance reinforced by effective strategies and breadth and reach of portfolio Well positioned to driv
Slide 17: Mike Smith, EVP and Chief Financial Officer
Mike Smith Executive Vice President And Chief Financial Officer
Slide 18: 1Q 2021 Sales Results
1Q 2021 SALES RESULTS TOTAL COMPANY 20.0% constant currency 22.2% 15.2% 4.0% 2.2% 0.8% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS 32.2% constant currency 3.4% constant currency 35.4% 28.6% 3.3% 3.2% 4.9% 4.3% 0.3% 1.5% 0.9% -3.0% Volume/Mix Price Acquisitions Currency
Slide 19: 1Q 2021 Sales Results: Consumer Segment (Americas)
1Q 2021 SALES RESULTS: CONSUMER SEGMENT AMERICAS 29.5% constant currency Cholula acquisition growth 29.8% Broad-based volume and product mix growth 24.7% Branded strength in: 5.0% ‒ McCormick 0.3% ‒ Frank’s RedHot and French’s -0.2% Volume/Mix Price Acquisitions Currency Net Sales ‒ Zatarain’s
Slide 20: 1Q 2021 Sales Results: Consumer Segment (EMEA)
1Q 2021 SALES RESULTS: CONSUMER SEGMENT EMEA 26.2% constant currency Double-digit growth in all countries and categories 34.6% Significant volume and mix growth drivers: 25.3% ‒ Schwartz and Ducros branded spices and seasonings 8.4% ‒ Vahine homemade dessert products 0.9% 0.0% ‒ Thai Kitchen and
Slide 21: 1Q 2021 Sales Results: Consumer Segment (Asia/Pacific)
1Q 2021 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC 55.0% constant currency Recovery from 1Q FY20 disruption in China consumption 64.7% 52.9% Double-digit growth excluding recovery ‒ Strong China consumer and branded foodservice demand 9.7% ‒ Continued strength in Australia 2.1% 0.0% Volume/M
Slide 22: 1Q 2021 Sales Results
1Q 2021 SALES RESULTS TOTAL COMPANY 20.0% constant currency 22.2% 15.2% 4.0% 2.2% 0.8% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS 32.2% constant currency 3.4% constant currency 35.4% 28.6% 3.3% 3.2% 4.9% 4.3% 0.3% 1.5% 0.9% -3.0% Volume/Mix Price Acquisitions Currency
Slide 23: 1Q 2021 Sales Results: Flavor Solutions (Americas)
1Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 2.4% constant currency FONA and Cholula acquisitions growth Pricing to offset cost increases Volume and mix decline driven by: 7.1% 1.6% 2.1% ‒ Reduced demand from branded foodservice and restaurant customers -0.3% -6.3% ‒ Partially offs
Slide 24: 1Q 2021 Sales Results: Flavor Solutions (EMEA)
1Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 0.1% constant currency Pricing to offset cost increases Volume and mix decline driven by: ‒ Lower sales to branded foodservice and restaurant customers 2.9% 1.3% 1.4% 0.0% ‒ Partially offset by sales growth with packaged food -2.8% companies w
Slide 25: 1Q 2021 Sales Results: Flavor Solutions (Asia/Pacific)
1Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC 17.6% constant currency Volume and mix growth driven by: 25.8% ‒ Higher sales to quick service restaurant customers in 19.4% China and Australia 8.2% ‒ Recovery from 1Q FY20 China COVID-19 related 0.0% lockdown -1.8% Volume/Mix Price A
Slide 26: Operating Income
OPERATING INCOME Fav/(Unfav) (in millions) 1Q 2021 1Q 2020 Change Operating income $236.3 $194.2 22% Adjusted operating income $262.5 $195.2 35% Consumer 189.9 119.6 59% Flavor Solutions 72.6 75.6 (4%) 32% constant currency adjusted operating income growth for total company ‒ Consumer segment grow
Slide 27: Operating Margin
OPERATING MARGIN Fav/(Unfav) (in millions) 1Q 2021 1Q 2020 Change Gross margin 39.0% 38.8% 20 bps Adjusted gross margin 39.4% 38.8% 60 bps Selling, general & administrative expenses as percent of net sales 21.7% 22.7% 100 bps Operating margin 16.0% 16.0% 0 bps Adjusted operating margin 17.7% 16.1% 1
Slide 28: Income Taxes
INCOME TAXES (in millions) 1Q 2021 1Q 2020 Income tax rate 28.3% 18.3% Adjusted income tax rate 22.7% 18.4% Adjusted income tax rate higher than the year-ago period driven by significant favorable discrete item related to refinement of entity structure in 1Q 2020 28 The non-GAAP measures included
Slide 29: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS Fav/(Unfav) (in millions) 1Q 2021 1Q 2020 Change Income from unconsolidated operations $13.3 $10.4 28% Income from unconsolidated operations increase driven by strong performance of joint venture in Mexico 29
Slide 30: Earnings Per Share
EARNINGS PER SHARE Fav/(Unfav) (in millions) 1Q 2021 1Q 2020 Change Earnings per share $0.60 $0.54 11% Adjusted earnings per share $0.72 $0.54 33% Change in adjusted earnings per share Increase in adjusted operating income $0.20 Increase in adjusted tax rate (0.04) Other impacts, net 0.02 Total incr
Slide 31: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Timing of working capital payments drove a $32 million outflow of BALANCED USE OF CASH cash from operations versus a $45 million inflow in 1Q 2020 Long-term financing optimized with $1 billion issuance of 5-year and 10-year notes $91 million of cash returned to shar
Slide 32: 2021 Outlook Growth Rates
2021 OUTLOOK GROWTH RATES Reported Currency Constant Currency Sales growth 8% to 10% 6% to 8% Contribution from Cholula and FONA acquisitions 3.5% to 4% Adjusted operating income increase 9% to 11% 7% to 9% CCI-led cost savings Approximately $110M Cost inflation Low single-digit increase Adjusted gr
Slide 33: 2021 Outlook Growth Rates
2021 OUTLOOK GROWTH RATES STRONG BASE 2021 BUSINESS & COVID-19 ERP TaxTAX CONSTANT ACQUISITION COST INVESTMENT HEADWIND Headwind CURRENCY GROWTH INCREASE GUIDANCE Sales growth* 6% to 8% 6% to 8% Adjusted operating 7% to 9% 11% to 13% -1% -3% income growth* Adjusted EPS growth* 11% to 13% -1% -3% -4%
Slide 34: Key Takeaways
KEY TAKEAWAYS Outstanding 1Q results bolsters confidence in a stronger 2021 outlook Confidence in sustainability of higher at-home consumption beyond the pandemic and well positioned to capitalize on accelerating consumer trends Enthusiasm and confidence in Cholula and FONA acquisitions streng
Slide 35: McCormick & Company, Inc.
MCCORMICK & COMPANY, INC. 1ST QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK The following slides accompany a March 30th, 2021, earnings release conference call. This information should be MARCH 30, 2021 read in conjunction with the press release issued on that date.
Slide 36: Non-GAAP Financial Measures
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 sh
Slide 37: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended 2/28/2021 2/29/2020 Gross profit $ 577.5 $ 469.9 1) Transaction and integration expenses include transaction and integration expenses associated with our Impact of transaction and integration expenses acquisitions of
Slide 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 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 exc
Slide 39: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To present “constant currency” information for the fiscal year 2021 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 2021
Slide 40: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The following provides a reconciliation of our estimated earnings per share to adjusted earnings per share for 2021 and actual results for 2020: Twelve Months Ended 2021 Projection 11/30/20 Earnings per share - diluted $2.77 to $2.82 $ 2.78 Impact of transaction and integ