Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q2 2024 Earnings Presentation
32 slides from Mccormick &'s earnings presentation, Jun 27, 2024
Slide 1: 2nd Quarter 2024 and Outlook Financial Results
2nd QUARTER 2024 and Outlook Financial Results McCORMICK & COMPANY, INC. June 27, 2024 The following slides accompany a June 27, 2024, earnings release conference call. This information should be read in conjunction with the press release issued on that date. 1
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, gross margin, earnings, cost savings, special charges, acquisitions, brand marketing support, volume and product mix, income tax e
Slide 3: Brendan Foley, President and CEO
Brendan Foley President and Chief Executive Officer 3
Slide 4: Second Quarter Performance
SECOND QUARTER PERFORMANCE RESULTS DEMONSTRATE SUCCESS OF PRIORITIZED INVESTMENTS 1 (1% ) net sales decline reflects flat pricing and (1%) volume Consumer volumes improved substantially sequentially, leading to year-over-year volume growth Flavor Solutions volumes declined due to soft customer volum
Slide 5: Second Quarter 2024 Sales Growth
SECOND QUARTER 2024 SALES GROWTH Areas of Success Areas of Pressure Consumer Consumer Volume growth in core categories across major markets Volume declines in prepared food categories Spices and seasonings unit share gains in U.S. Short-term impacts on hot sauce share Recipe mix distribution gains i
Slide 6: Executing on Growth Plans for 2024
EXECUTING ON GROWTH PLANS FOR 2024 Brand Marketing Innovation Category Management Proprietary Technologies Differentiated Customer Engagement 6
Slide 7: Focus on Innovation – Consumer
FOCUS ON INNOVATION – CONSUMER 7
Slide 8: Focus on Innovation – Flavor Solutions
FOCUS ON INNOVATION – FLAVOR SOLUTIONS Flavors Branded Foodservice 8
Slide 9: Marcos Gabriel, Incoming CFO
Marcos Gabriel Incoming Executive Vice President and Chief Financial Officer 9
Slide 10: Mike Smith, Executive Vice President and CFO
Mike Smith Executive Vice President and Chief Financial Officer 10
Slide 11: 2Q 2024 Sales Results
2Q 2024 SALES RESULTS TOTAL COMPANY -1.0% constant currency 0.0% 0.0% -0.3% -0.7% -1.0% Acquisitions/ Volume/Mix Price Divestitures Currency Net Sales Divestitures CONSUMER FLAVOR SOLUTIONS -0.5% constant currency -1.4% constant currency 0.3% 1.0% 0.0% 0.3% -0.8% -0.3% -0.6% -0.8% -1.1% -1.8% Acquis
Slide 12: 2Q 2024 Sales Results: Consumer Segment (Americas)
2Q 2024 SALES RESULTS: CONSUMER SEGMENT AMERICAS CONSUMER Pricing investments of -1% -1.6% constant currency Volume and mix flat reflecting: – Spices and Seasonings growth 0.0% 0.0% – Prepared food categories, Asian and Frozen, declines -0.3% -1.3% -1.6% Acquisitions/ Volume/Mix Price Divestitur
Slide 13: 2Q 2024 Sales Results: Consumer Segment (EMEA)
2Q 2024 SALES RESULTS: CONSUMER SEGMENT EMEA CONSUMER 3.9% constant currency Volume growth across categories and major markets – Expanded distribution in grocery, discounter, and e-commerce – Realized benefits from new product innovation 3.7% 5.0% 0.2% 1.1% 0.0% Volume/Mix Price Acquisitions/ Acqu
Slide 14: 2Q 2024 Sales Results: Consumer Segment (APAC)
2Q 2024 SALES RESULTS: CONSUMER SEGMENT APAC CONSUMER Volume and mix decline due to macro environment in China -0.9% constant currency Broad-based volume-led growth outside of China 0.6% 0.0% -1.5% -3.9% -4.8% Acquisitions/ Volume/Mix Price Currency Net Sales Divestitures 14 The non-GAAP measure
Slide 15: 2Q 2024 Sales Results
2Q 2024 SALES RESULTS TOTAL COMPANY -1.0% constant currency 0.0% 0.0% -0.3% -0.7% -1.0% Acquisitions/ Volume/Mix Price Divestitures Currency Net Sales Divestitures CONSUMER FLAVOR SOLUTIONS -0.5% constant currency -1.4% constant currency 0.3% 1.0% 0.0% 0.3% -0.8% -0.3% -0.6% -0.8% -1.1% -1.8% Acquis
Slide 16: 2Q 2024 Sales Results: Flavor Solutions (Americas)
2Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS FLAVOR SOLUTIONS Volume and mix decline included: -0.9% constant currency – Softness in QSR and packaged food volumes – Timing of customer activities 1.5% 0.7% 0.0% – Partially offset by volume growth in branded foodservice -0.2% -2.4% Acqui
Slide 17: 2Q 2024 Sales Results: Flavor Solutions (EMEA)
2Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA FLAVOR SOLUTIONS 3% impact from divestiture of canning business -8.2% constant currency Volume and mix decline included: – Softness in QSR and packaged food volumes 0.9% – Timing of customer activities -1.0% -4.1% -3.1% -7.3% Acquisitions/ Vol
Slide 18: 2Q 2024 Sales Results: Flavor Solutions (APAC)
2Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT APAC FLAVOR SOLUTIONS Volume and mix growth driven by: 10.3% constant currency – Timing of customer promotions and limited-time offers 9.2% – New product innovation 5.9% 1.1% 0.0% -4.4% Acquisitions/ Volume/Mix Price Acquisitions Currency Net Sales D
Slide 19: Gross Margin
GROSS MARGIN 2Q (in millions) 2Q 2024 2Q 2023 Fav/(Unfav) Change Gross Margin 37.7% 37.1% 60 bps Expansion primarily driven by Comprehensive Continuous Improvement (CCI) savings program Anticipate higher gross margin in 2H 2024 relative to 1H 2024 19
Slide 20: Operating Income
OPERATING INCOME 2Q (in millions) 2Q 2024 2Q 2023 Fav/(Unfav) Change Selling, general & administrative expenses as percent of net sales 23.3% 22.9% (40) bps Operating income $234.1 $221.8 6% Adjusted operating income $235.9 $235.0 0% Consumer 149.3 153.6 (3%) Flavor Solutions 86.6 81.4 6% SG&A exp
Slide 21: Interest Expense and Income Taxes
INTEREST EXPENSE AND INCOME TAXES 2Q (in millions) 2Q 2024 2Q 2023 Fav/(Unfav) Change Interest Expense $52.9 $52.2 (1%) Income tax rate 13.5% 22.1% 860 bps Adjusted income tax rate 13.6% 22.3% 870 bps Interest expense increase driven by higher short-term rates partially offset by reduction in aver
Slide 22: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 2Q (in millions) 2Q 2024 2Q 2023 Fav/(Unfav) Change Income from Unconsolidated Operations $16.8 $10.3 63% Increase driven by strong performance in largest joint venture, McCormick de Mexico 22
Slide 23: Earnings Per Share
EARNINGS PER SHARE 2Q 2Q 2024 2Q 2023 Fav/(Unfav) Change Earnings per share $0.68 $0.56 21% Adjusted earnings per share $0.69 $0.60 15% Change in adjusted earnings per share Decrease in tax rate 0.06 Increase in unconsolidated income 0.03 Total Increase $ 0.09 The non-GAAP measures included herein,
Slide 24: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW BALANCED Year-to-date cash flow provided from operations of $302 million USE OF CASH – Decrease from $394 million year-to-date 2023 – Decline driven by increased incentive compensation and timing of cash tax payments $226 million of cash returned to shareholders throu
Slide 25: 2024 Outlook
2024 OUTLOOK Reported Currency Constant Currency Sales growth -2% to 0% -1% to 1% Adjusted operating income increase 3% to 5% 4% to 6% Cost inflation Low single-digit increase Adjusted gross profit margin Up 50 to 100 bps Brand marketing High single-digit increase Adjusted income from unconsolidated
Slide 26: Key Takeaways
KEY TAKEAWAYS First-half results reflect effectiveness of investments to drive long-term organic growth Execution of proven strategies with speed and agility in alignment with consumer behavior CCI savings program continues to fund investments and drive margin expansion Confidence in delivering mid
Slide 27: 2nd Quarter 2024 and Outlook Financial Results
2nd QUARTER 2024 and Outlook Financial Results McCORMICK & COMPANY, INC. June 27, 2024 The following slides accompany a June 27, 2024, earnings release conference call. This information should be read in conjunction with the press release issued on that date. 27
Slide 28: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The tables below include financial measures of 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, whi
Slide 29: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended 5/31/2024 5/31/2023 1) Operating income margin, impact of special charges, and adjusted operating income margin are Operating income $ 234.1 $ 221.8 calculated as operating income, impact of special charges, and adjus
Slide 30: 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 31: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 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
Slide 32: 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 2024 and actual results for 2023: Year Ended 2024 Projection 11/30/2023 Earnings per share - diluted $2.76 to $2.81 $ 2.52 Impact of special charges 0.04 0.18 Ad