Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q4 2021 Earnings Presentation
41 slides from Mccormick &'s earnings presentation, Jan 27, 2022
Slide 1: 4th Quarter 2021 Financial Results and 2022 Outlook
4TH QUARTER 2021 FINANCIAL RESULTS AND 2022 OUTLOOK McCormick & Company, Inc. January 27, 2022 The following slides accompany a January 27th, 2022, earnings release conference call. This information should be 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, gross margins, earnings, cost savings, transaction and integration expenses, special charges, acquisitions, brand marketing suppo
Slide 3: Lawrence Kurzius, Chairman, President and CEO
Lawrence Kurzius Chairman, President and Chief Executive Officer 3
Slide 4: 2021 Results Reflect Robust and Sustained Growth
2021 RESULTS REFLECT ROBUST AND SUSTAINED GROWTH RECORD SALES GROWTH PERFORMANCE UNDERSCORED FUNDAMENTALS Executing on long-term strategies Strength of business model Responding to changing consumer behaviors Value of our products and capabilities Capitalizing on new opportunities Resili
Slide 5: McCormick Is End-to-End Flavor
MCCORMICK IS END-TO-END FLAVOR BROAD AND ADVANTAGED GLOBAL PORTFOLIO1 DRIVING DIFFERENTIATED GROWTH U.S. Spices & Flavors WITH OUR FLAVOR PORTFOLIO Seasonings Compelling offerings for every retail International Spices & and customer strategy across all channels Seasonings Branded Foodservice Ideally
Slide 6: Strong Fourth Quarter Financial Results
STRONG FOURTH QUARTER FINANCIAL RESULTS FOURTH QUARTER NET SALES GREW 11%1 Base business, new product and acquisition growth Higher volume and pricing drove base business growth Strong growth in both segments ADJUSTED OPERATING INCOME GREW 6% Higher sales and CCI-led cost savings Partially
Slide 7: Fourth Quarter Consumer Segment Update
FOURTH QUARTER CONSUMER SEGMENT UPDATE AMERICAS Incremental sales from Cholula Sequential improvement of market share performance 19% U.S. branded portfolio consumption growth versus 4Q 2019 Seventh consecutive quarter of double-digit consumption growth versus two years ago Household penet
Slide 8: Fourth Quarter Consumer Segment Update
FOURTH QUARTER CONSUMER SEGMENT UPDATE EMEA Strong consumption growth in key categories versus 4Q 2019 Full year market share gains in key categories Growth in household penetration and repeat rates versus two years ago APZ China branded foodservice recovery Consumer consumption growth acr
Slide 9: Fourth Quarter Flavor Solutions Segment Update
FOURTH QUARTER FLAVOR SOLUTIONS SEGMENT UPDATE AMERICAS FONA and Cholula acquisitions contributed to significant growth Robust growth momentum with consumer-packaged food customers Branded foodservice recovery continues to strengthen EMEA Double-digit growth in all channels Robust recovery
Slide 10: Fiscal Year 2021 Financial Results
FISCAL YEAR 2021 FINANCIAL RESULTS TOTAL McCORMICK GREW 13%1 ROBUST NET SALES GROWTH VERSUS 2019 Record sales growth in 2021 TOTAL McCORMICK (in billions) Strong organic growth 2021 2020 +18% growth 2019 Cholula and FONA contributed 4% to growth CONSUMER SEGMENT GREW 9%1 CONSUMER SEGMENT(in bi
Slide 11: Fiscal Year 2021 Highlights
FISCAL YEAR 2021 HIGHLIGHTS DELIVERING INDUSTRY-LEADING RECOGNIZED FOR FINANCIAL PERFORMANCE DOING WHAT’S RIGHT McCormick named a Global Compact LEAD Proud of our sustained performance and company 1 being included in this prestigious group Inaugural Terra Carta Seal awarded for industry leadership i
Slide 12: Accelerating Global Condiments Platform
ACCELERATING GLOBAL CONDIMENTS PLATFORM CONSUMER SEGMENT FLAVOR SOLUTIONS SEGMENT UNLOCKING SIGNIFICANT POTENTIAL STRENGTHENED GO-TO-MARKET MODEL BY LEVERAGING OUR EXPERTISE WITH BROAD PRESENCE ACROSS CHANNELS Gained over 1 million new households and growing Grew portion control packets double-digit
Slide 13: Accelerating Global Flavors Platform
ACCELERATING GLOBAL FLAVORS PLATFORM REALIZING GROWTH AMBITIONS WITH OUR RECORD 2021 PERFORMANCE COMBINED PASSION FOR FLAVOR Double-digit sales growth versus 2020 +15% Beverage growth in 2021 with strength in performance nutrition Leveraging our global Expanding flavor manufacturing footprint to exp
Slide 14: 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 FUTURE GROWTH Healthy and flavorful cooking Alignment with consumer trends Digital engagement Breadth and reach of portfolio Trusted brands Successf
Slide 15: Driving Consumer Segment Growth in 2022
DRIVING CONSUMER SEGMENT GROWTH IN 2022 ACCELERATING MOMENTUM WITH BRAND MARKETING, CATEGORY MANAGEMENT, AND NEW PRODUCTS Building confidence in the kitchen Inspiring home cooking and flavor exploration Accelerating flavor usage and delivering on demand for heat Creating a delicious, healthy
Slide 16: Driving Flavor Solutions Segment Growth in 2022
DRIVING FLAVOR SOLUTIONS SEGMENT GROWTH IN 2022 ACCELERATING MOMENTUM WITH OUR CULINARY FOUNDATION AND FLAWLESS CUSTOMER EXPERIENCE Migrating portfolio to more value-added categories Targeting opportunities to grow with customers in high-growth categories Leveraging our broad technology platfo
Slide 17: Strong Fundamentals and Momentum into 2022
STRONG FUNDAMENTALS AND MOMENTUM INTO 2022 2021 achievements and effective strategies bolster confidence in strong 2022 growth Well-equipped to navigate ever-changing environment with focus on long-term objectives, strategies and values Strong foundation, in attractive categories and capitalizing on
Slide 18: Mike Smith, EVP and Chief Financial Officer
Mike Smith Executive Vice President And Chief Financial Officer
Slide 19: Driving Value Through Acquisitions
DRIVING VALUE THROUGH AND 2021 4% incremental sales growth from acquisitions delivered according to plans Value Cholula margin accretive to gross and operating margins in Consumer and Flavor Solutions segments creation FONA margin accretive to gross and operating margins in Flavor Solutions se
Slide 20: 4Q 2021 Sales Results
4Q 2021 SALES RESULTS TOTAL COMPANY 10.2% constant currency 11.1% 4.0% 3.8% 2.4% 0.9% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS 9.2% constant currency 12.1% constant currency 9.8% 13.6% 4.8% 7.3% 2.5% 1.9% 0.6% 2.5% 2.3% 1.5% Volume/Mix Price Acquisitions Currency Ne
Slide 21: 4Q 2021 Sales Results: Consumer Segment Americas
4Q 2021 SALES RESULTS: CONSUMER SEGMENT AMERICAS 4Q compared to 2020 12.3% constant currency ‒ Higher volume and mix from sustained shift to at-home consumption 12.7% ‒ Pricing to partially offset cost inflation 6.5% 3.2% 2.6% ‒ Cholula acquisition growth 0.4% 4Q compared to 2019 ‒ 19% constant
Slide 22: 4Q 2021 Sales Results: Consumer Segment EMEA
4Q 2021 SALES RESULTS: CONSUMER SEGMENT EMEA 4Q compared to 2020 -4.9% constant currency ‒ Decline from lapping high demand last year 4Q compared to 2019 ‒ 5% constant currency growth 0.0% 0.0% ‒ Spices and seasonings, hot sauce and mustard growth -0.3% -4.9% -5.2% Volume/Mix Price Acquisitions
Slide 23: 4Q 2021 Sales Results: Consumer Segment Asia/Pacific
4Q 2021 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC 4Q compared to 2020 10.8% constant currency ‒ Recovery of branded foodservice sales in China 15.5% ‒ Higher sales of cooking-at-home products across the region 9.0% 4Q compared to 2019 4.7% 1.8% 0.0% ‒ Comparable in constant currency ‒ Growt
Slide 24: 4Q 2021 Sales Results
4Q 2021 SALES RESULTS TOTAL COMPANY 10.2% constant currency 11.1% 4.0% 3.8% 2.4% 0.9% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS 9.2% constant currency 12.1% constant currency 9.8% 13.6% 4.8% 7.3% 2.5% 1.9% 0.6% 2.5% 2.3% 1.5% Volume/Mix Price Acquisitions Currency Ne
Slide 25: 4Q 2021 Sales Results: Flavor Solutions Americas
4Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 4Q compared to 2020 12.7% constant currency ‒ FONA and Cholula acquisitions growth 13.7% ‒ Pricing to partially offset cost inflation 10.8% ‒ Volume impacted by exit of low margin business 2.9% 1.0% 4Q compared to 2019 -1.0% ‒ 15% constant
Slide 26: 4Q 2021 Sales Results: Flavor Solutions EMEA
4Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 4Q compared to 2020 16.2% constant currency ‒ Quick service restaurants and branded foodservice growth 18.6% 14.7% ‒ Continued growth momentum with packaged food and beverage companies 2.4% 1.5% 0.0% 4Q compared to 2019 ‒ 26% constant currency
Slide 27: 4Q 2021 Sales Results: Flavor Solutions Asia/Pacific
4Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC 4Q compared to 2020 1.2% constant currency ‒ Growth driven by quick service restaurants ‒ Partially impacted by timing of customers’ limited time offers and promotional activities 2.6% 3.8% 4Q compared to 2019 1.1% 0.1% 0.0% ‒ 8% con
Slide 28: Operating Income
OPERATING INCOME 4Q FY2021 (in millions) 4Q 2021 4Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Operating income $276.2 $274.9 0% 2% Adjusted operating income $308.7 $290.2 6% 8% Consumer 250.4 220.7 14% 3% Flavor Solutions 58.3 69.5 (16%) 25% 6% constant currency adjusted operating income growth f
Slide 29: Operating Margin
OPERATING MARGIN 4Q FY2021 (in millions) 4Q 2021 4Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Gross Margin 40.6% 42.4% (180) bps (160) bps Adjusted Gross Margin 40.9% 42.4% (150) bps (140) bps Selling, general & administrative expenses as percent of net sales 23.1% 23.8% 70 bps 60 bps Operating mar
Slide 30: Income Taxes
INCOME TAXES (in millions) 4Q 2021 4Q 2020 FY2021 FY2020 Income tax rate 23.0% 23.2% 21.5% 19.8% Adjusted income tax rate 21.3% 22.9% 20.1% 19.9% Both periods favorably impacted by discrete items 30 The non-GAAP measures included herein, which we refer to as “adjusted”, exclude the impact of items
Slide 31: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 4Q FY2021 (in millions) 4Q 2021 4Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Income from unconsolidated operations $6.4 $10.6 (40%) 28% Adjusted income from unconsolidated $6.4 $10.6 (40%) (5%) operations Adjusted income from unconsolidated operations unfavor
Slide 32: Earnings per Share
EARNINGS PER SHARE 4Q FY2021 (in millions) 4Q 2021 4Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Earnings per share $0.73 $0.74 (1%) 1% Adjusted earnings per share $0.84 $0.79 6% 8% Change in adjusted earnings per share Increase in adjusted operating income $0.05 Decrease in adjusted income tax rate
Slide 33: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Cash flow provided from operations was $828 million for 2021 BALANCED USE OF CASH − Impacted by higher inventory levels to support significantly increased demand and mitigate supply and service issues − Includes payment of transaction and integration expenses $363 mil
Slide 34: 2022 Outlook Growth Rates
2022 OUTLOOK GROWTH RATES Reported Currency Constant Currency Sales growth 3% to 5% 4% to 6% Adjusted operating income increase 7% to 9% 8% to 10% CCI-led cost savings Approximately $85M Cost inflation Mid-teens increase Adjusted gross profit margin Comparable to 2021 to 50 bps decrease Brand market
Slide 35: Key Takeaways
KEY TAKEAWAYS Record sales growth in 2021 2021 operating performance underscored strength of business model, value of products and capabilities and resilience of employees Cholula and FONA have proven to be fantastic additions Compounded growth regardless of short-term pressures Confidence in drivin
Slide 36: 4th Quarter 2021 Financial Results and 2022 Outlook
4TH QUARTER 2021 FINANCIAL RESULTS AND 2022 OUTLOOK McCormick & Company, Inc. January 27, 2022 The following slides accompany a January 27th, 2022, earnings release conference call. This information should be read in conjunction with the press release issued on that date.
Slide 37: 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 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended Twelve Months Ended 11/30/2021 11/30/2020 11/30/2021 11/30/2020 1) Transaction and integration expenses include transaction and integration expenses Gross profit $ 702.9 $ 660.7 $ 2,494.6 $ 2,300.4 associated with our
Slide 39: 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 40: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To present the percentage change in projected 2022 net sales, adjusted operating income and adjusted earnings per share — diluted on a constant currency basis, 2022 projected local currency net sales, adjusted operating income, and adjusted net income for entities reporti
Slide 41: 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 2022 and actual results for 2021: Twelve Months Ended 2022 Projection 11/30/21 Earnings per share - diluted $3.07 to $3.12 $ 2.80 Impact of transaction and integ