Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q1 2024 Earnings Presentation
29 slides from Mccormick &'s earnings presentation, Mar 26, 2024
Slide 1: 1st Quarter 2024 and Outlook Financial Results
1st QUARTER 2024 and Outlook Financial Results McCORMICK & COMPANY, INC. March 26, 2024 The following slides accompany a March 26, 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 Chief Executive Officer
Brendan Foley President and Chief Executive Officer 3
Slide 4: First Quarter Performance
FIRST QUARTER PERFORMANCE 2%1 NET SALES GROWTH DRIVEN BY 3% PRICING WITH (1)% VOLUME OFFSET Results demonstrate early success of prioritized investments Improved volume performance in Consumer and Flavor Solutions Unit share gains are expected to lead our trends; results to build through 2024 Consum
Slide 5: First Quarter 2024 Sales Growth
FIRST QUARTER 2024 SALES GROWTH Signposts of Success Areas of Pressure Consumer Consumer Spices and seasonings global volume growth, excluding China Volume declines in prepared food categories U.S. spices and seasonings unit share improvement Impact from mustard private label low price points Recipe
Slide 6: Executing on Growth Plans for 2024
EXECUTING ON GROWTH PLANS FOR 2024 Brand Marketing New Products Category Management Proprietary Technologies Differentiated Customer Engagement 6
Slide 7: Mike Smith, Executive Vice President and Chief Financial Officer
Mike Smith Executive Vice President and Chief Financial Officer 7
Slide 8: 1Q 2024 Sales Results
1Q 2024 SALES RESULTS TOTAL COMPANY 1.5% constant currency 2.7% 2.4% 0.9% -0.2% -1.0% Acquisitions/ Volume/Mix Price Divestitures Currency Net Sales Divestitures CONSUMER FLAVOR SOLUTIONS 0.7% constant currency 2.5% constant currency 2.9% 1.3% 2.4% 1.3% 3.8% 0.0% 0.6% 0.7% -0.6% -2.2% Acquisitions/
Slide 9: 1Q 2024 Sales Results: Consumer Segment (Americas)
1Q 2024 SALES RESULTS: CONSUMER SEGMENT AMERICAS CONSUMER ▪ Prior year pricing actions 0.1% constant currency ▪ Volume and mix decline included: – 1% impact from exit of Hispanic product direct store delivery 2.7% 0.0% 0.0% 0.1% – Lower volume in prepared foods -2.6% Acquisitions/ Volume/Mix Price D
Slide 10: 1Q 2024 Sales Results: Consumer Segment (EMEA)
1Q 2024 SALES RESULTS: CONSUMER SEGMENT EMEA CONSUMER 8.2% constant currency ▪ Prior year pricing actions 13.3% ▪ Broad-based growth across categories in major markets 5.3% 5.1% 2.9% 0.0% Acquisitions/ Volume/Mix Price Acquisitions Currency Net Sales Divestitures 10 The non-GAAP measure included her
Slide 11: 1Q 2024 Sales Results: Consumer Segment (APAC)
1Q 2024 SALES RESULTS: CONSUMER SEGMENT APAC CONSUMER ▪ Prior year pricing actions -5.4% constant currency ▪ Volume and mix decline due to economic environment in China ▪ Broad-based sales growth outside of China 0.9% 0.0% -2.0% -6.3% -7.4% Acquisitions/ Volume/Mix Price Currency Net Sales Divestitu
Slide 12: 1Q 2024 Sales Results
1Q 2024 SALES RESULTS TOTAL COMPANY 1.5% constant currency 2.7% 2.4% 0.9% -0.2% -1.0% Acquisitions/ Volume/Mix Price Divestitures Currency Net Sales Divestitures CONSUMER FLAVOR SOLUTIONS 0.7% constant currency 2.5% constant currency 2.9% 1.3% 2.4% 1.3% 3.8% 0.0% 0.6% 0.7% -0.6% -2.2% Acquisitions/
Slide 13: 1Q 2024 Sales Results: Flavor Solutions Segment (Americas)
1Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS FLAVOR SOLUTIONS ▪ Prior year pricing actions 3.4% constant currency ▪ Volume and mix growth included: – Flavors growth with strength in Performance Nutrition 4.7% 1.5% 1.9% 1.3% 0.0% – Branded Foodservice growth Acquisitions/ Volume/Mix Price
Slide 14: 1Q 2024 Sales Results: Flavor Solutions Segment (EMEA)
1Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA FLAVOR SOLUTIONS ▪ Prior year pricing actions -1.4% constant currency ▪ 3% impact from divestiture of canning business ▪ Volume and mix decline included: 4.0% 3.2% 1.8% – 2% impact from exiting a foodservice product line -2.5% -2.9% Acquisitions/
Slide 15: 1Q 2024 Sales Results: Flavor Solutions Segment (APAC)
1Q 2024 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT APAC FLAVOR SOLUTIONS ▪ Prior year pricing actions ▪ China business delivered strong volume growth 4.5% constant currency ▪ Lower demand in quick service restaurants outside of China 3.5% 1.0% 0.0% 1.5% -3.0% Acquisitions/ Volume/Mix Price Acquisitions
Slide 16: Gross Margin
GROSS MARGIN 1Q (in millions) 1Q 2024 1Q 2023 Fav/(Unfav) Change Gross Margin 37.4% 36.0% 140 bps ▪ Favorable gross margin impacts: − Favorable product mix − Comprehensive Continuous Improvement (CCI) and Global Operating Effectiveness (GOE) savings programs − Effective price realization ▪ Gross mar
Slide 17: Operating Income
OPERATING INCOME 1Q (in millions) 1Q 2024 1Q 2023 Fav/(Unfav) Change Selling, general & administrative expenses as percent of net sales 22.6% 21.5% (110) bps Operating income $233.5 $199.0 17% Adjusted operating income $237.7 $226.8 5% Consumer 176.3 173.4 2% Flavor Solutions 61.4 53.4 15% ▪ SG&A ex
Slide 18: Interest Expense and Income Taxes
INTEREST EXPENSE AND INCOME TAXES 1Q (in millions) 1Q 2024 1Q 2023 Fav/(Unfav) Change Interest Expense $50.3 $50.6 1% Income tax rate 25.5% 21.6% (390 bps) Adjusted income tax rate 25.5% 21.8% (370 bps) ▪ Interest expense comparable to the prior year ▪ Year-ago period tax rate benefitted from discre
Slide 19: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 1Q (in millions) 1Q 2024 1Q 2023 Fav/(Unfav) Change Income from Unconsolidated Operations $21.3 $14.0 52% ▪ Increase driven by strong performance in largest joint venture, McCormick de Mexico 19
Slide 20: Earnings Per Share
EARNINGS PER SHARE 1Q 1Q 2024 1Q 2023 Fav/(Unfav) Change Earnings per share $0.62 $0.52 19% Adjusted earnings per share $0.63 $0.59 7% Change in adjusted earnings per share Increase in adjusted operating income 0.04 Increase in unconsolidated income 0.03 Increase in tax rate (0.03) Total Increase $
Slide 21: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW ▪ Strong year-to-date cash flow provided from operations of $138 million CASH FLOW FROM OPERATIONS – Increased from $103 million year-to-date 2023 – Increase driven by higher operating income and working capital improvements $138M $103M ▪ $113 million of cash returned to
Slide 22: 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 23: Key Takeaways
KEY TAKEAWAYS First quarter performance demonstrates effectiveness of our investments Successful execution of proven strategies with speed and agility CCI and GOE programs generating fuel to fund investments and drive margin expansion Confidence in delivering mid to high-end of constant currency sal
Slide 24: 1st Quarter 2024 and Outlook Financial Results
1st QUARTER 2024 and Outlook Financial Results McCORMICK & COMPANY, INC. March 26, 2024 The following slides accompany a March 26, 2024, earnings release conference call. This information should be read in conjunction with the press release issued on that date. 24
Slide 25: 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 26: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended 2/29/2024 2/28/2023 Operating income $ 233.5 $ 199.0 1) Operating income margin, impact of special charges, and adjusted operating income margin are Impact of special charges 4.2 27.8 calculated as operating income, i
Slide 27: 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 28: 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 29: 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