Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q1 2022 Earnings Presentation
34 slides from Mccormick &'s earnings presentation, Mar 29, 2022
Slide 1: 1st Quarter 2022 Financial Results and Outlook
1 QUARTER ST 2022 Financial Results and Outlook McCORMICK & COMPANY, INC. MARCH 29, 2022 The following slides accompany a March 29th, 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 release, including statements concerning expected performance, such as those relating to net sales, gross margin, earnings, cost savings, transaction and integration expenses, special charges, acquisitions, brand marketing support, vo
Slide 3: Lawrence Kurzius, Chairman, President and CEO
Lawrence Kurzius Chairman, President and Chief Executive Officer 3
Slide 4: Solid First Quarter 2022 Results In-Line with Expectations
SOLID FIRST QUARTER 2022 RESULTS IN-LINE WITH EXPECTATIONS 1 TOP-LINE GROWTH DRIVEN BY BREADTH AND REACH OF BALANCED FLAVOR PORTFOLIO U.S. Spices & Flavors FIRST QUARTER NET SALES GREW 3% Seasonings ▪ 4% constant currency growth on top of 20% 1Q 2021 growth International Branded Spices & Foodservice
Slide 5: First Quarter Consumer Segment Update
FIRST QUARTER CONSUMER SEGMENT UPDATE STRENGTH OF OUR CATEGORIES HIGHLIGHTED AS CONSUMERS COOK MORE AT HOME TOTAL CONSUMER SALES DECLINED 2% ▪ Decline against a strong comparison of 35% growth in 1Q 2021 ▪ Double-digit growth in each region versus 1Q 2020 ▪ Pricing actions in each region AMERICAS ▪
Slide 6: First Quarter Flavor Solutions Segment Update
FIRST QUARTER FLAVOR SOLUTIONS SEGMENT UPDATE DIFFERENTIATED CUSTOMER ENGAGEMENT AND TECHNICAL CAPABILITIES DRIVING GROWTH TOTAL FLAVOR SOLUTIONS SALES GREW 12% ▪ Base business, new products and acquisition growth ▪ Higher volume and product mix as well as pricing in all regions ▪ Market conditions
Slide 7: Global Demand for Flavor Is the Foundation of Sales Growth
GLOBAL DEMAND FOR FLAVOR IS THE FOUNDATION OF SALES GROWTH CAPITALIZING ON SUSTAINABLY ACCELERATED LONG-TERM POSITIONED FOR CONSUMER TRENDS FUTURE GROWTH Healthy and flavorful cooking Alignment with consumer trends Digital engagement Breadth and reach of portfolio Trusted brands Successful strategy
Slide 8: Consumer Segment Growth Plans
CONSUMER SEGMENT GROWTH PLANS FUELING OUR GROWTH WITH BRAND MARKETING, CATEGORY MANAGEMENT AND NEW PRODUCTS Accelerating flavor usage Strengthening at home and delivering relationships at every point of purchase on the demand for heat Value Line Launch Bigger Sizes, Better Value Building confidence
Slide 9: Flavor Solutions Growth Plans
FLAVOR SOLUTIONS GROWTH PLANS DRIVING GROWTH WITH CULINARY AND CONSUMER PREFERRED FLAVOR DEVELOPMENT Migrating the portfolio to more Leveraging our broad value-added and technically technology to develop clean insulated products and natural solutions Targeting opportunities Developing consumer with
Slide 10: Commitment to People, Communities and the Planet
COMMITMENT TO PEOPLE, COMMUNITIES AND THE PLANET Purpose-led Performance Greenhouse gas emissions targets updated to 2021 Progress Report released align with United Nations 1.5°C target by 2030 and Net Zero by 2050 10
Slide 11: Strong Fundamentals and Growth Momentum Continue into 2022
STRONG FUNDAMENTALS AND GROWTH MOMENTUM CONTINUE INTO 2022 Strong foundation, in attractive categories and capitalizing on accelerated long-term trends Forward-looking and actively responding to changing marketing conditions, consumer behaviors and customer needs Focus on long-term objectives, strat
Slide 12: Mike Smith, EVP and Chief Financial Officer
Mike Smith Executive Vice President and Chief Financial Officer
Slide 13: 1Q 2022 Sales Results
1Q 2022 SALES RESULTS TOTAL COMPANY 4.0% constant currency 4.8% 0.7% 2.8% -1.5% -1.2% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -1.5% constant currency 13.7% constant currency 11.5% 4.4% 6.4% 5.4% 0.0% 1.9% -0.7% -2.2% -2.2% -5.9% Volume/Mix Price Acquisitions Curren
Slide 14: 1Q 2022 Sales Results: Consumer Segment, Americas
1Q 2022 SALES RESULTS: CONSUMER SEGMENT AMERICAS 2.2% constant currency ▪ Growth driven by pricing actions ▪ Lower volume due to lapping 1Q 2021 elevated demand 5.5% ▪ Branded products led growth 2.3% 0.0% 0.1% ▪ Decline in private label -3.3% Volume/Mix Price Acquisitions Currency Net Sales 14 The
Slide 15: 1Q 2022 Sales Results: Consumer Segment, EMEA
1Q 2022 SALES RESULTS: CONSUMER SEGMENT EMEA -9.4% constant currency ▪ Lower volume and product mix due to lapping high 1Q 2021 demand ▪ Most significant decline in Vahine homemade desserts 1.8% ▪ Pricing actions to offset cost increases 0.0% -4.8% -11.2% -14.2% -14.2% Volume/Mix Price Acquisitions
Slide 16: 1Q 2022 Sales Results: Consumer Segment, Asia/Pacific
1Q 2022 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC -6.0% constant currency ▪ Volume and mix decline driven by: − Exit of lower margin business in India − Scaled down Chinese New Year celebrations 3.7% 0.0% 1.7% ▪ Pricing actions to offset cost inflation -4.3% -9.7% Volume/Mix Price Acquisitions
Slide 17: 1Q 2022 Sales Results
1Q 2022 SALES RESULTS TOTAL COMPANY 4.0% constant currency 4.8% 0.7% 2.8% -1.5% -1.2% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -1.5% constant currency 13.7% constant currency 11.5% 4.4% 6.4% 5.4% 0.0% 1.9% -0.7% -2.2% -2.2% -5.9% Volume/Mix Price Acquisitions Curren
Slide 18: 1Q 2022 Sales Results: Flavor Solutions, Americas
1Q 2022 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 12.4% constant currency ▪ Pricing actions to offset cost inflation ▪ Volume and mix growth driven by: 12.1% − Higher sales to packaged food and beverage 4.3% 5.4% 2.7% companies with strength in snack seasonings -0.3% − Recovery of branded foo
Slide 19: 1Q 2022 Sales Results: Flavor Solutions, EMEA
1Q 2022 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 24.2% constant currency ▪ Volume and mix driven by robust demand recovery of: − Quick service restaurant customers 17.0% 15.2% 7.2% − Branded foodservice customers 0.0% ▪ Pricing actions to offset cost inflation -9.0% Volume/Mix Price Acquisitions
Slide 20: 1Q 2022 Sales Results: Flavor Solutions, Asia/Pacific
1Q 2022 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC 4.3% constant currency ▪ Pricing actions to offset cost inflation ▪ Quick service restaurant customers growth from: − Core menu items 2.6% 2.5% 1.7% 0.0% − Limited time menu offers and promotional activities -1.8% Volume/Mix Price Acquis
Slide 21: Operating Income
OPERATING INCOME Fav/(Unfav) (in millions) 1Q 2022 1Q 2021 Change Operating income $206.9 $236.3 (12%) Adjusted operating income $227.1 $262.5 (14%) Consumer 167.0 189.9 (12%) Flavor Solutions 60.1 72.6 (17%) ▪ 12% constant currency adjusted operating income decline for total company ‒ Both segments
Slide 22: Operating Margin
OPERATING MARGIN Fav/(Unfav) (in millions) 1Q 2022 1Q 2021 Change Gross Margin 36.8% 39.0% (220) bps Adjusted Gross Margin 36.8% 39.4% (260) bps Selling, general & administrative expenses as percent of net sales 21.9% 21.7% (20) bps Operating margin 13.6% 16.0% (240) bps Adjusted operating margin 14
Slide 23: Income Taxes
INCOME TAXES (in millions) 1Q 2022 1Q 2021 Income tax rate 19.1% 28.3% Adjusted income tax rate 19.7% 22.7% ▪ Higher level of discrete tax items in 2022 23 The non-GAAP measures included herein, which we refer to as “adjusted”, exclude the impact of items affecting comparability between periods. See
Slide 24: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS Fav/(Unfav) (in millions) 1Q 2022 1Q 2021 Change Income from unconsolidated operations $9.3 $13.3 (30%) Adjusted income from unconsolidated operations 9.3 13.3 (30%) ▪ Adjusted income from unconsolidated operations decline due to: ‒ Elimination of higher earning
Slide 25: Earnings Per Share
EARNINGS PER SHARE Fav/(Unfav) 1Q 2022 1Q 2021 Change Earnings per share $0.57 $0.60 (5%) Adjusted earnings per share $0.63 $0.72 (13%) Change in adjusted earnings per share Decrease in adjusted operating income ($0.10) Decrease in adjusted income tax rate 0.02 Decrease in unconsolidated income (0.0
Slide 26: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW ▪ Cash flow provided from operations: BALANCED USE OF CASH − $18 million inflow compared to a $32 million outflow in 1Q 2021 − Includes impact of working capital improvements − Reflects lower payments for transaction and integration costs ✓ Drive growth ▪ $99 million of c
Slide 27: 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-to-high teens increase Adjusted gross profit margin Comparable to 2021 to 50 bps decrease Bran
Slide 28: Key Takeaways
KEY TAKEAWAYS Solid first quarter results in-line with expectations Successful execution of strategies and have grown long-term value regardless of environment Strong foundation for long-term sustainable growth provided by: ▪ Strength of business model ▪ Value of products and capabilities ▪ Alignmen
Slide 29: 1st Quarter 2022 Financial Results and Outlook
1 QUARTER ST 2022 Financial Results and Outlook McCORMICK & COMPANY, INC. MARCH 29, 2022 The following slides accompany a March 29th, 2022, earnings release conference call. This information should be read in conjunction with the press release issued on that date.
Slide 30: 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 31: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended 1) Transaction and integration expenses include transaction and integration expenses 2/28/2022 2/28/2021 associated with our acquisitions of Cholula and FONA. These expenses include the effect of Gross profit $ 560.4
Slide 32: 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 33: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To present “constant currency” information for the fiscal year 2022 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 2022
Slide 34: 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