Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q1 2020 Earnings Presentation
33 slides from Mccormick &'s earnings presentation, Mar 31, 2020
Slide 1: 1st Quarter 2020 Financial Results
McCormick & Company, Inc. 1st Quarter 2020 Financial Results March 31, 2020 BUILDING THE McCORMICK OF THE FUTURE The following slides accompany a March 31st, 2020, 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 margins, earnings, cost savings, acquisitions, brand marketing support, special charges, income tax expense and the impact of for
Slide 3: Lawrence Kurzius
ilk LAWRENCE KURZIUS
Slide 4: COVID-19 Focus
COVID-19 FOCUS ▪ Concern for all affected people of COVID-19 and appreciation to those working to keep people safe ▪ Priorities during this period of volatility and uncertainty ‒ Ensure health and safety of our employees and the quality and integrity of our products ‒ Keep our brands and customers’
Slide 5: COVID-19 China Impact
COVID-19 CHINA IMPACT FIRST QUARTER PEAK SEASON DISRUPTION ▪ > 50% of business relates to away-from-home, with branded foodservice in consumer segment ▪ Significant lockdown, with extended lockdown in Hubei Province, home of DaQiao brand ▪ Reduced Q1 total company sales 3% ▪ Reduced Q1 adjusted oper
Slide 6: COVID-19 Current Conditions in Other Major Markets
COVID-19 CURRENT CONDITIONS IN OTHER MAJOR MARKETS ▪ Supply chain business continuity plans in place with no material impact to supply ▪ Consumer segment consumption increases ‒ Short-term pantry stocking ‒ Increased cooking at home ‒ History indicates consumers eat more at home during recession per
Slide 7: First Quarter 2020 Financial Results
FIRST QUARTER 2020 FINANCIAL RESULTS NET SALES LOWER 1%* BROAD AND ADVANTAGED GLOBAL ▪ Unfavorably impacted 3% from China results FLAVOR PORTFOLIO ▪ Partial offset by 2% growth contributed by the rest of the business U.S Spices & Seasonings Flavors ADJUSTED OPERATING INCOME LOWER 2%* International S
Slide 8: Consumer Segment Update
CONSUMER SEGMENT UPDATE AMERICAS ▪ Under shipped consumption driven by trade inventory reductions ▪ U.S. branded spices and seasonings outpace category growth for all channels ▪ Branded dry recipe mixes share growth for 10th consecutive quarter ▪ Condiment growth acceleration and share growth ▪ Conf
Slide 9: Flavor Solutions Segment Update
FLAVOR SOLUTIONS SEGMENT UPDATE AMERICAS ▪ Broad based growth across product categories and customers ▪ New products and base business growth ▪ Continued portfolio migration to more value-added categories EMEA ▪ Strong momentum with quick service restaurants and packaged food companies ▪ Growth from
Slide 10: Consumer Growth Plans
CONSUMER GROWTH PLANS ▪ Current demand surge with high double digit growth ▪ Increased consumer preference for cooking at home ▪ Focused brand marketing investments ▪ Stronger digital connection with consumers ▪ E-commerce acceleration and investments ▪ New product innovation ▪ Spice and seasoning U
Slide 11: Flavor Solutions Product Portfolio
FLAVOR SOLUTIONS PRODUCT PORTFOLIO ▪ Focus on responding to volatility FLAVOR SOLUTIONS PRODUCT PORTFOLIO ▪ Flavor and ingredients product categories Coatings & − Greater than 50% of flavor solutions portfolio Ingredients − Sold primarily to packaged food companies − Demand is strong similar to cons
Slide 12: Solid Foundation in Dynamic Environment
SOLID FOUNDATION IN DYNAMIC ENVIRONMENT ▪ Aligned with the consumer demands and preferences ▪ Solid foundation in a dynamic and uncertain environment ▪ Agile, relevant and focused on long-term sustainable growth ▪ Strategies are building long-term shareholder value ▪ Solid first quarter results, exc
Slide 13: Mike Smith
MIKE SMITH Executive Vice President and Chief Financial Officer 13
Slide 14: 1Q 2020 Sales Results
1Q 2020 SALES RESULTS CONSUMER TOTAL COMPANY -5.7% constant currency -1.4% constant currency 1.0% 0.0% -0.4% 1.1% -6.7% -6.1% Volume/Mix Price Acquisitions Currency Net sales 0.0% -0.2% FLAVOR SOLUTIONS 5.2% constant currency -1.6% -2.5% 5.3% 4.0% 1.2% 0.0% 0.1% Volume/Mix Price Acquisitions Currenc
Slide 15: 1Q 2020 Sales Results: Consumer Segment Americas
1Q 2020 SALES RESULTS: CONSUMER SEGMENT AMERICAS -1.6% constant currency ▪ Decline driven by trade inventory reductions ▪ Partially offset from pricing actions taken in first quarter 1.4% 0.0% 0.1% -1.5% -3.0% Volume/Mix Price Acquisitions Currency Net sales 15 The non-GAAP measure included herein,
Slide 16: 1Q 2020 Sales Results: Consumer Segment EMEA
1Q 2020 SALES RESULTS: CONSUMER SEGMENT EMEA 0.8% constant currency ▪ Growth driven by pricing, primarily due to timing of trade promotional activities 0.7% 0.1% 0.0% -0.6% -1.4% Volume/Mix Price Acquisitions Currency Net sales 16 The non-GAAP measure included herein, which we refer to as “constant
Slide 17: 1Q 2020 Sales Results: Consumer Segment Asia/Pacific
1Q 2020 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC -27.7% constant currency ▪ Decline driven by China disruption ▪ Strong growth across rest of region 0.0% 0.0% -1.4% -27.7% -29.1% 17 The non-GAAP measure included herein, which we refer to as “constant currency”, excludes the impact of foreign c
Slide 18: 1Q 2020 Sales Results
1Q 2020 SALES RESULTS CONSUMER TOTAL COMPANY -5.7% constant currency -1.4% constant currency 1.0% 0.0% -0.4% -6.7% -6.1% 1.1% Volume/Mix Price Acquisitions Currency Net sales 0.0% -0.2% FLAVOR SOLUTIONS -1.6% -2.5% 5.2% constant currency 5.3% 4.0% 1.2% 0.0% 0.1% Volume/Mix Price Acquisitions Currenc
Slide 19: 1Q 2020 Sales Results: Flavor Solutions Americas
1Q 2020 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 5.4% constant currency ▪ Volume and mix driven by: 5.8% − New products 4.2% − Base business 1.2% 0.4% ▪ Strength in snack seasonings and branded 0.0% foodservice 19 The non-GAAP measure included herein, which we refer to as “constant currency”
Slide 20: 1Q 2020 Sales Results: Flavor Solutions EMEA
1Q 2020 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 9.2% constant currency ▪ Growth with quick service restaurants and packaged food companies driven by: 8.8% ‒ New products 7.3% ‒ Base business ‒ Pricing 1.9% 0.0% -0.4% Volume/Mix Price Acquisitions Currency Net sales 20 The non-GAAP measure inclu
Slide 21: 1Q 2020 Sales Results: Flavor Solutions Asia/Pacific
1Q 2020 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC -2.3% constant currency ▪ Decline driven by China disruption ▪ Other parts of region drove growth 0.0% -0.7% -1.6% -1.4% -3.7% Volume/Mix Price Acquisitions Currency Net sales 21 The non-GAAP measure included herein, which we refer to as
Slide 22: Operating Income
OPERATING INCOME 1Q 2020 1Q 2019 Fav/(Unfav) (in millions) Change Operating income $194.2 $196.9 (1%) Adjusted operating income $195.2 $199.0 (2%) Consumer 119.6 135.3 (12%) Flavor Solutions 75.6 63.7 19% ▪ 2% constant currency adjusted operating income decline for total company with 11% decline for
Slide 23: Operating Margin
OPERATING MARGIN 1Q 2020 1Q 2019 Fav/(Unfav) (in millions) Change Gross margin 38.8% 37.9% 90 bps Selling, general & administrative expenses as percent of net sales 22.7% 21.7% (100) bps Operating margin 16.0% 16.0% 0 bps Adjusted operating margin 16.1% 16.2% (10) bps ▪ Gross margin expansion of 90
Slide 24: Income Taxes
INCOME TAXES (in millions) 1Q 2020 1Q 2019 Income tax rate 18.3% 13.8% Adjusted income tax rate 18.4% 13.9% ▪ Adjusted income tax rate increased vs the year-ago period ▪ Both quarters’ favorably impacted by discrete tax items, primarily related to entity structure refinements, which had a more signi
Slide 25: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 1Q 2020 1Q 2019 Fav/(Unfav) (in millions) Change Income from unconsolidated operations $10.4 $10.1 3% ▪ Income from unconsolidated operations was comparable to 1Q 2019 25
Slide 26: Earnings Per Share
EARNINGS PER SHARE Fav(Unfav) 1Q 2020 1Q 2019 Change Earnings per share $1.08 $1.11 (3%) Adjusted earnings per share 1.08 1.12 (4%) Change in adjusted earnings per share Increase in adjusted tax rate ($0.06) Decrease in adjusted operating income (0.03) Decrease in interest expense 0.05 Total decreas
Slide 27: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW ▪ Cash flow provided from operations of $45 million vs $104 million in 2019 ▪ Cash conversion cycle improved 3 days from 2019 year end ▪ Returned $82 million of cash to shareholders through dividends ▪ Capital expenditures of $39 million through first quarter ▪ Adequate l
Slide 28: Fiscal 2020 Financial Outlook Withdrawn
FISCAL 2020 FINANCIAL OUTLOOK WITHDRAWN FISCAL 2020 FINANCIAL OUTLOOK ISSUED ON JANUARY EARNINGS CALL WITHDRAWN ▪ COVID-19 situation evolving rapidly with uncertainty about duration and extent of impact ▪ Early in our fiscal year with largest quarters ahead FISCAL 2020 EXPECTATIONS ▪ COVID-19 impact
Slide 29: Key Takeaways
KEY TAKEAWAYS ▪ Delivered solid first quarter results, excluding COVID-19 impact ▪ Effectively executing our strategies and confident in underlying foundation ▪ Responding to COVID-19 development with agility focusing on long-term goals, strategies and values ▪ Managing through short-term volatility
Slide 30: Building the McCormick of the Future
McCormick & Company, Inc. 1st Quarter 2020 Financial Results March 31, 2020 BUILDING THE McCORMICK OF THE FUTURE 30following slides accompany a March 31st, 2020, earnings release conference call. This information should be read in conjunction with the press The release issued on that date.
Slide 31: 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, each excluding the impact of special charges for
Slide 32: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES 1) Adjusted operating income margin is calculated as adjusted operating income as a percentage of net sales for each period presented. 2) Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before in
Slide 33: 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