Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q2 2021 Earnings Presentation
39 slides from Mccormick &'s earnings presentation, Jul 1, 2021
Slide 1: 2nd Quarter 2021 Financial Results and Outlook
2ND QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK McCormick & Company, Inc. July 1, 2021 The following slides accompany a July 1st, 2021, 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 margin, earnings, cost savings, transaction and integration expenses, special charges, acquisitions, brand marketing support
Slide 3: Lawrence Kurzius, Chairman, President and CEO
Lawrence Kurzius Chairman, President and Chief Executive Officer 3
Slide 4: Strong Second Quarter 2021 Results Compared to Exceptional 2020 Performance
STRONG SECOND QUARTER 2021 RESULTS COMPARED TO EXCEPTIONAL 2020 PERFORMANCE Executing from a position of strength ROBUST 2-YEAR GROWTH MOMENTUM NET SALES (in billions) Well positioned to drive differentiated growth 2Q FY21 2Q FY20 +20% growth Broad and advantaged portfolio 2Q FY19 Acceleration o
Slide 5: Our Broad and Advantaged Global Portfolio
OUR BROAD AND ADVANTAGED GLOBAL PORTFOLIO U.S. Spices & Seasonings Flavors International Spices & STRENGTH AND DIVERSITY OF Seasonings Branded Foodservice OUR OFFERING Pro-Forma 2020 Compelling products for every retail and NET SALES1 Custom Condiments customer strategy across all channels Recipe Mi
Slide 6: Second Quarter and Year-to-Date 2021 Performance
SECOND QUARTER AND YEAR-TO-DATE 2021 PERFORMANCE SECOND QUARTER YEAR-TO-DATE Net Sales +11% Net Sales +16% Adjusted Operating Income (1%) Adjusted Operating Income +14% Adjusted EPS (7%) Adjusted EPS +10% Sales increase strong against 8% growth in 2Q 2020 Outstanding 2021 first half results Ad
Slide 7: Capturing the Consumer Segment Momentum
CAPTURING THE CONSUMER SEGMENT MOMENTUM FUELING AT-HOME CONSUMPTION WITH BRAND MARKETING, NEW PRODUCTS AND CATEGORY MANAGEMENT AMERICAS 18% U.S. branded portfolio consumption growth versus 2Q 2019 Household penetration and repeat buy rate increases versus 2Q 2019 EMEA Outstanding momentum and
Slide 8: Returning to a Robust Growth Trajectory in Flavor Solutions
RETURNING TO A ROBUST GROWTH TRAJECTORY IN FLAVOR SOLUTIONS DRIVING GROWTH WITH ACQUISITIONS, NEW PRODUCTS AND DIFFERENTIATED CUSTOMER ENGAGEMENT AMERICAS FONA and Cholula acquisitions contributed to strong growth Strong snack seasoning and beverage growth with consumer packaged food and beverag
Slide 9: Accelerating Global Condiments Platform
ACCLERATING GLOBAL CONDIMENTS PLATFORM SECOND QUARTER REALIZING GROWTH AMBITIONS AND PERFORMANCE ACCELERATING MOMEMTUM Gaining share with 54% consumption growth versus 2019 Expanding Launching distribution points cleaner using category formulas and Grew total distribution points 11% and management n
Slide 10: Accelerating Global Flavors Platform
ACCELERATING GLOBAL FLAVORS PLATFORM YEAR-TO-DATE REALIZING GROWTH AMBITIONS WITH OUR PERFORMANCE COMBINED PASSION FOR FLAVOR Double Digit sales growth Delivering FONA flavors through MKC’s versus 2020 global footprint +14% Beverage growth with strength in performance nutrition Leveraging MKC’s sust
Slide 11: Global Demand for Flavor Is the Foundation of Sales Growth
GLOBAL DEMAND FOR FLAVOR IS THE FOUNDATION OF SALES GROWTH CAPITALIZING ON PRE-PANDEMIC Gen Z likes bold, spicy flavors ~60% of China, U.K. and French ACCELERATED more than previous generations7 consumers are focused on healthy LONG-TERM 88% of U.S. population liked eating …with an increased focus o
Slide 12: Consumer Sentiment and Behavior Driving At Home Consumption
CONSUMER SENTIMENT AND BEHAVIOR DRIVING AT HOME CONSUMPTION Sustained Increase In Home Finding Your Inner Chef Cooking …Today And Tomorrow 65% of U.S., U.K. and French recreating Consumers consumers feel creative and restaurant meals at adventurous when cooking1 home is growing1 68% of U.S. 78% of U
Slide 13: Transformative Investments to Deliver Growth
TRANSFORMATIVE INVESTMENTS TO DELIVER GROWTH INCREASING CAPACITY AND EXPANDING CAPABILITIES Headquarters New & Net Zero & Largest Condiment Technical MKC Plant Innovation Distribution Center Center Modernization Flavor Encapsulation & Liquid Flavor Condiment Capabilities Capacity Realignment New Hea
Slide 14: Purpose-Led Performance
PURPOSE-LED PERFORMANCE DELIVERING INDUSTRY-LEADING RECOGNIZED FOR FINANCIAL PERFORMANCE DOING WHAT’S RIGHT McCormick Milestone 5th consecutive year named as a named as a Fortune 500 Company DiversityInc Top 50 Company Sustained performance with overarching focus on growth and successful execution o
Slide 15: Strong Fundamentals, Momentum and Growth Outlook
STRONG FUNDAMENTALS, MOMENTUM AND GROWTH OUTLOOK Confidence in strong 2021 growth and performance bolstered by: Alignment with long-term trends Breadth and reach of portfolio Robust operating momentum Successful execution of strategies 2021 Outlook reflects strong underlying base business pe
Slide 16: Mike Smith, Executive Vice President and CFO
Mike Smith Executive Vice President And Chief Financial Officer
Slide 17: 2Q 2021 Sales Results
2Q 2021 SALES RESULTS TOTAL COMPANY 7.6% constant currency 11.1% 3.3% 4.4% 3.5% -0.1% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -4.7% constant currency 34.6% constant currency 39.5% 25.1% 9.2% 2.9% 4.9% 2.2% 0.3% -0.4% -1.8% -6.5% Volume/Mix Price Acquisitions Curren
Slide 18: 2Q 2021 Sales Results: Consumer Segment Americas
2Q 2021 SALES RESULTS: CONSUMER SEGMENT AMERICAS 2Q compared to 2020 -7.2% constant currency ‒ Decline from lapping year-ago demand surge ‒ Cholula acquisition growth partially offset decline 2Q compared to 2019 3.0% 0.8% ‒ 26% constant currency growth -0.9% -6.4% ‒ Broad-based growth across bra
Slide 19: 2Q 2021 Sales Results: Consumer Segment EMEA
2Q 2021 SALES RESULTS: CONSUMER SEGMENT EMEA 2Q compared to 2020 -4.2% constant currency ‒ Decline from lapping high demand in 2Q 2020 ‒ U.K. and Eastern Europe growth partially offset decline 7.8% 2Q compared to 2019 3.6% 1.0% 0.0% ‒ 21% constant currency growth -5.2% ‒ Double-digit growth in a
Slide 20: 2Q 2021 Sales Results: Consumer Segment Asia/Pacific
2Q 2021 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC 2Q compared to 2020 15.0% constant currency ‒ Growth for recovery of branded foodservice sales and 25.5% disruption in Wuhan in 2Q 2020 14.0% ‒ Partial offset from decline in consumer demand due to 10.5% elevated 2Q 2020 levels 1.0% 0.0% 2Q
Slide 21: 2Q 2021 Sales Results
2Q 2021 SALES RESULTS TOTAL COMPANY 7.6% constant currency 11.1% 3.3% 4.4% 3.5% -0.1% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -4.7% constant currency 34.6% constant currency 39.5% 25.1% 9.2% 2.9% 4.9% 2.2% 0.3% -0.4% -1.8% -6.5% Volume/Mix Price Acquisitions Curren
Slide 22: 2Q 2021 Sales Results: Flavor Solutions Americas
2Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 2Q compared to 2020 29.7% constant currency ‒ FONA and Cholula acquisitions growth 31.6% − Higher sales to branded foodservice customers 16.6% 12.6% − Growth with packaged food and beverage companies 1.9% with strength in snack seasonings an
Slide 23: 2Q 2021 Sales Results: Flavor Solutions EMEA
2Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 2Q compared to 2020 64.7% constant currency ‒ Quick service restaurants and branded foodservice growth 77.7% ‒ Continued growth momentum with packaged food and 63.0% 13.0% beverage companies 1.7% 0.0% 2Q compared to 2019 ‒ 16% constant currenc
Slide 24: 2Q 2021 Sales Results: Flavor Solutions Asia/Pacific
2Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC 2Q compared to 2020 22.6% constant currency ‒ Growth led by quick service restaurants in China and 35.5% Australia 25.6% 12.9% ‒ Recovery from COVID-19 lockdowns outside of China in year-ago period contributed to growth 0.0% 2Q compa
Slide 25: Operating Income
OPERATING INCOME 2Q YTD 2021 (in millions) 2Q 2021 2Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Operating income $237.4 $257.4 (8%) 5% Adjusted operating income $258.0 $260.3 (1%) 14% Consumer 176.8 231.6 (24%) 4% Flavor Solutions 81.2 28.7 183% 47% 4% constant currency adjusted operating income
Slide 26: Operating Margin
OPERATING MARGIN 2Q YTD 2021 (in millions) 2Q 2021 2Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Gross Margin 39.5% 41.4% (190) bps (100) bps Adjusted Gross Margin 39.5% 41.4% (190) bps (80) bps Selling, general & administrative expenses as percent of net sales 22.9% 22.8% (10) bps 50 bps Operating
Slide 27: Income Taxes
INCOME TAXES (in millions) 2Q 2021 2Q 2020 YTD 2021 YTD 2020 Income tax rate 22.1% 17.9% 25.2% 18.1% Adjusted income tax rate 22.2% 18.0% 22.5% 18.2% Both periods favorably impacted by discrete tax items More significant impact in 2Q 2020 due to a discrete item related to refinement of our entit
Slide 28: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 2Q YTD 2021 (in millions) 2Q 2021 2Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Income from unconsolidated operations $23.4 $10.2 129% 78% Adjusted income from unconsolidated $10.0 $10.2 (2%) 13% operations Sale of minority stake in Eastern Condiments complete
Slide 29: Earnings Per Share
EARNINGS PER SHARE Fav/(Unfav) (in millions) 2Q 2021 2Q 2020 Change Earnings per share $0.68 $0.73 (7%) Adjusted earnings per share $0.69 $0.74 (7%) Change in adjusted earnings per share Decrease in adjusted operating income ($0.01) Increase in adjusted income tax rate (0.04) Total decrease ($0.05)
Slide 30: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Cash flow provided from operations was $229 million compared to BALANCED USE OF CASH $356 million in 2020 − Driven by the timing of working capital payments − Includes payment of transaction and integration expenses $182 million of cash returned to shareholders throug
Slide 31: 2021 Outlook Growth Rates
2021 OUTLOOK GROWTH RATES Reported Currency Constant Currency Sales growth 11% to 13% 8% to 10% Contribution from Cholula and FONA acquisitions High-end of 3.5% to 4% Adjusted operating income increase 10% to 12% 8% to 10% CCI-led cost savings Approximately $110M Cost inflation Mid-single digit incr
Slide 32: 2021 Outlook Growth Rates
2021 OUTLOOK GROWTH RATES STRONG BASE 2021 BUSINESS & COVID-19 ERP TaxTAX CONSTANT ACQUISITION COST INVESTMENT HEADWIND Headwind CURRENCY GROWTH INCREASE GUIDANCE Sales growth* 8% to 10% 8% to 10% Adjusted operating 8% to 10% 12% to 14% -1% -3% income growth* Adjusted EPS growth* 12% to 14% -1% -3%
Slide 33: Key Takeaways
KEY TAKEAWAYS Exceptional 2Q 2021 growth despite a challenging comparison Double-digit year-to-date and two-year growth rates Higher at-home consumption expected to persist beyond the pandemic and well positioned to capitalize on accelerated consumer trends Enthusiasm and confidence in Cholu
Slide 34: 2nd Quarter 2021 Financial Results and Outlook
2ND QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK McCormick & Company, Inc. July 1, 2021 The following slides accompany a July 1st, 2021, earnings release conference call. This information should be read in conjunction with the press release issued on that date.
Slide 35: 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 income from unconsolidated operations, adjusted
Slide 36: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES For the three months ended For the six months ended For the three months ended For the six months ended May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020 Gross profit $ 614.6 $ 579.5 $ 1,192.1 $ 1,049.4 May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020 Impact of trans
Slide 37: 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 38: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To present “constant currency” information for the fiscal year 2021 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 2021
Slide 39: 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 2021 and actual results for 2020: For the year Estimated for the ended year ending November 30, November 30, 2020 2021 Earnings per share – diluted $ 2.78 $ 2.83