Mccormick & Company, Incorporated · NYSE:MKC
Mccormick & — Q3 2021 Earnings Presentation
35 slides from Mccormick &'s earnings presentation, Sep 30, 2021
Slide 1: 3rd Quarter 2021 Financial Results and Outlook
3RD QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK McCormick & Company, Inc. September 30, 2021 The following slides accompany a September 30th, 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 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: Third Quarter 2021 Results Reflect Robust and Sustained Growth Momentum
THIRD QUARTER 2021 RESULTS REFLECT ROBUST AND SUSTAINED GROWTH MOMENTUM BROAD AND ADVANTAGED WELL POSITIONED TO DRIVE DIFFERENTIATED GROWTH GLOBAL PORTFOLIO Balanced portfolio to drive performance consistency U.S. Spices & Seasonings Flavors Effective execution of strategies Acceleration of co
Slide 5: Third Quarter Financial Results and Outstanding Year-to-Date Performance
THIRD QUARTER FINANCIAL RESULTS AND OUTSTANDING YEAR-TO-DATE PERFORMANCE ROBUST YEAR-TO-DATE GROWTH VERSUS 2019 THIRD QUARTER NET SALES GREW 8%1 NET SALES (in billions) Substantial Flavor Solutions segment growth 3Q FY21 3Q FY20 +19% growth Consumer segment sales impacted by logistics challenges
Slide 6: Operating in a Dynamic Cost Environment
OPERATING IN A DYNAMIC COST ENVIRONMENT 2Q EARNINGS CALL CURRENT ENVIRONMENT MITIGATING ACTIONS Industry-wide cost pressures Rapidly accelerating inflation Expectation to fully offset over time Broad-based inflation Transportation CCI-led cost savings Pricing lags cost escalation Packaging R
Slide 7: The Consumer Segment Growth Momentum Continues
THE CONSUMER SEGMENT GROWTH MOMENTUM CONTINUES SUSTAINED SHIFT IN CONSUMER CONSUMPTION DRIVING INCREASED DEMAND MCCORMICK IS AMERICAS #1 GLOBAL HOT SAUCE MANUFACTURER1 19% U.S. branded portfolio consumption growth versus 3Q 2019 Six consecutive quarters of double-digit consumption growth vs. 2 y
Slide 8: Fueling Our Consumer Segment Growth
FUELING OUR CONSUMER SEGMENT GROWTH STRONG BRAND MARKETING, NEW PRODUCT LAUNCHES AND CATEGORY MANAGEMENT INITIATIVES Director of Taco Relations earned New heat products Category and MKC 1+ billion impressions driving growth growing faster where spice aisle reinvention adopted Cholula’s First Choice
Slide 9: Robust Growth Trajectory in Flavor Solutions Segment
ROBUST GROWTH TRAJECTORY IN FLAVOR SOLUTIONS SEGMENT GROWTH DRIVEN EQUALLY FROM OUR AT-HOME AND AWAY-FROM-HOME PRODUCTS AMERICAS FONA and Cholula acquisitions contributed to strong growth Outstanding growth momentum with consumer packaged food customers through base business and new products B
Slide 10: Purpose-Led Performance
PURPOSE-LED PERFORMANCE RECOGNITION FOR DOING SUSTAINABILITY-LINKED PARTNERSHIP TO INCREASE WHAT’S RIGHT FINANCING PARTNERSHIP FARMER RESILIENCE McCormick named as a Global Compact LEAD company McCormick named as one of the Top 50 Best Companies for Latinas to Work for in the U.S. 10
Slide 11: McCormick Is a Growth Company with a Strong Foundation
McCORMICK IS A GROWTH COMPANY WITH A STRONG FOUNDATION Expecting growth in both segments in 2022 Rising demand for flavor is foundation of sales growth Capitalizing on accelerated long-term consumer trends Intentionally focused on great categories Successfully executing on strategies and initi
Slide 12: Mike Smith, Executive Vice President and CFO
Mike Smith Executive Vice President And Chief Financial Officer
Slide 13: 3Q 2021 Sales Results
3Q 2021 SALES RESULTS TOTAL COMPANY 5.3% constant currency 8.3% 4.5% 3.0% 0.7% 0.1% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -1.2% constant currency 16.6% constant currency 20.8% 7.5% 8.0% 2.5% 2.4% 1.2% 4.2% 1.1% -0.4% -3.3% Volume/Mix Price Acquisitions Currency N
Slide 14: 3Q 2021 Sales Results: Consumer Segment Americas
3Q 2021 SALES RESULTS: CONSUMER SEGMENT AMERICAS 3Q compared to 2020 -0.6% constant currency ‒ Decline from lapping year-ago elevated demand ‒ Cholula acquisition growth 3Q compared to 2019 3.4% 0.8% 0.2% ‒ 17% constant currency growth -3.2% -0.8% ‒ Significant growth in branded portfolio ‒ Decl
Slide 15: 3Q 2021 Sales Results: Consumer Segment EMEA
3Q 2021 SALES RESULTS: CONSUMER SEGMENT EMEA 3Q compared to 2020 -10.6% constant currency ‒ Decline from lapping year-ago high demand ‒ Eastern Europe growth 3Q compared to 2019 4.6% 0.4% 0.0% ‒ 10% constant currency growth ‒ Strong Kamis, Schwartz and Frank’s RedHot growth -6.0% -11.0% Volume/M
Slide 16: 3Q 2021 Sales Results: Consumer Segment Asia/Pacific
3Q 2021 SALES RESULTS: CONSUMER SEGMENT ASIA / PACIFIC 3Q compared to 2020 10.6% constant currency ‒ Growth from recovery of branded foodservice sales ‒ Partial offset from decline in consumer demand due to 20.2% elevated levels in year-ago period 9.9% 9.6% 3Q compared to 2019 0.7% 0.0% ‒ 4% con
Slide 17: 3Q 2021 Sales Results
3Q 2021 SALES RESULTS TOTAL COMPANY 5.3% constant currency 8.3% 4.5% 3.0% 0.7% 0.1% Volume/Mix Price Acquisitions Currency Net Sales CONSUMER FLAVOR SOLUTIONS -1.2% constant currency 16.6% constant currency 20.8% 7.5% 8.0% 2.5% 2.4% 1.2% 4.2% 1.1% -0.4% -3.3% Volume/Mix Price Acquisitions Currency N
Slide 18: 3Q 2021 Sales Results: Flavor Solutions Americas
3Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT AMERICAS 3Q compared to 2020 18.6% constant currency ‒ FONA and Cholula acquisitions growth − Higher sales to branded foodservice customers 20.8% 11.8% − Growth with packaged food and beverage companies 5.4% with strength in snack seasonings 1.4% 2.2
Slide 19: 3Q 2021 Sales Results: Flavor Solutions EMEA
3Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT EMEA 3Q compared to 2020 19.4% constant currency ‒ Quick service restaurants and branded foodservice growth 28.1% 18.5% ‒ Continued growth momentum with packaged food and beverage companies 8.7% 0.9% 0.0% 3Q compared to 2019 ‒ 23% constant currency
Slide 20: 3Q 2021 Sales Results: Flavor Solutions Asia/Pacific
3Q 2021 SALES RESULTS: FLAVOR SOLUTIONS SEGMENT ASIA / PACIFIC 3Q compared to 2020 0.8% constant currency ‒ Growth driven by quick service restaurants ‒ Partially impacted by timing of customers’ limited time offers and promotional activities 7.6% 8.4% 1.6% 3Q compared to 2019 0.0% -0.8% ‒ 8% co
Slide 21: Operating Income
OPERATING INCOME 3Q YTD 2021 (in millions) 3Q 2021 3Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Operating income $265.2 $273.0 (3%) 2% Adjusted operating income $272.3 $273.1 - 9% Consumer 187.8 209.0 (10%) (1%) Flavor Solutions 84.5 64.1 32% 42% 3% constant currency adjusted operating income dec
Slide 22: Operating Margin
OPERATING MARGIN 3Q YTD 2021 (in millions) 3Q 2021 3Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Gross Margin 38.7% 41.3% (260) bps (150) bps Adjusted Gross Margin 38.7% 41.3% (260) bps (140) bps Selling, general & administrative expenses as percent of net sales 21.1% 22.2% 110 bps 70 bps Operating
Slide 23: Income Taxes
INCOME TAXES (in millions) 3Q 2021 3Q 2020 YTD 2021 YTD 2020 Income tax rate 13.4% 19.3% 20.9% 18.5% Adjusted income tax rate 14.1% 19.3% 19.6% 18.6% Both periods favorably impacted by discrete tax items More significant impact in 3Q 2021 due to the favorable impact of the reversal of a tax accr
Slide 24: Income from Unconsolidated Operations
INCOME FROM UNCONSOLIDATED OPERATIONS 3Q YTD 2021 (in millions) 3Q 2021 3Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Income from unconsolidated operations $9.1 $9.6 (5%) 52% Adjusted income from unconsolidated $9.1 $9.6 (5%) 7% operations Mid-single digit increase in adjusted income from unconsol
Slide 25: Earnings Per Share
EARNINGS PER SHARE 3Q YTD 2021 (in millions) 3Q 2021 3Q 2020 Fav/(Unfav) Fav/(Unfav) Change Change Earnings per share $0.79 $0.76 4% 2% Adjusted earnings per share $0.80 $0.76 5% 8% Change in adjusted earnings per share Decrease in adjusted income tax rate $0.04 Total increase $0.04 25 The non-GAAP
Slide 26: Balance Sheet and Cash Flow
BALANCE SHEET AND CASH FLOW Cash flow provided from operations was $373 million through 3Q 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 $
Slide 27: 2021 Outlook Growth Rates
2021 OUTLOOK GROWTH RATES Reported Currency Constant Currency Sales growth 12% to 13% 9% to 10% Contribution from Cholula and FONA acquisitions 4% Adjusted operating income increase 6% to 8% 4% to 6% CCI-led cost savings Approximately $110M Cost inflation Mid-single digit increase Adjusted gross pro
Slide 28: 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* 9% to 10% 9% to 10% Adjusted operating 4% to 6% 8% to 10% -1% -3% income growth* Adjusted EPS growth* 8% to 10% -1% -3% -1%
Slide 29: Key Takeaways
KEY TAKEAWAYS Robust and sustained growth momentum reflected in 3Q 2021 results Double-digit year-to-date growth versus 2019 Growth momentum of our business is sustainable Expect higher at-home consumption to persist beyond pandemic Continuing momentum gained in away-from-home consumption Compou
Slide 30: 3rd Quarter 2021 Financial Results and Outlook
3RD QUARTER 2021 FINANCIAL RESULTS AND OUTLOOK McCormick & Company, Inc. September 30, 2021 The following slides accompany a September 30th, 2021, earnings release conference call. This information should be read in conjunction with the press release issued on that date.
Slide 31: 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 32: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES (in millions except per share data) Three Months Ended Nine Months Ended 8/31/2021 8/31/2020 8/31/2021 8/31/2020 1) Transaction and integration expenses include transaction and integration expenses Gross profit $ 599.6 $ 590.3 $ 1,791.7 $ 1,639.7 associated with our acqui
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
Slide 34: 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 35: 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: Twelve Months Ended 2021 Projection 11/30/20 Earnings per share - diluted $2.80 to $2.85 $ 2.78 Impact of transaction and integ