Group 1 - The initial earnings reports from U.S. companies indicate a cautious outlook due to geopolitical uncertainties affecting travel demand and consumer spending [1] - Delta Air Lines and United Airlines have expressed concerns about the impact of global tensions on their profitability and travel demand [1] - Consumer goods companies like Procter & Gamble and McCormick report that consumers are maintaining a cautious spending attitude, reflecting broader economic uncertainties [1] Group 2 - 3M's earnings outlook fell short of market expectations, leading to its largest single-day stock drop since April of the previous year, highlighting ongoing uncertainties in the consumer and automotive sectors [1] - Industrial distribution and logistics companies, such as Fastenal and JB Hunt, reported earnings below expectations, indicating continued pressure in the industrial sector [1] - Despite a generally positive economic backdrop, with 80% of S&P 500 companies exceeding earnings expectations, corporate management's pessimistic statements contrast sharply with these indicators [1] Group 3 - The political landscape and trade policy changes under the Trump administration are complicating corporate planning, as CEOs face challenges in forecasting annual performance [2] - McCormick's CEO noted that inflation, geopolitical tensions, and trade uncertainties are exerting pressure on the company's core market, contributing to disappointing earnings forecasts [2] - Procter & Gamble anticipates sales growth in the next six months despite external disruptions, including the impact of government shutdowns on low-income consumer purchasing power [3] Group 4 - Airlines like United Airlines are experiencing significant negative impacts on ticket bookings due to military actions in Venezuela, which could disrupt their previously positive operational outlook [3] - The Trump administration's policy measures, such as high tax refunds and potential stimulus, may provide short-term relief for consumers, potentially boosting consumer confidence [4] - The focus on consumer relief initiatives, including credit card interest rate caps, is part of a broader strategy to support low-income households and stimulate spending [4]

Acquisition and Ownership - McCormick completed the purchase of an additional 25% ownership interest in McCormick de Mexico for $750 million, increasing its ownership to 75%[12]. - The company anticipates continued growth opportunities in the Mexican market and Latin America following the acquisition of McCormick de Mexico[12]. - The company acquired an additional 25% ownership in McCormick de Mexico on January 2, 2026, which may present financial and operational challenges[69]. Financial Performance - In 2025, net sales increased by 1.7% to $6,840.3 million compared to $6,723.7 million in 2024, with organic sales growth of 1.9%[152]. - Operating income for 2025 was $1,070.8 million, reflecting a 1.0% increase from $1,060.3 million in 2024, while adjusted operating income rose by 2.3% to $1,094.0 million[140]. - Diluted earnings per share in 2025 was $2.93, a slight increase from $2.92 in 2024, with adjusted diluted earnings per share rising to $3.00 from $2.95, representing a 1.7% increase[142]. - Net income for 2025 was $789.4 million, with adjusted net income of $807.1 million, marking a 1.4% increase compared to the previous year[183]. - The effective tax rate for 2026 is estimated to be 24.0%, up from 21.5% in 2025[150]. Segment Performance - In 2025, the Consumer segment contributed approximately 58% of consolidated net sales and 67% of consolidated operating income, while the Flavor Solutions segment contributed approximately 42% of consolidated net sales and 33% of consolidated operating income[14]. - Consumer segment net sales rose by 2.6% to $3,950.3 million in 2025, driven by a 2.1% increase in volume and product mix[169]. - Flavor Solutions segment net sales increased by 0.5% to $2,890.0 million in 2025, with favorable pricing contributing 1.3% to sales growth[174]. - Segment operating income for the Consumer segment decreased by $5.4 million to $734.9 million, resulting in a margin decline to 18.6%[173]. - Segment operating income for the Flavor Solutions segment increased by $29.6 million to $359.1 million, with an operating margin improvement to 12.4%[178]. Market Presence and Sales - Approximately two-thirds of Consumer segment sales are from spices, seasonings, condiments, and sauces, with McCormick being a global brand leader in these categories[15]. - Sales to Wal-Mart Stores, Inc. accounted for approximately 12% of consolidated sales in 2025, while sales to PepsiCo, Inc. accounted for approximately 12% in 2025 and 13% in both 2024 and 2023[24]. - Approximately 39% of sales in fiscal year 2025 were from non-U.S. operations, indicating significant international market presence[38]. - The company generated approximately 39% of its sales from international markets in fiscal year 2025[103]. - McCormick's products are sold in approximately 150 countries and territories, showcasing a broad global reach[15]. Cost and Pricing Challenges - The company faces risks related to its ability to drive revenue growth and manage inflationary pressures on product costs[40]. - The company is exposed to fluctuations in raw material prices, particularly for key ingredients like dairy products, pepper, and soybean oil, which could negatively impact financial results[53]. - The company has experienced inflation in commodity and supply chain costs, including raw materials, packaging, labor, and transportation, and expects inflation to continue at a similar level in 2026 as in 2025[61]. - Increased competition in the food industry may necessitate price reductions, potentially impacting profitability during economic uncertainty[63]. - The rising popularity of private label products poses a risk to the company's brand relevance and market share[46]. Operational and Supply Chain Risks - Disruptions in the supply chain due to geopolitical tensions, natural disasters, or pandemics could impair the company's ability to manufacture and sell products[58]. - The company has implemented supply chain management initiatives to offset cost pressures, but these may not be sufficient to prevent reductions in sales volume[57]. - Labor shortages and increased turnover rates could lead to higher costs, including overtime and increased wage rates, negatively impacting the company's operations[60]. - The company is committed to maintaining high-quality standards, but any breach in quality assurance could lead to significant reputational damage and financial loss[48]. Strategic Initiatives and Future Outlook - The company is focused on product innovation and customer engagement to drive growth in highly competitive markets[30]. - The company is implementing a multi-year business transformation initiative to enhance global processes and reduce costs, including a new enterprise resource planning (ERP) system[96]. - The company expects net sales growth of 13% to 17% in 2026, driven by the acquisition of a controlling interest in McCormick de Mexico, contributing 11% to 13% of this growth[148]. - Adjusted operating income for 2026 is projected to increase by 16% to 20%, reflecting recovery in gross margin and cost savings from the CCI program[149]. - The company plans to increase brand marketing investments in 2026 by low to mid-teens percentages, including impacts from the recent acquisition[149]. Financial Management and Capital Structure - As of November 30, 2025, the company reported approximately $5.3 billion in goodwill and $3.0 billion in other indefinite-lived intangible assets, which are subject to impairment testing[70]. - The company's total indebtedness is approximately $4.0 billion as of November 30, 2025, which could increase debt service obligations and limit borrowing capacity[86]. - The company plans to maintain a prudent capital structure to support growth objectives, utilizing a mix of equity and debt financing[193]. - The company has $1.7 billion of earnings from non-U.S. subsidiaries considered indefinitely reinvested as of November 30, 2025[210]. Cybersecurity and Compliance - The company has implemented a risk-based, multilayered approach to cybersecurity, with significant resources devoted to managing threats[107]. - The company has not experienced any material cybersecurity threats or incidents to date, but acknowledges the potential for future risks[113]. - The company is actively engaged in monitoring and improving its cybersecurity and data privacy program, with oversight from the Board and Audit Committee[114]. - The company is subject to evolving data privacy laws, including GDPR and CCPA, which create compliance obligations and potential financial penalties[100]. - The company faces potential litigation related to privacy and data security, which could adversely affect its reputation and financial condition[102].

Core Viewpoint - Investors are evaluating the value opportunities presented by Kerry Group PLC (KRYAY) and McCormick (MKC), with KRYAY currently appearing as the superior value option based on valuation metrics [1][7]. Valuation Metrics - Both KRYAY and MKC hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and improving earnings outlooks [3]. - KRYAY has a forward P/E ratio of 14.32, while MKC has a forward P/E of 20.73, suggesting KRYAY is more attractively priced [5]. - The PEG ratio for KRYAY is 2.91, compared to MKC's PEG ratio of 4.00, indicating KRYAY offers better value relative to its expected earnings growth [5]. - KRYAY's P/B ratio is 2.11, while MKC's P/B ratio is 3.09, further supporting KRYAY's position as the more undervalued stock [6]. - KRYAY earns a Value grade of B, while MKC receives a Value grade of C, highlighting KRYAY's stronger valuation metrics [6].

Core Insights - McCormick reported revenue of $1.85 billion for the quarter ended November 2025, reflecting a year-over-year increase of 2.9% [1] - The company's EPS was $0.86, up from $0.80 in the same quarter last year, but fell short of the consensus estimate of $0.87, resulting in an EPS surprise of -1.29% [1] - The revenue fell slightly below the Zacks Consensus Estimate of $1.86 billion, leading to a revenue surprise of -0.46% [1] Financial Performance - Net Sales in the Flavor Solutions segment were $723 million, slightly below the average estimate of $725.28 million, marking a year-over-year increase of 1.4% [4] - Net Sales in the Consumer segment reached $1.13 billion, exceeding the average estimate of $1.12 billion, with a year-over-year growth of 3.9% [4] - Operating income for Flavor Solutions, excluding special charges, was $86 million, compared to the estimated $93.29 million [4] - Operating income for the Consumer segment was $231 million, below the average estimate of $241.22 million [4] Stock Performance - McCormick's shares have returned -3.4% over the past month, contrasting with the Zacks S&P 500 composite's increase of +0.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Financial Data and Key Metrics Changes - In the fourth quarter, total organic sales increased by 2%, driven by growth in both consumer and flavor solutions segments [4][26] - Adjusted gross profit margin declined by 120 basis points in the fourth quarter due to higher commodity costs and tariffs [29] - Adjusted earnings per share for the fourth quarter was $0.86, an increase of 7% compared to the previous year [34] Business Line Data and Key Metrics Changes - Consumer segment organic sales increased by 3%, driven by both price and volume contributions [26][27] - Flavor solutions segment organic sales rose by 1%, with a 3% price contribution offset by a 2% volume decline [28] - In the Americas, consumer organic sales grew 3%, while flavor solutions organic sales increased by 1% [27][28] Market Data and Key Metrics Changes - In the Asia-Pacific region, consumer organic sales increased by 2%, primarily driven by volume growth in China and Australia [27] - EMEA region saw consumer organic sales growth of 3%, with stable volume performance [27][29] - Flavor solutions organic sales in EMEA decreased by 3%, reflecting soft volumes from large CPG customers [29] Company Strategy and Development Direction - The company aims to sustain top-line growth while strengthening profitability and investing in growth initiatives [14][15] - Focus on innovation, brand marketing, and expanding distribution channels to drive future growth [11][23] - The acquisition of McCormick de Mexico is expected to significantly contribute to top-line growth and operating income in 2026 [20][39] Management's Comments on Operating Environment and Future Outlook - The operating environment remains volatile, with pressures from inflation and geopolitical uncertainties impacting consumer confidence [16][17] - Management expects to navigate these challenges through disciplined cost management and strategic investments [20][22] - The outlook for 2026 anticipates organic net sales growth between 1% and 3%, supported by volume growth and pricing contributions [38] Other Important Information - The company authorized a 7% increase in the quarterly dividend, marking 102 years of continuous dividend payments [15] - Recent changes to the board of directors include the retirement of two long-serving members and the addition of two new members with extensive industry experience [25] Q&A Session Summary Question: What are the key drivers underpinning the 2026 outlook? - Management indicated that the consumer segment is expected to drive mid to high-end growth, with pricing contributing more than in 2025 while maintaining volume growth [51][52][53] Question: What should be considered regarding EPS growth cadence in 2026? - EPS growth is expected to follow operating profit fluctuations, with Q1 likely to be slightly below guidance due to the timing of the McCormick de Mexico acquisition [58][59] Question: Can you elaborate on gross margin expectations for 2026? - Management expects to recover the margin compression experienced in 2025, although precise predictions are challenging due to market uncertainties [65][66][70] Question: How should the ERP implementation be viewed in terms of costs and timeline? - The ERP implementation costs are expected to shift into 2026 due to a compressed deployment plan, which aims to minimize risks associated with dual operations [71][75]

Financial Data and Key Metrics Changes - In the fourth quarter, total organic sales increased by 2%, driven by growth in both consumer and flavor solutions [5][27] - Adjusted earnings per share for the fourth quarter was $0.86, a 7% increase compared to the previous year, while full-year adjusted earnings per share was $3, reflecting a 2% increase [35][43] - Adjusted gross profit margin declined by 120 basis points in the fourth quarter due to higher commodity costs and tariffs [30][31] Business Line Data and Key Metrics Changes - Consumer segment organic sales increased by 3%, driven by both price and volume, with volume growth of 1% and price contribution of 2% in the Americas [27][28] - Flavor solutions segment saw a 1% increase in organic sales, with a 3% price contribution offset by a 2% volume decline [29] - In EMEA, consumer organic sales grew by 3%, while flavor solutions organic sales decreased by 3% [28][30] Market Data and Key Metrics Changes - In the Americas, consumer organic sales grew by 3%, while in Asia-Pacific, organic sales increased by 2%, primarily driven by volume growth in China and Australia [28][29] - The company experienced softness in large CPG customer volumes and branded food service, impacting overall performance [12][30] Company Strategy and Development Direction - The company is focused on sustaining top-line growth, strengthening profitability, and investing in growth while managing costs effectively [15][16] - Continued investment in brand marketing, innovation, and expanding distribution is a key part of the strategy to drive future growth [12][15] - The acquisition of a controlling interest in McCormick de Mexico is expected to significantly contribute to top-line growth and operating income [16][39] Management's Comments on Operating Environment and Future Outlook - The management highlighted ongoing challenges from inflation, geopolitical uncertainties, and low consumer confidence, particularly among low to middle-income households [17][18] - Despite these challenges, the company remains optimistic about its ability to deliver sustainable growth and profitability, supported by strong brand performance and innovation [45][46] - The outlook for 2026 anticipates organic net sales growth between 1% and 3%, with contributions from pricing and sustained volume growth [39][40] Other Important Information - The company plans to continue its digital transformation and ERP implementation, which will involve increased spending in 2026 [41][42] - The board of directors will see changes with the retirement of two members and the addition of two new members with extensive industry experience [26] Q&A Session Summary Question: What are the key drivers underpinning the 2026 outlook? - Management expects continued volume momentum driven by innovation, increased distribution, and effective marketing strategies [52][54] Question: What should be considered regarding the cadence of EPS growth in the upcoming quarters? - EPS growth is expected to follow operating profit fluctuations, with Q1 likely being slightly below guidance due to the timing of the McCormick de Mexico acquisition [59][60] Question: Can you elaborate on the gross margin outlook for 2026? - Management indicated expectations for gross margin recovery in 2026, despite challenges from inflation and tariffs [66][70]

Financial Data and Key Metrics Changes - In Q4 2025, total organic sales increased by 2%, with growth in both consumer and flavor solutions segments [5][25] - Adjusted earnings per share for Q4 was $0.86, a 7% increase compared to the previous year, driven by increased operating income and improved interest expense [33] - For the full year, adjusted earnings per share was $3, reflecting a 2% increase primarily due to growth in adjusted operating income [33] Business Line Data and Key Metrics Changes - Consumer segment organic sales increased by 3% in Q4, driven by both price and volume, with volume growth of 1% and price contribution of 2% [25][26] - Flavor solutions segment saw a 1% increase in organic sales in Q4, driven by a 2% price contribution, partially offset by a 1% volume decline [28] - For the full year, adjusted operating income in the consumer segment declined by 1%, while flavor solutions operating income grew by 9% [32][33] Market Data and Key Metrics Changes - In the Americas, consumer organic sales grew by 3%, while EMEA also saw a 3% increase, and Asia-Pacific experienced a 2% increase [26] - Flavor solutions organic sales in EMEA decreased by 3%, while Asia-Pacific saw a 3% increase driven by QSR customer promotions [29] - Overall, the company maintained or improved market share across many core categories in key markets for the last six quarters [7] Company Strategy and Development Direction - The company continues to focus on sustainable, long-term value creation through brand investment, distribution expansion, and innovation [4] - Strategic partnerships and increased brand marketing investments are key components of the company's growth strategy [11] - The acquisition of a controlling interest in McCormick de Mexico is expected to significantly contribute to top-line growth and operating income in 2026 [19][39] Management's Comments on Operating Environment and Future Outlook - The management highlighted ongoing challenges from inflation, geopolitical uncertainty, and low consumer confidence, particularly among low to middle-income households [16] - Despite these challenges, the company remains optimistic about its ability to sustain volume growth and profitability through strategic investments and cost management [19][44] - The outlook for 2026 anticipates organic net sales growth between 1% and 3%, supported by sustained volume growth and higher pricing contributions [38] Other Important Information - The company achieved a 7% increase in quarterly dividends, marking 102 years of continuous dividend payments [15] - The company successfully reduced its leverage ratio to below 2.7 times, reflecting strong cash flow from operations [34] - Recent changes to the board of directors include the retirement of two long-serving members and the addition of two new members with extensive industry experience [25] Q&A Session Summary Question: What are the key drivers underpinning the 2026 outlook? - The company expects continued volume momentum driven by strong messaging, innovation, and expansion in high-growth channels [47][50] Question: Can you elaborate on the gross margin outlook for 2026? - Management indicated expectations for gross margin recovery in 2026, despite ongoing inflation and tariff impacts [55][59] Question: How will the ERP implementation affect costs in 2026? - The ERP implementation costs are expected to shift into 2026, impacting the overall cost structure but are seen as necessary for long-term efficiency [60][65]

Core Viewpoint - McCormick's quarterly earnings of $0.86 per share fell short of the Zacks Consensus Estimate of $0.87 per share, marking an earnings surprise of -1.29% [1]. Financial Performance - The company reported revenues of $1.85 billion for the quarter ended November 2025, which was below the Zacks Consensus Estimate by 0.46%, compared to $1.8 billion in the same quarter last year [2]. - Over the last four quarters, McCormick has surpassed consensus EPS estimates two times and topped consensus revenue estimates only once [2]. Stock Performance - McCormick shares have declined approximately 2.3% since the beginning of the year, while the S&P 500 has gained 0.4% [3]. - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.65 on revenues of $1.78 billion, and for the current fiscal year, it is $3.21 on revenues of $7.63 billion [7]. - The estimate revisions trend for McCormick was favorable prior to the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6]. Industry Context - The Food - Miscellaneous industry, to which McCormick belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, suggesting potential challenges ahead [8].

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

4th Quarter 2025 McCormick & Company, Inc. Business Update, Financial Results, and Outlook | January 22, 2026 The following slides accompany a January 22, 2026 earnings release conference call. This information should be read in conjunction with the press release issued on that date. 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 inc ...