Core Viewpoint - McCormick (MKC) is anticipated to report a year-over-year increase in earnings driven by higher revenues in its upcoming earnings report for the quarter ended February 2025, with the actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The consensus estimate for McCormick's quarterly earnings is $0.67 per share, reflecting a year-over-year increase of 6.4%, while revenues are projected to be $1.61 billion, up 0.6% from the previous year [3]. - The consensus EPS estimate has been revised 0.06% higher in the last 30 days, indicating a slight positive adjustment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model compares the Most Accurate Estimate to the Zacks Consensus Estimate, suggesting that recent analyst revisions may provide more accurate insights into the company's earnings prospects [5][6]. - A negative Earnings ESP of -2.46% for McCormick indicates that analysts have recently become more bearish on the company's earnings outlook, complicating predictions of an earnings beat [10][11]. Historical Performance - McCormick has a history of beating consensus EPS estimates, having done so in the last four quarters, including a surprise of +3.90% in the most recent quarter [12][13]. Conclusion - While McCormick does not appear to be a strong candidate for an earnings beat based on current estimates, investors should consider other factors that may influence stock performance ahead of the earnings release [16].

Company Overview - McCormick & Company, Incorporated (NYSE: MKC) is a global leader in the flavor market, offering a diverse product portfolio across consumer and flavor solutions markets [1]. Market Position - The company has effectively managed its operations and maintains a strong presence in the flavor industry, indicating robust market positioning and competitive advantages [1]. Investment Strategy - The investment approach focuses on fundamental, bottom-up analysis with an emphasis on long-term quality growth, targeting companies in niche markets with strong growth potential and sound management [1]. Portfolio Construction - The typical portfolio consists of 15-20 stocks, emphasizing diversification, risk management, macro-driven sector weights, and disciplined trading and valuations as key factors [1].

Core Viewpoint - McCormick (MKC) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a strong history of exceeding expectations [1][4]. Group 1: Earnings Performance - McCormick has a solid track record of surpassing earnings estimates, with an average surprise of 12.98% over the last two quarters [2]. - In the last reported quarter, McCormick achieved earnings of $0.80 per share, exceeding the Zacks Consensus Estimate of $0.77 per share, resulting in a surprise of 3.90% [3]. - In the previous quarter, the company reported earnings of $0.83 per share against an expectation of $0.68 per share, delivering a significant surprise of 22.06% [3]. Group 2: Earnings Estimates and Predictions - Recent favorable changes in earnings estimates for McCormick indicate a positive outlook, with a positive Earnings ESP (Expected Surprise Prediction) suggesting a strong likelihood of an earnings beat [4][7]. - The current Earnings ESP for McCormick stands at +2.49%, reflecting increased analyst optimism regarding its near-term earnings potential [7]. - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced positive surprises nearly 70% of the time, indicating a high probability of beating consensus estimates [5].

Core Insights - Holladay Distillery is expanding its operations by constructing Rickhouse D, its fourth ironclad rickhouse, to meet increasing consumer demand and enhance its distilling capacity [1][2][3] Company Overview - Founded in 1856, Holladay Distillery is known for producing Missouri bourbon, including its flagship brands Holladay Soft Red Wheat and Ben Holladay Bourbon, which utilizes a recipe over 160 years old [5] - The distillery has a historical significance in Missouri's distilling industry, having built its first three rickhouses in the early 1900s, 1930, and 1950 [1][5] Expansion Details - Rickhouse D will be constructed in partnership with Al J. Mueller and is expected to take eight to nine months to complete [2] - The new rickhouse will have an 11,000-barrel capacity, contributing to the consistency of bourbon production [2] Product Development - After a hiatus from bourbon distilling between 1985 and 2015, the distillery resumed production in 2015, leading to the release of Ben Holladay Bourbon in 2022 after six years of aging [3] - The introduction of a new mash bill in 2016 resulted in the launch of Holladay Soft Red Wheat Bourbon in 2023, reflecting the distillery's commitment to innovation [3][4] Product Offerings - In addition to its flagship brands, Holladay Distillery offers Rickhouse Proof and One Barrel Bourbons, both aged for a minimum of six years [4] - The distillery also features the Ancient Cave Collection, which includes bourbons aged in experimental barrels for secondary finishes, all of which will benefit from the new rickhouse capacity [4]

Core Insights - Holladay Distillery is expanding its production operations by constructing a new Rickhouse D to meet increased consumer demand for its bourbon products [1][2][3] Company Overview - Founded in 1856, Holladay Distillery is located in Weston, Missouri, and is known for producing bourbon steeped in history, including Holladay Soft Red Wheat and Ben Holladay Bourbon [5] - The distillery has a legacy of distilling that dates back over 160 years, with its first three rickhouses built in the early 1900s, 1930, and 1950 [1][5] Expansion Details - Rickhouse D will be constructed over eight to nine months in partnership with Al J. Mueller, a St. Joseph-based construction company [2] - The new rickhouse will have an 11,000-barrel capacity, which is designed to maintain consistency across the bourbon products [2] Product Offerings - Holladay Distillery produces several bourbon varieties, including its flagship brands, Holladay Soft Red Wheat and Ben Holladay Bourbon, as well as Rickhouse Proof and One Barrel Bourbons [4] - The distillery also offers the Ancient Cave Collection, which features bourbon aged in experimental barrels for a secondary finish [4] Historical Context - The distillery took a hiatus from bourbon production from 1985 to 2015, focusing on other spirits before resuming bourbon production in 2015 [3] - The original mash bill from 1856 was used for production, leading to the release of Ben Holladay Bourbon in 2022 after six years of aging [3]

Company Overview - McCormick & Company, Incorporated is a global leader in flavor with over $6.5 billion in annual sales across 150 countries and territories [2] - The company manufactures, markets, and distributes a variety of products including spices, seasoning mixes, and condiments to various sectors of the food industry [2] - Popular brands under McCormick include McCormick, French's, Frank's RedHot, and OLD BAY among others [2] Upcoming Event - McCormick will present at the Consumer Analyst Group of New York (CAGNY) Conference on February 18, 2025, at 4:00 p.m. ET [1] - The presentation will be led by Brendan Foley, Chairman, President & CEO, and Marcos Gabriel, Executive Vice President & CFO [1] - The event will be webcast live and a replay will be available on the McCormick website [1] Company Mission and Vision - McCormick is guided by principles that emphasize a commitment to a sustainable and flavorful future [3] - The company envisions a world united by flavor, where health, sustainability, and deliciousness coexist [3]

Investment Thesis - The analyst assigned a hold rating to McCormick & Co (NYSE: MKC) in October, citing concerns over headwinds from the Flavor Solutions segment despite the positive trend in food-at-home dining [1] Analyst's Background - The analyst is a passionate investor with a strong foundation in fundamental analysis and a focus on identifying undervalued companies with long-term growth potential [1] - The investment approach combines value investing principles with a focus on long-term growth, aiming to buy quality companies at a discount to their intrinsic value and hold them for the long term to benefit from compounding earnings and shareholder returns [1] Disclosure - The analyst has no stock, option, or derivative positions in any of the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article reflects the analyst's own opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Financial Performance - In 2024, McCormick achieved net sales growth of 0.9% compared to 2023, with operating income increasing to $1,060.3 million from $963.0 million[142]. - Adjusted operating income for 2024 was $1,069.8 million, representing a 4.5% increase from $1,024.2 million in 2023[142]. - Diluted earnings per share rose to $2.92 in 2024, up from $2.52 in 2023, with adjusted diluted earnings per share increasing by 9.3% to $2.95[143]. - Net cash provided by operating activities was $921.9 million in 2024, with $504.1 million returned to shareholders through dividends and share repurchases[144]. - For 2025, McCormick expects net sales growth between 0% and 2%, with a 1% unfavorable impact from foreign currency rates[146]. - The company anticipates a gross profit margin improvement of 50 to 100 basis points from the 38.5% reported in 2024, driven by product mix changes and cost savings[147]. - Projected operating income for 2025 is expected to increase by 3% to 5% over the 2024 level, reflecting anticipated gross profit margin rise and SG&A cost savings[148]. - The effective tax rate for 2025 is estimated to be 22.0%, up from 20.5% in 2024[149]. - Income from unconsolidated operations is expected to decline by a mid-teen percentage rate in 2025 due to the strengthening of the U.S. dollar against the Mexican peso[150]. - McCormick's long-term growth objectives include increasing sales by 4% to 6% and adjusted earnings per share by 9% to 11% annually[137]. - Diluted earnings per share for 2024 was $2.92, an increase from $2.52 in 2023, with projections for 2025 ranging from $2.99 to $3.04[166]. - Net sales for 2024 were $6,723.7 million, reflecting a growth of 0.9% compared to $6,662.2 million in 2023, with organic sales growth of 0.8%[152]. - Gross profit increased by $88.5 million, or 3.5%, to $2,591.0 million in 2024, with a gross profit margin of 38.5%, up from 37.6% in 2023[153]. - Operating income rose by $97.3 million, or 10.1%, to $1,060.3 million in 2024, with an operating income margin of 15.8%, up from 14.5% in 2023[158]. - Selling, general & administrative (SG&A) expenses increased by $42.9 million to $1,521.2 million, representing 22.6% of net sales, up from 22.2% in 2023[154]. - Special charges decreased significantly from $61.2 million in 2023 to $9.5 million in 2024, positively impacting operating income[155]. - Income from consolidated operations before income taxes was $898.3 million in 2024, compared to $798.7 million in 2023, with an effective tax rate of 20.5%[160]. Market Segments - In 2024, the consumer segment contributed approximately 57% of consolidated net sales and 69% of consolidated operating income, while the flavor solutions segment contributed approximately 43% of consolidated net sales and 31% of consolidated operating income[13]. - Approximately two-thirds of the consumer segment sales are from spices, seasonings, condiments, and sauces, with McCormick being the global brand leader in the spices and seasoning category[14]. - Consumer segment net sales increased by 1.1% to $3,848.5 million in 2024, with segment operating income of $740.3 million[169]. - In the EMEA region, consumer sales increased by 7.3% in 2024, driven by favorable volume and product mix[171]. - Flavor solutions segment net sales increased by 0.7% in 2024 to $2,875.2 million compared to $2,854.9 million in 2023[174]. - Segment operating income for flavor solutions increased by $40.8 million, or 14.1%, in 2024, reaching $329.5 million[178]. - In the Americas region, flavor solutions sales grew by 1.4% in 2024, with organic growth of 1.5%[175]. - EMEA region flavor solutions sales decreased by 3.5% in 2024, with an organic decline of 3.6%[176]. - APAC region flavor solutions sales increased by 4.1% in 2024, with organic growth of 5.1%[177]. Customer Relationships - Sales to Wal-Mart Stores, Inc. accounted for approximately 12% of consolidated sales in 2024, while sales to PepsiCo, Inc. accounted for approximately 13%[23]. - Approximately 25% of consolidated sales in 2024 were generated from two large customers, highlighting the importance of maintaining strong relationships with major clients[54]. International Operations - In fiscal year 2024, approximately 39% of sales were from non-U.S. operations, indicating a significant international presence[39]. - Approximately 39% of the company's sales in fiscal year 2024 were generated from international markets, exposing it to currency fluctuations and regulatory risks[107]. Employee Relations - The company employs approximately 14,100 full-time employees worldwide as of November 30, 2024, with good employee relations and minimal work stoppages reported[32]. - The company is committed to fostering a diverse and inclusive workplace, which it believes contributes to business growth and innovation[31]. - Labor shortages and increased turnover rates may lead to higher operational costs, negatively impacting the company's efficiency and overall business[60]. Product Innovation and Strategy - The company is focused on product innovation and customer engagement to drive growth in highly competitive markets[29]. - The company has a diverse product offering, including clean-label, organic, natural, reduced sodium, gluten-free, and non-GMO products to meet increasing consumer demand[12]. - The company is committed to ongoing product innovation and expansion into new markets to drive future growth[40]. Cost Management and Risks - The company utilizes strategic raw material purchases and cost-saving programs to mitigate the impact of raw material price volatility[20]. - The company faces risks related to fluctuations in raw material prices, particularly for key ingredients such as dairy products, pepper, and tomato products, which could negatively impact financial results[55]. - The impact of inflationary pressures on product costs is a significant concern, with the company exploring pricing actions to offset these challenges[41]. - The company has experienced significantly elevated commodity and supply chain costs, with expectations of continued inflation in 2025 at a more modest rate compared to 2024[61]. - Attempts to offset cost pressures through price increases may not be successful, potentially leading to reduced sales volume[62]. - The food industry is highly competitive, and economic uncertainties may force the company to reduce product prices, adversely affecting profitability[64]. - Ongoing geopolitical conflicts, including those between Russia and Ukraine, may disrupt supply chains and affect overall economic conditions, impacting consumer demand[46]. - Ongoing geopolitical conflicts, including those between Russia and Ukraine, may disrupt the company's operations and increase costs due to trade restrictions[65]. - Climate change and related regulatory measures may negatively impact the availability and pricing of raw materials essential for the company's products[76]. - Increased compliance costs due to environmental regulations may disrupt operations and increase manufacturing and distribution costs[77]. - The company may face reputational risks if it fails to address stakeholder concerns regarding climate change and sustainability[78]. Financial Management and Debt - As of November 30, 2024, the company had total outstanding variable rate debt of approximately $449 million at a weighted-average interest rate of approximately 4.7%[85]. - The company's total outstanding fixed to variable interest rate swaps had a notional value of $600 million as of November 30, 2024[86]. - The company's total indebtedness as of November 30, 2024, was approximately $4.3 billion[88]. - The company relies on revolving credit facilities to fund a portion of its working capital needs and other general corporate purposes, including acquisitions[89]. - The company's credit ratings impact the cost and availability of future borrowings, with any downgrade potentially increasing borrowing costs[87]. - The company is exposed to credit risks from customers and counterparties, particularly in volatile credit markets[92]. Cybersecurity and Compliance - The company maintains an information security program to address cybersecurity threats, although risks continue to evolve[97]. - The company has adopted a risk-based, multilayered approach to cybersecurity, with significant resources allocated to protect data and manage threats[111]. - The company has not experienced any material cybersecurity threats or incidents to date, but acknowledges the potential for future risks[113]. - The company is subject to various data privacy laws, including the GDPR and CCPA, which impose compliance obligations and potential penalties for non-compliance[102]. - The company maintains a cybersecurity insurance policy, although it may not cover all potential claims related to cyber threats[117]. - The company has established an Executive Cybersecurity Steering Committee to enhance governance and compliance related to cybersecurity[121]. Cash Flow and Investments - Operating cash flow decreased to $921.9 million in 2024 from $1,237.3 million in 2023, primarily due to higher working capital needs[200]. - Net cash used in investing activities was $269.0 million in 2024, with capital expenditures expected to approximate $300 million in 2025[206]. - Net cash used in financing activities was $583.1 million in 2024, a decrease from $1,184.2 million in 2023, primarily due to changes in net borrowings and share repurchase activity[208]. - The cash conversion cycle improved to 36 days in 2024 from 40 days in 2023, driven by better inventory management[203]. - The company repaid $801.1 million of long-term debt in 2024, including $700.0 million of notes that matured in August 2024[208]. - The company issued $500.0 million of 4.95% notes due 2033, with net cash proceeds of $496.4 million[209]. - The share repurchase program activity shows 0.7 million shares repurchased in 2024 for a total of $53.1 million, compared to 0.5 million shares for $35.7 million in 2023[209]. - As of November 30, 2024, $448 million remains of a $600 million share repurchase program authorized in November 2019[209]. - Proceeds from exercised stock options were $17.5 million in 2024, $16.6 million in 2023, and $41.4 million in 2022[210]. - Total dividends paid in 2024 were $451.0 million, an increase from $418.5 million in 2023 and $396.7 million in 2022[210]. - Dividends paid per share increased to $1.68 in 2024, up 7.7% from $1.56 in 2023[210]. - The Board of Directors approved a 7.1% increase in the quarterly dividend from $0.42 to $0.45 per share in November 2024[210]. - The company repurchased $9.0 million of common stock in 2024 for employee tax withholding requirements[210]. - The percentage increase in dividends per share was 5.4% in 2023 and 8.8% in 2022[210].

Financial Data and Key Metrics - The company has adopted the organic sales measure, defined as the impact of volume and mix plus price, to simplify communication and align with investor feedback [5] Business Line Data and Key Metrics - No specific data provided in the content Market Data and Key Metrics - No specific data provided in the content Company Strategy and Industry Competition - The company has made changes to its release and slides to streamline and enhance communication, aligning with investor and analyst feedback [5] Management Commentary on Operating Environment and Future Outlook - The presentation contains projections and forward-looking statements, with actual results potentially differing materially from those projected [4] - The company undertakes no obligation to update or revise publicly any forward-looking statements, whether due to new information, future events, or other factors [4] Other Important Information - The company will refer to certain non-GAAP financial measures during the call, with reconciliations to GAAP results included in the press release and slides [3] - Certain percentages in the comments are rounded, and complete information can be found in the presentation [4] Q&A Session Summary - No Q&A session details provided in the content

Investment Opportunity - McCormick & Company, Incorporated (NYSE: MKC) is considered a long-term buy, with a buy call made at the bottom in October 2023 [1] Service Offering - Seeking Alpha's premier investing service offers a 33% discount, reducing the annual fee from $779 to $564, saving $215 [1] - Benefits of BAD BEAT Investing include understanding market dynamics, executing weekly trade ideas, access to 4 chat rooms, daily analyst summaries, basic options trading education, and extensive trading tools [1] Team Expertise - Quad 7 Capital, the pioneer of BAD BEAT Investing, consists of 7 analysts with diverse experience in business, policy, economics, mathematics, game theory, and sciences [1] - The team has a proven track record, including a notable February 2020 call to sell everything and go short, and has been 95% long and 5% short since May 2020 [1] Investment Strategy - BAD BEAT Investing focuses on short- and medium-term investments, income generation, special situations, and momentum trades [1] - The service aims to teach investors to become proficient traders through a detailed playbook, providing high-quality research with clear entry and exit targets [1]