Sales Performance - Sales in Q3 2024 were comparable to the year-ago period, with a volume growth of 1% partially offset by pricing[1]. - Consumer segment sales were comparable to Q3 2023, with a 1% increase in volume growth fully offset by a 1% decrease from pricing[11]. - Flavor Solutions segment sales declined 1% from Q3 2023, with operating income excluding special charges growing 31% compared to the year-ago period[14][16]. - Total net sales for the three months ended August 31, 2024, showed a slight decline of 0.3% as reported, but a 0.1% increase on a constant currency basis[21]. - The Flavor Solutions segment experienced a reported decline of 0.7% in net sales for the three months ended August 31, 2024, but a 0.2% increase on a constant currency basis[21]. Income and Earnings - Operating income increased to $287 million in Q3 2024, up from $245 million in Q3 2023, with adjusted operating income at $288 million compared to $251 million[1][6]. - Earnings per share rose to $0.83 in Q3 2024, compared to $0.63 in the year-ago period, with adjusted earnings per share also at $0.83 versus $0.65[7]. - Net income for the three months ended August 31, 2024, was $223.1 million, representing a 28.3% increase from $170.1 million in the same period last year[19]. - Adjusted earnings per share for the three months ended August 31, 2024, was $0.83, a 27.7% increase compared to $0.65 in the prior year[19]. - The company projects diluted earnings per share for 2024 to be between $2.81 and $2.86, compared to $2.52 for the year ended November 30, 2023[23]. Financial Projections - For fiscal year 2024, McCormick expects sales to range between (1)% to 1% compared to 2023, with operating income projected to grow by 9% to 11% from $963 million in 2023[8][9]. - The company anticipates 2024 earnings per share to be in the range of $2.81 to $2.86, compared to $2.52 in 2023, representing an expected increase of 5% to 7%[10]. - For the nine months ended August 31, 2024, adjusted operating income increased by 6.9% compared to the same period in 2023[22]. - The company anticipates continued growth driven by brand marketing support, product innovation, and expansion in various markets[25]. Cash Flow and Assets - Net cash provided by operating activities through Q3 2024 was $463 million, down from $660 million in the same period of 2023[7]. - Cash and cash equivalents at the end of the period were $154.7 million, reflecting a decrease of $701.2 million during the period[36]. - The company reported net cash flow provided by operating activities of $463.2 million, down from $660.1 million in the prior year[34]. - Total assets as of August 31, 2024, were $13,204.9 million, up from $12,862.3 million a year earlier[32]. - Total liabilities decreased slightly to $7,753.9 million from $7,778.8 million in the previous year[33]. Profitability Metrics - Gross profit margin expanded by 170 basis points year-over-year, driven by favorable mix and cost savings from the Comprehensive Continuous Improvement program[6]. - Gross profit increased to $649.9 million, resulting in a gross profit margin of 38.7%, up from 37.0% in the prior year[31]. - Adjusted operating income for the three months ended August 31, 2024, was $288.4 million, a 14.9% increase compared to $251.1 million for the same period in 2023[19]. - The adjusted operating income margin for the three months ended August 31, 2024, was 17.2%, up from 14.9% in the prior year[19]. - Operating income rose to $286.5 million compared to $245.0 million in the same quarter last year[31]. Strategic Initiatives - The company plans to host its Investor Day on October 22, 2024, to share its strategic roadmap and long-term objectives[2]. - The impact of foreign currency exchange rates has been noted as a significant factor affecting reported results, with adjustments made for constant currency comparisons[20]. - Capital expenditures for the nine months ended August 31, 2024, were $189.3 million, compared to $187.2 million in the same period last year[35].

Financial Performance - Net sales for the three months ended May 31, 2024, were $1,643.2 million, a slight decrease of 1.0% compared to $1,659.2 million in the same period of 2023[11] - Gross profit for the six months ended May 31, 2024, increased to $1,218.9 million, up 3.4% from $1,178.4 million in 2023[11] - Operating income for the three months ended May 31, 2024, was $234.1 million, representing an increase of 5.2% from $221.8 million in 2023[11] - Net income for the six months ended May 31, 2024, rose to $350.2 million, a 20.2% increase compared to $291.2 million in 2023[11] - Earnings per share (diluted) for the three months ended May 31, 2024, were $0.68, up from $0.56 in the same period of 2023, reflecting a 21.4% increase[11] - Net income for the three months ended May 31, 2024, was $184.2 million, compared to $152.1 million for the same period in 2023, representing a 21.1% increase[21] - For the six months ended May 31, 2024, net income totaled $350.2 million, compared to $291.2 million for the same period in 2023, marking a 20.2% increase[22] - Operating income for the first half of 2024 was $467.6 million, up from $420.8 million in the first half of 2023, indicating a strong performance[81] Dividends and Shareholder Returns - Cash dividends declared per share for the six months ended May 31, 2024, were $0.42, compared to $0.39 in 2023, marking a 7.7% increase[11] - Dividends paid during the three months ended May 31, 2024, totaled $112.7 million, consistent with the same amount paid in the previous year[21] - The company paid dividends of $112.7 million in both the three and six months ended May 31, 2024, consistent with the previous year[21] - As of May 31, 2024, the company had $497.0 million remaining from the $600 million share repurchase program authorized in November 2019[73] Assets and Liabilities - Total assets as of May 31, 2024, were $12,987.6 million, an increase from $12,862.3 million as of November 30, 2023[15] - Total liabilities decreased to $7,633.4 million as of May 31, 2024, down from $7,778.8 million as of November 30, 2023[15] - Total shareholders' equity increased from $5,257.4 million on February 29, 2024, to $5,354.2 million on May 31, 2024, reflecting a growth of 1.8%[21] Special Charges and Cost Management - Special charges for the three months ended May 31, 2024, amounted to $1.8 million, a decrease from $13.2 million in the same period of 2023[35] - The company recorded $6.0 million in special charges for the six months ended May 31, 2024, down from $41.0 million for the same period in 2023[38] - Special charges for the six months ended May 31, 2024, totaled $6.0 million, significantly lower than $41.0 million for the same period in 2023, indicating a reduction of 85.4%[36] - The company reported a decrease in special charges from $13.2 million in Q2 2023 to $1.8 million in Q2 2024, highlighting improved operational efficiency[81] Cash Flow and Capital Expenditures - The company reported net cash flow provided by operating activities of $301.5 million for the six months ended May 31, 2024, compared to $394.2 million in 2023[19] - Capital expenditures for the six months ended May 31, 2024, were $130.3 million, an increase from $118.6 million in 2023[19] Segment Performance - The consumer segment reported net sales of $904.5 million for the three months ended May 31, 2024, down from $912.1 million in the same period of 2023[80] - The flavor solutions segment achieved net sales of $738.7 million for the three months ended May 31, 2024, compared to $747.1 million in the same period of 2023[80] - Net sales in the Americas for the six months ended May 31, 2024, were $2,283.5 million, slightly up from $2,272.5 million in the same period last year[82] - EMEA net sales for the first half of 2024 were $614.0 million, an increase from $594.6 million in the first half of 2023, indicating growth in that region[82] - APAC net sales decreased to $348.4 million in the first half of 2024 from $357.6 million in the same period last year, reflecting challenges in that market[82] Financial Instruments and Risk Management - The company utilizes derivative financial instruments to manage risks related to foreign currency and interest rates, with all derivatives designated as hedges[43] - The notional amount of outstanding foreign currency exchange contracts as of May 31, 2024, was $939.6 million, down from $1,000.4 million as of November 30, 2023[45] - Interest rate derivative contracts had a notional amount of $600 million in liabilities as of May 31, 2024, with a fair value of $53.8 million[48] Tax and Pension Contributions - The company recognized $19.4 million in tax benefits related to a deferred tax asset from an international legal entity reorganization for the six months ended May 31, 2024[69] - The company contributed $3.5 million to pension plans during the six months ended May 31, 2024, slightly down from $3.6 million in the prior year[62] - The total contributions to pension plans in fiscal year 2023 were $9.2 million[62] Stock Options and Compensation - The number of outstanding stock options increased to 6.2 million as of May 31, 2024, from 5.5 million in the same period of 2023[65] - The weighted-average grant-date fair value of stock options granted in 2024 was $17.63, compared to $19.35 in 2023[65] - The intrinsic value of all options outstanding as of May 31, 2024, was $43.0 million[66] - Stock-based compensation for the three months ended May 31, 2024, was $19.4 million, compared to $26.7 million for the same period in 2023, indicating a decrease of 27.3%[21]

Sales Performance - McCormick reported a 1% sales decline in Q2 2024 compared to the same period last year, with operating income increasing to $234 million from $222 million[4]. - The Consumer segment's net sales decreased by 1% to $904.5 million, while the Flavor Solutions segment's sales also declined by 1% to $738.7 million[18][21]. - The total net sales for the three months ended May 31, 2024, decreased by 1.0% as reported, with a constant currency basis showing no change[32]. - McCormick reported net sales of $1,643.2 million for the three months ended May 31, 2024, a decrease of 1.1% compared to $1,659.2 million for the same period in 2023[44]. Earnings and Income - Adjusted earnings per share rose to $0.69 in Q2 2024, up from $0.60 in the prior year, primarily due to a discrete tax benefit and strong performance from McCormick de Mexico[11]. - The diluted earnings per share for the three months ended May 31, 2024, increased by 15.0% to $0.68, compared to $0.56 in the same period last year[28]. - Net income for the second quarter of 2024 was $184.2 million, compared to $152.1 million in the same quarter of 2023, representing a year-over-year increase of 21.1%[44]. - The company reported a 14.5% increase in adjusted net income for the three months ended May 31, 2024, reaching $185.6 million compared to $162.1 million in the prior year[28]. Operating Income - Operating income for the Flavor Solutions segment grew by 6% to $86.6 million, driven by pricing actions and cost savings initiatives[22]. - For the three months ended May 31, 2024, adjusted operating income was $235.9 million, a slight increase of 0.3% compared to $235.0 million in the same period last year[28]. - The Flavor Solutions segment reported a 6.3% increase in adjusted operating income for the six months ended May 31, 2024[33]. Financial Outlook - McCormick expects 2024 sales to range from -2% to 0% compared to 2023, with an anticipated operating income growth of 8% to 10% from $963 million in 2023[14][15]. - The company projects 2024 earnings per share to be between $2.76 and $2.81, reflecting an increase from $2.52 in 2023[16]. - The company projects a percentage change in net sales for the year ending November 30, 2024, to be between -2% to 0%[34]. - Adjusted operating income is expected to increase by 3% to 5% for the year ending November 30, 2024, with a constant currency increase projected at 4% to 6%[34]. Cash Flow and Assets - Net cash provided by operating activities was $302 million in Q2 2024, down from $394 million in Q2 2023, mainly due to higher incentive compensation payments[12]. - The company reported net cash flow provided by operating activities of $301.5 million for the second quarter of 2024, compared to $394.2 million for the same period in 2023[46]. - Total assets as of May 31, 2024, were $12,987.6 million, an increase from $12,862.3 million as of November 30, 2023[45]. - Total liabilities decreased to $7,633.4 million as of May 31, 2024, down from $7,778.8 million as of November 30, 2023[45]. Profitability Metrics - Gross profit margin expanded by 60 basis points year-over-year, attributed to cost savings from the Comprehensive Continuous Improvement program[8]. - Gross profit margin improved to 37.7% for the second quarter of 2024, up from 37.1% in the same quarter of 2023[44]. - The income tax rate for the six months ended May 31, 2024, was 19.5%, down from 21.9% in the same period last year[28]. Strategic Initiatives - McCormick plans to host its Investor Day on October 22, 2024, to discuss long-term strategy and financial outlook[17]. - The company remains focused on brand marketing, new products, and proprietary technology to drive volume growth in the second half of 2024[5]. - The company continues to focus on driving sustainable growth through its Consumer and Flavor Solutions segments, leveraging scale, insights, and technology[41]. - McCormick's capital expenditures for the second quarter of 2024 were $130.3 million, compared to $118.6 million in the same quarter of 2023[46]. Currency Impact - The company noted that foreign currency exchange had a 1% unfavorable impact on net sales projections for the upcoming year[34].

Financial Performance - Net sales for the three months ended February 29, 2024, increased to $1,602.7 million, up from $1,565.5 million in the same period last year, representing a growth of 2.3%[11] - Gross profit rose to $599.3 million, compared to $562.9 million a year ago, reflecting an increase of 6.5%[11] - Operating income improved to $233.5 million, up from $199.0 million, marking a growth of 17.3%[11] - Net income for the period was $166.0 million, compared to $139.1 million in the prior year, an increase of 19.4%[11] - Earnings per share (EPS) on a diluted basis increased to $0.62, up from $0.52, representing a growth of 19.2%[11] - The consumer segment reported net sales of $921.5 million for the three months ended February 29, 2024, compared to $909.5 million in the prior year, a growth of 1.9%[71] - The flavor solutions segment achieved net sales of $681.2 million for the three months ended February 29, 2024, up from $656.0 million in the same period of 2023, an increase of 3.8%[71] - Comprehensive income decreased to $163.0 million from $181.5 million year-over-year, primarily due to a significant drop in currency translation adjustments[13] Cash and Assets - Cash and cash equivalents at the end of the period were $178.0 million, compared to $356.8 million at the end of the same period last year, a decrease of 50.2%[19] - Total assets as of February 29, 2024, were $12,890.1 million, slightly up from $12,862.3 million at the end of the previous quarter[15] - The total fair value of financial assets as of February 29, 2024, was $326.8 million, with $178.0 million in cash and cash equivalents[51] - The carrying amount of long-term debt as of February 29, 2024, was $4,127.5 million, with a total fair value of $3,871.9 million[54] Liabilities and Equity - Total liabilities decreased to $7,632.7 million from $7,778.8 million, a reduction of 1.9%[15] - Shareholders' equity increased to $5,257.4 million, compared to $5,083.5 million, reflecting a growth of 3.4%[15] - Total current liabilities decreased to $2,973.8 million from $3,098.9 million, showing a reduction of 4.0%[16] - Retained earnings increased to $3,412.8 million from $3,249.7 million, reflecting a growth of 5.0%[21] Cash Flow and Operating Activities - The company reported net cash flow provided by operating activities of $138.4 million, up from $103.4 million in the same period last year, an increase of 33.9%[19] - The company reported a cash dividend of $0.42 per share for the three months ended February 29, 2024, up from $0.39 in the same period of 2023[11] Special Charges and Costs - Special charges for the three months ended February 29, 2024, totaled $4.2 million, a significant decrease from $27.8 million for the same period in 2023, representing an 85.1% reduction[34][35] - The Global Operating Effectiveness program incurred total costs of approximately $48 million as of November 30, 2023, with $2.1 million recognized in severance and related benefits during the three months ended February 29, 2024[36] - The initiative to consolidate manufacturing operations in the UK is expected to cost approximately $40 million, with $36 million incurred as of November 30, 2023, and $1.4 million recognized in the latest quarter[37][38] Foreign Currency and Derivatives - The notional amount of outstanding foreign currency exchange contracts as of February 29, 2024, was $953.7 million, down from $1,000.4 million as of November 30, 2023, indicating a 4.67% decrease[42] - Interest rate derivative contracts had a notional amount of $600.0 million as of February 29, 2024, with a fair value of $51.9 million in liabilities[45] - The company recorded a loss of $2.9 million on foreign exchange contracts for the three months ended February 29, 2024, compared to a gain of $1.0 million for the same period in 2023[46] Organizational Changes and Future Expectations - The company expects to adopt new accounting standards related to segment reporting and income tax disclosures by November 30, 2025, and November 30, 2026, respectively, which will enhance financial reporting transparency[30][31] - The company continues to evaluate changes to its organizational structure to improve competitiveness and reduce fixed costs, indicating ongoing strategic adjustments[33] Stock and Compensation - Stock-based compensation expense for the three months ended February 29, 2024, was $11.7 million, slightly down from $11.8 million in the same period last year[58] - The number of stock options outstanding at the end of the period was 5.6 million, with an average exercise price of $70.54[59] - The intrinsic value of all options outstanding as of February 29, 2024, was $38.4 million[59] Pension and Other Benefits - The net aggregate amount of pension and other postretirement benefits (income) for the three months ended February 29, 2024, was $(2.0) million[57] - The total contributions to pension plans in fiscal year 2023 were $9.2 million[56]

Financial Performance - McCormick reported a 3% increase in sales for Q1 2024 compared to the same period last year, with a 2% growth in constant currency[5]. - Operating income for Q1 2024 was $234 million, up from $199 million in Q1 2023, while adjusted operating income increased to $238 million, a 5% rise year-over-year[10]. - Earnings per share (EPS) rose to $0.62 in Q1 2024, compared to $0.52 in the prior year, reflecting a 19% increase; adjusted EPS was $0.63, up 7% from $0.59[11]. - Cash flow from operations for Q1 2024 was $138 million, an increase from $103 million in Q1 2023, driven by higher operating income and working capital improvements[12]. - Total net sales for the three months ended February 29, 2024, were $1,602.7 million, a 2.4% increase compared to $1,565.5 million in the same period of 2023[45]. - Adjusted operating income increased by 4.8% to $233.5 million, up from $199.0 million year-over-year[45]. - The company reported a net income of $166.0 million for the three months ended February 29, 2024, compared to $139.1 million in the same period of 2023[45]. - Net income for the three months ended February 29, 2024, was $166.0 million, representing a 19.3% increase compared to $139.1 million for the same period in 2023[47]. - Net cash flow provided by operating activities rose to $138.4 million, up from $103.4 million year-over-year, indicating a growth of 33.9%[47]. Sales Projections - For fiscal year 2024, McCormick expects sales to range from -2% to 0% compared to 2023, with a constant currency basis projection of -1% to 1%[14]. - Projected percentage change in net sales for the year ending November 30, 2024, is expected to be between -2% to 0%[34]. Earnings Projections - Operating income for 2024 is anticipated to grow by 8% to 10% from $963 million in 2023, with adjusted operating income expected to increase by 3% to 5%[15]. - McCormick projects 2024 EPS to be between $2.76 and $2.81, compared to $2.52 in 2023, with adjusted EPS expected to rise by 4% to 6%[16]. - Adjusted earnings per share for 2024 are projected to be between $2.80 to $2.85, compared to $2.70 for 2023[34]. Segment Performance - The Consumer segment saw a 1% sales increase in Q1 2024, with a 3% rise from pricing actions offset by a 2% decline in volume[18]. - The Flavor Solutions segment reported a 4% sales increase in Q1 2024, with a 2% increase in constant currency, driven by pricing actions and volume growth[20]. - The Consumer segment reported a total net sales increase of 1.3%, while the Flavor Solutions segment saw a 3.8% increase[32]. Profitability Metrics - Gross profit margin expanded by 140 basis points year-over-year, supported by favorable product mix and cost savings initiatives[9]. - The gross profit margin improved to 37.4% in Q1 2024, compared to 36.0% in Q1 2023[45]. Balance Sheet Highlights - Total assets increased to $12,890.1 million as of February 29, 2024, up from $12,862.3 million on November 30, 2023, reflecting a growth of 0.22%[46]. - Total current liabilities decreased to $2,973.8 million from $3,098.9 million, a reduction of 4.0%[46]. - Long-term debt remained stable at $3,329.1 million compared to $3,339.9 million, showing a slight decrease of 0.3%[46]. - Retained earnings increased to $3,412.8 million from $3,249.7 million, reflecting a growth of 5.0%[46]. Cash Management - Cash and cash equivalents at the end of the period were $178.0 million, an increase from $166.6 million at the beginning of the period, marking a growth of 6.8%[47]. - Dividends paid increased to $112.7 million from $104.6 million, representing a rise of 7.7% year-over-year[47]. - The effect of exchange rate changes on cash and cash equivalents resulted in an increase of $2.5 million during the quarter[47]. Cost Management Initiatives - The company is focused on productivity improvements and cost savings through its CCI and GOE programs[37].

Financial Performance - In 2023, McCormick achieved net sales of $6,662.2 million, representing a growth of 4.9% compared to 2022[131][147]. - Adjusted operating income for 2023 was $1,024.2 million, an increase of 11.6% from $917.4 million in 2022, with a constant currency increase of 12.0%[131]. - Diluted earnings per share for 2023 was $2.52, with adjusted diluted earnings per share increasing by 6.7% to $2.70[132][133]. - Gross profit for 2023 was $2,502.5 million, with a gross profit margin of 37.6%, up from 35.8% in 2022[148]. - Selling, general, and administrative (SG&A) expenses increased to $1,478.3 million, representing 22.2% of net sales, an increase of 80 basis points from the previous year[149][150]. - Operating income rose by $99.4 million, or 11.5%, from $863.6 million in 2022 to $963.0 million in 2023, with an operating income margin increase to 14.5%[156]. - The effective tax rate for 2024 is estimated to be 22%, slightly higher than 21.8% in 2023[144]. - The company projects adjusted earnings per share for the year ending November 30, 2024, to be between $2.80 and $2.85[205]. Segment Performance - The consumer segment contributed approximately 57% of consolidated net sales and 73% of consolidated operating income, while the flavor solutions segment contributed approximately 43% of consolidated net sales and 27% of consolidated operating income[13]. - Consumer segment net sales increased by 1.3% to $3,807.3 million in 2023, driven by a 6.5% increase from pricing actions[164]. - Flavor solutions segment net sales grew by 10.1% to $2,854.9 million in 2023, with pricing actions contributing 11.4% to the increase[169]. - Segment operating income for the consumer segment increased by $24.8 million, or 3.5%, to $735.5 million in 2023[168]. - Segment operating income for the flavor solutions segment increased by $82.0 million, or 39.7%, in 2023 compared to 2022, with a segment operating margin of 10.1%[173]. Customer and Market Dynamics - Sales to Wal-Mart Stores, Inc. accounted for approximately 12% of consolidated sales in 2023, while sales to PepsiCo, Inc. accounted for approximately 13% of consolidated sales in the same year[23]. - Approximately 25% of consolidated sales in 2023 came from two large customers, highlighting the importance of maintaining strong relationships with major clients[53]. - Approximately 39% of sales in fiscal year 2023 were from non-U.S. operations, indicating a significant international presence[39]. - The rise of private label products and competitive brands could negatively impact the company's market share and brand relevance[47]. Operational Challenges - The company faces risks from inflationary pressures affecting product costs and the ability to increase pricing to offset these costs[41]. - Ongoing geopolitical conflicts, including those between Russia and Ukraine and Israel and Hamas, may disrupt economic conditions and impact the company's operations[42]. - Fluctuations in raw material prices and availability, particularly for dairy products, pepper, and wheat, pose significant risks to the company's financial performance[54]. - Labor shortages and increased turnover rates may lead to higher operational costs, negatively impacting efficiency and overall business performance[61]. - The company faces potential adverse effects on operations due to supply chain disruptions, which could impair manufacturing and sales capabilities[57]. Strategic Initiatives - The company is implementing a global enterprise resource planning (ERP) system as part of its business transformation initiative[40]. - The company expects to drive revenue growth through brand marketing support, product innovation, and e-commerce expansion[40]. - The company is focused on improving productivity through its CCI and GOE programs to enhance operational efficiency[41]. - The company has adopted rigorous quality assurance and control procedures to safeguard its reputation for high-quality products[49]. Regulatory and Compliance Issues - The company’s operations are subject to various governmental regulations, impacting safety, production, and distribution of its products[30]. - The company is subject to extensive regulations regarding food products, which could increase compliance costs and impact financial results[102]. - Increased regulatory requirements related to environmental causes may result in increased compliance costs or disruptions in product manufacturing[86]. - Compliance with data privacy laws such as GDPR and CCPA is critical, as non-compliance could lead to significant financial penalties and operational challenges[104]. Financial Position and Debt - The company holds approximately $5.3 billion in goodwill and $3.0 billion in other indefinite-lived intangible assets, which are subject to impairment testing[70]. - As of November 30, 2023, the company had total outstanding variable rate debt of approximately $320 million, including $272 million of short-term borrowings, at a weighted-average interest rate of approximately 5.5%[87]. - The company's total indebtedness is approximately $4.4 billion as of November 30, 2023[90]. - The company relies on revolving credit facilities for funding working capital needs, and disruptions in these facilities could impact liquidity[91]. Environmental and Social Governance (ESG) - The company established science-based targets for Scope 1, 2, and 3 greenhouse gas emissions for the period 2025-2030[81]. - The company has established diversity, equity, and inclusion goals as part of its ESG initiatives[85]. - The company may incur additional costs to meet evolving consumer demands regarding sustainability and environmental impact[84]. Future Outlook - For 2024, McCormick expects net sales to decline by 2% to 0%, including a 1% unfavorable impact from foreign currency rates[140]. - Projected operating income for 2024 is expected to increase by 8% to 10%, with adjusted operating income anticipated to rise by 3% to 5%[142][143]. - The percentage change in net sales for 2024 is projected to be between -2% and 0%, with a constant currency change of -1% to 1%[210].

Financial Performance - Net sales for the three months ended August 31, 2023, increased to $1,684.7 million, a 5.6% increase from $1,595.6 million in the same period of 2022[11] - Gross profit for the nine months ended August 31, 2023, was $1,801.2 million, up from $1,650.1 million in 2022, reflecting a 9.2% increase[11] - Operating income for the three months ended August 31, 2023, was $245.0 million, compared to $235.2 million in the same period of 2022, representing a 4.0% increase[11] - Net income for the three months ended August 31, 2023, was $170.1 million, down from $222.9 million in 2022, a decrease of 23.6%[13] - Earnings per share (diluted) for the nine months ended August 31, 2023, was $1.71, compared to $1.83 in 2022, a decline of 6.6%[11] - For the nine months ended August 31, 2023, net sales reached $4,909.4 million, an increase of 5.5% from $4,654.8 million in the same period of 2022[11] - The operating income for the nine months ended August 31, 2023, was $665.8 million, up from $599.3 million in the prior year, marking an increase of 11.1%[11] Cash Flow and Assets - Net cash flow provided by operating activities for the nine months ended August 31, 2023, was $660.1 million, significantly higher than $250.1 million in 2022[19] - The company reported a decrease in cash and cash equivalents to $154.7 million as of August 31, 2023, down from $334.0 million at the beginning of the period[19] - Total assets as of August 31, 2023, were $12,990.1 million, a slight decrease from $13,124.9 million as of November 30, 2022[15] - Total liabilities decreased to $7,920.0 million as of August 31, 2023, from $8,425.7 million as of November 30, 2022[15] - Total current liabilities decreased to $3,171.0 million as of August 31, 2023, down from $3,432.4 million in November 2022, a reduction of approximately 7.6%[16] - Long-term debt decreased to $3,385.3 million as of August 31, 2023, down from $3,642.3 million in November 2022, a reduction of approximately 7.1%[16] Shareholder Returns - Cash dividends paid per share increased to $0.39 for the three months ended August 31, 2023, compared to $0.37 in the same period of 2022[11] - The company paid dividends totaling $104.7 million in the three months ended August 31, 2023, compared to $99.2 million in the same period in 2022, reflecting an increase of approximately 5.5%[20] - Dividends paid increased to $313.8 million for the nine months ended August 31, 2023, compared to $297.5 million in the prior year, reflecting a rise of 5.5%[19] - As of August 31, 2023, $510.5 million remained of the $600 million share repurchase program authorized in November 2019, indicating ongoing commitment to returning capital to shareholders[73] Special Charges and Expenses - Special charges for the three months ended August 31, 2023, amounted to $6.1 million, compared to $3.4 million for the same period in 2022, indicating an increase of approximately 79.4%[30] - The company recorded $47.1 million in special charges for the nine months ended August 31, 2023, down from $51.6 million for the same period in 2022, a decrease of about 8.7%[31] - The Global Operating Effectiveness (GOE) program accounted for $3.6 million of the special charges in the three months ended August 31, 2023[30] - The company incurred special charges of $6.1 million for the three months ended August 31, 2023, compared to $3.4 million in the same period of 2022[83] Tax and Income - Income tax expense for the nine months ended August 31, 2023 included $10.1 million in net discrete tax benefits, primarily from adjustments related to deferred tax assets and unrecognized tax benefits[68] - The company reported a net discrete tax expense of $3.3 million for the three months ended August 31, 2023, which included various tax benefits and expenses related to prior year earnings[67] Segment Performance - The Americas region generated net sales of $1,203.3 million for the three months ended August 31, 2023, compared to $1,141.7 million in the same period of 2022, a growth of 5.4%[83] - The consumer segment generated net sales of $937.1 million for the three months ended August 31, 2023, up from $927.9 million in the prior year[82] - The flavor solutions segment reported net sales of $747.6 million for the three months ended August 31, 2023, compared to $667.7 million in the same period of 2022, marking an increase of 12.0%[82] Financial Instruments and Contracts - The company executed a nonrecourse accounts receivable sale program, selling approximately $26.1 million in receivables during the three and nine months ended August 31, 2023[42] - As of August 31, 2023, the company had foreign currency exchange contracts totaling $966.5 million, up from $560.5 million at November 30, 2022[45] - The company recognized a loss of $4.9 million on interest rate contracts for the three months ended August 31, 2023, compared to a gain of $0.6 million in 2022[51] - The company recognized a loss of $(8.0) million on cross currency contracts for the three months ended August 31, 2023[53] Pension and Stock-Based Compensation - The company contributed $7.4 million to its pension plans during the nine months ended August 31, 2023, compared to $9.9 million in the same period in 2022[61] - Stock-based compensation expense for the three months ended August 31, 2023, was $12.6 million, slightly up from $12.2 million in 2022[64] - Stock-based compensation expense for the nine months ended August 31, 2023, was $51.1 million, compared to $49.1 million in 2022[64]

Financial Performance - Net sales for the three months ended May 31, 2023, increased to $1,659.2 million, up 8.0% from $1,536.8 million in the same period of 2022[11] - Gross profit for the six months ended May 31, 2023, was $1,178.4 million, representing a 8.8% increase compared to $1,083.4 million in 2022[11] - Operating income for the three months ended May 31, 2023, rose to $221.8 million, a 41.0% increase from $157.2 million in the prior year[11] - Net income for the six months ended May 31, 2023, was $291.2 million, compared to $273.4 million in the same period of 2022, reflecting a 6.5% increase[11] - Earnings per share (diluted) for the three months ended May 31, 2023, increased to $0.56, up from $0.44 in the same period of 2022[11] - For the three months ended May 31, 2023, the net income was $152.1 million, compared to $118.5 million for the same period in 2022, representing a 28.4% increase[22] - Operating income for the six months ended May 31, 2023, was $420.8 million, an increase from $364.1 million in the same period of 2022[11] - The company reported net sales of $3,224.7 million for the six months ended May 31, 2023, compared to $3,059.2 million for the same period in 2022, marking a 5.4% increase[11] Cash Flow and Liquidity - Cash and cash equivalents decreased to $127.4 million as of May 31, 2023, down from $334.0 million at the end of November 2022[15] - Net cash flow provided by operating activities for the six months ended May 31, 2023, was $394.2 million, significantly higher than $154.4 million in the prior year[19] - Net cash flow used in financing activities was $518.1 million, up from $81.7 million in the same period last year, indicating increased financing activities[19] - Cash and cash equivalents at the end of the period were $127.4 million, down from $325.8 million at the end of the same period in 2022[19] Dividends and Shareholder Equity - The company declared cash dividends of $0.39 per share for the three months ended May 31, 2023, up from $0.37 in the same period of 2022[11] - The total dividends paid during the three months ended May 31, 2023, were $104.6 million, consistent with the same period in 2022[22] - Dividends paid during the six months ended May 31, 2023, totaled $209.2 million, compared to $198.2 million in the same period of 2022, reflecting a 5.1% increase[19] - The balance of total shareholders' equity as of May 31, 2023, was $4,956.9 million, up from $4,615.1 million a year earlier, reflecting a 7.4% increase[22] Special Charges and Expenses - The total special charges for the three months ended May 31, 2023, amounted to $13.2 million, down from $15.1 million in the same period of 2022[32] - The company recorded $41.0 million in special charges for the six months ended May 31, 2023, compared to $34.6 million for the same period in 2022, indicating a 18.5% increase[35] - Special charges for the three months ended May 31, 2023, totaled $13.2 million, primarily due to the Global Operating Effectiveness (GOE) program, with $8.6 million related to this initiative[32] - The consumer segment incurred special charges of $8.4 million for the three months ended May 31, 2023, compared to $10.7 million in the same period of 2022[39] Debt and Financing - The company issued $500 million in unsecured senior notes at a 4.950% interest rate, with net proceeds of $496.4 million used to repay commercial paper borrowings[41] - The company has a 364-day $500 million revolving credit facility, with current pricing at SOFR + 1.23%[42] - The carrying amount of long-term debt increased to $4,403.3 million as of May 31, 2023, from $3,912.9 million as of November 30, 2022[58] Segment Performance - The consumer segment sells products under various brands, including "McCormick," "French's," and "Frank's RedHot," while the flavor solutions segment serves food manufacturers and the foodservice industry[74] - The consumer segment generated net sales of $912.1 million for the three months ended May 31, 2023, compared to $866.1 million in the same period of 2022, marking a 5.3% increase[78] - The flavor solutions segment reported net sales of $747.1 million for the three months ended May 31, 2023, up from $670.7 million in the prior year, representing an 11.4% increase[78] Other Comprehensive Income - The accumulated other comprehensive loss decreased to $(431.5) million as of May 31, 2023, from $(480.6) million in November 2022, primarily due to a $62.2 million decrease in foreign currency translation adjustments[72] - The net amount of accumulated other comprehensive loss expected to be reclassified in the next 12 months is $1.3 million, which will decrease earnings[53] Stock-Based Compensation - Stock-based compensation for the three months ended May 31, 2023, was $26.7 million, compared to $25.8 million in the same period of 2022, showing a 3.5% increase[22] - The total intrinsic value of all options exercised during the six months ended May 31, 2023, was $7.4 million, compared to $38.2 million in the same period of 2022[62] - The weighted-average grant-date fair value of stock options granted in 2023 was $19.35, down from $22.14 in 2022, with risk-free interest rates increasing to 3.5% - 4.9% from 0.2% - 2.5%[62] Tax and Benefits - For the six months ended May 31, 2023, the company recognized $6.8 million in net discrete tax benefits, including $3.2 million from the adjustment of a valuation allowance[66] - Income tax expense for the six months ended May 31, 2023, included $6.8 million of net discrete tax benefits, primarily from adjustments related to deferred tax assets and tax settlements[66]

PART I – FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) For Q1 2023, McCormick & Company reported increased net sales but decreased operating and net income, alongside stable total assets and significantly improved operating cash flow [Condensed Consolidated Income Statement](index=5&type=section&id=Condensed%20Consolidated%20Income%20Statement) For Q1 2023, net sales increased, but higher costs and special charges resulted in a decline in operating income, net income, and diluted EPS Q1 2023 vs Q1 2022 Income Statement Highlights (in millions, except per share amounts) | Metric | Three months ended Feb 28, 2023 | Three months ended Feb 28, 2022 | | :--- | :--- | :--- | | **Net sales** | $1,565.5 | $1,522.4 | | **Gross profit** | $562.9 | $560.4 | | **Operating income** | $199.0 | $206.9 | | **Net income** | $139.1 | $154.9 | | **Earnings per share – diluted** | $0.52 | $0.57 | [Condensed Consolidated Balance Sheet](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) As of February 28, 2023, total assets slightly increased, while total liabilities decreased and total shareholders' equity rose compared to November 30, 2022 Balance Sheet Summary (in millions) | Metric | February 28, 2023 (unaudited) | November 30, 2022 | | :--- | :--- | :--- | | **Total current assets** | $2,411.3 | $2,386.7 | | **Total assets** | $13,205.4 | $13,124.9 | | **Total current liabilities** | $3,321.0 | $3,432.4 | | **Total liabilities** | $8,317.7 | $8,425.7 | | **Total shareholders' equity** | $4,887.7 | $4,699.2 | [Condensed Consolidated Cash Flow Statement](index=8&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) For Q1 2023, net cash provided by operating activities significantly increased, while net cash used in investing activities rose, and financing activities shifted to a net outflow compared to the prior year Cash Flow Summary (in millions) | Metric | Three months ended Feb 28, 2023 | Three months ended Feb 28, 2022 | | :--- | :--- | :--- | | **Net cash flow provided by operating activities** | $103.4 | $17.9 | | **Net cash flow used in investing activities** | $(61.5) | $(43.7) | | **Net cash flow (used in) provided by financing activities** | $(44.7) | $4.4 | | **Increase (decrease) in cash and cash equivalents** | $22.8 | $(13.3) | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details key accounting policies, special charges primarily from the GOE program, the use of derivative financial instruments, and segment performance for Consumer and Flavor Solutions - The company recorded special charges of **$27.8 million** in Q1 2023, a year-over-year increase from **$19.5 million**. These charges were primarily driven by the Global Operating Effectiveness (GOE) program (**$24.8 million**) and the transition of a manufacturing facility in EMEA[31](index=31&type=chunk) - The company utilizes derivative financial instruments, including foreign currency exchange contracts with a notional value of **$509.6 million** and interest rate swaps with a notional value of **$600.0 million** as of February 28, 2023, to manage market risks[40](index=40&type=chunk)[45](index=45&type=chunk) Segment Performance (in millions) | Segment | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | :--- | | **Consumer** | Net Sales | $909.5 | $926.1 | | | Operating Income (adj.) | $173.4 | $167.0 | | **Flavor Solutions** | Net Sales | $656.0 | $596.3 | | | Operating Income (adj.) | $53.4 | $60.1 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=21&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the impact of global economic conditions, inflation, and supply chain disruptions, projecting sales and operating income growth for fiscal 2023 through pricing and cost-saving initiatives, with Q1 consolidated sales increasing due to pricing, showing mixed segment performance [Overview and 2023 Outlook](index=21&type=section&id=Overview%20and%202023%20Outlook) The company is navigating inflationary and supply chain challenges by implementing pricing actions and cost-saving programs like GOE, with a positive 2023 outlook projecting significant growth in sales, operating income, and adjusted diluted EPS - Key business challenges include a persistent inflationary cost environment and supply chain disruptions. The company is mitigating these through pricing actions and cost savings from its Comprehensive Continuous Improvement (CCI) and Global Operating Effectiveness (GOE) programs[77](index=77&type=chunk)[80](index=80&type=chunk)[83](index=83&type=chunk) Fiscal Year 2023 Outlook | Metric | Projected Growth/Range | | :--- | :--- | | **Net Sales Growth** | 5% to 7% | | **Operating Income Growth** | 10% to 12% | | **Adjusted Operating Income Growth** | 9% to 11% | | **Adjusted Diluted EPS** | $2.56 to $2.61 | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Consolidated net sales for Q1 2023 increased, driven by pricing actions offset by volume/mix declines and a divestiture, while gross profit margin decreased, and segment performance showed a sales decline for Consumer but growth for Flavor Solutions Components of Consolidated Net Sales Change (Q1 2023 vs Q1 2022) | Component | Percentage Change | | :--- | :--- | | **Pricing actions** | 10.6% | | **Volume and product mix** | (4.6)% | | **Divestiture** | (0.7)% | | **Foreign exchange** | (2.5)% | | **Total Net Sales Increase** | **2.8%** | - The Consumer segment's sales decreased by **1.8%** due to unfavorable volume/mix (**-6.8%**) and the divestiture of Kitchen Basics (**-1.1%**), which more than offset strong pricing actions (**+8.7%**). However, segment operating income margin improved by **110 basis points** to **19.1%**[107](index=107&type=chunk)[112](index=112&type=chunk) - The Flavor Solutions segment's sales grew **10.0%**, driven by significant pricing actions (**+13.5%**). Despite the sales growth, segment operating income margin decreased by **200 basis points** to **8.1%** due to lower gross margin and higher SG&A expenses[113](index=113&type=chunk)[117](index=117&type=chunk) [Liquidity and Financial Condition](index=31&type=section&id=Liquidity%20and%20Financial%20Condition) The company maintains strong liquidity, evidenced by a significant increase in operating cash flow and a prudent capital structure, with sufficient sources to meet obligations for the next twelve months, including amounts related to its Supply Chain Financing program - Net cash provided by operating activities increased by **$85.5 million** to **$103.4 million** in Q1 2023 compared to the same period in 2022, primarily due to lower payments for employee benefits accrued at the prior year-end[140](index=140&type=chunk) - The company utilizes a Supply Chain Financing (SCF) program. As of February 28, 2023, amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately **$320.1 million**[142](index=142&type=chunk) - The company maintains two committed revolving credit facilities: a **$1.5 billion** facility expiring in June 2026 and a **$500 million** facility expiring in July 2023, which support its commercial paper program and general corporate needs[152](index=152&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=36&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company reports no significant changes in its market risk exposures since November 30, 2022, actively managing key risks including foreign exchange, interest rate, commodity price, and credit risk - There have been no significant changes in the company's financial instrument portfolio or market risk exposures since the fiscal year ended November 30, 2022[165](index=165&type=chunk) - The company is exposed to foreign currency risk, interest rate risk, commodity price volatility, and credit risk. It uses derivative financial instruments, such as forward contracts and swaps, to manage these exposures[118](index=118&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=36&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of February 28, 2023, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[166](index=166&type=chunk) - No changes occurred in the company's internal control over financial reporting during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[167](index=167&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reports no material pending legal proceedings involving itself or its subsidiaries - There are no material pending legal proceedings in which the company or its subsidiaries is a party or in which any of their property is the subject[169](index=169&type=chunk) [ITEM 1A. RISK FACTORS](index=38&type=section&id=ITEM%201a.%20RISK%20FACTORS) No material changes have occurred in the company's risk factors since its Annual Report on Form 10-K for the fiscal year ended November 30, 2022 - No material changes have occurred in the company's risk factors since the filing of its Form 10-K for the fiscal year ended November 30, 2022[170](index=170&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q1 2023, the company repurchased **60,514** shares of Common Stock for approximately **$4.76 million**, with **$532.4 million** remaining under the November 2019 share repurchase authorization as of February 28, 2023 Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased (CS) | Average Price Paid per Share | | :--- | :--- | :--- | | Dec 2022 | 23,164 | $84.25 | | Jan 2023 | 0 | — | | Feb 2023 | 37,350 | $75.26 | | **Total** | **60,514** | **$78.70** | - As of February 28, 2023, **$532.4 million** remained of the **$600 million** share repurchase authorization approved by the Board of Directors in November 2019[174](index=174&type=chunk) [OTHER ITEMS (3, 4, 5)](index=39&type=section&id=ITEM%203,%204,%205) The company reported no defaults on senior securities, no applicable mine safety disclosures, and no other material information for the quarter - The company reports no defaults on senior securities, no applicable mine safety disclosures, and no other material information for the quarter[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) [ITEM 6. EXHIBITS](index=40&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, security holder rights instruments, material contracts, and CEO/CFO certifications required by the Sarbanes-Oxley Act of 2002 - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, affirming the accuracy and completeness of the financial statements[187](index=187&type=chunk) - Financial statements and notes are provided in Inline XBRL format for data accessibility and analysis[188](index=188&type=chunk)[189](index=189&type=chunk)

Acquisitions - McCormick completed the acquisition of FONA International for approximately $708 million, with FONA's annual sales at the time of acquisition being around $114 million[12]. - The acquisition of Cholula Hot Sauce was finalized for about $801 million, with Cholula's annual sales at the time being approximately $96 million[13]. - The company anticipates that acquisitions will contribute approximately one-third of its sales growth over time, having completed four acquisitions since 2017[148]. Financial Performance - In 2022, net sales increased by 0.5% to $6,350.5 million, with pricing actions contributing 7.7% to sales growth, while volume and product mix negatively impacted sales by 4.5%[163]. - The company's gross profit margin for 2022 was 35.8%, a decrease of 370 basis points from 39.5% in 2021, primarily due to increased costs and pricing actions[164]. - Operating income in 2022 was $863.6 million, down from $1,015.1 million in 2021, with adjusted operating income decreasing by 16.7% to $917.4 million[154]. - The company reported diluted earnings per share of $2.52 in 2022, down from $2.80 in 2021, reflecting a decrease in operating income and other factors[176]. - The effective tax rate for 2023 is projected to be 22%, up from 20.7% in 2022[160]. Sales Segments - In 2022, the consumer segment contributed approximately 59% of consolidated net sales and 80% of consolidated operating income, while the flavor solutions segment contributed about 41% of consolidated net sales and 20% of consolidated operating income[15]. - Approximately two-thirds of consumer segment sales are from spices, seasonings, and condiments, with McCormick being a global brand leader in these categories[16]. - Consumer segment net sales fell by 4.6% to $3,757.9 million in 2022, with a 9.3% decline in volume and product mix, partially offset by a 7.4% increase from pricing actions[179]. - Flavor solutions segment net sales increased by 8.9% in 2022 to $2,592.6 million, compared to $2,380.4 million in 2021[184]. Market and Economic Conditions - The company anticipates continued challenges from inflationary pressures, particularly in commodity, packaging, and transportation costs, which may impact gross margins[44]. - The ongoing conflict between Russia and Ukraine poses potential risks for broader economic disruption, affecting the company's operations and market conditions[44]. - The ongoing conflict between Russia and Ukraine has increased global economic uncertainty, prompting the company to suspend operations in Russia and pause operations in Ukraine[143]. Operational Challenges - The company faces risks related to supply chain disruptions, including labor shortages and the ability to obtain necessary raw materials[50]. - Labor shortages and increased turnover rates may lead to higher operational costs and negatively impact manufacturing efficiency[66]. - The company is experiencing increased competition from private label brands, which could impact its market share and brand relevance[52]. Strategic Initiatives - The company is focused on product innovation and customer engagement to differentiate itself in a highly competitive market[32]. - The company is implementing a multi-year business transformation initiative to enhance global processes and reduce costs, including a significant upgrade to its enterprise resource planning (ERP) system[105]. - The company is focused on improving productivity through its Comprehensive Continuous Improvement (CCI) program and Global Operating Effectiveness Program (GOEP)[44]. Regulatory and Compliance Issues - The company is subject to extensive regulations regarding food products, which may increase compliance costs and impact financial performance[107]. - Increased scrutiny on ESG policies may adversely affect the company's reputation and financial condition if it fails to meet evolving stakeholder expectations[87]. - The California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) impose strict requirements on data privacy, with potential civil penalties for non-compliance[110]. Debt and Financial Obligations - As of November 30, 2022, the company had total outstanding variable rate debt of approximately $1,295 million, including $1,237 million of short-term borrowings, at a weighted-average interest rate of approximately 4.2%[91]. - The company's total outstanding indebtedness is approximately $5.1 billion as of November 30, 2022, which may limit its ability to issue additional debt and meet debt service requirements[93]. - Increased costs from pension obligations could reduce cash available for operations, impacting financial condition and liquidity[81]. Future Projections - The company projects 2023 net sales growth of 5% to 7%, driven by pricing actions and a minimal impact from foreign currency rates[156]. - The expected increase in operating income for 2023 is 10% to 12%, with a target of approximately $85 million in cost savings from the CCI program[158]. - The company expects to eliminate approximately $125 million in costs during 2023 and 2024, including $100 million in supply chain costs[138].