McCormick(US:MKC)2020-09-29 20:47Financial Performance - Net sales for the three months ended August 31, 2020, increased to $1,430.3 million, up 7.6% from $1,329.2 million in the same period of 2019[9] - Gross profit for the nine months ended August 31, 2020, was $1,639.7 million, representing a 8.2% increase from $1,515.3 million in 2019[9] - Operating income for the three months ended August 31, 2020, was $273.0 million, a 7.7% increase compared to $253.5 million in 2019[9] - Net income for the nine months ended August 31, 2020, rose to $546.7 million, up 11.7% from $489.3 million in 2019[11] - Earnings per share (EPS) for the three months ended August 31, 2020, increased to $1.55, compared to $1.45 in the same period of 2019[9] - For the three months ended August 31, 2020, net income was $206.1 million, compared to $191.9 million for the same period in 2019, representing a 7.0% increase[18] - The company reported a net income of $546.7 million for the nine months ended August 31, 2020, compared to $489.3 million for the same period in 2019, reflecting an increase of 11.7%[19] - The company recorded a total operating income of $724.6 million for the nine months ended August 31, 2020, compared to $658.5 million for the same period in 2019, marking a 10.0% increase[93] Cash and Assets - Cash and cash equivalents at the end of the period were $221.0 million, up from $162.9 million at the end of August 31, 2019[14] - Total assets as of August 31, 2020, were $10,860.7 million, an increase from $10,366.0 million in 2019[14] - Total liabilities as of August 31, 2020, were $6,914.7 million, compared to $6,885.4 million in 2019[14] - The total shareholders' equity as of August 31, 2020, was $3,946.0 million, up from $3,480.6 million a year earlier, indicating a growth of 13.4%[18] - The balance of retained earnings increased to $2,391.0 million as of August 31, 2020, up from $2,019.8 million a year earlier, representing a growth of about 18.4%[18] Dividends and Share Repurchase - The company declared cash dividends of $0.62 per share for the three months ended August 31, 2020, up from $0.57 in 2019[9] - Dividends paid during the nine months ended August 31, 2020, totaled $165.0 million, compared to $151.1 million in the same period of 2019, marking an increase of 9.3%[19] - The company declared dividends totaling $82.6 million for the three months ended August 31, 2020, compared to $75.6 million in the same period of 2019, indicating a year-over-year increase of approximately 9.3%[18] - Shares purchased and retired during the three months ended August 31, 2020, totaled $28.6 million, compared to $18.3 million in the same period of 2019, reflecting an increase of approximately 56.5%[18] - As of August 31, 2020, the company had $586.0 million remaining from the $600 million share repurchase program authorized in November 2019[85] Segment Performance - The consumer segment generated net sales of $910.9 million for the three months ended August 31, 2020, up from $794.2 million in the prior year, representing a 14.6% increase[92] - The flavor solutions segment reported net sales of $519.4 million for the three months ended August 31, 2020, down from $535.0 million in the same period of 2019, indicating a decrease of 2.4%[92] - For the nine months ended August 31, 2020, consumer segment sales increased by 11.7% compared to the same period in 2019, driven by a shift in consumer behavior towards at-home meal preparation[135] - The flavor solutions segment experienced a 5.7% decline in sales for the nine months ended August 31, 2020, due to lower demand during the COVID-19 disruption[143] Special Charges and Costs - Special charges for the three months ended August 31, 2020, were $0.1 million, significantly lower than $7.7 million in the same period of 2019[34] - The company incurred $1.1 million in special charges related to the GE initiative during the nine months ended August 31, 2020[39] - For the nine months ended August 31, 2020, the company recorded special charges of $4.0 million, including $2.9 million for streamlining actions in the EMEA region and $1.1 million related to the GE initiative[39] Future Projections - The company projects 2020 sales growth at the upper end of a 4% to 5% range, with an estimated 1% unfavorable impact from currency rates, translating to 5% to 6% growth on a constant currency basis[107] - Anticipated operating income for 2020 is expected to increase by 6% to 7%, reflecting lower special charges estimated at $7.0 million compared to $20.8 million in 2019[108] - Adjusted diluted earnings per share for 2020 are projected to range from $5.60 to $5.68, representing a growth of 5% to 7% over the adjusted diluted earnings per share of $5.35 in 2019[110] - The effective tax rate for 2020 is projected to be approximately 20%, including the impact of discrete tax items[109] Cash Flow and Financing - Net cash flow provided by operating activities for the nine months ended August 31, 2020, was $626.7 million, compared to $494.6 million in 2019[16] - Cash used in investing activities rose to $143.3 million for the nine months ended August 31, 2020, compared to $104.5 million in the prior year, an increase of 37.1%[172] - Financing activities used cash of $432.7 million in the first nine months of 2020, compared to $319.2 million in the same period of 2019, reflecting a 35.5% increase[173] - The average short-term borrowings outstanding for the nine months ended August 31, 2020, were $567.3 million, down from $839.0 million in the same period of 2019, a decrease of 32.3%[179] Market Conditions and Risks - The impact of COVID-19 led to increased demand in the consumer segment, while the flavor solutions segment faced decreased demand due to restaurant closures, affecting overall performance[26] - The company is exposed to foreign exchange risks, with a notional value of forward foreign currency contracts at $363.4 million as of August 31, 2020[148] - Interest rate swap contracts had a notional value of $350.0 million as of August 31, 2020, with an unrealized net gain of $45.6 million[150]