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]
McCormick(MKC_V) - 2023 Q2 - Quarterly Report