Financial Performance - Net sales for the three months ended May 31, 2022, were $1,536.8 million, a decrease of 1.8% compared to $1,556.7 million in the same period of 2021[11] - Gross profit for the six months ended May 31, 2022, was $1,083.4 million, down 9.2% from $1,192.1 million in the prior year[11] - Operating income for the three months ended May 31, 2022, was $157.2 million, a decline of 33.7% from $237.4 million in the same period of 2021[11] - Net income for the six months ended May 31, 2022, was $273.4 million, down 20.9% from $345.5 million in the same period of 2021[11] - Earnings per share (diluted) for the three months ended May 31, 2022, were $0.44, compared to $0.68 in the same period of 2021, reflecting a decrease of 35.3%[11] - Operating income for the six months ended May 31, 2022, was $364.1 million, compared to $473.7 million for the same period in 2021, reflecting a decrease of 23.1%[79] - Income from consolidated operations for the three months ended May 31, 2022, was $129.8 million, a decrease from $205.7 million in the same period of 2021, representing a decline of 37%[111] Cash Flow and Dividends - Cash and cash equivalents at the end of the period were $325.8 million, a decrease from $351.7 million at the beginning of the period[18] - The company declared dividends totaling $99.2 million during the six months ended May 31, 2022, consistent with the previous year[31] - Dividends paid increased to $198.2 million, or $0.37 per share, in the first six months of 2022, up from $181.6 million, or $0.34 per share, in the same period last year[168] - Net cash provided by operating activities for the six months ended May 31, 2022, was $154.4 million, down from $228.7 million in the same period of 2021[157] - Net cash used in investing activities for the six months ended May 31, 2022, was $89.2 million, significantly lower than $753.6 million in the same period of 2021[19] Assets and Liabilities - Total assets as of May 31, 2022, were $12,957.9 million, slightly up from $12,905.8 million as of November 30, 2021[15] - Total liabilities decreased to $8,342.8 million from $8,480.3 million as of November 30, 2021[15] - As of May 31, 2022, total shareholders' equity was $4,615.1 million, slightly down from $4,640.8 million as of May 31, 2021[20] Special Charges and Costs - The total special charges for the six months ended May 31, 2022, amounted to $34.6 million, primarily due to the exit of the consumer business in Russia and the transition of a manufacturing facility in EMEA[33] - McCormick recorded $22.2 million in special charges related to the exit of its consumer business in Russia, which included a non-cash impairment charge of $10.0 million for the Kamis brand[34] - Special charges for the three months ended May 31, 2022, totaled $15.1 million, compared to $13.7 million for the same period in 2021, with the consumer segment accounting for $10.7 million[41] 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] - Consumer segment net sales for the three months ended May 31, 2022, decreased by 8.4% to $866.1 million compared to $945.2 million in the same period of 2021[120] - Flavor solutions segment net sales for the three months ended May 31, 2022, were $670.7 million, a 9.7% increase compared to $611.5 million in the same period of 2021[128] Market Conditions and Outlook - The company expects net sales growth in 2022 to be between 3% to 5%, with an estimated 2% unfavorable impact from currency rates[89] - The gross profit margin for 2022 is projected to decline by 130 to 180 basis points from 39.5% in 2021, primarily due to inflationary pressures[90] - The company anticipates that volume and product mix will be negatively impacted by demand disruptions from COVID-related lockdowns in China and the conflict in Ukraine[89] Stock and Compensation - McCormick's stock-based compensation for the three months ended May 31, 2022, was $25.8 million, compared to $28.4 million for the same period in 2021[31] - The total intrinsic value of all options exercised during the six months ended May 31, 2022, was $38.2 million, significantly higher than $4.9 million in the same period of 2021[63] Organizational Changes - The company continues to evaluate changes to its organizational structure to reduce fixed costs and improve competitiveness[30] - Historical trends indicate that net sales and cash flow from operations are typically lower in the first half of the fiscal year and higher in the second half due to seasonal consumer purchasing patterns[25]
McCormick(MKC_V) - 2022 Q2 - Quarterly Report