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]
McCormick(MKC_V) - 2024 Q1 - Quarterly Report