Company Overview - McCormick is recognized as one of the few large-cap packaged food companies that has achieved consistent volume growth despite a challenging broader packaged food environment [4] Management Insights - Brendan Foley, Chairman, President, and CEO of McCormick, emphasizes that the company does not compete for calories but rather focuses on flavoring them [4] Future Plans - The company is expected to share more about its plans for the fiscal year, including the implementation of additional pricing strategies [4]

Summary of McCormick & Company 2026 Conference Call Company Overview - **Company**: McCormick & Company (NYSE: MKC) - **Industry**: Packaged Food - **Date of Conference**: February 17, 2026 Key Points Industry Position and Growth - McCormick is recognized as a global leader in flavor, delivering consistent volume growth in a challenging packaged food environment [2][4] - The company emphasizes that it competes with flavor rather than calories, differentiating itself from peers [3][7] - The global demand for flavor is projected to grow by 5%-7%, with a market growth of 35% within McCormick's current geographic footprint [10] Financial Performance - From 2015 to 2025, McCormick achieved a 12% organic sales growth, with a compounded annual growth rate of 6% [36][37] - The company expects to maintain organic sales growth of 3%-4% in 2026, driven by new products and increased brand marketing [49][50] - Operating income margins are anticipated to improve through operating leverage and cost savings initiatives [50] Strategic Initiatives - McCormick is focused on digital transformation, leveraging data and AI to enhance innovation, operations, and consumer engagement [12][41] - The company is committed to sustainability and health trends, aiming to meet consumer demands for healthier options [32][33] - McCormick's Flavor Solutions segment is central to its growth strategy, emphasizing partnerships with customers to reformulate products [31] Brand and Product Innovation - McCormick holds the number one brand position in spices, seasonings, hot sauce, and mustard, with strong household penetration [16] - The company is innovating with new flavors and packaging, including the McCormick Gourmet collection and modernized seasoning blends [20][23] - Marketing campaigns, particularly for Frank's RedHot, have successfully engaged younger consumers, driving brand loyalty [22][29] Acquisitions and Market Expansion - Recent acquisitions, including a majority stake in McCormick de Mexico, are expected to contribute to both top and bottom-line growth [46][49] - The company maintains a disciplined approach to acquisitions, with a focus on enhancing its portfolio and market presence [47] Challenges and Outlook - McCormick faces cost pressures from inflation and increased tax rates, but is implementing strategies to offset these challenges [39][48] - The company remains confident in its ability to deliver on its long-term objectives, reaffirming targets of 4%-6% net sales growth and 8%-11% earnings per share growth [51] Conclusion - McCormick is well-positioned to capitalize on the growing demand for flavor, supported by a strong brand portfolio, innovative product offerings, and strategic initiatives aimed at enhancing profitability and market reach [52]

McCormick & Company, Inc. CAGNY I February 17, 2026 Forward-looking Information Certain information contained in this presentation, including statements concerning expected performance such as those relating to net sales, gross margin, earnings, cost savings, special charges including transaction and integration expenses, acquisitions, brand marketing support, volume and product mix, income tax expense, and the impact of foreign currency rates are "forward-looking statements" within the meaning of Section 2 ...

Group 1 - PepsiCo's snack division, Frito-Lay, is struggling due to the impact of GLP-1 weight loss drugs, prompting concerns about the company's future performance [1] - CEO Ramon Laguarta may take significant actions to reduce the company's reliance on snacks, indicating potential strategic shifts [1] - Despite these challenges, PepsiCo's stock closed nearly five points higher, suggesting market optimism or a broader positive trend following a strong quarter from Colgate [1] Group 2 - The market is currently seeing declines in traditional safety stocks, with PepsiCo down over 8% for the year, although it has a 4% yield and is under pressure from an activist firm [3] - Comparatively, other companies like Conagra have experienced even steeper declines, with a nearly 33% drop, highlighting the challenging environment for food and beverage stocks [3]

Core Insights - McCormick & Co. is increasing prices in its consumer goods segment due to rising costs from tariffs and ingredients [1][2] - Price increases are expected to contribute more significantly to growth in 2026 compared to 2025, as the company has not fully passed on tariff costs [2] Company Actions - McCormick plans to implement targeted price increases starting in February 2025, with additional increases anticipated [2] - Other companies in the spice and seasoning industry, such as B&G Foods and International Flavors & Fragrances, are also raising prices due to similar cost pressures [5][6] Market Trends - The U.S. seasoning and spice market, valued at approximately $2.9 billion, is projected to grow to $4 billion by 2030, driven by a multicultural population and diverse tastes [4] - Despite rising prices, consumers are still inclined to cook at home as a cost-saving measure, which supports ongoing demand for spices and seasonings [7][8] Consumer Behavior - Consumers, particularly those from low-to-middle income households, are making more frequent shopping trips while purchasing fewer items per trip, indicating a focus on budget management [8] - The importance of flavor in everyday cooking remains strong, with herbs and spices leading in unit consumption [8]

Core Insights - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1][2] - The investment group emphasizes high-yield, dividend growth investment ideas, targeting dividend yields up to 10% [2] Investment Strategy - Earnings season presents opportunities for investors to capitalize on price swings caused by knee-jerk reactions, particularly for those with a medium- to long-term investment horizon [2] - The group provides research on various asset classes including REITs, ETFs, closed-end funds, preferreds, and dividend champions [2] Target Audience - The service is designed for investors seeking dependable monthly income and portfolio diversification [2]

Core Viewpoint - McCormick & Company, Inc. is a leading player in the spices and condiments market, facing competition but maintaining its market position despite recent challenges [1]. Financial Performance - McCormick reported Q4 revenue of $1.85 billion, reflecting a year-over-year increase of 2.9%, driven primarily by a 4.0% sales increase in the Consumer segment [3][6]. - The company experienced an EPS miss in Q4, marking only the second miss in the past three years, which contributed to a decline in share price [2][6]. Market Position and Stock Performance - The current stock price of MKC is $61.20, down by $5.36 or approximately 8.05%, with a market capitalization of around $16.42 billion [5]. - Bernstein has set a price target of $85 for MKC, indicating a potential upside of approximately 38.89% from the current trading price [2][6]. Operational Challenges - McCormick's gross margin is under pressure due to rising commodity costs, tariffs, and investments in capacity expansion, although cost-saving measures have provided some relief [4][6]. - The company's guidance for FY26 is mixed, with lower EPS expectations but higher revenue forecasts, influenced by the acquisition of a controlling interest in McCormick de Mexico [4].

Group 1 - The focus is on producing objective, data-driven research primarily about small- to mid-cap companies, which are often overlooked by many investors [1] - Occasionally, large-cap companies are analyzed to provide a broader perspective on the equity markets [1] Group 2 - There is no current stock, option, or similar derivative position in any of the companies mentioned, but there may be plans to initiate a beneficial long position in MKC within the next 72 hours [2] - The article expresses the author's own opinions and is not influenced by compensation from any company mentioned [2]

Core Viewpoint - McCormick & Company reported disappointing Q4 results, leading to an 8% decline in share price on the day of the announcement, and a nearly 20% loss over the past year [1] Financial Performance - The company's Q4 results did not meet market expectations, resulting in a significant drop in share value [1]

Acquisition and Ownership - McCormick completed the acquisition of an additional 25% ownership interest in McCormick de Mexico for $750 million, increasing its ownership to 75%[12]. - The company acquired an additional 25% ownership in McCormick de Mexico on January 2, 2026, which may present financial and operational challenges[69]. Financial Performance - In 2025, net sales increased by 1.7% to $6,840.3 million compared to $6,723.7 million in 2024, with organic growth of 1.9%[152]. - Operating income for 2025 was $1,070.8 million, reflecting a 1.0% increase from $1,060.3 million in 2024, while adjusted operating income rose by 2.3% to $1,094.0 million[140]. - Diluted earnings per share for 2025 was $2.93, a slight increase from $2.92 in 2024, with adjusted diluted earnings per share rising by 1.7% to $3.00[142]. - Net income for 2025 was $789.4 million, with adjusted net income of $807.1 million, marking a 1.4% increase year-over-year[183]. - The total net sales growth for 2025 was 1.7%, with a constant currency basis growth of 1.9%[190]. Segment Performance - In 2025, the Consumer segment contributed approximately 58% of consolidated net sales and 67% of consolidated operating income, while the Flavor Solutions segment contributed approximately 42% of consolidated net sales and 33% of consolidated operating income[14]. - Consumer segment net sales grew by 2.6% to $3,950.3 million in 2025, driven by a 2.1% increase in volume and product mix[169]. - Flavor Solutions segment net sales increased by 0.5% to $2,890.0 million in 2025, with favorable pricing contributing 1.3% to sales growth[174]. - Segment operating income for the Consumer segment decreased by $5.4 million to $734.9 million, resulting in a margin decline to 18.6%[173]. - Segment operating income for the Flavor Solutions segment rose by $29.6 million to $359.1 million, with an operating margin increase of 90 basis points to 12.4%[178]. Market Presence and Sales - Approximately 39% of McCormick's sales in fiscal year 2025 were from non-U.S. operations, highlighting the company's global market presence[38]. - Sales to Wal-Mart Stores, Inc. accounted for approximately 12% of consolidated sales in 2025, while sales to PepsiCo, Inc. accounted for approximately 12% of consolidated sales in the same year[24]. - Approximately two-thirds of Consumer segment sales are from spices, seasonings, condiments, and sauces, with McCormick being a global brand leader in these categories[15]. Cost and Pricing Challenges - The company faces risks related to its ability to drive revenue growth and manage inflationary pressures on product costs[40]. - The company is exposed to fluctuations in raw material prices, particularly for key ingredients like dairy products, pepper, and soybean oil, which could negatively impact financial results[53]. - The company has experienced inflation in commodity and supply chain costs, including raw materials, packaging, labor, and transportation, and expects inflation to continue at similar levels in 2026 as in 2025[61]. - Increased competition in the food industry may necessitate price reductions, potentially impacting profitability during economic uncertainty[63]. Operational Efficiency and Strategy - The company anticipates growth in net sales and earnings, driven by brand marketing support, product innovation, and expansion in various markets[39]. - The company is focused on leveraging technology and data analytics to enhance marketing and respond to consumer trends effectively[47]. - The company is implementing a multi-year business transformation initiative to enhance global processes and reduce costs, including replacing its enterprise resource planning (ERP) system[96]. - The company expects to continue evaluating organizational changes to reduce fixed costs and improve competitiveness, indicating a focus on operational efficiency[155]. Regulatory and Compliance Issues - The company is subject to numerous regulations globally, impacting safety, production, and distribution of its products[31]. - The company faces potential increased compliance costs due to new or increased legal and regulatory requirements related to environmental issues[83]. - The company has a significant focus on compliance with data privacy laws, including GDPR and CCPA, which could lead to increased financial penalties for non-compliance[100]. Employee and Labor Considerations - As of November 30, 2025, McCormick had approximately 14,100 full-time employees worldwide, with about 400 employees in the U.S. covered by collective bargaining contracts[35]. - Labor shortages and increased turnover rates could lead to higher costs, including overtime and increased wage rates, negatively impacting operational efficiency[60]. Cash Flow and Capital Management - In fiscal 2025, net cash provided by operating activities was $962.2 million, with $517.8 million returned to shareholders through dividends and share repurchases[143]. - The company plans to maintain a prudent capital structure to support growth objectives, utilizing a mix of equity and debt[193]. - Total dividends paid increased to $483.0 million in 2025, with a dividend per share of $1.80, reflecting a 7.1% increase[209]. Cybersecurity and Risk Management - The company has experienced cybersecurity threats and attacks, which could impact operations and business reputation[95]. - The company has implemented a risk-based, multilayered approach to cybersecurity, with no material cybersecurity threats or incidents reported to date[108]. - The company maintains a cybersecurity insurance policy, although it may not cover all potential cyber threats[112]. Future Projections - The company expects net sales growth of 13% to 17% in 2026, driven by the acquisition of a controlling interest in McCormick de Mexico and a 1% favorable impact from foreign currency rates[148]. - Adjusted operating income for 2026 is projected to increase by 16% to 20%, reflecting recovery of adjusted gross margin and cost savings from the CCI program[149].