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 ...

Core Insights - The housing market is currently weak, facing challenges such as affordability issues, low consumer confidence, and depressed commodity prices, leading to a decline in sales and starts [2][18] - Despite macroeconomic pressures, the company remains focused on growth, operational excellence, and strategic investments to enhance its competitive position [3][4][27] - The company has successfully navigated through a challenging environment by maintaining profitability and investing in technology and value-added solutions [3][4][7] Market Conditions - The housing market is characterized by more headwinds than tailwinds, with sales falling more than expected in late 2025 due to builders delaying starts to manage excess inventory [2][18] - Economists have mixed outlooks for 2026, with some predicting further declines in single-family starts while others expect modest growth amid uncertain macro conditions [2] - Commodity prices have dropped significantly, with a composite below $350 per thousand board feet as of late 2025, impacting overall market dynamics [2] Financial Performance - For Q4 2025, net sales decreased by 12% to $3.4 billion, driven by a 15% decline in single-family sales and a 20% decline in multifamily sales [18] - Gross profit for Q4 was $1 billion, a 19% decrease year-over-year, with a gross margin of 29.8%, down 250 basis points [19] - Adjusted EBITDA was $275 million, down approximately 44%, with an adjusted EBITDA margin of 8.2%, reflecting lower gross profit margins [21] Strategic Initiatives - The company invested over $110 million in new and upgraded value-added operations in 2025, focusing on enhancing capabilities and expanding its footprint [7] - A total of 25 facilities were consolidated in 2025, with a focus on maximizing operational flexibility and reducing capital expenditures [6] - The company has made 40 acquisitions since the BMC merger in 2021, representing over $2.3 billion in annual sales, indicating a strong commitment to growth through M&A [10][11] Technology and Innovation - The company is investing in digital solutions and technology to enhance customer experience and streamline operations, processing nearly $7 billion in quotes through its digital platform in 2025 [12][13] - Ongoing implementation of SAP is expected to improve operational efficiency, with plans for broader deployment in 2026 [14] - AI initiatives are being integrated to enhance estimating processes and improve sales efficiency, although headcount reductions have not been significant [69][71] 2026 Outlook - The company expects net sales for 2026 to be in the range of $14.8 billion to $15.8 billion, with adjusted EBITDA projected between $1.3 billion and $1.7 billion [23] - Gross margin for 2026 is anticipated to be between 28.5% and 30%, reflecting the ongoing challenges in the housing market [24] - Free cash flow is expected to be approximately $500 million, influenced by a shift in working capital dynamics compared to 2025 [24][22]

Financial Data and Key Metrics Changes - For Q4 2025, net sales decreased by 12% to $3.4 billion, driven by lower core organic sales and commodity deflation, partially offset by growth from acquisitions [19] - Gross profit was $1 billion, a decrease of 19% year-over-year, with a gross margin of 29.8%, down 250 basis points [22] - Adjusted EBITDA was $275 million, down approximately 44%, with an adjusted EBITDA margin of 8.2%, down 470 basis points from the prior year [23] - Adjusted EPS was $1.12, a decrease of 52% compared to the prior year [23] - Operating cash flow was $195 million, down $179 million, with free cash flow of $109 million for the quarter and $874 million for the year [24] Business Line Data and Key Metrics Changes - Core organic sales decreased by 15% in single-family and 20% in multifamily, with repair and remodel down 7% [20] - The company consolidated 25 facilities in 2025, maintaining an on-time and in-full delivery rate of 92% [9] - The install business remained around 16%-17% of overall business, outpacing the market decline [85] Market Data and Key Metrics Changes - The housing market remains weak, characterized by affordability challenges, muted consumer confidence, and depressed commodity prices [6] - Commodity prices for OSB were below $350 per thousand board foot as of the end of 2025 [7] - The company expects single-family and multifamily starts to be flat year-over-year in 2026, with repair and remodel up 1% [25] Company Strategy and Development Direction - The company is focused on reducing barriers to affordable housing and driving a more efficient, integrated supply chain [4] - Investments of over $110 million were made in new, expanded, or upgraded value-added operations across the footprint [10] - The company aims to pursue acquisitions that expand value-added product offerings and advance leadership in desirable geographies [11] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing housing affordability challenges and a weak market environment impacting sales [6] - The outlook for 2026 is cautious, with expectations for modest growth amid macroeconomic uncertainties [7] - The company remains committed to advancing its strategy with a focus on growth, continuous improvement, and innovation [8] Other Important Information - The company has made 40 acquisitions since the BMC merger in 2021, representing over $2.3 billion in annual sales [14] - Digital investments have processed nearly $7 billion of quotes, reflecting a year-over-year increase of over 130% [15] - The company is implementing SAP across its operations, with plans for broader deployment in 2026 [16] Q&A Session Summary Question: Can you discuss the cadence of the year and expectations for single-family versus R&R? - Management indicated a slow exit from 2025, with expectations for a ramp-up in the first half of 2026, particularly in single-family starts [33][34] Question: Can you provide more detail on the cost actions planned for this year? - Cost actions are primarily SG&A related, with most already executed, and benefits expected to materialize throughout the year [36] Question: What are the dynamics driving gross margin expectations? - Management noted that gross margins have been stable, but Q1 may see volatility due to seasonal factors and contract resets [40][42] Question: How should incremental margins be viewed as volume returns? - Management expects higher than average incremental margins due to operational leverage as the market grows [51] Question: What is the outlook for modular housing and the acquisition of Pleasant Valley Homes? - The acquisition is seen as a strategic move to enhance modular housing capabilities, focusing on partnerships with builders rather than traditional retail [63][65]

Group 1 - The Technology Innovators Fund experienced mixed performance in Q4 2025, with top ten holdings making up approximately 59% of assets, while facing challenges from high-valuation innovation names due to slowing momentum and investor risk aversion [1] - The fund's portfolio declined by 6.3% quarter-to-date, but achieved a 14.7% return over the year, indicating stock-specific challenges rather than broad macroeconomic issues [1] - Management highlighted a long-term investment strategy with an average annual portfolio turnover of 21%, noting that many companies in the portfolio continued to show solid earnings growth in 2025, driven by revenue models linked to AI, cloud computing, and digital transformation [1] Group 2 - Cloudflare, Inc. (NYSE:NET) was highlighted as a key stock in the fund's Q4 2025 investor letter, with a one-month return of 6.34% and a market capitalization of approximately $68.92 billion [2] - The stock traded between $89.42 and $260.00 over the last 52 weeks, closing at around $195.85 per share on February 13, 2026 [2] - The increasing frequency and sophistication of cyberattacks have made security a core operational requirement for enterprises, governments, and individuals, emphasizing the importance of cybersecurity in the current landscape [3]

Core Insights - Rockwell Automation, Inc. (ROK) is a leading provider of industrial automation and digital transformation solutions, with a market cap of $44.3 billion [1] Performance Overview - ROK shares have outperformed the broader market, gaining 32.1% over the past year compared to the S&P 500 Index's 11.8% increase [2] - Year-to-date, ROK stock is up 1.4%, while the S&P 500 has experienced a slight decline [2] - Compared to the Industrial Select Sector SPDR Fund (XLI), which gained 26.3% over the past year, ROK's performance is notable, although the ETF outperformed ROK on a year-to-date basis with a 12.3% gain [3] Financial Performance - ROK reported Q1 results with an adjusted EPS of $2.75, exceeding Wall Street's expectation of $2.54, and revenue of $2.11 billion, surpassing forecasts of $2.09 billion [7] - For the current fiscal year ending in September, analysts project ROK's EPS to grow by 14.9% to $12.10 on a diluted basis [8] - ROK has a strong earnings surprise history, beating consensus estimates in each of the last four quarters [8] Analyst Ratings - Among 25 analysts covering ROK, the consensus rating is a "Moderate Buy," with 11 "Strong Buy" ratings and 14 "Holds" [8] - Recent analysis indicates a slight decrease in bullish sentiment, with 12 analysts recommending a "Strong Buy" and one suggesting a "Strong Sell" [9] - Mizuho Financial Group analyst maintained a "Hold" rating with a price target of $400, indicating a potential upside of 1.4% from current levels [9] Growth Drivers - ROK's performance is attributed to strong demand for automation and software solutions, with double-digit sales growth in core products like Logix controllers and motion solutions [6] - The company has seen significant growth in software, particularly in recurring revenue from sectors such as automotive, life sciences, and energy [6] - Management is focusing on AI integration and productivity initiatives to enhance efficiency [6]

Core Insights - The Technology Innovators Fund experienced mixed performance in Q4 2025, with a portfolio decline of 6.3% quarter-to-date and a 14.7% return over the year, driven by a narrow group of large-cap growth stocks [1] - The fund's top ten holdings represented approximately 59% of assets, indicating a concentration in a few key stocks [1] - Stock-specific challenges were noted, particularly in emerging technology holdings, while select platform and infrastructure businesses showed strength [1] Fund Performance - The fund's results were attributed to stock-specific challenges rather than broad macroeconomic shocks, with certain high-valuation innovation names facing pressure from slowing momentum and investor risk aversion [1] - The average annual portfolio turnover was reported at 21%, reflecting a long-term investment strategy [1] - Many portfolio companies continued to show solid full-year earnings growth in 2025, supported by durable revenue models related to artificial intelligence, cloud computing, and digital transformation [1] Klaviyo, Inc. Insights - Klaviyo, Inc. (NYSE:KVYO) was highlighted as a key stock, with a one-month return of -21.91% and a market capitalization of approximately $5.669 billion as of February 13, 2026 [2] - The company reported a 32% sequential revenue growth in Q3 2025, with net revenue expansion improving for the first time since Q3 2021 [3] - Management emphasized strong performance metrics, including international acceleration and record mid-market customer wins, while the stock price has not yet reflected the company's underlying momentum [3]

Core Insights - The Sands Capital Technology Innovators Fund experienced mixed performance in Q4 2025, with a portfolio decline of 6.3% quarter-to-date and a 14.7% return over the year, driven by a narrow group of large-cap growth stocks [1] - The fund's top ten holdings represented approximately 59% of its assets, indicating a concentration in a few key stocks [1] - The performance challenges were attributed to stock-specific issues rather than broad macroeconomic factors, with certain emerging technology holdings underperforming while platform and infrastructure businesses showed strength [1] Fund Performance - The fund's average annual portfolio turnover was noted to be 21%, reflecting a long-term investment strategy [1] - Despite the mixed performance, many portfolio companies continued to show solid full-year earnings growth in 2025, supported by revenue models linked to artificial intelligence, cloud computing, and digital transformation [1] Company Highlight: Palo Alto Networks, Inc. - Palo Alto Networks, Inc. is recognized as a leader in cybersecurity, providing advanced network, cloud, and AI-driven security solutions globally [2][3] - The stock of Palo Alto Networks, Inc. had a one-month return of -11.04%, with shares trading between $144.15 and $223.61 over the past 52 weeks [2] - As of February 13, 2026, Palo Alto Networks, Inc. closed at approximately $166.95 per share, with a market capitalization of about $134.91 billion [2] - The company is transitioning from a focus on network security to a broader, cloud-delivered platform aimed at securing complex hybrid environments [3]

Core Insights - Sands Capital Management's Technology Innovators Fund experienced mixed performance in Q4 2025, with top ten holdings comprising approximately 59% of assets, indicating a concentration in large-cap growth stocks [1] - The fund's portfolio declined by 6.3% quarter-to-date, but achieved a 14.7% return over the year, reflecting stock-specific challenges rather than macroeconomic shocks [1] - The management emphasized a long-term investment strategy with an average annual portfolio turnover of 21%, highlighting continued earnings growth in 2025 driven by sectors like artificial intelligence and cloud computing [1] Company Highlights - Quanta Services, Inc. (NYSE:PWR) was noted for its engineering and construction services in utilities and energy infrastructure, achieving a one-month return of 12.28% [2] - The stock of Quanta Services, Inc. traded between $227.08 and $524.08 over the past 52 weeks, closing at approximately $515.88 on February 13, 2026, with a market capitalization of about $78.15 billion [2] - The fund is expanding its focus on energy supply, including companies like Quanta Services, which supports power demand through transmission and distribution initiatives [3]

Sands Capital Management, LLC's Technology Innovators Fund released its Q4 2025 investor letter for "Technology Innovators Fund". A copy of the letter can be downloaded here. The Fund delivered mixed performance during the fourth quarter of 2025, as market returns were increasingly driven by a narrow group of large-cap growth stocks, with the portfolio’s top ten holdings accounting for roughly 59% of assets, while several high-valuation innovation names faced pressure from slowing momentum and investor risk ...

Core Insights - EPAM Systems has launched Empathy Lab in North America to assist Chief Marketing Officers (CMOs) in leveraging AI for business growth and transformation [1] - The agency aims to unify marketing, product, and technology through AI-powered platforms that emphasize human insight [1] - Empathy Lab's approach is designed to help brands maintain differentiation and build lasting customer relationships in an increasingly AI-driven market [1] Company Overview - EPAM Systems, Inc. is a leading digital and AI transformation company, recognized for its software engineering expertise and digital strategy services [2] - The company has been operational since 1993 and has established itself as a key player in digital engineering, cloud, and AI-enabled transformation services [2] - EPAM has been included in the S&P 500 and Forbes Global 2000, and is recognized as a top IT vendor in Europe [2] Empathy Lab's Objectives - Empathy Lab aims to help CMOs navigate the complexities of integrating AI into marketing strategies, focusing on connecting siloed functions and enhancing customer experiences [1] - The agency offers a suite of AI-powered tools designed to support various stages of the marketing lifecycle, from insights and planning to content and measurement [1] - Recent projects include empowering over 700 marketers at Reckitt and developing an Agentic Retail Media Platform for a major UK supermarket [1] Leadership and Expansion - Ben Hall has been appointed as the Head of Empathy Lab for North America, bringing over 20 years of experience in enterprise growth [1] - The North American launch follows a successful inaugural year in Europe, where Empathy Lab partnered with global brands and agency groups [1] - The focus is on providing integrated services that combine creativity, technology, and human insight to enhance marketing effectiveness [1]