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]

Core Insights - McCormick reported revenue of $1.85 billion for the quarter ended November 2025, reflecting a year-over-year increase of 2.9% [1] - The company's EPS was $0.86, up from $0.80 in the same quarter last year, but fell short of the consensus estimate of $0.87, resulting in an EPS surprise of -1.29% [1] - The revenue fell slightly below the Zacks Consensus Estimate of $1.86 billion, leading to a revenue surprise of -0.46% [1] Financial Performance - Net Sales in the Flavor Solutions segment were $723 million, slightly below the average estimate of $725.28 million, marking a year-over-year increase of 1.4% [4] - Net Sales in the Consumer segment reached $1.13 billion, exceeding the average estimate of $1.12 billion, with a year-over-year growth of 3.9% [4] - Operating income for Flavor Solutions, excluding special charges, was $86 million, compared to the estimated $93.29 million [4] - Operating income for the Consumer segment was $231 million, below the average estimate of $241.22 million [4] Stock Performance - McCormick's shares have returned -3.4% over the past month, contrasting with the Zacks S&P 500 composite's increase of +0.7% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]

Core Insights - McCormick & Company Inc. (MKC) reported steady growth in its Flavor Solutions segment for Q3 fiscal 2025, with net sales increasing 1% year over year to $752 million, despite challenging industry conditions [1][9] Segment Performance - In the Americas, organic sales for Flavor Solutions rose 0.9% year over year, driven by a 2% contribution from pricing and strong performance with faster-growing flavor customers, although there was a modest decrease in CPG volumes [2] - The Asia-Pacific region saw organic sales grow 6.3% year over year, with 9% volume growth supported by QSR promotions, partially offset by a 3% adverse pricing impact [2] Profitability Trends - Year-to-date profitability in Flavor Solutions is positive, with adjusted operating income up 9.5% (12% on a constant currency basis), but in Q3, it declined 1.8% due to higher commodity costs and tariffs [3] - McCormick anticipates that the Flavor Solutions segment will be the main driver of operating margin expansion in 2025 [3] Market Trends - The company is experiencing strong momentum in health and wellness trends, with increased demand for high-protein and healthy products, leading to partnerships for energy and hydration products, protein-based beverages, and zero-sugar drinks [4] - These consumer trends are expected to support the long-term growth trajectory of the Flavor Solutions segment [4][5] Stock Performance - MKC's shares have declined 13.7% year to date, compared to the industry's decline of 18.9%, and currently holds a Zacks Rank of 3 (Hold) [8] Valuation Metrics - MKC trades at a forward price-to-earnings ratio of 20.87, which is higher than the industry average of 14.53 [10] Earnings Estimates - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings implies a year-over-year rise of 2.4% and 6.5%, respectively [11]

Core Insights - McCormick & Company Inc. (MKC) achieved volume-led growth for the fifth consecutive quarter in Q3 2025, reporting a 2% organic sales growth primarily driven by increased volumes in the Consumer segment [1][8]. Group 1: Sales Performance - The company's strong performance was notably supported by mustard and hot sauce, which enhanced dollar unit share, alongside a robust Flavor Solutions business that diversified its customer base [2]. - McCormick anticipates organic sales growth in the range of 1-3% for 2025, focusing on efficiency, alternative sourcing, and disciplined revenue management to mitigate future risks [4][8]. Group 2: Operational Challenges - Despite the growth, McCormick faces pressures from the global trade landscape and macroeconomic challenges, including rising commodity prices and tariffs, prompting the company to implement efficiency strategies [3]. - The effective execution of these strategies led to an improvement in operating profit in Q3 2025, even as gross margins faced some strain [3]. Group 3: Competitive Landscape - In the first quarter of fiscal 2026, Conagra Brands Inc. reported a 5.8% drop in net sales, while Kraft Heinz Company experienced a 2.3% decline in net sales to $6.24 billion, indicating competitive pressures in the industry [5][6]. Group 4: Market Position and Valuation - MKC's shares have decreased by 15.3% year-to-date, compared to a 14% decline in the industry, and it currently holds a Zacks Rank 3 (Hold) [7]. - The company trades at a forward price-to-earnings ratio of 20.05, which is higher than the industry average of 14.59 [9]. Group 5: Earnings Estimates - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings suggests a year-over-year increase of 2.4% and 6.9%, respectively [11].

Core Insights - McCormick reported revenue of $1.72 billion for the quarter ended August 2025, marking a year-over-year increase of 2.7% and exceeding the Zacks Consensus Estimate by 0.6% [1] - The company's EPS for the same period was $0.85, up from $0.83 a year ago, representing a surprise of 4.94% over the consensus estimate of $0.81 [1] Financial Performance - Net Sales in Flavor Solutions reached $752 million, surpassing the average estimate of $745.46 million, with a year-over-year change of +1.3% [4] - Net Sales in the Consumer segment totaled $973 million, exceeding the average estimate of $967.01 million, reflecting a year-over-year increase of +3.8% [4] - Operating income for Flavor Solutions, excluding special charges, was $100 million, below the average estimate of $106.18 million [4] - Operating income for the Consumer segment was $194 million, slightly below the estimated $195.21 million [4] Stock Performance - McCormick's shares have returned -2.7% over the past month, contrasting with the Zacks S&P 500 composite's +4.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Insights - McCormick reported revenue of $1.66 billion for the quarter ended May 2025, reflecting a 1% increase year-over-year, with EPS remaining stable at $0.69 compared to the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate by -0.22%, while the EPS exceeded the consensus estimate by +6.15% [1] Financial Performance - Net Sales in Flavor Solutions were reported at $729 million, which is -1.3% lower than the estimated $746.82 million [4] - Net Sales in the Consumer segment reached $931 million, surpassing the estimated $918.28 million, marking a year-over-year increase of +2.9% [4] - Operating income for Flavor Solutions, excluding special charges, was $95 million, exceeding the average estimate of $92.07 million [4] - Operating income for the Consumer segment was reported at $164 million, also above the average estimate of $152.43 million [4] Stock Performance - McCormick's shares have returned +3.2% over the past month, underperforming the Zacks S&P 500 composite's +5.1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Summary of McCormick & Company (MKC) 2025 Conference Call Company Overview - McCormick & Company is a global leader in flavor, focusing on consumer spices, seasonings, condiments, and B2B flavor solutions. The company generated over $6.7 billion in revenue last year from products sold in 150 countries and territories [2][3]. Key Industry Insights - The company is navigating a challenging consumer environment, particularly in the U.S. and EMEA, but remains resilient. There is a notable search for value among consumers, leading to changes in shopping behavior, such as smaller basket sizes and increased use of leftovers [20][22][24]. - In China, a gradual recovery is expected in 2025, with growth in smaller format stores and tier cities, while larger formats are not growing as quickly [26][28]. Consumer Sentiment and Behavior - Consumer sentiment in the U.S. is declining, but stable unemployment rates provide some resilience. Consumers are increasingly cooking at home, with 86% of households making meals at home, which is two points higher than pre-pandemic levels [30][31]. - The intersection of health and wellness trends with value-seeking behavior is significant, as consumers are looking for healthier meal options that are also budget-friendly [28][32]. Financial Performance and Outlook - The company expects continued volume growth in the consumer segment, while the flavor solutions segment may experience fluctuations due to customer activity timing [70][72]. - McCormick's operating margin target is set to reach 17.5% by 2028, with flavor solutions contributing significantly to this goal [54][56]. Tariff and Cost Management - The company is actively managing tariff impacts through productivity programs and revenue management strategies. Approximately 85% of products sold in major markets are manufactured locally, mitigating some tariff exposure [15][16][18]. - The company has a diverse sourcing strategy, with over 17,000 unique materials sourced from more than 90 countries, reducing reliance on any single geography [14][15]. Digital Transformation and Technology Investments - McCormick is undergoing a digital transformation to enhance demand creation, product innovation, and operational efficiency. Investments in technology, such as AI and machine learning, are aimed at improving forecasting and procurement processes [78][81][84]. - The implementation of S/4HANA is part of the strategy to strengthen the digital foundation and improve integration capabilities for future M&A activities [80][89]. M&A Strategy - McCormick is in a strong position for acquisitions, with a leverage ratio below 3x. The company remains disciplined in its approach, focusing on accretive acquisitions that enhance net sales and operating profit [93][94]. Long-term Trends - Key long-term trends identified include the enduring role of flavor, sourcing agility in response to climate change and political factors, digital transformation, and the importance of R&D in flavor technology [95][96][98][100]. - Maintaining McCormick's culture and attracting talent are also seen as critical for future growth [100]. This summary encapsulates the key points discussed during the conference call, highlighting McCormick's strategic positioning, market dynamics, and future outlook.