McCORMICK REPORTS SOLID FIRST QUARTER PERFORMANCE AND REAFFIRMS 2025 OUTLOOK
HUNT VALLEY, Md., March 25, 2025 /PRNewswire/ -- McCormick & Company, Incorporated (NYSE:MKC), a global leader in flavor, today reported financial results for the first quarter ended February 28, 2025 and reaffirmed fiscal 2025 outlook.
Sales in the first quarter were comparable to the year-ago period, reflecting volume growth of 2% offset by a 2% unfavorable impact from currency. Organic sales growth of 2% was driven by volume.
Operating income was $225 million in the first quarter compared to $234 million in the year-ago period. Adjusted operating income was $225 million compared to $238 million in the year-ago period.
Earnings per share was $0.60 in the first quarter as compared to $0.62 in the year-ago period. Adjusted earnings per share was $0.60 compared to $0.63 in the year-ago period.
For fiscal year 2025, McCormick reaffirmed its sales, operating profit, and earnings per share outlook.
Chairman, President, and CEO's Remarks
Brendan M. Foley, Chairman, President, and CEO, stated, "We are pleased to start the year with solid first quarter results that are in line with our expectations, as we are managing a dynamic environment. Our continued volume-driven performance reflects the success of our prioritized investments in the areas that are driving the greatest value and will sustain our momentum for the remainder of 2025 and beyond. We achieved share gains in core categories across key markets and delivered volume growth in both the Consumer and Flavor Solutions segments.
"Our continued volume growth underscores that we have the right plans to capitalize on secular trends that remain in our favor and sustain this differentiated performance and drive long-term growth. In addition, we continue to be well positioned with our cost savings initiatives to fuel investments and generate operating margin expansion. We remain confident in the sustained trajectory of our business, and in our ability to deliver on our 2025 outlook, near-term as well as long-term financial objectives and to drive shareholder value.
"Lastly, I want to express my appreciation to McCormick employees worldwide; they remain the cornerstone of our success. I am continuously inspired and energized by their dedication and contributions. Importantly, we remain committed to elevating our power of people culture and to building the next generation of leaders and capabilities that will drive our success well into future years."
First Quarter 2025 Results
Sales Metrics
First Quarter 2025
AsReported
Organic(1)
% Change
Volume/Mix
Price
% Change
Total Net Sales
0.2 %
2.2 %
(0.2) %
2.0 %
Total Consumer
(0.2) %
2.6 %
(1.4) %
1.2 %
Americas
(0.4) %
2.9 %
(2.8) %
0.1 %
EMEA
(0.2) %
1.5 %
2.1 %
3.6 %
APAC
0.4 %
2.0 %
0.7 %
2.7 %
Total Flavor Solutions
0.8 %
1.8 %
1.5 %
3.3 %
Americas
0.8 %
0.8 %
2.8 %
3.6 %
EMEA
(5.2) %
(1.9) %
(2.0) %
(3.9) %
APAC
12.7 %
15.7 %
(0.4) %
15.3 %
(1) Organic sales defined as the impact of volume/mix and price and excludes the impact of acquisitions or divestitures, as applicable, and foreign currency. For the first quarter of 2025, organic sales are equal to constant currency sales.
Profitability Metrics($ in millions except per share data)
First Quarter 2025
As Reported
Adjusted
Q1 2025
vs. 2024
Q1 2025
vs. 2024
Gross profit
$ 604.0
0.8 %
$ 604.0
0.8 %
Gross profit margin
37.6 %
20 bps
37.6 %
20 bps
Operating income
$ 225.2
(3.6) %
$ 225.2
(5.3) %
Operating income margin
14.0 %
(60) bps
14.0 %
(80) bps
Net income
$ 162.3
(2.2) %
$ 162.3
(4.0) %
Earnings per share - diluted
$ 0.60
(3.2) %
$ 0.60
(4.8) %
First Quarter 2025 Results
Net sales in the first quarter were consistent with the year-ago period and included a 2% unfavorable impact from currency. Organic sales increased 2%, driven by volume and product mix.
Consumer segment sales of $919 million were consistent with the first quarter of 2024 and included a 1% unfavorable impact from currency. Organic sales increased 1%, reflecting a 3% increase in volume and product mix, partially offset by a 2% decrease from pricing, reflecting price gap management investments implemented in the prior year and targeted incremental promotions in the Americas as well as pricing actions to offset rising commodity costs in Europe, Middle East, and Africa (EMEA).
Flavor Solutions segment sales increased 1% from the first quarter of 2024 to $686 million, including a 2% unfavorable impact from currency. Organic sales increased 3%, driven by a 2% increase in volume and product mix and a 1% increase from pricing.
Gross profit for the first quarter increased by $5 million from the comparable period in 2024. Gross profit margin expanded 20 basis points versus the first quarter of last year. This expansion was primarily driven from the benefit of cost savings led by the Company's Comprehensive Continuous Improvement (CCI) program.
Operating income was $225 million in the first quarter of 2025 compared to $234 million in the first quarter of 2024. Excluding special charges, adjusted operating income was $225 million compared to $238 million in the year-ago period. Adjusted operating income decreased 5% from the year-ago period and included a 2% unfavorable impact from currency. In constant currency, adjusted operating income decreased 3% from the year-ago period, primarily due to increased selling, general and administrative expenses driven by a shift in timing of stock-based compensation costs and increased investments in brand marketing and technology.
Consumer segment operating income, excluding special charges, decreased 17% in the first quarter of 2025 compared to the year-ago period to $147 million, a decrease of 16% in constant currency. The decrease was primarily due to pricing, as well as increased selling, general and administrative costs, including brand marketing investments, partially offset by cost savings generated by the CCI program.
Flavor Solutions segment operating income, excluding special charges, grew 28% in the first quarter of 2025 compared to the year-ago period to $79 million, or 33% in constant currency, driven by product mix, pricing, and cost savings generated by the CCI program, which were partially offset by increased selling, general and administrative costs.
Earnings per share was $0.60 in the first quarter of 2025 compared to $0.62 in the first quarter of 2024. Special charges lowered earnings per share by $0.01 per share in the first quarter of 2024. Excluding the impact of special charges, adjusted earnings per share was $0.60 in the first quarter of 2025 compared to $0.63 in the year-ago period. This decrease was attributable to the impact of lower operating income as well as lower income from unconsolidated operations, primarily driven by approximately $0.03 per share unfavorable impact from currency and was partially offset by a more favorable tax rate.
Fiscal Year 2025 Financial Outlook
McCormick's fiscal 2025 outlook continues to reflect the Company's prioritized investments in key categories to strengthen volume trends and drive long-term profitable growth while appreciating the current uncertainty of the consumer and macro environment. The Company's CCI program is continuing to fuel growth investments while also driving operating margin expansion. The Company expects foreign currency rates to unfavorably impact sales by 1%, adjusted operating income by 1%, and adjusted earnings per share by 2%.
As Reported
ConstantCurrency
Expectations:
Net sales growth
0% to 2%
1% to 3%(1)
Drivers:
• Volume-led growth across both segments
• Gradual improvement in China Consumer
Operating income
3% to 5%
Gross margin expansion partially offset by growth investments, including brand marketing.
Anticipate $15 million in special charges related to organizational and streamlining actions.
Adjusted operating income
3% to 5%
4% to 6%
Earnings per share (EPS)
$2.99 to $3.04
2% to 4%
Operating income growth, partially offset by:
• Tax rate of 22% vs. 20.5% in 2024
• Mid-teens year-over-year decline in income from unconsolidated operations due to U.S. dollar strengthening vs. Mexican peso.
Special charges expected to impact EPS by $0.04 in 2025.
Adjusted EPS
$3.03 to $3.08
3% to 5%
5% to 7%
(1)
Organic sales, defined as the impact of volume/mix and price and excludes the impact of acquisitions or divestitures, as applicable, and foreign currency, growth is expected to be a 1% to 3% increase over the 2024 level.
For fiscal 2025, the Company expects strong cash flow driven by profit and working capital initiatives and anticipates returning a significant portion of cash flow to shareholders through dividends.
The Company's fiscal 2025 outlook reflects plans to offset costs related to U.S. import tariffs on China with CCI savings and targeted price adjustments. Due to continued uncertainty regarding the implementation dates and scope of additional potential U.S. import tariffs or retaliatory tariffs put in place by other countries, this outlook does not include any additional impact from tariff actions in 2025.
Non-GAAP Financial Measures
The following tables include financial measures of organic sales, adjusted operating income, adjusted operating income margin, adjusted income tax expense, adjusted income tax rate, adjusted net income and adjusted diluted earnings per share. These represent non-GAAP financial measures which are prepared as a complement to our financial results prepared in accordance with United States generally accepted accounting principles. These financial measures exclude the impact, as applicable, of the following:
Special charges, Special charges consist of expenses and income associated with certain actions undertaken by the Company to reduce fixed costs, simplify or improve processes, and improve our competitiveness and are of such significance in terms of both up-front costs and organizational/structural impact to require advance approval by our Management Committee. Expenses associated with the approved actions are classified as special charges upon recognition and monitored on an ongoing basis through completion.
We believe that these non-GAAP financial measures are important. The exclusion of the items noted above provides additional information that enables enhanced comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.
These non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP; however, they should not be viewed as a substitute for, or superior to, GAAP results. Furthermore, these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, as they may calculate them differently than we do. We intend to continue providing these non-GAAP financial measures as part of our future earnings discussions, ensuring consistency in our financial reporting. A reconciliation of these non-GAAP financial measures to the related GAAP financial measures is provided below:
(in millions except per share data)
Three Months Ended
2/28/2025
2/29/2024
Operating income
$ 225.2
$ 233.5
Impact of special charges
—
4.2
Adjusted operating income
$ 225.2
$ 237.7
% decrease versus year-ago period
(5.3) %
Operating income margin (1)
14.0 %
14.6 %
