McCormick & Company (MKC) Q2 2024 earnings summary

Executive summary

• Second quarter net sales declined 1% year-over-year, with Consumer segment volume growth offset by declines in Flavor Solutions and the impact of divestitures.

• Operating income rose to $234.1M from $221.8M, driven by improved gross margin and lower special charges; adjusted operating income was $235.9M, nearly flat year-over-year.

• Adjusted EPS increased 15% to $0.69, aided by discrete tax benefits and higher income from unconsolidated operations.

• Cash flow from operations for the first half was $302M, down from $394M last year, mainly due to higher incentive compensation and tax payments.

• Fiscal 2024 outlook reaffirmed, expecting mid to high end of projected constant currency sales growth.

Financial highlights

• Gross profit margin expanded by 60 basis points to 37.7%, driven by cost savings from CCI and GOE programs.

• Adjusted operating income was flat year-over-year; Consumer segment declined 3%, while Flavor Solutions increased 6%.

• Adjusted EPS for Q2 was $0.69, up from $0.60 last year, primarily due to a discrete tax benefit and higher JV income.

• Net income for Q2 was $184.2M, up from $152.1M year-over-year.

• $226M returned to shareholders via dividends; $130M used for capital expenditures.

Outlook and guidance

• 2024 constant currency net sales expected to range from -1% to +1%, with results likely at the mid to high end of the range.

• Gross margin projected to expand 50–100 basis points for the year.

• Adjusted operating income expected to grow 4%–6% in constant currency.

• Adjusted EPS guidance for 2024 is $2.80–$2.85, a 4%–6% increase year-over-year.

• Currency expected to negatively impact sales, adjusted operating income, and EPS by about 1%.