McCormick & Company (MKC) Q2 2026 earnings summary

Executive summary

• Net sales grew 16.7% year-over-year in Q2 2026, driven by the McCormick de Mexico acquisition (12% contribution), favorable pricing, and positive currency impacts; organic sales up 1.7%.

• Adjusted operating income increased 30% to $336.4M, with margin up 180 bps to 17.4%; adjusted EPS rose 16% to $0.80, including a $0.07 benefit from a tariff refund.

• Flavor Solutions segment showed robust growth, offsetting softer Consumer trends in the Americas, while international Consumer markets and food service channels saw share gains.

• Integration of Unilever Foods is progressing well, with synergy targets and milestones on track, and the merger expected to create a global flavor leader and deliver meaningful EPS accretion.

• The company reaffirmed its 2026 outlook, expecting continued growth, margin expansion, and strong cash flow.

Financial highlights

• Q2 2026 net sales: $1,936.6M (+16.7% YoY); Consumer segment up 23% (20% from McCormick de Mexico), Flavor Solutions up 9%.

• Gross profit margin expanded 270 bps to 40.2%, aided by acquisition, pricing, and a $28M tariff refund.

• Adjusted operating income grew 30% to $336.4M; Consumer adjusted operating income up 33% to $217M, Flavor Solutions up 26% to $120M.

• Adjusted EPS was $0.80, up from $0.69; reported EPS was $0.56, impacted by special charges.

• Cash flow from operations for H1 was $431M, up from $161M last year.

Outlook and guidance

• Fiscal 2026 net sales growth projected at 13–17%, with 12–16% from McCormick de Mexico and 1–3% organic growth.

• Adjusted operating income expected to grow 16–20%; adjusted EPS guidance is $3.05–$3.13, up 2–5% year-over-year.

• Gross margin for the year expected to expand by 100–120 bps, offset by inflation and increased SG&A.

• Anticipate 100% net income conversion to free cash flow and $1.5B–$2.0B available for debt paydown over two years post-Unilever Foods close.

• Q3 adjusted operating income projected to grow high single to low double digits year-over-year, with EPS impacted by higher SG&A and tax normalization.