McCormick & Company (MKC) Q3 2024 earnings summary

Executive summary

• Third quarter 2024 delivered flat sales but strong volume growth and margin expansion, with operating income rising to $287M from $245M and EPS increasing to $0.83 from $0.63, supported by innovation, brand investment, and cost management.

• Consumer-led total volume growth and sequential improvement in both Consumer and Flavor Solutions segments, with strategies executed to align with consumer trends and drive differentiated results.

• E-commerce and new packaging initiatives contributed to double-digit consumption growth in key markets, while consumer resilience and increased at-home cooking benefited core categories.

• The company reaffirmed its 2024 sales and operating profit outlook and raised its EPS guidance, remaining confident in achieving the mid to high end of its constant currency sales growth guidance.

Financial highlights

• Q3 2024 net sales were $1.68B, nearly unchanged year-over-year, with 1% volume growth offset by flat pricing and divestiture impacts.

• Gross profit margin expanded by 170 basis points to 38.7%, driven by favorable mix and cost savings programs.

• Adjusted operating income rose 15% to $288M (16% in constant currency), with operating income margin up to 17.2%.

• Adjusted EPS for Q3 was $0.83, up from $0.65 last year, reflecting higher operating profit and lower tax rate.

• Cash flow from operations for the first nine months was $463M, down from $660M last year due to working capital and tax payments.

Outlook and guidance

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

• Adjusted operating income projected to grow 4% to 6% in constant currency; operating income up 9–11%.

• Gross margin for 2024 expected to expand by 50–100 basis points over 2023.

• Adjusted EPS guidance raised to $2.85–$2.90, a 5%–7% increase over 2023, with results expected near the high end.

• Tax rate for 2024 now expected at 21%, improved from previous guidance.