• Organic Sales Growth: Increased by 2% in the fourth quarter.
• Consumer Segment Organic Sales: Increased by 3%, with a 4% volume growth partially offset by a 1% price impact.
• Americas Consumer Volume Growth: 5% year-over-year.
• EMEA Consumer Volume Growth: 5% increase, partially offset by a 2% promotional pricing impact.
• APAC Consumer Volume Decline: 11% decrease, primarily due to challenges in China.
• Flavor Solutions Organic Sales: Increased by 1%, driven by pricing.
• Gross Profit Margin: Expanded by 20 basis points in the fourth quarter.
• SG&A Expenses: Increased by 80 basis points as a percentage of net sales in the fourth quarter.
• Adjusted Operating Income: Declined by 1% in the fourth quarter.
• Adjusted Earnings Per Share: $0.80 for the fourth quarter, compared to $0.85 in the prior year.
• Fiscal Year Adjusted Earnings Per Share: $2.95, a 9% increase over 2023.
• Cash Flow from Operations: $922 million in 2024, compared to $1.2 billion in 2023.
• Capital Expenditures: $275 million used for capital projects.
• Leverage Ratio: Reduced to below 3 times in 2024.

• Warning! GuruFocus has detected 7 Warning Signs with MKC.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• McCormick & Co Inc (NYSE:MKC) reported a 2% increase in total organic sales for the fourth quarter, driven by volume and product mix growth.
• The company's consumer segment in the Americas showed strong performance with more than 5% volume growth year-over-year.
• McCormick & Co Inc (NYSE:MKC) successfully expanded its distribution points across various categories, including spices, seasonings, and condiments.
• The company achieved double-digit consumption growth in e-commerce, outpacing the market.
• McCormick & Co Inc (NYSE:MKC) reported a 9% increase in earnings per share for the fiscal year 2024, exceeding the high end of their guidance range.

Negative Points

• The company's Asia Pacific consumer business faced challenges, particularly in China, where consumer sentiment remained low.
• Flavor Solutions volumes were flat globally, impacted by softness in CPG and QSR customer volumes.
• Geopolitical boycotts related to the Middle East conflict affected some EMEA customers, potentially impacting results into 2025.
• QSR traffic remained soft in both the EMEA and Americas regions, affecting McCormick & Co Inc (NYSE:MKC)'s results.
• The company's cash flow from operations decreased to $922 million in 2024 from $1.2 billion in 2023, impacted by strategic buying decisions and increased incentive compensation payments.

Q & A Highlights

Q: What factors contributed to McCormick's strong consumer organic sales growth in the fourth quarter, and how do you see this momentum continuing into fiscal 2025? A: Brendan Foley, President and CEO, attributed the strong performance to increased investments in brand marketing, innovation, and expanded distribution. The company also executed well during the holiday season and saw strong performance in e-commerce. Looking ahead to 2025, McCormick plans to continue increasing brand marketing investments and innovation, maintaining price gap management, and focusing on renovation efforts.

Q: Can you elaborate on the investment plans for fiscal 2025 and how they align with the broader guidance for the year? A: Marcos Gabriel, CFO, stated that McCormick will continue to invest in technology, including ERP implementation and AI capabilities, as well as brand marketing. These investments are expected to drive growth and align with the company's guidance for the year, which includes a focus on volume-led growth with minimal pricing.

Q: How does McCormick plan to address the challenges in the Flavor Solutions segment, particularly with new innovative customers? A: Brendan Foley explained that McCormick is focusing on high-growth innovator customers in categories like snacks, beverages, and performance nutrition. The company is also seeing strong performance in branded foodservice and expects to continue gaining share and driving growth in these areas.

Q: What is McCormick's outlook for the consumer environment in 2025, and how does it impact the company's strategy? A: Brendan Foley noted that the demand for flavor remains strong, with consumers continuing to cook at home and focus on healthier eating. McCormick's portfolio is well-positioned to meet these trends, and the company plans to maintain its focus on value and affordability, particularly for lower-income consumers.

Q: How does McCormick plan to manage price gaps in 2025, and what impact will this have on the company's performance? A: Brendan Foley stated that McCormick will maintain its price gap management strategy from 2024 into 2025, with a focus on supporting brand growth and volume. The company will continue to evaluate the effectiveness of these investments and adjust as needed to ensure strong returns.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.