Exhibit 99.1
FOR IMMEDIATE RELEASE
McCORMICK ANNOUNCES RECORD FIRST QUARTER RESULTS
SPARKS, MD, MAR. 23 - - - McCormick & Company, Incorporated (NYSE:MKC), today reported record sales, net income and earnings per share for the first quarter ended February 29, 2004.
Sales for the quarter were $572 million, an increase of 18% versus the first quarter of 2003. Higher volumes, pricing and product mix in the consumer and industrial businesses led to an increase of 7%. In addition, favorable foreign exchange rates added 6%, and the 2003 acquisition of Zatarain’s added another 5% to sales.
Earnings per share from continuing operations for the first quarter increased 17% to 27¢ compared to 23¢ in the first quarter of 2003. During the quarter, the Company increased advertising spending by $5 million related largely to the Zatarain’s acquisition and new product launches. Strong sales growth and higher gross profit margin were the primary drivers of the first quarter increase in net income and earnings per share.
Consumer Business
| | Three Months Ended | |
(in thousands) | | 2/29/04 | | 2/28/03 | |
Net sales | | $ | 299,054 | | $ | 236,286 | |
Operating income | | 48,998 | | 39,835 | |
| | | | | | | |
For the first quarter, sales for McCormick’s consumer business rose 27% when compared to 2003. Zatarain’s added 10% to sales, higher volume, price and product mix added 9% and favorable foreign exchange another 8%. Consumer sales in the Americas rose 33% with 16% from the Zatarain’s acquisition and 2% from foreign exchange. Higher volume in both the U.S. and Canada was the primary driver of the remaining 15% of sales increase for the quarter. Sales in the U.S. benefited from new distribution gained in 2003 with a leading dollar store chain and a major grocery retailer. In addition to these volume increases, pricing was higher for vanilla products in response to higher vanilla bean costs. Consumer sales in Europe increased 17% for the quarter, with 16% due to favorable foreign exchange. The remaining 1% of increase was due to sales of new products and strength with the Schwartz brand in the U.K. Volumes in France were even with prior year due to a weaker economy. In the Asia/Pacific region, favorable foreign exchange led to a 19% increase in consumer sales. During the quarter, increased sales in Australia offset a decrease from slotting fees for new products in China that were recorded as a reduction to sales. Operating income from continuing operations for the consumer business increased 23% to $49 million for the first quarter of 2004. This increase was driven by strong sales performance, offset in part by a $5 million increase in advertising related to Zatarain’s and new product launches.
Industrial Business
| | Three Months Ended | |
(in thousands) | | 2/29/04 | | 2/28/03 | |
Net sales | | $ | 273,308 | | $ | 249,161 | |
Operating income | | 25,358 | | 22,713 | |
| | | | | | | |
McCormick’s industrial business had improved results for the first quarter of 2004. Sales increased 10% versus last year, with higher volumes, price and product mix contributing 6% and favorable foreign exchange another 4%. In the Americas, industrial sales rose 6% with 1% from foreign exchange. As in 2003, sales to restaurant customers have remained strong with new products leading to higher volumes. Sales to food processors improved during the quarter, while sales to food service customers continued to be even with prior year results. Industrial sales in Europe benefited from new products, increasing 26% for the quarter, with foreign exchange contributing 15%. In the Asia/Pacific region, industrial sales rose 14%, with an 11% increase from foreign exchange. In the first quarter of 2004, industrial business operating income increased 12% to $25 million, benefiting from sales of more higher-margin, value-added product lines.
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Forward-Looking Statement
Certain information contained in this release, including expected trends in net sales and earnings performance, are “forward-looking statements” within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could be materially affected by external factors such as: actions of competitors, customer relationships, market acceptance of new products, actual amount and timing of special charge items, removal and disposal costs, final negotiations of third-party contracts, the impact of the stock market conditions on its share repurchase program, fluctuations in the cost and availability of supply chain resources, global economic conditions, including interest and currency rate fluctuations, and inflation rates. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise.
About McCormick
McCormick & Company, Incorporated is the global leader in the manufacture, marketing and distribution of spices, seasonings and flavors to the entire food industry – to foodservice and food processing businesses as well as to retail outlets.
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For information contact:
Corporate Communications: Mac Barrett (410-771-7310 or mac_barrett@mccormick.com)
Investor Relations: Joyce Brooks (410-771-7244 or joyce_brooks@mccormick.com) 3/2004
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First Quarter Report | | McCormick & Company, Incorporated |
Consolidated Income Statement (Unaudited) | | |
(In thousands except per-share data) | | |
| | Three Months Ended | |
| | 2/29/2004 | | 2/28/2003 | |
Net sales | | $ | 572,362 | | $ | 485,447 | |
Cost of goods sold | | 350,676 | | 299,317 | |
Gross profit | | 221,686 | | 186,130 | |
Gross profit margin | | 38.7 | % | 38.3 | % |
Selling, general & administrative expense | | 160,233 | | 130,979 | |
Special charges | | 69 | | 120 | |
Operating income | | 61,384 | | 55,031 | |
Interest expense | | 9,572 | | 9,511 | |
Other (income)/expense, net | | (148 | ) | (641 | ) |
Income from consolidated operations before income taxes | | 51,960 | | 46,161 | |
Income taxes | | 16,056 | | 14,206 | |
Net income from consolidated operations | | 35,904 | | 31,955 | |
Income from unconsolidated operations | | 3,261 | | 2,847 | |
Minority interest | | (1,059 | ) | (1,375 | ) |
Net income from continuing operations | | 38,106 | | 33,427 | |
Discontinued operations, net of tax | | — | | 1,712 | |
Net income | | $ | 38,106 | | $ | 35,139 | |
| | | | | |
Earnings per share - basic: | | | | | |
Net income from continuing operations | | $ | 0.28 | | $ | 0.24 | |
Net income from discontinued operations | | $ | — | | $ | 0.01 | |
Net income | | $ | 0.28 | | $ | 0.25 | |
| | | | | |
Earnings per share - diluted: | | | | | |
Net income from continuing operations | | $ | 0.27 | | $ | 0.23 | |
Net income from discontinued operations | | $ | — | | $ | 0.01 | |
Net income | | $ | 0.27 | | $ | 0.25 | |
| | | | | |
Average shares outstanding - basic | | 137,357 | | 139,882 | |
Average shares outstanding - diluted | | 141,817 | | 142,461 | |
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First Quarter Report | | McCormick & Company, Incorporated |
Consolidated Balance Sheet (Unaudited) | | |
(In thousands) | | |
| | 2/29/2004 | | 2/28/2003 | |
Assets | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 17,735 | | $ | 22,882 | |
Receivables, net | | 325,387 | | 271,084 | |
Inventories | | 366,337 | | 325,361 | |
Prepaid expenses and other current assets | | 22,059 | | 38,319 | |
Current assets of discontinued operations | | — | | 55,435 | |
Total current assets | | 731,518 | | 713,081 | |
Property, plant and equipment, net | | 464,592 | | 412,980 | |
Goodwill and intangible assets, net | | 741,005 | | 540,305 | |
Prepaid allowances | | 86,405 | | 113,908 | |
Investments and other assets | | 140,885 | | 128,111 | |
Non-current assets of discontinued operations | | — | | 77,521 | |
Total assets | | $ | 2,164,405 | | $ | 1,985,906 | |
| | | | | |
Liabilities and shareholders’ equity | | | | | |
Current liabilities | | | | | |
Short-term borrowings and current portion of long-term debt | | $ | 179,686 | | $ | 207,966 | |
Trade accounts payable | | 153,577 | | 173,081 | |
Other accrued liabilities | | 299,675 | | 268,920 | |
Current liabilities of discontinued operations | | — | | 21,248 | |
Total current liabilities | | 632,938 | | 671,215 | |
Long-term debt | | 450,024 | | 451,063 | |
Other long-term liabilities | | 219,842 | | 199,480 | |
Long-term liabilities of discontinued operations | | — | | 3,163 | |
Total liabilities | | 1,302,804 | | 1,324,921 | |
Minority interest | | 23,323 | | 21,360 | |
Shareholders’ equity | | | | | |
Common stock | | 278,360 | | 236,223 | |
Retained earnings | | 495,824 | | 459,113 | |
Accumulated other comprehensive income (loss) | | 64,094 | | (55,711 | ) |
Total shareholders’ equity | | 838,278 | | 639,625 | |
Total liabilities and shareholders’ equity | | $ | 2,164,405 | | $ | 1,985,906 | |
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