Earnings call transcript Q2 2023

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Kasey Jenkins

Good morning. This is Kasey Jenkins, Chief Strategy Officer. Thank you for joining today's second quarter earnings call. To accompany this call, we've posted a set of slides at ir.mccormick.com. With me this morning are Lawrence Kurzius, Chairman and CEO; Brendan Foley, President, and COO; and Mike Smith, Executive Vice President, and CFO. to joining like call on also morning. this would welcome us [Indiscernible] this I earlier as this Relations. McCormick joined [Indiscernible] month Vice Investor President,

During complete press non-GAAP are to refer The will GAAP certain results related this percentages non-GAAP in the information. slides. call, measures. this our In included financial comments, morning’s reconciliations to to refer nature and measures presentation rounded. financial certain these Please are for and release the of we our

other forward-looking from information, and statements, information. Actual slide results Company Today's no Please materially projections presentation of update future forward-looking statements. could differ other on factors. two publicly refer those undertakes for new contains or whether because any The to more projected. events, statements or our obligation to revise forward-looking

over turn to now will the Lawrence. I discussion

Lawrence Kurzius

transition serve we internally the everyone. September and will an morning, Brendan that Executive to to finally multi-year stakeholders will with Good of Board a news start, To once been all of continue as for have Brendan succession you. and more successor. I us. McCormick pleased X, we Brendan becomes its he of Officer Thanks last as next and I with as is announced This night, part of it's exciting joining my Chairman could planning CEO. Executive all of plan, not the become Board orderly Chief on that Directors be McCormick’s share immediately. Foley joining the is

Brendan's delivering of for With and growth, doing As the Congratulations, flavor planet. long-term will supported and our importance leadership, shareholder He and well that understands positioning, prepared under value. continue talent, strong qualified McCormick, competitive and with growing tremendous many drive our for growth to while is to utmost have confidence differentiated of McCormick. I depth by Brendan. advantaged demand you things deeply the people, exceptionally right of lead the the communities, Brendan know, continued

our earnings to on update. Now

First, will details our segment second quarter will your XXXX I'll Brendan will of provide our I provide on results after results. final business and the questions, Mike some and have provide financial an comments. overview update, outlook,

Starting across reflects and We're of delivered results. business our effective performance, demand our with sales sustained quarter pleased double-digit strong second our which strategy. growth. execution quarter currency our second constant We with

and, Our pricing in volume actions are our improved. place performance importantly,

momentum We in McCormick line our sustained positioning continue for see to growth. business, top

profit Additionally, we on margin expansion both our drove in meaningful realization. segments, year-over-year underscoring focus

per results. program, chain includes Our adjusted grew global earnings income our XX% and rate operating driven growth, by adjusted of significant We or optimization effectiveness share the is structure, headwinds. which despite GOE tax of yielding supply cost interest and operating

all and from in than planned. more levels reducing Both flow driven capital segments I with improvements. earnings, strong growth. we're by contributed working cash operations just as higher Year-to-date, doubled inventory mentioned Notably, regions

progresses. results Overall, Our the will pace recovery in results our while confident the provide execution are we of less from still in in we our results it first during benefited China. strong, year of China pleased XXXX. as recovery our our And the robust and half was contribution the timing was anticipated, than to with China and are and business

second-half optimizing trajectory as the year-to-date approach growth expect enter our structure, of across diligent our with in year. to our demand confidence and Our continue we the our our strong combined results, bolster to we portfolio the cost

share adjusted full-year. are earnings operating for income per outlook we such, our raising and As the

XX% In slide X% the Turning constant growth sales currency. drove in to we quarter, five. second or

Russia, and increase this recovery, our Basics our net performance, the XX% by in pruning reflected strong growth low-margin from and and Kitchen decline X% volume business. are mix. partially sales and of China product contribution from volume X% business currency attributable volume constant exit with X% decline Our in divestiture a pricing an in Consumer Netted to decline business offset

As each continue sales examples, to Consumer a drove and quarter both improvement constant Solutions, service Americas and the sales label we Hispanic have bagged Flavor consumer we in segments ninth volume Solutions our our line performance in we food Consumer currency In strong our region. our segment, realization and exceptional exited Flavor strong delivery, with segment growth continued lens, of a performance. private in the sequential segment price products delivered DSD, in store of a double-digit consecutive growth. direct EMEA. From

as improvement, a demonstrates or cover the business. performance like in us of global last prune moments. our I'd we in margin GOE cost highlights recovery gross portfolio share focus performance, margin drove more a We detail growth made significant sales CCI positions the to programs a from the year. impact improvement our few the continued and reflecting broad which on line Our our strength with top year. low-margin of well to to few for about inflation savings optimize Cost margin the of of lagged the pricing we've strategic for driving will balance continue continued our and gross portfolio, decisions and Mike

in quarter as as incentive back offset Our compensation expansion partially build margin planned. was the we gross SG&A by higher

rate. growth operating adjusted quarter per share tax interest higher XX%, in drove of which an currency, or, increased the XX% reflected constant Our last XX%. income second by increase adjusted of versus effective year and also This earnings

place remain are right plans we the and have confident in We the right that taking actions.

halfway year. through We the are

year-to-date Our speak for results themselves.

our is for We're balance optimizing and the We strong. structure year. continue growth effectively. cost the profitable our expect improvements of driving in driving to margin profile Demand

environment the I'd like and excitement I'm is driving done want last employees success. collective navigating proud the energy thank business, few through years. in is the results. McCormick I over to recognize team which to their that worldwide the dynamic has their for of our for coming McCormick tremendous job power our

our to Now Brendan for like to updates quarter second the business I'd ask share segments.

Brendan Foley

Starting Consumer our Lawrence. with you, eight. on segment, Thank slide

trends. consumption momentum our was Our strong in realization price continuing underlying and performance reflecting our positive

see We improvement. sequential to continue

the highlights Now region, for starting some with by Americas.

combined our and the items and grew listing data The as Our consumption products. between channels X%. total and was fees the retail for indicated sell-through with consumption to sales IRI portfolio increase our new an in attributable difference discontinued unmeasured of and by U.S. distribution branded consumption

For brown example, line and items Tabitha new expansions. Cholula our and Stubs

As alignment and is consumption our between anticipated, shipments normalizing.

As such which well usual, consumers both as In spices dollars and exploration. and unit business period-to-period. from our from strength some convenience flavor and both fluctuations units seasonings, expect we and several seasoning products sequentially spices consumption with quarters last fill in blends, the provide core vanilla, as as straight accelerated

our everyday Lunch-to-date spice continue Lawry's of to positive. be results range

are of sales to category, and incremental the new profits We like quarter, the the to McCormick incremental from category. buyers of purchases are and first the overall seeing over and half

to We also private see continue from label. consumers trade up

As research when our still under pressure. economic even brands, consumers indicates, proprietary preferred

line for this continues to build. distribution Our excitement and product

of The U.S. their into transition it the up shelf, we partners end of had the the for on rollout at course our our XX% in to core spots. seamless quarter our retail the rolling product be Everyday of renovation is campaign out significant according the will of continue fits existing the portfolio about a third of is year to as and end At will Spice quarter. ramping shelf over we second brand plan our SKUs marketing the and

Deal's XX% McCormick category penetration are put of continue early home. the end McCormick continue seasoning volume. even spices purchase French's the With Deal in X growth. and and second to results Super that season and the recipe greater are good. Frank’s close all than benefit following though and consumers smaller mayonaisa, growth second herbs similar at with And quarter quarter. of at Marinade’s, Grill double-digit to blends larger-size cycle sauce, pre-COVID. mixes, Super more kicked to they Cholula growth as times quarter as and Hot in Stubs the household consumption with Our Sauces, Lawry's high-single-digit the barbecue is delivered the sizes grilling as remains well second RedHot and off the Mate's We mustard,

We our Burger use on-trend Choice performance. flavors, as new Smash as acceptance. strong new strong and products launched had Marinades, three Butter, as three Grill which We've up all including Garlic are Griller's flavors, to and can Mates you promotions retailer share different expecting heat grilling have well

are Honey flavor Stubb hardwood flavor Rubs, flavor Wing of We combines sauce trending nuance two Stubs our smoke which capture Sweet Frank's Smoke excited offers. and the that which and Smoke are and heat Sauce, really Real and about Jalapeno Barbecue Barbecue profiles real authentic and

up in fired for our of and the are grilling third the up expect consumer We campaign fire the launch well. marketing season up to brand demand as quarter fire

salsas with Taco start the Cholula Mexican and is mixes formulas on Cinco recipe a Our great off expansion authentic execution. based de Mayo to following Mexican aisle our fast into growing

support are the our increasing During investments expanded quarter, Cholula we our portfolio. to brand third marketing

further our sustainability to campaign, for increasing include commitment also will product marketing brand our quarter line our our McCormick from for Gourmet third with highlighting to investments table. farm Our flavor

issues premium product supply product this as this most of are significant excited offering first two second-half the line we is time in of period. the support we for to the With importantly, years. able And enter it year, historically resolved, our to our be

to by spices the growth led in continue and Americas, we e-commerce, Finally, consumption double-digit drive seasonings. in

hot our on growing Frank high Pickle and realizing sauce our in are on direct-to-consumer We less products, sold a out investments, such Dill than new our which returns new platform, with as week. customers, gaining new

We late expand this stores year. will to distribution in start

and solid. sequentially. two is Consumption years, double-digit accelerated strongest our growth performance Europe. Eastern pricing our second the our performance data performance indicate in improved to we and in was and contribute well in volume categories And continues is holding in up grew fact, the EMEA, In volume quarter quarterly share sales our to effective U.K. our consumer

and and share are plans also results our are with France seasonings We spices Italy, share in Europe growth performance. improved herbs, in and growing yielding Eastern in

this anniversary We [Indiscernible] of the year. our celebrating excited about brand are XXth

the We key celebrate are retailers reason to to partnering to and with brand's our activation spark grilling celebrate and up grill. anniversary in around the scaling another France,

Grill our have U.K., the emphasize and investments well featuring Across we building meaningful Schwartz we distribution, channel, continue are Mates the support new channel and grilling, the expanding making gaining the grilling to support share. we marketing region, third as value growing be brand messaging. in the and France and off discount discount as progress are In increasing our the to quarter season products U.K., our out In both also will products. kicked to fast our and

hot Finally, we are sauce U.K. share gaining category. the of

accelerating to brand are and Frank's distribution products drive and new our are and marketing, multi-packs, in our hot performance Cholula continue our investments We strong merchandising are growth new to proven growth. Overall, e-commerce EMEA. effective to With contributing sauce be growth. significantly and RedHot in driving

the in Asia growth China. lapping reflected the COVID region, for the quarter Pacific related In disruptions

in double-digit pressures was is spending reopening proving the as and China, spices XXXX, of We environment our marketing enter lower optimistic to progresses than year growth our executed more pressured on we second the in recovering markets and more by broad-based new pace operating as Outside brand was emerging is robust, strength initiatives our and products drove economic and normal as and growth we branded it RedHot. was growth our into be region. and consumer driving While quarter business of gradual remain seasonings Frank's a strategies. other and for with expectations sustainable

up to increase and update, management innovation increased distribution The our our and we the drive we to of growth growth. issues fueling Wrapping category power category are McCormick using with last in resolved, and supply and brand year consumer we're are marketing. experienced and brands strength our

believe and bolster after we leadership will for McCormick, consumers, during our a growth sales past, drive as execution will win more the have core differentiating in the results even our in and growth We we year-to-date strengthening confidence our continue that us of customers, our and pandemic. categories. categories, plans be before, to the Our

solutions XX. flavor slide on Now to turning

outstanding growth We our momentum sales this are continuing segment. in

currency As Lawrence ninth quarter with was constant double-digit our second sales mentioned, growth. already quarter consecutive

point have We marketing this to second segment, restoring our margin. continuing to our the profitability is inflection objective to quarter toward commitment build shared our in and previously an

was priced pricing the Our the growth the Recovery our we lag quarter in was greater three to and recover cost led second years. are current all to in two the last by first. cover inflation even actions regions, pricing than inflation continuing are year

Now regional for highlights.

iconic is growth flavors second year's in Within our was as as outpacing strong, by strength Americas customers' last growth our seasonings sales contribution, category. including led volume which our well flavors, related product strong was growth to new products, quarter Our products. product new

we nutrition in performance winning our end our platform, double-digit beverages, applications sales seasonings to are as We health market contributed performance for and with also flavors driving heat strong continue growth.

new winning new products existing and for We are customers. with

and In branded Lawry's. quarter with in we food Mates to spices, share service, mustard, hot continue and gain strength Grill sauce, in this seasonings,

just service like in portfolio firing our grilling branded in Our consumer up is food segment.

realization customers Moving across our Notably, quick we from restaurant growth to quarter our pruning QSR grew sales some price in to food we continue quarter. again volume softness to from led drive within their the Overall, service sales second an portfolio, as higher the broad-based EMEA, quarter. the by own last and customers' impact earlier, business despite constant XX% mentioned currency impacted in low of Lawrence and in margin our business. beverage accelerated

including as inspired solid demand and portfolio flavor solutions are by The we our driven APZ, performance encouraged from momentum. as engagement realization, about as culinary innovation to China, was differentiated and are strength growth experienced flavor double-digit return of by in also we and in normal China strong effective of our volume well service price capabilities, delivered driving And growth Outside QSRs. solutions our quick restaurant promotions. customers' of outstanding our customer also recovery growth with driven the

and together our And create value-added our portfolio we growth. continues McCormick to food in of partnerships the penetration, and growth branded increased technically of Nutrition. wins and in new culinary power especially to with products, exciting continued menu FONA drive insulated service, in part The Healthy opportunities recent expect

driving bolster flavor trajectory robust confidence continuing growth solutions and leadership. solutions and flavor our our Our of plans our

like financial Now, provide over to to turn our it on to Mike I'd details performance.

Mike Smith

Brendan, to constant with last and XX%, line the on morning, sales everyone. compared top currency XX, offset from of year, pricing, X% grew decline. Thanks, slide XX% quarter partially and a reflecting second good volume mix our Starting

volume exit there out. our Kitchen recovery, our strategic optimizing level, the all portfolio. consumer to related decisions we in were Lawrence of China the business the As netted total already the divestiture, and to Basics related made the Russia, profitability mentioned, impacts of to these company impacts At

or the volume increased constant X% segment, X% by sales reflecting increase this Consumer X%, net a a increase decline Including pricing a in decline. offset are our volume from In X% actions, from partially currency partially divestiture business decline from Hispanic Delivery X% bag recovery the for the our our exiting Kitchen Direct by offset in business Americas. exit Basics DSD China, a Russia, and in in products Store

sales decline X% consumer Hispanic a a Kitchen partially volume the volume divestiture, X% XX, and in from currency, X% increased an mix slide decline. offset from with actions the X% decline DSD increase product On the underlying by Americas in Basics X% pricing exit constant and volume from

Brendan mentioned the Our products in strong grilling underlying driven was our sales by growth earlier. portfolio,

exiting partially increase increased constant offset XX% consumer X% volume X% volume X% and currency a a mix EMEA, In Russia sales with by a from pricing underlying from decline. decline actions, and

product categories Asia increase region, XX% Russia, Constant the Excluding sales in markets. volume currency in and from X% growth was pricing XX% sales region and as increased actions a X% the broad-based and from as recovery a driven increase across increase China entire all across Pacific all by other mix. consumer volume well

decline this offset pricing low a discontinuing product margin label sales are higher segment decline Included and on contributed Turning offset volume actions a from in currency Americas, line solutions, flavor recovery mix a more in sales grew flavor China solutions to XX%, fully slide our and growth base. partially of of by quarter increase by from Volume seasonings business. volume a decline. than quarter in food X% private impact the by XX% in the Pricing sales constant strong increase X% from pruning customer X% rose the a constant we In service actions XX, product currency across second the offset XX%. declined reflecting to the as was volume net EMEA.

growth portfolio, by its within businesses, higher some declined as product driven by as lower from Flavor volume actions to line beverage Volume sales impact label mix, of customers. and in the mix In was currency product and softness and solutions across pricing to outside the QSR led broad-based their discontinuation with sales outstanding EMEA, product mentioned pricing XX% packaged well food a volume private mainly was by earlier. discontinuing including partially EMEA's due I customers' constant increased and customers offset X% QSRs. own our

XX% X% COVID-related region, year other grew prior in solution the Pacific in Asia pricing currency and due increase and lapping an in the a volume disruption, Australia. by all constant China sales actions to In driven volume with X% XX% from Flavor increase benefit mix a

to on increasing inflation profit lagged period, our second while of planned, solutions, quarter over in our versus with the high certain meet seen in on we ago our the CCI years product favorable in XX, of level in unwavering demand the inflation drivers the profit expanded offset slide the mix continued realization. As quarter points in Notably, margin second business. year parts were programs. cost two both of cost last reflecting year continue basis we flavor as pricing. focus XXX the incur to segments. GOE and and gross our in We Favorable pricing recovery higher current some The quarter our

on second And costs. We the expected, these continue to progress experienced reducing year. comparable last in of were quarter's U.K. to costs running make dual we the as level we the

our to with balance gross improvement pleased year. very expect the to are the in for of quarter margin margin expansion and We the drive continue

Now employee slide and increased an marketing third of and quarter XX, quarter compared distribution to in year quarter. selling, were even second year-over-year year savings. moving compensation offset second increase general Brand expecting higher relative expenses of the SG&A GOE to partially and the and last CCI more by to we lead costs administrative expenses increased incentive last as or the significant are

As points. net XX sales, a basis of increased percentage SG&A

the segment income the grew currency, partially and growth XX% In XX%, constant Flavor currency the offset XXXX. of adjusted Consumer operating Solutions segment's to second in XX%. resulted increase quarter and costs a by operating gross increased in compared income expansion sales of constant margin adjusted Strong SG&A higher

slide expense Turning income and to taxes interest XX. on

by rate interest the higher of XXXX, over significantly driven quarter increased environment. expense second the interest Our

second adjusted were compared significant last Our rate Both was period. impact tax year. XX.X% to items year a tax with in favorably quarter impacted effective the more XX.X%, discrete periods by ago

At was the for driven effective tax by bottom XXXX higher second $X.XX a adjusted year earnings $X.XX, increase compared by higher line, The ago quarter higher the expense income, as shown rate. share per on and as adjusted offset interest slide to was XX, operating partially period.

we've XX, sheet. On slide cash flow for end the and balance summarized quarter highlights

increase well from operations was XXXX, half working to higher by Our compared for million driven in was XXXX. cash strong. including shareholders capital We incentive and to flow $XXX first returned dividends $XXX cash primarily second million $XXX as the income inventory, compensation million million improvements, net $XXX lower through The lower capital of used and payments. the quarter. as our through year-to-date expenditures of for

be XXXX driven strong working by initiatives. a to flow year expect We cash profit and of our capital

a a is portion Our debt. balanced remain to of history a grade growth, use funding continue to cash, through committed strong have to and we a our returning strong investments shareholders drive cash and priority to and to paying rating realization. significant profit dividends investment have down of We generation

outlook Now XX. turning on to updated XXXX slide financial our

our realization. momentum profit XXXX top of reflects with structure, positive increased continued our cost growth outlook optimization and Our the line

several expect that underlying drive margin business to from and our as net well as We growth expansion favorable with impact health operating income discrete of drivers. sales the adjusted the reflects performance, strong

offset operating profit We interest profit will expect be operating adjusted expense and a below tax higher higher rate. our effective projected growth by partially

the will although minimal the in a be there expect there year, projected unfavorable impact rates, timing realize impact first-half aspect second-half. from be we impact currency also the of and in will favorable an as a We

although and our robust we top At we structure. impact we primarily the optimizing last the we expect product and we at lower the Lawrence to in and actions share, benefit from historically of raising from in quarter-to-quarter to we X% including factors will cost driven last earnings by expect new year's and growth, performance, X% actions elasticities our exit experienced, the we to quarter. the The continue XXXX's operating level sales by environment, of several our adjusted with in the mentioned, to XXXX, adjusted a volatility. year-to-date second we but of over COVID-related approach of have wrap per income Russia the continue year driven pricing disruptions consumer expect with year's in demand estimated demand the XXXX divestiture volume our year's have of mix pricing of our current price August our line, are levels combined taken last expect Kitchen to year, diligent X% course during business and business are fiscal strong our XXXX, outlook as given lapping For than with China, last of impact with Basics reaffirming vary combined line in consistent impact

a Americas impact And margin which impact Solution discontinuation lower finally, quarter. the We exit X% began private and DSD continual second to EMEA the segment on portfolio. our pruning to the the Consumer in estimate be from of us business Flavor the label year, approximately

plan As engagement our brand and to always, drive through as marketing, new products, of management, plans. as well brands, growth we strength customer the our category

compared cost projected in points programs expansion favorable to portfolio inflation. mid-teens to partially from a margin impact basis points offset Our than of to and points increase the optimization, cost XXX our and guidance GOE reflects savings by our higher anticipated to CCI XXXX range XX This margin to points. led impact gross XXXX, XX from basis a pricing, low gross is XX between basis prior basis

during pressures for as We by pricing be we recover inflation to the pricing lagged last more offset the cost year the cost our expect than years. two

to Moving operating income. adjusted

expected walk our XXXX to impact me profit discrete operating their some let through adjusted items growth. and First,

to basis cost expected GOE to expected program up have savings are savings the progresses. year the as XXX point First, this The scale from impact. our are from program an

basis unfavorable these compensation. is points. an And basis a Next, XXX The divestiture of in build is expected net point have to an Kitchen basis back expected lapping point we the incentive impact XXX benefit basis expected is unfavorable have of point Basics as XXX impact of impact finally, impact. favorable COVID-related favorable disruptions items China a XXX The discrete the to impact. is

which by This improved XX% our operating XX%. with in driven our to X% adjusted to our XX% income X% XX%, growth, underlying guidance of combined results operating of momentum, to previous impact, compared business projection favorable is to expected

margin impacts leg savings just a and of cost $XX In target to mentioned, I investments includes the adjusted low-single-digit increase in brand our million. projection approximately this CCI addition also marketing gross

expense to interest environment, by will will estimate from continue interest debt. meaningful evenly XXXX to higher million a $XXX the in in rate driven our which that We anticipate expense the million impact step throughout range interest up floating year. $XXX We our spread

an a portfolio, reminder, million XXXX. third of we in we quarter As which XXXX, $XX realized favorable impact will from debt optimizing our in the lap

expected impact net these basis adjusted The is be headwind interest share of XXX items growth. our point related to to per approximately earnings XXXX

based level rate earnings in adjusted to versus is XXXX effective rate, income a headwind XXXX we of growth. effective be earnings geography, as of this be upon as adjusted our our basis XXXX Our discrete expect XXX factoring XX% approximately tax by projected a to to point well mix impacts estimated tax our outlook

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recap slide I've turning like XX. Brendan, on key it I seen would to takeaways to the Before back

business Our sales execution second strategies. and reflects across quarter of growth demand the our our effective sustained

of pricing profit realization. Our underscoring are actions on segments in meaningful place both our our and We improved. year-over-year performance volume in margin drove focus expansion

our programs expectations. savings line are yielding Our results with cost in

robust and performance our bolster expectations confidence Our to strong our XXXX structure, our the optimize actions continued outlook. year-to-date results cost combined demand projected in our enhanced with delivering in operating

Brendan Foley

Mike. you, Thank

to it we Before I would turn like additional some provide to over Q&A, comments.

demand flavor on to say, its great am I future. would very for sales our to excited lead opportunity with promising truly remains fast and rich about the intentionally growing First, Global we foundation focused company I growth honored like categories. and and the this have great, of

engagement, with create and cooking, purpose a alignment tailwind flavorful practices trends, growth. to long-term and Our for brands continues trusted consumer increased healthy digital minded

McCormick capitalize great is uniquely demand on positioned for this flavor. to

With flavor flavor reach breadth delivering of portfolio, are and our occasion. strong for we global experiences every the meal

the are and end-to-end consumers flavor global leader in We customers. from our our for

the capitalizing and half As to our and on year, strong shareholder structure focus demand, on to long-term will we positioning look ahead we value. to continue cost McCormick deliver the of optimizing growth back sustainable

have in place, products our including and growth heat compelling profit to We commitment with our momentum our increasing on are and new plans platform delivering building realization.

trajectory execution bolsters confidence of as in in to business successful plans financial realize with XXXX confident of particularly our reflected updated are further both actions, We products begins our of of our concrete our value environment and our the model, growth segments, outlook. in and strength strategies profitable capabilities we growth will the the The our normalize. execution and proven our

position with consumer on and investments our performance compounding the with relentless McCormick's and trends impact alignment growth, focus Remaining differentiated growth to with of long-term growth. our combined deliver continued people underscores

deliver sales shareholder strong growth, at return total and Our leading only not continue industry remain an strong but drive also pace. to fundamentals to expect we

Importantly, I'd service like vision continued transformational great oriented and company. On leader to entrepreneurial to McCormick. mentorship growth platform shareholders innovated to been CEO has his flavor recognize for global and bringing outstanding personally McCormick, spirit, through of for as thank his and for to company. leadership behalf our a Lawrence his life thinking, employees, want Lawrence of this I

market grown shareholder we over than CEO, sales significant doubled, creating and more as time value. XX% his During have capitalization

returned operations than We have prioritized shareholders. investing and flow to have drive future cash more growth, $X.X realization, increase million our improved from profit to

the and as into This pandemic. performance an is like forward period iconic with successfully FONA, led and Executive purpose McCormick company's Chairman. congratulations, track industry-leading enviable French's, leading performance, expansion, efforts, as continued global record, support widely unprecedented and driving brands the including RedHot, look well Cholula, by embedding your a credited through as we to tremendous Lawrence is McCormick's acquisitions of culture championing growth, of Frank's sustainability

Now for your questions.

Operator

session. your question-and-answer Please Instructions] comes a from Thank you. Lazar Our proceed Barclays. with we’ll Andrew conducting with At [Operator line the of question. this first question time

Andrew Lazar

much. very Thanks Great.

First, effort congratulate as I previous succession a Lawrence, amount evening's last of ones. of wanted into go I on announcement. bit you, just smoothly to every planning, will tremendous know both McCormick sure and as transition this I'm puts Brendan, and

Brendan Foley

Well, to kind say of very thank That's you, you Andrew. that.

Lawrence Kurzius

does thoughtful process thank that the well. as very mentioned leadership I McCormick well. Andrew, have you at been to I'm for and pride this ourselves get point. us development planning, and very very glad And deliberate succession you and much of and multiyear Board a McCormick that in this

Over his years, CEO partner leading had of are an ideal bank key I've for come to to of forward. Brendan disciplined the growth delivering few of McCormick company many you've this going chance qualities to last approach a and initiatives, the expect our with

to see the on an call, off signaling last appointment opportunity we qualities And get this. Brendan you call have this his of year, we to given all were With President hand. and this to know and first

Andrew Lazar

Good just stuff. Good stuff. I've two questions. got

to through significant through did year. full-year, quarter one but upside in XQ not more McCormick essentially First be any flowed of upside the the the also second flow would EPS the to

or change sort half conservatism, in some get from of increased is a I'm is the marketing on really need requires there the something or XQ? that sense marketing that the either being just simply whether in year the our to So back opportunistic trying this McCormick of it's

Lawrence Kurzius

front half outlook year the execution year. with the the lot our of first The in of confident within pleased still we're back I'll for that's business, and are so year. that, say of is this of the we biggest part There's us. exciting all, Well, far in a our

largest two of are quarter fourth quarters and the year. Third

still about we prudent of what is And also front want are in us. be so to we while optimistic,

There the in are and puts business takes some overall.

bit have we China and expected, else in than into most has that part, slower been Whereas, recovery a our and Our for we're the in guidance. is we the moving positive. direction, right quite factored everything

of tips our our reflect get we over not but to and anything. that didn't strong did -- we're So reflecting and signal trying performance -- guidance year-to-date our we to the want want that We had skis. in have the also performance, get ahead strong the to reflect fact to of increase

Andrew Lazar

we McCormick pricing, if still sort to what the the you the And your key the And to that lap that some so, second, half of the year about turn and drivers starting that? be would the then would be as think visibility volume would of expectations of give positive? back

Lawrence Kurzius

changed. to words say few first-half. going have let going that, has performance be stronger through we up. expect improve the and not it to in to our outlook as volume second-half Brendan to about I'm along, and pick I'm the a been versus we the we year go that as saying And all But

contribution slightly Given close plus outlook, about in talking that be a really the are to have China we're Call and second-half, to that part we're a volumes as very volumes that there. But numbers softer the little in bit flat. from it, the our overall, we company, not less of business. maybe in we have meaningful minus expecting or and X% within range well forecast of

Brendan Foley

performing we're yes, Andrew. perspective, that on the a Americas, build In to from as pretty planned. much Just regional

have include, I need the and portfolio, what DSD and it is does half. kind improvement that's to look of, you to result, that of And But of think to broadly it take we when view exit think think broader of is But at it at second underscores back sort kind take the fairly which of recognize quarter out, also improvement showing together versus across warrants we're month-to-month going we price kind so sequential unfold the sort consistent, the kind in this the of business, been of is look the in an first. a you profile. the we of, far. when quarter-to-quarter that volume and I

pretty have that, for. in we're kind Also, just little a think recovery. than strong had it's bit less of to going than confident we gradual initially although what a we planned more China, a recovery

than on probably And exclude really and nevertheless, thinking overall, a that's underlying been pretty volume. the still would bit had strong So I about of little it performance volume you pretty the when what factor when nice. is or you exit the we're a in actually And Russia mix EMEA, pleased But we out recovery. different elements with that previously. say, was

the we growth pleased region. those we're despite in to things some EMEA that see have volume So

meaningful need we time. of delivered -- is just about of that this business more is exit, also color to whole portion out chunk, store, idea X I a we to profitable, we that would DSD to a it a we have and see DSD on simply that is that wasn't of was to a and from distribution what delivery was provide think, that this say warehouse And over but I to it this improve second quarter, we've kind the And decided would handle. On that the this we just we exit, points. business been trying that the

that we an So rest have probably year, it from away for. but be impact as the that of we will for planned something the transition business,

Andrew Lazar

Thanks so congratulations and again. much

Lawrence Kurzius

Thanks, Andrew.

Operator

Thank you.

question next of proceed line the with Please JPMorgan. your comes from question. Goldman Our Ken with

Ken Goldman

accept Everyone's Lawrence, in sincere great moving well, and please congratulations my too. and it’s up world, thanks as Brendan, to the Hi, Kasey, see.

you're ask guess, contractually you're I'm in get it and to after general? supply risk safety And or similar to retail customers' where obligated normalize your a know, think back inventory stock anything if of maybe how was? chain your continues I I yesterday sensing, as feeling deload any to you levels about,

Lawrence Kurzius

take one. Brendan, you why that don't

Brendan Foley

more products. there's our listing that. launching question. the higher more point the just and items, new DSD We're discontinued not this. an fees between is that quarter we anything experiencing the fact But the of how or made much sell-through destocking. sales Ken, difference this of in unusual consumption just and example due retail trade drama us just to the Honestly, for thanks we're significant also, quarter inventory attributable I to regarding the have on really was for The

you There's on of that we think Tabitha consumption I or at terms really dialogue alignment Cholula for so in going our in between in not that. Mates quarter. or And as this anticipated, had shipments But and grilling unusual so lot items of our is definitely anything Grill see brown normalizing. we line,

Lawrence Kurzius

for have service solid underscore levels that been our I'll pretty And quite a while now.

of So on. levels to time adjust retailers have and their stock had so plenty

has like actually X.X something over So this occurred the for past years already us. seems

Ken Goldman

a you. progress some year seeing commentary whether beverage Flavor for as it ask you're customers, current -- of it Consumer we the are with little the worsening? quick performing how is as or that then side. Europe food, still bit go Got the how get your as progresses. Maybe follow-up, just some a of the your about quarter, into to the QSR Just it. about be you're sense trying just I the wanted seeing softness And to Solutions or side. Thank a sorry, and And larger

Brendan Foley

noted the it's would our into But of affecting rate is just I what's we mostly think, -- that impact -- would the Ken, think beverage more see Flavor overall Hey, and that most we reflection the from it's we volume on region. in remarks sort and slowing inflationary because of, kind food a of definitely, what demand terms customer consumer restaurant specifically been than probably that be really as of softer in think, here, a is overall Europe. our side of I EMEA And being our that And we're business of it's through Solutions definitely, have say, in EMEA, in the in something would of what more coming expected, channel. quick-serve happening and we reported, EMEA, but call leading customers. the seeing both, I

Mike Smith

that there. just of on the that exit the lines. due to two service private About to color I in think little of decrease volume volume is a label, the add too, one-third

again, portfolio optimization. So another

Lawrence Kurzius

And plans the that, actually our couldn't is not a beginning contemplated that reasons, for Maybe of was relations that but surprise we the us. to Yes. for customer about be specific in year. it

Ken Goldman

Great. Thanks so much.

Operator

Thank you.

with Bank your line question with of Peter Galbo comes Our next from question. of the America. Please proceed

Peter Galbo

again morning Brendan to and Lawrence. congratulations to Good and guys. Hey,

Lawrence Kurzius

Thank you.

Brendan Foley

Peter. Thanks,

Peter Galbo

exit the you the commentary, for DSD. on I of thank guess, Guys,

helpful, the in around business. Consumer think this morning particularly I been context we've of the some questions it's getting

So Consumer, that, wanted maybe some I around Americas grilling. specifically up appreciate pick to I guess, in what of comments on your

given easy protein You do prices pretty were. year where just obviously last of compares from have kind

help the you So anything out you can with curious there? have Day, specific things Obviously, you're expecting just summer. the of what kind of but course you're you of Memorial saw coming over on, us that what working some

Brendan Foley

look RedHot. we're really launching grilling Thanks solid mustard assured for new if of we're some where grilling really the are year promotional at definitely supply think we certainly back we plan, in period Plus a just good for this A to Frank's think, just I that, of on on Lawry’s a coming about items. we -- activity also the lot season, areas grilling and innovation supply as Peter. normal We're on good in where healthier we of summer start on in much And if top by and supply, really QX. question, we're and the we're our and off full a customers, last really just a these for start marinades, driven you for business. saw turning have that before now it's on have season,

you want the in look off probably as to So from performed quarter. those standpoint, quite year. to of we a really getting of we start things kicking a good innovation, we it feel the the together, supply, And kind on at we all way back to share run have like well really put a grilling, second season

come the I great things those season. together, to summer all for start So a think,

Peter Galbo

No, that's margin a maybe gross question just Great. And for guidance. kind Mike helpful. around of the

of you’ve kind covered in the kind about kind over balance there's notice maybe conservatism of the year, what of back that did in But Just the the maybe implies half, of the about I change year? there. first-half didn't just us think help where inflation some the it of guide, you

Mike Smith

XX XX raise to basis on for guidance know, margin, mean, did to points gross points points year, our basis the I points. Peter, as Yes. XX basis XXX to you basis we

and doing those So really realizing second-half. We're we and ramp about pricing the some the our up in reflected well call. really, of the program those we increased savings talked realization in GOE in

last that the basis the XXX second second improvement, quarter, year. quarter our about worst of thing point year was performance The

second in the and back the in improvements basis as as they year, we be You'll see but versus half had won't the big points quarter. last XXX

Peter Galbo

maybe, ahead. it. Got go Mike, sorry

Lawrence Kurzius

line Finish of… this Go ahead.

Peter Galbo

magnitude margins same the of improve still not maybe maybe year. the half Mike, though -- in change, Yes, but of year-over-year tend the understanding Sure. sequentially, back

about So that? of thinking kind curious just how you're

Mike Smith

based does the in back of the I generally, half margins, business, especially higher on mean, our the mix fourth quarter. have

improvement, almost But there. basis we bit recovery get is to of for that XX we you in if points to and little really in continue has a guidance strong success, lows ramp going positive QX, a squeeze that's see us. Xs, have implied so Our second-half. the again, China high a factor a of have up

margins. have and We good over have there scale

Lawrence Kurzius

improvement quite mean, I forward. optimistic we're with year through the go we improvement margin as margin and going profit continued gross and operating

Mike Smith

is everything direction. right said, the Lawrence guess, in moving I

Peter Galbo

it. it. Got Got

Lawrence Kurzius

the improving chosen of of worth the the a in customers exit our still portfolio, profit we've the of business, not lot part was I is a and it that, interest I'm know, we same know brands there It's we've part performance sure to difference channel, a very some worth we the units, in got a that very This DSD had you of just optimizing that in. spices with as business sell and and I low because DSD just that range moved that are a they're second to through of a so sell attractive largely you've the head not want and unscanned the dried warehouse lot of in a staying exit, where a banged We're but to of -- long is we've and on -- the portion for that. a but bags the are elaborate bag units, those settle value. talking value. you Peter, against peppers time channels, distribution -- -- business lot to our and through in margins moneymaker. But of that spend major DSD not

Peter Galbo

very it, you, helpful. Got guys. Thank

Operator

you. Thank

the of Our your Howard Alexia line next question comes from proceed Please question. with Bernstein. with

Alexia Howard

to so Thank for of you. all Good you everything morning, much everyone, congratulations around. and all

there retail question, regaining ended to ended -- distribution supply losing chain distribution first you Okay, in number me those that lost retailers that a up It U.S. seems up were smaller during disruptions. of channels.

much a over And start to what are how distribution, next the quantify are you year in? we innings to that tailwind XX be able you of rebuild to As could months? that

Brendan Foley

overall on question TDPs Well, thank you and Alexia, for the distribution.

half. continue metrics really we I'd our and year-to-date. might performance all, trends we we a as and happy we're to to as through we that into especially our And progress progress back come see to at, second in the different of expect positive, at the like And look do to quarter. as First all say, see the continued good look go make we

as effort retailer because we some of important we improvements of terms guide wins of we the just lot A start really all that put reset happen. to know customers will come have things category. We significant that that their in get through start and online shelves, category those to help the and forth management the

not to discontinuations terms next we're get year, all before, on We back at only go going into in know working rough the think all an know of as is this way back of going not as also that kind that about I'm to we've the half. the as ‘XX But effort, into and And to course there's that to but of almost of going ‘XX. we we continue back on as overall we through that that because this to originally. half distribution, we that be over look reluctant be said we're to year. the that all was of that of quantify helpful coming improvements half some points,

continue So also distribution should on through we right about in we an as go feel and now good points, improve it ‘XX. to overall ‘XX progress our really and

Lawrence Kurzius

our that, last tremendous Everyday And U.S. a the quarterly building on I have market in the spice QX hit and of top innovation. said of amount of the our to through of second-half restoration Alexia, starting call, year. the we on as And line

the more opportunities shelf. advantageous a those us give of the hands a distribution on greater All to shelf to of get on amount get and set

further shelf number actually quarter We in TDP. on wins of major which that first are that talked a the QX, about build should on in going have we customer

year. improvement pretty the confident see So continue areas through we're those have we in to

Mike Smith

And are the in third plans. second willing then A of half. with to to our those brand support going into marketing, we're that go lot going the to be that's mid-single-digit quarter increase

Alexia Howard

of And costs be running can by follow-up, have there, in us one-time are that give there's eliminated an you you in transition the as the two you overview seem to the plants Great. co-manufacturing going costs a U.S. remember I here U.K. to as just XXXX?

of is a out of that's how to there Just sort idea events? from onetime come much recent more

Mike Smith

Okay.

about Let that. think me

We're sure to So region, think, due pretty and costs manufacturing in to our because this -- to $XX I some dual to we're cost I same quarter, because into is we facilities. as second you're which still large call, about said for EMEA large going running have over new next facility the the go the year. around going have feel in year, referring first there. last these I'm million are -- it's transition, the last I year, our

if away, the I winging to timing. going So of to were is depending that I'd but exact it, say go off, half I'm on going be

Alexia Howard

Great.

Lawrence Kurzius

And of next year. program continues our course, GOE

Mike Smith

We'll that. Yes, yes. into from a wrap see nice XXXX

Alexia Howard

I’ll very on. you Thank pass it much. Great.

Operator

Thank you.

proceed the with comes next Bank. question Our question. your with of Please from Deutsche line Steve Powers

Steve Powers

me. both Great, morning. Two to And from as Flavor related congratulations well Solutions. to questions everyone good

to you all to the Flavor if industry. raised, the or well one, follow-up different from around just impacting curious as various perspective, it impact part you just year? had We've the that half business the a of that's Solutions pockets of I heard dynamics. if as from was inventory Goldman first expect destocking potential at see The Ken of over the second in discussions to topic a customer

Brendan Foley

thanks question. the for Steve,

focus volume when account, choose and profile seasonings and Flavor it, other the taking performance for still intentionally, into health our that and that we look and in that business, and think mix relates growth As to we've impacts, really Solutions nutrition. focus These of kind nutrition we exit we reflects, profile the healthy on in area kind those on categories at had see of volume lot of, been a discussions it and areas we to like of, are us. growth have our already of, overall, our now right sort

we're specifically be with not profile, won't customers particular have this reflects restocking customer I'm that in I we're volume but we discussions seeing any our at we time. able sure And on of and believe that know don't activity, kind business. I so point broad to And more -- any that of of, that comment composition our

Lawrence Kurzius

also gaining as positive a I'll in of customer for so space, wins contributor believe a share lot and we're and agree is well. that us that this

Mike Smith

solutions A things are those really of drive our growth in too. lot flavor the in that And from volume comes innovations margin Solutions. and Flavor

Steve Powers

then Great. question, margin the Okay. Great. And is my second front. segue, a on actually, good

look well of ahead guess recovery. you was you much frame about just at trend think forward, about wondering out over you you for if I to And Solution's And if expect you Flavor then longer how updates making or here margin expectations because are pre-pandemic year-to-date back build term? Just that influences front further the that the any second-half. I on on the could you to as whether or maybe progress you progress as in how our continue year-to-date how levels higher to least think us that

Mike Smith

I'd our Yes. one, I say, mean with very pleased we're progress. margin

year, right As that are Solutions XX%. lot stated a going I sequential the to things our not Flavor we of this in we Longer were direction, we're we -- margins last don't have the portfolio both as will Short with Consumer GOE term, we'll migration, We and program, Flavor a moving get side. -- going ceiling, higher. call, said on improvement. go in be XX%. look everything pre-pandemic, were like call, see that the strong It's little optimization, at however. we helping over Solutions the back a think belief the Like is we term-wise, but portfolio to to

like cost lumpiness running And run on based that. quarter-to-quarter, there and be good cost, things will

easy QX but -- year, Flavor we quarter. last to recovery. but So It had we're was good bullish an on Solutions' second a pretty comp, really compared of

Lawrence Kurzius

big basis this area. guidance And And hard we point raised pleased in both margin the year, for our right And of just our expansion that company to can I we're in improvement. with back -- not OP that be progress in operating it's XXX the direction segments pleased will a a add just we’ve long we of all quarter. seen in way. moving we're if the really to step We're that total it's the up and the margin I on this time, excited that, about level, had to it very in

Steve Powers

Great, again. thanks for that and congratulations

Operator

you. Thank

the BNP line with proceed comes next Our question your Max of Gumport from Please with question. Paribas.

Max Gumport

want Hey, regard to And the to congrats, second-half. gross with question. question I return everyone. thanks the for the margin to

margin expansion in So it so And gross look your ‘XX, at fiscal was would whether that, or basis, reversion fiscal to versus pre-pandemic seem quarter. the recovery? I it see updated gross towards that some nice year year to the in margin that when guidance ‘XX we the see better-than-expected range, actually progress imply means

we're implied what's chain terms of that tie supply to ramping pricing guidance up cost improving. to inflation, by trying in savings I'm what versus up, catching range hearing

But in move outlook. and go XQ we some levels that All point? there's get of quarters do wanted as you. I to Thank the year. lead that margins have prudence some embedded I you, I through closer And which would XQ thought probably continuing pre-pandemic recognize just for big and to this are on gross to could to clarity

Mike Smith

you just cover what to large the time has quantified Yes. point we math. multi-year XXX you're that And been I headwind you're a think pricing a the last basis dilution before, line. due XXX basis remember, large have impact year, the going said Max, range we point in a to is margin mean, to have I to costs over I mean but to when as

that. some We haven't having still talked of but about we're it much year, this

get will cost time normal through the CCI back inflation as programs, said, our future. We that over in we more

point, but it's the lot a That's an we four as to ago the see to dilution, at So is see quarter. trajectory hard that second this of we compare margin important the but in thing. upward gross years

dilution a gross or CCI is excited Even Even impact, really we're years. the with the me program pricing we've catching over the on positive recovered GOE on is under we're even programs. two -- that makes a based the showing with up that, negative impact. margin What that, last with

gives us that confidence forward. So going really

Max Gumport

then and act, Got more share and turning of to all you the I maybe to the as be points, the natural spices move as think see it. and year-over-year should flat there advertise in Understood. U.S. data performance. that, in in some think full fully as brand see about track distribution to in building we're year sort can And pickup start and improvement would TDPs significantly. approaching, a to so then we trends? yet of, nice it's dollar recovery the terms the it Should seem been because share today. does your that And not get But that way seasoning, seeing to a and we you've Is to be the we more you right back bring it? dollar through the start flagged as scanner

Brendan Foley

Yes.

of, improvement plans. Just long-term Americas, and also we like in those specifically of think we've categories, reflects, and seen the and in tailwinds our that current extracts our spices volume trends, within Max, kind the across sequential but even do sales unit, growth portfolio our

in So and of get we compounding really also that us brand on that investments. continue those kind effect and category management growth, focused volumes focus marketing, And to to allows of and invest that innovation. sustainable those

So as yes, profile half. back to we through I do improve that expect go the

called the improvement as an we in to start see should think improvement share. about dollar out, reasonably overall you As then we TDP, also

a to is out that so I And for. look think reasonable thing

performance brand in Europe. we What will, and is on and similar as is increased distribution, right we management driving we forward, and think trend marketing, this also innovation, our moving now a continue see category

our morning, say say And going continue I'm it, put a this would are said we is these moving has right -- direction. so to to far focus up in of guess, too. that I as So everyone is I Everything against. lot areas the outlook

So we our feel external off that shelf. way about performance same

Lawrence Kurzius

share don't that I don't there got gains to we've big in in miss certainly Europe, seasonings, is certainly I gains in in to miss share anyone gains the I the area it. categories, U.S. are And we noted, spices, an know got And our as Australia it, and and don't want justifiable. -- want And in -- and mentioned guys share you other focus if have we've Asia. of important

we same for believe that there. We're recipe get that. to following going the we're that confident the to get going as and to playbook, we're CAGNY, So we're with at that same we've said mixes did

Max Gumport

Great. Thanks very much.

Operator

Thank you.

Our from question. next Sachs. line Please Goldman with the comes question with proceed of Adam your Samuelson

Adam Samuelson

you. covered I the of let to thank my just Brendan, sure me lot team. there's making first, ground -- morning, Yes, Good whole and And everyone. Lawrence, a add been today. have congratulations guess

year-on-year If kind cadence comp, from, basis think as of actually half realized you first-half how of and year? on about the has the margins, that headwinds a we think the the the about of, from some just back into of that of in incentive been layering earnings much

quarter, second back maybe again, mean, gross in margins fourth volume question given seem It this the I second-half where sequential much -- gross particularly in guidance from second-half be biggest first imply margins, quarter? then, And coming the you in the on to to to improvement gross your historically, imply the margin doesn't the that's were would the so cadence. than seem higher doesn't quarter.

bigger make even between fourth implied price to just seem doesn't to there quarter, cost I'm mix up -- the in of -- trying just a Is usually, there's in the And and that we're something end it different the conservatism? business mix on I'm or at certainly guidance step just the high missing? that units there is just be range?

Mike Smith

Yes. mean, Like you said before. But on we if I SG&A, back second quarter to really second difficult the year, mentioned as second-half. mostly incentive quarter, was the of it quarter, it's in on back, I last last call the bill remember

comp incentive there. So adjustments we making obviously were to

the did in QX, is So it come loaded. of but that of second-half through majority some back

mean quarter quarter program. GOE -- prudent. highest talked to I -- of points I We're the are this say going we're at the in As level, lot on that far things the going realization be a on margin we've second ramp board as putting down. about to gross first -- Pricing it's high is think call. just margin, and I pricing but gross a I'd in got a very mean, we lot optimistic,

little that's still we again, moved being so of to mid-teen of But low And bit from going at show margin gross down. And a that. improvement. the prudent. a on, day, coming perspective, to that's haven't end we're having we're inflation So cost that we're the

Lawrence Kurzius

sure question, bit. be -- to we're differentiating want I confused your actually, And a because little I'm Yes.

that's higher is of Our quarter. and gross in underlying a the state. and That's mix our the in third margin business business, always fourth natural

like those year I have and continue in to holds, expecting both about expecting might We're it sounds are prior versus as that. still to think asking quarters that we you're relationship asking improvement -- you well. be

Adam Samuelson

I you And And year mix back second-half of will Lawrence. the second-half. much that, of, Thanks kind XX% the get in that really where the gets a quarter. I do basis for the the you year the versus XXX company, in doesn't consolidated gross -- were quarters the total, the margin certainly you, XX.X% points in into second-half versus and last above guess, percentage, year-on-year second the you appreciate higher And bit. you for it little

So XQ, -- think by the the… gross percent you be but that's that margin would usually, would higher

Mike Smith

points basis change the favorable, first-half, were we up margin to last XXX in year. gross The

basis midpoint. XX improvement The second-half basis the XX to guidance at point implies point

So second in Remember increase positive we a we're basis that year, showing points XXX-some had quarter last improvement. really QX.

why a XX it's points basis But bit that. that's happy first-half. in over we're So XXX of with points basis improvement, the

Adam Samuelson

it leave there I’ll Thank Okay. the line. and pass you.

Mike Smith

thanks. Great,

Operator

you. Thank

Our next with Matt of your Stifel. proceed question comes from the with line Smith question. Please

Matt Smith

what channel Wanted now in Hi, with ask to up U.S. activity good marketing you're the a product Americas new periods We've and in question sounds the some follow-up along like seen Consumer tailwinds. in morning improve measured and the distribution ramping more elasticities in specifically on or data, and congratulations. recent business positive

the trends the year, currently softer little should With the how which overall the in outlook on in about we're So to elasticity the commentary with are than line a elasticities in your U.S.? talking consideration second-half? about we seeing think prior

Brendan Foley

Having our recently. that fourth important better-than-expected. held and pressure remains and And price all, first for that, at case continue. pressure performance the look of we to think, quarter there to to still of be though, speaking, shelf, base quarter, it XXXX, the most is out in as up I been saw said has expect the what has pretty out kind we our off Consumer and it's own we Yet, broadly consistent under that call although elasticities Consumer with there. first in in the

we're so seeing And where deviation not been. from big a we've

we in worse. also, fact, consistent And trends a elasticity. see with that early regard say we're that price indicating through We right better. because that these Consumer. so examples of still increase rest come price getting very the on we're or any to to trends planning the and consistent base it yet far not still see case would we are had I we now April, in retail of year, sure measurably it's on I'm getting a But pressured our are of But then for planning don't

Lawrence Kurzius

-- in through that as think, though robust to growth I see that second-half, solid the we year. with really -- I U.S. the got volume our that the we've we've we're a that improvement as a compelling take demand would go And the we're Consumer. plans sustained specifically good, good business to you say in from going there's continue and reason believe to

Matt Smith

quarter, the you second And about follow-up momentum you're quarter? quarter? the but your the on recovery talked sequential more consumer Okay. ask how exiting I through normal progressing in it's quarter? current And talk on the for if in which levels, China. the the that. one could Thank year-ago it in how to It But environment, slowly. a lagged could improvement see were Did you contributed more growth expectations you in business and the about does compared the seeing you've more

Brendan Foley

in strong Well, robust is -- observed, I the view, No, still consistent. And quarter, that sequential of rebound, maybe sort up, being end one way did was the say thing I it say, of, they're as we it the the or terms a weren't dealing we would and isn't as China, of changes were as open of higher held our I see throughout unemployment. many of saw much improvement sort the we sequential all performance throughout quarter second any seeing of quarter. we with spending we think quarter performance but on, any pretty kind in as went And the that, through planning in the once Consumer quarter? yet us different a largely, was that obvious would the

And question meant sort maybe that your your China the on year the how think period thinking a I though recovery quarter. third though, you back we're third last in half of big the recall of quarter. in -- was rebound in question, with about

through But of quarter into we against kind that that. to in again, we're just, the we fourth, to those recovery third And again. expect of be quarter. level when the expect comparing trends going third get we the then same year So it's don't same up yet flow to this because different

to going to comparing et cetera. So against be we're challenging with lockdowns, COVID a very period respect

so quarter. more And like second the to is that likely feel

Mike Smith

Yes.

an in China, they comparison quarter QX tough last in year. comparison were maybe on year. the down it's strong recovery locked fourth a because last a is because QX is So summary, easier

Lawrence Kurzius

the to in the economy talking the on roller And a we and we in how team have office spent reopened, ago, question year-to-year lockdown, with ride -- don't the all China they a be? recovery as them creates comparison. quite want robust of that otherwise. couple going the time noise our was had And actually reopen. the management here lockdown, the call in lot of of a reopened, about just China It's days coaster lot that about on We strong. really to think anyone been I

considered four. our is question I the a all And going Our is to is -- start it is that our is it China it. with for tempered -- been three, -- a going little along a looks -- going to today, the in three in recovery two we've not now, but not guidance, outlook performance four? has a say or tempered actually growth but or just would our Right -- results bit also so we have our to the like captured

Matt Smith

it for thank I’ll leave that. there Okay, pass you it and on.

Operator

the our final from question Robert Please comes TD Ladies question. your you. Cowen. of with line with Thank and gentlemen, Moskow proceed

Robert Moskow

pleasure you, of thank Lawrence and you Hi, for been It's really these with Lawrence. me Brendan, both Especially you. congratulations working getting in you years. to a all and

Lawrence Kurzius

back so Rob. Thank Congratulations by And the welcome to you. much, way. you

Brendan Foley

to you. Congratulations

Robert Moskow

a little I'm we're you. jealous Well, -- of Yes.

-- research I to brands for -- versus you what Brendan, consumer So on, wanted about said got private honest. your but follow-up preferences be says to label. I what But about

every market data consumers prefer The and share is things growing I together I growing been know think data in I the private your is years, to terms you U.S.? you last of said And shows those want showing the thing has that year brands. two market for reconcile label the think. share the how of couple if do same in and

Brendan Foley

from acknowledge moderated, idea not unit is of our our growth as us of, the and items. finding Well, sort are also, I Those keeps pricing we we what think categories, label, I we're more recently. sort see of, especially mean, what private coming looking cheapest down unit of has shelf improvement. that to label. necessarily on And it and sequential for going trends, so and the show smaller sort it -- But consumer trends telling with path value, reinforced of feedback and to keep own the gaps seeing back to research I and consumers you we're think therefore, decelerate they're there been have more we -- own but and narrow, has especially some in trade private

of do And we've about also mix to brands. consumers the customers. our label do see we consistently been And business private think the prefer label lot just trying do brand private what recall, in with when we're and we between a

So a label we role in for our see categories. private

for management as lot sizes. And focused showing standpoint a sort a not seeing consumer been from Right on in so both signs we value. of pushing of and But us saw supported not provide our the to now, of through the there right that range down that we or We're more are trade We're a and as period they obviously shift as category that for going maybe really on line of We're value, this trends. consumer. dilutive it's through. seeing offerings look of are we've retailer. the to during more the hype it's inflationary now growth greater our we definitely many

But what certainly go highs several little that to see happen harder appears private for recessionary category are previous or comment we by If from but seen category, different not years, label. bit typically to periods. in during of again, the this we're back share. on gain to inflationary a I over times to hitting to seems we've It -- were then sort

our So perspective we on in certainly, but of, that's it, have are both kind the parts our of foot category.

Robert Moskow

Great. you. Thank

Brendan Foley

Rob. Thanks,

Operator

comments. to and Thank that turn back our gentlemen, floor I'll you. concludes question-and-answer Ladies session. final for Kurzius any the Mr.

Lawrence Kurzius

the to Thank all I'd tell and our you. great perspective of strategies Well, analyst the I like and company, you we about before and know, investor which and our helped let clarify our you've end, provided McCormick, to community the insights messaging. you have for shape opportunity the me, appreciated in

CEO. our you us transparent, be constructive, a interactions all really been even whether hold Whether you've mutually always shares, our buy, have a You better on have helped and sell a or and respectful. me have many held

well to strategic confident as success our continued breadth portfolio, reach to McCormick thank I'm want of trends, well our growth the I you all, consumer and with for our is positioned and as alignment investments.

value for strong foundation for a growth sustainable our and remain committed long-term to have shareholders. We driving

Kasey Jenkins

Thank you, today's Lawrence, you everyone joining and call. for thank to

to Xth in call. This up we of you free products. have U.S., the fire this contact for questions, the enter make July, McCormick And conference grills Canada If please with of concludes the energize, as and and you those further morning's feel have the any me. season summer some to

McCormick & Company (MKC) 29 Jun 232023 Q2 Earnings call transcript