McCormick & Company reports better-than-expected second-quarter earnings

McCormick & Company, Incorporated (NYSE: MKC), a global leader in flavors, today announced financial results for the second quarter ended May 31, 2024. The company reported a slight decrease in sales of 1% compared to the same period last year.

This decline was consistent on both a currency-neutral and constant currency basis. The decline in sales was primarily due to a 1% decline in volume in the Flavor Solutions segment, which more than offset the increase in volume in the Consumer segment.

Operating income for the quarter was $234 million, compared to $222 million in the prior year. Operating income was $236 million, net of special charges, compared to $235 million in the prior year. Earnings per share (EPS) improved significantly to $0.68, compared to $0.56 in the prior year period. Adjusted EPS was $0.69, compared to $0.60, reflecting the positive impact of separate tax benefits and improved joint venture performance, particularly McCormick de Mexico.

McCormick & Company Beats Fiscal Second-Quarter Earnings and Revenue Expectations

Compared to market expectations, McCormick’s second-quarter 2024 results exceeded analyst forecasts. Expected earnings per share for the quarter were $0.59, but the company beat expectations with actual earnings per share of $0.68.

This significant outperformance can be attributed to higher operating income and favorable tax benefits. Adjusted EPS of $0.69 exceeded expectations, highlighting the strength of McCormick’s operational efficiencies and strategic investments.

Revenue expectations for the quarter were set at $1.63 billion, and McCormick reported actual revenues of $1.643 billion. Although sales declined 1% year-over-year, the company met revenue expectations, indicating stable performance in the face of challenging market conditions. The slight decline in sales was attributed to strategic sales and lower demand in certain segments, which was anticipated by the market.

McCormick & Company confirms fiscal 2024 guidance, expects EPS in the range of $2.76 to $2.81

McCormick maintained its fiscal 2024 outlook with a continued focus on strengthening volume trends and prioritizing investments to drive profitable growth.

The company expects sales to range from a 2% decline to flat growth compared to 2023, or a 1% decline to 1% growth in constant currency. This guidance reflects the anticipated impact of prior pricing actions and strategic decisions made in 2023, including the discontinuation of low-margin businesses and asset divestitures.

Operating income is expected to increase 8% to 10% in 2024, driven by gross margin growth and significant investments in brand marketing. The company expects adjusted operating income to increase 3% to 5%, or 4% to 6% on a constant currency basis.

McCormick forecasts 2024 EPS to be in the range of $2.76 to $2.81 and adjusted EPS to be in the range of $2.80 to $2.85, representing growth of 4% to 6% or 5% to 7% on a constant currency basis.

Disclaimer: The author does not own or hold a position in any of the securities discussed in the article.

About the author

Tim Fries is the co-founder of The Tokenist. He holds a BS in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim was a senior associate in the investment team at RW Baird’s U.S. Private Equity practice and is a co-founder of Protective Technologies Capital, an investment firm specializing in sensor, security and control solutions.