McCormick & Company Inc.
Adjusted earnings came in at 80 cents per share, topping analysts' expectations of 69 cents. GAAP diluted earnings were 56 cents per share, down from 65 cents a year earlier.
Sales Growth And Margin Expansion
Net sales benefited from a 2.7% favorable currency impact, while the acquisition of McCormick de Mexico contributed 12 percentage points to sales growth. Organic sales increased 1.7%, driven by pricing.
Operating income rose to $276.4 million from $245.8 million a year earlier. Adjusted operating income increased 30.1% to $336.4 million, while adjusted operating margin expanded 180 basis points to 17.4%.
Gross profit margin improved 270 basis points to 40.2%, supported by the McCormick de Mexico acquisition, pricing actions, cost savings and a $28 million IEEPA tariff refund, which contributed about 140 basis points to margin expansion. Higher commodity costs and expenses related to the Middle East conflict partially offset those gains.
Segment Performance
Consumer segment net sales climbed 23% to $1.143 billion, helped by a 20% contribution from McCormick de Mexico and a 2% currency benefit. Organic sales increased 1% as higher pricing offset weaker volume and product mix. Adjusted operating income for the segment rose 33% to $217 million.
Flavor Solutions posted net sales of $794 million, up 9% from a year earlier. Results included a 3% currency benefit and a 3% contribution from McCormick de Mexico. Organic sales rose 3%, driven by pricing and higher volume and product mix. Adjusted operating income increased 26% to $120 million.
Cash Flow And Outlook
Operating cash flow totaled $430.7 million during the first six months of the fiscal year. As of May 31, cash and cash equivalents stood at $331.2 million. Short-term borrowings and current long-term debt totaled $1.34 billion, while long-term debt was $3.60 billion.
McCormick affirmed its fiscal 2026 adjusted earnings guidance of $3.05 to $3.13 per share, compared with analysts' estimate of $3.09. The company also maintained its sales outlook of $7.73 billion to $8.00 billion, versus the consensus estimate of $7.88 billion.
CEO Brendan M. Foley said, "Looking ahead to the rest of the year, we expect to sustain the momentum in Flavor Solutions and increase reinvestment to improve Consumer volume trends and organic sales."
During the earnings call, management said near-term profit growth will be pressured by ERP-related technology spending, higher incentive compensation and increased brand marketing investment.
The company added that cost inflation is tracking near the high end of its mid-single-digit outlook, at about 6%, primarily because of the Middle East conflict. Management expects most of the tariff refund to offset those higher costs.
Executives also said Consumer volumes should improve sequentially in the third quarter and return to growth in the fourth quarter. Flavor Solutions continues to benefit from faster-than-expected customer reformulation activity and growing demand for health-and-wellness products.
McCormick said changing consumer preferences toward healthier eating are creating new growth opportunities across its Flavor Solutions business.
The company pointed to strong innovation activity in protein, sports nutrition, beverages and better-for-you products, while noting that health and wellness initiatives now account for a majority of customer project briefs.
Management also said reformulation projects are increasing as food manufacturers adapt products to meet evolving consumer demand.
MKC Price Action: McCormick shares were up 5.63% at $50.23 at the time of publication on Thursday, according to Benzinga Pro data.
