What guidance did McCormick V's management provide for the next earnings period?

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What does McCormick V do and what are its main business segments?

- **Volume Growth Resilience**: Consumer segment up 3% in Americas, 4% in EMEA, driven by brand marketing and innovation despite 120bps gross margin pressure from tariffs.
- **Tariff Mitigation Focus**: 2025 tariff impact now $70M, with surgical pricing and CCI savings to offset. 2026 planning includes $140M annualized exposure mitigation.
- **China Gradual Recovery**: Foodservice softness offset by retail growth, with 2% year-to-date improvement in Asia Pacific.
- **Health & Wellness Trend**: Reformulation projects and natural ingredient demand driving Flavor Solutions growth in private label and emerging brands.
- **Financial Adjustments**: 2025 EPS now $3-$3.05, reflecting higher costs and 22% tax rate, with Q4 gross margin improvement expected.

**【CEO Summary Section】**
- **Strong Top-Line Growth**: Q3 organic sales grew 2%, driven by volume-led growth in Consumer segment, with 3% growth in Americas and 4% in EMEA. China Consumer faced softness in foodservice but remains on track for gradual recovery.
- **Tariff and Cost Challenges**: Gross margin pressured by 120bps due to higher commodity costs and tariffs, with $70M tariff impact in 2025 (vs. $50M previously). Mitigation efforts include pricing, alternative sourcing, and CCI savings.
- **Strategic Investments**: Maintaining volume momentum through brand marketing, innovation (e.g., McCormick Gourmet relaunch), and distribution expansion in e-commerce and QSR channels.
- **2025 Outlook**: Reaffirms volume-led growth, with adjusted EPS now $3-$3.05 (down from $3.03-$3.08) due to higher costs and tax rate. Gross margin expected to improve in Q4 as mitigation efforts take hold.

**【CFO Financial Commentary】**
- **Financial Performance**: Q3 adjusted EPS of $0.85, up 2% YoY. Consumer segment operating income +4%, offset by -2% in Flavor Solutions due to tariffs and commodity costs.
- **Cash Flow**: Q3 cash flow from operations $420M, down 9% YoY due to working capital timing. Free cash flow used for dividends ($362M) and capex ($138M).
- **Tariff Update**: 2025 gross tariff costs now $70M (vs. $50M) and annualized exposure $140M (vs. $90M). Surgical pricing and CCI savings to offset impacts, with focus on 2026 mitigation planning.
- **Tax Rate**: Full-year tax rate expected at 22%, up from 20.5% in 2024 due to discrete items not repeating.

**【Q&A Highlights】**
- **Volume vs. Pricing Balance**: CEO emphasizes maintaining volume growth through strategic pricing, with elasticity monitoring. Q4 pricing impacts expected to be surgical and targeted.
- **China Recovery**: Slow foodservice recovery offset by retail growth, with 2% year-to-date improvement in Asia Pacific.
- **Reformulation Trends**: Increased demand for natural ingredients and health-focused products, with McCormick winning share in private label and emerging brands.
- **Acquisition Strategy**: Focus on bolt-on deals in condiments, sauces, and flavor technologies, with no comment on Kraft Heinz speculation.
- **Tariff Mitigation**: Weekly reviews of mitigation plans, with $140M annualized exposure expected to be offset through productivity, sourcing, and pricing.


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