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What were the key takeaways from McCormick V's earnings call?

- **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.


McCormick & Company, Incorporated (MKC) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

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Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

MKC.V

MKC.V fundamentals

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