MCCORMICK & CO INC

McCormick is a global leader in flavor, manufacturing, marketing, and distributing herbs, spices, seasoning mixes, condiments, and other flavorful products to the entire food and beverage industry, including retailers, food manufacturers, and foodservice businesses. The company operates in two business segments: Consumer and Flavor Solutions. Demand for flavor is growing globally, and across both segments, McCormick has the customer base and product breadth to participate in all types of eating occasions. The company's major sales, distribution, and production facilities are located in North America, Europe, and China, with additional facilities in Australia, Central America, Thailand, and South Africa. The most significant joint venture is McCormick de Mexico, a prominent food company in Mexico with a broad portfolio including mayonnaise, spices, marmalades, mustard, hot sauce, and tea sold under McCormick brands.

McCormick is a global leader in flavor and describes itself as the brand leader globally in the spices and seasoning category and one of the brand leaders globally and in the U.S. in the condiments and sauces category. In the Consumer segment, there are numerous competitive brands of spices and seasonings and condiments and sauces in the U.S. and international markets, some owned by large food manufacturers and others by small privately-owned companies. In the Flavor Solutions segment, competitors include those that specialize in a particular range of products with limited geographic reach, as well as large publicly held flavor companies that are more global and tend to focus on providing integrated solutions extending beyond flavor through other functional and nutritional ingredients. The company's growth strategies include customer engagement and product innovation based on consumer insights, building brand recognition and loyalty through advertising and promotions in the Consumer segment, and differentiating through culinary and consumer-inspired flavor development, breadth of product offering, and customer engagement in the Flavor Solutions segment.

McCormick generates revenue by manufacturing, marketing, and distributing herbs, spices, seasoning mixes, condiments, and other flavorful products. The company operates in two business segments: Consumer and Flavor Solutions. In the Consumer segment, products are sold to consumers under a number of brands through a variety of retail channels including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce. In the Flavor Solutions segment, products are used by food and beverage manufacturers as ingredients in their finished goods and by foodservice customers for menu items. The company also partners in a number of joint ventures involved in the manufacture and sale of flavorful products. Consistent with market conditions in each segment, the Consumer segment has a higher overall profit margin than the Flavor Solutions segment.

In the Consumer segment, McCormick's leading brands in the Americas include McCormick, French's, Frank's RedHot, Lawry's, Cholula, and Club House, as well as Gourmet Garden and OLD BAY. The company also markets authentic regional brands such as Zatarain's, Stubb's, Thai Kitchen, and Simply Asia. In the EMEA region, major brands include Ducros, Schwartz, Kamis, and La Drogheria brands of spices, herbs, and seasonings and an extensive line of Vahiné brand dessert items. In the APAC region, the company markets spices and seasonings under the McCormick brand, DaQiao, as well as other brands, dessert products under the Aeroplane brand, and packaged chilled herbs under the Gourmet Garden brand. Approximately two-thirds of Consumer segment sales are spices and seasonings and condiments and sauces. In 2025, the Consumer segment contributed approximately 58% of consolidated net sales and 67% of consolidated operating income. The Consumer segment's net sales were $3,950.3 million ¹ in 2025, compared to $3,848.5 million ² in 2024. Segment operating income for the Consumer segment was $734.9 million ³ in 2025, compared to $740.3 million ⁴ in 2024, with a segment operating income margin of 18.6% ⁵ in 2025 versus 19.2% ⁶ in 2024.

In the Flavor Solutions segment, McCormick provides a wide range of products to multinational food manufacturers and foodservice customers, including seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company's range of Flavor Solutions remains one of the broadest in the industry. In 2025, the Flavor Solutions segment contributed approximately 42% of consolidated net sales and 33% of consolidated operating income. The Flavor Solutions segment's net sales were $2,890.0 million ⁷ in 2025, compared to $2,875.2 million ⁸ in 2024. Segment operating income for the Flavor Solutions segment was $359.1 million ⁹ in 2025, compared to $329.5 million ¹⁰ in 2024, with a segment operating income margin of 12.4% ¹¹ in 2025 versus 11.5% ¹² in 2024.

On January 2, 2026, McCormick completed the purchase of an additional 25% ownership interest in McCormick de Mexico for a purchase price of $750 million ¹³, which increased its ownership to a 75% controlling interest. On March 31, 2025, the company purchased substantially all of the assets of Jurado, Inc., a supplier of chili mash located in Las Cruces, New Mexico, for a purchase price of $38.1 million ¹⁴, including $14.3 million ¹⁵ associated with a customary purchase price adjustment and $4.0 million ¹⁶ of payments to be made in $2.0 million ¹⁷ installments on the first and second anniversary of the acquisition date. During 2025, the company recorded $21.1 million ¹⁸ of special charges, including transaction and integration expenses, consisting principally of $15.9 million ¹⁹ of employee severance and related benefits associated with SG&A streamlining actions, $3.3 million ²⁰ associated with other actions, and $1.9 million ²¹ of transaction and integration costs. The company repurchased 0.5 million ²² shares of common stock for $34.8 million ²³ in 2025. As of November 30, 2025, approximately $414 million ²⁴ remained of a $600 million ²⁵ share repurchase authorization approved by the Board of Directors in November 2019. Total dividends paid were $483.0 million ²⁶ in 2025, and dividends paid per share were $1.80 ²⁷ in 2025, a 7.1% ²⁸ increase per share. In November 2025, the Board of Directors approved a 6.7% ²⁹ increase in the quarterly dividend from $0.45 ³⁰ to $0.48 ³¹ per share.

In fiscal 2025, McCormick achieved net sales growth of 1.7% ³² as compared to 2024, with net sales of $6,840.3 million ³³ in 2025 versus $6,723.7 million ³⁴ in 2024. Operating income was $1,070.8 million ³⁵ in 2025, compared to $1,060.3 million ³⁶ in 2024, reflecting an increase of 1.0% ³⁷. Gross profit margin was 37.9% ³⁸ in 2025, a decrease of 60 basis points ³⁹ from 38.5% ⁴⁰ in 2024. Diluted earnings per share was $2.93 ⁴¹ in 2025 and $2.92 ⁴² in 2024. Excluding special charges, adjusted diluted earnings per share was $3.00 ⁴³ in 2025, compared to $2.95 ⁴⁴ in 2024, representing an increase of 1.7% ⁴⁵. Net cash provided by operating activities was $962.2 million ⁴⁶ in 2025, compared to $921.9 million ⁴⁷ in 2024.

For fiscal 2026, McCormick expects net sales to grow between 13% and 17% ⁴⁸ compared to 2025, including an 11% to 13% ⁴⁹ increase as a result of the acquisition of a controlling interest in McCormick de Mexico and a 1% ⁵⁰ favorable impact from foreign currency rates, or to grow from 1% to 3% ⁵¹ on an organic basis. The company expects an increase in adjusted operating income of 16% to 20% ⁵² compared to 2025, including a 1% ⁵³ favorable impact from foreign currency rates, or to increase by 15% to 19% ⁵⁴ on a constant currency basis. Adjusted diluted earnings per share is projected to range from $3.05 to $3.13 ⁵⁵ in 2026, with an expected increase of 2% to 5% ⁵⁶, which includes a 1% ⁵⁷ favorable impact from currency rates, or to increase by 1% to 4% ⁵⁸ on a constant currency basis.

McCormick's long-term annual growth objectives in constant currency are to increase sales 4% to 6% ⁵⁹, increase adjusted operating income 7% to 9% ⁶⁰, and increase adjusted earnings per share 9% to 11% ⁶¹. Over time, the company expects to grow sales with similar contributions from its base business, new products, and acquisitions. Acquisitions are expected to approximate one-third of sales growth over time. The company focuses on acquisition opportunities that meet the growing demand for flavor and health, with a geographic focus on acquisitions that build scale where it currently has presence in both developed and emerging markets. The acquisition of a controlling interest in McCormick de Mexico is expected to create opportunities for further growth in the Mexican market and provide a strategic platform for further expansion in Latin America.

McCormick projects its brand marketing investments in 2026 to rise by low to mid-teens digits, including the impact from the acquisition of the controlling interest in McCormick de Mexico, compared to 2025. The anticipated increase in adjusted operating income reflects recovery of adjusted gross margin, accretion from the acquisition of the controlling interest in McCormick de Mexico, and cost savings from the CCI program, partially offset by increased commodity costs and an increase in SG&A expense, including performance-based employee compensation expenses and investments aimed at driving volume growth, particularly in brand marketing. The company estimates that its 2026 adjusted effective tax rate, including the net favorable impact of anticipated discrete tax items, although at a lower amount than in 2025, will be 24.0% ⁶² as compared to 21.5% ⁶³ in 2025.

McCormick expects 2026 capital expenditures to approximate $275 million ⁶⁴. The company's CCI program is continuing to fuel growth investments while also driving operating margin expansion. The company expects 2026 transaction and integration expenses to include a step-up in inventory to fair value related to the recent acquisition of an additional 25% ownership interest in McCormick de Mexico, which will be recognized in cost of goods sold as the related inventory is sold. The company anticipates that net sales will benefit from favorable volume and product mix and pricing.

McCormick expects 2026 capital expenditures to approximate $275 million ⁶⁵. As of November 30, 2025, approximately $414 million ⁶⁶ remained of a $600 million ⁶⁷ share repurchase authorization approved by the Board of Directors in November 2019. The company's dividend history shows total dividends paid of $483.0 million ⁶⁸ in 2025, $451.0 million ⁶⁹ in 2024, and $418.5 million ⁷⁰ in 2023, with dividends paid per share of $1.80 ⁷¹ in 2025, $1.68 ⁷² in 2024, and $1.56 ⁷³ in 2023. In November 2025, the Board of Directors approved a 6.7% ⁷⁴ increase in the quarterly dividend from $0.45 ⁷⁵ to $0.48 ⁷⁶ per share.

McCormick's fiscal 2026 outlook continues to reflect prioritized investments in key categories to sustain volume trends and drive long-term profitable growth while appreciating the uncertainty of the consumer and macro environment, including global trade policies. The company expects inflation to continue in 2026 at a similar level to that experienced in 2025. The company's attempts to offset cost pressures, such as through increases in the selling prices of some of its products, may not be successful, and higher product prices may result in reductions in sales volume. Changes in global trade policies, including tariffs, have caused inflationary pressures and higher costs on certain raw materials and imports, and if maintained, could pose a risk to the company's business and results of operations.

McCormick faces material risks from customer concentration, as sales to Wal-Mart Stores, Inc. accounted for approximately 12% ⁷⁷ of consolidated sales in 2025, 2024, and 2023, and sales to PepsiCo, Inc. accounted for approximately 12% ⁷⁸ in 2025 and 13% ⁷⁹ in both 2024 and 2023. The loss of either of these large customers could have an adverse effect. The company also has significant exposure to raw material price volatility, with the most significant raw materials being dairy products, pepper, garlic, onion, capsicums, salt, tomato products, sugar, and soybean oil, which are subject to fluctuations in market price and availability caused by weather, market conditions, and global trade policies including tariffs. As of November 30, 2025, the company had approximately $5.3 billion ⁸⁰ of goodwill and approximately $3.0 billion ⁸¹ of other indefinite-lived intangible assets, and an impairment of these assets could negatively affect results. The company has a substantial amount of indebtedness outstanding of approximately $4.0 billion ⁸² as of November 30, 2025, which could limit its ability to borrow additional funds and increase its vulnerability to adverse economic conditions. Additionally, approximately 39% ⁸³ of sales in fiscal 2025 were from non-U.S. operations, exposing the company to risks from foreign currency fluctuations, trade policies, and geopolitical conditions.

Management's message emphasizes that in 2025, McCormick achieved net sales growth of 1.7% ⁸⁴ as compared to 2024, with operating income increasing 1.0% ⁸⁵ to $1,070.8 million ⁸⁶. The company's long-term annual growth objectives in constant currency are to increase sales 4% to 6% ⁸⁷, increase adjusted operating income 7% to 9% ⁸⁸, and increase adjusted earnings per share 9% to 11% ⁸⁹. For fiscal 2026, management expects net sales to grow between 13% and 17% ⁹⁰ compared to 2025, an increase in adjusted operating income of 16% to 20% ⁹¹, and adjusted diluted earnings per share projected to range from $3.05 to $3.13 ⁹². The strategic priorities emphasized for the period ahead include prioritized investments in key categories to sustain volume trends, driving long-term profitable growth through the CCI program, and realizing meaningful contributions from the acquisition of a controlling interest in McCormick de Mexico, which closed on January 2, 2026.