McCormick & Company (MKC) 26 Jan 232022 Q4 Earnings call transcript

Good morning. This is Kasey Jenkins, Chief Strategy Officer and Senior Vice President, Investor Relations. Thank you for joining today’s fourth quarter earnings call. To accompany this call, we have posted a set of slides at ir.mccormick.com. With me this morning are Lawrence Kurzius, Chairman and CEO; Brendan Foley, President and COO; and Mike Smith, Executive Vice President and CFO.

will certain we financial call, this refer non-GAAP to measures. During press measures of are related morning’s those nature and included and non-GAAP this results The GAAP financial the slides. the reconciliations in release to comments, our certain rounded. In are percentages information. refer Please for our presentation to complete contains forward-looking statements. projections other and presentation Today’s results materially projected. from Actual could differ those update The new or events information, to publicly forward-looking or undertakes company obligation statements, any future other revise no whether of factors. because statements forward-looking refer Slide for more our Please information. X on to

turn now I the to Lawrence. discussion will over

us. joining for Thanks everyone. morning, Good

Our challenging on and impacted expectations cost in progress At fourth a momentum our consumption and ability ended reshape and structure. to performance. with starting that quarter volatile year positive trends we flavor concluded and financial year and time, to our the our levels solutions supply meaningful with consumer service the demand, deliver same our stabilized

done, more confidence our in to our strong. remains While for is and work beyond be XXXX outlook

focused I executing is on organization on priorities the squarely Our mentioned. just

the our are important All of the execution results. strategies successful drivers of stronger delivery and which in of

X% our quarter would currency, sales constant COVID-related our total disruptions the impacted have segment on of X% quarter Fourth in X%. in X, below Slide expectations. currency. declined year our Greater-than-expected impact grown to the from China a for expected of both at period, sales growth sales range quarter Consumer fourth but results, including X% sales currency, grew results. approximately unfavorably excluding unfavorable constant implied McCormick ago and impact our In China guidance X% by from range, our fourth within in Turning the our the

the with our further growth growth. anticipated in even We fourth segment quarter higher tempered restocking Consumer had Americas comparisons

X% sales Russia underlying X% performance, and Basics accelerate decline year, expected in business in the contribution a India quarter China us decline in Despite X% an sales divestiture constant a growth to a decline volume positions from underlying partially XXXX. actions compared the to strength X% the disruption. our X% offset low-margin of COVID-related our and exit volume and volume sales mix, and fourth growth quarter the year-over-year by As in product of sales consumer last from well business pricing fourth tempered from reflected currency Kitchen

our our China, particularly fourth sales our was consumer momentum where regions. across grew increasing quarter consumption and excluding customers’ is all through demand reflected this flavor, in continued Consumer segment, In the those insights or research. Solutions our X%. for proprietary outstanding, segment, U.S., recent Consumers strengthened, most branded whether in our in performance trends products total Flavor our In consumption product growth our

of eating to consumer strength continues in Our flavor. alignment, combined category alignment fundamental and valuing advantaged at to home, portfolio, with flavorful for and differentiated underscore brands plus clean with the the deliver long-term positioning McCormick’s results. and cooking broad of This trends our continues long-term trusted our growth

profit, operating income XX% to short expectations. fell per adjusted share earnings of in our of XX% our constant or currency Moving adjusted X% and decline decline of

particularly factor, the will inventory moment moment. mix comparison U.S. driving was restocking in in due XXXX lower Let segment. primarily differences me seasoning to Unfavorable to and expectation. was our both stemming in a XXXX, product on a our a which quarter fourth sales Consumer I and from spend This bites discuss

sales and Our unfavorable related mix reflected segments. an product China in sales mix results the lower-than-anticipated between also to

leverage. in lower two we China, In operating realized shutdowns plant addition, COVID-related with

quarter that been in that progress we to quarter, of fourth have one-time elevated was the our we made discrete impact incurring cost the During flavor high run-rate the meaningful business. demand with offset in The meet of unexpected costs to issues. lower parts solutions in our reduction by progress of

positive to expect forward. going our results see in benefits we However,

last increasing discussed To that earnings our X, costs customers. our X Turning are normalizing service supply Slide and to targeted next $XXX increasing end, In our to costs have chain years. over of strengthening while our committed the call, ability efficiencies realization we also XXXX. we to we the supply profit million chain of in elimination

We entire organization cost million streamlining our targeting also of actions taking an now across $XX are incremental savings.

The combination actions, program, these effectiveness is our our to global of operating or comprehensive CCI is continuous improvement which incremental savings.

its has discipline program of we track Our record program and CCI well-established drive proven results. a success to are leveraging

which to impact the our up in XXXX, $XX results to scale through realize year annual of profit We the expect program can we cost effectiveness through and increased operating of see coming the approximately progresses. $XXX enabling to expect million drive the global savings we P&L We million, expect realization. as

let details share our more me on Now, actions.

allowing we During drive us model scale more our to and to year, our leverage transitioned reductions. operating cost global effectively last

As taking our to we entire model actions streamline and our advance more structure we and are corresponding processes, collaboration streamline our efficiently, that further strengthen work our the workforce align organization. across to

of date by some on underway. component U.S. is X. This very streamlining progress which will a other considerable is February separation large retirement of involuntary. be we which have actions streamlining We a of the will along be with A targeted our program, actions voluntary are actions, far making followed

As keeping shared for will in our care always, value. we with employees

Moving supply to the chain.

their our keeping have years we to few over remains supply global strengthened in supply while this continued customers resiliency our top in And past the supply expect supporting Our growth. chain volatility achieve we chain, priority and priority.

demand additional customers our to supply inflation, over and past incurred inefficiencies years, responded develop in costs chain. to volatility service we we As our above the seen have several

are than of disruption. levels and service McCormick our expected. of levels focus of can Some costs for to of and occur longer and XXXX, supply In in our support normalization customers for has decisions buildup the made and of periods costs these taken that investments both a some result with the chain the growth continued inventory

strengthening ability our inventory As supply we during began to service and quarter, our while structure, our on resiliency capacity call, implement quarter levels initiatives and cost stated optimize fourth our customers. we to the third chain our increase reduce to

initiatives. details some for on Now these

we level inventory goods foremost, we outliers, us to pare performance, stabilized on First at operations. our maximize from strong hand. costs and have our continue Operating service finished enables while our within to some co-packers and back excessive back of to resolve a this our reduce use and position levels and of rebuilt labor high

we with to Starting to to inefficient as of locations unpopular operating XX/X most staff shift quarter, expect be allows a we normal and This schedule more on the during labor us fourth eliminate pattern. difficult it reductions, now the significant cost with shifts. most driver reinstated our

move and pandemic, away from we turnover more stabilized staffing the absenteeism issues during have seen by line. to as we Additionally, standard rates and industry-wide the our workforce returned labor in

we throughout the facilities are structure increasing quarter, leadership levels our our and we roles. the During Simultaneously, optimized of capability upgraded our talented team. key the

for pieces of automated for bringing a a automation, accelerating also line are equipment packaging format. high-volume completely individual to We

chain We Americas the months, the half expect through XX% already past reduction. And planned of have of we these supply X workforce. initiatives over our to reduce achieved

Next, turning to our capacity.

We continuing are we by service repatriation areas. demand. while both supporting reliability in These co-packers and elevated enabling up future the meet of to investments capacity customer investing constrained production and better at manufacturing to also the scaled growth increase enable the

the at volume, In been flavor and seasonings a of demand past including has strong. and for X our our each Solutions Flavor mid years remains growing flavors single-digit rate segment, encapsulation,

quarter. to with Our expansion the investments be are dry capacity the well track second during of additional seasoning on bonus online in as spring capacity footprint as

have Consumer segment, of been items. Meanwhile, packaging our in co-packers for such our large format sized using as high-demand we targeted value some

in we on Now to some started past the given are of the formats. to these investments lowest repatriate efficiencies track flight, already Overall, spending and XXXX co-pack in the gained in years. we the X have be for

inventory chain last levels initiatives quarter. both years. has finished issues inventory an of during by the to are few the perspective, We safety been historical reduced supply From which and material fourth to disrupted executing the raised we raw on and return good stock

to progress we results by we are and delivering initiatives are confident encouraged aware our the While far. make, we have so are further

progress more additional realize environment, we will to from As changes. a normalized these benefits we

expect transportation shipping and less we in reductions than streamline to and freight see example, other inefficiencies. expedited truckload costs will For

logistics expense are With lower levels, opening to efficient we the material center, new before accelerating realizing the eliminate we savings. fully manufacturing able expensive and losses. of With even inventory inventory reduction, warehouse low external expect the recent Maryland costs more our

increase of reflected through our challenges in approach managed our meet years. impact profit our The supply while ability chain to last ultimately as meeting cost, I our inventory disciplined supply am needs. chain actions resolving normalize is the and enhance supply have our realization expected XXXX and confident several over demand, prioritizing cost customers’ levels within We our various outlook. our in increased reduce efficiency chain to our to the

XXXX. of on more we global forward with effectiveness you after has momentum sharing operating first Our and our quarter look program our progress considerable to

business to moving of Now our each fourth for quarter segments. updates

quarter full of businesses sales previously, factors Consumer year Slide demand COVID-related exits the the our early on performance. segment impacted dynamics trade the These as between mentioned to was factors in year impacted high X, Turning inventory in as as divestiture, Kitchen well by China years. COVID-related Basics performance lapping well in as disruptions and also the

Importantly, have with we the Americas CAGR, region, trend. driven ending the annual are we on but by at grown a positive in year X-year momentum basis, sales consumption our X% a

our lapping higher sales with of we the some sales than we that were Starting XXXX regional quarter on during highlights because for growth. Americas, quarter, and were which fourth shipments this consumption. Now are impacts and the restocking, consumption

As holiday need strong the the three season of much shifted their holiday fairly consumption during line despite quarters season. in customers entered for did we year, to the replenish having and the year as inventory this consumption first consumer with not

high-margin on XXXX, fourth growth not and restocking our the restocking volume That sales was the our estimate quarter did impact, performance the expected this quarter comparisons. related unfavorably of was resulting as in to better in of and the than growth underlying and stronger and appreciate herbs year-over-year quarter level third our growth especially said quarters. sales such, fourth this fourth We second had excluding We X% in impact rate spices these fully holiday impacted year.

as retailer consumption year an and the resulting our confidence pandemic-driven restocking level quarter, and out will have well fluctuations visibility. We we we inventory that of season of move in holiday dynamics normalized first increased from have as confidence as have this levels the between

of was was year. branded growth as consumption this strongest data the U.S. unmeasured IRI with consumption combined channel the by X% total quarter, our portfolio Our indicated

investments the the and service Our merchandising continued the level and year, marketing was with our holiday of our restoration stronger stabilization proved be shy standards. effective. service fourth disruptions, of to of of quarter brand pre-pandemic supply best in levels our And just

sales, unit all accelerated stabilized. have distribution volume our TDPs and Our sequentially or consumption total dollar points and

navigate to was our to messaging, to value current and In our fourth and consumer to responding insights are are of the seasoning, learning according trading Consumers quarter performance sizes year. the strongest spices up the larger environment. our

continuing to are Lawry’s and on We the we positive. results spice launched range quarter last early everyday build distribution are

trading We and private consumers for line incremental this are profit sales the to as up seeing to label. are category

share for strongest gained recipe Across quarter sales we during packaging portfolio, the the In the of fifth the share and we and EMEA, first fourth growth trends mixes, consecutive also strengthen continuing gained sauce ended in our in quarter. In quarter. hot we the with the year supply, mustard our quarter improved to in XXXX. are with

Our effective fourth lowest. year three the product decline, the our volume realization, the quarter quarters growth accelerated new pricing the first and highest and our with of versus price

and Our sequentially. strong continued consumption momentum accelerated

and and as last quarter gained by performance spices Eastern UK share the UK, the Those we the for and in year, versus RedHot are hot compared in continuing for fourth somewhat and with full the again year the gain herbs, as Europe year sauce category to driving year XXXX. gains full were offset the well in softer Frank’s seasoning. versus and XXXX the In In share we last quarter France. to

one UK, the mix leadership number XXXX in during advanced to we Additionally, recipe position. the our share

as XXXX, entered confident COVID-related low the after in which will well In for are momentum India, first year the of the of business the quarter lap we growth our region, margin quarter in China. the the as continued was EMEA we As by the in XXXX we disruption in and exit region. Asia-Pacific impacted

we into disruption quarter continued Chinese expected our expecting with XXXX New the are first outlook, of Year. an recovery in after Reflected the

continue we of While the pressure, growth long-term business China. believe in trajectory we are short-term in currently experiencing the our to

in we driving with plans and products sharing this positive initiatives weeks. to brand CAGNY from and a management more are and to our XXXX new marketing, Our come momentum look few forward growth at category

sales reflected Solutions well products. to Turning actions as volume pricing growth higher Flavor on as Slide growth in base X, new

growth Americas in double-digit Our basis, sales been an in grown in X% all three year, performance for regions. a regions, every with X-year we the CAGR XX% sales at quarter resulting all annual strong led growth the have full has and On outstanding by EMEA growth year.

some for Now regional highlights.

including quarter the strong as and flavors sales products well applications, seasonings fourth market health quarter foodservice broad-based nutrition Americas growth Growth the branded performance as of strongest for the flavors, Our year. year. performance snack in growth end drove fourth well was and for as our our as

of as from are strong outstanding in EMEA, fourth all FONA capped and McCormick X% of more performance seasonings growth, contributing Flavors we quarter than continue and to institutional share as growth and benefits both hot an year distribution and XX% gaining with In significant combined our foodservice also and We XXXX pricing. categories with approximately and realize capabilities well expanding XX% the growth to strengthen continues spices volume in branded customers including foodservice product sauce. new Demand products in year. last of the in restaurant

further in delivered of and strong performance the growth with across quick-service flavor. partially momentum year COVID-related menu markets strong APC QSR customer core our sweet for Growth APV, menu channels. activities. In by their China. solid led the are remains driven We base distribution realizing the by penetration We in region driving we QSR and all promotional despite restaurant winning customers, are or in the our growth disruptions from customers, our expanded with item

chain and certain contributions Across Solutions regions, pricing. in continues double-digit And growth beginning yield. demand, customers business already our of and our with markets pressured China, to both parts drove customers. is Flavor the supply of to We driving has Americas costs outside volume service appreciate by the are and EMEA working meet to remained we high our strong. this extraordinary collaboration to our our with for be demand Overall, us encouraged results from

this sales growth are Flavor outstanding, delivering segment. profit our not in Solutions been While we has growth

both recovering to customers. and driving our supply Solutions committed Flavor growth ensuring McCormick keep we restoring are We while for profitability, in customers margin our and

are margin confident we recovery price through will realization. We achieve actions, three effective

the and year. increases are recover up to price we pace inflation Our of pricing live only cost or the last to catching now are beginning inflation

The particular, and the in driving operating elimination continued finally, of in mentioned, our margin segment. inefficiencies culinary in We more expect inspired just and The focus including and of weeks. customer supply successful about driving I our effectiveness global And have portfolio. in are engagement of significant investments at impact the strength few portfolio program we of our on outstanding high-margin and approach growth plan capacity the our execution Flavor solution our innovation Solutions Solutions a CAGNY the in capabilities, flavor to chain Flavor recovery a sharing momentum. look parts growth to

over Now some it summary to turning before Mike. comments

performance. Turning we our that focused to Flavor Slide differentiate remains global of on fast-growing XX, the and categories continue our demand to foundation great growth have sales for intentionally will

digital are capitalize rise them purpose-minded are through with positioned than engagement, flavor practices. for These driving demand and the reach stealing generation cooking, healthy we customers’ is at a our We strong continue McCormick our occasion trends on the during to that for consumer in uniquely of meal brands great products capitalize taste but on trusted this and the great and global every breadth pandemic, taste today increased greater delivering long-term long-term more flavorful our rate. and global younger relevant the demand for accelerated experiences flavor the and ever, are products portfolio trends to growth. and

are flavor. end-to-end We

us focused that remain on and so have the values strategies successful. long-term made We goals,

and our of and model, products our volatility. adapting our through compounded global The strength periods capabilities give the us growth other ability our execution leaders pandemic of dynamic including by that confidence strategies to business over We grown in value our accordingly, and the have of years, changes in the experienced proven the of growth to and environment. while our momentum the navigate and

to we the are our on their they fundamentals financial look long-term in ahead are on in shareholder and world strong value. capitalizing that positioned remains are momentum well driving growth industry in XXXX. the demand cost we positioning profitable confident optimizing focus and drive employees contributions want for As sustainable historical recognize McCormick XXXX. and and structure to growth our drove I strong XXXX, will performance around we leading McCormick deliver The to we to XXXX

turn I Now, Mike. will it over to

Thanks, and year. India Russia in tempered was X% from decline Consumer Lawrence India This and COVID top to as customer of China quarter with the of consumption restrictions. the X% currency everyone. a and XX, morning constant last a disruption to from related combined the exiting the the X% the currency a good of business to by exits impact well divestiture the Starting sales the Kitchen In contributing X% impact unfavorable consumption line contributing segment, in decline. declined grew to compared X% our of fourth on low-margin Russia Slide in the the X% Basics impact as business and Basics disruption, from impact our constant sales China divestiture, businesses growth Kitchen X% and

XX, a the a lapping year’s the in decline, restocking Americas than constant entering quarter region holiday impact more higher by consumer in a Basics declined inventory retail from the impact well inventories from and X% in the and the retail X% of fourth sales as Kitchen Pricing X% level divestiture were Slide On last season. in actions as this of volume including a offset currency. year

tempered our quarter comparison Additionally, sales the to fourth returning to levels year. pre-pandemic promotional also last of

sales exit China margin across from lower in business disruption currency partially markets all X%. sales sales unfavorable product including currency across impact actions actions Asia-Pacific Pricing X% including a impact the were and volume XX%, offset Pricing constant Russia. in of the in partially lower by in mix, well the offset region in from as the low unfavorable India. grew consumption consumer as all impact. this EMEA, In unfavorable consumer declined region XX% a Constant markets

actions Turning contributing snack to with to the demand growth our fourth to XX%, we actions quarter sales with volume also constant primarily also to contributing growth. packaged Flavor higher increase. in Flavor Higher mix and customers growth. grew in Solutions higher and In companies volume foodservice Solutions beverage segment currency strength the Higher sales grew branded food to with currency on due all Americas, sales constant Slide pricing seasonings, for XX% led pricing XX, of contributed and regions. the product

customers. we constant with the mix. with and higher pricing Solutions sales XX% sales to actions volume this the and with broad-based drove Flavor the Flavor to strong EMEA, region, strength by growth, In grew Asia-Pacific growth and customers, related by in X% by was increase. In beverage their menu in actions company XX% currency food and items. sales driven higher driven QSR portfolio, core Growth behind currency QSR was to XX% Solutions constant contributing pricing across EMEA’s packaged led growth

adjusted fourth the ones a ago significant will As versus XXX margin drivers, quarter seen in spend drove on Slide year the XX, compression period. that on the highlighting the basis had gross than we declined points moment expected. I more

dollar First, basis points XXX or this of approximately offset to our to impact due the of cost dilutive pricing decline increases. XX% is

as unfavorable product was as year, of fourth Next, last quarter compared to our to quarter. expectations well mix the for the as compared

First, segment. in Consumer our

the sales and and both inventory mix. products COVID and in unfavorable expected Consumer U.S. restocking to of China fourth due in higher between as impacted as was well segments the we the The quarter shortfall sales shift quarter the stemming of mix product our lower what from mix consumer negatively we sales. by impact year. unfavorable spices compared Solutions in sales as last the comparisons lower from and Sales XXXX product had of fourth restrictions driven higher-margin Flavor due lower China As to earlier, mentioned seasoning anticipated to U.S. both to also contributed XXXX, than

our on supply comparisons already our lower experienced segment, we gross Flavor new COVID-related sales to China margins. impact, In though, our running the of Consumer we the impact as transition was Now shutdowns. discussed. continue Peterborough for to due challenges operating Solutions of expected because leverage The facility, we plant than dual manufacturing chain In incur segment, production UK the costs. to greater

year-over-year We XXXX. expect the impact to them unfavorable these of first costs quarter expect of balance And to in the for year, XXXX. of to continue then be the the comparable

certain still in to we elevated incurring demand of business. our Additionally, costs high meet are parts

While growth. painful customers support investments our are approach we to short-term, of know disruption during right the long-term these periods drive to

said, That of reducing on the the costs these progress make in quarter. fourth we level did

of quarter. exchange experienced the impact impact offset the some transactional that issues our discrete rates we However, the foreign operations and in of unfavorable progress Flavor currency Solutions by during was

the issues, they we quickly unexpected costs quarter. to contributed still these While significant recovered from

Finally, cost line the our we has of our drivers our plan years. were our segments. note, partially to just the during with expectations increases catch up performance. XXXX, was pricing fully continue offsetting the lagged for with or And over price quarter cost I last to both unfavorable in with X This inflation recover mentioned CCI the inflation In consistent savings. and

Now moving declined of Slide expenses for marketing from compensation expenses, and with higher Selling, general brand distribution year the SG&A by quarter lower investments. costs incentive offset partially last and fourth administration XX. to

the factors constant points. special net operating integration percentage impact constant and it In Solutions I of in of declined costs just compared of which of to a quarter in X%. The sales, income, a fourth the currency X% segment, currency, income transaction Flavor resulted XXX SG&A the As adjusted charges in adjusted declined Consumer the mentioned And net and basis excludes XX%. declined and XXXX. operating decline segment’s

year, of driven Turning Slide environment. this interest increased quarter as third rate taxes significantly XX, to well fourth as income the expense higher over by on and our both XXXX quarter over our the interest expense

last periods discrete adjusted favorably more rate compared to period. tax impact was by were XX.X% with impacted Our Both items the year-ago XX.X% fourth effective significant tax quarter in year. a

period. year adjusted XXXX to $X.XX higher At a $X.XX fourth driven operating decrease. The decrease income by expense and the primarily adjusted bottom adjusted interest line, share fourth also XX, the with as to ago the earnings higher was Slide quarter tax lower for as rate effective contributing quarter was per compared shown on

year-end On for flow Slide balance cash the sheet. XX, we’ve and summarized highlights

cash lower We operations decrease returned This of $XXX million net cash our and year to for lower for higher period is used than in Our income flow was from driven capital $XXX primarily shareholders same through which $XXX last the levels. dividends expenditures year. XXXX. the million, was inventory and million by

Our projects capital included the globe. optimization expenditures growth and investments across

XXXX to in to In to XXXX, capital fuel we our as on continue future progress expect spend be as we comparable investments expenditures well to support the have our initiatives we to growth. as

to be flow expect of profit We and initiatives. driven year working cash XXXX strong a by our capital

drive priority have a is of balanced use shareholders growth to our returning funding to debt. through down significant portion dividends cash, to paying Our continue a and investments to

history will paying to and levels, fiscal our of chain our investment We strong end through costs a XXXX. our supply and and approximately better the normalize rating realization. by and to Xx generation have of continue strong de-lever plan inventory profit remain a to gross to down we grade be committed cash we to debt With improving positioned margin, expect

XXXX realization. XX, Now profit momentum outlook turning optimization on and cost our structure, our with our to the positive of financial growth top reflects XXXX Slide line our outlook increased

drivers. the with business growth the to as health drive and several operating discrete expect We that income adjusted well performance of strong as underlying reflects margin net our favorable impact expansion sales from

growth projected and operating interest rate. higher partially below profit significantly will profit effective tax operating adjusted a our expense by offset higher be expect We

primarily At there sales combined taking with actions in grow the line, we we expect be will of actions the to last driven new impact also currency We minimal from by X%, rates. X% pricing pricing to are year’s XXXX. expect top wrap

to the course low we levels over line factors be historically which we the that X% consistent impact have We expect from year’s with lapping expect but product and volume in China. current last elasticities, several estimated with price at XXXX benefit A experienced, the disruptions in of mix of impact COVID-related environment. including year, our to

year quarter-to-quarter pruning last exit lower continued The Russia level our in our the will quarter. Basics portfolio. of given year’s our second of XXXX’s of finally, impact consumer in Kitchen of the from from of expect we the volatility. during business last Although business demand vary August business margin And divestiture and

As as as through always, to engagement category our and the brand our customer growth of drive new well products strength marketing, plan we brands management, plans.

basis margin of pricing, gross points margin This gross mid-teens in effectiveness is higher expansion adjusted than partially adjusted range favorable between inflation. low XX cost increase reflects XXXX from offset our by and a from programs, to XXXX. cost impact projected global anticipated to savings to impact a Our operating XX the CCI-led

during pressures by be last as cost more year. expect the offset to lag We inflation than or pricing pricing the year recover we cost

operating Moving adjusted income. to

profit First, their let me our walk operating adjusted growth. through impact some discrete to and items expected XXXX

scale up the The cost program this are to to the effectiveness as our from First, savings savings year progresses. operating global program basis point impact. expected are expected have an from XXX

of unfavorable as we impact point is impact. incentive expected a expected impact. an to have China have back benefit an The Kitchen XXX disruptions Basics XXX lapping compensation. point COVID-related XXX the basis basis to is the Next, favorable of in divestiture expected impact unfavorable basis finally, build And is point

X% is with of combined expected a adjusted net This to The X% discrete business results of XXX operating favorable impact these to items favorable projection momentum in driven basis growth, impact, X% improved points. income by XX%. operating which our underlying our is

approximately the million. I marketing savings addition of gross single-digit projection mentioned, increase includes our also just CCI-led cost target this $XX in brand investments, adjusted and In to margin a low impacts

returned in to profit in the toward peak the then the expect quarter normalized profit of inflation quarter be year’s the remainder and first sales impact. of last and XXXX, beginning of items, anticipated be Also, from to quarter, lapping cadence Based pressured quarter, China adjusted expect in we The and impact we timing will in disruptions continued benefit growth of on first the operating the quarter. to half inflation cost pressure certain second COVID-related second weighted our the of in with delivery for the accelerated the first in first the year. from

consumer our quarter. in business of exit the the will first Additionally, impact Russia

it year. As a second during reminder, began the of last we quarter exiting

to expect the first while in project in impact and related we impact the from favorable profit minimal impact currency the a quarter X% year in we Finally, half and year. of unfavorable the unfavorable the a expected half second rates, timing, of an first

We driven spread estimate in impact our $XXX year. which $XXX in million higher by interest floating expense will evenly step-up are interest the environment, and to from meaningful our anticipating million throughout expense interest We will XXXX a range rate debt. the that

As portfolio, a from XXXX. lap debt reminder, which our in in $XX million impact XXXX, we we realized optimizing favorable will an

net impact point XXXX items is our XXX headwind earnings The these of an be per to expected interest-related growth. adjusted share to basis

effective based earnings Our adjusted by expect level factoring on to projected in growth. be geography as adjusted is be our tax a headwind of XXXX approximately XXXX as effective of outlook this XXXX our discrete to a to and our estimated Versus impacts. we mix basis XXX point rate income earnings well tax XX% rate,

We to half. expect half the the be second compared year of in our rate to first the higher

to of divestiture compensation for in earnings combined rebuild, tax partially profit, X% items $X.XX. China Basics Kitchen effectiveness the share share underlying offset projected our XX%, earnings adjusted XXXX of headwind the per expectations and per business the to favorable to a from interest growth reflect increase net just This mentioned program, the X% or results a expected I recovery, adjusted in $X.XX strong operating the and X% impacting XXXX summarize, X% global range by the incentive discrete To guidance an of X%. impact of

XXXX operating We well top significant with are as as cost optimization expansion. projecting operating profit strong our in structure adjusted continued and of line growth margin strong performance momentum,

remain tax performance be the business execution of strategies, proven headwinds, our we of with profitable and and tempered will in our that in growth by confident the to underlying strength this XXXX. While expected interest is drive we

Mike. Thank you,

Now that Mike seen recap has and key shared the would our financial Slide in detail, more outlook results like takeaways as I XX. to on

despite challenges the of fourth long-term the sales strength from our global in our China underlying Our strategies. COVID-related reflects quarter continued execution and the disruptions portfolio performance of

volume and segment acceleration and in consumer base. consumption to With positive demand the the of XXXX and customer strong dollars we across net as chain service is in supply flavor our our strength stabilization with our momentum expect an of performance trends, portfolio addition solutions outstanding continued in and sales

We have them to forward look at we strong CAGNY. growth sharing programs, and

chain increasing effectiveness realization. already to to our We efficiency normalize our are supply and costs The increase committed organizational profit results. are we underway yielding actions our and have

global effectiveness deliver savings. operating program cost to is of expected Our $XXX million

We of XXXX expect and quarter the benefits up each the to be continue into scale through accretive to XXXX. of program

operating sustainable employees, operate The to the beyond. While fundamentals discipline place, our shareholders execution earnings are as the commitment realize to macroeconomic in historical recovering performance benefits actively diligent will on with continues value have we sales coupled other people growth, to we XXXX in McCormick and lowering that allow relentless and and driven This, inflation continue growth. in our and margins to facing, growth. ever have and consumers, in and we driving remain focus customers we responding focus for to on long-term as expand position performance any both environment. to same as are us challenges our The cost with compelling of drive costs our to

want to questions. our And reiterate your reflected turning and for confidence to outlook. my driving in profitable questions, now I your growth Before the XXXX

is Our Thank proceed your question Lazar from first Andrew question. the you. with Instructions] line Please Barclays. with of [Operator

Good Great, thanks. morning, everybody.

Andrew. Hi,

well. offset this rebuild the operating to are that getting, has with XX%. the do the guess loaded from seems, operating morning and got guidance comp we’ve morning, spoken folks environment, profit especially savings to I I understand you’ve in to be really dynamic of the of guess, a incremental expected China I have some a it to I’m recovery to built somewhat most I fiscal it’s X% investors still Hello. of cost profitability guess, incentive given to still question aggressive clearly set a this back-end you a year I ‘XX what’s But think, in bunch as standpoint. from

this. you And I hoping, just I’ve on the got and could a color then you. on Lawrence bit So a level Thank confidence around that some was more follow-up. maybe comment of add

We This guidance. is is that not almost this on the off prepared comes remarks. balanced final really of Sure. my comments It aggressive. believe certainly

by have this confidence the balanced in including strong degree risk. our humility high we is and a strongest And from a from consumer underlying of of have due last outlook We underscored operating of It’s guidance, have a guidance. profit demand, year after considering degree demand quarter actually to quite Flavor demand consumer and coming we’ve have the Solutions out we continue demand our the demand, the strong that consumer tremendous seen. fourth is And customer.

we programs spices CAGNY. sharing this talk particularly call, and very those that have and growth herbs will be strong we at about programs on not on We did

is so on foundation, the a underlying operating performance profit. And that

also our very last very is what expect talking being of programs inflation, described. realize know, the that our them. more I are only fully manages in cost And you’re they take We actions the sell confident early you the not the to savings control in. over than maybe costs to about team I pricing the some think that These they strong same in that we’re years lagged we program. our And in haven’t are much through recover confidence the people year. quite that considered actions believe X to the that we have And cover build programmatically this but offset about cost time comp. as have incentive and managed our year’s ability we pricing And of all that CCI of

correct conversations well would be this you at So that underway of assuming many these in completed either or are time.

that and jives in core fact as in follow-up, XQ? build still you’ve maybe pricing thought with which Thanks. And decelerated it sequentially mid-teens and that’s further talked is to and to supposed the with come pricing get in you’ve I’m about my fiscal your actual a about previously into XQ sense segue the was price spice seasonings And was gap how that inflation helpful. that versus consumer to versus issue I mix to actions category talked still good that trying likely price? That’s and a Great. ahead, just low

to a going and to me. Brendan I’m going that let about am couple of follow say words I

up that of First when side there. significant of make us to to all, on on It’s of sort moves forget that business. some the pricing, going come and portion it be I have Flavor of would is allowed the Solutions the those confident not

big certainly And a part equation. pricing of the is so that

for on the Our year. inputs inflation Solutions actually on input outlook Flavor the is higher than consumer

the more to take it Solutions from please. so skewed it. the let gaps going I’m pricing Brendan And is talk side Flavor towards similarly of about price and here the

Andrew, private the think up to points has to you Yes, back still jump – build on and I just regarding one replied. it’s maybe, label. of brought just I’ll Lawrence

price down seeing quarter. honestly, moderate right saw now. the are leading certainly quarter. through And And even that fourth gaps into started the We we narrow that in first quarter, we the to see trade

So inflationary that’s looking sort in also And insight. they just of looking maybe kind there out overall. are to that’s seem reaction the but have macro brands, of a factors for also for moderate Consumers economy the are an value. also

And that so of Parts a for necessarily seeing drive to as it’s kind really of large the on price. consumers value. our we start sizes not we’re growth see portfolio, look lowest lot of just

Lawry’s better really are expected. have everyday called in you starting line fact, are distribution this out, but – we launched build results spices this, and should good, maybe than we also on what continue early We the to to of

coming new seeing those up portfolio. private incremental We’re volume and McCormick from from seeing consumers profit source this the line, category that it’s of from this label. bringing consumers kind lot trading coming sales and of in a That’s are the of into because we’re

reinstating that’s activity out are factors called your that think, fact But previously. the of like been, we promotional that to think outcome, a quarter-to-quarter, and think – is good it point, the into more just I about that’s On that’s we this I how probably pricing, next we a so comparing providing. results certainly year. So of sort far function we’ve been

year’s We’re in relative a on the which fourth also too. increases, volume on last quarter level had our also that were impact But overall an higher is basis. pricing, lapping of

covered to that’s into that regard that and quarter-to-quarter factored we’ve with view. the So restocking comparison,

guys much Okay, and thanks you see so in Florida.

the with question from your of comes question. next Please Ken JPMorgan. Our proceed line with Goldman

Hi, good morning.

Ken. morning. Hey, Good

driven why heard maybe and sales guess, growth think primarily that is you said level, to that small to will pricing. you ‘XX? in environment will the Does you expect Hi. be think given correctly, at in be remain I to mentioned year those along I Thank And I positive? be that maybe you said a I eroding it that you sure you. I you But not lines, if if necessarily seem heard you ‘XX the I you ‘XX didn’t. this for this, curious by wasn’t kind amount? worsen volumes does versus expect mean said elasticity right, of you today’s consumer just

and time gallon part seen looks the last the elasticity of with so level some above the much really were through that inflation experiencing our on price were to to the Ken. of consumers but and We’ve high when at $X it, like Start gas prices as peak their not around pressure gone we’ve of country elasticity a of general year. It was for moderation was wallet. the most the and a increase, reaction

range. that in elasticity, similar less looked at got in elasticity seems also and we’ve we’ve – seen elasticity the we’ve forward – and that reflected had outlook actions. that for our seeing that environment carries we’re where greater We’ve XXXX we’ve pricing and future we’ve So adjusted our where

consumer we’ve a that landing. call lower of going to money going around question half. not think are and careful less in the recession the the to really with talking I’m have even I’m budgets. under I on been elasticity. income you We certainly So a about end lower – spectrum, be I thoughtful the whether bottom, do or talking don’t pressure be their to it the about not the of I’m Consumers XXXX. expect soft care

total on many that our is true our we reflecting and And value, product really It’s It the cheapest that are to our and buying come with components. much driven some that’s sales growth not all the proprietary pricing has of for about launched. through in in We at is level, looking company clear that are already, that flat. be volumes pretty expect programs research primarily value XXXX. the marketing by innovation consumers and we’ve

come line, COVID tremendous but quarter going vary this by recovery bit expect from where trend in during good improvement the a overall that’s region this that volume is going following so an to growth we the tremendously right have impact now and following New of China be in that would we to Chinese And Year.

missed guys anything there? You

I No, think.

for and quick that. follow-up thank a Just you

anything is maybe way. you mentioned quite the time, those totally real-time the to ability a of going through. large hadn’t how curious doing impact in dynamics last that the On the understandable that slightly given maybe quantify perhaps restocking, the more everyone company years, couple I’m the is just recognized its volatility if at you was to improve

from is that forward, surprises there just fewer So year-end. going

a great to going to Brendan. question, pass Ken. that straight That’s I’m

of refine it question. the to to the I we going it look of think that for to the Ken, we fluctuations at tougher time that read. certainly we just how to apply. in I has us, allowed think this but out I use, this refine and definitely moving through, made volatile, the our Definitely, think us analytics Thanks, environment, just we look as how think, season has definitely even this prior period coming kind Yes. But we pandemic, Overall, had and consumption the view. at particularly the refine we between forward, shipments. tools pretty it’s kind This of disciplined approach about it is your allowed a of restocking is to

confidence to into particularly we the during and going the consumption things this then that we And quarter a between of shipments. that we exit season that, first begin this typically just the So see lot as of comparison, top year, fluctuations restocking have holiday normalize. next on would

we a is just that as read. bit providing QX of think I stability more our in out come view little

is to that of internal Some me.

than sales. really stability. it gives is now and chain us better higher investment that another our thing much operating perspective at a service That’s supply into has level Our insight an

Thank you.

with with question. your proceed Robert Our comes Please Moskow the line of next Suisse. Credit question from

volumes down down strong weak was I one hoping Solutions. at bonds I were consumers strange XXXX your the is pretty you save thanks. think Hi, but in when trying in could forecast to of break a time hoping Solutions. versus Flavor money, volume Flavor of I are break was Because your Consumer dynamics that by to – Consumer,

foodservice because and it think a be between there you ‘XX be? is retail risk So environment down of I trade what very like might tough to so that and determine the the might that volatile am consumer how wondering is

Well, are I think flavor between would that don’t growth flavor the on rates giving say on we higher or in that split will growth a expect consumer and solutions. we providing I And solutions XXXX.

segment, have in number expected higher itself. of Solutions America, of have business we foodservice in in It a is includes and the branded share in higher a year-on-year. wins pricing branded significant foodservice, that where of gained else, level particular, is We North nothing we the our we if with the year. through believe Flavor that Solutions Flavor have as bit gone – a portfolio a drive going alone increase to

solutions our end of in had through strong of flavors flavor tremendous end have seen the health we and ‘XX, no that. seasonings, unit the entire flavor and have on for very performance and pandemic a continuing we had through growth sight have growth market, on We snacks, The nutrition. customers area

capacity both the of where online. we from been that low-margin and capability, one significant We effectively that’s in that that And some coming capacity conversion finally that a with our we investments the longer of new that quarter spray products, in up us constraint for flavor have snack expansion at to have on drying additional area. done. slightly in ability for have that bona coming some run have And or for opens term snack are plants in we been converting line the seasonings capacity process second is some and seasonings,

in trial We in quarter. now, are be the second stages should online right

longish So, a of that but there, bit a I hope covered answer it.

UK is double and taking ask a get talked so follow-up? that I about costs, these I Can costs? the in opening Why guess that’s new long Okay. plant past in the You it to involved are it. the double

mean mean the is UK I part taking one I very are plant, Hey then Rob, large it’s facility. – we we a actually about that. footprint answer I and a which this, massive in I say Petersburg talked we Mike. have would will of the

in process two-step are service make of we doing this properly. our So, sure to customers kind a we

are So, talked we of than like a building when different to kind just plant. it’s new you on capacity you have adding where about, are

very lot We plants are it plant actually difficult a a close facility. a in to environment moving to reasons, a brand-new of closing for

we good So, that after that of the does take kind almost quarter. more of news time. The out first are is

production taking in as talked a the will that year, remaining it plants quarter, about costs year. they around really don’t is take about this transfers first about and a – you out. production are this when over that clean plant, a is it, one quarter you But much incremental take year, think You time. rest big the about what And big the levels think have ‘XX will opening if that’s the closing of after be it we one

Okay. Thank you.

Howard Our Bernstein. Alexia proceed next with question with is from the line of Please your question.

Good morning everyone.

Alexia. Hi

you. on Hi business? You just there. this margins the Can reasons about solutions pricing follow-up. And the timing elimination we on Thank a focus kind timing. why the am have capacity of curious the quickly little gave and I in a three the I flavor of should expansion costs, How on in improve kick bit the will year. us that.

when improvement solutions. was the costs I really flavor in I Yes. mean running dual the on wasn’t being specific describing I

not inflation of because we that the all flavor now. conversations. has solutions there side. also have on the inflation business about experienced solutions of don’t than is in in I of pricing overly But right say on we the the last well Year, I been want have this terms pricing, lag side fully get recover up are New that the as commercial flavor into the would but that generally in I expect, And our caught In tension will conversations it cumulative two. consumer all is specific as we certain in are collected of getting those And the said of we greater the we that – that that a incurring only getting amount customer on to we

– year. important in an fully complete work that’s element. pretty early and have be it’s to that the So, going expect We to meaningful would it’s

year. I of Alexia, think talked the front the of inflation to other a couple things. too, point, the We about weighted being

First inflation well that quarter as consumer. is highest labor impacts solutions the as

been there up positive and is going it’s of program. is second The fourth least I quarter rapidly other going first effectiveness really activity. the operating thing though mean and our to The in a lot is third quarter have the the impact quarter. quarter, reality global has ramp to

year quarter have talked second been flavor the the is So, chain to the of big solutions inefficiencies in a going impact. area supply about be solutions. we for a The flavor because over lot the have last

see that to help. going So, of which more savings do that segment, will we

are the that – expect losing what do what herbs and in like corner? spices then to – dynamics share share. there? the anymore. come have pass we to turn seeing as us label are on. Thanks dynamics it’s It private the presume Nielsen in And look but as a Great. you it’s And brands. doesn’t though follow-up, When it, It any can are give more to about I looks the will the I smaller color I U.S. you data. back and market the that still you it

going love would answer I that I to Brendan Alexia. but answer to am question, it. let

Thanks quarter. I I we look Alexia, our just – on fourth just at first, business, remarking the think as Lawrence.

think quarter have to about consumer best but seen the quarter across as Fourth the quarter volume we that – spices. only We the sequential pretty feeling momentum we is we talked in and McCormick improvement only in herbs probably U.S., the feel really were through and sequential good saw and quarter. also way fourth terms of unit pretty portfolio before about what on also I not in the our is total have all the improvement year. we also second but went sales, not of the

the don’t into year. now and going So, that, expect get into a improve share share really what where we be projecting said of that of next future. that’s sort we the habit certainly, But the never will though, of over pretty ‘XX. the is in of to our course momentum saw stabilization Having right good

we related be, expect improved to we So, talk think what to not but have more on to do call this those a that will that we ‘XX. plans going do in lot at CAGNY. are performance will And necessarily, about I

opportunity lot And deeper so opportunities go a I to look plans think great of on there what kind and of will those like. be

the call spices have I if power. see to we question, loved insisted done about fourth that hot and specifically. have could I on gained was sauce. higher would step actually We U.S. share in this Alexia, your if herbal look just that we back, has some quarter, and Kasey at know I But

everyone international mixes, what there in which have had in with but and and urban our strong I our, spices then spices. specifically. a share We mustard And supply. gained their consecutive share full in substantial finally many we share We row gains had forgets quarter herbs we right profitability back – our those, in think markets, is of of are in growth recipe in fifth

of as case you I ‘XX. we as losses year seeing we look you due the have still left. expect that market generally, go we has loss some it TDP the – at share to A of have had expect picture, where to share. that those and we back lot grow to ability been when I so us along, is we got the to do have the And our are through TDPs So, had good continue are the all being have supply, full early won in

very you pass much. on. I Thank will helpful. Very it

next Sachs. with Adam with your Samuelson from proceed Please is Our the question. Goldman question of line

morning everyone. Good Yes.

Adam. morning Good

Hi. morning. Good

operating moving year, of net trying guidance growth was cost high shake the of come there how Currency an level which or out to – headwind. the through million to just in of been of COVID, years if ago are net wanted few end were things fully at the where shouldn’t profit $XX to the bit relative be the where a lower dollars an kind think to XXXX basis, of on X hone little were where cumulative of restructuring digit incentive sold I am that forward? rebase and Especially XXXX, kind and you incremental we $XX get I XXXX. in mean of on an to and we about of about So, trying range? the into am CAGR I for company inclusive we or should ‘XX, pricing high-single beyond issue guess that maybe talk EBIT range, XXXX effect income kind is we and back for I XXXX, mid to and But there square X in has than kind absolute growth relative the lower. XXXX profit Divestitures guidance kind pricing ago, you long-term because years out to shake I dollar and are volumes of just and inflation. still little in profit million, at you somewhat thought you reconcile comparison where acceleration through a the as of recovering kind there the comp a last a of kind bit

costs is from base growth. you mean Mike. really at deck together slide to for, not basis, taking are profit think dollars, program, getting effectiveness out current that the base hate And like but walk global during one-timers, year-over-year, by our currency will long-term take I rebuilding it, are you as of but a to back you really operating discrete underlying Adam, to year, guidance. next all to this have the pandemic. there it’s realizing And continue about into I which and the these look out come question. put algorithm if constant a you items the once we some profit say earnings percentage guidance Good percentage through from from really in kind the the the talked things basis, that of about you underlying

for think is acceleration there the a I into case So, future.

growth actually We end ‘XX guidance. X% is at went sales underlying talking nail the ‘XX to now. look that which about or high bolt-on at of ‘XX. right We if growth, are you net our need base X% M&A not to out But

to underlying back get operating good to X% We really the So, performance. growth. X% profit

will X about percentage you If point if that that really of get we to drive increase you to really think allows pricing to us recovery the that the about, talked X%. that X%

that, normal things brand. the and about investing program our good our noble bit like feel like CCI advertising with more that, in we So, a grow along things to

hard So, down that virtuous cycle profit operating are more X% our we to driving need this pay programs we be. year working would talk there, about debt. is to we get why leverage That’s get our and to down the they below back where capital to to inventories love on

a it’s So, We prudent about call. about said confident feel it. like good we really feel before, Lawrence

next so than which into And the the you the net some I But feel hopefully continue ‘XX positives we other than on even understand discrete China, moving helps is in the items, better think of good the recovery that hopefully parts ‘XX. about year, will base.

that but be and will have balanced we everything to this our our recover, that that’s of from prudent. we we to not plans, think and opinion. guidance we have I somebody some actually have business will are – a tried all might saying And and do the there here, just heard very But giving exceed. but that, aggressive have even balanced winning guidance used you to other – And from to teams we is aggressive. give can just have that we been as questions, the are add that is

to used we to low year-end track phrase on historic starting do and call with record – every that back with record year, earnings get with are like record of the We would were to performance. We that not able results. this

or that’s want underlying amongst taken that in a are are either actions you kind solutions who If Okay. ask of just of business destocking sense if to context environment? of about just think some you sluggish worried to that of the other of get on food have there forward into selling can a still reduction meaningful any saw your fairly consumption working I have I a appreciate color. company flavor moving portion experience customers or mean I taking capital all about is – or and that yourselves, a similar as food counseled companies. just potential follow-up have And kind you

say and The fact the our our we point, this supply at peers. generally would from chain customers that ahead recovery, believe the I of I is is get no. feedback

have fairly the dynamics. shelf sorry, of And snacking so in at and them inventory growth. correctly of in just experiencing inventories different set many explosive – getting rebuilding rebuilding the right mouth them now items are still Many a hand are are the area store of those still to reinstated. And of and

flavor consider algorithm innovation part Adam, good If to in winning and the build winning activity a customers Lawrence. solutions business as a our of our other share lot well is new is new customers on growth for market. of that I regarding that, the product could thing as and sales

And growth. factors we how so about think our that into

all helpful. That’s I Alright. Thank Okay. you. pass will it on.

with Our question. next question Please your is Chris Growe line coming from of the with Stifel. proceed

morning. Good Hi.

morning. Good

coming am that like the kind trade up would in back need helped had kind U.S. I drive square to understand, pricing. of and do attribute spending? that you are it wanted a talked the factors down see can Was promotional you of of I moderating in Hi. you Brendan accomplish one fiscal your question to of seems promotional consumers that to to that price the had more overall, and and the ‘XX, business about kind U.S. the And you points need trying here? be the spending And seeking expect also with because for that? value I to

the about promotional activity isn’t all discounting. that say will I Yes.

it. – And and Brendan so around about and activity which lot that floor displays partnerships merchandising are reinstate and activity, includes things of I and going have am good able the quite though. we a these ROI, all give been positive is we to very to here digital have the promotional to

that overall the that of to promotional with mean in was categories of we welcome, though, of we look the driving you customers. and we just front is is where them going, question, frankly, Chris, growth. how Lawrence to getting lot our feedback remind regard are at is up better back because go a regards driving think into it, me Can And from end keep the build I I just ‘XX Yes. what? to into getting spending your in we as want off

moderating Just and have have you you that a seen increase – and promotional is in there trade down had spending. an

driving trying are was prices then to to down? that and you can you And get trying moderating trade if understand, accomplish I that higher? that So, is

I like seeing spoken those things of of about have those seem happening some the macro the before, in moderated. a of confluence think that we a you are where quarter factors gas, price number have of to may etcetera,

So therefore, has impact. we think broadly, an that

called obviously, during, like a a also of reason. important reinstatement in out QX of we that. aggressive like value think year-over-year and promotions things of that have quarter. we a lot we would increased in for But couple response an the So, third from a also a We A&P more too. the that is very have includes part of great And to seen would I there, And focus holiday of season also the got is lot add impact probably a messaging. there around

there a we And momentum going into to that got think number ‘XX. that here, in Chris, good I lead have us so believe of is playing things

and with Trading store the private coping survey mechanisms between have was we that. that were and consumers ask doing the who terms item also will in when had we shows the brands down label to consumer with I proprietary our talked certainly biggest that decline about say May consumers for – their that of pricing. December, higher

And are scanner and so we seeing with well data. up matches that think what our I through other the

Okay. all that That’s helpful. of Thanks there. for color

inventory kind a should in better had that I say year factor quarter? inventory maybe the of question big the build overall and guess Did factor quarter expected? was that Just lower in you did in increase inventory, will one a other move inventory. move quick or the last fourth you year-over-year than you around less that Is inventory I moving that the be follow-on or unique

our fourth focus finished with as excellence making program. our goods in global progress in raw material side, was which inventory on We efficiency the did really the for a both operating and start mentioned quarter, you

aggressive cash creating the you reduced supply as for And to of more One down. help our drive to your is year. this inventory And targets it chain. very stabilize we have again, outputs that back too of debt goes

How about retail? at

is starting. Progress just

quarter? retail did at as lower in about move retail How well, inventories fourth the

have season. just hand the holiday as describe believe say executing feel restocking trying would done normal. are inventories just are I on the And are not say happen But quarter the as like relationship I here. have they to don’t than [ph]. differently really they going X.X to they to more season simply We lot Chris. that’s had holiday we fourth we of No, the to we trying a retailers in are that

stands Yes. the fiscal in in Remember, end middle of of holiday the flow our things. and And the normal season. ebb just year

So, first always high. coming quarter, retailer set inventories pattern. the the well That’s quarter. a seasonal that. ship consumption And up always are in are think first in normal We below for like we that I

we have And about rapid we given cautious remarks, are being just after normalization QX. change, in of that. said the Just our we expect amount

so Thanks That much that color. makes for sense.

Thank you.

Max is proceed Our Paribas. the from Please question. next of with Gumport with your question BNP line

the for Thanks Hi. question.

you’re welcome. Max,

quarter in ‘XX. year, savings the COVID-related result pressured the some of continued with the give among like as China EPS? your FY ramping first cadence impact us sense takes gave could cost tax impacts. higher quarter and first for dramatically a inflation, peak and from you Can you factors of disruptions helpful to If in puts EPS a how other call, have the will to on up your be throughout rate On right, consider help details these back a the I sounds it regard a it hold

mean highest I quarter. that, I first the cost the commodity think in increases top of on Yes.

think our quarter. is the always first I quarter smallest

of most fourth biggest China’s New is and of you the for Chinese Year. actually about first because quarter are which If is the most the their of, cadence quarter in history, sales our profit season. holiday inversed. think Max, Except quarter through because the China, comes

get it’s I to be on hesitate factor is the number put our another going issues. it’s what would because But difficult first but going year a round we quarter. first that’s So, of pressure to that’s to say be, to quarter going COVID this

factors, also For that. all or factors I five into the you of the named four impact list. added on the China right our

in Max, negative X% FX. flat about but as a well FX for as year-on-year. the So, is it’s first year, quarter, the

for but year. first it the that effectiveness, operating challenging, the reason recoveries the is most will and be the the you to another going for all the the that’s rest reasons mentioned quarter be strong So, with of global

I much. very Thanks leave it there. Great. will

Great. Thanks.

Thank you.

line with comes Peter your proceed from with Our of America. Bank final of question. question today Please the Galbo

committed gets of you incentive you that year income an as longer – a will for pretty to operating piece to or Like that? take for taking much you Like question destocking your in that the reason the function. Thanks longer that, or target, still you at income I the right, if or the XXX the U.S. think this back is of guess stronger the point? guys. operating I it goes the means of have, reopen discretionary just the I basis keep you puzzle point to headwind is kind rebuild let’s wrong as morning. that comp can the is, are take Good plan Hey the question. China as more is of pull factors, that something And how about quick. restock pretty in piece have to flexible spending that, how or that that’s say, outside of kind hit bridge,

growth in of we Well, short pays comp XXXX. fell Peter, our for growth. incentive And

a didn’t confidence incentive P&L. low reflected comp that that’s the and so in to take And very we back

went through New As XXXX, Year. in it a we starts XXXX,

will so with we we of under are And we goals. as the over adjust course, to starting we are expectation comp year. incentive the hit achieve, through And we as or that go going our

we kind The held formulaic. are on model capital Yes, our capital it’s incentive accountable call very operating of for majority to us EVA competence of is light charge our based McCormick profit, profit which basically sure make a of less all improvement.

and focused really for We lot profit bit pay a it’s So, too, growth. formulaic. operating very a on EPS, on

Great. Thanks guys. very much

Kurzius for At Lawrence will remarks. this you. I to back turn Thank closing floor the time,

with Great. investments strong the our for flavor with reach and foundation and combination consumer Thank the and in a sustainable growth. of strategic aligned portfolio rising you. demand is our trends global provide McCormick for breadth

investing business. our are our the We right in disciplined in focus opportunities on and

on our We changing strength. and strategy consumer actively drive from to are relative execute our capitalize further we respond long-term as opportunities successfully to growth behavior on continuing

continue our be positioned and long-term to remain to continued for committed for driving value We success well shareholders.

today’s everybody call. Laurence you and Thank you, to thank joining for

concludes This If you today. to please questions contact have any regarding me. feel information, for call free the the