McCormick & Company (MKC) 26 Mar 242024 Q1 Earnings call transcript

Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's first quarter earnings call. To accompany this call, we posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO; 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 Brendan. discussion will over

for you thank us. and everyone, morning, joining Good

many Scott in on the As have news the seen of probably Key you this morning, Baltimore. Francis collapsed bridge

Our thoughts tragedy. everyone by this go terrible out to impacted

have We team the monitoring situation. are activated the and

We pleased strong start a with first are quarter. the to year

and drive growth. begin the morning an remarks top will reflects with profitable this success my drivers. performance on of results, prioritized focusing early quarter trends our investments line first overview our I Our volume of to improve

trends, as first to outlook. will closing early and then before provide results I finally, some plans. Mike the more signposts on go continue our review and I we financial highlight And your areas will comments. into success have industry depth of work our questions, as growth on Next, perspective quarter some review will XXXX on well

a Underlying the driven Turning canning our volume decline the currency, primarily grew the by low-margin X% pricing, in divestiture. Slide reflecting from mix, now in volume of compared product by a X. our X% prior was on to first business to offset year. business partially constant results and In quarter, sales pruning X% flat and contribution

substantially this progress actions. driving throughout from while the In top we continuing fourth drove pricing in and volume EMEA, Americas. both quarter, remain focused indication benefit we improved In of growth quarter volume from fourth continued in the as Consumer from to positive an Flavor line portfolio. volumes believe growth Solutions. We is improved the Consumer, improvement our on quality Sequentially trends

macro the we environment by impacted was performance volume expected. as in Pacific, Asia In China,

continue of to China year expect price growth consumer XXXX. to Outside we to China, strong both full sales sales We volume. by XXXX delivered and be comparable driven

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product to volume noting fluctuate activity, including Solutions trends new time It's offers and other quarter their customer Flavor worth launches, typically largely from quarter, in activity. limited attributable that to promotional

we said important at year is company, As an is XXXX investment McCormick the conference, to our long-term and return growth to objectives. a CAGNY

the further the early our growth made our on impact categories. investments to of of line capitalize demonstrate results fuel we Our and top have underlying

a and have trends of will to expect initiatives results units robust We build lead our continue and XXXX. set to throughout in share gains our

Let me industry perspectives trends. our on some share of

We and our reach Solutions. a Flavor position are portfolio's and unique breadth Consumer in in with both

behaviors preferences, a remain Our has understanding of inflation trends. behavior. and of challenged. exhibiting and are steep impact, needs, insights an consumers' give us years strong flavor X many shared value-seeking very Consumers had

in compounded consumers. is the felt stretched, trend still is are fourth is Budgets decisions, impact from its inflation food quarter. being continuing resulting a While slowing, by spending that choiceful

markets. prices, home the in food from away saw service In shift our retail from the and broadly first food at quarter, with we food channel a higher major slowing home inflation in to consumption food

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X. Slide to Moving

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our categories, Performance and in the category Flavors key in Volume strong business including Nutrition. beverages outpacing across is growth alcoholic

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get let some growth into on where is areas some plans, there I me Before pressure. our touch

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we label, For earnings our extremely Mustard is our continue in which as call, discussed in low impacting price and driving consumption experience Americas category to points we dollars. down last consumer, for private

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consumer loyalty. First, we and in underlying strength have business our base strong

distribution. time, growth fueling as with year-round exciting activated with marketing, Cholula Our first expanding Frank's growth plans aligned as brand both consumer trends innovation the and for consistent, well and RedHot through increasing Frank's remain

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talk we I in global our Seasonings. growth At pleased a quarter. with let the the are delivered level, touch and in to and Spices we detail, me plans on Before growth consumption

looking significant at Specifically driving and U.S. we are spices seasonings, improvements.

distribution are to end Our and velocity unit led of new packaging recapturing shelf, improvement the to quarter. and sequential on our continues gains increase share at positive the we points,

and our growth addition, by products. In new our increased brand marketing is supported

the of the seeing our our half shelf year, of start quarter. of to impact results most resets of actions second following expect we Lastly, the during the customers' end in at our second the

first Let's to which quarter now plans are our our and performance leading X, and drive in Slide to continue beyond. XXXX growth our strong success move on

growth engagement Brand and the our marketing, packaging new to initiatives proprietary management, products behind customer continue and be technologies innovation, levers. category

Starting with brand marketing.

by Our marketing all are categories initiatives. brand plans across our supported global

We are prioritizing investments fuel to connect and with growth. consumers

brand is of marketing a Our by combination factors. driven differentiated

the to flavor them purchase on share to in and our of maintaining are their journey, having reaches the was online. broad-based eating and across committed increase from and and exploration menu prior QX, right in high was as their to that regions sharing and brand driver an consumers the a In playing, voice, In categories, was shopping improving This and path to even points year, the educates experience inspires at all and compared spend to we up marketing important addition content cooking flavor expected. and to volumes. best significantly content

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proved regions our across successful. campaigns holiday Our

marketing campaigns Americas improved Our and our highlight the and of everyday improvement. trends share consumers supporting our difference value and in point to are volume

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products benefit packaging. as to continues of launches It is CAGNY, drivers the primary to of We one improve. continue performance the of our And growth. and new at said our we from

realize our We are launches. continuing to XXXX growth from

and are in buyers this salsas expectation exceeding we to launching to Cholula the distribution formats our category also And example, are mixes Canada launch. driving continue and year. U.S. build our recipe and new both are For since

our U.S. shipped by and end second to the of quarter. fully the plan is on be spice of expected urban rollout The portfolio everyday

performance Our of short range expand [indiscernible] household innovation and with consumers. same and penetration seasonings younger our recipe continued to drive mixes

in we both and to consumers' dinner Americas ahead shifting the year, seasonings mixes, proteins. EMEA our win new offerings As meat non-red to recipe renovated look meet rest with and opportunities we portfolio of preference cuisine to growing global for with by the reshaping occasions the more have

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our In customer our drive technologies win base proprietary gains and leveraging and Flavor diversifying our to Solutions, to our customers, support are portfolio. new we innovation share flavors across

to and pipeline. our Our with momentum our be Flavors customers strong continues fuel product new

up their from customers snacking collaborating are with products beverages. to of to We many our heat

win brief are our rates heat across Our strong regions.

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review like distribution. management, to efforts where I'd turn management to revenue Let's our category expanding and

and we on of First, and remains McCormick revenue a pricing both management optimizing retailer. have history the capability, shelf benefit to a

surgical price a branded label our take to to to continue and We competitors. private approach managing gaps

where segment. XX% focused investments price in in primarily about are consumer, of impact our portfolio they Americas that Our

an refine growth consistently real-time important continue plans. for management insights analytics our we driving Revenue will and leverage to be will to tool and

a In terms to make due was distribution the distribution, majority lost to of continue restoring supply issues. of on expanding progress that we

new and wins secured have distribution. We

in our small expanding across is discounter. stores stores, grown in cities. which strengthen fast-growing the leading a EMEA, in U.S., distribution as point channel. value price opening and have we grown as we of years, Lawry's in discount well And further third format China, in proposition, tier in a fourth rapidly expanding our the And recent To have are into

the meeting and live with shop. a consumer are We

heat mention Let our briefly me platform.

are As my infused in growth. you our driving and heat heard portfolio products remarks, span

long-term globally younger particularly growth be to continue continue this in accelerator We a for heat demand profile. generations, Consumers, McCormick. to flavor to drive expect

we our iconic decades. brands We our scale heat positioned to are in uniquely that global meaningful and win with expertise for have building been and

leadership. win To McCormick, and wrap will strengthen which differentiate a consumers, for our will execution our up, our we customers, of be believe growth the categories plans and

XXXX, are details. As the we of more we share Mike maintaining will look to ahead our outlook.

the given momentum level, to high saw first high line a expect of top in guidance we the At we mid- our the at end range quarter. be our to

We for consumer uncertainty are also in in provided initiatives, proof points on our and where in are of continue we XXXX. environment said, our to the outlook we have confident That the they working. reflect

Before Mike, a I pass the call let few points. reiterate to me

on profitable growth. We significant capitalize focused segments, position are resulting in That attractive this continue that said, categories long-term drive deliberately on we across to a to of crucial high-growth tailwind strength. both it's

exploration The consumer our continue categories, healthy, that improving interest consumer very to brands and trusted be trends dedicated We to volumes. fuel long-term remain cooking is flavor And importantly, enjoyment and growing. in flavorful strong. cooking,

coming XXXX our results you Mike. to the sustainable drive and to impactful should and plans our are continue We refine and improvement into continue Over differentiated investments year to prioritizing to beyond. growth, return over and expect volume-led and and to

Thanks, everyone. Brendan, morning, X. on good Slide Starting and

currency grew volume X% a last sales to year, X% pricing X% quarter first decline. the offset of benefit, constant compared line and of top mix by Our reflecting

performance Underlying mix underlying where EMEA. X%. growth from our small exit reflecting the and quarter, decision total by bagged flat store direct for the was DSD, exit a Americas, As divestiture impacted of spices sequential expected, a in label business fourth strategic volumes was quarter, the volume product our Hispanic the a delivery of private to the of were canning improvement in volume line approximately and down

in food of just increase to Consumer our a categories, our sales from lower X% prepared a is I X% the macro due and in environment the and Frozen product with exit currency of X% volume growth by In mix actions, impact Asian which consistent of reflects the X% mentioned, in offset pricing and impact volume including DSD decline, the business expectations, China. constant segment, Americas, specifically a

food to categories decline product comparable volume by Consumer On was from prepared and and the Americas sales and Contribution a Slide X, in lower price volume were I to mix in the mix was of attributable the decline last X%. just year. fully exit DSD offset This mentioned.

markets. X% from was In volume currency Sales actions across our consumer major growth. a X% categories increase and constant with in sales product broad-based growth EMEA, increased X% pricing

We we expect the growth are pleased continue XXXX. and through EMEA with momentum delivered the volume in to

down we broad-based drove growth the Constant with a due decrease, consumer across in the by equally to sales volume in China. currency primarily volume environment APAC of China, categories macro X% the X%, region was high and were price markets. single-digit growth sales contributing and Outside driven and

Flavor currency due by We exit of to of sales first label Turning partially Slide a business segment contributing the constant XX. volume a Solutions on to with X%, X% private and decline our X% in and by product grew divestiture the canning contributing X%, EMEA. the quarter offset line pricing

growth X% Sales currency growth was Nutrition and rose flavor, Solutions' volume Flavor a constant Branded most Performance price product in Foodservice. Americas, notably sales by and contribution X%, reflecting mix. the in and X% In from

X%, In divestiture by and impact of were private attributable the X% Pricing lower X% of decreased I the volume product of label a mentioned from earlier. EMEA, mix Kenny constant actions currency the the partially exit by X%, line business. including primarily to of product sales offset

with Solutions region, our remained sales Southeast are constant geopolitical boycotts of Outside pricing in X% volume customers service and contribution APAC Flavor from restaurant of some the X% growth. X% sales in by a In China, grew impacted experiencing Asia. quick negatively currency,

the margin included effective improvement comprehensive in program, basis the global realization. or mix, year period. As seen of GOE, expanded program, quarter and the effectiveness Drivers the our in by XX, on as quarter first or our benefit gross product continuous as ago Slide CCI, XXX well versus favorable operating profit points price

we and may of cadence. in trend compared second quarter historical ago second our we period As we differ year This modestly recovery look margins the pricing to cost as expand of to the quarter, our expect highest gross realized to XXXX. the from level

every margin gross quarter Our increased the year. throughout sequentially

first However, second half compared year. half the we the to continue the margins in to expect higher of

last Now and to moving selling, savings. by general research of development administrative relative driven cost brand investments, the expenses, were partially by year, CCI Slide which SG&A, offset to and XX, increased GOE quarter and or marketing and first

compared SG&A XXX basis of significantly prior Brand As net increased a percentage sales, points. marketing the to year. increased

investments Our results, behind and to these are anticipate efforts. we invest continuing yielding

adjusted Adjusted XXXX resulted the first operating Sales the growth impact and gross increase from to an margin operating currency. compared higher constant income currency. costs, expansion, in partially income in X% offset by X% to was Consumer in in of up and SG&A minimal quarter segment X% with

XX% impact. In we and first as restoring the year increased Flavor operating drove committed margin And profitability. remain the currency segment. adjusted Solutions, expansion quarter, this Solutions versus included a We income prior in in to X% expected, Flavor

top and this make in performance positions quarter to commitment Our to profit increase well our realization us to continued reflects our investments fuel growth. XXXX line

Slide XX. taxes Turning to interest and on income expense

Our was interest expense year. the to comparable prior

ago year XX.X% Our the in effective XX.X% tax adjusted was rate first period. to compared quarter

year tax tax from items. benefited rate Our discrete in the prior

us year XXXX. in these to expect the later We in for occur benefits

expect result, our year. a approximately XX% the be rate to As continue to tax we for

cash income the and contribute in in our flow our Mexico, market product income We're performance leader venture, unconsolidated the to net with largest joint reflects continues quarter our Our operating McCormick business mayonnaise, de McCormick from in meaningfully branded first operations marmalades strong the and lines mustard to and Mexico. results.

shown expansion, results driven offset growth tax adjusted to bottom At rate. earnings from higher operating $X.XX well as first joint Slide per effective and The was $X.XX line, for the XXXX higher by partially compared period. the Mexico gross increase ago by as the adjusted XX, de as McCormick was on to sales share a venture, year income margin as quarter attributable

for XX, On cash Slide balance the flow summarized we've sheet. and highlights

XXXX. flow quarter, primarily cash Our operating and million was income $XXX increase first higher from compared operations improvements. strong working in to the in million driven was $XXX by The capital

for million and returned $XXX our through We expenditures. to used dividends shareholders of million cash $XX capital

expenditures reminder, a transformation capabilities optimize meet and demand, growing to advance our capital digital increase to cost include capacity As our structure. projects and

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

be investment-grade by and Importantly, expect strong working strong to driven XXXX remain flow committed of initiatives. rating profit to we a another to continue cash year and capital

Slide to financial our Now turning XXXX outlook XX. on

reflect Our in the trends our investments sustainable to the prioritized growth, outlook continues strengthen categories key while volume drive environment. long-term appreciating of consumer to and uncertainty

the to details. Turning

per sales net impact adjusted decline to of approximately growth At to unfavorably expect currency are and X%. First, currency between earnings constant income by operating the a continue X% to of line, expected rates adjusted X%. top we range share to sales,

in we to high closer be the our of midpoint to momentum the expect quarter, Given end range. the first to guidance

expect our pricing, investments of pricing impact significantly growth. that actions, partially In drive management of to wrap in will the price most the to continue first a year's terms we half, last favorable related volume by gap offset

expect volume drive We targeted intentional of and and our investments trends to the as we making. the strength progresses brands the through year improved are

noted, quarter. will As return And Starting expect our growth the will the initiatives during we macroeconomic us we the second The in product and to business wins. Giotti volume time the the any absent new continue line will divestiture candy private have to year, DSD of we take business the to impact second quarter, half exits. of through label to materialize. lapped the third of impact

optimize We the be to the will of the lower-margin of within to reflected sales. portfolio, prune which continue throughout our business as we expect year impact fluctuation natural

of half year. comparable to the sales as our is from we be business, APAC the demand consumer the which for to China to full expected is Home XXXX away China, year. by in expect impacted food included first such, consumer, be finally, in in And slower And

continue in there in trajectory has the believe volatility recognize we to demand of business. China China, While in long-term the been growth we

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operating adjusted to income. Moving

as X% programs, margin well We constant to to drive brand our be X% volume to our CCI is DOE gross from by growth. and growth, expect growth investments as cost partially offset by This projected marketing. expansion savings currency driven including SG&A

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from performance income our the Mexico. in increase we de reflecting operations, mid-teens unconsolidated anticipate McCormick a expect in We strong

XXXX earnings share $X.XX our increase reflects to XXXX. compared of summarize, adjusted To projection to a X% X% per to $X.XX

the of head quarter, and into we the summarize takes. me As puts second let some

our expected working volume and prior pressure drive of Flavor driving actions with Brendan Solutions and to lapped and our significant brand expect improvement our of the in pricing We growth. mentioned the earlier, in some are in the took a efforts due activated management impact as programs investments gap to year continue portion marketing we price trends fully

be operating the our As profit for robust less a likely result, quarter. will second

in second the of growth However, the to half strong anticipate year. we continue profit

noted, we dedicated are Brendan improving to As volumes.

impactful return our prioritizing and are investments We volume-led differentiated growth. and sustainable results to to drive

delivering financial in growth our confident our of in We XXXX the profitable underlying and remain business reflected on outlook. the fundamentals

Mike. you, Thank

XX. like close key on moving Before I to with takeaway to our would Slide Q&A,

right to growth that results and quarter investments our volume sustainable confidence. demonstrate our making trajectory drive and we long-term, reinforces are organic First

on executing alignment business an strategies across our and capitalizing behavior, investing to proven are categories consumer with behind and our We speed advantaged and and agility on segments.

the costs, to to programs, and able by are and in margin CCI managing to great drive business progress make led expansion. our continue increased this GOE support do We investments our and on

achieving in XXXX. constant our end give currency for plans, sales us mid- quarter, for our confidence projected the performance to Our growth the coupled high with growth of

McCormick and their XXXX in to the profitable drive that our the outlook. growth confidence want I my Finally, recognize for world we employees reflected around contributions reiterate together, will

your Now questions. for

[Operator of Instructions] Our from first Barclays. the question Lazar with Andrew line comes

did confirm end your currency you than, comments better forecast sounds you first it sales in high mid- sales confidence it's Maybe of of have to sales course, year better notable in that smaller increased and constant a came And range, well. achieving year. quarter initially than had the like seasonally full the was expected. to quarter the off, McCormick start I organic your the obviously about your in think, for might But maybe growth obviously, Street having for range full while growth as

you us could when give sense last now So guidance the I quarter? greater of you confidence what was hoping of you specifics first a of maybe than that gives some gave

Andrew, the that sequential We in the sales, a and upper our improvement, thanks, think up to spices that we half does things our your us I progress. Well, quarter. think that strong and on I confidence we for core little at volume couple a good remarks categories, in question. to We importantly, to of be would seasonings. accomplished drive of We Maybe drove did give improvement lot which range. more a with have open bit question. the drove do, heart just a we we on made And especially said of mid- of

targeted gap and this able that to price were we be to the a an brand execute in investment, execution. -- market, said example, marketing, management well intended that we and was out increased And and quickly get as new year from launches programs and XXXX of the performing are product that would we

same the time, we expand margins. did at And

with called start and smallest are it's yet. out. year, you results the as our quarter, So It we the is the pleased of

in keeping And strong this is so it progress. we're But perspective.

of the us gives that think year. of into I the so that And some confidence rest going

changed. our or noted pricing As call assumptions haven't we as probably on you expect, the

through volumes that as doesn't year. this are improving go imply the we So

progresses to year. to investments, improve and of those the volume expect and half during growth to the continue year have as the volume We trends second drive we targeted

we've what that. region, focused those by additional segment in confident but don't We called color can on points we've quarter or that heard provide And you've that in got out. hopefully, we We're necessarily initiatives the control, proof we're some we and can cited. or

segment be From half. does those volume level, that volume expect the We volumes Flavor to fluctuate similar. growth relatively segments out, we'd the as call And see to same quarter we second both quarter. in the Solutions in did

something largely we still customer So that's attributable that expect to just see across business, to our activity.

like brand But delivering is first of the we what's a do good established. we've made The on feel of in substantial that half we I year lot momentum, there increased drivers think, of marketing. investments this, the

it So QX. happened already in

expect do that some QX. to more of in We

also have in out launches XXXX. We coming product new

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I that the in think to forward. we our continue confidence So year move as would speak to

volume down America Consumer more in to noted, Americas consumer modest -- I X% a of the year, pointed of I consumer challenge quarter. the expect half still down less and think, in specifically from that Or some volumes And segment, that positive exist you headwinds that in the were of continue you second know quarter the the sort is out fourth of as you sort X% in still improve that? Americas, to it Would to year? last again, could to much sequentially in more first in than a about of during inflect here?

foundation also that provide it context help was is about over X.X% to exit X then decline coming about to really volume Americas QX, through more the quite how we've year factors. QX, and of DSD of the spoken give X a that me The a Let last quarters. that key One think bit the around might sort for go. in for

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volume exclude Americas would been positive. So if you factors, Consumer X slightly those to in flat have growth

set So to think the helps to about I for we think sort of that how of kind year a foundation go.

in growth offset it mixes healthy, categories Also declines in our recipe mustard by spices key in seasonings hot was sauce. and pretty and and was QX, but in

against that's think provide context other So I QX. we would

As continue to volumes we the we forward we half. to get to and growth sequentially volume drive as year, look second the improve into expect

probably the would I be on that perspective So provide best can that.

Yes.

I think about it, increased I And about in think activities, brand-building lot Americas all is consumer. call, globally a to building of this side. just volume regions. this not the talked such consumer A&P, is we're same the too, as the in mean we about on

globally of just So regions, we our continue Americas. in brands to not support those each

comes the with of question next Our from line Galbo Peter Bank of America.

follow to just Maybe up on Andrew's question.

had the quarter, consumption have ahead you or ahead data first exit said North in still a ship I think the of in of kind consumer. DSD, scanner you strip out what the would if American

upside that variance I in some you kind rank but the know you positive to relative, probably level if detail, I basis want between to you don't point give drivers scanner drove the data the quarter. co-manufacturing guess, of of untracked, maybe some of the the So do, like kind of could

the Peter, On thanks sales for consumption to with U.S. your we an is driving and are Americas line shipping on probably that business growth What's our we delivered America Latin excluding about. that total in growth. consumer talked But our growth we sales lagging unmeasured, contributed that. question basis, had consumption. DSD on is Canada, and roughly apples-to-apples exit we consumption in our to in also that and good

shipments consumer this inventory for XX% any can in point there's sort But call between out alignment driven do that really about moving and by us important at to expect don't of that forward, consumption so was of And e-commerce. sales. that we and we believe we continued movement represents primarily It total just unmeasured growth also globally our time. that call in it's out

so And of and did positive. seen in in double-digit growth But again in all and e-commerce healthy we've pretty QX. XXXX that's

continue question do that top believe is to shipments measured continue think consumption really to put probably and that consider But back we of to the on our I of e-commerce we channels, to and your against a is -- and about it. sort think that So thing on channel, are believe resources about. would coming up alignment. growth But as in we one broadly

maybe, No, maybe China the things. it. guys, And seemed wanted because then just to on helpful. slide that's say I clarify to Got X

Flavor I consumer in think I in Solutions, the QSRs know But Foodservice, then business, China talked strength was China. more is Branded in kind there on weakness. some China which of you about

maybe a because bit of between to it read wanted a seem unpack different subsegments? kind just to be get things X those X more So better and saying those on

Sure. I'll things and than quarter. Mike any couple It our some met what expectations we have about China of We're differently last comments not largely make a might add. thinking here, perspective a continue said we for total quarter, segment from the XXXX. be both a would consumer to China sales first And expect that Solutions comparable for for to Consumer perspective. XXXX, and Flavor to segment

continue for young does are Broadly, to consumer our reduced think consumer I with cautious. several that way, reasons the persisting adults, remain to mean there outlook Chinese unemployment confidence.

might losing say independent into falls sales and reluctant QSR restaurants, still that spend where things. consumer larger traffic our and somewhat business, are Some some That to to consumers you're us in and are the they chain. our segment smaller different is to hearing X be

we're the do address Solutions how and Yet Chinese off of XXXX like flight so we trend expect regions, some with and have to based in Then plans do we the looking that we're just business of China changing consumers. stronger trends at we to be perspective seeing. around that is Flavor other on And our that.

So do you want perspective. that's, of add anything? I the to think, some Mike,

China kind we ago where starting Other parts talk I we talk is QSR are about into about it's the mean their well. context whole China some share of QSRs, X you saw the really to just Solutions as bit business I a would -- give doing of the parts, biggest business, think just some challenged. to versus like our traffic Flavor of I a kind world in type QSRs lot were Yes, stores. drive established mom-and-pop these and the and smaller gain trends stores of months in

we off to the lumpy has QSR talk things that there's on customers our customers But like is product our which is great. part Flavor side, foot started Solutions strong as traffic think launches that the So CPG -- control and about things in those that. new fact about and QSR business the guidance, and China due are

next line of Our question Max Paribas. comes from the with Gumport . BNP

progress you've progress it restoring So on distribution have restoring couple seeing, was over and you're making commentary middle of following good resets you of getting that line think issues. still the on year. that could about this that making some lost I on distribution sounded in that last pass quarter, what just heard supply U.S. And on I curious the sight customer back good Seasoning? gotten insights to updated you what was with and you're talked customer the you us months more hearing last we color in past bit from you give regard of wins if some a Spices since you're of to

Thanks for Yes. the Max. question,

the those discontinuations reminder, proactive losses up a course of over the we X that last experienced. XX% roughly TDP the make years of As

on is reminder background just So that.

that what lost terms now a right seeing the of then think of not pretty across it. all really a would it, we're I due we're the I good But of really bit of on lot that recovered we TDP to but really add categories, core our making we've context of entirely And top it, of quite progress. supply, in

QX. this at years. just compared seen or last probably up mix, we've probably example, have to X category, points that our the we X were distribution the And on TDPs total for point, in highest that So recipe again in

So is strong. quite -- of really TDPs our and and healthy share

the have on points TDPs we and too. that similar highest business, share again, highest total on TDPs. X have were one, the TDPs in and in TDPs up sauce, X mustard, years. hot the TDP total that QX, our In QX, last were last again in the of On up situation. we And years, the

and doing we're quite well nicely quite a feel this. So those of progressing number up like we categories against

top We shelf. and Broadly GDP or go reflect that any of but pretty will to year. tend we seeing In now, on as of also X resets, lot Seasonings, most, the of think these in segments, we flat making to Spices improve about is growth. the we're end for expect A you year. the when good And middle happen think X about our right the to TDP QX, through start the we're progress. us, those shares category towards of

so of we've And I reflection that of the gains as of there we definitely, a wouldn't the say QX. the of we think will be But won. half think for all we go more back year, into

on then And one Solutions. Great. Flavor more

expected, it's least the limited timing, was it's to than segment or you. whether So growth start the offerings to positive It launches, what bit a fluctuations, out time called And promotional know new that seat. to due earlier all we have can see our product at you from nice volume I this have year.

comment, a XQ? segment us to if there we I'll some that see now Or trying know we XQ? it any just that back see in it are know more a think is right about is you that you to is potentially to a With this would things a let more leave make could performance step there's and in reason dip that flatter back there. think could volatile

the performance is the you're We're But first pretty there, right. Yes. some improvement. our as sequential very public. I material And think happy with EMEA. This business regions, really the of Mike. such QSR quarter is Yes, it's

customers the talking and the coming traffic. about of Some foot out

is side. quarter, the Solutions as think I a there Brendan of Flavor second call, the there on said in bit headwind So

strength. Brendan So said, for as second half, too, Consumer Flavor I be Solutions we're surprised volume, by wouldn't But and expecting that. both

too, in halves think our versus And performance, I quarters. about

very you a very sometimes. quarter, get makes -- get week can a -- This difference

of flattish within kind growth half, still for volume across So business. half volumes, first the second the we're calling

So think terms, too. in it about those

Samuelson question of comes Adam Our line with from the next Goldman Sachs.

So on improvement. of seasonings I I unit Americas kind and more the bit provide on share just more and spices little dig Brendan, Mike, on consumer business a context, and guess specs a the point maybe wanted little to the

that seems that was some coming a and that the that there? unit is particular, retail just some whole broadly you of that trends similar same -- bit accelerated thought that -- Just and it's Is through channel to shift January, was share tracking February? uplift through industry, gone It through you faster quarter that the do of back to? weather like there sales the through in little held February. than for you as of alluded expected? in bigger quarter think end the you exiting Or Was you've towards the

provide seasonings. spices Adam, on context more Yes. to and happy I'm

came to to in we through as about noted, we remarks the think, appeared industry, difficult and be sort if compared that broadly And started a improvement saw more challenging, QX. of the Just maybe first see of very -- -- broadly, speaking home degree. away from the think food expense of what to to store I what our maybe prepared quarter. center first was QX we We to what at some

here. speaking cold to a always of recipe to We spices lot a of for and part winter But and make like seasonings benefits we're see Certainly, so our mix is always specifically McCormick. people great chili, that business.

different we perspective. to this tend So from think about a

that is driving, things our really business. are our point benefiting I What's now out maybe performance a I couple of would think, right

increase that. and to complete Our of will end by through, on out and more of we're second rolling the the flowing shelf, new quarter. just be more packaging It's continues velocity of it

point somewhere XXX% that's that XX% time, driving at of So in we're the at between at XX% obviously and end QX. believe and improvement. this so we're We

positive. improvement and gains some distribution are sequential share end increase plus unit in our we points, our advertising at too, the quarter. new the new from of of recapturing velocity the our -- We led to to that That, coming and led packaging, think

a positive of our certainly things in in that in one Spices our the of And business Seasonings. advertising, led trends that increase I and was think, lot we think

are these of the that we performance we from The that of is fourth quarter spoke some here. business things to, on believe overall. CAGNY, or of the of just but right call, collection I all and not integration at level think, so I'll the also the only them And together driving reiterate the

Mike. That's helpful. And follow-up maybe Okay. then a just for

make trying in overall that trying of top second be seem about comments similar the tougher of to a the from percent comp seem is talking sequentially and SG&A on a the like themselves, terms year just bit the will just why doesn't seem guess dollars I quarter just last up the margin, make But Flavor of Just sales guess sense modestly setback your quarter? should of like sure understand doesn't not to sales. I a in line growth, big thinking a top if in year-over-year. line. the first be would I profit price little cost. maybe we a But the It you're terms gross of to Solutions -- are decelerating like company broadly profit I'm back on I it about sequentially. step the know only

for for kind first it I the about for think I X%. about think, The Adam, of quarter at be inflection is point to think an which and quarter us. this it about second maybe pricing, X.X% mean the year way. was going is

coming third and it's fourth down. So quarters, second,

that the cover in sequentially much is isn't lots and improving While half. getting quarter, improvements, as we're second the your level second volume have to and pricing is for you it in turning don't positive, volume

quarter, we're the first second as quarter. said of price some -- management more remarks, activating in gap in the than activities So that the our I in

little first sales a will but sequential in pressure QX, in in which had puts profit the that the the the both contribute on quarter, line second confident including and but A&P, also But investments, the half. quarter, those we're So driving improvement second in we in to increased volume line. too,

growth, point of, second said, what I is inflection think bit volume we an the the getting like in you're I a little So about which half. talked bit before a

like think of a you But our puts it little overcoming pressure spot in margins. margin really sweet was year, improvement the the on about So last going if impacts. are versus having year. cost still that We're when positive last pricings

about that And talked last quarter. we second

basis was that margins were our think -- was. XXX at I the So from points it point, that prior up year,

the did give -- to bit We This move the wrap a So while is the like parts A we programs, second margin you first investments. things half, half. half good the first the moving to -- back to help again, in lot the half of for of of benefited we which the GOE really script. first the little quarter. summary but it too, quarter see, is still in first improvement in about second first But the also in sec of that, kind try half,

next of Moskow with question from Robert line comes TD Our the Cowen.

us mentioned and you explain gap are haven't just little what to right a sizes some dollar helping think percent Just it? I are seen really on it's portfolio share And a maybe you're a if category? your from U.S. this Secondarily, I any it color segments working incremental in the hot that. a Is that little you again Can strategy? price of what remind so, sauces. I think couple in trial you competition they why learning that's you're think as now on result? And everybody? of you executing more follow-ups. said the the what you XX%. bit Can gaining you Or doing is

Thanks, Rob.

With than me would to program don't I represents gap XX% as Americas. address. on less I to question I at just address is also price we've a those CAGNY our management, go quite confirming forget what think and I your your make to that said efforts, basis, second which mean, that, regard I I is back targeted let of SKU-by-SKU first. sure just So want

XX%?

Yes, X-X. not X-X,

really you and XX%, parts category applied and it's Recipe may Seasonings XX%. be said it's and of Spices And targeted thought I being to Mixes. our

also price other selectively we're efforts taking regions. So gap across management

can just it we part EMEA think a point at that. think, But isn't our and just where price I successful. specifically say parts would portfolio, maybe is I a on tackling good is tactical blocking of example this a place be what an of of, the

would to that's that. add So color the I

an this more so always specifically is I in sauce, always, of first on on the most lot categories, Now There's competition particularly your provide, enter category. category. than question new background attractive hot would the hey, a

remain consumer something our in the on pretty time. and base really this sauce have we So strength and consistent. underlying hot operate our do plans healthy that We is all loyalty. business And with live

We're fueling a both marketing. increasing brand Frank's Cholula lot and of growth through

this of air. in pretty seen Frank's trends year being fact, doing we've the that And is tap into in first And all are XX that's In also really we're of on to be expanding terms segment. underlying but the the to in really time that growth we're distribution, months good. going our active

consumer of Now the the point. value more or significant particularly at fourth when And the in we've one quarter, in price, of less recently, an unit that's of trial just the like ounce obviously for price seen like something lot $X product, beginning a you growth. really $X push have a the but opening of quarter, first low end created like it's of it's resulted of sizes, concept

And going it's been the into period. this driving we down seeing time been sort of had volume that growth maybe category and dollar

by is might driven A the gifting is units, you lot pressuring holidays. performance, imagine. that during this of particularly on our So share if

then And you spike decelerating of it's since of kind so then. and see could the sort big

is coming from something new do households coming we the users And contributing new it's category of adding the how to new much of it's the households it believe category. to the versus positively majority because into existing households. that's We've But from it's category. evaluated

that and in taking size always we our in these having it's We're some this would and in behind also learnings think Frank's, innovation of the building own on coming we A&P category, on particularly awareness And drives is hot because anything Cholula. year, a efforts competing at but have actions positive. think that's kind support a of We're the So out a of obviously I trial the and trial a we all looking place importantly, promotional lot also say, that which increasing healthy. brands. sauce, it's already lot this is upon area of

Obviously, at just the this and where lends the year we're to And for like think have itself these promotional use they're categories, certainly traditional that, during of we periods too. key making on educations. sure the mayo, time right

sauce. So our hot that's of the context

XX%. And it. a Got on Okay. follow-up the just

like Seasonings. to from it it the make data you dollar that be share addressed Spices just take still in Or that of where it's market you see we to might year, comfortable look that of doesn't a and portfolio through possible need basis As price it be optically, XX% you in want also need don't the terms action you Is to gaps? any the are there? other

don't that take applied. might are we if I action. think I precise, best how need we any of needs And that pretty we're to say and we apply to where be comfortable this terms in

constantly to -- are we're say it. I So but we have evaluating also

month, right at data something whether the So every looking not deciding place. in and or and is we're results

we're our unit we're think we right business think, in our in specifically, just we direction we right that, of now ways, of the a is focusing are to I of that. focus speak delivering market growth, right perspective the dollar share share on have of against share follow business the lot what to as that specificity, with see, top more the on guide But while confidence to trends which in percentage and improvement us, business. don't to first going looking would think expect many then we expect to at I sort for plans, that around I begins improving on But of

like Spices seeing U.S. and now. Seasonings, But right type in performance of that we're

marketing, other architecture, appreciate, putting innovation, efforts a increased is including category also effort with of just activities, this management a we're so big brand price And integrated other forward. lot that too. pack

of together. would question. those levers. your sort perspective actually, And one of on add single wouldn't I of But that's all any out So work they the I top

comes line question with from next the of Stifel. Matt Our Smith

on ask targeting we and some are in there's tools more question some the these phasing, in quarter? gap Spices that wanted consumer more You that in you management to gap Should in the was the you it in first as to the price into your quarter? a particularly expect XX% U.S. see build price where targeting terms still the of to to made progress quarter, use share. second to opportunity go and portfolio, continue against you're the or I categories improve of Seasonings you've targeted to meaning that management targeted follow-up fourth business, up the XX% built

off me kick to. let Matt,

XX%. not at X-X. you stress look about is total think I a as That I Again, X-X, think the would that year.

I indeed, at would the year. say QX type expect So business isn't our that start hit level through to of percentage to go we yet, would necessarily our of that and we as

to the quickly top, I help of just context around So provide question. your wanted off that Mike? some

good just script, in And said does And Matt, more question. because is of pressure quarter the as it quarter. bit a in activation second second the the I

more right, in So a bit the fourth, in little the you're first.

throughout Second quarter is is of with drive and like first early that things the first positive, when activated, frankly combined and Brendan really it investments the But the almost fully quarter fourth growth very results volume -- quite year, investments these have that so. building are which AMP been again, mentioned.

program. So holistic that

your talked challenged, in the the price some points lower of improvement mustard in the that of address prepared you it is particular particularly foods? are those consumer you prepared -- the And improvement the drive And just Mustard? your for the to in talk about your or in Can portions categories? portfolio some plans some foods. have Do place you recovery to that's U.S. frozen frozen really about outlook the in of going

impacted context mustard. low, down the So private readdress low a definitely again I'll trajectory and our sort from our But price of driving this. sort We just on the We consumption. which dollars. speak it lot consumption of is it's to on category points first fairly of the label, impacting of importantly, are seeing background

trends improve So planning those XXXX. to in

programs. look going think promotional I Largely, we're to at increasing

up. a season at sure of making drilling quite a just big that coming excited So at are portfolio points, season, grilling our within think, we part across as price that, right a plus have business. I big actually we the items number about are Mustard's the of

trends strengthening also strengthen top of which distribution, We're too, will on that.

to the were in season. what we to So particularly the don't first it quarter plans, as expecting that's we know saw will to were mustard, implement start -- that as contrary better. saw I But continue was get those what our about we we in perspective fourth get grilling we to the on we as quarter, talking

of riding now On smaller would kind foods that to, portfolio. think call of the you us that's us, we category I expect would what our as the see in perform. We would spoke a trends part part It's we're see marketplace. And core. we not prepared of how right that it to the

like going manner. making we are the think, much it I the we follow and that in sure treating trends, what's really, on category, And so watching just in we're

the is too, We're talked management. it, about part -- this in Flavor portfolio About as our meet items we've we on sure side, Consumer our portfolio, prune of or making business that think about the we have you And doesn't Solutions that. our whether targets.

So some this too. But probably as it a calling separate you'll area, of see won't item. that we in be out

comes line question next from Citi. Our of the Palmer Tom with

moving shelf ask that's I not quarter? think timing kind I of the the to potential timing outlook. your on as the key there a driver just there would second shelf also of I Is that's depending standpoint? parts understand the if into on from the some this goes, how going the kind incremental factored set? resets just shelf want I second is to of about this wanted we quarter. in coming assume favorable expanded to and shipment the for be, mean later space

that Well, when time. in as in we the we that that view we to our presence incremental believe at market gain distribution, TDPs do for

year. like second outlook impact feel that on think the our in the got called we of quarter, the for the I speaking to we've rest

specific getting So second identify anything of be that's exactly ships, et the point. think stuff there's I probably I at want level into all for a behind don't wouldn't if we And I cetera, know the detail quarter when this. this to just

of same as last -- the a a of I it's big basically the that's been size replacing we're year out new kind with really think, It's shelf of going on shipment. and rolled on in. I kind year, fits But bottle the think you're it's that's into not Thomas, focusing bottles, -- not that's reset. big -- the the from this end rolling maybe renovation

filling of that. with we're So kind pipeline just the

So you're not going to see a spike. big

velocity it, year. you see and did throughout will like that and build things is that, will which we Now the better why

the resets other happened with time the will talked those in of sets shelf winning about in us and second second business quarter new some Some in half. categories, the benefit we

there Thomas. welcome your the kind there's X different about It's first to it. of call. think So as thoughts call, you And

comes this question morning the Rob of final from with Our line Dickerson Jefferies.

Great.

mechanical Just one upfront question to ones.

just doing in So we're what I the I tracked which us I say clearly was last well. seeing for the was guess, Latin all kind in to the of like heard of better. America delta think back, I channel last data, just you then you look And time, did in at, go Americas want question, overall and consumer

prior was of let's it channel I But know feel growing I there's it's better still what if had some digit. say, relative report have much in delta already track between digit e-comm bit to or driving sounds there the data clearly like e-com like I got well, color versus, to in years. double try been difference been because like QX doing be that's get growing what seeing you a that X LatAm more double the because kind we're in to little

to So at So was nicely we, just not what just something then you should see past like of going not data because asking, it's XX that's you didn't ship seen looking drivers? will I really we've there and that it. but get -- we're that why you're ahead there, but consumption, tracking as that the think data the all maybe I quarters? also what we for all in be not like it's guess, saying forward, we're given Or same

is an business much a at, X and make Rob, seeing that's our think getting and attempt there, think questions business, what we there's refined read which you're different categories. I view Sircana, of what through we're I our broader, possibly more Well, in and that I our

so we that as talk in And data are we our it. reflecting about kind of performance

nature. what do Nielsen what in anything capturing level broader they're been on refined We call the categories. be spices we terms higher our view at of traditionally, might in -- reporting, versus seen the of might the because difference more some reporting category really reconcile and be we've how reporting. time, to that Compared there But over at that have think in times or differences that it's I a Nielsen as look in seasonings don't

of your that So part might address question.

will it's comments line half of that pretty channels, cetera. be back shipments And and I other to earlier that between the Now that et about via consumption. everything much going to made go the being I see we in largely

called We e-commerce, a in strong lot out I of in as the call. are growth getting earlier

to And see So we if if the that is maybe and create could and obviously, I'm America. I pause in that address, a Canada thoughtfully going good difference numbers something the performance Latin metrics. in think. to certainly

No, -- just just fair. that's JV, I the thought That's one I then business think I'd on And Yes. ask fair. Mexico last totally fair. is good. the know with for guidance quickly, time. That's mid-teens. I

mid-teens I the think growth year. it's for

up put XX% like You QX. in

what maybe you're drive then still mid-teens what that -- So saw occur just why you'd just if think do And could should given of growth so kind ahead? QX, we like grow you to of did discuss in already QX? actually in kind if you

too. quarter. mean weaker our No, it's comping great a venture had first first against a quarter, I

little that year. volume, the going economy managed a bit they've Mexico, there's of It's in also through just some in of lot here, things And to early they're there's there's the as year. too there. So like call price the a

the hoping really of So as quarter, to we're But year the just underlying as bit strong little we're again, but one. is and with it. the early happy first strong that call a business, on rest it's

All right. right. Mike... then enough. And Fair quickly, Okay. just All

but we you a gets part I'm our glad profitable ignored because large mean of business. it's asked I profit, -- the operating It below portfolio. know don't very lot such it's because a question

dominant. not -- dominant have We or

too, we have into strong down brand the export a there We things, positions across couple real mayonnaise of And categories. U.S., too. and other

So it's business really, really a us. for good

interest I think expense was core don't heard guess and then you I Mike, actually frequently I but it you of driver And Yes. quickly, just, speak provide a do to that. Anyway, income. net guidance,

all I know So you and if don't that, have. I that's have

first it, provide so we to -- lot The that really whole was always provided a equal the material. . not but it's we fact year I think roughly it quarter, change didn't year the wouldn't was We expect year. of last means first the that for it I

our to the concludes final turn for That back question-and-answer floor Ms. any comments. session. I'll Freiha

joining you, and to all thanks today's Thank for call.

free today's to any have concludes please our call. feel further you me. information, If questions This contact regarding conference