McCormick Reports Financial Results for Second Quarter 2013 and Updates 2013 Financial Outlook
- Grew second quarter net sales 2%, led by a 4% increase in consumer business sales. As expected, industrial sales were down slightly.
- Reported earnings per share of
$0.59 , which included$0.02 of transaction costs associated with the completion of the WAPC acquisition. - Adjusted 2013 financial outlook for addition of WAPC and latest industrial business projection. The company expects to grow sales 4% to 6% and achieve earnings per share of
$3.13 to $3.19 .
Chairman's Remarks
"
Financial Results
In the second quarter of 2013, operating income was
Earnings per share was
2013 Financial Outlook
In the third quarter of 2013, the company expects earnings per share to be comparable to the year-ago result of
Pension Plan Update
In order to reduce the size and potential volatility of its U.S. defined benefit pension plan obligation,
Business Segment Results
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Consumer Business
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(in millions) |
Three months ended |
Six months ended |
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5/31/2013 |
5/31/2012 |
5/31/2013 |
5/31/2012 |
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Net sales |
$591.0 |
$568.8 |
$1,160.7 |
$1,102.9 |
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Operating income |
87.6 |
88.6 |
175.3 |
170.0 |
|||||||||||||
Consumer business sales grew 4% when compared to the second quarter of 2012. In local currency, sales grew 5% with 3% of the increase a result of higher volume and product mix.
- Consumer sales in the
Americas rose 5%, and in local currency grew 6%. Most of the increase was driven by volume and product mix, with pricing actions adding 1%. Initiatives driving this unit growth included consumer marketing, promotional activity and in-store merchandising for spices, herbs and seasonings in both the U.S. and Canada. In addition, product innovation led to increased sales that included new grilling items and Zatarain's brand products. - Consumer sales in EMEA were comparable to the year-ago period, but in local currency increased 3%. Both pricing actions and higher volume and product mix contributed to this increase. During the second quarter this growth was led by innovation and incremental marketing support for the Vahiné and Ducros brands in
France and the Schwartz brand in the U.K. - Second quarter sales in the
Asia/Pacific region grew 2%, and in local currency the increase was 4%.China was the largest contributor to this increase with 11% sales growth in local currency, driven by strong sales execution at retail, revitalized packaging and expanded advertising.
In the second quarter, operating income for the consumer business was
Industrial Business
|
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(in millions) |
Three months ended |
Six months ended |
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5/31/2013 |
5/31/2012 |
5/31/2013 |
5/31/2012 |
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Net sales |
$411.6 |
$415.2 |
$776.2 |
$787.8 |
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Operating income |
28.4 |
32.7 |
52.7 |
63.9 |
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Industrial business sales declined 1% when compared to the second quarter of 2012. In local currency, sales were up slightly from the year-ago period, with a 1% increase from pricing actions, offset in part by lower volume and product mix.
- Industrial sales in the
Americas declined 1%, with minimal impact from currency in the second quarter of 2013. Pricing added 1% to sales, while volume and product mix lowered sales. The majority of the decline in volume and product mix related to lower demand from quick service restaurants in the U.S.McCormick grew sales of snack seasonings and other flavors to food manufacturers in the U.S. andMexico and grew sales of branded products to food service distributors in the U.S. A number of new items developed for industrial customers in theAmericas are expected to drive sales growth in the fourth quarter of 2013. - In EMEA, industrial sales declined 3%, but in local currency grew 4%. Both volume and product mix, as well as pricing actions contributed to this increase. Volume and product mix rose slightly led by increased sales of branded food service items in the
U.K. - In the
Asia/Pacific region, sales grew 2%, with minimal impact from currency. Pricing actions and volume and product mix contributed evenly to this result. A double-digit increase inAustralia was largely offset by reductions in other parts of this region, includingChina where consumer traffic in quick service restaurants has been impacted by consumer concerns regarding bird flu. Sales are expected to improve in the fourth quarter as these consumer concerns ease and these customers grow sales through promotions, new products and additional restaurant locations inChina .
For the second quarter, operating income for the industrial business was
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As previously announced,
Forward-looking Information
Certain information contained in this release, including statements concerning expected performance such as those relating to net sales, earnings, cost savings, acquisitions and brand marketing support, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "may," "will," "expect," "should," "anticipate," "believe" and "plan." These statements may relate to: the expected results of operations of businesses acquired by us, the expected impact of raw material costs and our pricing actions on our results of operations and gross margins, the expected productivity and working capital improvements, expected trends in net sales and earnings performance and other financial measures, the expectations of pension and postretirement plan contributions and anticipated charges associated with such plans, the holding period and market risks associated with financial instruments, the impact of foreign exchange fluctuations, the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing, our ability to issue additional debt or equity securities and our expectations regarding purchasing shares of our common stock under the existing authorizations.
These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Results may be materially affected by external factors such as damage to our reputation or brand name, business interruptions due to natural disasters or similar unexpected events, actions of competitors, customer relationships and financial condition, the ability to achieve expected cost savings and margin improvements, the successful acquisition and integration of new businesses, fluctuations in the cost and availability of raw and packaging materials, changes in regulatory requirements, and global economic conditions generally which would include the availability of financing, interest, inflation rates and investment return on retirement plan assets, as well as foreign currency fluctuations, risks associated with our information technology systems, the threat of data breaches or cyber attacks, and other risks described in the company's filings with the
Actual results could differ materially from those projected in the forward-looking statements. The company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
About
McCormick &
Every day, no matter where or what you eat, you can enjoy food flavored by
To learn more please visit us at www.mccormickcorporation.com.
For information contact:
Investor Relations:
(Financial tables follow)
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Second Quarter Report |
McCormick & Company, Incorporated |
||||||
Consolidated Income Statement (Unaudited) |
|||||||
(In millions except per-share data) |
|||||||
Three Months Ended |
Six Months Ended |
||||||
May 31, 2013 |
May 31, 2012 |
May 31, 2013 |
May 31, 2012 |
||||
Net sales |
$ 1,002.6 |
$ 984.0 |
$ 1,936.9 |
$ 1,890.7 |
|||
Cost of goods sold |
608.2 |
595.6 |
1,180.8 |
1,147.0 |
|||
Gross profit |
394.4 |
388.4 |
756.1 |
743.7 |
|||
Gross profit margin |
39.3% |
39.5% |
39.0% |
39.3% |
|||
Selling, general and administrative expense |
278.4 |
267.1 |
528.1 |
509.8 |
|||
Operating income |
116.0 |
121.3 |
228.0 |
233.9 |
|||
Interest expense |
13.5 |
13.9 |
27.4 |
27.4 |
|||
Other income (expense), net |
0.8 |
(0.1) |
1.4 |
0.7 |
|||
Income from consolidated operations before income taxes |
103.3 |
107.3 |
202.0 |
207.2 |
|||
Income taxes |
30.6 |
30.8 |
58.8 |
60.8 |
|||
Net income from consolidated operations |
72.7 |
76.5 |
143.2 |
146.4 |
|||
Income from unconsolidated operations |
5.9 |
3.9 |
11.4 |
8.5 |
|||
Net income |
$ 78.6 |
$ 80.4 |
$ 154.6 |
$ 154.9 |
|||
Earnings per share - basic |
$ 0.60 |
$ 0.61 |
$ 1.17 |
$ 1.17 |
|||
Earnings per share - diluted |
$ 0.59 |
$ 0.60 |
$ 1.16 |
$ 1.15 |
|||
Average shares outstanding - basic |
132.1 |
132.6 |
132.3 |
132.8 |
|||
Average shares outstanding - diluted |
133.6 |
134.1 |
133.8 |
134.3 |
Second Quarter Report |
McCormick & Company, Incorporated |
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Consolidated Balance Sheet (Unaudited) |
|||||
(In millions) |
|||||
May 31, 2013 |
May 31, 2012 |
||||
Assets |
|||||
Cash and cash equivalents |
$ 72.1 |
$ 61.4 |
|||
Trade accounts receivable, net |
399.9 |
378.0 |
|||
Inventories |
611.4 |
611.0 |
|||
Prepaid expenses and other current assets |
134.1 |
116.8 |
|||
Total current assets |
1,217.5 |
1,167.2 |
|||
Property, plant and equipment, net |
554.3 |
507.5 |
|||
Goodwill |
1,754.2 |
1,651.8 |
|||
Intangible assets, net |
353.3 |
341.1 |
|||
Investments and other assets |
329.5 |
298.1 |
|||
Total assets |
$ 4,208.8 |
$ 3,965.7 |
|||
Liabilities |
|||||
Short-term borrowings and current portion of long-term debt |
$ 551.9 |
$ 244.4 |
|||
Trade accounts payable |
322.1 |
321.9 |
|||
Other accrued liabilities |
352.2 |
334.0 |
|||
Total current liabilities |
1,226.2 |
900.3 |
|||
Long-term debt |
774.4 |
1,027.7 |
|||
Other long-term liabilities |
474.5 |
398.8 |
|||
Total liabilities |
2,475.1 |
2,326.8 |
|||
Shareholders' equity |
|||||
Common stock |
947.7 |
862.7 |
|||
Retained earnings |
953.2 |
885.9 |
|||
Accumulated other comprehensive loss |
(184.2) |
(127.3) |
|||
Non-controlling interests |
17.0 |
17.6 |
|||
Total shareholders' equity |
1,733.7 |
1,638.9 |
|||
Total liabilities and shareholders' equity |
$ 4,208.8 |
$ 3,965.7 |
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Second Quarter Report |
McCormick & Company, Incorporated |
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Consolidated Cash Flow Statement (Unaudited) |
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(In millions) |
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Six Months Ended |
|||||
May 31, 2013 |
May 31, 2012 |
||||
Operating activities |
|||||
Net income |
$ 154.6 |
$ 154.9 |
|||
Adjustments to reconcile net income to net |
|||||
cash provided by operating activities: |
|||||
Depreciation and amortization |
51.7 |
50.6 |
|||
Stock based compensation |
12.5 |
8.7 |
|||
Income from unconsolidated operations |
(11.4) |
(8.5) |
|||
Changes in operating assets and liabilities |
(77.3) |
(72.6) |
|||
Dividends from unconsolidated affiliates |
2.6 |
11.3 |
|||
Net cash provided by operating activities |
132.7 |
144.4 |
|||
Investing activities |
|||||
Acquisition of business |
(116.7) |
- |
|||
Capital expenditures |
(34.6) |
(35.2) |
|||
Proceeds from sale of property, plant and equipment |
1.9 |
0.3 |
|||
Net cash used in investing activities |
(149.4) |
(34.9) |
|||
Financing activities |
|||||
Short-term borrowings, net |
158.9 |
25.3 |
|||
Long-term debt repayments |
(0.9) |
(4.2) |
|||
Proceeds from exercised stock options |
29.8 |
29.6 |
|||
Common stock acquired by purchase |
(92.1) |
(68.6) |
|||
Dividends paid |
(90.1) |
(82.4) |
|||
Net cash provided by (used in) financing activities |
5.6 |
(100.3) |
|||
Effect of exchange rate changes on cash and |
|||||
cash equivalents |
4.2 |
(1.7) |
|||
(Decrease) increase in cash and cash equivalents |
(6.9) |
7.5 |
|||
Cash and cash equivalents at beginning of period |
79.0 |
53.9 |
|||
Cash and cash equivalents at end of period |
$ 72.1 |
$ 61.4 |
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SOURCE