McCormick Reports First Quarter Financial Results, Reaffirms 2012 Outlook
- Grew first quarter net sales 16% with contributions from acquisitions, pricing actions and increased volume and product mix.
-
Reported earnings per share of
$0.55 for the first quarter. -
Reaffirmed projected 2012 earnings per share of
$3.01 to $3.06 .
“Product innovation, expanded distribution and a 22% increase in brand
marketing support helped maintain the positive momentum for our
business, and we continue to benefit from our Comprehensive Continuous
Improvement (CCI) program. As anticipated, profit margins in the first
quarter were adversely affected by year-over-year material cost
inflation, although this situation is expected to gradually improve in
the remainder of 2012. As a result of lower profit margins, we projected
a reduction in net income and earnings per share when compared to the
first quarter of 2011. While the first quarter 2012 earnings per share
result of
McCormick’s first quarter sales rose 16%. Acquisitions completed in 2011
added 7% to sales during this period. Pricing actions taken in response
to higher material costs increased sales 5% and volume and product mix
rose 4% compared to the first quarter of 2011. Operating income rose to
Cash flow from operations was
The Company reaffirmed its guidance for fiscal year 2012 sales growth
and earnings per share. Sales are projected to grow 9% to 11% in local
currency. Based on current rates, the Company estimates a 2% reduction
in sales from the impact of foreign currency exchange rates. Included in
the 9% to 11% sales growth range is an expected 4% increase from
acquisitions completed in 2011 and the favorable impact of pricing
actions taken in response to increased material costs. In addition to
pricing actions, the Company expects to offset a portion of this
material cost increase with productivity improvements from its CCI
program and now anticipates cost savings of at least
Earnings per share for fiscal year 2012 are expected to be in a range of
Business Segment Results
Consumer Business |
||||||
(in millions) |
Three Months Ended |
|||||
2/29/12 |
2/28/11 |
|||||
Net sales |
$534.2 |
$454.1 | ||||
Operating income |
81.4 |
86.9 | ||||
Consumer business sales grew 18% when compared to the first quarter of 2011. Acquisitions completed in 2011, accounted for two thirds of the increase and the remaining third was largely due to pricing actions. Even with increased prices, volume and product mix rose slightly in the first quarter. The impact of foreign currency exchange rates on sales growth was minimal this period.
-
Consumer sales in the
Americas rose 7%, with minimal impact from foreign currency exchange. This increase was driven by pricing actions, as well as a 2% increase that resulted from the Company’s 2011 acquisition of Kitchen Basics, a leading brand of liquid stock. Volume and product mix was down slightly from the year-ago period. In the year-ago period, sales were unfavorably affected by an estimated$10 million shift in sales to the fourth quarter of 2010 due to customer purchases in advance of a price increase. This had a favorable impact on the rate of sales growth in the first quarter of 2012. Also favorably impacting sales in the first quarter of 2012 were new product introductions, incremental brand marketing support and distribution gains. These increases were more than offset this period by lower sales of core items, which the Company believes were largely affected by initial consumer reaction to pricing actions taken during 2011. -
Consumer sales in
Europe ,Middle East andAfrica (EMEA) grew 25%, and in local currency increased 26%. The majority of the increase resulted from McCormick’s 2011 acquisition of Kamis, aPoland -based leading brand of spices, seasonings and mustards. The base business grew 4% this period, led by higher volume and product mix inFrance , as well as some smaller countries in the EMEA region. The impact of pricing was minimal during the first quarter of 2012. -
First quarter sales in the
Asia/Pacific region rose 110%, and in local currency grew 104%. A large portion of the increase resulted from McCormick’s 2011 acquisition of Kohinoor, based inIndia . Excluding this impact, the Company achieved growth of 21% in its base business. This result was led by 29% local currency sales growth inChina , which was driven by both higher volume and product mix, as well as pricing actions.
For the first quarter, operating income for the consumer business was
Industrial Business |
||||||
(in millions) |
Three Months Ended |
|||||
2/29/12 |
2/28/11 |
|||||
Net sales |
$372.5 |
$328.7 | ||||
Operating income |
31.1 |
23.7 | ||||
Industrial business sales grew 13% when compared to the first quarter of 2011. In local currency, sales grew 15% with about two thirds of the increase from higher volume and product mix and one third from pricing actions.
-
Industrial sales in the
Americas grew 14%, and in local currency grew 15%. Higher volume and product mix was largely the result of increased demand from the restaurant industry. McCormick’s customers, including quick service restaurants, saw improved consumer traffic in the first quarter of 2012 compared to the year-ago period. The Company also increased sales to food manufacturers with the introduction of new products to support their innovation efforts. Pricing actions added 6% to sales growth in the first quarter of 2012. - In EMEA, industrial sales rose 5%, and in local currency increased 10%. This increase was led by demand from quick service restaurants in this region which was strong throughout 2011 and continued into the first quarter of 2012. Higher prices also added 2% to sales growth in this region.
-
In the
Asia/Pacific region, sales rose 27%, and in local currency increased 22%. This was driven largely by new product introductions and increased demand from quick service restaurants inAustralia, China and other parts ofSoutheast Asia . This result compares to a 1% sales decline in local currency that was reported for this region in the first quarter of 2011.
As a result of the significant increase in sales and CCI cost savings,
industrial business operating income rose 31% to
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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 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.
About
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.
3/2012
First Quarter Report |
McCormick & Company, Incorporated |
|||||
Consolidated Income Statement (Unaudited) | ||||||
(In millions except per-share data) | ||||||
Three Months Ended | ||||||
February 29, 2012 | February 28, 2011 | |||||
Net sales | $ | 906.7 | $ | 782.8 | ||
Cost of goods sold | 551.4 | 454.6 | ||||
Gross profit | 355.3 | 328.2 | ||||
Gross profit margin | 39.2% | 41.9% | ||||
Selling, general and administrative expense | 242.8 | 217.6 | ||||
Operating income | 112.5 | 110.6 | ||||
Interest expense | 13.5 | 12.2 | ||||
Other income, net | 0.9 | 0.5 | ||||
Income from consolidated operations before income taxes | 99.9 | 98.9 | ||||
Income taxes | 30.0 | 30.0 | ||||
Net income from consolidated operations | 69.9 | 68.9 | ||||
Income from unconsolidated operations | 4.6 | 7.9 | ||||
Net income | $ | 74.5 | $ | 76.8 | ||
Earnings per common share - basic | $ | 0.56 | $ | 0.58 | ||
Earnings per common share - diluted | $ | 0.55 | $ | 0.57 | ||
Average shares outstanding - basic | 133.1 | 132.9 | ||||
Average shares outstanding - diluted | 134.5 | 134.6 | ||||
First Quarter Report | McCormick & Company, Incorporated | ||||||
Consolidated Balance Sheet (Unaudited) | |||||||
(In millions) | |||||||
February 29, 2012 | February 28, 2011 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 54.4 | $ | 40.6 | |||
Trade accounts receivable, net | 381.1 | 326.8 | |||||
Inventories | 640.4 | 544.9 | |||||
Prepaid expenses and other current assets | 116.9 | 103.3 | |||||
Total current assets | 1,192.8 | 1,015.6 | |||||
Property, plant and equipment, net | 523.4 | 491.4 | |||||
Goodwill, net | 1,697.4 | 1,455.1 | |||||
Intangible assets, net | 355.0 | 234.1 | |||||
Investments and other assets | 311.1 | 281.4 | |||||
Total assets | $ | 4,079.7 | $ | 3,477.6 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities | |||||||
Short-term borrowings and current portion of long-term debt | $ | 283.1 | $ | 194.5 | |||
Trade accounts payable | 342.3 | 286.8 | |||||
Other accrued liabilities | 334.5 | 325.4 | |||||
Total current liabilities | 959.9 | 806.7 | |||||
Long-term debt | 1,028.7 | 775.7 | |||||
Other long-term liabilities | 398.5 | 318.7 | |||||
Total liabilities | 2,387.1 | 1,901.1 | |||||
Shareholders' equity | |||||||
Common stock | 840.9 | 772.0 | |||||
Retained earnings | 869.0 | 731.3 | |||||
Accumulated other comprehensive (loss) income | (35.6 | ) | 64.1 | ||||
Noncontrolling Interest | 18.3 | 9.1 | |||||
Total shareholders' equity | 1,692.6 | 1,576.5 | |||||
Total liabilities and shareholders' equity | $ | 4,079.7 | $ | 3,477.6 | |||
First Quarter Report | McCormick & Company, Incorporated | |||||||
Consolidated Cash Flow Statement (Unaudited) | ||||||||
(In millions) | ||||||||
Three Months Ended | ||||||||
February 29, 2012 | February 28, 2011 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 74.5 | $ | 76.8 | ||||
Adjustments to reconcile net income to net cash flow from operating activities: |
||||||||
Depreciation and amortization | 25.8 | 23.7 | ||||||
Stock based compensation | 2.6 | 2.1 | ||||||
Income from unconsolidated operations | (4.6 | ) | (7.9 | ) | ||||
Changes in operating assets and liabilities | (76.3 | ) | (119.1 | ) | ||||
Dividends from unconsolidated affiliates | 0.5 | 1.3 | ||||||
Net cash flow provided by (used in) operating activities | 22.5 | (23.1 | ) | |||||
Cash flows from investing activities | ||||||||
Capital expenditures | (15.1 | ) | (14.2 | ) | ||||
Proceeds from sale of property, plant and equipment | 0.2 | - | ||||||
Net cash flow used in investing activities | (14.9 | ) | (14.2 | ) | ||||
Cash flows from financing activities | ||||||||
Short-term borrowings, net | 64.2 | 93.6 | ||||||
Long-term debt repayments | (4.2 | ) | - | |||||
Proceeds from exercised stock options | 14.4 | 17.1 | ||||||
Common stock acquired by purchase | (42.3 | ) | (50.3 | ) | ||||
Dividends paid | (41.4 | ) | (37.2 | ) | ||||
Net cash flow (used in) provided by financing activities | (9.3 | ) | 23.2 | |||||
Effect of exchange rate changes on cash and cash equivalents |
2.2 | 3.9 | ||||||
Increase (decrease) in cash and cash equivalents | 0.5 | (10.2 | ) | |||||
Cash and cash equivalents at beginning of period | 53.9 | 50.8 | ||||||
Cash and cash equivalents at end of period | $ | 54.4 | $ | 40.6 | ||||
Source:
McCormick & Company, Incorporated
Corporate Communications:
Lori
Robinson, 410-527-6004
lori_robinson@mccormick.com
or
Investor
Relations:
Joyce Brooks, 410-771-7244
joyce_brooks@mccormick.com