McCormick Reports Strong Growth In Third Quarter
SPARKS, Md.,
a global leader in flavor, today reported strong growth in the third quarter of fiscal year 2012. To
reflect a more favorable tax rate, the company increased its expected full year earnings per share
to a range of
- Grew third quarter net sales 9% in local currency and increased operating income 12% from the year-ago period.
- Reported third quarter earnings per share of
$0.78 compared to$0.69 in the third quarter of 2011. Increased guidance for 2012 earnings per share to a range of$3.03 to $3.08 to reflect a more favorable tax rate. - Generated cash flow from operations of
$256 million through the first three quarters of fiscal year 2012. Cash flow is expected to exceed$400 million for the full year.
"Across all of our businesses, we continue to face volatile material costs. However, we are effectively offsetting the impact of higher material costs with our pricing actions and cost savings from our Comprehensive Continuous Improvement (CCI) program. CCI is also helping to fund our growth and in 2012 we are on track to increase our brand marketing support by at least
Third quarter earnings per share rose to
Through the first three quarters of 2012, the company generated cash flow from operations of
For fiscal year 2012, the company reaffirmed its projected sales growth of 9% to 11% in local currency, which includes an estimated 4% contribution from acquisitions completed in 2011. Unfavorable foreign currency exchange rates are expected to have a 2% unfavorable impact. In addition, the company reaffirmed its outlook for operating income growth of 9% to 11%, which includes at least
Business Segment Results | ||||
Consumer Business | ||||
(in millions) |
Three Months Ended |
Nine Months Ended | ||
8/31/12 |
8/31/11 |
8/31/12 |
8/31/11 | |
Net sales |
$568.3 |
$522.0 |
$1,671.2 |
$1,475.1 |
Operating income |
108.9 |
100.5 |
278.9 |
264.4 |
Consumer business sales grew 9% when compared to the third quarter of 2011. In local currency, sales grew 12% with acquisitions completed in 2011 accounting for about two thirds of the growth for this segment. The remaining increase was due to pricing actions, taken primarily in 2011 to offset the impact of higher material costs.
- Consumer sales in the
Americas rose 4%, and in local currency, grew 5%. The increase was driven by pricing actions, as well as a 1% increase that resulted from the company's 2011 acquisition of Kitchen Basics, a leading brand of liquid stock. Volume and product mix were about even with the year-ago period, even with higher pricing. The company reported in third quarter of 2011 that sales rose approximately 3% as a result of customer purchases in advance of a price increase in the U.S., which created a more difficult comparison in the third quarter of 2012. In the third quarter of 2012, new product introductions, brand marketing support and distribution gains drove underlying sales growth in this region. - In the
Europe ,Middle East andAfrica (EMEA) region, consumer sales grew 10%, and in local currency increased 22%.McCormick 's 2011 acquisition of Kamis, aPoland -based leading brand of spices, seasonings and mustards, contributed 22% to the sales growth this quarter. For the base business, a moderate level of pricing offset a moderate decrease in volume and product mix during the quarter. While a difficult environment persists in much ofEurope where consumers are under economic pressure, the company is driving incremental sales with new products and brand marketing support. - Consumer sales in the
Asia/Pacific region rose 67%, and in local currency grew 69%.McCormick 's 2011 acquisition of Kohinoor, based inIndia , added 55% of the sales growth. Excluding this impact, the company grew its base business 14% in local currency, which was driven primarily by a strong increase in volume and product mix in China. Year-to-date, consumer sales inChina have grown 20% in local currency.
For the third quarter, operating income for the consumer business was
Industrial Business | ||||
(in millions) |
Three Months Ended |
Nine Months Ended | ||
8/31/12 |
8/31/11 |
8/31/12 |
8/31/11 | |
Net sales |
$409.4 |
$398.4 |
$1,197.2 |
$1,111.8 |
Operating income |
35.3 |
27.9 |
99.1 |
83.9 |
Industrial business sales grew 3% when compared to the third quarter of 2011. In local currency, sales grew 6% primarily as a result of pricing actions taken in response to increased material costs.
- Industrial sales in the
Americas grew 5%, and in local currency grew 7% as a result of pricing actions. Increased volume and product mix of seasonings and flavors to food manufacturers and of branded items to foodservice distributors, were offset by lower demand from quick service restaurants in this region. - In EMEA, industrial sales rose 1%, and in local currency grew 11%. This growth was led by increased demand from quick service restaurants in this region which has been particularly strong in recent quarters. In addition, higher prices contributed 4% to sales growth this period.
- In the
Asia/Pacific region, industrial sales declined 6%, and in local currency decreased 4%. This compares to a year-on-year increase of 17% in local currency for the third quarter of 2011. In the third quarter of 2012, industrial business sales in this region continue to be impacted by a lower level of promotional activity behind certain menu items flavored byMcCormick .
For the third quarter, operating income for the industrial business rose 27% from the year-ago period, 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 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, 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
Every day, no matter where or what you eat, you can enjoy food flavored by McCormick. McCormick Brings Passion to Flavor™.
To learn more please visit us at www.mccormickcorporation.com.
For information contact:
Investor Relations:
(Financial tables follow)
Third Quarter Report |
McCormick & Company, Incorporated | ||||||
Consolidated Income Statement (Unaudited) |
|||||||
(In millions except per-share data) |
|||||||
Three Months Ended |
Nine Months Ended | ||||||
August 31, 2012 |
August 31, 2011 |
August 31, 2012 |
August 31, 2011 | ||||
Net sales |
$ 977.7 |
$ 920.4 |
$ 2,868.4 |
$ 2,586.9 | |||
Cost of goods sold |
586.0 |
555.9 |
1,733.0 |
1,543.5 | |||
Gross profit |
391.7 |
364.5 |
1,135.4 |
1,043.4 | |||
Gross profit margin |
40.1% |
39.6% |
39.6% |
40.3% | |||
Selling, general and administrative expense |
247.5 |
236.1 |
757.4 |
695.1 | |||
Operating income |
144.2 |
128.4 |
378.0 |
348.3 | |||
Interest expense |
13.2 |
13.1 |
40.7 |
37.6 | |||
Other income, net |
0.9 |
1.1 |
1.8 |
2.5 | |||
Income from consolidated operations before income taxes |
131.9 |
116.4 |
339.1 |
313.2 | |||
Income taxes |
33.0 |
31.2 |
93.8 |
91.7 | |||
Net income from consolidated operations |
98.9 |
85.2 |
245.3 |
221.5 | |||
Income from unconsolidated operations |
5.5 |
6.8 |
14.0 |
20.9 | |||
Net income |
$ 104.4 |
$ 92.0 |
$ 259.3 |
$ 242.4 | |||
Earnings per share - basic |
$ 0.79 |
$ 0.69 |
$ 1.95 |
$ 1.83 | |||
Earnings per share - diluted |
$ 0.78 |
$ 0.69 |
$ 1.93 |
$ 1.81 | |||
Average shares outstanding - basic |
132.7 |
132.6 |
132.8 |
132.7 | |||
Average shares outstanding - diluted |
134.3 |
134.1 |
134.3 |
134.3 | |||
Third Quarter Report |
McCormick & Company, Incorporated | ||||
Consolidated Balance Sheet (Unaudited) |
|||||
(In millions) |
|||||
August 31, 2012 |
August 31, 2011 | ||||
Assets |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ 72.2 |
$ 52.2 | |||
Trade accounts receivable, net |
411.2 |
391.7 | |||
Inventories |
628.6 |
600.3 | |||
Prepaid expenses and other current assets |
107.4 |
119.1 | |||
Total current assets |
1,219.4 |
1,163.3 | |||
Property, plant and equipment, net |
518.5 |
497.6 | |||
Goodwill |
1,667.0 |
1,511.2 | |||
Intangible assets, net |
345.4 |
236.0 | |||
Investments and other assets |
306.7 |
306.5 | |||
Total assets |
$ 4,057.0 |
$ 3,714.6 | |||
Liabilities and shareholders' equity |
|||||
Current liabilities |
|||||
Short-term borrowings and current portion of long-term debt |
$ 231.3 |
$ 0.3 | |||
Trade accounts payable |
317.5 |
303.2 | |||
Other accrued liabilities |
353.8 |
336.0 | |||
Total current liabilities |
902.6 |
639.5 | |||
Long-term debt |
1,026.2 |
1,031.7 | |||
Other long-term liabilities |
404.2 |
323.0 | |||
Total liabilities |
2,333.0 |
1,994.2 | |||
Shareholders' equity |
|||||
Common stock |
885.8 |
806.8 | |||
Retained earnings |
909.6 |
785.7 | |||
Accumulated other comprehensive (loss) income |
(89.5) |
118.8 | |||
Non-controlling interests |
18.1 |
9.1 | |||
Total shareholders' equity |
1,724.0 |
1,720.4 | |||
Total liabilities and shareholders' equity |
$ 4,057.0 |
$ 3,714.6 |
Third Quarter Report |
McCormick & Company, Incorporated | ||||
Consolidated Cash Flow Statement (Unaudited) |
|||||
(In millions) |
|||||
Nine Months Ended | |||||
August 31, 2012 |
August 31, 2011 | ||||
Operating activities |
|||||
Net income |
$ 259.3 |
$ 242.4 | |||
Adjustments to reconcile net income to net |
|||||
cash flow from operating activities: |
|||||
Depreciation and amortization |
76.8 |
73.2 | |||
Stock based compensation |
11.9 |
10.4 | |||
Income from unconsolidated operations |
(14.0) |
(20.9) | |||
Changes in operating assets and liabilities |
(91.9) |
(233.0) | |||
Dividends received from unconsolidated affiliates |
14.2 |
13.6 | |||
Net cash provided by operating activities |
256.3 |
85.7 | |||
Investing activities |
|||||
Acquisitions of businesses |
- |
(39.2) | |||
Capital expenditures |
(62.2) |
(58.8) | |||
Proceeds from sale of property, plant and equipment |
0.7 |
0.7 | |||
Net cash used in investing activities |
(61.5) |
(97.3) | |||
Financing activities |
|||||
Short-term borrowings, net |
12.1 |
(0.3) | |||
Long-term debt borrowings |
- |
251.5 | |||
Long-term debt repayments |
(4.6) |
(100.0) | |||
Proceeds from exercised stock options |
37.3 |
45.5 | |||
Common stock acquired by purchase |
(98.2) |
(89.2) | |||
Dividends paid |
(123.6) |
(111.4) | |||
Net cash used in financing activities |
(177.0) |
(3.9) | |||
Effect of exchange rate changes on cash and |
|||||
cash equivalents |
0.5 |
16.9 | |||
Increase in cash and cash equivalents |
18.3 |
1.4 | |||
Cash and cash equivalents at beginning of period |
53.9 |
50.8 | |||
Cash and cash equivalents at end of period |
$ 72.2 |
$ 52.2 |
SOURCE