McCormick Reports 40% Increase in First Quarter Earnings Per Share
SPARKS, Md., March 14 /PRNewswire/ -- McCormick & Company, Incorporated (NYSE: MKC), today reported record sales and earnings per share for the first quarter of 2000.
Earnings per share for the quarter ended February 29 were 35 cents, an increase of 40% over 1999's earnings per share of 25 cents. Net sales for the quarter were $462 million, up 5% over the first quarter of 1999. In the quarter, the Company's gross profit margin increased to 35.4% from 32.9%, and operating profit rose 12%, excluding special charges. These results were achieved through a combination of cost reduction and a continued shift in sales toward more value-added products, particularly in the industrial business. Unconsolidated income for the quarter was $6.1 million versus $1.7 million last year. Net income rose 34% for the quarter.
Consumer Business
Sales for McCormick's consumer business were up 6% over last year's first quarter. In local currency, sales were up 7% in the Americas, 2% in Europe, and 20% in Asia. Sales growth was driven by more effective promotions, new products, and new distribution. Operating profit ended the quarter 13% ahead of 1999's first quarter, and as a percent of net sales rose to 12.8% from 12%.
Industrial Business
Industrial sales rose 3% for the quarter. Sales to warehouse clubs and foodservice distributors continued to show a strong performance within this segment. Sales in Europe declined during this period due to a very competitive environment. As the product mix for McCormick's industrial business shifts to more value-added products, margins are improving. Strong operating profit improvement this quarter was dampened by a $4 million write- off due to the bankruptcy of a major foodservice distributor. Operating profit ended the quarter 12% ahead of 1999's first quarter and as a percent of net sales rose to 7% from 6.5%.
Packaging Business
The packaging business reported sales up 7% as a result of success in gaining new product distribution with existing customers. Operating profit increased 39% over last year's quarter and as a percent of sales rose to 12.5% from 9.6%.
Commented Robert J. Lawless, Chairman, President & CEO, "We are off to a strong start for 2000. Each of our three segments -- consumer, industrial and packaging -- contributed positively to the sales, gross profit margin, and operating profit improvement. McCormick's unconsolidated operations got back on track in 1999 and had an excellent performance in this first quarter. The outstanding results we had this quarter provide the opportunity to further support our brands while having the potential to exceed the 11-14% earnings per share goal we set for this year.
"As a further indication of our confidence in the business and supported by our strong cash flow, the Company repurchased 1.4 million shares or 2% of its outstanding shares during the quarter.
"Three key drivers of our performance continue to be growth in branded products, technical innovation, and efficiencies in processes and asset utilization. We are enthusiastic about our progress and are confident that 2000 will be another excellent year for McCormick."
Forward Looking Statement
Certain information contained in this release, including expected trends in net sales and earnings performance, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward- looking statements are based on management's current views and assumptions, and involve risks and uncertainties that could be materially affected by external factors such as: actions of competitors, customer relationships, fluctuations in the cost and availability of supply chain resources and foreign economic conditions, including currency rate fluctuations.
About McCormick
McCormick & Company, Incorporated is the global leader in the manufacture, marketing and distribution of spices, seasonings and flavors to the entire food industry -- to foodservice and food processing businesses as well as to retail outlets. In addition, the packaging group manufactures and markets specialty plastic, bottles and tubes for personal care and other industries.
McCormick & Company, Incorporated
First Quarter Report
Consolidated Income Statement (Unaudited)
(In thousands except per-share data)
Three Months Ended
2/29/00 2/28/99
NET SALES
Consumer $203,092 $191,589
Industrial 217,301 210,667
Packaging 42,010 39,287
Total net sales 462,403 441,543
Cost of goods sold 298,571 296,204
Gross profit 163,832 145,339
Gross profit margin 35.4% 32.9%
Selling, general & administrative
expense 125,938 111,355
Special charges 502 0
Operating income 37,392 33,984
Interest expense 7,406 8,134
Other expense 1,445 228
Income before income taxes 28,541 25,622
Income taxes 10,189 9,198
Net income from consolidated operations 18,352 16,424
Income from unconsolidated operations 6,065 1,746
NET INCOME $24,417 $18,170
EARNINGS PER SHARE - BASIC AND
ASSUMING DILUTION $0.35 $0.25
Average shares outstanding - basic 69,537 72,326
Average shares outstanding -
assuming dilution 69,818 72,953
| Note: | Royalty income of $2,599 and $1,323 has been reclassified from |
|---|---|
| Other expense to Selling, general & administrative expense for 2000 and 1999, | |
| respectively. |
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)
2/29/00 2/28/99
Assets
Receivables $180,622 $176,367
Inventories 247,316 246,392
Prepaid allowances 123,524 153,729
Property, plant and equipment, net 362,356 372,209
Other assets 286,477 268,469
Total assets $1,200,295 $1,217,166
Liabilities and shareholders' equity
Short-term borrowings $188,172 $190,764
Other current liabilities 321,881 311,635
Long-term debt 239,871 247,956
Other liabilities 96,992 99,225
Shareholders' equity 353,379 367,586
Total liabilities and shareholders'
equity $1,200,295 $1,217,166
SOURCE McCormick & Company, Incorporated
CONTACT: McCormick Corporate Communications, 410-771-7310/