LONDON, UK / ACCESSWIRE / July 16, 2018 / If you want access to our free earnings report on McCormick & Co., Inc. (NYSE: MKC) ("McCormick"), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=MKC. The Company reported its second quarter fiscal 2019 operating and financial results on June 28, 2018. The spices and seasonings Company outperformed top- and bottom-line expectations. Additionally, the Company re-affirmed its guidance for FY18. Register today and get access to over 1,000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the quarter ended May 31, 2018, McCormick reported net sales of $1.33 billion, up 19% compared to $1.14 billion in Q2 FY17. The recently acquired Frank's and French's brands added 13% to the Company's sales in the reported quarter. The Company's revenue numbers beat analysts' estimates of $1.31 billion.
During Q2 FY18, McCormick's gross profit margin increased 340 basis points (bps) to 43.3% compared to 39.9% in Q2 FY17. This expansion was driven by the Comprehensive Continuous Improvement (CCI) program, which led cost savings and the Company's shift in the portfolio to more value-added products.
McCormick's operating income was $191.7 million in Q2 FY18, up 45% compared to $132.6 million in Q2 FY17, driven by higher sales and gross margin expansion. The Company recognized $8 million of transaction and integration expenses in operating income related to the RB Foods acquisition in Q2 FY18. Excluding transaction and integration expenses, as well as special charges, the Company's adjusted operating income was $207.9 million, up 51% compared to $137.3 million in the year ago same period.
McCormick posted a net income of $123.3 million, or $0.93 per diluted share, in Q2 FY17 compared to $100.0 million, or $0.79 per diluted share, in Q2 FY17. The Company's earnings for the reported quarter were impacted by $0.09 per share due to transaction and integration expenses, as well as special charges.
On an adjusted basis, McCormick's earnings per share (EPS) surged 24% to $1.02 versus $0.82 in the year ago comparable period. The Company's EPS surpassed Wall Street's estimates of $0.93.
During Q2 FY18, McCormick's Consumer segment's sales rose 20% to $785.4 million on a y-o-y basis. During the reported quarter, Consumer sales in the Americas rose 23% on a y-o-y basis, while Consumer sales in Europe, Middle-East, and Africa (EMEA) increased 14% compared to the year ago corresponding period, and sales in the Asia/Pacific region rose 15% on a y-o-y basis, led by China.
For Q2 FY18, the Consumer segment's operating income surged 44% to $131.1 million on a y-o-y basis compared to $91.3 million in Q2 FY17, driven by the favorable impact of higher sales, including a favorable mix, and CCI-led cost savings.
McCormick's Flavor Solutions segment's sales increased 18% to $541.9 million in Q2 FY18, driven by a growth in the Americas and EMEA regions. The segment's sales in the Americas grew 23% on a y-o-y basis. On a constant currency basis, the growth was 22% with sales from the Frank's and French's brands contributing 17%. For Q2 FY18, the segment's sales in EMEA rose 12% on a y-o-y basis, while its sales in the Asia/Pacific region increased 5% compared to the year ago same period.
During Q2 FY18, the Flavor Solutions segment's operating income soared 67% to $76.8 million compared to $46.0 million in Q2 FY17, driven by the favorable impact of higher sales, product mix, and CCI-led cost savings.
McCormick's year-to-date net cash provided by operating activities was $235 million in Q2 FY18 compared to $177 million in Q2 FY17. The increase was mainly due to the net income growth. The Company utilized a portion of its cash to make prepayments on its recent acquisition debt.
2018 Financial Outlook
McCormick reaffirmed its sales, operating income, and EPS guidance for FY18. During FY18, the Company expects its sales to grow in the range of 13% to 15% compared to FY17. McCormick plans to achieve at least $105 million of cost savings in FY18, and intends to use these savings to improve margins, fund an increase in brand marketing, and as a further offset, to increased costs.
McCormick reaffirmed its expectations to grow operating income by 32% to 34% for FY18 from $702 million in FY17. The Company is projecting EPS to be in the band of $6.85 to $6.95 for FY18 compared to $3.72 in FY17. McCormick is projecting FY18 to be another year of strong cash flow, with plans to return a significant portion to its shareholders through dividends and to reduce debt.
Stock Performance Snapshot
July 13, 2018 - At Friday's closing bell, McCormick's stock slightly climbed 0.93%, ending the trading session at $119.14.
Volume traded for the day: 543.24 thousand shares.
Stock performance in the last month – up 13.77%; previous three-month period – up 12.61%; past twelve-month period – up 22.90%; and year-to-date – up 16.91%
After last Friday's close, McCormick's market cap was at $15.53 billion.
Price to Earnings (P/E) ratio was at 29.46.
The stock has a dividend yield of 1.75%.
The stock is part of the Consumer Goods sector, categorized under the Processed & Packaged Goods industry. This sector was up 0.3% at the end of the session.
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