McCormick & Company, Incorporated (MKC): history, ownership, mission, how it works & makes money

A Brief History of McCormick & Company

Founded in 1889, McCormick & Company, Incorporated has evolved into a global leader in flavoring solutions and spices. The company is headquartered in Hunt Valley, Maryland, and trades under the ticker symbol MKC on the New York Stock Exchange.

Company Overview

As of August 31, 2024, McCormick reported net sales of $1,679.8 million for the third quarter, a slight decrease of (0.3%) compared to $1,684.7 million in the same period of 2023. For the nine months ended August 31, 2024, net sales reached $4,925.7 million, reflecting a modest increase of (0.3%) from $4,909.4 million in 2023.

Financial Performance

McCormick's diluted earnings per share (EPS) for the third quarter of 2024 increased to $0.83 from $0.63 in the third quarter of 2023. For the nine months ended August 31, 2024, diluted EPS was $2.13, compared to $1.71 in the previous year.

Market Segments

McCormick operates primarily through two segments: Consumer and Flavor Solutions. In Q3 2024, the Consumer segment reported net sales of $937.4 million, a slight increase of from the previous year, while the Flavor Solutions segment had net sales of $742.4 million, reflecting a decrease of (0.7%) year-over-year.

Special Charges and Operational Changes

For the nine months ended August 31, 2024, McCormick recorded special charges totaling $7.9 million, compared to $47.1 million for the same period in 2023. These charges were largely associated with the Global Operating Effectiveness (GOE) program and the transition of manufacturing facilities.

Future Outlook

Looking ahead, McCormick expects its 2024 gross profit margin to increase by 50 to 100 basis points compared to 2023. The company anticipates a projected increase in operating income of 9% to 11% and an adjusted diluted EPS range of $2.85 to $2.90, signaling a growth of 5% to 7% over the adjusted diluted EPS of $2.70 in 2023.

Key Financial Ratios

A Who Owns McCormick & Company, Incorporated (MKC)

Ownership Structure

As of 2024, McCormick & Company, Incorporated (MKC) has a diverse ownership structure comprising institutional investors, individual shareholders, and company executives. The company's common stock is divided into two classes: common stock (CS) and non-voting common stock (CSNV).

Major Shareholders

The largest shareholders of McCormick & Company include various institutional investors and individual stakeholders. The following table outlines the top institutional holders as of 2024:

Executive Ownership

Executive officers and board members also hold significant shares in the company. The following table provides details on the ownership of key executives:

Stock Performance and Dividends

In 2024, McCormick has demonstrated a stable financial performance, with a projected diluted earnings per share ranging from $2.81 to $2.86. The company has maintained a consistent dividend policy, with cash dividends paid amounting to $338.3 million for the first nine months of 2024, compared to $313.8 million in the same period of 2023.

Market Capitalization

As of August 31, 2024, McCormick's total market capitalization was approximately $15.3 billion, reflecting its strong position in the food industry.

Share Repurchase Program

McCormick has an ongoing share repurchase program, with $472 million remaining of the $600 million authorized by the Board of Directors in November 2019. In the nine months ended August 31, 2024, the company repurchased 382 thousand shares at a total cost of $29.0 million.

McCormick & Company, Incorporated (MKC) Mission Statement

Corporate Mission Statement

McCormick & Company, Incorporated aims to be a global leader in flavor, serving customers with a wide range of spices, seasonings, and flavor solutions. The company emphasizes its commitment to quality, innovation, and sustainability, ensuring that it meets the diverse flavor needs of consumers and food manufacturers worldwide.

Financial Overview

As of August 31, 2024, McCormick reported net sales of $1,679.8 million for the third quarter, a slight decrease of 0.3% compared to $1,684.7 million in the same period of 2023. The year-to-date net sales for the nine months ended August 31, 2024, totaled $4,925.7 million, reflecting a 0.3% increase over $4,909.4 million in 2023.

Market Segments

McCormick operates in two primary segments: Consumer and Flavor Solutions. In Q3 2024, the Consumer segment generated net sales of $937.4 million, while the Flavor Solutions segment contributed $742.4 million.

Global Presence and Operations

Approximately 39% of McCormick's sales were generated outside the U.S. in fiscal year 2023. The company operates in multiple geographic markets, with significant contributions from the Americas, EMEA (Europe, Middle East, and Africa), and APAC (Asia-Pacific) regions.

Future Outlook

For 2024, McCormick anticipates adjusted diluted earnings per share to range between $2.81 and $2.86, reflecting an increase of 5% to 7% over the adjusted diluted earnings per share of $2.70 in 2023. The company expects operating income growth of 9% to 11%, with an effective tax rate projected at approximately 21%.

How McCormick & Company, Incorporated (MKC) Works

Business Overview

McCormick & Company is a global leader in flavor manufacturing, specializing in spices, seasonings, and flavor solutions. The company operates through two main segments: Consumer and Flavor Solutions.

Financial Performance (Q3 2024)

As of the third quarter ending August 31, 2024, McCormick reported the following financial results:

Sales Breakdown by Segment

The sales performance by segment for Q3 2024 was as follows:

Market Trends and Challenges

McCormick's sales faced challenges due to pricing actions and foreign exchange fluctuations. Specifically, pricing actions negatively impacted sales by 0.2%, while foreign exchange rates contributed to a 0.4% decrease.

Operational Highlights

In Q3 2024, McCormick achieved a gross profit margin of 38.7%, an increase from 37.0% in the prior year, driven by favorable product mix and cost savings initiatives.

Outlook for 2024

For the full year 2024, McCormick anticipates net sales to range from a decline of 1% to an increase of 1%, with an expected operating income increase of 9% to 11% over the previous year.

Cash Flow and Investments

McCormick's cash flow from operating activities remains a primary source for funding growth, dividends, and capital expenditures. In the first nine months of 2024, McCormick paid dividends totaling $338.3 million, up from $313.8 million in the same period of 2023.

Debt Management

As of August 31, 2024, McCormick's total average debt outstanding was $4,970.8 million, compared to $5,245.9 million in the prior year. The company utilizes revolving credit facilities to manage its cash needs effectively.

Geographic Sales Distribution

Sales distribution by region for Q3 2024 is as follows:

Conclusion

McCormick & Company continues to navigate a challenging market landscape while focusing on strategic pricing actions and operational efficiencies to drive growth and profitability.

How McCormick & Company, Incorporated (MKC) Makes Money

Business Segments

McCormick operates through two primary segments: Consumer and Flavor Solutions. The Consumer segment focuses on retail channels, while the Flavor Solutions segment serves food manufacturers and foodservice providers.

Revenue Generation

As of August 31, 2024, McCormick's net sales for the three months ended were $1,679.8 million, slightly down from $1,684.7 million in the same period in 2023, representing a decrease of 0.3%.

Consumer Segment Performance

In the Consumer segment, net sales were $937.4 million for the three months ended August 31, 2024, showing a slight increase from $937.1 million in 2023. The operating income increased to $186.8 million, with an operating margin of 19.9%.

Flavor Solutions Segment Performance

The Flavor Solutions segment reported net sales of $742.4 million for the three months ended August 31, 2024, down from $747.6 million in 2023. Operating income for this segment rose to $101.6 million, resulting in an operating margin of 13.7%.

Cost Management Strategies

McCormick has implemented several cost management strategies that have positively impacted gross profit margins. For the nine months ended August 31, 2024, gross profit increased by $67.6 million, or 3.8%, to $1,868.8 million, reflecting a gross profit margin of 37.9%, an increase of 120 basis points from the previous year.

Pricing Actions and Sales Impact

Pricing actions contributed to an increase in sales by 0.8% in the nine months ended August 31, 2024. However, unfavorable volume and product mix decreased sales by 0.4%, which included impacts from the discontinuation of low-margin businesses.

Geographic Revenue Distribution

Net sales by geographic area for the three months ended August 31, 2024 are as follows:

Operating Income Trends

Operating income for the three months ended August 31, 2024 was $286.5 million, an increase from $245.0 million in 2023. This increase was attributed to improved gross profit margins and reduced selling, general, and administrative (SG&A) expenses.

Future Outlook

For 2024, McCormick anticipates net sales to range from a decline of 1% to an increase of 1%. The company projects an increase in operating income of 9% to 11% compared to 2023, driven by favorable pricing actions and cost savings initiatives.