McCormick & Company, Incorporated (NYSE:MKC) Q3 2023 Earnings Conference Call October 3, 2023 8:00 AM ET

Company Participants

Faten Freiha - Vice President of Investor Relations

Brendan Foley - President and Chief Executive Officer

Mike Smith - Executive Vice President and Chief Financial Officer

Conference Call Participants

Andrew Lazar - Barclays

Alexia Howard - Bernstein

Max Gumport - BNP Paribas

Adam Samuelson - Goldman Sachs

Steve Powers - Deutsche Bank

Matt Smith - Stifel

Robert Moskow - TD Cowen

Rob Dickerson - Jefferies

Faten Freiha

Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's Third Quarter Earnings Call.

To accompany this call, we have posted a set of slides on our IR website.

With me this morning are Brendan Foley, President and CEO; Mike Smith, Executive Vice President and CFO; and Kasey Jenkins, Chief Growth Officer.

During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information.

Today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or other factors. Please refer to our forward-looking statement slide for more information.

I'll now turn the discussion over to Brendan.

Brendan Foley

Good morning, everyone, and thank you for joining us.

Let me start by saying how pleased I am to join you today for my first earnings call as President and CEO. Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation.

Let's turn to our results. We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies, across our Consumer and Flavor Solutions segments. Our results were in line with our expectations across our business, notwithstanding challenges for our Consumer segment in Asia Pacific, or APAC, where the pace of China's economic recovery been slower than previously anticipated.

Let me start with the highlights for the third quarter: we delivered solid constant currency sales growth; we continued to realize effective price realization, and importantly, volume performance, excluding China, has improved each quarter throughout the year; we continued to see top-line momentum in our business, positioning McCormick for sustained growth; we drove meaningful year-over-year margin expansion, underscoring our focus on profit realization; year-to-date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements. Our performance demonstrates the strength of our business fundamentals and the effective execution of our proven strategies while leveraging the sustained demand for flavor.