McCormick & Company (MKC) Q1 2023 Earnings Call Transcript

For the period ending February 28, 2023

March 28, 2023 8:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Kasey Jenkins

Good morning. This is Kasey Jenkins, Chief Strategy Officer and Senior Vice President, Investor Relations. Thank you for joining today's first quarter earnings call. To accompany this call, we've posted a set of slides at ir.mccormick.com. With me this morning are Lawrence Kurzius, Chairman and CEO; Brendan Foley, President and COO; and Mike Smith, Executive Vice President and CFO.

During this call, we will refer to certain non-GAAP financial measures. The nature of these non-GAAP financial measures and the related reconciliations to 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 statements on Slide 2 for more information.

I will now turn the discussion over to Lawrence.

Lawrence Kurzius

Good morning, everyone. Thanks for joining us. We are pleased with the start of the year. We delivered solid first quarter results that reflect strong demand and early results from our actions to increase our profit realization in 2023. Our sales performance reflects the strength of our broad global portfolio and the effective execution of our strategies.

Our global operating effectiveness, or GOE program, is yielding results with first quarter cost savings in line with our expectations. The progress we are making on gross margin improvement reflects the level of urgency with which we are addressing the pressure points from last year. These results, combined with the strong demand we continue to expect across our portfolio and our diligent approach to optimizing our cost structure, bolster our confidence in our plan and our 2023 full year outlook.

Turning to Slide 5. In the first quarter, we drove 3% sales growth or 5% in constant currency. Our constant currency sales growth reflected strong underlying business performance with an 11% contribution from pricing, partially offset by a 3% decline in underlying volume and product mix, a planned 1% decline from in basics divestiture and the exit of our consumer business in Russia, and an expected 1% year-over-year volume decline from lower consumption due to COVID-related disruption in China, which we expect to see a return towards normal consumption trends in the coming quarters.