McCormick Announces Record First Quarter Results
SPARKS, Md., March 23 /PRNewswire-FirstCall/ -- McCormick & Company, Incorporated (NYSE: MKC) today reported record sales, net income and earnings per share for the first quarter ended February 29, 2004.
Sales for the quarter were $572 million, an increase of 18% versus the first quarter of 2003. Higher volumes, pricing and product mix in the consumer and industrial businesses led to an increase of 7%. In addition, favorable foreign exchange rates added 6%, and the 2003 acquisition of Zatarain's added another 5% to sales.
Earnings per share from continuing operations for the first quarter increased 17% to $0.27 compared to $0.23 in the first quarter of 2003. During the quarter, the Company increased advertising spending by $5 million related largely to the Zatarain's acquisition and new product launches. Strong sales growth and higher gross profit margin were the primary drivers of the first quarter increase in net income and earnings per share.
Consumer Business
(in thousands) Three Months Ended
2/29/04 2/28/03
Net sales $299,054 $236,286
Operating income 48,998 39,835
For the first quarter, sales for McCormick's consumer business rose 27% when compared to 2003. Zatarain's added 10% to sales, higher volume, price and product mix added 9% and favorable foreign exchange another 8%. Consumer sales in the Americas rose 33% with 16% from the Zatarain's acquisition and 2% from foreign exchange. Higher volume in both the U.S. and Canada was the primary driver of the remaining 15% of sales increase for the quarter. Sales in the U.S. benefited from new distribution gained in 2003 with a leading dollar store chain and a major grocery retailer. In addition to these volume increases, pricing was higher for vanilla products in response to higher vanilla bean costs. Consumer sales in Europe increased 17% for the quarter, with 16% due to favorable foreign exchange. The remaining 1% of increase was due to sales of new products and strength with the Schwartz brand in the U.K. Volumes in France were even with prior year due to a weaker economy. In the Asia/Pacific region, favorable foreign exchange led to a 19% increase in consumer sales. During the quarter, increased sales in Australia offset a decrease from slotting fees for new products in China that were recorded as a reduction to sales. Operating income from continuing operations for the consumer business increased 23% to $49 million for the first quarter of 2004. This increase was driven by strong sales performance, offset in part by a $5 million increase in advertising related to Zatarain's and new product launches.
Industrial Business
(in thousands) Three Months Ended
2/29/04 2/28/03
Net sales $273,308 $249,161
Operating income 25,358 22,713
McCormick's industrial business had improved results for the first quarter of 2004. Sales increased 10% versus last year, with higher volumes, price and product mix contributing 6% and favorable foreign exchange another 4%. In the Americas, industrial sales rose 6% with 1% from foreign exchange. As in 2003, sales to restaurant customers have remained strong with new products leading to higher volumes. Sales to food processors improved during the quarter, while sales to food service customers continued to be even with prior year results. Industrial sales in Europe benefited from new products, increasing 26% for the quarter, with foreign exchange contributing 15%. In the Asia/Pacific region, industrial sales rose 14%, with an 11% increase from foreign exchange. In the first quarter of 2004, industrial business operating income increased 12% to $25 million, benefiting from sales of more higher-margin, value-added product lines.
Chairman's comments
Robert J. Lawless, Chairman, President & CEO, commented on the first quarter, "Both the consumer and industrial businesses of McCormick delivered excellent financial results for the first quarter of the 2004 fiscal year. We were pleased to report record sales, net income and earnings per share.
"This strong start to our year is encouraging. We are benefiting from our 2003 acquisition activity and distribution gains along with recent new product success. With this momentum and the favorable foreign exchange environment, we expect to exceed our initial objective to increase sales 7-9%. Sales growth is more likely to increase at a low double-digit rate. Our earnings per share objective for 2004 remains $1.51 to $1.54 as we continue to invest in growth initiatives and offset additional cost increases. We expect cash from operations after net capital expenditures and dividends to exceed $100 million.
"In 2004, we are focused on new product success in our consumer and industrial businesses worldwide, the next phase of our B2K process improvement and technology implementation, improved efficiency with supply chain initiatives, and integration of recent acquisitions. These activities are the foundation for our continued momentum and future success."
Live Webcast
As previously announced, McCormick will hold a conference call with the analysts today at 10:00 a.m. EST. The conference call will be web cast live via the McCormick corporate web site http://www.mccormick.com. Click on "Company Information" then "Investor Information," and follow directions to listen to the call. At this same location, a replay of the call will be available for one week following the live call. Past press releases and additional information can be found at the Company's website.
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, market acceptance of new products, actual amount and timing of special charge items, removal and disposal costs, final negotiations of third-party contracts, the impact of the stock market conditions on its share repurchase program, fluctuations in the cost and availability of supply chain resources, global economic conditions, including interest and currency rate fluctuations, and inflation rates. The Company undertakes no obligation to update or revise publicly, any forward-looking statements, whether as a result of new information, future events or otherwise.
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.
First Quarter Report McCormick & Company, Incorporated
Consolidated Income Statement (Unaudited)
(In thousands except per-share data)
Three Months Ended
2/29/2004 2/28/2003
Net sales $572,362 $485,447
Cost of goods sold 350,676 299,317
Gross profit 221,686 186,130
Gross profit margin 38.7% 38.3%
Selling, general &
administrative expense 160,233 130,979
Special charges 69 120
Operating income 61,384 55,031
Interest expense 9,572 9,511
Other (income)/expense, net (148) (641)
Income from consolidated operations
before income taxes 51,960 46,161
Income taxes 16,056 14,206
Net income from consolidated operations 35,904 31,955
Income from unconsolidated
operations 3,261 2,847
Minority interest (1,059) (1,375)
Net income from continuing operations 38,106 33,427
Discontinued operations, net of tax - 1,712
Net income $38,106 $35,139
Earnings per share - basic:
Net income from continuing operations $0.28 $0.24
Net income from discontinued
operations $- $0.01
Net income $0.28 $0.25
Earnings per share - diluted:
Net income from continuing operations $0.27 $0.23
Net income from discontinued
operations $- $0.01
Net income $0.27 $0.25
Average shares outstanding - basic 137,357 139,882
Average shares outstanding - diluted 141,817 142,461
First Quarter Report McCormick & Company, Incorporated
Consolidated Balance Sheet (Unaudited)
(In thousands)
2/29/2004 2/28/2003
Assets
Current assets
Cash and cash equivalents $17,735 $22,882
Receivables, net 325,387 271,084
Inventories 366,337 325,361
Prepaid expenses and other current assets 22,059 38,319
Current assets of discontinued operations - 55,435
Total current assets 731,518 713,081
Property, plant and equipment, net 464,592 412,980
Goodwill and intangible assets, net 741,005 540,305
Prepaid allowances 86,405 113,908
Investments and other assets 140,885 128,111
Non-current assets of discontinued operations - 77,521
Total assets $2,164,405 $1,985,906
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings and current
portion of long-term debt $179,686 $207,966
Trade accounts payable 153,577 173,081
Other accrued liabilities 299,675 268,920
Current liabilities of discontinued
operations - 21,248
Total current liabilities 632,938 671,215
Long-term debt 450,024 451,063
Other long-term liabilities 219,842 199,480
Long-term liabilities of discontinued
operations - 3,163
Total liabilities 1,302,804 1,324,921
Minority interest 23,323 21,360
Shareholders' equity
Common stock 278,360 236,223
Retained earnings 495,824 459,113
Accumulated other comprehensive
income (loss) 64,094 (55,711)
Total shareholders' equity 838,278 639,625
Total liabilities and
shareholders' equity $2,164,405 $1,985,906
SOURCE McCormick & Company, Incorporated
-0- 03/23/2004
/CONTACT: Corporate Communications: Mac Barrett, +1-410-771-7310 or
mac_barrett@mccormick.com, or Investor Relations: Joyce Brooks,
+1-410-771-7244 or joyce_brooks@mccormick.com, both of McCormick & Company/
/Web site: http://www.mccormick.com /
(MKC)
CO: McCormick & Company, Incorporated
ST: Maryland
IN: FOD
SU: ERN MAV CCA
JS
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7474 03/23/2004 09:03 EST http://www.prnewswire.com