McCormick Reports 25% Increase in Earnings Per Share for Second Quarter
SPARKS, Md., June 14 /PRNewswire/ -- McCormick & Company, Incorporated (NYSE: MKC) today reported a 25% increase in earnings per share, excluding special charges, for the second quarter of 2000, ended May 31.
Net sales for the quarter were $486 million, up 4% over the second quarter of 1999. In the quarter, the Company's gross profit margin increased to 35.1% from 33.7% the prior year. Operating profit rose 16%, excluding special charges. Unconsolidated income for the quarter was $3.2 million versus $2.1 million last year. Earnings per share for the quarter were 35 cents, an increase of 25% over 1999's earnings per share of 28 cents, excluding special charges. The segment information that follows excludes the impact of special charges.
Consumer Business
Sales for McCormick's consumer business rose 6% over last year's second quarter. In local currency, consumer sales were up 7% in the Americas, 7% in Europe, and 20% in Asia. In all markets, sales volumes grew through effective promotions, new products, and new distribution. Operating profit for the quarter was $22.5 million, 9% ahead of 1999's second quarter. As a percent of sales, operating profit margin rose to 11.2% from 10.9%.
Industrial Business
Industrial sales rose 1% for the quarter. In local currency, industrial sales were up 3% in the Americas, down 6% in Europe, and up 9% in Asia. In the Americas, sales volume to foodservice customers continued to grow. While lower commodity costs reduced pricing for certain products to restaurants and food processors, margins were maintained. Europe continued to experience sales softness in a competitive environment. However, actions to improve supply chain costs together with a more profitable mix of products, resulted in an industrial business operating profit for the quarter of $21.9 million, a 15% increase over the prior year. As a percent of sales, operating profit margin rose to 9.2% from 8.1%.
Packaging Business
The packaging business reported sales up 5% for the quarter over last year. Operating profit was $6.4 million, an increase of 14%, and as a percent of sales rose to 14.1% from 13%.
Commented Robert J. Lawless, Chairman, President & CEO, "We are extremely pleased with our progress through the second quarter. For 2000, our goal for gross profit margin was a 70 to 100 basis point improvement over 1999. Year-to-date, we have reported an improvement of 200 basis points. This is the combined result of many projects to improve efficiencies and a more profitable product mix. Our favorable results, together with successful asset management, have improved the cash flow of the Company. This strong cash flow has enabled us to reduce shares outstanding by 4% versus the prior year through our share repurchase program. This share reduction, together with strong profit performance, grew earnings per share by 34% for the first six months of 2000, well ahead of our 11-14% objective.
"As we grow sales of branded products, invest in technical innovation, and gain efficiency in our processes and asset utilization, McCormick is adding shareholder value. We believe that 2000 will be another excellent year for the Company."
Forward Looking Statement
Certain information contained in this release, including expected synergies and projections, are "forward-looking statements" within the meaning of Section 21E of the Securities and 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, fluctuations in the cost and availability of supply chain resources and foreign economic conditions, including currency rate fluctuations.
About McCormick & Company, Incorporated
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. In addition, the packaging group manufactures and markets specialty plastic bottles and tubes for personal care and other industries. McCormick reported 1999 net sales of $2.0 billion. For more information about McCormick, visit the Company's website on the Internet at: http://www.mccormick.com
Second Quarter Report
McCormick & Company, Incorporated
Consolidated Income Statement (Unaudited)
(in thousands except per-share data)
Three Months Ended Six Months Ended
5/31/00 5/31/99 5/31/00 5/31/99
NET SALES
Consumer $201,356 $189,321 $404,448 $380,910
Industrial 239,258 235,869 456,559 446,536
Packaging 45,110 42,988 87,120 82,275
Total Net sales 485,724 468,178 948,127 909,721
Cost of goods sold 315,242 310,443 613,813 606,647
Gross Profit 170,482 157,735 334,314 303,074
Gross profit margin 35.1% 33.7% 35.3% 33.3%
Selling, general &
administrative
expense (a) 127,799 120,824 253,737 232,179
Special charges 464 14,665 966 14,665
Operating income 42,219 22,246 79,611 56,230
Interest expense 8,313 8,154 15,719 16,288
Other expense (a) 1,255 79 2,700 307
Income before
income taxes 32,651 14,013 61,192 39,635
Income taxes 11,649 10,274 21,838 19,472
Net income from
consolidated
operations 21,002 3,739 39,354 20,163
Income from
consolidated
operations 3,200 2,057 9,265 3,803
NET INCOME $24,202 $5,796 $48,619 $23,966
EARNINGS PER SHARE
BASIC AND ASSUMING
DILUTION (b) $0.35 $0.08 $0.70 $0.33
Average shares outstanding
-basic 68,675 71,502 69,112 71,922
Average shares outstanding
- assuming dilution 69,605 71,919 69,590 72,430
(a) For the quarter, Royalty income of $2,423 and $1,260 has been reclassified from Other expense to Selling, general & administrative expense for 2000 and 1999, respectively. For the six months ended, Royalty income of $5,022 and $2,583 has been reclassified from Other expense to Selling, general & administrative expense for 2000 and 1999, respectively.
(b) For the quarter, Earnings Per Share - Assuming Dilution, excluding special charges were $0.35 and $0.28 for 2000 and 1999, respectively. For the six months ended, Earnings Per Share - Assuming Dilution, excluding special charges were $0.71 and $0.53 for 2000 and 1999, respectively.
Condensed Consolidated Balance Sheet (Unaudited)
(In thousands)
5/31/00 5/31/99
Assets
Receivables $175,195 $182,866
Inventories 252,033 262,201
Prepaid allowances 124,082 150,255
Property, plant and equipment, net 356,447 366,593
Other assets 287,560 260,651
Total assets $1,195,317 $1,222,566
Liabilities and shareholders' equity
Short-term borrowings $202,233 $206,678
Other current liabilities 324,534 320,766
Long-term debt 235,084 243,401
Other liabilities 99,047 100,675
Shareholders' equity 334,419 351,046
Total liabilities and
shareholders' equity $1,195,317 $1,222,566
SOURCE McCormick & Company, Incorporated
CONTACT: McCormick Corporate Communications, 410-771-7310/