McCormick Reports First Quarter Financial Results, Reaffirms 2013 Outlook
SPARKS, Md.,
- Net sales rose 3% to
$934 million , led by 7% growth in consumer business sales on
strong volume and product mix. - Reported earnings per share of
$0.57 compared to$0.55 in the first quarter of 2012.
Cash flow from operations rose to$32 million from$23 million in the prior year. - Reaffirmed outlook for 3% to 5% sales growth in local currency and 2013
earnings per share of$3.15 to $3.23 .
"We grew consumer business sales 7% with innovation in spices and seasonings, recipe mixes and our 'regional leaders' such as Zatarain's in the U.S. and Vahine in France. Digital media, in-store merchandising and other brand marketing support also drove our growth in the first quarter. We had particularly strong performance in emerging markets where we increased consumer business sales 14%. As expected, our industrial business had a slower start to the year. Compared to a 13% rate of sales growth in the first quarter of 2012, industrial business sales declined 2% in the first quarter of 2013. Demand has been weak in certain markets, including quick service restaurants in the U.S. and
Operating income of
Cash flow from operations was
The company reaffirmed its expectation to grow sales 3% to 5% in local currency, largely from higher volume and product mix and expects a minimal impact of foreign currency exchange rates based on current rates. The company also reaffirmed guidance for a 6% to 8% increase in operating income, including projected CCI cost savings of at least
Business Segment Results |
|||
Consumer Business |
|||
(in millions) |
Three Months Ended |
||
2/28/13 |
2/29/12 | ||
Net sales |
$569.8 |
$534.2 | |
Operating income |
87.7 |
81.4 |
Consumer business sales grew 7% when compared to the first quarter of 2012. Higher volume and product mix contributed 5% of the increase and pricing 2%. The impact of foreign currency exchange rates on sales growth was minimal this period.
- Consumer sales in the
Americas rose 7%, with minimal impact from foreign currency exchange. This increase was mainly driven by volume and product mix, with pricing actions adding 1%. Initiatives driving this unit growth included consumer marketing, promotional activity and in-store merchandising for spices, herbs and seasonings in both the U.S. andCanada . In addition, product innovation led to an increase in sales of recipe mixes, as well as Grill Mates, Zatarain's and Simply Asia brand products. - Consumer sales in EMEA rose 4%, and in local currency increased 2%. Both higher volume and product mix, and pricing actions contributed to this increase. During the first quarter the company grew sales of Vahine and Ducros brand products in
France , and its Schwartz brand in theU.K. , and gained new distribution of Kamis items in Russia. - First quarter sales in the
Asia/Pacific region grew 13%, and in local currency the increase was 15%.China was the largest contributor to this increase with 20% sales growth in local currency, driven by strong sales execution, revitalized packaging and expanded advertising. Sales of Kohinoor products inIndia grew 19% in local currency, which was the net impact of pricing actions taken in response to a steep rise in the cost of basmati rice, a primary ingredient, offset in part by lower volume and product mix.
For the first quarter, operating income for the consumer business was
Industrial Business | ||
(in millions) |
Three Months Ended | |
2/28/13 |
2/29/12 | |
Net sales |
$364.6 |
$372.5 |
Operating income |
24.3 |
31.1 |
In the first quarter of 2013, industrial business sales declined 2% when compared to the year ago period, and in local currency, sales declined 3%. Volume and product mix decreased 5%, offset in part by pricing actions. The company had expected weaker results in the first quarter of 2013 due to a decrease in demand from quick service restaurants in certain markets and a comparison to a 13% increase in the first quarter of 2012. This situation is expected to improve by the second half of 2013.
- Industrial sales in the
Americas declined 3%, with minimal impact from currency in the first quarter of 2013. Pricing added 3% to sales, while lower volume and product mix reduced sales 6%. The majority of the decline in volume and product mix related to quick service restaurants where the company is being impacted by lower demand. While sales to food manufacturers declined slightly in the first quarter, the company has a solid 2013 new product pipeline for these customers that includes seasonings for snacks and meal preparation kits. - In EMEA, industrial sales rose 7%, with minimal impact from currency. This increase was led by demand from quick service restaurants in this region which grew throughout 2012 and continued into the first quarter of 2013. Higher prices added 2% to sales growth in this region.
- In the
Asia/Pacific region, sales decreased 12%, and in local currency declined 13%. InChina , lower consumer traffic in quick service restaurants impacted industrial business sales in the first part of 2013. Sales are expected to improve in the upcoming quarters as a result of customers' plans for promotions, new products and additional restaurant locations inChina .
Operating income for the industrial business was
Live Webcast
As previously announced,
Forward-looking Information
Certain information contained in this release, including statements concerning expected performance such as those relating to net sales, earnings, cost savings, acquisitions and brand marketing support, are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "may," "will," "expect," "should," "anticipate," "believe" and "plan." These statements may relate to: the expected results of operations of businesses acquired by us, the expected impact of raw material costs and our pricing actions on our results of operations and gross margins, the expected productivity and working capital improvements, expected trends in net sales and earnings performance and other financial measures, the expectations of pension and postretirement plan contributions, the holding period and market risks associated with financial instruments, the impact of foreign exchange fluctuations, the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing, our ability to issue additional debt or equity securities and our expectations regarding purchasing shares of our common stock under the existing authorizations.
These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Results may be materially affected by external factors such as damage to our reputation or brand name, business interruptions due to natural disasters or similar unexpected events, actions of competitors, customer relationships and financial condition, the ability to achieve expected cost savings and margin improvements, the successful acquisition and integration of new businesses, fluctuations in the cost and availability of raw and packaging materials, changes in regulatory requirements, and global economic conditions generally which would include the availability of financing, interest, inflation rates and investment return on retirement plan assets, as well as foreign currency fluctuations, risks associated with our information technology systems, the threat of data breaches or cyber attacks, and other risks described in the company's filings with the
Actual results could differ materially from those projected in the forward-looking statements. 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, except as may be required by law.
About
Every day, no matter where or what you eat, you can enjoy food flavored by McCormick. McCormick Brings Passion to Flavor™.
To learn more please visit us at www.mccormickcorporation.com.
For information contact:
Investor Relations:
(Financial tables follow)
First Quarter Report |
McCormick & Company, Incorporated | |||||||
Consolidated Income Statement (Unaudited) |
||||||||
(In millions except per share data) |
||||||||
Three Months Ended |
||||||||
February 28, 2013 |
February 29, 2012 |
|||||||
Net sales |
$ 934.4 |
$ 906.7 |
||||||
Cost of goods sold |
572.7 |
551.4 |
||||||
Gross profit |
361.7 |
355.3 |
||||||
Gross profit margin |
38.7% |
39.2% |
||||||
Selling, general and administrative expense |
249.7 |
242.8 |
||||||
Operating income |
112.0 |
112.5 |
||||||
Interest expense |
13.9 |
13.5 |
||||||
Other income, net |
0.6 |
0.9 |
||||||
Income from consolidated operations before income taxes |
98.7 |
99.9 |
||||||
Income taxes |
28.1 |
30.0 |
||||||
Net income from consolidated operations |
70.6 |
69.9 |
||||||
Income from unconsolidated operations |
5.4 |
4.6 |
||||||
Net income |
$ 76.0 |
$ 74.5 |
||||||
Earnings per share - basic |
$ 0.57 |
$ 0.56 |
||||||
Earnings per share - diluted |
$ 0.57 |
$ 0.55 |
||||||
Average shares outstanding - basic |
132.5 |
133.1 |
||||||
Average shares outstanding - diluted |
134.0 |
134.5 |
First Quarter Report |
McCormick & Company, Incorporated | |||
Consolidated Balance Sheet (Unaudited) |
||||
(In millions) |
||||
February 28, 2013 |
February 29, 2012 | |||
Assets |
||||
Cash and cash equivalents |
$ 68.6 |
$ 54.4 | ||
Trade accounts receivable, net |
403.9 |
381.1 | ||
Inventories |
606.5 |
640.4 | ||
Prepaid expenses and other current assets |
132.5 |
116.9 | ||
Total current assets |
1,211.5 |
1,192.8 | ||
Property, plant and equipment, net |
532.5 |
523.4 | ||
Goodwill |
1,693.0 |
1,697.4 | ||
Intangible assets, net |
321.3 |
355.0 | ||
Investments and other assets |
327.8 |
311.1 | ||
Total assets |
$ 4,086.1 |
$ 4,079.7 | ||
Liabilities |
||||
Short-term borrowings and current portion of long-term debt |
$ 453.8 |
$ 283.1 | ||
Trade accounts payable |
340.2 |
342.3 | ||
Other accrued liabilities |
321.5 |
334.5 | ||
Total current liabilities |
1,115.5 |
959.9 | ||
Long-term debt |
776.0 |
1,028.7 | ||
Other long-term liabilities |
469.8 |
398.5 | ||
Total liabilities |
2,361.3 |
2,387.1 | ||
Shareholders' equity |
||||
Common stock |
921.9 |
840.9 | ||
Retained earnings |
948.3 |
869.0 | ||
Accumulated other comprehensive loss |
(163.0) |
(35.6) | ||
Non-controlling interests |
17.6 |
18.3 | ||
Total shareholders' equity |
1,724.8 |
1,692.6 | ||
Total liabilities and shareholders' equity |
$ 4,086.1 |
$ 4,079.7 | ||
First Quarter Report |
McCormick & Company, Incorporated | ||||
Consolidated Cash Flow Statement (Unaudited) |
|||||
(In millions) |
|||||
Three Months Ended | |||||
February 28, 2013 |
February 29, 2012 | ||||
Operating activities |
|||||
Net income |
$ 76.0 |
$ 74.5 | |||
Adjustments to reconcile net income to net |
|||||
cash provided by operating activities: |
|||||
Depreciation and amortization |
26.2 |
25.8 | |||
Stock-based compensation |
2.8 |
2.6 | |||
Income from unconsolidated operations |
(5.4) |
(4.6) | |||
Changes in operating assets and liabilities |
(69.8) |
(76.3) | |||
Dividends from unconsolidated affiliates |
1.8 |
0.5 | |||
Net cash provided by operating activities |
31.6 |
22.5 | |||
Investing activities |
|||||
Acquisition of businesses |
(0.8) |
- | |||
Capital expenditures |
(12.4) |
(15.1) | |||
Proceeds from sale of property, plant and equipment |
1.9 |
0.2 | |||
Net cash used in investing activities |
(11.3) |
(14.9) | |||
Financing activities |
|||||
Short-term borrowings, net |
60.8 |
64.2 | |||
Long-term debt repayments |
(0.4) |
(4.2) | |||
Proceeds from exercised stock options |
10.5 |
14.4 | |||
Common stock acquired by purchase |
(60.2) |
(42.3) | |||
Dividends paid |
(45.1) |
(41.4) | |||
Net cash used in financing activities |
(34.4) |
(9.3) | |||
Effect of exchange rate changes on cash and |
|||||
cash equivalents |
3.7 |
2.2 | |||
(Decrease) increase in cash and cash equivalents |
(10.4) |
0.5 | |||
Cash and cash equivalents at beginning of year |
79.0 |
53.9 | |||
Cash and cash equivalents at end of period |
$ 68.6 |
$ 54.4 | |||
SOURCE