McCormick & Company, Incorporated

Third-quarter constant-currency total net sales grew 17%, including 2% organic growth and acquisition contribution from McCormick de Mexico. Consumer constant-currency sales increased 24%, with 1% organic growth; Flavor Solutions constant-currency sales grew 6%, including 3% organic growth. Adjusted gross profit margin expanded 180 basis points, adjusted operating income increased 22% (21% in constant currency), and adjusted EPS was $0.86, up 1% year over year. Year-to-date cash flow from operations was approximately $600 million versus $420 million last year, and leverage was approximately 2.9x. For 2026, management expects organic growth to be between the low end and midpoint of its guidance range, about a 30 basis point hit from the consumer packaging supply constraint, cost inflation of 6% to 7%, and full-year gross margin expansion of 100 to 120 basis points versus 2025, now expected at the high end of that range; operating income growth and EPS are expected at the midpoint of the range.

Brendan Foley said the quarter showed the resilience of McCormick’s flavor-focused model, helped by base business strength, productivity, and the McCormick de Mexico acquisition. He emphasized that the company is actively managing uneven consumer demand by sharpening pricing, promotion, assortment, innovation, and distribution, especially in U.S. Consumer and recipe mixes. He also stressed confidence in the 2026 outlook and said Unilever Foods integration planning is on track, with regulatory filings and synergy planning progressing.

Marcos Gabriel highlighted that adjusted gross margin expanded 180 basis points in Q3, driven by McCormick de Mexico accretion, pricing, and CCI savings, partially offset by higher freight costs. SG&A rose 110 basis points as a percentage of sales due to the acquisition and higher technology and brand marketing investment, while adjusted operating income rose 22%. He said year-to-date operating cash flow was about $600 million, dividend cash returned was $387 million, capex was $131 million, and leverage was about 2.9x. On guidance, he said inflation is now expected at 6% to 7%, gross margin expansion for the year remains 100 to 120 basis points, and the company expects to have $1.5 billion to $2 billion available for debt paydown within the first 2 years after the Unilever Foods close, with a longer-term leverage target of 2x to 3x.

Analysts focused on the slower-than-expected recovery in U.S. Consumer volumes, the pace and effectiveness of interventions in herbs/spices and recipe mixes, and whether cost inflation and freight pressure could become a longer-term margin headwind. Management said the third quarter saw improvement but also transitory pressure from higher beef and seafood prices, higher gas prices, tougher category consumption, and slower implementation timing with retailers. On debt financing for the Unilever deal, Marcos said the company is evaluating currency mix, fixed versus floating debt, and maturity profile, and still believes it can preserve EPS accretion and delever from 4x to 3x in 2 years despite rate volatility. On the packaging supply issue, Brendan said it is a specific packaging component issue in Consumer Americas, not a demand or raw-material problem, and the company is working to mitigate it with alternative formats.