McCormick & Company, Incorporated

Second-quarter total net sales grew 14% in constant currency, including 12% acquisition contribution from McCormick Mexico and 2% organic growth. Consumer constant-currency sales increased 20%, with 1% organic growth; Flavor Solutions constant-currency sales grew 6%, with 3% organic growth. Gross profit margin expanded 270 basis points year over year, with 140 basis points from the tariff refund and 130 basis points of underlying expansion. Adjusted operating income increased 30% (27% in constant currency), and adjusted EPS was $0.80, up 16%; the tariff refund contributed about $0.07 per share. Cash flow from operations for the first half was $431 million versus $161 million a year ago, and leverage was about 2.9x at quarter end. For the full year, management expects gross margin expansion of 100 to 120 basis points, continued strength in Flavor Solutions, improving Consumer volumes later in the year, and Q3 adjusted operating income growth in the high single digits to low double digits; the 2026 top-line outlook remains broadly consistent with prior guidance.

Brendan Foley framed the quarter as evidence of McCormick’s resilient, flavor-focused portfolio, saying stronger Flavor Solutions performance more than offset softer Consumer trends. He emphasized that the company is responding to U.S. spice and seasoning pressure with the same broad playbook used before, but with more targeted actions, faster execution, and heavier use of digital and precision marketing. Foley also sounded constructive on the Unilever Foods combination, saying integration planning is progressing well and that he is increasingly excited about the deal’s strategic fit and growth potential.

Marcos Gabriel focused on the quarter’s math: 14% constant-currency sales growth, 270 basis points of gross margin expansion, 30% adjusted operating income growth, and $0.80 adjusted EPS. He said the tariff refund contributed about $0.07 per share, and that underlying gross margin still expanded 130 basis points, showing resilience even after stripping out the refund. On cash, he highlighted $431 million of operating cash flow in the first half versus $161 million last year, $258 million returned via dividends, $75 million of capex, and leverage of about 2.9x. He also said the company expects to keep paying down debt and reiterated that at close of Unilever Foods, McCormick expects industry-leading operating margins of 21%, 100% free cash flow conversion from net income before synergies, and $1.5 billion to $2 billion available for debt paydown in the first two years.

Analysts repeatedly pressed management on U.S. spices and seasonings, asking whether the current consumer weakness is different from prior periods and whether the planned actions can restore volume quickly enough. Foley said the response is broadly similar to prior playbooks, but the current issues are more segment-specific and the consumer is under heavier inflation pressure; he stressed faster, more targeted execution and said early results are encouraging. Analysts also questioned the use of the tariff refund and the apparent softness in Q3 EPS versus earlier tone; Gabriel said most of the refund will offset higher inflation, especially costs tied to the Middle East conflict, while Q3 profit is being pressured by SG&A timing, ERP-related spending, and heavier brand marketing. On Flavor Solutions, management said reformulation and health-and-wellness activity are ramping faster than expected, and that branded food service growth is coming from QSRs, fast casual, and non-commercial channels.