McCormick & Co. (MKC) Tops Q1 EPS by 1c, Reiterates Financial Outlook

McCormick & Co. (NYSE: MKC) reported Q1 EPS of $0.63, $0.01 better than the analyst estimate of $0.62. Revenue for the quarter came in at $1.52 billion versus the consensus estimate of $1.47 billion.

GUIDANCE:

McCormick & Co. sees FY2022 EPS of $3.17-$3.22, versus the consensus of $3.19.

• For the 2022 fiscal year, McCormick reiterated its financial outlook for sales, operating income and earnings per share.
• McCormick's broad and advantaged global flavor portfolio enables the Company to meet the rising demand for flavor around the world. The Company is capitalizing on the growing consumer interests in healthy and flavorful cooking, digital engagement, trusted brands, and purpose-minded practices. This, coupled with the breadth and reach of McCormick's portfolio and its effective strategies, sustainably position the Company to continue on its growth trajectory.
• In 2022, the Company expects to grow sales by 3% to 5% compared to 2021, which in constant currency is 4% to 6%. McCormick expects sales growth to be driven by brand marketing, new products, category management and differentiated customer engagement, as well as pricing actions, which in conjunction with cost savings, are expected to offset anticipated inflationary pressures.
• Operating income in 2022 is expected to grow by 13% to 15% from $1.02 billion in 2021. The Company anticipates integration expenses related to the FONA acquisition of approximately $3 million in 2022. In addition, McCormick expects approximately $30 million of special charges in 2022 that relate to previously announced organization and streamlining actions. Excluding the impact of integration expenses as well as special charges in 2022 and 2021, adjusted operating income is expected to increase 7% to 9%, which in constant currency is 8% to 10%.
• McCormick projects 2022 earnings per share to be in the range of $3.07 to $3.12, compared to $2.80 of earnings per share in 2021. The Company expects integration expenses, as well as special charges, to lower earnings per share by $0.10 in 2022. Excluding these impacts, the Company projects 2022 adjusted earnings per share to be in the range of $3.17 to $3.22, compared to $3.05 of adjusted earnings per share in 2021, which represents an expected increase of 4% to 6%, or in constant currency 5% to 7%. This reflects strong operating growth, partially offset by a 3% headwind from an anticipated increase in the Company's projected adjusted effective tax rate. For fiscal 2022, the Company expects strong cash flow and anticipates returning a significant portion to shareholders through dividends.

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