What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-06-29 compared with 2023-03-28 · 210 added, 130 removed, 385 unchanged (47% of the section changed)

15 unchanged sentences

We expect elevated levels of cost inflation to persist throughout 2023, although at lower levels than experienced in 2022.

We anticipate in 2023 that these headwinds will be partially mitigated by pricing actions taken in response to inflationary cost environment, supply chain productivity improvements and cost savings initiatives.

We anticipate in 2023 that these headwinds will be mitigated by pricing actions taken in response to inflationary cost environment, supply chain productivity improvements and cost savings initiatives.

The effects of inflation have also resulted in central banks raising short-term interest rates and, as a result, we expect that our interest expense will increase in 2023.

While we expect the impacts of COVID-19 on our business to moderate, there still remains uncertainty around the pandemic, its effect on labor or other macroeconomic factors, its severity and duration, the continued availability and effectiveness of vaccines and actions taken by third parties or by government authorities in response, including restrictions, laws or regulations, or other responses.

ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, have increased global economic and political uncertainty.

While the impacts of COVID-19 on our business have largely moderated, there still remains uncertainty around the pandemic, including its effect on labor or other macroeconomic factors and spread of new COVID-19 variants and resurgences.

Also, the ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, have increased global economic and political uncertainty.

While the impact of these factors remains uncertain, we continue to evaluate the extent to which they may impact our business, financial condition, or results of operations.

2 unchanged sentences

Global Economic Conditions and Inflationary Cost Environment – During fiscal 2021 and 2022, we experienced inflationary cost increases in our commodities, packaging materials and transportation costs.

We expect that these inflationary cost increases will continue but we expect they will be partially mitigated by our planned 2023 pricing actions, our organization and streamlining actions, including our Global Operating Effectiveness (GOE) program, and by our Comprehensive Continuous Improvement (CCI) program-led cost savings.

We expect that these inflationary cost increases will continue but we anticipate they will be mitigated by our planned 2023 pricing actions, the effect of pricing actions executed in 2022, our organization and streamlining actions, including our Global Operating Effectiveness (GOE) program, and by our Comprehensive Continuous Improvement (CCI) program-led cost savings.

There has been, and we expect there could continue to be, a difference between the timing of when the impact of cost inflation occurs and when these pricing and other actions impact our results of operations.

2 unchanged sentences

The inflationary environment has also resulted in central banks raising short-term interest rates.

For the quarter ended February 28, 2023, we had total outstanding variable rate debt of approximately $1,361 million.

As of May 31, 2023, we had total outstanding variable rate debt of approximately $513 million.

Our policy is to manage our interest rate risk by entering into both fixed and variable rate debt arrangements.

We also use interest rate swaps to achieve a desired mix of fixed and variable rate debt.

As of both February 28, 2023 and 2022, we had total outstanding fixed to variable interest rate swaps of $600 million notional.

As of both May 31, 2023 and 2022, we had total outstanding fixed to variable interest rate swaps of $600 million notional.

We expect that our interest expense will increase in 2023 as a result of the higher interest rate environment.

8 unchanged sentences

We expect our GOE program, and organization and streamlining actions to deliver savings of approximately $75 million in 2023.

COVID-19 – The COVID-19 pandemic has impacted our operating results.

COVID-19 – COVID-19 has impacted our operating results.

There still remains uncertainty around the COVID-19 pandemic.

6 unchanged sentences

The extent and nature of government actions, customer and end-consumer demand varied during 2022, 2021 and 2020.

However, the impact of COVID-19 during the quarters ended February 28, 2023 and 2022, based upon the then-current extent and severity of the COVID-19 pandemic within the countries, localities and markets where we do business, were generally comparable with the exception of the impact on our results of operations in the Asia/Pacific region, specifically within China where we experienced a negative impact to consumer behavior in 2022, as compared to 2021, related to the impact of restrictive measures imposed associated with COVID-19 resurgences.

We expect the impact of COVID-19 to be mitigated from that experienced in 2022.

However, the impact of COVID-19 during the quarters ended May 31, 2023 and 2022, based upon the then-current extent and severity of the COVID-19 pandemic within the countries, localities and markets where we do business, were generally comparable with the exception of the impact on our results of operations in the Asia/Pacific region, specifically within China where we experienced a negative impact to consumer behavior in 2022, related to the impact of restrictive measures imposed associated with COVID-19 resurgences.

We expect the impact of COVID-19 during 2023 to be mitigated from that experienced in 2022.

Conflict Between Russia and Ukraine – The ongoing conflict between Russia and Ukraine, and the sanctions imposed in response to this conflict, have increased global economic and political uncertainty.

5 unchanged sentences

In 2023, we expect to grow net sales over the 2022 level by 5% to 7%, which includes a minimal impact of foreign currency rates.

We anticipate that the 2023 sales growth will be driven by pricing actions, including the completion of those executed in 2022 combined with new pricing actions we are taking in 2023.

We anticipate that the 2023 sales growth will be driven by pricing actions, including the completion of those executed in 2022 in conjunction with cost savings which are expected to offset inflationary pressures.

We expect volume and product mix to be impacted by pricing elasticities, although, consistent with 2022, at a lower level than we have experienced historically.

4 unchanged sentences

In 2023, we expect an increase in operating income of 11% to 13%, which includes a minimal impact from foreign currency rates, over the 2022 level.

The projected 2023 change in operating income includes the effects of cost savings from our Global Operating Effectiveness Program and lapping the COVID-19 restrictive measures in China during 2022, which we anticipate will be partially offset by increased employee incentive compensation and the impact of our Kitchen Basics divestiture.

The projected 2023 change in operating income includes the effects of cost savings from our GOE program and lapping the COVID-19 restrictive measures in China during 2022, which we anticipate will be partially offset by increased employee incentive compensation and the impact of our Kitchen Basics divestiture.

Our CCI-led cost savings target in 2023 is approximately $85 million.

8 unchanged sentences

We estimate that our 2023 effective tax rate, including the net favorable impact of anticipated discrete tax items, will be 22% as compared to 20.7% in 2022.

Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 22% in 2023, as compared to an adjusted effective tax rate of 20.9% in 2022.

projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 22% in 2023, as compared to an adjusted effective tax rate of 20.9% in 2022.

Diluted earnings per share was $2.52 in 2022.

6 unchanged sentences

RESULTS OF OPERATIONS – COMPANY

Three months ended

February 28, 2023 February 28, 2022

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Net sales $ 1,659.2 $ 1,536.8 $ 3,224.7 $ 3,059.2

Percent increase 2.8 % 2.8 %

Percent increase (decrease) 8.0 % (1.3) % 5.4 % 0.7 %

Components of percent change in net sales – increase (decrease):

2 unchanged sentences

Acquisitions — % — % — % 0.3 %

Divestiture (0.7) % — %

Divestitures (0.4) % — % (0.5) % — %

Foreign exchange (1.5) % (1.5) % (2.0) % (1.4) %

1 unchanged sentence

Gross profit margin 37.1 % 34.0 % 36.5 % 35.4 %

Sales for the first quarter of 2023 increased by 2.8% from the prior year level and increased by 5.3% on a constant currency basis (that is, excluding the impact of foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures).

Sales for the second quarter of 2023 increased by 8.0% from the prior year level and increased by 9.5% on a constant currency basis (that is, excluding the impact of foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures).

Pricing actions, taken in response to the inflationary cost environment, increased sales by 10.8% compared to the prior year period.

Unfavorable volume and product mix decreased sales by 0.9%, including the impact of price elasticity.

The impact of COVID-19 resurgences in China and the exit of our consumer operations in Russia contributed approximately 1.1% to that decline.

Both our flavor solutions and consumer segments experienced unfavorable volume and product mix.

The net impact of the recovery experienced from the restrictive measures that existed in the prior year related to COVID-19 resurgences in China and the exit of our consumer operation in Russia favorably impacted volume and product mix by approximately 1.4%.

Also, our decision to discontinue certain low margin businesses also contributed approximately 1.1% to the unfavorable impact of volume and product mix.

The divestiture of our Kitchen Basics business unfavorably impacted sales by 0.4% as compared to the prior year period.

Sales were also impacted by unfavorable foreign currency rates that decreased net sales by 2.5% in the first quarter of 2023 compared to the year-ago quarter and is excluded from our measure of sales growth of 5.3% on a constant currency basis.

Gross profit for the first quarter of 2023 increased by $2.5 million, or 0.4%, from the comparable period in 2022.

Our gross profit margin for the three months ended February 28, 2023 was 36.0%, a decrease of 80 basis points from the comparable period in 2022.

The decrease in gross profit margin in the quarter ended February 28, 2023 was driven by the margin dilutive impact of pricing actions taken in response to the inflationary cost environment, and higher conversion costs, each as compared to the 2022 period.

These unfavorable impacts were partially offset by the favorable impact of pricing actions in response to increased costs and cost savings led by our CCI and GOE programs.

Three months ended

February 28, 2023 February 28, 2022

Sales were also impacted by unfavorable foreign currency rates that decreased net sales by 1.5% in the second quarter of 2023 compared to the year-ago quarter and is excluded from our measure of sales growth of 9.5% on a constant currency basis.

Sales for the six months ended May 31, 2023 increased by 5.4% from the prior year level and increased by 7.4% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 10.7% compared to the prior year period.

Unfavorable volume and product mix decreased sales by 2.8%, including the impact of price elasticity.

Both our flavor solutions and consumer segments experienced unfavorable volume and product mix.

The divestiture of our Kitchen Basics business unfavorably impacted sales by 0.5% as compared to the prior year period.

Sales were impacted by unfavorable foreign currency rates that decreased sales by 2.0% in the six months ended May 31, 2023 as compared to the year-ago period and is excluded from our measure of sales growth of 7.4% on a constant currency basis.

Gross profit for the second quarter of 2023 increased by $92.5 million, or 17.7%, from the comparable period in 2022.

Our gross profit margin for the three months ended May 31, 2023 was 37.1%, an increase of 310 basis points from the comparable period in 2022.

The increase in gross profit margin in the quarter ended May 31, 2023 was driven by the favorable impact of our pricing actions taken in response to increased costs, favorable product mix within our segments and cost savings led by our CCI and GOE programs.

These favorable impacts were partially offset by increased commodity costs as compared to the 2022 period.

Gross profit for the six months ended May 31, 2023 increased by $95.0 million, or 8.8%, from the comparable period in 2022.

Our gross profit margin for the six months ended May 31, 2023 was 36.5%, an increase of 110 basis points from the same period in 2022 driven by the favorable impact of our pricing actions taken in response to increased costs, favorable product mix within our segments and cost savings led by our CCI and GOE programs.

These favorable impacts were partially offset by increased commodity costs and higher conversion costs, each as compared to the 2022 period.

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Selling, general & administrative expense (SG&A) $ 380.5 $ 349.2 $ 716.6 $ 682.5

Percent of net sales 22.9 % 22.7 % 22.2 % 22.3 %

SG&A increased by $2.8 million in the first quarter of 2023 as compared to the 2022 level, as increased distribution costs and higher performance-based employee incentive expense were partially offset by favorable investment results associated with non-qualified retirement plan assets and CCI-led and GOE cost savings, all as compared to the 2022 period.

SG&A as a percentage of net sales decreased by 40 basis points from the prior year level as the higher net sales base more than offset the unfavorable net impact of the previously mentioned factors, all as compared to the prior year period.

Three months ended

February 28, 2023 February 28, 2022

SG&A increased by $31.3 million in the second quarter of 2023 as compared to the 2022 level, as increased distribution costs, increased selling and marketing costs and higher performance-based employee incentive expense were partially offset by CCI-led and GOE cost savings and favorable investment results associated with non-qualified retirement plan assets, all as compared to the 2022 period.

SG&A as a percentage of net sales increased by 20 basis points from the prior year levels due primarily to the net impact of the previously mentioned factors, all as compared to the prior year period.

SG&A increased by $34.1 million in the six months ended May 31, 2023 compared to the 2022 level, as increased distribution costs, increased selling and marketing costs and higher performance-based employee incentive expense were partially offset by CCI-led and GOE cost savings and favorable investment results associated with non-qualified retirement plan assets, all as compared to the 2022 period.

SG&A as a percent of net sales for the six months ended May 31, 2023 decreased 10 basis points from prior year as the higher net sales base more than offset, the net impact of the previously mentioned factors, all as compared to the prior year period.

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Total special charges $ 13.2 $ 15.1 $ 41.0 $ 34.6

During the three months ended February 28, 2023, we recorded $27.8 million of special charges.

Those special charges principally consisted of $24.8 million associated with the GOE program, including $19.7 million under our voluntary retirement program, $0.9 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), and streamlining actions of $1.3 million in the Americas region, and $0.8 million in the EMEA region.

During the three months ended February 28, 2022, we recorded $19.5 million of special charges, consisting principally of $14.9 million associated with the transition of a manufacturing facility in EMEA, streamlining actions of $2.1 million in the Americas region, and $1.5 million in the EMEA region.

During the three months ended May 31, 2023, we recorded $13.2 million of special charges.

Those special charges principally consisted of $8.6 million associated with the GOE program, $1.3 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), and streamlining actions of $3.2 million in the Americas region.

During the six months ended May 31, 2023, we recorded $41.0 million of special charges.

Those special charges principally consisted of $33.4 million associated with the GOE program, $2.2 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $4.5 million in the Americas region, and $0.9 million in the EMEA region.

During the three months ended May 31, 2022, we recorded $15.1 million of special charges, consisting principally of $22.2 million associated with the exit of our consumer business in Russia, $2.5 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $3.2 million in the Americas region, and $2.8 million in the EMEA region.

These charges were offset by a $13.6 million gain, on the sale of Kohinoor brand as well as a reversal of $2.2 million of estimated costs associated with the exit of our rice product line in India upon settlement of a supply agreement related to that product line.

During the six months ended May 31, 2022, we recorded $34.6 million of net special charges.

Those special charge consisted principally of $22.2 million associated with the exit of our consumer business in Russia, $17.4 million associated with the transition of a manufacturing facility in EMEA, as more fully described in note 2 of the notes to the accompanying financial statements, and streamlining actions of $5.3 million in the Americas region and $4.3 million in the EMEA region.

These charges were offset by a $13.6 million gain, on the sale of our Kohinoor brand, as we exited our Kohinoor rice product line in India in the fourth quarter of fiscal 2021, as well as a reversal of $2.2 million of estimated costs associated with the exit of our rice product line in India upon settlement of a supply agreement related to that product line.

Details with respect to the composition of special charges are included in note 2 of the notes to the accompanying financial statements.

Three months ended

February 28, 2023 February 28, 2022

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Total integration expenses $ — $ 1.5 $ — $ 2.2

During the three months ended February 28, 2022, we recorded $0.7 million of integration expenses related to our acquisition of FONA.

Three months ended

February 28, 2023 February 28, 2022

During the three months and six months ended May 31, 2022, we recorded $1.5 million and $2.2 million, respectively, of integration expenses related to our acquisition of FONA.

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Interest expense $ 52.2 $ 33.7 $ 102.8 $ 66.8

Other income, net 12.5 6.3 23.6 12.5

Interest expense increased by $17.5 million in the three months ended February 28, 2023, as compared to the prior year period, as the effects of the higher interest rate environment more than offset lower average borrowing levels.

Other income, net for the three months ended February 28, 2023 increased by $4.9 million, as compared to the prior year period, which was primarily driven by higher interest income, also principally associated with the higher interest rate environment.

Three months ended

February 28, 2023 February 28, 2022

Interest expense increased by $18.5 million and $36.0 million in the three and six months ended May 31, 2023, as compared to the prior year periods, as the effects of the higher interest rate environment more than offset lower average borrowing levels.

Other income, net for the three and six months ended May 31, 2023 increased by $6.2 million and $11.1 million, as compared to the prior year periods.

That increase was primarily driven by higher interest income, also principally associated with the higher interest rate environment.

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Income from consolidated operations before income taxes $ 182.1 $ 129.8 $ 341.6 $ 309.8

2 unchanged sentences

The provision for income taxes is based on the estimate of the annual effective tax rate adjusted to reflect the tax impact of items discrete to the fiscal period.

We record tax expense or tax benefits that do not relate to ordinary income in the current fiscal year discretely in the period in which such items occur pursuant to the requirements of U.S.

We record tax expense or tax benefits that do not relate to ordinary income in the current fiscal year discretely in the period in which such items occur pursuant to the requirements of GAAP.

Examples of such types of discrete items not related to ordinary income include, but are not limited to, excess tax benefits or expense associated with stock-based compensation, changes in estimates of the outcome of tax matters related to prior years, including reversals of reserves upon the lapsing of statutes of limitations, provision-to-return adjustments, the settlement of tax audits, changes in enacted tax rates, changes in the assessment of deferred tax valuation allowances, and the tax effects of certain intra-entity asset transfers (other than inventory).

Income tax expense for the three months ended February 28, 2023 included $3.8 million of net discrete tax benefit consisting principally of $3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, $0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, and $0.2 million of tax expense associated with stock-based compensation.

Income tax expense for the three months ended February 28, 2022 included $10.3 million of net discrete tax benefits consisting primarily of $7.6 million of excess tax benefits associated with stock-based compensation and $2.5 million of tax benefits related to the revaluation of deferred taxes resulting from legislation enacted during the period.

Three months ended

February 28, 2023 February 28, 2022

Income tax expense for the three months ended May 31, 2023 included $3.0 million of net discrete tax benefit consisting principally of (i) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, (ii) $1.2 million of tax benefits related to a tax settlement, and (iii) $0.6 million of excess tax benefits associated with stock-based compensation.

Income tax expense for the six months ended May 31, 2023 included $6.8 million of net discrete tax benefit consisting principally of (i) $3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, (ii) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, (iii) $1.2 million of tax benefits related to a tax settlement, (iv) $0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, and (v) $0.4 million of excess tax benefits associated with stock-based compensation.

Income tax expense for the three months ended May 31, 2022 included $9.0 million of net discrete tax benefits consisting principally of the following:

(i) $1.1 million of excess tax benefits associated with stock-based compensation, (ii) $4.1 million of net tax benefits associated with the adjustment of valuation allowances due to changes in judgment about the realizability of deferred tax assets, (iii) $1.3 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, and (iv) $2.3 million of tax benefits related to the sale of an asset associated with a previously exited line of business.

Income tax expense for the six months ended May 31, 2022 included $19.3 million of net discrete tax benefits consisting principally of the following:

(i) $8.7 million of excess tax benefits associated with stock-based compensation, (ii) $4.1 million of net tax benefits associated with an adjustment of valuation allowances due to changes in judgment about the realizability of deferred tax assets, (iii) $2.5 million of tax benefits related to the revaluation of deferred taxes resulting from enacted legislation, (iv) $2.3 million of tax benefits related to the sale of an asset associated with a previously exited line of business, and (v) $1.5 million from the resolution of tax uncertainties in non-U.S.

jurisdictions, including the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in certain non-US jurisdictions.

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Income from unconsolidated operations $ 10.3 $ 10.4 $ 24.3 $ 19.7

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $4.7 million for the three months ended February 28, 2023, as compared to the year ago period.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, declined slightly for the three months ended May 31, 2023 as compared to the prior year period.

Income from unconsolidated operations increased by $4.6 million for the six months ended May 31, 2023, as compared to the year ago period.

The increase was driven by higher earnings of our largest joint venture, McCormick de Mexico.

The following table outlines the major components of the change in diluted earnings per share from 2022 to 2023:

Three months ended February 28,

Three months ended May 31,

Six months ended May 31,

2022 Earnings per share – diluted $ 0.44 $ 1.01

Impact of change in operating income 0.18 0.18

Increase in special charges, net of taxes — (0.03)

Decrease in integration expenses, net of tax — 0.01

Increase in interest expense (0.06) (0.10)

1 unchanged sentence

Increase in income from unconsolidated operations — 0.02

Impact of change in effective income tax rate, excluding taxes on special charges (0.02)

Impact of change in effective income tax rate, excluding taxes on special charges and transaction and integration expenses (0.02) (0.04)

2023 Earnings per share – diluted $ 0.56 $ 1.08

6 unchanged sentences

CONSUMER SEGMENT

Three months ended

February 28, 2023 February 28, 2022

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Net sales $ 912.1 $ 866.1 $ 1,821.6 $ 1,792.2

Percent decrease (1.8) % (2.2) %

Percent increase (decrease) 5.3 % (8.4) % 1.6 % (5.3) %

Segment operating income $ 153.6 $ 124.8 $ 327.0 $ 291.8

Segment operating income margin 16.8 % 14.4 % 18.0 % 16.3 %

In the first quarter of 2023, sales of our consumer segment decreased by 1.8% as compared to the first quarter of 2022 and increased by 0.8% on a constant currency basis.

That 1.8% decrease included higher sales of our consumer business in the Americas regions, which was more than offset by lower sales in the EMEA and Asia/Pacific regions, all as compared to the prior year quarter.

In the second quarter of 2023, sales of our consumer segment increased by 5.3% as compared to the second quarter of 2022 and increased by 7.0% on a constant currency basis.

That 5.3% increase included higher sales of our consumer business in all regions, as compared to the prior year quarter.

Pricing actions, taken in response to increased costs, favorably impacted sales by 8.5% as compared to the prior year period.

Unfavorable volume and product mix decreased consumer segment sales by 6.8% in the first quarter of 2023 as compared to the same period last year, including the impact of price elasticity as well as the negative impact of 1.9% due to the impact of COVID-19 resurgences in China and the exit of our consumer operations in Russia, all as compared to the first quarter of 2022.

The divestiture of our Kitchen Basics business unfavorably impacted sales by 1.1% as compared to 2022.

Sales in the first quarter of 2023 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 2.6% compared to the year-ago quarter and is excluded from our measure of sales growth of 0.8% on a constant currency basis.

In the Americas region, consumer sales increased 3.3% in the first quarter of 2023 as compared to the same quarter of 2022 and increased by 3.8% on a constant currency basis.

Unfavorable volume and product mix decreased consumer segment sales by 0.7% in the second quarter of 2023 as compared to the same period last year, including the impact of price elasticity.

Also, our decision to discontinue certain low margin businesses also contributed approximately 1.2% to the unfavorable impact of

volume and product mix.

The divestiture of our Kitchen Basics business unfavorably impacted consumer sales by 0.8% as compared to 2022.

Sales in the second quarter of 2023 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 1.7% compared to the year-ago quarter and is excluded from our measure of sales growth of 7.0% on a constant currency basis.

In the Americas region, consumer sales increased 3.0% in the second quarter of 2023 as compared to the same quarter of 2022 and increased by 3.6% on a constant currency basis.

Pricing actions, taken in response to inflationary cost environment, increased sales by 8.1% as compared to the prior year period.

For the first quarter of 2023, unfavorable volume and product mix decreased sales by 4.5% as compared to the corresponding period in 2022.

This reduction included the unfavorable impact of price elasticity.

For the second quarter of 2023, unfavorable volume and product mix decreased sales by 3.5% as compared to the corresponding period in 2022.

This reduction included an approximately 1.6% impact of our decision to discontinue a low margin business.

The sale of our Kitchen Basics business unfavorably impacted sales by 1.0% as compared to 2022.

The unfavorable impact of foreign currency rates decreased sales by 0.6% in the quarter and is excluded from our measure of sales growth of 3.6% on a constant currency basis.

In the EMEA region, consumer sales decreased 8.8% in the first quarter of 2023 as compared to the same quarter of 2022 and decreased by 2.1% on a constant currency basis.

In the EMEA region, consumer sales increased 7.2% in the second quarter of 2023 as compared to the same quarter of 2022 and increased by 9.3% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 11.8% as compared to the 2022 period.

Sales were impacted by unfavorable volume and product mix during the first quarter of 2023 that decreased sales by 9.4% from the prior year level, including a 3.9% impact associated with the exit

of our consumer operations in Russia.

Lower sales of our consumer business in France also contributed to the decrease as compared to the prior year period.

During the first quarter of 2023, an unfavorable impact from foreign currency rates decreased sales by 6.7% compared to the year-ago period and is excluded from our measure of sales decline of 2.1% on a constant currency basis.

In the Asia/Pacific region, consumer sales decreased 15.1% in the first quarter of 2023 as compared to the first quarter of 2022 and decreased by 8.1% on a constant currency basis.

Sales were impacted by unfavorable volume and product mix during the second quarter of 2023 that decreased sales by 2.5% from the prior year level, including a 2.3% impact associated with the exit of our consumer operations in Russia.

During the second quarter of 2023, an unfavorable impact from foreign currency rates decreased sales by 2.1% compared to the year-ago period and is excluded from our measure of sales growth of 9.3% on a constant currency basis.

In the Asia/Pacific region, consumer sales increased 18.7% in the second quarter of 2023 as compared to the second quarter of 2022 and increased by 27.4% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 6.0% as compared to the prior year period.

For the quarter ended February 28, 2023, unfavorable volume and product mix decreased sales by 12.8%, including a 7.7% impact of COVID-19 resurgences in China and a 2.9% impact associated with the exit of our rice product line in India.

During the first quarter of 2023, an unfavorable impact from foreign currency rates decreased sales by 7.0% compared to the year-ago period and is excluded from our measure of sales growth of 8.1% on a constant currency basis.

Segment operating income for our consumer segment increased by $6.4 million, or 3.8%, in the first quarter of 2023 over the first quarter of 2022.

The increase in segment operating income was driven by the effects of an increase in gross profit more than offsetting the lower level of sales, as previously described, and lower SG&A expenses, all as compared to the prior year period.

Segment operating margin for our consumer segment increased by 110 basis points from the first quarter of 2022 to 19.1% in the first quarter of 2023.

That increase was principally the result of an increase in gross margin, including the impacts of pricing actions and CCI-led and GOE cost savings, as compared to 2022.

On a constant currency basis, segment operating income for our consumer segment increased by 6.1% in the first quarter of 2023 in comparison to the same period in 2022.

For the quarter ended May 31, 2023, favorable volume and product mix increased sales by 21.4%, including a 20.0% favorable impact from the recovery experienced from the restrictive measures that existed in the prior year related to COVID-19 resurgences in China.

During the second quarter of 2023, an unfavorable impact from foreign currency rates decreased sales by 8.7% compared to the year-ago period and is excluded from our measure of sales growth of 27.4% on a constant currency basis.

For the six months ended May 31, 2023, sales of our consumer segment increased 1.6% as compared to the six months ended May 31, 2022 and increased by 3.8% on a constant currency basis.

Pricing actions taken in all of our consumer business in all regions increased sales by 8.6% during the six months ended May 31, 2023 as compared to the prior year period.

Lower volume and unfavorable product mix decreased sales by 3.9% as compared to the prior year period driven primarily by the impact of price elasticity.

The sale of our Kitchen Basics business unfavorably impacted sales by 0.9% as compared to 2022.

An unfavorable impact from foreign currency rates decreased sales by 2.2% compared to the prior year and is excluded from our measure of sales growth of 3.8% on a constant currency basis.

Segment operating income for our consumer segment increased by $28.8 million, or 23.1%, in the second quarter of 2023 over the second quarter of 2022.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the higher level of sales, favorable pricing actions, and CCI-led and GOE cost savings partially offset by higher SG&A expenses, including higher distribution costs and higher performance-based employee incentive expense, all as compared to the prior year period.

Segment operating margin for our consumer segment increased by 240 basis points from the second quarter of 2022 to 16.8% in the second quarter of 2023.

That increase was principally the result of an increase in gross margin, including the impacts of pricing actions and CCI-led and GOE cost savings which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2022.

On a constant currency basis, segment operating income for our consumer segment increased by 24.5% in the second quarter of 2023 in comparison to the same period in 2022.

Segment operating income for our consumer segment increased by $35.2 million, or 12.1%, for the six months ended May 31, 2023 as compared to the same period in 2022.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily driven by the higher level of sales, favorable pricing actions in response to increased costs, and CCI-led and GOE cost savings which were partially offset by higher SG&A expenses, including higher distribution costs and higher performance-based employee incentive expense, all as compared to the prior year period.

Segment operating margin for our consumer segment increased by 170 basis points from the first half of 2022 to 18.0%.

The increase was the result of an increase in gross margin as previously discussed which was partially offset by a higher level of SG&A as a percentage of sales, principally due to the factors previously described, both as compared to 2022.

On a constant currency basis, segment operating income for our consumer segment increased by 14.0% for the six months ended May 31, 2023 in comparison to the same period in 2022.

FLAVOR SOLUTIONS SEGMENT

Three months ended

February 28, 2023 February 28, 2022

Three months ended Six months ended

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Net sales $ 747.1 $ 670.7 $ 1,403.1 $ 1,267.0

2 unchanged sentences

Segment operating income margin 10.9 % 7.3 % 9.6 % 8.6 %

In the first quarter of 2023, sales of our flavor solutions segment increased by 10.0% as compared to the first quarter of 2022, and increased by 12.3% on a constant currency basis.

Pricing actions, taken in response to increased costs, across all regions increased sales by 13.5% in the first quarter of 2023 and was partially offset by 1.2% of unfavorable volume and product mix, both as compared to the prior year quarter.

In the second quarter of 2023, sales of our flavor solutions segment increased by 11.4% as compared to the second quarter of 2022 and increased by 12.7% on a constant currency basis.

Pricing actions, taken in response to increased costs, across all regions increased sales by 13.8% in the second quarter of 2023 and was partially offset by 1.1% of unfavorable volume and product mix, both as compared to the prior year quarter.

Volume and product mix includes the net impact of the recovery experienced from the restrictive measures that existed in the prior year related to COVID-19 resurgences in China and our decision to discontinue certain low margin businesses of 1% favorable and 1% unfavorable, respectively.

The unfavorable impact of foreign currency rates decreased flavor solutions segment sales by 1.3% compared to the year-ago quarter and is excluded from our measure of sales growth of 12.7% on a constant currency basis.

In the Americas region, flavor solutions sales increased by 12.7% in the first quarter of 2023 as compared to the first quarter of 2022 and increased by 12.2% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 12.9% during the quarter ended February 28, 2023 as compared to the prior year period.

Unfavorable volume and product mix decreased flavor solutions sales in the Americas by 0.7% during the first quarter of 2023, including the effects of growth in sales to packaged food and beverage companies, as compared to the year ago period.

A favorable impact from foreign currency rates increased sales by 0.5% compared to the first quarter of 2022 and is excluded from our measure of sales growth of 12.2% on a constant currency basis.

In the EMEA region, flavor solutions sales increased by 6.8% in the first quarter of 2023 as compared to the first quarter of 2022 and increased by 16.8% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 19.4% in the first quarter of 2023 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 2.6% as compared to the corresponding period in 2022.

An unfavorable impact from foreign currency rates decreased sales by 10.0% compared to the first quarter of 2022 and is excluded from our measure of sales growth of 16.8% on a constant currency basis.

In the Asia/Pacific region, flavor solutions sales decreased 1.1% in the first quarter of 2023 as compared to the first quarter of 2022 and increased by 5.1% on a constant currency basis.

In the Americas region, flavor solutions sales increased by 11.9% in the second quarter of 2023 as compared to the second quarter of 2022 and increased by 11.0% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 12.1% during the quarter ended May 31, 2023, as compared to the prior year period.

Unfavorable volume and product mix decreased flavor solutions sales in the Americas by 1.1% during the second quarter of 2023, including the effects of growth in sales to packaged food and beverage companies, as compared to the prior year period.

A favorable impact from foreign currency rates increased sales by 0.9% compared to the second quarter of 2022 and is excluded from our measure of sales growth of 11.0% on a constant currency basis.

In the EMEA region, flavor solutions sales increased by 8.8% in the second quarter of 2023 as compared to the second quarter of 2022 and increased by 14.6% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 21.8% in the second quarter of 2023 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 7.2% as compared to the corresponding period in 2022 including the effects of the inflationary environment impacting consumer spending at quick service restaurants and an approximately 2.1% impact of our decision to discontinue a low margin business.

An unfavorable impact from foreign currency rates decreased sales by 5.8% compared to the second quarter of 2022 and is excluded from our measure of sales growth of 14.6% on a constant currency basis.

In the Asia/Pacific region, flavor solutions sales increased 13.4% in the second quarter of 2023 as compared to the second quarter of 2022 and increased by 21.6% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 8.0% as compared to the prior year period.

Unfavorable volume and product mix decreased segment sales by 1.1% in the first quarter of 2023 which included the impact of increased COVID-19 resurgences in China.

An unfavorable impact from foreign currency rates decreased sales by 6.2% compared to the first quarter of 2022 and is excluded from our measure of sales growth of 5.1% on a constant currency basis.

Segment operating income for our flavor solutions segment decreased by $6.7 million, or 11.1%, in the first quarter of 2023 as compared to the first quarter of 2022.

The decrease in segment operating income was driven by the effect of higher sales, as previously described, which was more than offset by a reduction in gross profit margin, as the favorable effects of pricing action and CCI-led and GOE cost savings were more than offset by increased conversion costs, including the impacts of scrapped inventory as well as costs related to supply chain investments, and a higher level of SG&A expenses, all as compared to the prior year period.

Segment operating margin for our flavor solutions segment decreased by 200 basis points from the prior year level to 8.1% in the first quarter of 2023.

That decrease was principally the result of a decrease in gross margin as previously described.

On a constant currency basis, segment operating income for our flavor solutions segment decreased by 10.7% in the first quarter of 2023 as compared to the same period in 2022.

Favorable volume and product mix increased segment sales by 13.6% in the second quarter of 2023 which was principally driven by the favorable impact from the recovery experienced from the restrictive measures that existed in the prior year related to COVID-19 resurgences in China.

An unfavorable impact from foreign currency rates decreased sales by 8.2% compared to the second quarter of 2022 and is excluded from our measure of sales growth of 21.6% on a constant currency basis.

For the six months ended May 31, 2023, our flavor solutions sales increased 10.7% as compared to the six months ended May 31, 2022 and increased by 12.5% on a constant currency basis.

Pricing actions, taken in response to increased costs, across all regions increased sales by 13.6% during the six months ended May 31, 2023 and was partially offset by 1.1% of unfavorable volume and product mix, both as compared to the prior year period.

The unfavorable impact of foreign currency rates decreased flavor solutions segment sales by 1.8% compared to the year-ago period and is excluded from our measure of sales growth of 12.5% on a constant currency basis.

Segment operating income for our flavor solutions segment increased by $32.4 million, or 66.1%, in the second quarter of 2023 as compared to the second quarter of 2022.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the higher level of sales, favorable pricing and CCI-led and GOE cost savings which more than offset by increased conversion costs and the higher level of SG&A expenses, including higher distribution costs and higher performance-based employee incentive expense, all as compared to the prior year period.

Segment operating margin for our flavor solutions segment increased by 360 basis points from the prior year level to 10.9% in the second quarter of 2023.

That increase was principally the result of an increase in gross margin as previously described.

On a constant currency basis,

segment operating income for our flavor solutions segment decreased by 65.7% in the second quarter of 2023 as compared to the same period in 2022.

Segment operating income for our flavor solutions segment increased by $25.7 million, or 23.6%, for the six months ended May 31, 2023, as compared to the same period of 2022.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the higher level of sales, favorable pricing and CCI-led and GOE cost savings which more than offset increased conversion costs, including the impact of scrapped inventory, and the higher level of SG&A expenses, including higher distribution costs and higher performance-based employee incentive expense, all as compared to the prior year period.

Segment operating margin for our flavor solutions segment increased by 100 basis points from the first half of 2022 to 9.6%.

That increase was principally the result of an increase in gross margin as previously described as the higher level of SG&A expenses were lower as a percentage of net sales due to the leverage effect of the higher level of sales as compared to the 2022 level.

On a constant currency basis, segment operating income for our flavor solutions segment increased by 23.7% in the six months ended May 31, 2023, in comparison to the same period in 2022.

MARKET RISK SENSITIVITY

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The following table sets forth the notional values and unrealized net gain (loss) of the portfolio of our forward foreign currency and cross currency swap contracts:

February 28, 2023 November 30, 2022

May 31, 2023 November 30, 2022

Forward foreign currency:

Notional value $ 840.0 $ 560.5

Unrealized net gain 4.1 9.5

Unrealized net gain (loss) (2.3) 9.5

Cross currency swaps:

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The following table sets forth the notional values and unrealized net gain (loss) of our interest rate swap contracts:

February 28, 2023 November 30, 2022

May 31, 2023 November 30, 2022

Notional value $ 600.0 $ 600.0

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Our most significant raw materials are dairy products, pepper, onion, capsicums (red peppers and paprika), garlic, wheat products, vegetable oils, and vanilla.

movements of raw material costs are uncertain, we respond to this volatility in a number of ways, including strategic raw material purchases, purchases of raw material for future delivery and customer price adjustments.

While future movements of raw material costs are uncertain, we respond to this volatility in a number of ways, including strategic raw material purchases, purchases of raw material for future delivery and customer price adjustments.

We generally have not used derivatives to manage the volatility related to this risk.

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• Transaction and integration expenses – We exclude certain costs associated with our acquisitions and their subsequent integration into the Company.

Such costs, which we refer to as Transaction and integration expenses, include transaction costs associated with each acquisition, as well as integration costs following the respective acquisition, including the impact of the acquisition date fair value adjustment for inventories, together with the impact of discrete tax items, if any, directly related to each acquisition.

• Gain on sale of Kitchen Basics – We exclude the gain realized upon our sale of the Kitchen Basics business in August 2022.

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A reconciliation of these non-GAAP financial measures to the related GAAP financial measures follows:

For the year ended November 30, 2022 For the three months ended Estimated for the year ending November 30, 2023

February 28, 2023 February 28, 2022

For the year ended November 30, 2022 For the three months ended For the six months ended Estimated for the year ending November 30, 2023

May 31, 2023 May 31, 2022 May 31, 2023 May 31, 2022

Operating income $ 863.6 $ 221.8 $ 157.2 $ 420.8 $ 364.1

Impact of transaction and integration expenses

2.2 — 1.5 — 2.2

Impact of special charges (1)

5 unchanged sentences

Impact of transaction and integration expenses

0.6 — 0.4 — 0.6

Impact of special charges 13.3 3.2 5.1 9.7 10.0

5 unchanged sentences

Impact of transaction and integration expenses

1.6 — 1.1 — 1.6

Impact of special charges (1)

4 unchanged sentences

Impact of transaction and integration expenses

0.01 — — — 0.01 —

Impact of special charges (1)

7 unchanged sentences

(2) Adjusted operating income margin is calculated as adjusted operating income as a percentage of net sales for each period presented.

(3) Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding transaction and integration expenses and special charges of $187.3 million and $200.2 million for the three months ended February 28, 2023 and 2022, respectively.

(3) Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding transaction and integration expenses and special charges of $195.3 million and $382.6 million for the three and six months ended May 31, 2023, respectively, $146.4 million and $346.6 million for the three and six months ended May 31, 2022.

Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding transaction and integration expenses, special charges and gain on the sale of Kitchen Basics of $817.0 million for the year ended November 30, 2022.

11 unchanged sentences

Rates of constant currency growth (decline) follow:

Three months ended February 28, 2023

Three months ended May 31, 2023

Percentage Change

4 unchanged sentences

Asia/Pacific 18.7 % (8.7) % 27.4 %

Total Consumer (1.8) % (2.6) % 0.8 %

Total Consumer segment 5.3 % (1.7) % 7.0 %

Flavor Solutions segment:

2 unchanged sentences

Asia/Pacific 13.4 % (8.2) % 21.6 %

Total Flavor Solutions 10.0 % (2.3) % 12.3 %

Total Flavor Solutions segment 11.4 % (1.3) % 12.7 %

Total net sales 8.0 % (1.5) % 9.5 %

3 unchanged sentences

Total adjusted operating income 35.2 % (0.9) % 36.1 %

Six months ended May 31, 2023

Percentage Change

as Reported Impact of Foreign Currency Exchange Percentage Change on Constant Currency Basis

Consumer segment:

Americas 3.1 % (0.5) % 3.6 %

EMEA (1.4) % (4.6) % 3.2 %

Asia/Pacific (2.4) % (7.6) % 5.2 %

Total Consumer segment 1.6 % (2.2) % 3.8 %

Flavor Solutions segment:

Americas 12.3 % 0.7 % 11.6 %

EMEA 7.9 % (7.7) % 15.6 %

Asia/Pacific 5.8 % (7.2) % 13.0 %

Total Flavor Solutions segment 10.7 % (1.8) % 12.5 %

Total net sales 5.4 % (2.0) % 7.4 %

Adjusted operating income:

Consumer segment 12.1 % (1.9) % 14.0 %

Flavor Solutions segment 23.6 % (0.1) % 23.7 %

Total adjusted operating income 15.2 % (1.4) % 16.6 %

To present constant currency information for the fiscal year 2023 projection, projected sales and adjusted operating income for entities reporting in currencies other than the U.S.

4 unchanged sentences

LIQUIDITY AND FINANCIAL CONDITION

Three months ended

February 28, 2023 February 28, 2022

Six months ended

May 31, 2023 May 31, 2022

Net cash provided by operating activities $ 394.2 $ 154.4

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We use a combination of equity and short- and long-term debt.

We use short-term debt, comprised primarily of commercial paper, principally to finance ongoing operations, including our requirements for working capital

(accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities).

We use short-term debt, comprised primarily of commercial paper, principally to finance ongoing operations, including our requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities).

We are committed to maintaining investment grade credit ratings.

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Accordingly, the amounts in the cash flow statement do not agree with changes in the operating assets and liabilities that are presented in the balance sheet.

Operating Cash Flow — Net cash provided by operating activities of $103.4 million for the three months ended February 28, 2023, increased $85.5 million from the same period of 2022.

This increase was primarily driven by the lower amount of certain employee benefits accrued as of the prior year-end and paid in the first quarter of the subsequent fiscal year.

Operating Cash Flow — Net cash provided by operating activities of $394.2 million for the six months ended May 31, 2023, increased $239.8 million from the same period of 2022.

This increase was primarily driven by higher net income, an improvement in cash provided by working capital, including the lower level of inventory and the lower amount of certain employee benefits accrued as of the prior year-end and paid in the subsequent fiscal year.

As more fully described in our Annual Report on Form 10-K for the year ended November 30, 2022, we participate in a Supply Chain Financing program (SCF) with several global financial institutions (SCF Banks).

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All outstanding amounts related to suppliers participating in the SCF are recorded within the line entitled Trade accounts payable in our condensed consolidated balance sheets, and the associated payments are included in operating activities within our consolidated statements of cash flows.

As of February 28, 2023 and November 30, 2022, the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $320.1 million and $347.0 million, respectively.

Investing Cash Flow — Cash used in investing activities of $61.5 million for the three months ended February 28, 2023 increased by $17.8 million as compared to $43.7 million for the corresponding period in 2022 as capital expenditures increased from the 2022 level to $61.5 million.

As of May 31, 2023 and November 30, 2022, the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $327.4 million and $347.0 million, respectively.

Investing Cash Flow — Cash used in investing activities of $116.1 million for the six months ended May 31, 2023 increased by $26.9 million as compared to $89.2 million for the corresponding period in 2022.

Capital expenditures increased from the 2022 level of $101.6 million to $118.6 million.

We expect 2023 capital expenditures to approximate $260 million to support our planned growth and other initiatives.

Financing Cash Flow — Financing activities used cash of $44.7 million for the first three months of 2023, as compared to the corresponding period in 2022 when financing activities provided cash of $4.4 million.

Investing cash flow for the six months ended May 31, 2022 includes $12.1 million net cash proceeds received on the sale of the Kohinoor brand name.

Financing Cash Flow — Financing activities used cash of $518.1 million for the first six months of 2023, as compared to the corresponding period in 2022 when financing activities used cash of $81.7 million.

The variability between years is a result of changes in our net borrowings, share issuance activity associated with the exercise of stock options, share repurchase activity, and dividends, all as described below.

The following table outlines our net borrowing activities:

Three months ended

February 28, 2023 February 28, 2022

Six months ended

May 31, 2023 May 31, 2022

Net increase (decrease) in short-term borrowings $ (776.8) $ 128.0

Proceeds of issuance of long-term debt, net of debt issuance costs 495.3 $ —

Repayments of long-term debt (9.1) (15.3)

Net cash provided by borrowing activities $ 64.3 $ 93.8

The following table outlines the activity in our share repurchase program for the three months ended February 28, 2023 and 2022 (in millions):

Net cash (used in) provided by borrowing activities $ (290.6) $ 112.7

During the six months ended May 31, 2023, we issued $500.0 million of 4.95% notes due 2033, with net cash proceeds received of $496.4 million.

The following table outlines the activity in our share repurchase program for the six months ended May 31, 2023 and 2022 (in millions):

Number of shares of common stock repurchased 0.23 0.13

Dollar amount $ 18.6 $ 12.9

As of February 28, 2023, $532.4 million remained of the $600 million share repurchase authorization approved by the Board of Directors in November 2019.

As of May 31, 2023, $518.6 million remained of the $600 million share repurchase authorization approved by the Board of Directors in November 2019.

The timing and amount of any shares repurchased is determined by our management based on its evaluation of market conditions and other factors.

During the three months ended February 28, 2023, we received proceeds of $5.2 million from exercised stock options as compared to $30.3 million received in the corresponding 2022 period.

We repurchased $6.1 million and $12.0 million of common stock during the three months ended February 28, 2023 and 2022, respectively, in conjunction with employee tax withholding requirements.

We increased dividends paid to $104.6 million, or a per share quarterly dividend of $0.39, in the first three months of 2023 from $99.0 million, or a per share quarterly dividend of $0.37, of dividends paid in the same period last year.

During the six months ended May 31, 2023, we received proceeds of $11.1 million from exercised stock options as compared to $36.1 million received in the corresponding 2022 period.

We repurchased $10.8 million and $19.4 million of common stock during the six months ended May 31, 2023 and 2022, respectively, in conjunction with employee tax withholding requirements.

We increased dividends paid to $209.2 million, or a per share quarterly dividend of $0.39, in the first six months of 2023 from $198.2 million, or a per share quarterly dividend of $0.37, of dividends paid in the same period last year.

The timing and amount of any future dividends is determined by our Board of Directors.

2 unchanged sentences

Those balances are generally available without legal restrictions to fund ordinary business operations, capital projects and any possible future acquisitions.

At February 28, 2023 and 2022, we temporarily used $150.1 million and $325.4 million, respectively, of cash from our non-U.S.

At May 31, 2023 and 2022, we temporarily used $372.7 million and $158.1 million, respectively, of cash from our non-U.S.

subsidiaries to pay down short-term debt in the U.S.

During a quarter, our short-term borrowings vary, but are typically lower at the end of a quarter.

The average short-term borrowings outstanding for the three months ended February 28, 2023 and 2022 were $1,460.0 million and $883.4 million, respectively.

Total average debt outstanding for the three months ended February 28, 2023 and 2022 was $5,265.0 million and $5,438.4 million, respectively.

The average short-term borrowings outstanding for the three months ended May 31, 2023 and 2022 were $1,315.9 million and $890.7 million, respectively.

Total average debt outstanding for the three months ended May 31, 2023 and 2022 was $5,287.5 million and $5,445.7 million, respectively.

The reported values of our assets and liabilities are significantly affected by fluctuations in foreign exchange rates between periods.

At February 28, 2023, the exchange rates for the British pound sterling, Euro, Chinese renminbi, Australian dollar and Polish zloty were higher than the U.S.

At May 31, 2023, the exchange rates for the British pound sterling, Euro, and Polish zloty were higher than the U.S.

dollar at November 30, 2022.

At February 28, 2023, the exchange rate for the Canadian dollar was lower than the U.S.

At May 31, 2023, the exchange rate for the Canadian dollar, Chinese renminbi, and Australian dollar were lower than the U.S.

dollar at November 30, 2022.

2 unchanged sentences

We also rely on our revolving credit facilities, or borrowings backed by these facilities, to fund working capital needs and other general corporate requirements.

Our committed revolving credit facilities include a five-year $1.5 billion revolving credit facility, which will expire in June 2026 and a 364-day $500 million revolving credit facility, which was entered into in July 2022 and will expire in July 2023.

In April 2023, we issued $500 million aggregate principal amount of 4.95% unsecured senior notes due 2033.

Interest is payable semiannually in April and October of each year.

The net proceeds received from the issuance of this note of $496.4 million was used to repay a portion of the Company's outstanding commercial paper borrowings.

The 364-day $500 million revolving credit facility that was entered into in July 2022 and was scheduled to expire in July 2023 was cancelled in conjunction with our entry into the June 2023 $500 million 364-day revolving credit facility.

The current pricing for the five-year credit facility, on a fully drawn basis, is Term SOFR plus 1.25%.

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In the next year, our most significant debt service obligation is the maturity of our $250.0 million, 3.50% notes due in September 2023.

Also in July 2023, our $500 million, 364-day revolving credit facility matures.

Our other cash requirements include raw material purchases, lease payments, income taxes, anticipated quarterly dividends, and pension and postretirement benefits, as well as other contractual obligations.

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These estimates can also affect supplemental information disclosed by us, including information about contingencies, risk and financial condition.

We believe, given current facts and circumstances, our estimates and assumptions are reasonable, adhere to U.S.

GAAP and are consistently applied.

We believe, given current facts and circumstances, our estimates and assumptions are reasonable, adhere to GAAP and are consistently applied.

Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates, and estimates may vary as new facts and circumstances arise.

31 unchanged sentences

the company's ability to drive revenue growth;

the success of our brand marketing, new products, category management and customer engagement plans;

the company's ability to increase pricing to offset, or partially offset, inflationary pressures on the cost of our products;

35 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis