What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-03-26 compared with 2023-10-03 · 213 added, 347 removed, 264 unchanged (68% of the section changed)

11 unchanged sentences

We manage our business in two business segments, consumer and flavor solutions.

Executive Summary

In the first quarter of 2024, we achieved net sales growth of 2.4% over the first quarter 2023 level, including impact from the following factors:

• Pricing actions, principally implemented in the prior year, contributed 2.7% to the increase in net sales.

• Volume and product mix unfavorably impacted our net sales growth by 1.0%, exclusive of divestitures.

Our decisions to exit certain low margin businesses contributed approximately 0.6% to the unfavorable impact of volume and product mix.

The consumer segment experienced unfavorable volume and product mix of 2.2% and the flavor solutions segment experienced favorable product and mix of 0.7%.

• Divestitures negatively impacted our net sales increase by 0.2%.

• Net sales growth was positively impacted by fluctuations in currency rates that increased sales growth by 0.9%.

Excluding this impact, we grew sales by 1.5% over the prior year quarter on a constant currency basis.

Operating income was $233.5 million in the first quarter of 2024 and $199.0 million in the comparable 2023 period.

We recorded $4.2 million and $27.8 million of special charges in the first quarter of 2024 and 2023, respectively, related to organization and streamlining actions.

In the first quarter of 2024, the effects of a 140 basis points improvement in our gross profit margin, primarily associated with the effects of favorable product mix, pricing actions that were implemented in the prior year and cost savings from our GOE and CCI programs, that were partially offset by commodity inflation.

Also, in the first quarter of 2024, selling, general and administrative expenses as a percentage of sales increased 110 basis points, including a 90 basis points impact associated with the higher level of advertising and promotion expenses.

Excluding special charges, adjusted operating income was $237.7 million in the first quarter of 2024, an increase of 4.8%, compared to $226.8 million in the year-ago period.

In constant currency, adjusted operating income increased 4.3%.

Diluted earnings per share was $0.62 and $0.52 in the first quarter of 2024 and 2023, respectively.

The increase in diluted earnings per share for the first quarter of 2024 was driven primarily by the impact of higher operating income, including the effects of lower special charges, the unfavorable effects of an increase in the effective tax rate, and the favorable effects of an increase in income from unconsolidated operations.

Special charges lowered earnings per share by $0.01 and $0.07 in the first quarter of 2024 and 2023, respectively.

Excluding the effects of special charges, adjusted diluted earnings per share was $0.63 in the first quarter of 2024 and $0.59 in the first quarter of 2023, or an increase of 6.8%.

A detailed review of our first quarter 2024 performance compared to the first quarter of fiscal 2023 appears in the section titled “Results of Operations – Company” and “Results of Operations – Segments”.

For a reconciliation of non-GAAP to reported amounts, see the subsequent discussion under the heading "Non-GAAP Financial Measures".

Recent Events

Recent events impacting our business include global economic conditions, inflationary cost environment, disruption in our supply chain, the COVID-19 pandemic, and the ongoing conflict between Russia and Ukraine, each of which are further discussed below.

We expect each of these factors will impact our fiscal 2023 performance.

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 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 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.

These and other uncertainties could result in changes to our current expectations.

The potential effects of these recent events also could impact us in a number of other ways including, but not limited to, variations in the level of our sales, profitability, cash flows, fluctuations in foreign currency markets, the availability of future borrowings, the cost of borrowings, valuation of our pension assets and obligations, credit risks of our customers and counterparties, laws and regulations affecting our business, and potential impairment of the carrying value of goodwill or other indefinite-lived intangible assets.

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 anticipate they will be mitigated by our 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.

Additionally, in some instances the pricing actions we take have been impacted by price elasticity which unfavorably impacts our sales volume and mix.

Our interest expense is impacted by the overall global economic and interest rate environment.

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

As of August 31, 2023, we had total outstanding variable rate debt of approximately $438.2 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 August 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.

Supply Chain Disruption – Over the past several years, as we have responded to demand volatility, COVID-19 and overall macroeconomic conditions, we have experienced pressures in our supply chain, including inefficiencies associated with demand volatility.

These pressures are in addition to the inflationary cost environment previously noted and have included strained availability of raw materials and transportation capacity, expedited shipping costs, costs incurred in response to COVID-19, incremental warehouse costs to store increased inventory associated with maintaining additional safety stock, additional use of co-manufacturers, and labor shortages and absenteeism, in part, associated with COVID-19.

The severity of those supply chain pressures varied over 2022, 2021 and 2020.

In response to the general economic conditions, inflationary cost environment, and the supply chain pressures and related inefficiencies, we expect to eliminate approximately $125 million of costs during 2023 and 2024, including $100 million of supply chain costs and $25 million of costs across the remainder of the organization under our GOE program.

The supply chain actions we are taking, and will continue to evaluate, include returning our manufacturing facilities to a more normal shift schedule, reducing headcount, and stabilizing turnover rates to reduce our labor costs;

increasing our manufacturing capacity and automation to respond to the evaluated demand as well as reduce the use of co-manufacturers;

and executing and evaluating initiatives to reduce the safety stock levels of our inventory that were put in place to protect against supply disruptions.

The elimination of other costs across the organization will include a voluntary retirement program and other streamlining initiatives.

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

We are making investments to build the McCormick of the future, including the expansion of our Global Business Services (GBS) organization to transform McCormick through globally aligned processes, and innovative services to enable growth.

Simultaneously, we continue to progress our global enterprise resource planning (ERP) replacement program which will enable us to accelerate the transformation of our ways of working and provide a scalable platform for growth.

We will concentrate our global ERP focus on our operations in the U.S.

over the next several years, or through 2027.

We expect that our annual capital expenditures, including the capitalized software associated with our ERP program, over the next several years will continue to approximate 4% of our sales.

We expect that our operating expenses associated with our global ERP program through 2027 will approximate $35 million to $50 million annually.

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

There still remains uncertainty around the COVID-19 pandemic.

The ultimate impact depends on the length and severity of the pandemic, including new strains and variants of the virus;

infection rates in the markets where we do business;

the federal, state, and local government actions taken in response;

vaccine effectiveness;

and the macroeconomic environment.

We will continue to evaluate the extent to which the COVID-19 pandemic impacts our business, consolidated results of operations and financial condition.

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 August 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 (APAC) 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.

It is not possible to predict the broader or longer-term consequences of this conflict, or the sanctions imposed to date, which could include further sanctions, embargoes, regional instability, geopolitical shifts and adverse effects on macroeconomic conditions, security conditions, energy and fuel prices, currency exchange rates and financial markets.

We announced on March 11, 2022, that we were suspending our business operations in Russia.

In May 2022, we made the decision to exit our consumer business in Russia.

Our operations in Ukraine were also temporarily paused in order to focus on the safety of our employees, but we have resumed, where appropriate, a reduced level of operating activities.

While neither our operations in Russia nor Ukraine constitute a material portion of our business, a significant escalation or expansion of economic disruption or the conflict's current scope could disrupt our supply chain, broaden inflationary costs, and have a material adverse effect on our results of operations.

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 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.

We anticipate that our volume and product mix will also be impacted by the combined impact of the divestiture of our Giotti canning business early in the fourth quarter of 2023, the divestiture of our Kitchen Basics brand in the third quarter of last year, the exit of our consumer business in Russia during the second quarter of last year, and the pruning of low margin businesses.

Our industry continues to be impacted by commodity cost inflation, labor cost inflation, and other global macro-economic conditions.

While we are seeing moderation in input cost inflation from that experienced in 2023, we expect inflationary pressures to persist into fiscal 2024.

However, we anticipate GOE program and CCI program-led cost savings as well as previously implemented pricing actions to mitigate those inflationary pressures.

We will also be lapping 2023 price increases and anticipate favorable net price realization in 2024.

Additionally, in some instances, the pricing actions we take have been impacted by consumer behavior, or price elasticity, which unfavorably impacts our sales volume and mix.

We are fueling our investment in growth with cost savings from our CCI program, an ongoing initiative to improve productivity and reduce costs throughout the organization, as well as savings from the organization and streamlining actions described in note 2 of notes to our consolidated financial statements that includes our GOE program.

Our CCI and GOE programs both delivered cost savings in 2023.

Our CCI program funds brand marketing support, product innovation and other growth initiatives.

We expect our CCI program, GOE program, and other organization and streamlining actions to deliver additional savings in 2024.

In 2024, we expect net sales to range from a decline of 2% to 0% from our net sales in 2023 including a 1% unfavorable impact of foreign currency rates, or to range from a decline of 1% to an increase of 1% on a constant currency basis.

We anticipate that the 2024 sales change will include a favorable impact from previously implemented pricing actions.

We anticipate that our volume and product mix will be impacted by the divestiture of our Giotti canning business in the third quarter of last year, and the pruning of low margin businesses.

We expect our 2024 gross profit margin to range from 50 basis points to 100 basis points higher than our gross profit margin of 37.6% in 2023.

The projected 2023 increase in gross profit margin is principally due to the net effect of (i) the favorable impact of pricing actions in response to increased commodity, packaging materials and transportation costs, (ii) the favorable impact of anticipated GOE program and CCI cost savings, and (iii) a low to mid-teen percentage impact of inflation in 2023 compared to 2022.

As we recover the cost inflation of our pricing that has lagged in the past two years, we expect cost pressures to be more than offset by pricing actions and our expected cost savings in 2023.

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 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.

We expect that the absence of $2.2 million of integration expenses related to the FONA acquisition in 2022 to favorably impact operating income in 2023.

The projected 2024 increase in gross profit margin is principally due to the net effect of (i) the favorable impact of pricing actions, (ii) the favorable impacts of product mix, (iii) the favorable impact of anticipated Global Operating Effectiveness Program and CCI cost savings, and (iv) a low single-digit percentage impact of inflation in 2024 compared to 2023.

In 2024, we expect an increase in operating income of 8% to 10%, which includes a 1% unfavorable impact from foreign currency rates, over the 2023 level.

The projected 2024 change in operating income includes the effects of the anticipated increase in our gross profit margin as well as SG&A cost savings from our CCI and GOE programs, which will be partially offset by our investments to drive volume growth, including brand marketing.

We expect our brand marketing investments in 2024 to increase in the high-single digits over the 2023 level.

We also expect approximately $15 million of special charges in 2024 that relate to previously announced organization and streamlining actions;

in 2023, special charges were $61.2 million.

Excluding special charges and transaction and integration expenses, we expect 2023’s adjusted operating income to increase by 10% to 12%, which includes a minimal impact from foreign currency rates.

We estimate that our interest expense will range from $200 to $210 million in 2023, with the increase over 2022 being driven by the higher interest-rate environment which will impact our variable rate debt.

In 2023, we will also lap the favorable effects associated with the termination of interest rate contracts.

These contracts were entered into to manage the interest rate risk associated with our then anticipated issuance of fixed rate debt, which favorably impacted other income, net in 2022.

Our underlying effective tax rate is projected to be higher in 2023 than in 2022.

Excluding special charges, we expect 2024’s adjusted operating income to increase by 3% to 5%, which includes a 1% unfavorable impact from foreign currency rates, or to increase by 4% to 6% on a constant currency basis.

We estimate that our 2024 effective tax rate, including the net favorable impact of anticipated discrete tax items, will be 22% as compared to 21.8% in 2023.

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.

We also expect that our income from unconsolidated operations, including the performance of our largest joint venture, McCormick de Mexico, will increase.

Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 22% in 2024, or comparable to an adjusted effective tax rate of 22.0% in 2023.

We also expect that our income from unconsolidated operations, including the performance of our largest joint venture, McCormick de Mexico, will increase by a mid-teens percentage rate over the 2023 level.

Diluted earnings per share was $2.52 in 2023.

Diluted earnings per share for 2024 is projected to range from $2.76 to $2.81.

Excluding the per share impact of (i) special charges of $51.6 million;

(ii) integration expenses of $2.2 million;

and (iii) the gain realized upon our sale of Kitchen Basics of $49.6 million, adjusted diluted earnings per share was $2.53 in 2022.

Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.16, is projected to range from $2.62 to $2.67 in 2023.

We expect adjusted diluted earnings per share to grow by 4% to 6% over adjusted diluted earnings per share of $2.53 in 2022, including a minimal impact from foreign currency rates.

Excluding the per share impact of special charges of $61.2 million adjusted diluted earnings per share was $2.70 in 2023.

Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.04, is projected to range from $2.80 to $2.85 in 2024, or an increase of 4% to 6% over adjusted diluted earnings per share of $2.70 in 2023.

RESULTS OF OPERATIONS – COMPANY

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three months ended

February 29, 2024 February 28, 2023

Net sales $ 1,602.7 $ 1,565.5

3 unchanged sentences

Volume and product mix (1.0) % (4.6) %

Acquisitions — % — % — % 0.2 %

Divestitures (0.2) % (0.7) %

2 unchanged sentences

Gross profit margin 37.4 % 36.0 %

Sales for the third quarter of 2023 increased by 5.6% from the prior year level and increased by 5.5% 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 7.8% compared to the prior year period.

Unfavorable volume and product mix decreased sales by 2.1%, including the impact of price elasticity.

Our consumer segment drove that unfavorable volume and product mix.

The impact of the recovery experienced in the prior year quarter from the COVID-19 restrictive measures that existed in China as well as a slower recovery in the third quarter of 2023 unfavorably impacted volume and product mix by approximately 1.2%.

Also, our decisions to exit our consumer operations in Russia and discontinue certain low margin businesses also contributed approximately 0.8% to the unfavorable impact of volume and product mix .

The divestiture of our Kitchen Basics business unfavorably impacted sales by 0.2% as compared to the prior year period.

Sales were also impacted by favorable foreign currency rates that increased net sales by 0.1% in the third quarter of 2023 compared to the year-ago quarter and is excluded from our measure of sales growth of 5.5% on a constant currency basis.

Sales for the nine months ended August 31, 2023 increased by 5.5% from the prior year level and increased by 6.8% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 9.7% compared to the prior year period.

Sales for the first quarter of 2024 increased by 2.4% from the prior year level and increased by 1.5% 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 increased sales by 2.7% as compared to the prior year period principally due to pricing actions implemented in the prior year.

Unfavorable volume and product mix decreased sales by 1.0%, including the impact of price elasticity.

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

Our decisions to exit our consumer operations in Russia and discontinue certain low margin businesses also contributed approximately 0.8% 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 impacted by unfavorable foreign currency rates that decreased sales by 1.3% in the nine months ended August 31, 2023 as compared to the year-ago period and is excluded from our measure of sales growth of 6.8% on a constant currency basis.

Gross profit for the third quarter of 2023 increased by $56.1 million, or 9.9%, from the comparable period in 2022.

Our gross profit margin for the three months ended August 31, 2023 was 37.0%, an increase of 150 basis points from the comparable period in 2022.

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

These favorable impacts were partially offset by increased commodity costs, and unfavorable segment mix, all as compared to the 2022 period.

Gross profit for the nine months ended August 31, 2023 increased by $151.1 million, or 9.2%, from the comparable period in 2022.

Our gross profit margin for the nine months ended August 31, 2023 was 36.7%, an increase of 130 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, favorable transportation costs, and cost savings led by our CCI and GOE programs.

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

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Unfavorable volume and product mix in our consumer segment exceeded the favorable volume and product mix in our flavor solutions segment.

Our decisions to discontinue certain low margin businesses contributed approximately 0.6% to the unfavorable impact of volume and product mix.

Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.2% as compared to the prior year period.

Sales were also impacted by favorable foreign currency rates that increased net sales by 0.9% in the first quarter of 2024 compared to the year-ago quarter and is excluded from our measure of sales growth of 1.5% on a constant currency basis.

Gross profit for the first quarter of 2024 increased by $36.4 million, or 6.5%, from the comparable period in 2023.

Our gross profit margin for the three months ended February 29, 2024 was 37.4%, an increase of 140 basis points from the comparable period in 2023.

The increase in gross profit margin in the quarter ended February 29, 2024 was driven by the favorable impact of our pricing actions, as previously described, favorable product and customer mix, and cost savings led by our CCI and GOE programs.

These favorable impacts were partially offset by increased commodity costs as compared to the 2023 period.

Three months ended

February 29, 2024 February 28, 2023

Selling, general & administrative expense (SG&A) $ 361.6 $ 336.1

Percent of net sales 22.6 % 21.5 %

SG&A increased by $43.6 million in the third quarter of 2023 as compared to the 2022 level, driven primarily by higher performance-based employee incentive expense, along with increases in selling, marketing and distribution costs 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 160 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 $77.7 million in the nine months ended August 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 nine months ended August 31, 2023 increased 50 basis points from prior year as the net impact of the previously mentioned factors was partially offset by the impact of the higher sales base, all as compared to the prior year period.

Three months ended Nine months ended

August 31, 2023 August 31, 2022 Aug 31, 2023 Aug 31, 2022

SG&A increased by $25.5 million in the first quarter of 2024 as compared to the 2023 level, driven primarily by advertising and promotional spend, increased selling and market costs and a higher investment in research and development.

These costs were partially offset by CCI-led and GOE cost savings, as compared to the 2023 period.

SG&A as a percentage of net sales increased by 110 basis points from the prior year levels due primarily to a 90 basis point increase in advertising and promotional expenses as compared to the prior year period.

Three months ended

February 29, 2024 February 28, 2023

Total special charges $ 4.2 $ 27.8

During the three months ended August 31, 2023, we recorded $6.1 million of special charges.

Those special charges principally consisted of $3.6 million associated with the GOE program, $1.7 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), and streamlining actions of $0.8 million in the Americas region.

During the nine months ended August 31, 2023, we recorded $47.1 million of special charges.

Those special charges principally consisted of $37.0 million associated with the GOE program, $3.9 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $5.3 million in the Americas region, and $0.9 million in the EMEA region.

During the three months ended August 31, 2022, we recorded $3.4 million of special charges.

Those special charges principally consisted of $1.0 million associated with the transition of a manufacturing facility in EMEA, $0.8 million associated with the exit of our consumer business in Russia, and streamlining actions of $0.4 million in the Americas region, and $1.2 million in the EMEA region.

During the nine months ended August 31, 2022, we recorded $38.0 million of net special charges.

Those special charges consisted principally of $23.0 million associated with the exit of our consumer business in Russia, $18.4 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $5.7 million in the Americas region and $5.5 million in the EMEA region.

These charges were offset by a $13.6 million gain during the nine months ended August 31, 2022, 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.

During the three months ended February 29, 2024, we recorded $4.2 million of special charges.

Those special charges principally consisted of $2.8 million associated with the GOE program and $1.4 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA).

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 EMEA, and streamlining actions of $1.3 million in the Americas region and $0.8 million in the EMEA region.

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

Three months ended Nine months ended

August 31, 2023 August 31, 2022 Aug 31, 2023 Aug 31, 2022

Total integration expenses $ — $ — $ — $ 2.2

During the nine months ended August 31, 2022, we recorded $2.2 million of integration expenses related to our acquisition of FONA.

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three months ended

February 29, 2024 February 28, 2023

Interest expense $ 50.3 $ 50.6

Other income, net 11.1 11.1

Interest expense increased by $14.8 million and $50.8 million in the three and nine months ended August 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 nine months ended August 31, 2023 decreased by $70.3 million and $59.2 million, as compared to the prior year periods.

Other income, net for the three and nine months ended August 31, 2022 included a $49.6 million gain on the sale of our Kitchen Basics business and $18.7 million associated with the settlement of treasury lock arrangements, both of which are more fully described in the notes to the accompanying condensed consolidated financial statements.

The remaining decrease in the third quarter of 2023 was due primarily to fluctuations in foreign exchange rates, partially offset by higher interest income, principally associated with the higher interest rate environment.

The remaining increase for the nine months ended August 31, 2023 was primarily driven by higher interest income, also principally associated with the higher interest rate environment.

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Interest expense decreased slightly in the three months ended February 29, 2024, as compared to the prior year period, driven by the effects of a reduction in average borrowing levels which were partially offset by higher short-term interest rates.

Other income, net for the three months ended February 29, 2024 remained consistent, as compared to the prior year period.

Three months ended

February 29, 2024 February 28, 2023

Income from consolidated operations before income taxes $ 194.3 $ 159.5

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 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 August 31, 2023 included $3.3 million of net discrete tax benefits consisting principally of the following:

(i) $2.2 million of tax benefits from the net reversal of certain reserves for unrecognized tax benefits and related interest in non-U.S.

jurisdictions, (ii) $0.8 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 non-U.S.

jurisdictions, (iii) $0.6 million of excess tax benefits associated with stock-based compensation, (iv) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (v) $1.9 million of tax expense related to certain unremitted prior year earnings.

Income tax expense for the nine months ended August 31, 2023 included $10.1 million of net discrete tax benefits consisting principally of the following:

(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) $2.2 million of tax benefits from the net reversal of certain reserves for unrecognized tax benefits and related interest in non-U.S.

jurisdictions, (iii) $2.0 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 non-U.S.

jurisdictions, (iv) $1.2 million of tax benefit related to a tax settlement, (v) $0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, (vi) $1.0 million of excess tax benefits associated with stock-based compensation, (vii) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (viii) $1.9 million of tax expense related to certain unremitted prior year earnings.

Income tax expense for the three months ended August 31, 2022 included $3.8 million of net discrete tax expense consisting principally of the following:

(i) $11.6 million of tax expense related to the sale of a business, (ii) $1.4 million of net tax benefits related to the revaluation of deferred taxes resulting from enacted legislation, (iii) $4.7 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, and (iv) $1.3 million of tax benefits resulting from an adjustment to a prior year tax accrual based on the final return filed.

Income tax expense for the nine months ended August 31, 2022 included $15.5 million of net discrete tax benefits consisting principally of the following:

(i) $9.0 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) $3.9 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, (v) $6.2 million of tax benefits from the resolution of tax uncertainties, including the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (vi) $1.3 million of tax benefits resulting from an adjustment to a prior year tax accrual based on the final return filed, and (vii) $11.6 million of tax expense related to the sale of a business.

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

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.

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, and changes in the assessment of deferred tax valuation allowances.

Income tax expense for the three months ended February 29, 2024 included $1.6 million of discrete tax expense consisting principally of $1.1 million of tax expense resulting from a state tax matter, and $0.5 million of tax expense associated with stock-based compensation.

Income tax expense for the three months ended February 28, 2023 included $3.8 million of net discrete tax benefits 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.

Three months ended

February 29, 2024 February 28, 2023

Income from unconsolidated operations $ 21.3 $ 14.0

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $5.9 million and $10.5 million, respectively, for the three and nine months ended August 31, 2023, both as compared to the prior year periods.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $7.3 million for the three months ended February 29, 2024, 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 2023 to 2024:

Three months ended August 31,

Nine months ended August 31,

Three months ended February 28, 2023 and February 29, 2024

2023 Earnings per share – diluted $ 0.52

Impact of change in operating income 0.04

Increase in special charges, net of taxes (0.01) (0.03)

Decrease in transaction and integration expenses, net of taxes — 0.01

Impact from the gain on the sale of a business, net of taxes (0.14) (0.14)

Increase in interest expense (0.04) (0.15)

Decrease in other income, excluding gain on sale of a business (0.06) (0.03)

Decrease in special charges, net of taxes 0.06

Increase in income from unconsolidated operations 0.03

Impact of change in effective income tax rate, excluding taxes on special charges, transaction and integration expenses, and gain on sale of a business — (0.04)

Impact of change in effective income tax rate, excluding taxes on special charges (0.03)

2024 Earnings per share – diluted $ 0.62

RESULTS OF OPERATIONS — SEGMENTS

We measure the performance of our business segments based on operating income, excluding special charges.

We also exclude transaction and integration expenses related to our acquisitions from our measure of segment performance as these expenses are similarly managed separately from the business segments.

These transaction and integration expenses excluded from our segment performance measure include costs directly associated with that acquisition and costs associated with integrating the businesses.

See note 10 of the notes to the accompanying condensed consolidated financial statements for additional information on our segment measures as well as for a reconciliation by segment of operating income, excluding special charges and transaction and integration expenses, to consolidated operating income.

We measure the performance of our business segments based on operating income, excluding special charges for the periods presented.

See note 10 of the notes to our accompanying condensed consolidated financial statements for additional information on our segment measures as well as for a reconciliation by segment of operating income, excluding special charges, to consolidated operating income.

In the following discussion, we refer to our previously described measure of segment profit as segment operating income.

CONSUMER SEGMENT

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three months ended

February 29, 2024 February 28, 2023

Net sales $ 921.5 $ 909.5

2 unchanged sentences

Segment operating income margin 19.1 % 19.1 %

In the third quarter of 2023, sales of our consumer segment increased by 1.0% as compared to the third quarter of 2022 and increased by 1.3% on a constant currency basis.

That 1.0% increase included higher sales of our consumer business in both the Americas and EMEA regions that was partially offset by lower sales in the APAC region, as compared to the prior year quarter.

Pricing actions, taken in response to increased costs, favorably impacted sales by 5.6% as compared to the prior year period.

Unfavorable volume and product mix decreased consumer segment sales by 4.0% in the third quarter of 2023 as compared to the same period last year, including the impact of price elasticity.

The impact of the recovery experienced from the COVID-19 restrictive measures that existed in the prior year in China as well as a slower recovery in the third quarter of 2023 unfavorably impacted volume and product mix by approximately 2.0%.

Also, our decisions to exit our consumer operations in Russia and 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 0.3% as compared to 2022.

Sales in the third quarter of 2023 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 0.3% compared to the year-ago quarter and is excluded from our measure of sales growth of 1.3% on a constant currency basis.

In the Americas region, consumer sales increased 1.4% in the third quarter of 2023 as compared to the same quarter of 2022 and increased by 1.7% on a constant currency basis.

Pricing actions, taken in response to inflationary cost environment, increased sales by 4.4% as compared to the prior year period.

For the third quarter of 2023, unfavorable volume and product mix decreased sales by 2.3% as compared to the corresponding period in 2022.

This reduction included an approximately 1.3% impact of our decision to discontinue a low margin business.

The sale of our Kitchen Basics business unfavorably impacted sales by 0.4% as compared to 2022.

The unfavorable impact of foreign currency rates decreased sales by 0.3% in the quarter and is excluded from our measure of sales growth of 1.7% on a constant currency basis.

In the EMEA region, consumer sales increased 14.9% in the third quarter of 2023 as compared to the same quarter of 2022 and increased by 10.4% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 13.0% as compared to the 2022 period.

Sales were impacted by unfavorable volume and product mix during the third quarter of 2023 that decreased sales by 2.6% from the prior year level, including a 1.7% impact associated with the exit of our consumer operations in Russia.

During the third quarter of 2023, a favorable impact from foreign currency rates increased sales by 4.5% compared to the year-ago period and is excluded from our measure of sales growth of 10.4% on a constant currency basis.

In the APAC region, consumer sales decreased 15.8% in the third quarter of 2023 as compared to the third quarter of 2022 and decreased by 10.5% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, increased sales by 4.5% as compared to the prior year period.

For the quarter ended August 31, 2023, unfavorable volume and product mix decreased sales by 15.0%, including a 15.3% unfavorable impact from the higher recovery experienced from the restrictive measures that existed in the prior year related to COVID-19 resurgences in China and a slower recovery in the third quarter of 2023.

During the third quarter of 2023, an unfavorable impact from foreign currency rates decreased sales by 5.3% compared to the year-ago period and is excluded from our measure of sales decline of 10.5% on a constant currency basis.

For the nine months ended August 31, 2023, sales of our consumer segment increased 1.4% as compared to the nine months ended August 31, 2022 and increased by 2.9% on a constant currency basis.

Pricing actions taken in our consumer business in all regions increased sales by 7.6% during the nine months ended August 31, 2023 as compared to the prior year period.

Lower volume and unfavorable product mix decreased sales by 4.0% as compared to the prior year period driven primarily by the impact of price elasticity.

Volume and product mix includes the unfavorable impact of our decisions to exit our consumer business in Russia and discontinue certain low margin businesses of 1.2% .

The sale of our Kitchen Basics business unfavorably impacted sales by 0.7% as compared to 2022.

An unfavorable impact from foreign currency rates decreased sales by 1.5% compared to the prior year and is excluded from our measure of sales growth of 2.9% on a constant currency basis.

Segment operating income for our consumer segment decreased by $10.4 million, or 5.7%, in the third quarter of 2023 from the third quarter of 2022.

The decrease 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 more than offset by increased commodity costs and SG&A expenses, including higher advertising and marketing expenses, increased distribution costs and higher performance-based employee incentive expense, all as compared to the prior year period.

Segment operating margin for our consumer segment decreased by 130 basis points from the third quarter of 2022 to 18.5% in the third quarter of 2023.

That decrease was principally the result of an increase in gross margin, including the impacts of pricing actions, CCI-led and GOE cost savings, as well as increased commodity costs, which were more than 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 decreased by 5.2% in the third quarter of 2023 in comparison to the same period in 2022.

Segment operating income for our consumer segment increased by $24.8 million, or 5.2%, for the nine months ended August 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 commodity costs and higher SG&A expenses,

including higher advertising and marketing expenses, increased 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 60 basis points from the first nine months 2022 to 18.1%.

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 6.6% for the nine months ended August 31, 2023 in comparison to the same period in 2022.

In the first quarter of 2024, sales of our consumer segment increased by 1.3% as compared to the first quarter of 2023 and increased by 0.7% on a constant currency basis.

The 1.3% increase was driven primarily by EMEA partially offset by lower sales in the APAC region, all as compared to the prior year quarter.

Pricing actions favorably impacted sales by 2.9% as compared to the prior year period principally due to pricing actions implemented in the prior year.

Unfavorable volume and product mix decreased consumer segment sales by 2.2% in the first quarter of 2024 as compared to the same period last year, including the impact of price elasticity.

Our decision to discontinue certain low margin businesses also contributed 0.8% to the unfavorable impact of volume and product mix.

Sales in the first quarter of 2024 reflected a favorable impact from foreign currency rates that increased consumer segment sales by 0.6% compared to the year-ago quarter and is excluded from our measure of sales growth of 0.7% on a constant currency basis.

In the Americas region, consumer sales increased 0.1% in the first quarter of 2024 as compared to the same quarter of 2023 and increased by 0.1% on a constant currency basis.

Pricing actions, principally implemented in the prior year, increased sales by 2.7% as compared to the prior year period.

For the first quarter of 2024, unfavorable volume and product mix decreased sales by 2.6% as compared to the corresponding period in 2023.

This reduction included a 1.1% impact of our decision to discontinue a low margin business.

Foreign currency rates did not have a significant impact on sales in the quarter.

Our sales growth on a constant currency basis was 0.1% for the quarter.

In the EMEA region, consumer sales increased 13.3% in the first quarter of 2024 as compared to the same quarter of 2023 and increased by 8.2% on a constant currency basis.

Pricing actions, principally implemented in the prior year, increased sales by 5.3% as compared to the 2023 period.

Sales were favorably impacted by volume and product mix during the first quarter of 2024 and increased sales by 2.9% from the prior year level.

During the first quarter of 2024, a favorable impact from foreign currency rates increased sales by 5.1% compared to the year-ago period and is excluded from our measure of sales growth of 8.2% on a constant currency basis.

In the APAC region, consumer sales decreased 7.4% in the first quarter of 2024 as compared to the first quarter of 2023 and decreased by 5.4% on a constant currency basis.

Pricing actions, principally implemented in the prior year, increased sales by 0.9% as compared to the prior year period.

For the quarter ended February 29, 2024, unfavorable volume and product mix decreased sales by 6.3%, which included the effects of customer inventory reductions.

During the first quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 2.0% compared to the year-ago period and is excluded from our measure of sales decline of 5.4% on a constant currency basis.

Segment operating income for our consumer segment increased by $2.9 million, or 1.7%, in the first quarter of 2024 from the first quarter of 2023.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to favorable pricing actions and CCI-led and GOE cost savings more than offsetting increased commodity costs and SG&A expenses, that was primarily driven by higher advertising and promotion expenses, all as compared to the prior year period.

Segment operating margin for our consumer segment in the first quarter of 2024 was 19.1% and was comparable to the first quarter of 2023 as an increase in gross margin was offset by an increase in SG&A as a percentage of sales, driven by an increase in advertising and promotion spend, all as compared to the prior year period.

On a constant currency basis, segment operating income for our consumer segment increased by 1.4% in the first quarter of 2024 in comparison to the same period in 2023.

FLAVOR SOLUTIONS SEGMENT

Three months ended Nine months ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three months ended

February 29, 2024 February 28, 2023

Net sales $ 681.2 $ 656.0

2 unchanged sentences

Segment operating income margin 9.0 % 8.1 %

In the third quarter of 2023, sales of our flavor solutions segment increased by 12.0% as compared to the third quarter of 2022 and increased by 11.4% on a constant currency basis.

Pricing actions, taken in response to increased costs, across all regions increased sales by 10.9% in the third quarter of 2023.

Favorable volume and product mix increased segment sales by 0.5% as compared to the prior period as growth in the Americas and APAC regions were partially offset by lower sales in EMEA.

In the first quarter of 2024, sales of our flavor solutions segment increased by 3.8% as compared to the first quarter of 2023 and increased by 2.5% on a constant currency basis.

Pricing actions across all regions increased sales by 2.4% in the first quarter of 2024 as compared to the prior year period principally due to pricing actions implemented in the prior year.

Favorable volume and product mix increased segment sales by 0.7% as compared to the prior period as growth in the Americas and APAC regions were partially offset by lower volume and product mix in the EMEA region.

Volume and product mix includes a 0.4% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses.

The divestiture of our Giotti canning business unfavorably impacted sales by 0.6% as compared to the prior year period.

The favorable impact of foreign currency rates increased flavor solutions segment sales by 1.3% compared to the year-ago quarter and is excluded from our measure of sales growth of 2.5% on a constant currency basis.

In the Americas region, flavor solutions sales increased by 11.3% in the third quarter of 2023 as compared to the third quarter of 2022 and increased by 10.1% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 8.7% during the quarter ended August 31, 2023, as compared to the prior year period.

Favorable volume and product mix increased flavor solutions sales in the Americas by 1.4% during the third quarter of 2023, including the effects of growth in sales to packaged food and beverage and nutrition and healthcare companies, as compared to the prior year period.

A favorable impact from foreign currency rates increased sales by 1.2% compared to the third quarter of 2022 and is excluded from our measure of sales growth of 10.1% on a constant currency basis.

In the EMEA region, flavor solutions sales increased by 16.7% in the third quarter of 2023 as compared to the third quarter of 2022 and increased by 15.1% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 20.2% in the third quarter of 2023 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 5.1% as compared to the corresponding period in 2022 including the effects of the inflationary environment impacting consumer spending at quick service restaurants and packaged food and beverage companies and an approximately 1.4% impact of our decision to discontinue a low margin business.

A favorable impact from foreign currency rates increased sales by 1.6% compared to the third quarter of 2022 and is excluded from our measure of sales growth of 15.1% on a constant currency basis.

In the APAC region, flavor solutions sales increased 7.4% in the third quarter of 2023 as compared to the third quarter of 2022 and increased by 13.0% on a constant currency basis.

Pricing actions, taken in response to the inflationary cost environment, favorably impacted sales by 7.5% as compared to the prior year period.

Favorable volume and product mix increased segment sales by 5.5% in the third quarter of 2023 which was principally driven by higher sales to quick service customers, including the effects of the timing of their promotional activities.

An unfavorable impact from foreign currency rates decreased sales by 5.6% compared to the third quarter of 2022 and is excluded from our measure of sales growth of 13.0% on a constant currency basis.

For the nine months ended August 31, 2023, our flavor solutions sales increased 11.2% as compared to the nine months ended August 31, 2022 and increased by 12.2% on a constant currency basis.

Pricing actions, taken in response to increased costs, across all regions increased sales by 12.7% during the nine months ended August 31, 2023 and was partially offset by 0.5% 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 1.0% compared to the year-ago period and is excluded from our measure of sales growth of 12.2% on a constant currency basis.

Segment operating income for our flavor solutions segment increased by $22.9 million, or 41.7%, in the third quarter of 2023 as compared to the third 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 driven by favorable pricing and CCI-led and GOE cost savings which more than offset increased commodity and conversion costs and the higher level of SG&A expenses, including increased distribution costs and higher performance-based employee incentive expense, as compared to the prior year period.

Segment operating margin for our flavor solutions segment increased by 220 basis points from the prior year level to 10.4% in the third quarter of 2023.

In the Americas region, flavor solutions sales increased by 4.7% in the first quarter of 2024 as compared to the first quarter of 2023 and increased by 3.4% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 1.9% during the quarter ended February 29, 2024, as compared to the prior year period.

Favorable volume and product mix increased flavor solutions sales in the Americas by 1.5% during the first quarter of 2024, including the effects of growth in sales to packaged food and nutrition and healthcare companies, as compared to the prior year period.

A favorable impact from foreign currency rates increased sales by 1.3% compared to the first quarter of 2023 and is excluded from our measure of sales growth of 3.4% on a constant currency basis.

In the EMEA region, flavor solutions sales increased by 1.8% in the first quarter of 2024 as compared to the first quarter of 2023 and declined by 1.4% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 4.0% in the first quarter of 2024 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 2.5% as compared to the corresponding period in 2023 including the effects of consumer spending at quick service restaurants and packaged food and beverage companies and a 1.8% impact of our decision to discontinue a low margin business.

The divestiture of our Giotti canning business unfavorably impacted sales by 2.9% as compared to the prior year period.

A favorable impact from foreign currency rates increased sales by 3.2% compared to the first quarter of 2023 and is excluded from our measure of sales decline of 1.4% on a constant currency basis.

In the APAC region, flavor solutions sales increased 1.5% in the first quarter of 2024 as compared to the first quarter of 2023 and increased by 4.5% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 3.5% as compared to the prior year period.

Favorable volume and product mix increased segment sales by 1.0% in the first quarter of 2024.

An unfavorable impact from foreign currency rates decreased sales by 3.0% compared to the first quarter of 2023 and is excluded from our measure of sales growth of 4.5% on a constant currency basis.

Segment operating income for our flavor solutions segment increased by $8.0 million, or 15.0%, in the first quarter of 2024 as compared to the first quarter of 2023.

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 driven by favorable pricing, product and customer mix, and CCI-led and GOE cost savings which more than offset increased commodity and conversion costs and the higher level of SG&A expenses.

Segment operating margin for our flavor solutions segment increased by 90 basis points from the prior year level to 9.0% in the first quarter of 2024.

That increase was principally the result of an increase in gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2023.

On a constant currency basis, segment operating income for our flavor solutions segment increased by 40.8% in the third quarter of 2023 as compared to the same period in 2022.

Segment operating income for our flavor solutions segment increased by $48.6 million, or 29.6%, for the nine months ended August 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 commodity and conversion costs, including the impact of scrapped inventory, and the higher level of SG&A expenses, increased 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 140 basis points from the first half of 2022 to 9.9%.

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 increased by 29.3% in the nine months ended August 31, 2023, in comparison to the same period in 2022.

On a constant currency basis, segment operating income for our flavor solutions segment increased by 13.7% in the first quarter of 2024 as compared to the same period in 2023.

MARKET RISK SENSITIVITY

8 unchanged sentences

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:

August 31, 2023 November 30, 2022

February 29, 2024 November 30, 2023

Forward foreign currency:

10 unchanged sentences

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

August 31, 2023 November 30, 2022

February 29, 2024 November 30, 2023

Notional value $ 600.0 $ 600.0

3 unchanged sentences

We purchase certain raw materials which are subject to price volatility caused by weather, market conditions, growing and harvesting conditions, governmental actions and other factors beyond our control.

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

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

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.

11 unchanged sentences

These represent non-GAAP financial measures, which are prepared as a complement to our financial results prepared in accordance with United States generally accepted accounting principles.

These financial measures exclude the impact, as applicable, of the following:

• Special charges – Special charges consist of expenses and income associated with certain actions undertaken by the Company to reduce fixed costs, simplify or improve processes, and improve our competitiveness and are of such significance in terms of both up-front costs and organizational/structural impact to require advance approval by our Management Committee.

These financial measures exclude the impact of special charges and the associated income tax effects, as applicable.

Special charges consist of expenses and income, as applicable, associated with certain actions undertaken by us to reduce fixed costs, simplify or improve processes, and improve our competitiveness and are of such significance in terms of both up-front costs and organizational/structural impact to require advance approval by our Management Committee.

Expenses associated with the approved actions are classified as special charges upon recognition and monitored on an on-going basis through completion.

• 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.

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

As more fully described in note 17 in our Annual Report on Form 10-K for the year ended November 30, 2022, the pre-tax gain associated with the sale was $49.6 million and is included in Other income, net in our consolidated income statement for the three and nine months ended August 31, 2022 and the year ended November 30, 2022.

Details with respect to the composition of transaction and integration expenses and special charges set forth below are included in note 2 of the notes to the accompanying condensed consolidated financial statements.

Details with respect to the composition of transaction and integration expenses, special charges and gain on sale of Kitchen Basics for the year ended November 30, 2022 are included in notes 2 and 3 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2022.

Details with respect to the composition of special charges set forth below are included in note 2 of the notes to our accompanying condensed consolidated financial statements.

Details with respect to the composition of special charges for the year ended November 30, 2023 are included in note 3 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2023.

We believe that these non-GAAP financial measures are important.

The exclusion of the items noted above provides additional information that enables enhanced comparisons to prior periods and, accordingly, facilitates the development of future

projections and earnings growth prospects.

The exclusion of the items noted above provides additional information that enables enhanced comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects.

This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.

These non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, GAAP results.

These non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but they should not be considered a substitute for, or superior to, U.S.

GAAP results.

In addition, these non-GAAP financial measures may not be comparable to similarly titled measures of other companies because other companies may not calculate them in the same manner that we do.

1 unchanged sentence

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

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

For the year ended November 30, 2023 For the three months ended Estimated for the year ending November 30, 2024

February 29, 2024 February 28, 2023

Operating income $ 963.0 $ 233.5 $ 199.0

Impact of transaction and integration expenses

2.2 — — — 2.2

Impact of special charges

1 unchanged sentence

Adjusted operating income $ 1,024.2 $ 237.7 $ 226.8

Operating income margin (1)

14.5 % 14.6 % 12.7 %

Impact of special charges 0.9 % 0.2 % 1.8 %

Adjusted operating income margin (1)

1 unchanged sentence

Income tax expense $ 174.5 $ 49.6 $ 34.4

Impact of transaction and integration expenses

0.6 — — — 0.6

Impact of special charges 14.5 1.1 6.5

13.3 1.3 0.7 11.0 10.7

Impact of sale of Kitchen Basics (11.6) — (11.6) — (11.6)

Adjusted income tax expense $ 189.0 $ 50.7 $ 40.9

Income tax rate (2)

21.8 % 25.5 % 21.6 %

Impact of special charges 0.2 % — % 0.2 %

Adjusted income tax rate (2)

1 unchanged sentence

Net income $ 680.6 $ 166.0 $ 139.1

Impact of transaction and integration expenses

1.6 — — — 1.6

Impact of special charges 46.7 3.1 21.3

38.3 4.8 2.7 36.1 27.3

Impact of after-tax gain on sale of Kitchen Basics (38.0) — (38.0) — (38.0)

Adjusted net income $ 727.3 $ 169.1 $ 160.4

Earnings per share – diluted $ 2.52 $ 0.62 $ 0.52 $2.76 to $2.81

Impact of transaction and integration expenses

0.01 — — — 0.01 —

Impact of special charges 0.18 0.01 0.07 0.04

0.14 0.02 0.01 0.13 0.10 0.16

Impact of after-tax gain on sale of Kitchen Basics (0.14) — (0.14) — (0.14) —

Adjusted earnings per share – diluted $ 2.70 $ 0.63 $ 0.59 $2.80 to $2.85

(1) Special charges are more fully described in note 2 of the notes to the accompanying condensed consolidated financial statements.

Special charges for the nine months ended August 31, 2022 and the year ended November 30, 2022 include a $10.0 million non-cash intangible asset impairment charge associated with our exit of our business operations in Russia.

We exited our Kohinoor rice product line in India in the fourth quarter of fiscal 2021.

Special charges for the nine months ended August 31, 2022 and the year ended November 30, 2022 include a $13.6 million gain associated with the sale of the Kohinoor brand name.

(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 $205.5 million and $588.1 million for the three and nine months ended August 31, 2023, respectively, and $228.5 million and $575.1 million for the three and nine months ended August 31, 2022, respectively.

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.

(1) Operating income margin, impact of special charges, and adjusted operating income margin are calculated as operating income, impact of special charges, and adjusted operating income as a percentage of net sales for each period presented.

(2) Income tax rate is calculated as income tax expense as a percentage of income from consolidated operations before income taxes.

Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding special charges of $198.5 million and $187.3 million for the three months ended February 29, 2024, and February 28, 2023 respectively.

Adjusted income tax rate is calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding special charges of $859.9 million for the year ended November 30, 2023.

Because we are a multi-national company, we are subject to variability of our reported U.S.

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dollars at the average exchange rates in effect during the corresponding period of the comparative year, rather than at the actual average exchange rates in effect during the current fiscal year.

As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the comparative year.

As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the

change in the average foreign currency exchange rate between the current fiscal period and the corresponding period of the comparative year.

Rates of constant currency growth (decline) follow:

Three months ended August 31, 2023

Percentage Change

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

Consumer segment:

Americas 1.4 % (0.3) % 1.7 %

EMEA 14.9 % 4.5 % 10.4 %

APAC (15.8) % (5.3) % (10.5) %

Total Consumer segment 1.0 % (0.3) % 1.3 %

Flavor Solutions segment:

Americas 11.3 % 1.2 % 10.1 %

EMEA 16.7 % 1.6 % 15.1 %

APAC 7.4 % (5.6) % 13.0 %

Total Flavor Solutions segment 12.0 % 0.6 % 11.4 %

Total net sales 5.6 % 0.1 % 5.5 %

Adjusted operating income:

Consumer segment (5.7) % (0.5) % (5.2) %

Flavor Solutions segment 41.7 % 0.9 % 40.8 %

Total adjusted operating income 5.2 % (0.2) % 5.4 %

Nine months ended August 31, 2023

Three months ended February 29, 2024

Percentage Change

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dollars using the same 2024 budgeted exchange rates, rather than at the average actual exchange rates in effect during fiscal year 2023.

To estimate the percentage change in adjusted earnings per share on a constant currency basis, a similar calculation is performed to arrive at adjusted net income divided by historical shares outstanding for fiscal year 2022 or projected shares outstanding for fiscal year 2023, as appropriate.

Projections for the Year Ending November 30, 2024

Percentage change in net sales (2)% to 0%

Impact of unfavorable foreign currency exchange 1 %

Percentage change in net sales in constant currency (1)% to 1%

Percentage change in adjusted operating income 3% to 5%

Impact of unfavorable foreign currency exchange 1 %

Percentage change in adjusted operating income in constant currency 4% to 6%

LIQUIDITY AND FINANCIAL CONDITION

Nine months ended

August 31, 2023 August 31, 2022

Three months ended

February 29, 2024 February 28, 2023

Net cash provided by operating activities $ 138.4 $ 103.4

Net cash used in investing activities (61.8) (61.5)

Net cash used in provided by financing activities (701.2) (173.7)

Net cash used in financing activities (67.7) (44.7)

The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives.

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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Due to the cyclical nature of a portion of our business, our cash flow from operations has historically been the strongest during the fourth quarter of our fiscal year.

Due to the timing of the interest payments on our debt, interest payments are higher in the first and third quarter of our fiscal year.

Due to the timing of the interest payments on our long-term debt, interest payments are higher in the first and third quarter of our fiscal year.

We believe that our sources of liquidity, which include existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, and access to capital markets, will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends for at least the next twelve months.

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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 $660.1 million for the nine months ended August 31, 2023, increased $410.0 million from the same period of 2022.

This increase was primarily driven by an improvement in cash provided by working capital, which was driven by 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.

This was partially offset by an increased use of cash associated with accounts payable which partially resulted from our lower level of inventory.

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).

Under the SCF, qualifying suppliers may elect to sell their receivables from us to an SCF Bank, enabling participating suppliers to negotiate their receivables sales arrangements directly with the respective SCF Bank.

We are not party to those agreements and have no economic interest in a supplier’s decision to sell a receivable.

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 August 31, 2023 and November 30, 2022, the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $316.7 million and $347.0 million, respectively.

Investing Cash Flow — Cash used in investing activities of $184.8 million for the nine months ended August 31, 2023 increased by $129.3 million as compared to $55.5 million for the corresponding period in 2022.

Operating Cash Flow — Net cash provided by operating activities of $138.4 million for the three months ended February 29, 2024, increased $35.0 million from the same period of 2023.

This increase was primarily driven by an increase in net income, as well as the improvement in cash provided by accounts payable.

This was partially offset by the higher amount of certain employee benefits accrued as of the prior year-end and paid in the subsequent fiscal year.

Investing Cash Flow — Cash used in investing activities of $61.8 million for the three months ended February 29, 2024 increased by $0.3 million as compared to $61.5 million for the corresponding period in 2023.

Capital expenditures increased from the 2023 level of $61.5 million to $62.0 million.

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

Investing cash flow for the nine months ended August 31, 2022 includes $95.2 million net cash proceeds received from the sale of our Kitchen Basics business and $13.6 million net cash proceeds received on the sale of the Kohinoor brand name.

Financing Cash Flow — Financing activities used cash of $701.2 million for the first nine months of 2023 increased $527.5 million as compared to $173.7 million for the corresponding period in 2022.

We expect 2024 capital expenditures to approximate $290 million.

Financing Cash Flow — Financing activities used cash of $67.7 million for the first three months of 2024 and increased $23.0 million as compared to $44.7 million for the corresponding period in 2023.

The increase 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:

Nine months ended

August 31, 2023 August 31, 2022

Net (decrease) increase in short-term borrowings $ (850.0) $ 898.1

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

Three months ended

February 29, 2024 February 28, 2023

Net increase in short-term borrowings $ 57.3 $ 67.9

Repayments of long-term debt (14.1) (3.6)

Net cash (used in) provided by borrowing activities $ (367.4) $ 129.4

During the nine months ended August 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 nine months ended August 31, 2023 and 2022 (in millions):

Number of shares of common stock repurchased 0.32 0.29

Dollar amount $ 26.7 $ 26.1

As of August 31, 2023, $510.5 million remained of the $600 million share repurchase authorization approved by the Board of Directors in November 2019.

Net cash provided by borrowing activities $ 43.2 $ 64.3

The following table outlines the activity in our share repurchase program for the three months ended February 29, 2024 and February 28, 2023:

Number of shares of common stock repurchased (in thousands) 4 44

Dollar amount (in millions) $ 0.3 $ 3.5

As of February 29, 2024, $501 million remained of the $600 million share repurchase program that was authorized 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 nine months ended August 31, 2023, we received proceeds of $15.9 million from exercised stock options as compared to $39.9 million received in the corresponding 2022 period.

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

We increased dividends paid to $313.8 million, or a per share quarterly dividend of $0.39, in the first nine months of 2023 from $297.5 million, or a per share quarterly dividend of $0.37, of dividends paid in the same period last year.

During the three months ended February 29, 2024, we received proceeds of $4.4 million from exercised stock options as compared to $5.2 million received in the corresponding 2023 period.

We repurchased $4.9 million and $6.1 million of common stock during the three months ended February 29, 2024 and February 28, 2023, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

We increased dividends paid to $112.7 million, or a per share quarterly dividend of $0.42, in the first three months of 2024 from $104.6 million, or a per share quarterly dividend of $0.39, of dividends paid in the same period last year.

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

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

At August 31, 2023 and 2022, we temporarily used $449.5 million and $157.3 million, respectively, of cash from our non-U.S.

At February 29, 2024 and February 28, 2023, we temporarily used $539.3 million and $150.1 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 August 31, 2023 and 2022 were $1,163.1 million and $968.1 million, respectively.

Total average debt outstanding for the three months ended August 31, 2023 and 2022 was $5,245.9 million and $5,439.8 million, respectively.

The average short-term borrowings outstanding for the three months ended February 29, 2024 and February 28, 2023 were $828.9 million and $1,460.0 million, respectively.

Total average debt outstanding for the three months ended February 29, 2024 and February 28, 2023 was $4,883.9 million and $5,265.0 million, respectively.

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

At August 31, 2023, the exchange rates for the British pound sterling, Euro, Canadian dollar, Mexican peso, and Polish zloty were higher than the U.S.

At February 29, 2024, the exchange rate for the Mexican peso was higher than the U.S.

dollar at November 30, 2023.

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

At February 29, 2024, the exchange rate for the Euro, British pound sterling, Canadian dollar, Chinese renminbi, Polish zloty, South African rand, and Australian dollar were lower than the U.S.

dollar at November 30, 2023.

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

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

Interest is payable semi-annually 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.

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 June 2023 and will expire in June 2024.

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Our primary obligations include principal and interest payments on our outstanding short-term borrowings and long-term debt.

In the next year, our most significant debt service obligations are the maturity of our $250.0 million, 3.50% notes which was repaid September 1, 2023 with proceeds from the issuance of commercial paper, and the maturity of our $700.0 million, 3.15% notes due in August 2024.

In the next year, our most significant debt service obligation is the maturity of our $700.0 million, 3.15% notes due in August 2024.

Also in June 2024, 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.

These obligations impact our liquidity and capital resource needs.

To meet those cash requirements, we intend to use our existing cash, cash equivalents and internally generated funds, to borrow under our existing credit facilities or under other short-term borrowing facilities and depending on market conditions and upon the significance of the cost of a particular debt maturity to our then-available sources of funds, to obtain additional short- and long-term financing.

To meet those cash requirements, we intend to use our existing cash, cash equivalents and internally generated funds, to borrow under our existing credit facilities or under other short-

term borrowing facilities and depending on market conditions and upon the significance of the cost of a particular debt maturity to our then-available sources of funds, to obtain additional short- and long-term financing.

We believe that cash provided from these sources will be adequate to meet our future cash requirements.

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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 GAAP and are consistently applied.

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

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.

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These statements may relate to:

the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees;

disruptions or inefficiencies in the supply chain, including any impact of COVID-19;

the expected results of operations of businesses acquired by the Company;

the expected impact of the inflationary cost environment, including commodity, packaging materials and transportation costs on our business;

general economic and industry conditions, including consumer spending rates, interest rates, and availability of capital;

expectations regarding sales growth potential in various geographies and markets, including the impact from brand marketing support, product innovation, and customer, channel, category, heat platform and e-commerce expansion;

expected trends in net sales and earnings performance and other financial measures;

the expected impact of pricing actions on the Company's results of operations and gross margins;

the impact of price elasticity on our sales volume and mix;

the expected impact of factors affecting our supply chain, including transportation capacity, labor shortages, and absenteeism;

the expected impact of productivity improvements, including those associated with our Comprehensive Continuous Improvement (CCI) program, streamlining actions, including our GOE program and global enablement initiative;

the impact of the ongoing conflict between Russia and Ukraine, including the potential for broader economic disruption;

the expected impact of the inflationary cost environment on our business;

the expected impact of factors affecting our supply chain, including the availability and prices of commodities and other supply chain resources including raw materials, packaging, labor energy, and transportation;

the expected impact of productivity improvements, and cost savings, including those associated with our CCI and GOE programs and Global Business Services operating model initiative;

the ability to identify, attract, hire, retain and develop qualified personnel and develop the next generation of leaders;

the impact of the ongoing conflicts between Russia and Ukraine, Israel and Hamas, and in the Red Sea, including the potential for broader economic disruption;

expected working capital improvements;

expectations regarding growth potential in various geographies and markets, including the impact from customer, channel, category, and e-commerce expansion;

expected trends in net sales and earnings performance and other financial measures;

the expected timing and costs of implementing our business transformation initiative, which includes the implementation of a global enterprise resource planning (ERP) system;

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the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing;

the anticipated sufficiency of future cash flows to enable the payments of interest and repayment of short- and long-term debt, working capital needs, planned

capital expenditures, and quarterly dividends;

our ability to obtain additional short- and long-term financing or issue additional debt securities;

the anticipated sufficiency of future cash flows to enable the payments of interest and repayment of short- and long-term debt, working capital needs, planned capital expenditures, quarterly dividends and our ability to obtain additional short- and long-term financing or issue additional debt securities;

and expectations regarding purchasing shares of McCormick's common stock under the existing repurchase authorization.

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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;

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the ability to identify, interpret and react to changes in consumer preference and demand;

business interruptions due to natural disasters, unexpected events or public health crises, including COVID-19;

business interruptions due to natural disasters, unexpected events or public health crises;

issues affecting the company's supply chain and procurement of raw materials, including fluctuations in the cost and availability of raw and packaging materials;

labor shortage, turnover and labor cost increases;

the impact of the ongoing conflict between Russia and Ukraine, including the potential for broader economic disruption;

the impact of the ongoing conflicts between Russia and

Ukraine, Israel and Hamas, and in the Red Sea, including the potential for broader economic disruption;

government regulation, and changes in legal and regulatory requirements and enforcement practices;

the lack of successful acquisition and integration of new businesses;

global economic and financial conditions generally, including stability of financial institutions, availability of financing, interest and inflation rates, and the imposition of tariffs, quotas, trade barriers and other similar restrictions;

global economic and financial conditions generally, availability of financing, interest and inflation rates, and the imposition of tariffs, quotas, trade barriers and other similar restrictions;

foreign currency fluctuations;

the effects of increased level of debt service following the Cholula and FONA acquisitions as well as the effects that such increased debt service may have on the company's ability to borrow or the cost of any such additional borrowing, our credit rating, and our ability to react to certain economic and industry conditions;

risks associated with the phase-out of LIBOR;

the effects of our amount of outstanding indebtedness and related level of debt service as well as the effects that such debt service may have on the company's ability to borrow or the cost of any such additional borrowing, our credit rating, and our ability to react to certain economic and industry conditions;

impairments of indefinite-lived intangible assets;

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risks associated with the company's information technology systems, including the threat of data breaches and cyber-attacks;

the company's ability to successfully implement our business transformation initiative;

the company's inability to successfully implement our business transformation initiative;

fundamental changes in tax laws;

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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