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Item 2. Management’s Discussion and Analysis

2024-10-01 compared with 2024-06-27 · 182 added, 195 removed, 336 unchanged (53% of the section changed)

12 unchanged sentences

Executive Summary

In the second quarter of 2024, our sales declined by 1.0% from the second quarter 2023 level, including impact from the following factors:

• Volume and product mix unfavorably impacted our net sales growth by 0.7%, exclusive of divestitures.

The flavor solutions segment experienced unfavorable volume and product mix of 1.8% and the consumer segment experienced favorable volume and product mix of 0.3%.

In the third quarter of 2024, our sales declined by 0.3% from the third quarter 2023 level, including impact from the following factors:

• Volume and product mix favorably impacted our net sales by 0.6%, exclusive of divestitures.

The consumer segment experienced favorable volume and product mix of 1.0% and the flavor solutions segment experienced flat volume and product mix.

• Pricing impacts unfavorably impacted our net sales decline by 0.2%.

The unfavorable impact of pricing actions in our consumer segment more than offset the favorable impact of pricing actions in our flavor solutions segment.

• Divestitures negatively impacted our net sales by 0.3%.

• Net sales in our flavor solutions segment were positively impacted by fluctuations in currency rates which were offset by the negative impact of fluctuations in currency rates for our consumer segment.

Operating income was $234.1 million in the second quarter of 2024 and $221.8 million in the comparable 2023 period, an increase of 5.5%.

We recorded $1.8 million and $13.2 million of special charges in the second quarter of 2024 and 2023, respectively, related to organization and streamlining actions.

In the second quarter of 2024, the effects of a 60 basis points improvement in our gross profit margin, primarily associated with the effects of cost savings from our GOE and CCI programs, were partially offset by increased conversion costs.

Also, in the second quarter of 2024, selling, general and administrative expenses as a percentage of sales increased 40 basis points, which was driven by the higher level of advertising and promotion expenses.

Excluding special charges, adjusted operating income was $235.9 million in the second quarter of 2024, an increase of 0.3%, compared to $235.0 million in the year-ago period.

• Net sales were negatively impacted by fluctuations in currency rates by 0.4%, decreasing sales growth by 0.2% in our consumers segment and 0.5% in our flavor solutions segment.

Operating income was $286.5 million in the third quarter of 2024 and $245.0 million in the comparable 2023 period, an increase of 16.9%.

We recorded $1.9 million and $6.1 million of special charges in the third quarter of 2024 and 2023, respectively, related to organization and streamlining actions.

In the third quarter of 2024, our gross profit margin improved by 170 basis points, primarily driven by favorable product and customer mix and cost savings led by our comprehensive continuous improvement (CCI) program.

Also, in the third quarter of 2024, selling, general and administrative expenses as a percentage of sales decreased 60 basis points, which was driven by lower incentive and stock-based compensation expenses as well as CCI-led cost savings.

Excluding special charges, adjusted operating income was $288.4 million in the third quarter of 2024, an increase of 14.9%, compared to $251.1 million in the year-ago period.

In constant currency, adjusted operating income increased 15.6%.

Diluted earnings per share was $0.68 and $0.56 in the second quarter of 2024 and 2023, respectively.

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

Special charges lowered earnings per share by $0.01 and $0.04 in the second quarter of 2024 and 2023, respectively.

Excluding the effects of special charges, adjusted diluted earnings per share was $0.69 in the second quarter of 2024 and $0.60 in the second quarter of 2023, or an increase of 15.0%.

A detailed review of our second quarter 2024 performance compared to the second quarter of fiscal 2023 and our performance for the six months ended May 31, 2024 compared to the prior year period appears in the section titled “Results of Operations – Company” and “Results of Operations – Segments”.

Diluted earnings per share was $0.83 and $0.63 in the third quarter of 2024 and 2023, respectively.

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

Special charges lowered earnings per share by $0.02 in the third quarter of 2023.

Excluding the effects of special charges, adjusted diluted earnings per share was $0.83 in the third quarter of 2024 and $0.65 in the third quarter of 2023, or an increase of 27.7%.

A detailed review of our third quarter 2024 performance compared to the third quarter of fiscal 2023 and our performance for the nine months ended August 31, 2024 compared to the prior year period 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

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, price elasticity, or the negative consumer response to the pricing actions we take, 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.

In 2024, we expect net sales to range from a decline of 1% to an increase of 1% on both a reported and a constant currency basis, with a minimal impact from currency.

We anticipate that the 2024 sales change will include a favorable impact from prior year pricing actions, which will be partially reduced by current year pricing actions taken in response to price gap management as well as promotional activities.

2 unchanged sentences

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 GOE 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.

In 2024, we expect an increase in operating income of 9% to 11%, which includes a minimal 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.

2 unchanged sentences

in 2023, special charges were $61.2 million.

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.

Excluding special charges, we expect 2024’s adjusted operating income to increase by 4% to 6% on a reported and a constant currency basis, with a minimal impact from currency.

We estimate that our 2024 effective tax rate, including the net favorable impact of anticipated discrete tax items, will be 21% 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 2024, or comparable to an adjusted effective tax rate of 22.0% in 2023.

Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 21% in 2024, as compared 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.

4 unchanged sentences

RESULTS OF OPERATIONS – COMPANY

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Net sales $ 1,679.8 $ 1,684.7 $ 4,925.7 $ 4,909.4

7 unchanged sentences

Gross profit margin 38.7 % 37.0 % 37.9 % 36.7 %

Sales for the second quarter of 2024 decreased by 1.0% from the prior year level and decreased by 1.0% 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).

Unfavorable volume and product mix decreased sales by 0.7%.

Unfavorable volume and product mix in our flavor solutions segment, including the effects of the lower quick service restaurant and packaged food customer demand, exceeded the favorable volume and product mix in our consumer segment.

Sales for the third quarter of 2024 decreased by 0.3% from the prior year level and increased by 0.1% 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 decreased sales by 0.2% as compared to the prior period.

Pricing actions taken in response to price gap management as well as promotional activities in our consumer segment were mitigated by the favorable impact of pricing actions taken in the prior year.

F avorable volume and product mix increased sales by 0.6% for the quarter.

Favorable volume and product mix in our consumer segment was mitigated by flat volume and product mix in our flavor solutions segment.

Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period.

Foreign currency rates had a neutral impact on sales for the quarter.

Sales for the six months ended May 31, 2024 increased by 0.7% from the prior year level and increased by 0.3% on a constant currency basis.

Foreign currency rates decreased sales by 0.4% for the quarter and is excluded from our measure of sales growth of 0.1% on a constant currency basis.

Sales for the nine months ended August 31, 2024 increased by 0.3% from the prior year level and increased by 0.1% on a constant currency basis.

Pricing actions increased sales by 0.8% as compared to the prior year period principally due to pricing actions implemented in the prior year.

2 unchanged sentences

Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period.

Sales were also impacted by favorable foreign currency rates that increased net sales by 0.4% in the six months ended May 31, 2024 compared to the year-ago period and is excluded from our measure of sales growth of 0.3% on a constant currency basis.

Gross profit for the second quarter of 2024 increased by $4.1 million, or 0.7%, from the comparable period in 2023.

Our gross profit margin for the three months ended May 31, 2024 was 37.7%, an increase of 60 basis points from the comparable period in 2023.

The increase in gross profit margin in the quarter ended May 31, 2024 was driven by our cost savings led by our CCI and GOE programs, which were partially offset by increased conversion costs as compared to the 2023 period.

Gross profit for the six months ended May 31, 2024 increased by $40.5 million, or 3.4%, from the comparable period in 2023.

Our gross profit margin for the six months ended May 31, 2024 was 37.6%, an increase of 110 basis points from the comparable period in 2023.

The increase in gross profit margin in the six months ended May 31, 2024 was driven by the favorable impact of our pricing actions, favorable product and customer mix, and cost savings led by our CCI and GOE programs.

Sales were also impacted by favorable foreign currency rates that increased net sales by 0.2% in the nine months ended August 31, 2024 compared to the prior period and is excluded from our measure of sales growth of 0.1% on a constant currency basis.

Gross profit for the third quarter of 2024 increased by $27.1 million, or 4.4%, from the comparable period in 2023.

Our gross profit margin for the three months ended August 31, 2024 was 38.7%, an increase of 170 basis points from the comparable

period in 2023.

The increase in gross profit margin in the quarter ended August 31, 2024 was driven by favorable product and customer mix and cost savings led by our CCI program as compared to the 2023 period.

Gross profit for the nine months ended August 31, 2024 increased by $67.6 million, or 3.8%, from the comparable period in 2023.

Our gross profit margin for the nine months ended August 31, 2024 was 37.9%, an increase of 120 basis points from the comparable period in 2023.

The increase in gross profit margin in the nine months ended August 31, 2024 was driven by the favorable impact of our pricing actions, favorable product and customer mix, less scrapped inventory, and cost savings led by our CCI and GOE programs.

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

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Selling, general & administrative expense (SG&A) $ 361.5 $ 371.7 $ 1,106.8 $ 1,088.3

Percent of net sales 21.5 % 22.1 % 22.5 % 22.2 %

SG&A increased by $3.2 million in the second quarter of 2024 as compared to the 2023 level, driven primarily by advertising and promotional spend and increased selling and marketing costs.

These costs were partially offset by CCI-led cost savings as well as a lower stock-based compensation expense, all as compared to the 2023 period.

SG&A as a percentage of net sales increased by 40 basis points from the prior year levels due to the factors described above.

SG&A increased by $28.7 million in the six months ended May 31, 2024 as compared to the 2023 period, driven primarily by advertising and promotional spend, increased selling and marketing costs and a higher investment in research and development.

These costs were partially offset by CCI-led and GOE cost savings as well as lower stock-based compensation expense, all as

compared to the 2023 period.

SG&A decreased by $10.2 million in the third quarter of 2024 as compared to the 2023 level, driven primarily by lower performance-based employee and stock-based compensation expense as well as CCI-led cost savings.

SG&A as a percentage of net sales decreased b y 60 basis points from the prior year levels due to the factors described above.

SG&A increased by $18.5 million in the nine months ended August 31, 2024 as compared to the 2023 period, driven primarily by advertising and promotional spend, increased selling and marketing costs and a higher investment in research and development.

These costs were partially offset by lower performance-based employee and stock-based compensation expense as well as CCI-led and GOE cost savings, all as compared to the 2023 period.

SG&A as a percentage of net sales increased by 30 basis points from the prior year levels due primarily to a 40 basis point increase in advertising and promotional expenses as compared to the prior year period.

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 Aug 31, 2024 Aug 31, 2023

Total special charges $ 1.9 $ 6.1 $ 7.9 $ 47.1

During the three months ended May 31, 2024, we recorded $1.8 million of special charges.

Those special charges principally consisted of $1.8 million associated with our GOE program.

During the six months ended May 31, 2024, we recorded $6.0 million of special charges.

Those special charges principally consisted of $4.6 million associated with the GOE program and $1.4 million associated with the transition of a manufacturing facility in EMEA.

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

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

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

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

During the three months ended August 31, 2024, we recorded $1.9 million of special charges, consisting principally of $0.7 million associated with our Global Operating Effectiveness (GOE) program, as more fully described below, and $1.2 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA), as more fully described below.

During the nine months ended August 31, 2024, we recorded $7.9 million of special charges, consisting principally of $5.3 million associated with our GOE program, as more fully described below, and $2.6 million associated with the transition of a manufacturing facility in EMEA, as more fully described below.

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 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.

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 Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Interest expense $ 53.5 $ 52.7 $ 156.7 $ 155.5

Other income, net 13.2 7.1 36.7 30.7

Interest expense increased slightly in the three and six months ended May 31, 2024, as compared to the prior year periods, driven by the effects of a reduction in average borrowing levels which were more than offset by higher short-term interest rates.

Other income, net for the three and six months ended May 31, 2024 remained consistent, as compared to the prior year periods.

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Interest expense increased $0.8 million and $1.2 million in the three and nine months ended August 31, 2024, respectively, as compared to the prior year periods, driven by the effects of a reduction in average borrowing levels which were more than offset by higher average interest rates on borrowings.

Other income, net for the three months ended August 31, 2024 increased as compared to the prior year period primarily due to an increase in interest income and a lower level of foreign currency exchanges losses.

Other income, net for the nine months ended August 31, 2024 increased as compared to the prior period primarily due to an increase in interest income.

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Income from consolidated operations before income taxes $ 246.2 $ 199.4 $ 634.1 $ 541.0

4 unchanged sentences

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 intra-entity asset transfers (other than inventory).

Income tax expense for the three months ended May 31, 2024 included $20.2 million of net discrete tax benefits consisting principally of the following:

(i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $1.3 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, (iii) $0.3 million of excess tax benefits associated with stock-based compensation, and (iv) $0.8 million of tax expense resulting from a state tax matter.

Income tax expense for the six months ended May 31, 2024 included $18.6 million of net discrete tax benefits consisting principally of the following:

jurisdiction, (iii) $1.9 million of tax expense resulting from state tax matters, and (iv) $0.2 million of tax expense associated with stock-based compensation.

Income tax expense for the three months ended May 31, 2023 included $3.0 million of net discrete tax benefits consisting principally of the following:

(i) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

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

Income tax expense for the six months ended May 31, 2023 included $6.8 million of net discrete tax 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) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

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

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Income tax expense for the three months ended August 31, 2024 included $16.3 million of net discrete tax benefits consisting principally of the following:

(i) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (ii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iii) $8.3 million of tax benefits resulting from state tax matters, and related deferred taxes, (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) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.

Income tax expense for the nine months ended August 31, 2024 included $34.9 million of net discrete tax benefits consisting principally of the following:

(i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $6.8 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (iii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iv) $6.4 million of tax benefits resulting from state tax matters, and related deferred taxes, (v) $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 (vi) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.

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 prior year 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 prior 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.

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Income from unconsolidated operations $ 17.9 $ 13.4 $ 56.0 $ 37.7

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $6.5 million and $13.8 million for the three and six months ended May 31, 2024, respectively, each as compared to the year ago period.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $4.5 million and $18.3 million for the three and nine months ended August 31, 2024, respectively, each 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 May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

2023 Earnings per share – diluted $ 0.63 $ 1.71

1 unchanged sentence

Decrease in special charges, net of taxes 0.02 0.11

Increase in other income 0.01 0.02

Increase in income from unconsolidated operations 0.02 0.07

6 unchanged sentences

CONSUMER SEGMENT

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Net sales $ 937.4 $ 937.1 $ 2,763.4 $ 2,758.7

Percent increase (decrease) (0.8) % 5.3 % 0.2 % 1.6 %

Percent increase — % 1.0 % 0.2 % 1.4 %

Segment operating income $ 186.8 $ 173.3 $ 512.4 $ 500.3

Segment operating income margin 19.9 % 18.5 % 18.5 % 18.1 %

In the second quarter of 2024, sales of our consumer segment decreased by 0.8% as compared to the second quarter of 2023 and decreased by 0.5% on a constant currency basis.

The 0.8% decrease was driven by the Americas and APAC regions, partially offset by higher sales in the EMEA region, all as compared to the prior year quarter.

In the third quarter of 2024, sales of our consumer segment were flat as compared to the third quarter of 2023 and increased by 0.2% on a constant currency basis.

Higher sales in the EMEA region were offset by decreases in the Americas and APAC regions, all as compared to the prior year quarter.

Pricing, including actions taken in response to price gap management as well as promotional activities, unfavorably impacted sales by 0.8% as compared to the prior year period.

Favorable volume and product mix increased consumer segment sales by 0.3% in the second quarter of 2024 as compared to the same period last year.

Sales in the second quarter of 2024 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 decline of 0.5% on a constant currency basis.

In the Americas region, consumer sales decreased 1.6% in the second quarter of 2024 as compared to the same quarter of 2023 and decreased by 1.6% on a constant currency basis.

Favorable volume and product mix increased consumer segment sales by 1.0% in the third quarter of 2024 as compared to the same period last year.

Sales in the third quarter of 2024 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 0.2% compared to the year-ago quarter and is excluded from our measure of sales growth of 0.2% on a constant currency basis.

In the Americas region, consumer sales decreased 0.4% in the third quarter of 2024 as compared to the same quarter of 2023 and decreased by 0.2% on a constant currency basis.

Pricing, including actions taken in response to price gap management as well as promotional activities, decreased sales by 0.9% as compared to the prior year period.

For the second quarter of 2024, unfavorable volume and product mix decreased sales by 0.3% as compared to the corresponding period in 2023.

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

Our sales decline on a constant currency basis was 1.6% for the quarter.

In the EMEA region, consumer sales increased 5.0% in the second quarter of 2024 as compared to the same quarter of 2023 and increased by 3.9% on a constant currency basis.

Favorable volume and product mix during the second quarter of 2024 increased sales by 3.7% from the prior year level, which was driven by growth in our major markets across their product categories.

Pricing actions, principally implemented in the prior year, increased sales by 0.2% as compared to the 2023 period.

During the second quarter of 2024, a favorable impact from foreign currency rates increased sales by 1.1% compared to the year-ago period and is excluded from our measure of sales growth of 3.9% on a constant currency basis.

In the APAC region, consumer sales decreased 4.8% in the second quarter of 2024 as compared to the second quarter of 2023 and decreased by 0.9% on a constant currency basis.

For the quarter ended May 31, 2024, unfavorable volume and product mix decreased sales by 1.5%, which was primarily driven by slower demand in China.

Pricing actions, principally implemented in the prior year, increased sales by 0.6% as compared to the prior year period.

During the second quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 3.9% compared to the year-ago period and is excluded from our measure of sales decline of 0.9% on a constant currency basis.

For the six months ended May 31, 2024, sales of our consumer segment increased 0.2% as compared to the six months ended May 31, 2023 and were flat on a constant currency basis.

The favorable impacts of pricing in all regions, including both actions implemented in the prior year as well as those taken in the current year in response to price gap management and promotional activities, increased sales by 1.0% during the six months ended May 31, 2024 as compared to the prior year period.

For the third quarter of 2024, favorable volume and product mix driven by growth across core product categories increased sales by 0.7% as compared to the corresponding period in 2023.

During the third quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 0.2% compared to the year-ago period and is excluded from our measure of sales decline of 0.2% on a constant currency basis.

In the EMEA region, consumer sales increased 2.9% in the third quarter of 2024 as compared to the same quarter of 2023 and increased by 2.6% on a constant currency basis.

Favorable volume and product mix during the third quarter of 2024 increased sales by 3.5% from the prior year level, which was driven by growth in our major markets across their product categories.

Pricing actions taken in response to price gap management as well as promotional activities decreased sales by 0.9% as compared to the 2023 period.

During the third quarter of 2024, a favorable impact from foreign currency rates increased sales by 0.3% compared to the year-ago period and is excluded from our measure of sales growth of 2.6% on a constant currency basis.

In the APAC region, consumer sales decreased 0.9% in the third quarter of 2024 as compared to the third quarter of 2023 and were flat on a constant currency basis.

Pricing actions, principally implemented in the prior year, favorably impacted sales by 0.6% as compared to the prior year period.

For the quarter ended August 31, 2024, unfavorable volume and product mix decreased sales by 0.6%, which was primarily driven by slower demand in China mitigated by growth in other parts of the region.

During the third quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 0.9% compared to the year-ago period and is excluded from our measure of sales on a constant currency basis.

For the nine months ended August 31, 2024, sales of our consumer segment increased 0.2% as compared to the nine months ended August 31, 2023 and increased 0.2% on a constant currency basis.

The favorable impacts of pricing in all regions, including both actions implemented in the prior year as well as those taken in the current year in response to price gap management and promotional activities, increased sales by 0.4% during the nine months ended August 31, 2024 as compared to the prior year period .

Lower volume and unfavorable product mix decreased sales by 0.2% as compared to the prior year period.

Volume and product mix includes a 0.3% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses.

A favorable impact from foreign currency rates increased sales by 0.2% compared to the prior year and is excluded from our measure of sales growth of 0.0% on a constant currency basis.

Segment operating income for our consumer segment decreased by $4.3 million, or 2.8%, in the second quarter of 2024 from the second quarter of 2023.

The decrease in segment operating income was driven by the effects of a decrease in gross profit primarily due to unfavorable pricing actions and higher conversion costs, which more than offset the favorable impacts of product mix and CCI-led and GOE cost savings, all as compared to the prior year period.

Segment operating margin for our consumer segment decreased in the second quarter of 2024 by 30 basis points from 2023 to 16.5% and was driven primarily by the decrease in gross margin as compared to the prior year period.

On a constant currency basis, segment operating income for our consumer segment decreased by 2.4% in the second quarter of 2024 in comparison to the same period in 2023.

Segment operating income for our consumer segment decreased by $1.4 million, or 0.4%, for the six months ended May 31, 2024 as compared to the same period in 2023.

The decrease in segment operating income was driven by the effects of an

increase in gross profit that was more than offset by an increase in SG&A expenses, primarily driven by higher advertising and promotion expenses, all as compared to the prior year period.

The increase in gross profit was primarily due to favorable pricing actions and CCI-led and GOE costs savings, which were partially offset by increased commodity costs, all as compared to the prior year.

Segment operating margin for our consumer segment for the six months ended May 31, 2024 was 17.8%, a reduction of 20 basis points from the 2023 level 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 decreased by 0.4% in the six months ended May 31, 2024 in comparison to the same period in 2023.

Foreign currency rates did not have a significant impact on sales for the nine months ended August 31, 2024.

Segment operating income for our consumer segment increased by $13.5 million, or 7.8%, in the third quarter of 2024 from the third quarter of 2023.

The increase in segment operating income was driven by the effects of a decrease in SG&A expenses, primarily driven by lower distribution, incentive, and stock compensation expense as well as CCI-led cost savings, which more than offset a decrease in gross profit.

The decrease in gross profit is primarily due to unfavorable pricing, which more than offset the favorable impacts of product mix, and CCI-led cost savings, all as compared to the prior year period.

Segment operating margin for our consumer segment increased in the third quarter of 2024 by 140 basis points from 2023 to 19.9% and was driven primarily by a decrease in SG&A as a percentage of sales, as compared to the prior year period.

On a constant currency basis, segment operating income for our consumer segment increased by 8.1% in the third quarter of 2024 in comparison to the same period in 2023.

Segment operating income for our consumer segment increased by $12.1 million, or 2.4%, for the nine months ended August 31, 2024 as compared to the same period in 2023.

The increase in segment operating income was driven by the effects of a decrease in SG&A expenses, primarily driven by lower distribution, incentive, and stock compensation expense, as well as CCI-led savings, offset by an increase in advertising and promotional expense.

Gross profit was relatively flat for our consumer segment as compared to the prior year.

Favorable impacts of pricing actions and product mix combined with the lower level of scraped inventory and CCI-led and GOE savings were offset by increases in commodity prices and conversion costs as compared to the prior year period.

Segment operating margin for our consumer segment for the nine months ended August 31, 2024 was 18.5%, an increase of 40 basis points from the 2023 level due to a decrease in SG&A as a percentage of sales as compared to the prior year period.

On a constant currency basis, segment operating income for our consumer segment increased by 2.5% in the nine months ended August 31, 2024 in comparison to the same period in 2023.

FLAVOR SOLUTIONS SEGMENT

Three months ended Six months ended

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

Three months ended Nine months ended

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Net sales $ 742.4 $ 747.6 $ 2,162.3 $ 2,150.7

Percent increase (1.1) % 11.4 % 1.2 % 10.7 %

Percent increase (decrease) (0.7) % 12.0 % 0.5 % 11.2 %

Segment operating income $ 101.6 $ 77.8 $ 249.6 $ 212.6

Segment operating income margin 13.7 % 10.4 % 11.5 % 9.9 %

In the second quarter of 2024, sales of our flavor solutions segment decreased by 1.1% as compared to the second quarter of 2023 and decreased by 1.4% on a constant currency basis.

Favorable pricing in the Americas and APAC regions more than offset unfavorable pricing in the EMEA region and increased sales by 1.0% in the second quarter of 2024 as compared to the prior year period principally due to pricing actions implemented in the prior year.

Unfavorable volume and product mix decreased segment sales by 1.8% as compared to the prior period as growth in the APAC region was more than offset by lower volume and product mix in the Americas and EMEA regions.

In the third quarter of 2024, sales of our flavor solutions segment decreased by 0.7% as compared to the third quarter of 2023 and decreased by 0.2% on a constant currency basis.

Favorable pricing in the Americas and APAC regions more than offset unfavorable pricing in the EMEA region and increased sales by 0.4% in the third 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 in the Americas region offset unfavorable volume and product mix in the EMEA and APAC regions, resulting in a neutral impact to sales for the quarter.

Volume and product mix includes a 0.2% 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 0.3% compared to the year-ago quarter and is excluded from our measure of sales decline of 1.4% on a constant currency basis.

In the Americas region, flavor solutions sales decreased by 0.2% in the second quarter of 2024 as compared to the second quarter of 2023 and decreased by 0.9% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 1.5% during the quarter ended May 31, 2024, as compared to the prior year period.

Unfavorable volume and product mix decreased flavor solutions sales in the Americas by 2.4% during the second quarter of 2024, as compared to the prior year period primarily as a result of softness in quick service restaurants and packaged food companies, including the timing of customer promotional and other activities.

A favorable impact from foreign currency rates increased sales by 0.7% compared to the second quarter of 2023 and is excluded from our measure of sales decline of 0.9% on a constant currency basis.

In the EMEA region, flavor solutions sales decreased by 7.3% in the second quarter of 2024 as compared to the second quarter of 2023 and declined by 8.2% on a constant currency basis.

Pricing actions unfavorably impacted sales by 1.0% in the second quarter of 2024 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 4.1% as compared to the corresponding period in 2023 including the effects of lower consumer spending at quick service restaurants and packaged food and beverage companies, including the timing of promotional activities, and a 0.9% impact of our decision to discontinue a low margin business.

The unfavorable impact of foreign currency rates decreased flavor solutions segment sales by 0.5% compared to the year-ago quarter and is excluded from our measure of sales decline of 0.2% on a constant currency basis.

In the Americas region, flavor solutions sales increased by 1.8% in the third quarter of 2024 as compared to the third quarter of 2023 and increased by 2.6% on a constant currency basis.

Net pricing favorably impacted sales by 1.0% during the quarter ended August 31, 2024, as compared to the prior year period principally due to pricing actions implemented in the prior year.

Favorable volume and product mix increased flavor solutions sales in the Americas by 1.6% during the third quarter of 2024, as compared to the prior year period including the effects of growth in foodservice sales.

An unfavorable impact from foreign currency rates decreased sales by 0.8% compared to the third quarter of 2023 and is excluded from our measure of sales growth of 2.6% on a constant currency basis.

In the EMEA region, flavor solutions sales decreased by 8.4% in the third quarter of 2024 as compared to the third quarter of 2023 and declined by 9.0% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, unfavorably impacted sales by 1.4% in the third quarter of 2024 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales in the EMEA region by 4.5% as compared to the corresponding period in 2023 including the effects of lower sales at quick service restaurants, and a 1.1% impact of our decision to discontinue a low margin business.

The divestiture of our Giotti canning business unfavorably impacted sales by 3.1% as compared to the prior year period.

A favorable impact from foreign currency rates increased sales by 0.9% compared to the second quarter of 2023 and is excluded from our measure of sales decline of 8.2% on a constant currency basis.

In the APAC region, flavor solutions sales increased 5.9% in the second quarter of 2024 as compared to the second quarter of 2023 and increased by 10.3% on a constant currency basis.

A favorable impact from foreign currency rates increased sales by 0.6% compared to the third quarter of 2023 and is excluded from our measure of sales decline of 9.0% on a constant currency basis.

In the APAC region, flavor solutions sales decreased 1.3% in the third quarter of 2024 as compared to the third quarter of 2023 and decreased by 0.1% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 0.3% as compared to the prior year period.

Favorable volume and product mix increased segment sales by 9.2% in the second quarter of 2024 which was principally driven by new products as well as the timing of customer promotions.

An unfavorable impact from foreign currency rates decreased sales by 4.4% compared to the second quarter of 2023 and is excluded from our measure of sales growth of 10.3% on a constant currency basis.

For the six months ended May 31, 2024, our flavor solutions sales increased 1.2% as compared to the six months ended May 31, 2023 and increased by 0.5% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior

year, across all regions increased sales by 1.7% during the six months ended May 31, 2024 and were partially offset by 0.6% of unfavorable volume and product mix, both as compared to the prior year period.

Unfavorable volume and product mix decreased segment sales by 0.4% in the third quarter of 2024.

Growth in quick service restaurant sales in China were more than offset by softness in quick service restaurant sales in other parts of the region.

An unfavorable impact from foreign currency rates decreased sales by 1.2% compared to the third quarter of 2023 and is excluded from our measure of sales decline of 0.1% on a constant currency basis.

For the nine months ended August 31, 2024, our flavor solutions sales increased 0.5% as compared to the nine months ended August 31, 2023 and increased by 0.2% on a constant currency basis.

Pricing actions, principally due to those implemented in the prior year, across all regions increased sales by 1.2% during the nine months ended August 31, 2024 and were partially offset by 0.4% of unfavorable volume and product mix, both as compared to the prior year period.

Volume and product mix includes a 0.3% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses.

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The favorable impact of foreign currency rates increased flavor solutions segment sales by 0.3% compared to the year-ago period and is excluded from our measure of sales growth of 0.2% on a constant currency basis.

Segment operating income for our flavor solutions segment increased by $5.2 million, or 6.3%, in the second quarter of 2024 as compared to the second quarter of 2023.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the favorable impact of pricing as well as CCI-led and GOE cost savings which more than offset the lower level of sales and the higher level of SG&A expenses.

Segment operating margin for our flavor solutions segment increased by 80 basis points from the prior year level to 11.7% in the second quarter of 2024.

That increase was 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 5.9% in the second quarter of 2024 as compared to the same period in 2023.

Segment operating income for our flavor solutions segment increased by $13.2 million, or 9.8%, in the six months ended May 31, 2024 as compared to the same period in 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, the favorable impacts of pricing actions, product 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 80 basis points from the prior year level to 10.4% in the six months ended May 31, 2024.

Segment operating income for our flavor solutions segment increased by $23.8 million, or 30.6%, in the third quarter of 2024 as compared to the third quarter of 2023.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to product mix and pricing actions, and CCI-led cost savings.

Segment operating margin for our flavor solutions segment increased by 330 basis points from the prior year level to 13.7% in the third quarter of 2024.

increase was 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 32.0% in the third quarter of 2024 as compared to the same period in 2023.

Segment operating income for our flavor solutions segment increased by $37.0 million, or 17.4%, in the nine months ended August 31, 2024 as compared to the same period in 2023.

The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to favorable impacts of pricing actions, product mix, and CCI-led and GOE cost savings which more than offset the higher level of SG&A expenses.

Segment operating margin for our flavor solutions segment increased by 160 basis points from the prior year level to 11.5% in the nine months ended August 31, 2024.

That increase was 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 9.0% in the six months ended May 31, 2024 as compared to the same period in 2023.

On a constant currency basis, segment operating income for our flavor solutions segment increased by 17.4% in the nine months ended August 31, 2024 as compared to the same period in 2023.

MARKET RISK SENSITIVITY

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

May 31, 2024 November 30, 2023

August 31, 2024 November 30, 2023

Forward foreign currency:

Notional value $ 1,110.7 $ 1,000.4

Unrealized net gain (loss) (6.6) (13.5)

Unrealized net (loss) (14.3) (13.5)

Cross currency swaps:

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We use interest rate swaps to minimize worldwide financing costs and to achieve a desired mix of fixed and variable rate debt.

We do not enter into

contracts for trading purposes, nor are we a party to any leveraged derivative instruments, and all derivatives are designated as hedges.

We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instruments, and all derivatives are designated as hedges.

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

May 31, 2024 November 30, 2023

August 31, 2024 November 30, 2023

Notional value $ 600.0 $ 600.0

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

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

May 31, 2024 May 31, 2023 May 31, 2024 May 31, 2023

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

August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023

Operating income $ 963.0 $ 286.5 $ 245.0 $ 754.1 $ 665.8

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(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 $195.4 million and $195.3 million for the three months ended May 31, 2024, and 2023 respectively, and $393.9 million and $382.6 million for the six months ended May 31, 2024 and 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 $248.1 million and $205.5 million for the three months ended August 31, 2024, and 2023 respectively, and $642.0 million and $588.1 million for the nine months ended August 31, 2024 and 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.

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Rates of constant currency growth (decline) follow:

Three months ended May 31, 2024

Three months ended August 31, 2024

Percentage Change

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Total adjusted operating income 14.9 % (0.7) % 15.6 %

Six months ended May 31, 2024

Nine months ended August 31, 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.

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

Six months ended

May 31, 2024 May 31, 2023

Nine months ended

August 31, 2024 August 31, 2023

Net cash provided by operating activities $ 463.2 $ 660.1

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Net cash used in financing activities (205.9) (701.2)

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

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

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

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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 long-term 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 quarters 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 $301.5 million for the six months ended May 31, 2024, decreased $92.7 million from the same period of 2023.

The effects of the increase in earnings was more than offset by the higher cash used for certain employee incentive compensation arrangements accrued as of the prior year-end and paid in the subsequent fiscal year as well as the timing of income tax payments.

Investing Cash Flow — Cash used in investing activities of $130.1 million for the six months ended May 31, 2024 increased by $14.0 million as compared to $116.1 million for the corresponding period in 2023.

Capital expenditures increased from the 2023 level of $118.6 million to $130.3 million.

Operating Cash Flow — Net cash provided by operating activities of $463.2 million for the nine months ended August 31, 2024, decreased $196.9 million from the same period of 2023.

The effects of the increase in earnings were more than offset by higher cash used for working capital, certain employee incentive compensation arrangements accrued as of the prior year-end and paid in the subsequent fiscal year as well as the timing of income tax payments.

Investing Cash Flow — Cash used in investing activities of $189.1 million for the nine months ended August 31, 2024 increased by $4.3 million as compared to $184.8 million for the corresponding period in 2023.

Capital expenditures increased from the 2023 level of $187.2 million to $189.3 million, and the cash generated by other investing activities declined from $2.4 million in 2023 to $0.2 million in 2024.

We expect 2024 capital expenditures to approximate $290 million.

Financing Cash Flow — Financing activities used cash of $172.2 million for the first six months of 2024 and decreased $345.9 million as compared to $518.1 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.

Financing Cash Flow — Financing activities used cash of $205.9 million for the first nine months of 2024 and decreased $495.3 million as compared to $701.2 million for the corresponding period in 2023.

The decrease is a result of changes in our net borrowings.

The following table outlines our net borrowing activities:

Six months ended

May 31, 2024 May 31, 2023

Nine months ended

August 31, 2024 August 31, 2023

Net increase (decrease) in short-term borrowings $ 908.6 $ (850.0)

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Net cash provided by (used in) borrowing activities $ 155.8 $ (367.4)

The following table outlines the activity in our share repurchase program for the six months ended May 31, 2024 and 2023:

During the nine months ended August 31, 2024, we repaid our $700.0 million 3.15% notes due in August 2024.

During the nine months ended August 31, 2023, we issued $500.0 million of 4.95% notes due in 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, 2024 and 2023:

Number of shares of common stock repurchased (in thousands) 382 318

Dollar amount (in millions) $ 29.0 $ 26.7

As of May 31, 2024, $497 million remained of the $600 million share repurchase program that was authorized by the Board of Directors in November 2019.

As of August 31, 2024, $472 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 six months ended May 31, 2024, we received proceeds of $10.4 million from exercised stock options as compared to $11.1 million received in the corresponding 2023 period.

We repurchased $8.9 million and $10.8 million of common stock during the six months ended May 31, 2024 and 2023, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

We increased dividends paid to $225.5 million, or a per share quarterly dividend of $0.42, in the first six months of 2024 from $209.2 million, or a per share quarterly dividend of $0.39, of dividends paid in the same period last year.

During the nine months ended August 31, 2024, we received proceeds of $12.8 million from exercised stock options as compared to $15.9 million received in the corresponding 2023 period.

We repurchased $8.9 million and $10.8 million of common stock during the nine months ended August 31, 2024 and 2023, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

We increased dividends paid to $338.3 million, or a per share quarterly dividend of $0.42, in the first nine months of 2024 from $313.8 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 May 31, 2024 and 2023, we temporarily used $585.8 million and $372.7 million, respectively, of cash from our non-U.S.

At August 31, 2024 and 2023, we temporarily used $609.0 million and $449.5 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 May 31, 2024 and 2023 were $886.6 million and $1,315.9 million, respectively.

Total average debt outstanding for the three months ended May 31, 2024 and 2023 was $4,941.6 million and $5,287.5 million, respectively.

The average short-term borrowings outstanding for the three months ended August 31, 2024 and 2023 were $955.8 million and $1,163.1 million, respectively.

Total average debt outstanding for the three months ended August 31, 2024 and 2023 was $4,970.8 million and $5,245.9 million, respectively.

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

At May 31, 2024, the exchange rates for the British pound sterling, Mexican peso, Polish zloty, and Australian dollar were higher than the U.S.

At August 31, 2024, the exchange rates for the Euro, British pound sterling, Canadian dollar, Chinese renminbi, Polish zloty, and Australian dollar were higher than the U.S.

dollar at November 30, 2023.

At May 31, 2024, the exchange rates for the Euro, Canadian dollar, and Chinese renminbi were lower than the U.S.

At August 31, 2024, the exchange rate for the Mexican peso was 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.

We previously maintained a 364-day $500 million revolving credit facility, which was entered into in June 2023 and expired in June 2024.

We continue to maintain a committed five-year $1.5 billion revolving credit facility, which will expire in June 2026.

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

The pricing of that credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to Term SOFR plus 1.75%.

The provisions of our revolving credit facility restrict subsidiary indebtedness and require us to maintain a minimum interest coverage ratio.

We do not expect that this covenant would limit our access to either revolving credit facilities for the foreseeable future.

In August 2024, we entered into a 364-day $500 million revolving credit facility which will expire in August 2025 (the 364-day facility).

The current pricing for the 364-day facility, on a fully drawn basis, is SOFR + 1.23%.

The pricing of the 364-day facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to SOFR + 1.60%.

We also maintain a committed five-year $1.5 billion revolving credit facility, which will expire in June 2026 (the five-year facility).

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

The pricing of the five-year facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to Term SOFR plus 1.75%.

The provisions of our 364-day facility and five-year facility restrict subsidiary indebtedness and require us to maintain a minimum interest coverage ratio.

We do not expect that this covenant would limit our access to those facilities for the foreseeable future.

We generally use our revolving credit facilities to support our issuance of commercial paper.

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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 obligation is the maturity of our $700.0 million, 3.15% notes due in August 2024.

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.

1 unchanged sentence

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.

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

12 unchanged sentences

These statements may be identified by the use of words such as “may,” “will,” “expect,” "should," "anticipate," "intend," “believe” and “plan” and similar expressions.

These statements may relate to:

These statements may

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

3 unchanged sentences

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 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;

49 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis