What changed in this filing

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Item 1. Business

2025-01-23 compared with 2024-01-25 · 72 added, 70 removed, 132 unchanged (52% of the section changed)

McCormick is a global leader in flavor.

We manufacture, market and distribute spices, seasoning mixes, condiments and other flavorful products to the entire food industry–retailers, food manufacturers and foodservice businesses.

We manufacture, market, and distribute spices, seasoning mixes, condiments, and other flavorful products to the entire food industry:

retailers, food manufacturers, and foodservice businesses.

We also are partners in a number of joint ventures that are involved in the manufacture and sale of flavorful products, the most significant of which is McCormick de Mexico.

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Business Segments

We operate in two business segments, consumer and flavor solutions.

We operate in two business segments:

consumer and flavor solutions.

Demand for flavor is growing globally, and across both segments, we have the customer base and product breadth to participate in all types of eating occasions.

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In the Europe, Middle East, and Africa (EMEA) region, our major brands include the Ducros ® , Schwartz ® , Kamis ® , and La Drogheria ® brands of spices, herbs, and seasonings and an extensive line of Vahiné ® brand dessert items.

In the Asia/Pacific (APAC) region, we market our products under the McCormick and DaQiao ® brands.

In China, we market our spices and seasonings under the McCormick brand, our dessert products under the Aeroplane ® brand, and packaged chilled herbs under the Gourmet Garden brand.

In Australia and elsewhere in the APAC region, we market our products under the McCormick brand as well as other brands.

In the Asia/Pacific (APAC) region, we market our spices and seasonings under the McCormick brand, DaQiao ® , as well as other brands, our dessert products under the Aeroplane ® brand, and packaged chilled herbs under the Gourmet Garden ® brand.

Approximately two-thirds of our consumer segment sales are spices and seasonings and condiments and sauces.

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In the condiments and sauces category, we are one of the brand leaders globally and in the U.S.

There are numerous competitive brands of spices and seasonings, and condiments and sauces in the U.S.

and additional brands in international markets.

There are numerous competitive brands of spices and seasonings and condiments and sauces in the U.S., as well as additional brands in international markets.

Some are owned by large food manufacturers, while others are supplied by small privately-owned companies.

In this competitive environment, we are leading with innovation and brand marketing, and applying our analytical tools to help customers optimize the profitability of their sales of these categories while simultaneously working to increase our sales and profit.

In this competitive environment, we are leading with innovation and brand marketing, applying our analytical tools to help customers optimize the profitability of their sales of these categories, while simultaneously working to increase our own sales and profit.

Our customers span a variety of retailers that include grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce retailers, served directly and indirectly through distributors or wholesalers.

In addition to marketing our branded products to these customers, we are also a leading supplier of private label items, also known as store brands.

In our businesses in China and, prior to 2022, India, foodservice sales are managed by and reported in our consumer segment.

In addition to marketing our branded products to these customers, we are a leading supplier of private label items, also known as store brands.

In our businesses in China, foodservice sales are managed by and reported in our consumer segment.

Flavor Solutions Segment.

In our flavor solutions segment, we provide a wide range of products to multinational food manufacturers and foodservice customers.

The foodservice customers are supplied with branded, packaged products both directly by us and indirectly through distributors, with the exception of our businesses in China and, prior to 2022, India, where foodservice sales are managed by and reported in our consumer segment.

The foodservice customers are supplied with branded, packaged products both directly by us and indirectly through distributors, with the exception of our businesses in China, where foodservice sales are managed by and reported in our consumer segment.

We supply food manufacturers and foodservice customers with customized flavor solutions, and many of these customer relationships have been active for decades.

Our range of flavor solutions remains one of the broadest in the industry

and includes seasoning blends, spices and herbs, condiments, coating systems and compound flavors.

In addition to a broad range of flavor solutions, our long-standing customer relationships are evidence of our effectiveness in building customer intimacy.

Our range of flavor solutions remains one of the broadest in the industry and includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors.

In addition to a broad range of flavor solutions, our long-standing customer relationships are evidence of our effectiveness in building customer

Our customers benefit from our expertise in many areas, including sensory testing, culinary research, food safety, and flavor application.

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Some tend to specialize in a particular range of products and have a limited geographic reach.

Other competitors include large publicly held flavor companies that are more global in nature, but which also tend to focus on providing integrated solutions extending beyond flavor through the use of other functional and nutritional ingredients.

Other competitors include large publicly held flavor companies that are more global in nature and tend to focus on providing integrated solutions extending beyond flavor through the use of other functional and nutritional ingredients.

Raw Materials

The most significant raw materials used in our business are dairy products, pepper, onion, garlic, capsicums (red peppers and paprika), tomato products, salts, and wheat products.

Pepper and other spices and herbs are generally sourced from countries other than the United States.

Other raw materials, like dairy products and onion, are primarily sourced locally, either within the United States or from our international locations.

The most significant raw materials used in our business are dairy products, pepper, onion, garlic, capsicums (red peppers and paprika), tomato products, sugar and salts.

Pepper and other spices and herbs are generally sourced from countries other than the U.S.

Other raw materials, like dairy products and onion, are primarily sourced locally, either within the U.S.

or from our international locations.

Because these raw materials are agricultural products, they are subject to fluctuations in market price and availability caused by weather, growing and harvesting conditions, market conditions, including inflationary cost increases, and other factors beyond our control.

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

In addition, we rely on third-party transportation providers to deliver raw materials as well as our products to our customers.

There has been, and there could continue to be, reduced availability of transportation capacity due to labor shortages and higher fuel costs that has and may continue to cause an increase in the cost of transportation for us and our suppliers.

Our products are sold directly to customers and also through brokers, wholesalers and distributors.

In addition, we rely on third-party transportation providers to deliver raw materials and our products to our customers.

There has been, and could continue to be, reduced availability of transportation capacity due to labor shortages and higher fuel costs, which have caused and may continue to cause an increase in transportation costs for us and our suppliers.

Our products are sold directly to customers as well as through brokers, wholesalers, and distributors.

In the consumer segment, products are then sold to consumers under a number of brands through a variety of retail channels, including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce.

In the flavor solutions segment, products are used by food and beverage manufacturers as ingredients for their finished goods and by foodservice customers as ingredients for menu items, as well as provided to their own customers for use in dine-in and take-out eating occasions, all to enhance the flavor of their foods.

Customers for the flavor solutions segment include food manufacturers and the foodservice industry supplied through a variety of channels including directly and indirectly through distributors, wholesale foodservice suppliers and e-commerce.

In the flavor solutions segment, products are used by food and beverage manufacturers as ingredients in their finished goods and by foodservice customers for menu items, as well as provided to their own customers for dine-in and take-out occasions, all to enhance the flavor of their foods.

Customers in the flavor solutions segment include food manufacturers and the foodservice industry, supplied through a variety of channels, including directly and indirectly through distributors, wholesale foodservice suppliers, and e-commerce.

We have a large number of customers for our products.

Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for approximately 12% of consolidated sales in 2023 and 2022, and 11% of consolidated sales in 2021.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for approximately 13% of consolidated sales in 2023 and 11% of consolidated sales in 2022 and 2021.

Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for consolidated sales of approximately 12% in 2024, 2023 and 2022.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for consolidated sales of approximately 13% in 2024, 13% in 2023, and 11% in 2022.

In 2024, 2023, and 2022, the top three customers in our flavor solutions segment represented between 47% and 49% of our global flavor solutions sales.

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Although in the aggregate these trademarks are material to our business, the loss of any one of those trademarks, with the exception of our “McCormick,” “French’s,” “Frank’s RedHot,” “Lawry’s,” “Zatarain’s,” “Cholula,” “Stubb's,” “Club House,” “Ducros,” “Schwartz,” “Vahiné,” "OLD BAY," "Simply Asia," "Thai Kitchen," “Kamis,” “La Drogheria,” "DaQiao," and "Gourmet Garden" trademarks, would not have a material adverse effect on our business.

The “Mc – McCormick” trademark is extensively used by us in connection with the sale of our food products in the U.S.

The “Mc – McCormick” trademark is extensively used in connection with the sale of our food products in the U.S.

and certain non-U.S.

The terms of the trademark registrations are as prescribed by law, and the registrations will be renewed for as long as we deem them to be useful.

The terms of the trademark registrations are prescribed by law, and the registrations will be renewed as long as we deem them useful.

We have entered into a number of license agreements authorizing the use of our trademarks by affiliated and non-affiliated entities.

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We also own various patents, none of which are individually material to our business.

Due to seasonal factors inherent in our business, our sales, income and cash from operations generally are higher in the fourth quarter due to the holiday season.

Due to seasonal factors inherent in the business, our sales, operating income, and cash from operations are generally higher in the fourth quarter because of the holiday season.

This seasonality reflects customer and consumer buying patterns, primarily in the consumer segment.

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We generally finance working capital items (inventory and receivables) through short-term borrowings, which include the use of lines of credit and the issuance of commercial paper.

For a description of our liquidity and capital resources, see note 6 of notes to our consolidated financial statements and the “Liquidity and Financial Condition” section of “Management’s Discussion and Analysis.”

Each segment operates in markets around the world that are highly competitive.

In this competitive environment, our growth strategies include customer engagement and product innovation based on consumer insights.

For a description of our liquidity and capital resources, see Note 5 of the notes to our consolidated financial statements and the “Liquidity and Financial Condition” section of “Management’s Discussion and Analysis.”

Each segment operates in highly competitive markets around the world.

In this environment, our growth strategies include customer engagement and product innovation based on consumer insights.

In the consumer segment, we are building brand recognition and loyalty through advertising and promotions.

In our flavor solutions segment, we are differentiated by our culinary and consumer inspired flavor development as well as the breadth of our product offering and customer engagement.

In our flavor solutions segment, we differentiate ourselves through culinary and consumer-inspired flavor development, as well as the breadth of our product offering and customer engagement.

Governmental Regulation

We are subject to numerous laws and regulations around the world that apply to our global businesses.

In the United States, the safety, production, transportation, distribution, advertising, labeling and sale of many of our products and their ingredients are subject to the Federal Food, Drug, and Cosmetic Act;

In the U.S., the safety, production, transportation, distribution, advertising, labeling, and sale of many of our products and their ingredients are subject to the Federal Food, Drug, and Cosmetic Act;

the Food Safety Modernization Act;

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state consumer protection laws;

competition laws, anti-corruption laws, customs and trade laws;

competition laws;

anti-corruption laws;

customs and trade laws;

federal, state and local workplace health and safety laws;

privacy laws;

various federal, state and local environmental protection laws;

and various other federal, state and local statutes and regulations.

Outside the United States, our business is subject to numerous similar statutes, laws and regulatory requirements.

federal, state, and local environmental protection laws;

and other federal, state, and local statutes and regulations.

Outside the U.S., our business is subject to numerous similar statutes, laws, and regulatory requirements.

Human Capital

We believe in the Power of People – our employees and customers across the world.

Our high-performance culture is rooted in our shared values and respect for all contributions of every employee.

We believe in the power of people—fostering a culture for our employees that embodies respect and collaboration across the organization.

Our high-performance culture is rooted in shared values and respect for all contributions of every employee.

Our key human capital objectives are to attract, retain, and develop the highest quality talent.

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We believe a diverse and inclusive workplace results in business growth and encourages increased innovation, retention of talent, and a more engaged workforce.

We have various employee ambassador groups that provide a supportive, collaborative space for employees to come together to promote inclusion.

We have various employee ambassador groups that provide a supportive and collaborative space for employees to come together and promote inclusion.

We prioritize the mental health and wellness of our employees by offering and encouraging participation in various programs and initiatives.

Respect for human rights is fundamental to our business and its commitment to ethical business conduct.

Respect for human rights is fundamental to our business and its commitment to ethical conduct.

We had approximately 14,100 full-time employees worldwide as of November 30, 2024.

Our operations have not been affected significantly by work stoppages, and, in the opinion of management, employee relations are good.

We have approximately 400 employees in the United States who are covered by a collective bargaining contract.

We have approximately 400 employees in the U.S.

who are covered by a collective bargaining contract.

At our subsidiaries outside the U.S., approximately 2,500 employees are covered by collective bargaining agreements or similar arrangements.

Through our continuous listening strategy, we measure employee engagement on an ongoing basis to solicit feedback and understand views of our employees, work environment and culture.

The results from these surveys are used to implement programs and processes designed to enhance employee engagement and improve the employee experience.

Through our continuous listening strategy, we measure employee engagement on an ongoing basis to solicit feedback and understand the views of our employees, work environment, and culture.

The results from these surveys are used to implement programs and processes designed to enhance employee engagement and improve the overall employee experience.

We are committed to the safety, health, and security of our employees.

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Information about our Executive Officers

In addition to the executive officers indicated in the 2024 Proxy Statement incorporated by reference in Part III, Item 10 of this Report, the other executive officers of McCormick are Andrew D.

Foust, Katherine A.

In addition to the executive officers indicated in the 2025 Proxy Statement incorporated by reference in Part III, Item 10 of this Report, the other executive officers of McCormick are Marcos M.

Gabriel, Katherine A.

Jenkins, and Ana G.

Foust is 43 years old and, during the last five years, has held the following positions with McCormick:

December 2021 to present - President, Americas;

February 2020 to November 2021 – President, U.S.

Consumer Products Group;

and July 2018 to January 2020 - Vice President Marketing, U.S.

Consumer Products Group.

Gabriel is 53 years old and, during the last five years has held the following positions within McCormick:

December 2024 to present - Executive Vice President and Chief Financial Officer;

March 2024 to November 2024 - Senior Vice President Global Finance and Capital Markets;

June 2023 to February 2024 - Senior Vice President, Finance and Global Business Services;

August 2022 to May 2023 - Chief Transformation Officer;

and August 2017 to July 2020 - Chief Financial Officer Americas.

Jenkins is 56 years old and, during the last five years, has held the following positions with McCormick:

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Certain statements contained in this report, including statements concerning expected performance such as those relating to net sales, gross margin, earnings, cost savings, special charges, acquisitions, brand marketing support, volume and product mix, income tax expense, and the impact of foreign currency rates are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

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

These statements may relate to:

general economic and industry conditions, including consumer spending rates, recessions, 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;

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

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

the expected impact of pricing actions on the Company's results of operations, including our sales volume and mix as well as gross margins;

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, 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 and Israel and Hamas, including the potential for broader economic disruption;

the anticipated effects of factors affecting our supply chain, including the availability and prices of commodities and other supply chain resources such as raw materials, packaging, labor, and transportation;

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

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

the impact of ongoing conflicts, including those between Russia and Ukraine and the war in the Middle East, particularly regarding the potential for broader economic disruption;

expected working capital improvements;

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

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

the expected impact of accounting pronouncements;

the expectations of pension and postretirement plan contributions and anticipated charges associated with those plans;

expectations regarding pension and postretirement plan contributions and anticipated charges associated with those plans;

the holding period and market risks associated with financial instruments;

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

the anticipated sufficiency of future cash flows to enable payments of interest, 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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increased private label use;

the company's ability to drive productivity improvements, including those related to our CCI program and streamlining actions, including our GOE program;

the Company's ability to drive productivity improvements, including those related to our CCI program and other streamlining actions;

product quality, labeling, or safety concerns;

negative publicity about our products;

actions by, and the financial

condition of, competitors and customers;

actions by, and the financial condition of, competitors and customers;

the longevity of mutually beneficial relationships with our large customers;

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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;

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 conflicts between Russia and Ukraine and Israel and Hamas, including the potential for broader economic disruption;

the impact of the ongoing conflicts between Russia and Ukraine and the war in the Middle East, including the potential for broader economic disruption;

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

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www.mccormickcorporation.com.

We make available free of charge through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the United States Securities and Exchange Commission (the SEC).

Securities and Exchange Commission (the SEC).

The information and other content contained on our website are not part of (or incorporated by reference in) this report or any other document we file with the SEC.

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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-K

Item 1. Business