What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-03-25 compared with 2024-10-01 · 219 added, 269 removed, 249 unchanged (66% of the section changed)

8 unchanged sentences

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

In fiscal year 2023, approximately 39% of our sales were outside of the U.S.

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.

In fiscal year 2024, approximately 39% of our sales were generated outside of the U.S.

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

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

Executive Summary

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 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 $0.83 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".

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.

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

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

The projected 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 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.

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

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

in 2023, special charges were $61.2 million.

Excluding special charges, 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 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.

In the first quarter of 2025, we achieved net sales growth of 0.2% as compared to the first quarter of 2024, due to the following factors:

• Volume and product mix favorably impacted net sales by 2.2%.

Both segments contributed to this growth, with a 2.6% increase in consumer and a 1.8% increase in flavor solutions.

• Pricing unfavorably impacted net sales by 0.2%.

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

• Fluctuations in currency rates negatively impacted net sales by 1.8%, decreasing sales growth by 1.4% in our consumer segment and 2.5% in our flavor solutions segment.

Operating income was $225.2 million in the first quarter of 2025, compared to $233.5 million in the same period of 2024, reflecting a decrease of 3.6%.

In the first quarter of 2025, our gross profit margin improved by 20 basis points, primarily driven by cost savings from the Company's Comprehensive Continuous Improvement (CCI) program.

Selling, general, and administrative (SG&A) expense as a percentage of sales increased by 100 basis points, primarily driven by higher stock-based

compensation expense due to a planned shift in timing of our annual stock grant from the second quarter to the first quarter, other employee benefit related costs and increased advertising and promotional spend.

Excluding special charges, adjusted operating income was $225.2 million in the first quarter of 2025, reflecting a decrease of 5.3%, compared to $237.7 million in the 2024 period.

In constant currency, adjusted operating income decreased by 3.2%.

Diluted earnings per share was $0.60 and $0.62 in the first quarter of 2025 and 2024, respectively.

The decrease in diluted earnings per share for the first quarter of 2025 was driven primarily by the impact of lower operating income and the unfavorable effects of a decrease in income from unconsolidated operations, partially offset by the favorable impact of a decrease in the effective tax rate.

Special charges lowered earnings per share by $0.01 in the first quarter of 2024.

Excluding the effects of special charges in the 2024 period, adjusted diluted earnings per share was $0.60 and $0.63 in the first quarter of 2025 and 2024, respectively, reflecting a decrease of 4.8%.

A detailed review of our first quarter 2025 performance compared to the first quarter of fiscal 2024 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.”

Our fiscal 2025 outlook reflects plans to offset costs related to U.S.

import tariffs on China with CCI savings and targeted price adjustments.

Due to continued uncertainty regarding the implementation dates and scope of additional potential U.S.

import tariffs or retaliatory tariffs put in place by other countries, our outlook does not include any additional impact from tariff actions in 2025.

In 2025, we expect net sales to grow between 0% and 2% compared to our 2024 net sales, including a 1% unfavorable impact from foreign currency rates, or to grow from 1% to 3% on an organic basis.

We anticipate that sales in 2025 will benefit from favorable volume and product mix.

We expect our 2025 gross profit margin to improve by 50 to 100 basis points from the 38.5% gross profit margin reported in 2024.

This projected increase is primarily driven by (i) positive effects from product mix changes, (ii) anticipated cost savings from our Comprehensive Continuous Improvement (CCI) program, and (iii) a low single-digit percentage impact of inflation in 2025 compared to 2024.

For 2025, we anticipate an increase in operating income of 3% to 5% over the 2024 level, including a 1% unfavorable impact from foreign currency rates.

This anticipated increase in operating income reflects the expected rise in our gross profit margin and SG&A cost savings from our CCI program, although these will be partially offset by investments aimed at driving volume growth, particularly in brand marketing.

We project our brand marketing investments in 2025 to rise by high-single digits compared to 2024.

Additionally, we expect approximately $15 million in special charges related to previously announced organizational and streamlining actions;

in 2024, special charges totaled $9.5 million.

Excluding these special charges, we expect adjusted operating income in 2025 to increase by 3% to 5%, which includes a 1% unfavorable impact from foreign currency rates, or to increase by 4% to 6% on a constant currency basis.

We estimate that our 2025 effective tax rate, including the net favorable impact of anticipated discrete tax items, although at a lower amount than in 2024, will be 22.0% as compared to 20.5% in 2024.

Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will also be approximately 22.0% in 2025, as compared to an adjusted effective tax rate of 20.5% in 2024.

We also expect that our income from unconsolidated operations, including the performance of our largest joint venture, McCormick de Mexico, will decline by a mid-teen percentage rate from the 2024 level, reflecting the strengthening of the U.S.

dollar against the Mexican peso.

Diluted earnings per share was $2.92 in 2024.

Diluted earnings per share for 2025 is projected to range from $2.99 to $3.04.

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

Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.04, is projected to range from $2.85 to $2.90 in 2024, or an increase of 5% to 7% over adjusted diluted earnings per share of $2.70 in 2023.

Excluding the per share impact of special charges, adjusted diluted earnings per share was $2.95 in 2024.

Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.04, is projected to range from $3.03 to $3.08 in 2025.

We expect adjusted diluted earnings per share to increase by 3% to 5%, which includes a 2% unfavorable impact from currency rates, or to increase by 5% to 7% on a constant currency basis over adjusted diluted earnings per share of $2.95 in 2024.

RESULTS OF OPERATIONS – COMPANY

Three months ended Nine months ended

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

Three months ended

February 28, 2025 February 29, 2024

Net sales $ 1,605.5 $ 1,602.7

Percent (decrease) increase (0.3) % 5.6 % 0.3 % 5.5 %

Percent increase 0.2 % 2.4 %

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

5 unchanged sentences

Gross profit margin 37.6 % 37.4 %

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 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.

Unfavorable volume and product mix from both our consumer and flavor solutions segments collectively decreased sales by 0.4%.

Our decisions to discontinue certain low margin businesses contributed approximately 0.3% to the unfavorable impact of volume and product mix.

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 0.2% 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 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

Sales for the first quarter of 2025 increased by 0.2% from 2024 and increased by 2.0% on an organic basis (that is, excluding the impact of divestitures and foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures).

Pricing impacts unfavorably impacted sales by 0.2% as compared to the same period in 2024.

F avorable volume and product mix increased sales by 2.2% for the quarter, including growth in both our consumer and flavor solutions segments.

Foreign currency rates decreased sales by 1.8% for the quarter as compared to the prior year quarter.

Organic sales growth was 2.0%, as compared to the same period in 2024.

Gross profit for the first quarter of 2025 increased by $4.7 million, or 0.8%, from the comparable period in 2024.

Our gross profit margin for the first quarter of 2025 was 37.6%, an increase of 20 basis points from the comparable period in 2024.

The increase in gross profit margin was primarily driven by CCI-led cost savings as compared to the 2024 period.

Three months ended

February 28, 2025 February 29, 2024

Selling, general & administrative (SG&A) expense $ 378.8 $ 361.6

Percent of net sales 23.6 % 22.6 %

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 Nine months ended

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

SG&A expense increased by $17.2 million in the first quarter of 2025 as compared to the 2024 level, primarily as a result of higher stock-based compensation expense, other employee benefit related costs and increased advertising and promotional spend.

The higher level of stock-based compensation expense was driven by a change in grant timing that shifted the recognition of expense from the second quarter into the first quarter of 2025, as more fully discussed in Note 6 of notes to our accompanying condensed consolidated financial statements.

SG&A expense as a percentage of net sales increased b y 100 basis points from the prior year levels principally due to the factors described above.

Three months ended

February 28, 2025 February 29, 2024

Total special charges $ — $ 4.2

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.

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

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

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

Three months ended Nine months ended

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

Three months ended

February 28, 2025 February 29, 2024

Interest expense $ 48.5 $ 50.3

Other income, net 9.8 11.1

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

Interest expense decreased by $1.8 million during the three months ended February 28, 2025, compared to the prior year period, driven by the effects of lower average borrowing levels.

Other income, net, for the three months ended February 28, 2025, decreased by $1.3 million compared to the prior year period, primarily due to a lower level of interest income.

Three months ended

February 28, 2025 February 29, 2024

Income from consolidated operations before income taxes $ 186.5 $ 194.3

2 unchanged sentences

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

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

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

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

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

Examples of such types of discrete items not related to ordinary income include, but are not limited to, excess tax benefits or expense associated with stock-based compensation, changes in estimates of the outcome of tax matters related to prior years, including reversals of reserves upon the lapsing of statutes of limitations, provision-to-return adjustments, the settlement of tax audits, changes in enacted tax rates or other legislation, 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 February 28, 2025 included $5.2 million of net discrete tax benefits consisting principally of a $5.0 million net tax benefit resulting from the revaluation of deferred taxes associated with enacted legislation.

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

Three months ended

February 28, 2025 February 29, 2024

Income from unconsolidated operations $ 17.4 $ 21.3

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.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, decreased by $3.9 million for the three months ended February 28, 2025, as compared to the year ago period.

The decrease was principally driven by the results of our largest joint venture, McCormick de Mexico, which included unfavorable impacts from foreign exchange rates, as compared to the 2024 period.

The following table outlines the major components of the change in diluted earnings per share from 2024 to 2025:

Three months ended August 31,

Nine months ended August 31,

Three months ended February 29, 2024 and February 28, 2025

2024 Earnings per share – diluted $ 0.62

1 unchanged sentence

Decrease in special charges, net of taxes 0.01

Increase in other income 0.01 0.02

Increase in income from unconsolidated operations 0.02 0.07

Decrease in income from unconsolidated operations (0.01)

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

5 unchanged sentences

CONSUMER SEGMENT

Three months ended Nine months ended

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

Three months ended

February 28, 2025 February 29, 2024

Net sales $ 919.2 $ 921.5

Percent increase — % 1.0 % 0.2 % 1.4 %

Percent (decrease) increase (0.2) % 1.3 %

Segment operating income $ 146.7 $ 176.3

Segment operating income margin 16.0 % 19.1 %

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 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 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.

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.

In the first quarter of 2025, sales of our Consumer segment decreased by 0.2% compared to the first quarter of 2024 and increased by 1.2% on an organic basis.

Higher volume and product mix increased sales by 2.6%, driven by growth in all regions as compared to the prior year period.

Pricing actions, primarily in the Americas region, unfavorably impacted sales by 1.4% compared to the prior year.

The unfavorable impact of foreign currency rates decreased sales by 1.4% as compared to the prior year period, and is excluded from our measure of sales growth of 1.2% on an organic basis.

In the Americas region, Consumer segment sales decreased by 0.4% in the first quarter of 2025 compared to the same quarter of 2024 and increased by 0.1% on an organic basis.

Favorable volume and product mix increased sales by 2.9% driven by growth across core categories.

Pricing actions, including prior year actions taken in response to price gap management that were predominantly in place in the second quarter of 2024, unfavorably impacted sales by 2.8% compared to the prior year period.

The unfavorable impact of foreign currency rates decreased sales by 0.5% in the prior year period and is excluded from our measure of sales growth of 0.1% on an organic basis.

In the EMEA region, Consumer segment sales decreased by 0.2% in the first quarter of 2025 compared to the same quarter of 2024 and increased by 3.6% on an organic basis.

Favorable volume and product mix increased sales by 1.5% driven by growth in Poland and the timing of trade activity in France, compared to the prior year period.

Favorable pricing impacted sales by 2.1% compared to the prior year period.

The unfavorable impact from foreign currency rates decreased sales by 3.8% compared to the prior year period, and is excluded from our measure of sales growth of 3.6% on an organic basis.

In the APAC region, Consumer segment sales increased by 0.4% in the first quarter of 2025 compared to the same quarter of 2024 and increased by 2.7% on an organic basis.

Favorable volume and product mix increased sales by 2.0%, driven by growth in China that was partially offset by unfavorable volume and product mix in other parts of the region as compared to the prior year period.

Favorable pricing impacted sales by 0.7% compared to the prior year period.

The unfavorable impact from foreign currency rates decreased sales by 2.3% compared to the prior year period and is excluded from our measure of sales growth of 2.7% on an organic basis.

Segment operating income for our Consumer segment decreased by $29.6 million, or 16.8%, in the first quarter of 2025 from the first quarter of 2024.

The decrease in segment operating income was driven by the effects of a decrease in gross profit and higher SG&A expense as compared to the prior year period.

The decrease in gross profit was primarily driven by the impacts of pricing actions and higher cost to meet demand which were partially offset by CCI-led cost savings.

The increase in SG&A expense was primarily driven by the items described in the consolidated discussion.

Segment operating margin for our Consumer segment decreased in the first quarter of 2025 by 310 basis points from 2024 to 16.0%.

On a constant currency basis, segment operating income for our Consumer segment decreased by 15.9% in the first quarter of 2025 compared to the same period in 2024.

FLAVOR SOLUTIONS SEGMENT

Three months ended Nine months ended

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

Three months ended

February 28, 2025 February 29, 2024

Net sales $ 686.3 $ 681.2

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

Percent increase 0.8 % 3.8 %

Segment operating income $ 78.5 $ 61.4

Segment operating income margin 11.4 % 9.0 %

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 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 0.6% 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.

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.

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 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 $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 17.4% in the nine months ended August 31, 2024 as compared to the same period in 2023.

In the first quarter of 2025, sales of our Flavor Solutions segment increased by 0.8% as compared to the first quarter of 2024 and increased by 3.3% on an organic basis.

Favorable volume and product mix increased sales by 1.8% driven by the APAC and Americas regions as compared to the prior year period.

Favorable pricing increased sales by 1.5%, primarily driven by the Americas region compared to the prior year period.

The unfavorable impact of foreign currency rates decreased Flavor Solutions segment sales by 2.5% compared to the prior year period and is excluded from our measure of sales growth of 3.3% on an organic basis.

In the Americas region, Flavor Solutions sales increased by 0.8% in the first quarter of 2025 compared to the first quarter of 2024 and increased by 3.6% on an organic basis.

Favorable volume and product mix increased sales by 0.8% compared to the prior year period.

Favorable pricing impacted sales by 2.8% compared to the prior year period.

The unfavorable impact from foreign currency rates decreased sales by 2.8% compared to the prior year period and is excluded from our measure of sales growth of 3.6% on an organic basis.

In the EMEA region, Flavor Solutions sales decreased by 5.2% in the first quarter of 2025 compared to the first quarter of 2024 and decreased by 3.9% on an organic basis.

Unfavorable volume and product mix decreased sales by 1.9%, driven by the effects of lower sales to quick-service restaurant customers as compared to the prior year period.

Unfavorable pricing impacted sales by 2.0% compared to the prior quarter.

The unfavorable impact from foreign currency rates decreased sales by 1.3% compared to the prior year period and is excluded from our measure of sales decline of 3.9% on an organic basis.

In the APAC region, Flavor Solutions sales increased by 12.7% in the first quarter of 2025 compared to the first quarter of 2024, and increased by 15.3% on an organic basis.

Favorable volume and product mix increased sales by 15.7% driven by higher sales to quick-service restaurant customers as compared to the prior year period.

Pricing unfavorably impacted sales by 0.4% compared to the prior year period.

The unfavorable impact from foreign currency rates decreased sales by 2.6% compared to the first quarter of 2024 and is excluded from our measure of sales growth of 15.3% on an organic basis.

Segment operating income for our Flavor Solutions segment increased by $17.1 million, or 27.9%, in the first quarter of 2025 compared to the first quarter of 2024.

The increase in segment operating income was driven by the effects of an increase in gross profit partially offset by increases in SG&A expense, as compared to the prior period.

The increase in gross profit was primarily driven by the impact of favorable pricing and CCI-led costs savings.

The increase in SG&A expense was primarily driven by the items described in the consolidated discussion.

Segment operating margin for our Flavor Solutions segment increased by 240 basis points from the prior year level to 11.4% in the first quarter of 2025.

On a constant currency basis, segment operating income for our Flavor Solutions segment increased by 33.2% in the first quarter of 2025 compared to the same period in 2024.

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:

August 31, 2024 November 30, 2023

February 28, 2025 November 30, 2024

Forward foreign currency:

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

August 31, 2024 November 30, 2023

February 28, 2025 November 30, 2024

Notional value $ 600.0 $ 600.0

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

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

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

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

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NON-GAAP FINANCIAL MEASURES

The following table includes financial measures of adjusted operating income, adjusted operating income margin, adjusted income tax expense, adjusted income tax rate, adjusted net income and adjusted diluted earnings per share.

The following tables include financial measures of organic net sales, adjusted operating income, adjusted operating income margin, adjusted income tax expense, adjusted income tax rate, adjusted net income, and adjusted diluted earnings per share.

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

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

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

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

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

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

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

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

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

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

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

We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.

These non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP;

however, they should not be viewed as a substitute for, or superior to, GAAP results.

Furthermore, these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, as they may calculate them differently than we do.

We intend to continue providing these non-GAAP financial measures as part of our future earnings discussions, ensuring consistency in our financial reporting.

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

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

For the year ended November 30, 2024 For the three months ended Estimated for the year ending November 30, 2025

February 28, 2025 February 29, 2024

Operating income $ 1,060.3 $ 225.2 $ 233.5

Impact of special charges

61.2 1.9 6.1 7.9 47.1

Adjusted operating income $ 1,069.8 $ 225.2 $ 237.7

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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 $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 $186.5 million and $198.5 million for the three months ended February 28, 2025, and February 29, 2024, 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 $907.8 million for the year ended November 30, 2024.

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dollar results due to changes in foreign currency exchange rates.

Those changes have been volatile over the past several years.

Those changes can be volatile.

The exclusion of the effects of foreign currency exchange, or what we refer to as amounts expressed “on a constant currency basis”, is a non-GAAP measure.

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It should be noted that our presentation herein of amounts and percentage changes on a constant currency basis does not exclude the impact of foreign currency transaction gains and losses (that is, the impact of transactions denominated in other than the local currency of any of our subsidiaries in their local currency reported results).

We provide organic net sales growth rates for our consolidated net sales and segment net sales.

We believe that organic net sales growth rates provide useful information to investors because they provide transparency to underlying performance in our net sales by excluding the effect that foreign currency exchange rate fluctuations, acquisitions, and divestitures, as applicable, have on year-to-year comparability.

A reconciliation of these measures from reported net sales growth rates, the relevant GAAP measures, are included in the tables set forth below.

Percentage changes in sales and adjusted operating income expressed on a constant currency basis are presented excluding the impact of foreign currency exchange.

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

Rates of constant currency growth (decline) follow:

Three months ended August 31, 2024

Percentage Change

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

Consumer segment:

Americas (0.4) % (0.2) % (0.2) %

EMEA 2.9 % 0.3 % 2.6 %

APAC (0.9) % (0.9) % — %

Total Consumer segment — % (0.2) % 0.2 %

Flavor Solutions segment:

Americas 1.8 % (0.8) % 2.6 %

EMEA (8.4) % 0.6 % (9.0) %

APAC (1.3) % (1.2) % (0.1) %

Total Flavor Solutions segment (0.7) % (0.5) % (0.2) %

Total net sales (0.3) % (0.4) % 0.1 %

Adjusted operating income:

Consumer segment 7.8 % (0.3) % 8.1 %

Flavor Solutions segment 30.6 % (1.4) % 32.0 %

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

Nine months ended August 31, 2024

Percentage Change

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

Rates of constant currency and organic growth (decline) follow:

Three months ended February 28, 2025

Percentage change as reported Impact of foreign currency exchange Percentage change on both a constant currency and organic basis

Consumer segment:

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APAC 0.4 % (2.3) % 2.7 %

Total Consumer segment 0.2 % — % 0.2 %

Total Consumer (0.2) % (1.4) % 1.2 %

Flavor Solutions segment:

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APAC 12.7 % (2.6) % 15.3 %

Total Flavor Solutions segment 0.5 % 0.3 % 0.2 %

Total Flavor Solutions 0.8 % (2.5) % 3.3 %

Total net sales 0.2 % (1.8) % 2.0 %

Three months ended February 28, 2025

Percentage change as reported Impact of foreign currency exchange Percentage change on constant currency basis

Adjusted operating income:

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Total adjusted operating income (5.3) % (2.1) % (3.2) %

To present constant currency information for the fiscal year 2024 projection, projected sales and adjusted operating income for entities reporting in currencies other than the U.S.

To present the percentage change in projected 2025 net sales, adjusted operating income, and adjusted earnings per share (diluted) on a constant currency basis, the projected local currency net sales, adjusted operating income, and adjusted net income for entities reporting in currencies other than the U.S.

dollar are translated into U.S.

dollars at the company’s budgeted exchange rates for 2024 and are compared to the 2023 results, translated into U.S.

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

dollars at forecasted exchange rates.

These figures are then compared to the 2025 local currency projected results, which are translated into U.S.

dollars at the average actual exchange rates in effect during the corresponding months of fiscal year 2024.

This comparison determines what the 2025 consolidated U.S.

dollar net sales, adjusted operating income, and adjusted earnings per share (diluted) would have been if the relevant currency exchange rates had not changed from those of the comparable 2024 periods.

Projections for the Year Ending November 30, 2025

Percentage change in net sales 0% to 2%

Impact of unfavorable foreign currency exchange 1 %

Percentage change in organic net sales 1% to 3%

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%

Percentage change in adjusted earnings per share - diluted 3% to 5%

Impact of unfavorable foreign currency exchange 2 %

Percentage change in adjusted earnings per share - diluted 5% to 7%

LIQUIDITY AND FINANCIAL CONDITION

Nine months ended

August 31, 2024 August 31, 2023

Three months ended

February 28, 2025 February 29, 2024

Net cash provided by operating activities $ 115.5 $ 138.4

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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 quarters of our fiscal year.

Due to the timing of the interest payments on our long-term debt, interest payments are higher in the second and fourth 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 $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.

Operating Cash Flow — Net cash provided by operating activities of $115.5 million for the three months ended February 28, 2025, decreased $22.9 million from the same period of 2024.

The decrease in operating cash flow was primarily driven by higher cash used for working capital partially offset by lower incentive payments.

Investing Cash Flow — Cash used in investing activities of $37.1 million for the three months ended February 28, 2025 decreased by $24.7 million as compared to $61.8 million for the corresponding period in 2024.

Capital expenditures decreased from the 2024 level of $62.0 million to $37.1 million.

We expect 2025 capital expenditures to approximate $300 million.

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.

Financing Cash Flow — Financing activities used cash of $155.2 million for the first three months of 2025 and increased $87.5 million as compared to $67.7 million for the corresponding period in 2024.

The increase is a result of changes in our net

borrowings, share issuance activity associated with the exercise of stock options, share repurchase activity, and dividends, all as described below.

The following table outlines our net borrowing activities:

Nine months ended

August 31, 2024 August 31, 2023

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

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

Three months ended

February 28, 2025 February 29, 2024

Net (decrease) increase in short-term borrowings $ (25.9) $ 57.3

Repayments of long-term debt (11.5) (14.1)

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

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:

Net cash (used in) provided by borrowing activities $ (37.4) $ 43.2

The following table outlines the activity in our share repurchase program:

Three months ended

February 28, 2025 February 29, 2024

Number of shares of common stock repurchased (in thousands) 224 4

Dollar amount (in millions) $ 17.2 $ 0.3

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.

As of February 28, 2025, $431 million remained of the $600 million share repurchase program that was authorized by the Board of Directors in November 2019.

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

During the nine months ended August 31, 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.

During the three months ended February 28, 2025, we received proceeds of $6.7 million from exercised stock options as compared to $4.4 million received in the corresponding 2024 period.

We repurchased $6.7 million and $4.9 million of common stock during the three months ended February 28, 2025 and February 29, 2024, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

We increased dividends paid to $120.7 million, or a per share quarterly dividend of $0.45, in the first three months of 2025 from $112.7 million, or a per share quarterly dividend of $0.42, of dividends paid in the same period last year.

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

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

At August 31, 2024 and 2023, we temporarily used $609.0 million and $449.5 million, respectively, of cash from our non-U.S.

At February 28, 2025 and February 29, 2024, we temporarily used $607.3 million and $539.3 million, respectively, of cash from our non-U.S.

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

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

The average short-term borrowings outstanding for the three months ended August 31, 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 average short-term borrowings outstanding for the three months ended February 28, 2025 and February 29, 2024 were $981.3 million and $828.9 million, respectively.

Total average debt outstanding for the three months ended February 28, 2025 and February 29, 2024 was $4,781.3 million and $4,883.9 million, respectively.

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

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.

At February 28, 2025, the exchange rate for the Polish zloty was higher than the U.S.

dollar at November 30, 2024.

At August 31, 2024, the exchange rate for the Mexican peso was lower than the U.S.

At February 28, 2025, the exchange rate for the British pound sterling, Euro, Canadian dollar, Mexican peso, Chinese renminbi, and Australian dollar were lower than the U.S.

dollar at November 30, 2024.

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

In 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.

Our committed revolving credit facilities include a five-year $1.5 billion revolving credit facility, which will expire in June 2026 and a 364-day $500 million revolving credit facility, which was entered into in August 2024 and will expire in August 2025.

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 current pricing for the 364-day credit facility, on a fully drawn basis, is Term SOFR plus 1.23%.

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 1.60%.

The provisions of each 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 those facilities for the foreseeable future.

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

In the next year, our most significant debt service obligations include the maturity of our $250.0 million, 3.25% notes due in November 2025 and our $500.0 million, 0.90% notes due in February 2026.

Also, in August 2025, our $500 million, 364-day revolving credit facility matures.

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

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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

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

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

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

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 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, and cost savings, including those associated with our CCI and GOE programs and Global Business Services operating model initiative;

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

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

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 potential impact of trade policies, including new tariffs;

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, including 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 offset cost pressures or business impacts related to trade policies, including new tariffs;

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;

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labor shortage, turnover and labor cost increases;

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

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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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