What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-06-26 compared with 2025-03-25 · 220 added, 159 removed, 309 unchanged (55% of the section changed)

12 unchanged sentences

Executive Summary

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:

In the second quarter of 2025, we achieved net sales growth of 1.0% as compared to the second quarter of 2024, due to the following factors:

• Volume and product mix favorably impacted net sales by 1.3%.

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.

The Consumer segment experienced favorable volume and product mix of 3.3% and the Flavor Solutions segment experienced unfavorable volume and product mix of 1.0%.

• Pricing favorably impacted net sales by 0.3%.

• Fluctuations in currency rates negatively impacted net sales by 0.6%, decreasing sales growth by 0.1% in our Consumer segment and 1.3% 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.

Operating income was $245.8 million in the second quarter of 2025, compared to $234.1 million in the same period of 2024, reflecting an increase of 5.0%.

In the second quarter of 2025, our gross profit margin decreased by 20 basis points primarily driven by increased commodity costs.

Selling, general, and administrative (SG&A) expense as a percentage of sales decreased by 140 basis points, primarily driven by lower stock-based compensation expense due to a shift in timing of our annual stock grant from the second quarter to the first quarter, lower performance-based employee incentive expense, and cost savings from our Comprehensive Continuous Improvement program (CCI) including the impact of SG&A streamlining actions.

Excluding special charges, adjusted operating income was $258.6 million in the second quarter of 2025, reflecting an increase of 9.7% compared to $235.9 million in the 2024 period.

In constant currency, adjusted operating income increased by 11.0%.

Diluted earnings per share was $0.65 and $0.68 in the second quarters of 2025 and 2024, respectively.

Special charges lowered earnings per share by $0.04 and $0.01 in the second quarters of 2025 and 2024, respectively.

Excluding the effects of special charges, adjusted diluted earnings per share was $0.69 in the second quarters of both 2025 and 2024.

Favorable operating income and higher income from unconsolidated operations were offset by the impact of a higher effective tax rate.

A detailed review of our performance during the three and six month periods ended May 31, 2025 compared to the same periods in fiscal year 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 tariffs, which are currently in place and include a 10% tariff on all U.S.

imported goods, an incremental 30% tariff on goods imported from China into the U.S.

and reciprocal tariffs from other countries.

Most of our U.S.

imports from Mexico and Canada are currently compliant with the United States-Mexico-Canada Agreement.

We plan to mitigate the impact of tariff costs through sourcing plans supported by advanced analytics, cost savings initiatives, and revenue growth management.

Due to continued uncertainty regarding the 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.

1 unchanged sentence

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.

We expect our 2025 gross profit margin to range between flat to an increase of 50 basis points from the 38.5% gross profit margin reported in 2024.

We expect our gross margin to be impacted by increased costs of certain commodities due to the global trade uncertainty and tariff costs which we expect to mitigate.

For 2025, we anticipate an increase in operating income of 2% to 4% 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.

This anticipated increase in operating income reflects the impact of savings from our CCI program including SG&A streamlining actions, 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 mid-single digits compared to 2024.

Additionally, we expect approximately $20 million in special charges related to previously announced organizational and streamlining actions and transaction and integration expenses associated with a second quarter 2025 acquisition.

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.

We estimate our 2025 effective tax rate, including the net favorable impact of anticipated discrete tax items, although at a lower amount than in 2024, to be 22% to 23% as compared to 20.5% in 2024.

Excluding projected taxes associated with special charges, we estimate our adjusted effective tax rate to also be approximately 22% to 23% in 2025, as compared to an adjusted effective tax rate of 20.5% in 2024.

We expect income from unconsolidated operations will decline by a high single digit percentage rate from the 2024 level driven by our largest joint venture, McCormick de Mexico, due to the strengthening of the U.S.

dollar against the Mexican peso partially offset by continued strength in the underlying performance of the business.

Diluted earnings per share was $2.92 in 2024.

4 unchanged sentences

RESULTS OF OPERATIONS – COMPANY

Three months ended

February 28, 2025 February 29, 2024

Three months ended May 31,

Six months ended May 31,

Net sales $ 1,659.5 $ 1,643.2 $ 3,265.0 $ 3,245.9

Percent increase 0.2 % 2.4 %

Percent increase (decrease) 1.0 % (1.0) % 0.6 % 0.7 %

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

5 unchanged sentences

Gross profit margin 37.5 % 37.7 % 37.6 % 37.6 %

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

Sales for the second quarter of 2025 increased by 1.0% from the same period in 2024 and increased by 1.6% 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 favorably impacted sales by 0.3%.

F avorable volume and product mix increased sales by 1.3% driven by growth across all three regions in our Consumer segment partially offset by unfavorable volume and product mix in the Americas and Europe Middle East and Africa (EMEA) regions in our Flavor Solutions segment.

Foreign currency rates decreased sales by 0.6%.

Sales for the six months ended May 31, 2025 increased by 0.6% from the same period in 2024 and increased by 1.8% on an organic basis.

Pricing favorably impacted sales by 0.1%.

Favorable volume and product mix increased sales by 1.7%, driven by growth across all three regions in our Consumer segment offset by unfavorable volume and product mix in the Americas and EMEA regions in our Flavor Solutions segment.

Foreign currency rates decreased sales by 1.2%.

Gross profit for the second quarter of 2025 increased by $3.2 million, or 0.5%, from the same period in 2024.

Our gross profit margin was 37.5%, a decrease of 20 basis points, driven by costs to support increased capacity for future growth and higher commodity costs, partially offset by CCI-led cost savings.

Gross profit for the six months ended May 31, 2025 increased by $7.9 million, or 0.6%, from the same period in 2024.

Our gross profit margin was 37.6% in both periods.

Three months ended May 31,

Six months ended May 31,

Selling, general & administrative (SG&A) expense $ 364.2 $ 383.7 $ 743.0 $ 745.3

Percent of net sales 21.9 % 23.3 % 22.8 % 23.0%

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 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

February 28, 2025 February 29, 2024

SG&A expense decreased by $19.5 million in the second quarter of 2025 as compared to the same period in 2024, driven primarily by lower stock-based compensation expense, lower performance-based employee incentive expense, and CCI-led cost savings including the impact of SG&A streamlining actions.

The lower 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 as a percentage of net sales decreased by 140 basis points due to the factors previously described.

SG&A decreased by $2.3 million in the six months ended May 31, 2025 as compared to the same period in 2024, driven primarily by lower performance-based employee incentive expense, and CCI-led cost savings including the impact of SG&A streamlining actions, partially offset by increased selling and marketing expense.

SG&A as a percentage of net sales decreased by 20 basis points as compared to the prior year period.

Three months ended May 31,

Six months ended May 31,

Special charges $ 12.8 $ 1.8 $ 12.8 $ 6.0

During the three and six months ended May 31, 2025, we recorded $12.8 million of special charges, including transaction and integration expenses.

Those expenses principally consisted of $11.4 million associated with employee severance and related benefits associated with our SG&A streamlining actions and $0.8 million of transaction and integration costs.

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

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

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

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

Details with respect to the composition of special charges, including transaction and integration expenses, are included in Note 2 of the notes to the accompanying condensed consolidated financial statements.

Three months ended May 31,

Six months ended May 31,

Interest expense $ 51.0 $ 52.9 $ 99.5 $ 103.2

Other income, net 9.8 12.4 19.6 23.5

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

Interest expense decreased by $1.9 million and $3.7 million for the three and six months ended May 31, 2025, respectively, compared to the prior year periods.

These decreases were driven by the effects of lower average borrowing levels.

Other income, net, decreased by $2.6 million and $3.9 million for the three and six months ended May 31, 2025, respectively, compared to prior periods primarily due to a lower level of interest income.

Three months ended May 31,

Six months ended May 31,

Income from consolidated operations before income taxes $ 204.6 $ 193.6 $ 391.1 $ 387.9

4 unchanged sentences

Examples of such types of discrete items not related to ordinary income include, but are not limited to, excess tax benefits or expense associated with stock-based compensation, changes in estimates of the outcome of tax matters related to prior years, including reversals of reserves upon the lapsing of statutes of limitations, provision-to-return adjustments, the settlement of tax audits, changes in enacted tax rates 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 tax expense for the three months ended May 31, 2025 included $2.4 million of net discrete tax benefits consisting principally of a $1.5 million net tax benefit resulting from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction and $0.9 million of excess tax benefits associated with stock compensation.

Income tax expense for the six months ended May 31, 2025 included $7.6 million of net discrete tax benefits consisting principally of the following:

(i) $5.0 million net tax benefit resulting from the revaluation of deferred taxes associated with enacted legislation, (ii) $1.5 million net tax benefit resulting from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S.

jurisdiction, and (iii) $1.2 million of excess tax benefits associated with stock compensation.

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

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

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

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

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

Three months ended May 31,

Six months ended May 31,

Income from unconsolidated operations $ 19.7 $ 16.8 $ 37.1 $ 38.1

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.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $2.9 million for the three months ended May 31, 2025, driven by the results of our largest joint venture, McCormick de Mexico, where strong operating results were partially offset by the unfavorable impacts from foreign exchange rates.

Income from unconsolidated operations decreased by $1.0 million for the six months ended May 31, 2025, driven by the results of our largest joint venture, McCormick de Mexico, which included unfavorable impacts from foreign exchange rates, which was partially offset by the overall favorable results from our other unconsolidated entities.

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

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

Three months ended May 31,

Six months ended May 31,

2024 Earnings per share – diluted $ 0.68 $ 1.30

Impact of change in operating income 0.07 0.03

Decrease in special charges, net of taxes 0.01

Decrease in income from unconsolidated operations (0.01)

Increase in special charges (0.03) (0.02)

Decrease in interest expense — 0.01

Decrease in other income, net — (0.01)

Increase in income from unconsolidated operations 0.01 —

Impact of change in effective income tax rate, excluding taxes on special charges (0.08) (0.06)

5 unchanged sentences

CONSUMER SEGMENT

Three months ended

February 28, 2025 February 29, 2024

Three months ended May 31,

Six months ended May 31,

Net sales $ 930.6 $ 904.5 $ 1,849.8 $ 1,826.0

Percent (decrease) increase (0.2) % 1.3 %

Percent increase (decrease) 2.9 % (0.8) % 1.3 % 0.2 %

Segment operating income $ 163.6 $ 149.3 $ 310.3 $ 325.6

Segment operating income margin 17.6 % 16.5 % 16.8 % 17.8 %

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.

In the second quarter of 2025, sales of our Consumer segment increased by 2.9% compared to the second quarter of 2024 and increased by 3.0% on an organic basis.

Higher volume and product mix increased sales by 3.3%, driven by growth in all three regions.

Pricing actions unfavorably impacted sales by 0.3%.

The unfavorable impact of foreign currency rates decreased sales by 0.1% and is excluded from our measure of sales growth of 3.0% on an organic basis.

In the Americas region, Consumer segment sales increased by 2.4% in the second quarter of 2025 compared to the same quarter of 2024 and increased by 2.8% on an organic basis.

Favorable volume and product mix increased sales by 3.5% 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.

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 0.7%.

The unfavorable impact of foreign currency rates decreased sales by 0.4% and is excluded from our measure of sales growth of 2.8% on an organic basis.

In the EMEA region, Consumer segment sales increased by 4.9% in the second quarter of 2025 compared to the same quarter of 2024 and increased by 3.3% on an organic basis.

Favorable volume and product mix increased sales by 2.2% driven by growth in France and Poland.

Favorable pricing impacted sales by 1.1%.

The favorable impact from foreign currency rates increased sales by 1.6% and is excluded from our measure of sales growth of 3.3% on an organic basis.

In the APAC region, Consumer segment sales increased by 2.9% in the second quarter of 2025 compared to the same quarter of 2024 and increased by 3.7% on an organic basis.

Favorable volume and product mix increased sales by 3.6%, driven by growth in China.

Favorable pricing impacted sales by 0.1%.

The unfavorable impact from foreign currency rates decreased sales by 0.8% and is excluded from our measure of sales growth of 3.7% on an organic basis.

For the six months ended May 31, 2025, sales of our Consumer segment increased 1.3% as compared to the same period in 2024 and increased by 2.0% on an organic basis.

Higher volume and product mix increased sales by 2.9%, driven by growth in all regions.

Unfavorable pricing impacted sales by 0.9% primarily driven by prior year actions taken in the Americas region in response to price gap management that were predominantly in place in the second quarter of 2024.

The unfavorable impact from foreign currency rates decreased sales by 0.7% and is excluded from our measure of sales growth of 2.0% on an organic basis.

Segment operating income for our Consumer segment for the second quarter of 2025 increased by $14.3 million, or 9.6%, compared to the same period in 2024, primarily driven by the impact of lower SG&A expense.

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

Segment operating margin increased by 110 basis points to 17.6%.

On a constant currency basis, segment operating income increased by 9.8%.

Segment operating income for our Consumer segment for the six months ended May 31, 2025 decreased by $15.3 million, or 4.7%, as compared to the same period in 2024, driven by the effects of a decrease in gross profit.

The decrease in gross profit was driven by costs to support increased capacity for future growth, higher commodity costs and the unfavorable impact of pricing actions, partially offset by favorable sales volume and CCI-led cost savings.

Segment operating margin decreased by 100 basis points to 16.8%.

On a constant currency basis, segment operating income decreased by 4.1%.

FLAVOR SOLUTIONS SEGMENT

Three months ended

February 28, 2025 February 29, 2024

Three months ended May 31,

Six months ended May 31,

Net sales $ 728.9 $ 738.7 $ 1,415.2 $ 1,419.9

Percent increase 0.8 % 3.8 %

Percent increase (decrease) (1.3) % (1.1) % (0.3) % 1.2 %

Segment operating income $ 95.0 $ 86.6 $ 173.5 $ 148.0

Segment operating income margin 13.0 % 11.7 % 12.3 % 10.4 %

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.

In the second quarter of 2025, sales of our Flavor Solutions segment decreased by 1.3% as compared to the second quarter of 2024 and were flat on an organic basis.

Unfavorable volume and product mix decreased sales by 1.0% driven by the Americas and EMEA regions partially offset by growth in the APAC region.

Favorable pricing increased sales by 1.0%, driven by the Americas regions partially offset by unfavorable pricing in the EMEA and APAC regions.

The unfavorable impact of foreign currency rates decreased sales by 1.3%.

On an organic basis, sales of the Flavor Solutions segment were flat as compared to the prior year period.

In the Americas region, Flavor Solutions sales decreased by 1.0% in the second quarter of 2025 compared to the second quarter of 2024 and increased by 1.4% on an organic basis.

Unfavorable volume and product mix decreased sales by 1.0%.

Favorable pricing impacted sales by 2.4%.

The unfavorable impact from foreign currency rates decreased sales by 2.4% and is excluded from our measure of sales growth of 1.4% on an organic basis.

In the EMEA region, Flavor Solutions sales decreased by 4.7% in the second quarter of 2025 compared to the second quarter of 2024 and decreased by 7.0% on an organic basis.

Unfavorable volume and product mix decreased sales by 4.7%, driven by the effect of lower sales to packaged food and quick-service restaurant customers.

Unfavorable pricing impacted sales by 2.3%.

The favorable impact from foreign currency rates increased sales by 2.3% and is excluded from our measure of sales decline of 7.0% on an organic basis.

In the APAC region, Flavor Solutions sales increased by 3.1% in the second quarter of 2025 compared to the second quarter of 2024, and increased by 3.4% on an organic basis.

Favorable volume and product mix increased sales by 5.7%, primarily driven growth in China and Southeast Asia.

Pricing unfavorably impacted sales by 2.3%.

The unfavorable impact from foreign currency rates decreased sales by 0.3% and is excluded from our measure of sales growth of 3.4% on an organic basis.

For the six months ended May 31, 2025, sales of our Flavor Solutions segment decreased 0.3% as compared to the same period in 2024 and increased by 1.6% on an organic basis.

Favorable volume and product mix increased sales by 0.3% driven by growth in the APAC region partially offset by unfavorability in the Americas and EMEA regions.

Favorable pricing increased sales by 1.3%, driven by the Americas regions partially offset by unfavorable pricing in the EMEA and APAC regions.

The unfavorable impact of foreign currency rates decreased segment sales by 1.9% and is excluded from our measure of sales growth of 1.6% on an organic basis.

Segment operating income for our Flavor Solutions segment for the second quarter of 2025 increased by $8.4 million, or 9.8%, compared to the same period in 2024, driven by the effects of an increase in gross profit and lower SG&A expense.

The increase in gross profit was driven by the impacts of favorable product mix and pricing and CCI-led cost savings, partially offset by costs to support increased capacity for growth.

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

Segment operating margin increased by 130 basis points to 13.0%.

On a constant currency basis, segment operating income increased by 12.9%.

Segment operating income for our Flavor Solutions segment for the six months ended May 31, 2025 increased by $25.5 million, or 17.2%, compared to the same period in 2024, driven by the effects of an increase in gross profit.

The increase in gross profit was driven by the impacts of favorable pricing and product mix and CCI-led cost savings, partially offset by costs to support increased capacity for growth.

Segment operating margin increased by 190 basis points to 12.3%.

On a constant currency basis, segment operating income increased by 21.2%.

MARKET RISK SENSITIVITY

8 unchanged sentences

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

February 28, 2025 November 30, 2024

May 31, 2025 November 30, 2024

Forward foreign currency:

10 unchanged sentences

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

February 28, 2025 November 30, 2024

May 31, 2025 November 30, 2024

Notional value $ 600.0 $ 600.0

20 unchanged sentences

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.

Included in special charges are transaction and integration costs incurred in conjunction with a second quarter 2025 acquisition.

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

Details with respect to the composition of special charges for the year ended November 30, 2024 are included in Note 2 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2024.

7 unchanged sentences

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

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

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

May 31, 2025 May 31, 2024 May 31, 2025 May 31, 2024

Operating income $ 1,060.3 $ 245.8 $ 234.1 $ 471.0 $ 467.6

Impact of special charges

9.5 12.8 1.8 12.8 6.0

Adjusted operating income $ 1,069.8 $ 258.6 $ 235.9 $ 483.8 $ 473.6

6 unchanged sentences

Impact of special charges

2.4 3.0 0.4 3.0 1.5

Adjusted income tax expense $ 186.4 $ 52.3 $ 26.6 $ 93.9 $ 77.3

2 unchanged sentences

Impact of special charges

— % — % 0.1 % — % 0.1 %

Adjusted income tax rate (2)

2 unchanged sentences

Impact of special charges

7.1 9.8 1.4 9.8 4.5

Adjusted net income $ 795.6 $ 184.8 $ 185.6 $ 347.1 $ 354.7

4 unchanged sentences

(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 $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 $217.4 million and $195.4 million for the three months ended May 31, 2025 and 2024, respectively, and $403.9 million and $393.9 million for the six months ended May 31, 2025 and 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.

14 unchanged sentences

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

Three months ended February 28, 2025

Three months ended May 31, 2025

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

10 unchanged sentences

Total net sales 1.0 % (0.6) % 1.6 %

Three months ended February 28, 2025

Six months ended May 31, 2025

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

Consumer segment:

Americas 1.0 % (0.5) % 1.5 %

EMEA 2.3 % (1.2) % 3.5 %

APAC 1.6 % (1.6) % 3.2 %

Total Consumer 1.3 % (0.7) % 2.0 %

Flavor Solutions segment:

Americas (0.2) % (2.6) % 2.4 %

EMEA (5.0) % 0.6 % (5.6) %

APAC 7.7 % (1.4) % 9.1 %

Total Flavor Solutions (0.3) % (1.9) % 1.6 %

Total net sales 0.6 % (1.2) % 1.8 %

Three months ended May 31, 2025

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

3 unchanged sentences

Total adjusted operating income 9.7 % (1.3) % 11.0 %

Six months ended May 31, 2025

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

Adjusted operating income:

Consumer segment (4.7) % (0.6) % (4.1) %

Flavor Solutions segment 17.2 % (4.0) % 21.2 %

Total adjusted operating income 2.2 % (1.7) % 3.9 %

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.

8 unchanged sentences

Impact of unfavorable foreign currency exchange 1 %

Percentage change in organic net sales 1% to 3%

Percentage change in net sales in constant currency 1% to 3%

Percentage change in adjusted operating income 3% to 5%

3 unchanged sentences

Impact of unfavorable foreign currency exchange 2 %

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

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

LIQUIDITY AND FINANCIAL CONDITION

Three months ended

February 28, 2025 February 29, 2024

Six months ended

May 31, 2025 May 31, 2024

Net cash provided by operating activities $ 161.4 $ 301.5

11 unchanged sentences

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 $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.

Operating Cash Flow — Net cash provided by operating activities of $161.4 million for the six months ended May 31, 2025, decreased $140.1 million as compared to $301.5 million for the corresponding 2024 period.

The decrease in operating cash flow was primarily driven by higher cash used for working capital primarily driven by accounts payable decreases driven by the timing of inventory purchases.

Investing Cash Flow — Cash used in investing activities of $105.2 million for the six months ended May 31, 2025 decreased by $24.9 million as compared to $130.1 million for the corresponding period in 2024.

Capital expenditures decreased from the 2024 level of $130.3 million to $85.4 million.

We expect 2025 capital expenditures to approximate $275 million.

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.

Cash used for the acquisition of a business was $19.8 million.

Financing Cash Flow — Financing activities used cash of $142.9 million for the six months ended May 31, 2025 and decreased $29.3 million as compared to $172.2 million for the corresponding period in 2024.

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

The following table outlines our net borrowing activities:

Three months ended

February 28, 2025 February 29, 2024

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

Six months ended

May 31, 2025 May 31, 2024

Net increase in short-term borrowings $ 116.0 $ 80.3

Repayments of long-term debt (13.6) (28.0)

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

Long-term debt borrowings 0.9 —

Net cash provided by borrowing activities $ 103.3 $ 52.3

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

Three months ended

February 28, 2025 February 29, 2024

Six months ended

May 31, 2025 May 31, 2024

Number of shares of common stock repurchased (in thousands) 345 64

Dollar amount (in millions) $ 26.5 $ 4.5

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.

As of May 31, 2025, approximately $422 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 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.

During the six months ended May 31, 2025, we received proceeds of $13.3 million from exercised stock options as compared to $10.4 million received in the corresponding 2024 period.

We repurchased $12.6 million and $8.9 million of common stock during the six months ended May 31, 2025 and 2024, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

We increased dividends paid to $241.5 million, or a per share quarterly dividend of $0.45, in the first six months of 2025 from $225.5 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.

2 unchanged sentences

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

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

At May 31, 2025 and 2024, we temporarily used $614.2 million and $585.8 million, respectively, of cash from our non-U.S.

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

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

The average short-term borrowings outstanding for the three months ended February 28, 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 average short-term borrowings outstanding for the six months ended May 31, 2025 and 2024 were $1,073.5 and $886.6 million, respectively.

Total average debt outstanding for the six months ended May 31, 2025 and 2024 was $4,873.5 million and $4,941.6 million, respectively.

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

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

At May 31, 2025, the exchange rate for the British pound sterling, Euro, Canadian dollar, Mexican peso, Chinese renminbi, and Polish zloty were higher than the U.S.

dollar at November 30, 2024.

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.

At May 31, 2025, the exchange rate for the Australian dollar was lower than the U.S.

dollar at November 30, 2024.

2 unchanged sentences

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

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

In May 2025, we entered into a five-year $2.0 billion revolving credit facility which will expire in May 2030 and simultaneously cancelled the five-year $1.5 billion revolving credit facility which was set to expire in June 2026 and the 364-day $500 million revolving credit facility which was set to expire in August 2025.

The current pricing for the five-year credit facility, on a fully drawn basis, is Term SOFR plus 1.125%.

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.

The pricing of the revolving 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 1.50%.

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

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

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

11 unchanged sentences

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.

14 unchanged sentences

FORWARD-LOOKING INFORMATION

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.

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, including transaction and integration expenses, 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,” “plan,” and similar expressions.

5 unchanged sentences

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

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 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;

37 unchanged sentences

the stability of credit and capital markets;

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

risks associated with the Company's

information technology systems, including the threat of data breaches and cyber-attacks;

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

9 unchanged sentences

Actual results could differ materially from those projected in the forward-looking statements.

We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

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