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Item 2. Management’s Discussion and Analysis

2025-10-07 compared with 2025-06-26 · 172 added, 158 removed, 371 unchanged (47% of the section changed)

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We manage our business in two business segments, Consumer and Flavor Solutions.

On August 21, 2025, we signed a definitive agreement, subject to customary closing and regulatory conditions, with Grupo Herdez to acquire an additional 25% ownership interest in McCormick de Mexico, for a purchase price of $750 million, which would increase our ownership in the joint venture to a controlling 75%.

The transaction is expected to be completed early in the fiscal year ending November 30, 2026.

We believe the acquisition creates opportunities for further growth in the Mexican market and provides a strategic platform for further expansion in Latin America.

McCormick de Mexico is a prominent food company in Mexico, with a broad portfolio, including mayonnaise, spices, marmalades, mustard, hot sauce, and tea, sold under McCormick brands.

Executive Summary

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:

In the third quarter of 2025, we achieved net sales growth of 2.7% as compared to the third quarter of 2024, due to the following factors:

• Volume and product mix favorably impacted net sales by 1.2%.

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• Pricing favorably impacted net sales by 0.6%.

• 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 $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.

• Fluctuations in currency rates positively impacted net sales by 0.9%, increasing sales growth by 1.2% in our Consumer segment and 0.6% in our Flavor Solutions segment.

Operating income was $288.7 million in the third quarter of 2025, compared to $286.5 million in the same period of 2024, reflecting an increase of 0.8%.

Our gross profit margin decreased by 130 basis points primarily driven by increased commodity costs including the impact of tariffs, and increased conversion costs including costs to support capacity for future growth, partially offset by CCI-led cost savings.

Excluding the effects of special charges included in cost of goods sold, our adjusted gross profit margin decreased by 120 basis points.

Selling, general, and administrative (SG&A) expense as a percentage of sales decreased by 100 basis points, primarily driven by lower performance-based employee incentive expense and CCI-led cost savings, including SG&A streamlining initiatives.

Excluding special charges, adjusted operating income was $293.6 million in the third quarter of 2025, reflecting an increase of 1.8% compared to $288.4 million in the 2024 period.

In constant currency, adjusted operating income increased by 1.6%.

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.

Diluted earnings per share was $0.84 and $0.83 in the third quarters of 2025 and 2024, respectively.

Special charges, including transaction and integration expenses, lowered earnings per share by $0.01 in the third quarter of 2025.

Excluding the effects of special charges, diluted earnings per share was $0.85 and $0.83 in the third quarters of 2025 and 2024, respectively.

Favorable operating income and lower interest expense were partially offset by lower interest income.

A detailed review of our performance during the three and nine month periods ended August 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 mitigate costs related to tariffs, which are currently in place.

Our actions to mitigate the impact of tariff costs include sourcing plans supported by advanced analytics, cost savings initiatives, and revenue growth management.

Due to the ongoing uncertainty around potential new U.S.

import tariffs or retaliatory tariffs put in place by other countries, our outlook is based on tariffs currently in place and does not factor in any potential actions that may arise during the remainder of 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 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.

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

We expect our 2025 gross profit margin to be flat or comparable to the 38.5% gross profit margin reported in 2024.

We expect our gross margin to be impacted by increased commodity costs due to the global trade uncertainty and tariffs currently in place.

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

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.

This anticipated increase in operating income reflects the impact of savings from our CCI program including SG&A streamlining actions, partially offset by investments aimed at driving volume growth, particularly in brand marketing and digital.

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.

In 2024, special charges totaled $9.5 million.

Excluding these special charges, we expect adjusted operating income in 2025 to increase by 2% to 4%, which includes a 1% unfavorable impact from foreign currency rates, or to increase by 3% to 5% on a constant currency basis.

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.

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% 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.

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

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 unfavorable impacts from foreign currency partially offset by continued strength in the underlying performance of the business.

Diluted earnings per share was $2.92 in 2024.

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RESULTS OF OPERATIONS – COMPANY

Three months ended May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

Net sales $ 1,724.9 $ 1,679.8 $ 4,989.9 $ 4,925.7

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Gross profit margin 37.4 % 38.7 % 37.5 % 37.9 %

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).

Sales for the third quarter of 2025 increased by 2.7% from the same period in 2024 and increased by 1.8% 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 0.6%.

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.

F avorable volume and product mix increased sales by 1.2% driven by favorable volume and product mix from our Consumer segment of 2.2% offset by unfavorable volume and product mix from our Flavor Solutions segment of 0.3%.

Foreign currency rates increased sales by 0.9%.

Sales for the nine months ended August 31, 2025 increased by 1.3% from the same period in 2024 and increased by 1.8% on an organic basis.

Pricing favorably impacted sales by 0.3%.

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.

Favorable volume and product mix increased sales by 1.5%, driven by growth across all three regions in our Consumer segment.

Foreign currency rates decreased sales by 0.5%.

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,

Gross profit for the third quarter of 2025 decreased by $4.8 million, or 0.7%, from the same period in 2024.

Our gross profit margin was 37.4%, a decrease of 130 basis points, driven by increased commodity costs including the impact of tariffs, and increased conversion cost including costs to support increased capacity for future growth, partially offset by Comprehensive Continuous Improvement (CCI) program-led cost savings.

Also, gross profit was impacted by unfavorable customer mix that was offset by the effects of favorable pricing.

Excluding the impact of special charges related to the step up of acquired inventory included in cost of goods sold, adjusted gross margin was 37.5% for the third quarter of 2025.

Gross profit for the nine months ended August 31, 2025 increased by $3.1 million, or 0.2%, from the same period in 2024.

Our gross profit margin was 37.5%, a decrease of 40 basis points, driven by unfavorable customer mix and increased conversion costs including costs to support increased capacity for future growth, partially offset by favorable pricing and CCI-led cost savings.

Excluding the impact of special charges related to the step up of acquired inventory included in cost of goods sold, adjusted gross margin was 37.5% for the nine months ended August 31, 2025.

Three months ended August 31,

Nine months ended August 31,

Selling, general & administrative (SG&A) expense $ 352.5 $ 361.5 $ 1,095.5 $ 1,106.8

Percent of net sales 20.5 % 21.5 % 21.9 % 22.5%

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 expense decreased by $9.0 million in the third quarter of 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.

SG&A as a percentage of net sales decreased by 100 basis points.

SG&A decreased by $11.3 million in the nine months ended August 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 60 basis points as compared to the prior year period.

Three months ended May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

Special charges $ 3.9 $ 1.9 $ 16.7 $ 7.9

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.

During the three months ended August 31, 2025, we recorded $3.9 million of special charges, including transaction and integration expenses.

Those expenses consisted of $1.3 million associated with employee severance and related benefits associated with our SG&A streamlining actions, $1.7 million associated with other actions and $0.9 million of transaction and integration costs.

During the nine months ended August 31, 2025, we recorded $16.7 million of special charges, including transaction and integration expenses.

Those expenses consisted principally of $12.7 million associated with employee severance and related benefits associated with our SG&A streamlining actions, $2.3 million associated with other actions and $1.7 million of transaction and integration costs.

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 and $1.2 million associated with the transition of a manufacturing facility in Europe, Middle East, and Africa (EMEA).

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, and $2.6 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,

Three months ended August 31,

Nine months ended August 31,

Interest expense $ 50.2 $ 53.5 $ 149.7 $ 156.7

Other income, net 9.4 13.2 29.0 36.7

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,

Interest expense decreased by $3.3 million and $7.0 million for the three and nine months ended August 31, 2025, respectively, compared to the prior year periods.

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

Other income, net, decreased by $3.8 million and $7.7 million for the three and nine months ended August 31, 2025, respectively, compared to prior periods primarily due to a lower level of interest income driven by lower interest rates and unfavorable impacts of foreign exchange rates and lower non-service cost income associated with our pension and postretirement benefit plans.

Three months ended August 31,

Nine months ended August 31,

Income from consolidated operations before income taxes $ 247.9 $ 246.2 $ 639.0 $ 634.1

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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 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 tax expense for the three months ended August 31, 2025 included $20.0 million of net discrete tax benefits consisting principally of the following:

(i) $8.7 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest, including $4.4 million associated with the expiration of statutes of limitations, (ii) $8.1 million of tax benefits resulting from state tax matters, and related deferred taxes, and (iii) $3.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed.

Income tax expense for the nine months ended August 31, 2025 included $27.6 million of net discrete tax benefits consisting principally of the following:

(i) $10.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest, including $5.9 million associated with the expiration of statutes of limitations, (ii) $8.0 million of tax benefits resulting from state tax matters, and related deferred taxes, (iii) a $5.0 million tax benefit resulting from the revaluation of deferred taxes associated with enacted legislation, (iv) $3.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final return filed, and (v) $1.0 million of excess tax benefits associated with stock compensation.

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.

On July 4, 2025, legislation known as the One Big Beautiful Bill Act (OBBBA) was signed into law.

The OBBBA makes changes to the United States corporate income tax system, including, among other provisions, the immediate expensing of research and development expenditures, and 100 percent bonus depreciation on qualified property.

While we expect certain provisions of the OBBBA to change the timing of cash tax payments in the current fiscal year and future year periods, we do not expect the legislation to have a material impact on our consolidated financial statements.

Three months ended August 31,

Nine months ended August 31,

Income from unconsolidated operations $ 16.9 $ 17.9 $ 54.0 $ 56.0

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.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, decreased by $1.0 million for the three months ended August 31, 2025, driven by the results of our largest joint venture, McCormick de Mexico, where unfavorable impacts from foreign exchange rates were partially offset by improved operating results.

Income from unconsolidated operations decreased by $2.0 million for the nine months ended August 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 May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

2024 Earnings per share – diluted $ 0.83 $ 2.13

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Decrease in other income, net (0.01) (0.02)

Increase in income from unconsolidated operations 0.01 —

Decrease in income from unconsolidated operations — (0.01)

Impact of change in effective income tax rate, excluding taxes on special charges — (0.05)

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CONSUMER SEGMENT

Three months ended May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

Net sales $ 973.2 $ 937.4 $ 2,823.0 $ 2,763.4

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

Percent increase 3.8 % — % 2.2 % 0.2 %

Segment operating income $ 193.8 $ 186.8 $ 504.1 $ 512.4

Segment operating income margin 19.9 % 19.9 % 17.9 % 18.5 %

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.

In the third quarter of 2025, sales of our Consumer segment increased by 3.8% compared to the third quarter of 2024 and increased by 2.6% on an organic basis.

Higher volume and product mix increased sales by 2.2%, driven by growth in the Americas and EMEA regions, partially offset by unfavorable volume and product mix in the APAC region.

Pricing actions favorably impacted sales by 0.4%.

The favorable impact of foreign currency rates increased sales by 1.2% and is excluded from our measure of sales growth of 2.6% on an organic basis.

In the Americas region, Consumer segment sales increased by 2.7% in the third quarter of 2025 compared to the same quarter of 2024 on both a reported and an organic basis.

Favorable volume and product mix increased sales by 2.7% 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 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.

Pricing was comparable.

The impact of foreign currency rates was flat and is excluded from our measure of sales growth of 2.7% on an organic basis.

In the EMEA region, Consumer segment sales increased by 11.4% in the third quarter of 2025 compared to the same quarter of 2024 and increased by 4.4% on an organic basis.

Favorable volume and product mix increased sales by 1.6%.

Favorable pricing impacted sales by 2.8%.

The favorable impact from foreign currency rates increased sales by 7.0% and is excluded from our measure of sales growth of 4.4% 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.

In the APAC region, Consumer segment sales in the third quarter of 2025 were comparable to the same quarter of 2024 and decreased by 0.8% on an organic basis.

Unfavorable volume and product mix decreased sales by 0.6%, driven by lower sales to foodservice customers in China.

Unfavorable pricing impacted sales by 0.2%.

The favorable impact from foreign currency rates increased sales by 0.8% and is excluded from our measure of sales decline of 0.8% on an organic basis.

For the nine months ended August 31, 2025, sales of our Consumer segment increased 2.2% as compared to the same period in 2024 and increased by 2.3% on an organic basis.

Higher volume and product mix increased sales by 2.7%, 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.

Unfavorable pricing impacted sales by 0.4%.

The unfavorable impact from foreign currency rates decreased sales by 0.1% and is excluded from our measure of sales growth of 2.3% 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.

Segment operating income for our Consumer segment for the third quarter of 2025 increased by $7.0 million, or 3.7%, compared to the same period in 2024, driven by an increase in gross profit and a decrease in SG&A expense.

The increase in

gross profit was driven by higher net sales, partially offset by increased conversion cost including costs to support increased capacity for future growth, and increased commodity costs including the impact of tariffs.

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 3.2%.

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 income for our Consumer segment for the nine months ended August 31, 2025 decreased by $8.3 million, or 1.6%, as compared to the same period in 2024, driven a decrease in gross profit, partially offset by a decrease in SG&A expense.

The decrease in gross profit was driven by unfavorable product mix, increased conversion costs including costs to support increased capacity for future growth and unfavorable pricing actions, partially offset by higher sales volume and CCI-led cost savings.

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

Segment operating margin decreased by 60 basis points to 17.9%.

1 unchanged sentence

FLAVOR SOLUTIONS SEGMENT

Three months ended May 31,

Six months ended May 31,

Three months ended August 31,

Nine months ended August 31,

Net sales $ 751.7 $ 742.4 $ 2,166.9 $ 2,162.3

2 unchanged sentences

Segment operating income margin 13.3 % 13.7 % 12.6 % 11.5 %

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.

In the third quarter of 2025, sales of our Flavor Solutions segment increased by 1.2% as compared to the third quarter of 2024 and increased by 0.6% an organic basis.

Unfavorable volume and product mix decreased sales by 0.3% 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 increased sales by 0.9%.

The favorable impact of foreign currency rates increased sales by 0.6% and is excluded from our measure of sales growth of 0.6% on an organic basis.

In the Americas region, Flavor Solutions sales increased by 0.1% in the third quarter of 2025 compared to the third quarter of 2024 and increased by 0.9% on an organic basis.

Unfavorable volume and product mix decreased sales by 1.3% driven by lower sales to branded foodservice and packaged food customers.

Favorable pricing impacted sales by 2.2%.

The unfavorable impact from foreign currency rates decreased sales by 0.8% and is excluded from our measure of sales growth of 0.9% 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.

In the EMEA region, Flavor Solutions sales increased by 2.1% in the third quarter of 2025 compared to the third quarter of 2024 and decreased by 3.1% on an organic basis.

Unfavorable volume and product mix decreased sales by 1.0%, driven by the effect of lower sales to packaged food customers.

Unfavorable pricing impacted sales by 2.1%.

The favorable impact from foreign currency rates increased sales by 5.2% and is excluded from our measure of sales decline of 3.1% 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.

In the APAC region, Flavor Solutions sales increased by 7.7% in the third quarter of 2025 compared to the third quarter of 2024, and increased by 6.3% on an organic basis.

Favorable volume and product mix increased sales by 9.0%, primarily driven by growth in China and Southeast Asia.

Pricing unfavorably impacted sales by 2.7%.

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.

The favorable impact from foreign currency rates increased sales by 1.4% and is excluded from our measure of sales growth of 6.3% on an organic basis.

For the nine months ended August 31, 2025, sales of our Flavor Solutions segment increased 0.2% as compared to the same period in 2024 and increased by 1.2% on an organic basis.

Favorable volume and product mix increased sales by 0.1% driven by growth in the APAC region mostly offset by unfavorability in the Americas and EMEA regions.

Favorable pricing increased sales by 1.1%, 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 1.0% and is excluded from our measure of sales growth of 1.2% 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.

Segment operating income for our Flavor Solutions segment for the third quarter of 2025 decreased by $1.8 million, or 1.8%, compared to the same period in 2024, driven by a decrease in gross profit partially offset by lower SG&A expense.

The decrease in gross profit was driven by increased commodity costs including the impact of tariffs, unfavorable product mix and increased conversion costs including costs to support increased capacity for future growth, partially offset by favorable pricing.

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 decreased by 40 basis points to 13.3%.

On a constant currency basis, segment operating income decreased by 1.6%.

Segment operating income for our Flavor Solutions segment for the nine months ended August 31, 2025 increased by $23.7 million, or 9.5%, compared to the same period in 2024, driven by an increase in gross profit and lower SG&A expense.

The increase in gross profit was driven by the impacts of favorable pricing and CCI-led cost savings, partially offset by increased

conversion costs including 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 110 basis points to 12.6%.

10 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:

May 31, 2025 November 30, 2024

August 31, 2025 November 30, 2024

Forward foreign currency:

3 unchanged sentences

Notional value 1,027.2 945.5

Unrealized net gain 0.6 36.8

Unrealized net (loss) gain (14.4) 36.8

The outstanding notional value is a result of our decisions on foreign currency exposure coverage, based on our foreign currency and foreign currency translation exposures.

4 unchanged sentences

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

May 31, 2025 November 30, 2024

August 31, 2025 November 30, 2024

Notional value $ 600.0 $ 600.0

15 unchanged sentences

NON-GAAP FINANCIAL MEASURES

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.

The following tables include financial measures of organic net sales, adjusted gross profit, adjusted gross profit margin, 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.

2 unchanged sentences

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

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

Included in special charges are transaction and integration costs incurred in conjunction with acquisitions.

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.

8 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 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

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

August 31, 2025 August 31, 2024 August 31, 2025 August 31, 2024

Gross profit $ 2,591.0 $ 645.1 $ 649.9 $ 1,871.9 $ 1,868.8

Impact of special charges included in cost of goods sold

— 1.0 — 1.0 —

Adjusted gross profit $ 2,591.0 $ 646.1 $ 649.9 $ 1,872.9 $ 1,868.8

Gross profit margin (1)

38.5 % 37.4 % 38.7 % 37.5 % 37.9 %

Impact of special charges — % 0.1 % — % — % — %

Adjusted gross profit margin (1)

38.5 % 37.5 % 38.7 % 37.5 % 37.9 %

Operating income $ 1,060.3 $ 288.7 $ 286.5 $ 759.7 $ 754.1

24 unchanged sentences

Adjusted earnings per share – diluted $ 2.95 $ 0.85 $ 0.83 $ 2.14 $ 2.15 $3.00 to $3.05

(1) Gross profit margin, impact of special charges, and adjusted gross profit margin are calculated as gross profit, impact of special charges, and adjusted gross profit as a percentage of net sales for each period presented.

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

(3) 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 $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 $252.8 million and $248.1 million for the three months ended August 31, 2025 and 2024, respectively, and $656.7 million and $642.0 million for the nine months ended August 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 May 31, 2025

Three months ended August 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 2.7 % 0.9 % 1.8 %

Six months ended May 31, 2025

Nine months ended August 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 1.3 % (0.5) % 1.8 %

Three months ended May 31, 2025

Three months ended August 31, 2025

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

3 unchanged sentences

Total adjusted operating income 1.8 % 0.2 % 1.6 %

Six months ended May 31, 2025

Nine months ended August 31, 2025

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

21 unchanged sentences

LIQUIDITY AND FINANCIAL CONDITION

Six months ended

May 31, 2025 May 31, 2024

Nine months ended

August 31, 2025 August 31, 2024

Net cash provided by operating activities $ 420.2 $ 463.2

8 unchanged sentences

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.

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, the payment associated with an acquisition and payment of anticipated quarterly dividends for at least the next twelve months.

In the condensed consolidated cash flow statement, the changes in operating assets and liabilities are presented excluding the translation effects of changes in foreign currency exchange rates as these do not reflect actual cash flows.

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 $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.

Operating Cash Flow — Net cash provided by operating activities of $420.2 million for the nine months ended August 31, 2025, decreased $43.0 million as compared to $463.2 million for the corresponding 2024 period.

The decrease in operating cash flow was primarily driven by higher cash used for working capital.

The higher use of cash associated with working capital was driven by an increased use of cash associated with accounts payable which was partially offset by a lower use of cash associated with inventory in the 2025 period as compared to the 2024 period.

Investing Cash Flow — Cash used in investing activities of $172.2 million for the nine months ended August 31, 2025 decreased by $16.9 million as compared to $189.1 million for the corresponding period in 2024.

Capital expenditures decreased from the 2024 level of $189.3 million to $138.1 million.

1 unchanged sentence

Cash used for the acquisition of a business was $34.1 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.

Financing Cash Flow — Financing activities used cash of $378.3 million for the nine months ended August 31, 2025 and increased $172.4 million as compared to $205.9 million for the corresponding period in 2024.

The decrease is a result of changes in our net borrowings, share repurchase activity, and dividends, all as described below.

The following table outlines our net borrowing activities:

Six months ended

May 31, 2025 May 31, 2024

Nine months ended

August 31, 2025 August 31, 2024

Net increase in short-term borrowings $ 13.2 $ 908.6

1 unchanged sentence

Long-term debt borrowings 2.4 —

Net cash provided by borrowing activities $ 103.3 $ 52.3

Net cash (used) provided by borrowing activities $ (0.1) $ 155.8

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

Six months ended

May 31, 2025 May 31, 2024

Nine months ended

August 31, 2025 August 31, 2024

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

Dollar amount (in millions) $ 29.2 $ 29.0

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.

As of August 31, 2025, approximately $419 million remained of the $600 million share repurchase program that was authorized by the Board of Directors in November 2019.

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

During the six months ended May 31, 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.

During the nine months ended August 31, 2025, we received proceeds of $15.1 million from exercised stock options as compared to $12.8 million received in the corresponding 2024 period.

We repurchased $13.2 million and $8.9 million of common stock during the nine months ended August 31, 2025 and 2024, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

Dividends paid increased to $362.2 million, or a per share quarterly dividend of $0.45, in the first nine months of 2025 from $338.3 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 May 31, 2025 and 2024, we temporarily used $614.2 million and $585.8 million, respectively, of cash from our non-U.S.

At August 31, 2025 and 2024, we temporarily used $652.2 million and $609.0 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 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 average short-term borrowings outstanding for the nine months ended August 31, 2025 and 2024 were $1,099.4 million and $955.8 million, respectively.

Total average debt outstanding for the nine months ended August 31, 2025 and 2024 was $4,899.4 million and $4,970.8 million, respectively.

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

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

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

dollar at November 30, 2024.

20 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.

During the third quarter of 2025 we entered into a definitive agreement, subject to customary closing and regulatory conditions, to acquire an additional 25% ownership interest in our largest joint venture, McCormick de Mexico, for a purchase price of $750 million which is expected to be completed early in the fiscal year ending November 30, 2026.

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.

62 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;

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis