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Item 7. Management’s Discussion and Analysis

2026-01-22 compared with 2025-01-23 · 187 added, 232 removed, 449 unchanged (48% of the section changed)

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We have a strong pipeline of Flavor Solutions products aligned with our customers’ new product launch plans, many of which include clean-label, organic, natural, and “better-for-you” innovation.

product innovation centers around the world, we are supporting the growth of our brands and those of our flavor solutions customers with products that appeal to local consumers.

With over 20 product innovation centers around the world, we are supporting the growth of our brands and those of our Flavor Solutions customers with products that appeal to local consumers.

Acquisitions – Acquisitions are expected to approximate one-third of our sales growth over time.

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Geographically, our focus is on acquisitions that build scale where we currently have presence in both developed and emerging markets.

On January 2, 2026 we acquired an additional 25% ownership interest in McCormick de Mexico for a purchase price of $750 million, which increased our ownership to a 75% controlling interest.

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 2024, we achieved net sales growth of 0.9% over the 2023 level due to the following factors:

• Volume and product mix favorably impacted our net sales growth by 0.3%, exclusive of divestitures.

In 2025, we achieved net sales growth of 1.7% as compared to 2024 due to the following factors:

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

The Consumer segment experienced favorable volume and product mix of 2.1% and the Flavor Solutions segment experienced unfavorable volume and product mix of 0.2%.

• Pricing actions contributed 0.5% to the increase in net sales, driven by the favorable impact of pricing actions in our flavor solutions segment.

• Divestitures negatively impacted our net sales by 0.2%.

• Net sales were favorably impacted by fluctuations in currency rates by 0.3%.

• Excluding the impact of divestitures and fluctuations in currency rates, we grew sales, on an organic basis, by 0.8% over the prior year.

Operating income was $1,060.3 million in 2024 and $963.0 million in 2023.

We recognized $9.5 million and $61.2 million of special charges in 2024 and 2023, respectively, related to organization and streamlining actions.

In 2024, operating income was positively impacted by the higher level of sales and an improvement in our gross profit margin as a percentage of sales of 90 basis points as compared to the prior year.

The gross profit margin improvement was driven by the effects of favorable pricing actions, favorable product and customer mix, less scrapped inventory, and cost savings led by our CCI and Global Operating Effectiveness (GOE) programs which were partially offset by higher conversion costs, all as compared to the prior year.

A higher level of SG&A expenses resulted in a 40 basis point increase in SG&A as a percentage of sales with approximately half of that basis point increase attributable to an increase in advertising and promotion spend.

In addition, the higher level of SG&A expenses was driven by increased selling and marketing costs and a higher level of research and development expenses that were partially offset by, lower performance-based employee and stock based compensation expense and cost savings led by our CCI and GOE programs, all as compared to the prior year.

Excluding special charges, adjusted operating income was $1,069.8 million in 2024, representing a 4.5% increase compared to $1,024.2 million in 2023.

• Pricing favorably impacted net sales by 0.7%.

• Fluctuations in currency rates negatively impacted net sales by 0.2%, Fluctuations in currency rates positively impacted our Consumer segment sales growth by 0.2% and negatively impacted our Flavor Solutions segment sales growth by 0.6%.

Operating income was $1,070.8 million in 2025, compared to $1,060.3 million in 2024, reflecting an increase of 1.0%.

Our gross profit margin decreased by 60 basis points primarily driven by increased commodity costs including the impact of tariffs, unfavorable product mix, and increased conversion costs including costs to support capacity for future growth, partially offset by pricing actions and CCI-led cost savings.

Selling, general, and administrative (SG&A) expense as a percentage of sales decreased by 70 basis points, primarily driven by lower performance-based employee compensation expense, lower distribution expense, and CCI-led cost savings including SG&A streamlining initiatives, partially offset by increased brand marketing expense.

Excluding special charges, adjusted operating income was $1,094.0 million in 2025, reflecting an increase of 2.3% compared to $1,069.8 million in 2024.

In constant currency, adjusted operating income increased 2.8%.

For further details and a reconciliation of non-GAAP to reported amounts, see the subsequent discussion under the heading "Non-GAAP Financial Measures".

Diluted earnings per share was $2.92 in 2024 and $2.52 in 2023.

In 2024, diluted earnings per share growth was driven primarily by higher operating income, which included the effects of lower special charges, an increase in income from unconsolidated operations and a decrease in the effective tax rate.

Diluted earnings per share was $2.93 in 2025 and $2.92 in 2024, driven by higher operating income and decreased interest expense, partially offset by an increase in the effective tax rate, higher special charges, a decrease in other income, and a decrease in income from unconsolidated operations.

Special charges lowered earnings per share by $0.07 and $0.03 in 2025 and 2024, respectively.

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A detailed review of our fiscal 2025 performance compared to fiscal 2024 appears in the section titled “Results of Operations – 2025 Compared to 2024.” A detailed review of our fiscal 2024 performance compared to our fiscal 2023 performance is set forth in Part II, Item 7 of our Form 10-K for the fiscal year ended November 30, 2024 under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations – 2024 Compared to 2023,” which is incorporated herein by reference.

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

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

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

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

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

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

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

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

in 2024, special charges totaled $9.5 million.

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

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

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

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

dollar against the Mexican peso.

Diluted earnings per share was $2.92 in 2024.

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

Our fiscal 2026 outlook continues to reflect prioritized investments in key categories to sustain our volume trends and drive long-term profitable growth while appreciating the uncertainty of the consumer and macro environment, including global trade policies.

Our CCI program is continuing to fuel growth investments while also driving operating margin expansion.

Our fiscal 2026 outlook also reflects meaningful contributions from the acquisition of a controlling interest in McCormick de Mexico, which closed on January 2, 2026.

Amounts are rounded with percentages calculated from the underlying amounts.

Our outlook for 2026 adjusted operating income and adjusted earnings per share are non-GAAP financial measures that exclude or otherwise adjust for items impacting comparability of financial results.

We are unable to reconcile projected adjusted operating income to projected reported operating income because we cannot reasonably predict the amount of special charges, including transaction and integration expenses, during this time period.

We expect 2026 transaction and integration expenses to include a step-up in inventory to fair value related to the recent acquisition of an additional 25% ownership interest in McCormick de Mexico.

This step-up will be recognized in cost of goods sold as the related inventory is sold.

We are unable to reconcile projected adjusted earnings per share to projected reported earnings per share due to the same factors affecting reported operating income, and because we cannot reasonably predict the amount of the anticipated non-cash gain from remeasuring the previously held equity interest in McCormick de Mexico to fair value.

In 2026, we expect net sales to grow between 13% and 17% compared to 2025, including an 11% to 13% increase as a result of the acquisition of a controlling interest in McCormick de Mexico and a 1% favorable impact from foreign currency rates, or to grow from 1% to 3% on an organic basis.

We anticipate that net sales will benefit from favorable volume and product mix and pricing.

In 2026, we expect an increase in adjusted operating income of 16% to 20% compared to 2025, including a 1% favorable impact from foreign currency rates, or to increase by 15% to 19% on a constant currency basis.

This anticipated increase in adjusted operating income reflects recovery of adjusted gross margin, accretion from the acquisition of the controlling interest in McCormick de Mexico and cost savings from our CCI program, partially offset by increased commodity costs and an increase in SG&A expense, including performance-based employee compensation expenses and investments aimed at driving volume growth, particularly in brand marketing.

We project our brand marketing investments in 2026 to rise by low to mid-teens digits, including the impact from the acquisition of the controlling interest in McCormick de Mexico, compared to 2025.

We estimate that our 2026 adjusted effective tax rate, including the net favorable impact of anticipated discrete tax items, although at a lower amount than in 2025, will be 24.0% as compared to 21.5% in 2025.

Excluding the per share impact of special charges, adjusted diluted earnings per share was $3.00 in 2025.

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

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

Adjusted diluted earnings per share is projected to range from $3.05 to $3.13 in 2026.

We expect adjusted diluted earnings

per share to increase by 2% to 5%, which includes a 1% favorable impact from currency rates, or to increase by 1% to 4% on a constant currency basis.

RESULTS OF OPERATIONS—2025 COMPARED TO 2024

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Percent growth 1.7 % 0.9 %

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

Components of percent change in net sales:

Volume and product mix 1.2 % 0.3 %

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Foreign exchange (0.2) % 0.3 %

Sales for 2024 increased by 0.9% from 2023 and by 0.8% 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 actions, primarily implemented during the prior year, increased sales by 0.5% as compared to 2023.

Favorable volume and product mix increased sales by 0.3%.

The divestiture of our Giotti canning business unfavorably impacted sales by 0.2% as compared to the prior year.

Sales were impacted by favorable foreign currency rates that increased sales by 0.3% in 2024 as compared to the prior year.

Excluding divestitures and the impact of foreign currency rates, our organic sales growth was 0.8%, as compared to 2023.

Sales for 2025 increased by 1.7% from 2024 and by 1.9% on an organic basis (that is, excluding the impact of foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures).

Pricing actions favorably impacted sales by 0.7%.

Favorable volume and product mix increased sales by 1.2% driven by favorable volume and product mix from our Consumer segment of 2.1% offset by unfavorable volume and product mix from our Flavor Solutions segment of 0.2%.

Foreign currency rates decreased sales by 0.2%.

Gross profit $ 2,592.2 $ 2,591.0

Gross profit margin 37.9 % 38.5 %

In 2024, gross profit increased by $88.5 million, or 3.5%, from 2023.

Our gross profit margin for 2024 was 38.5%, an increase of 90 basis points from 37.6% in 2023.

The increase was driven by the favorable impact of our pricing actions, favorable product and customer mix, less scrapped inventory and cost savings led by our CCI and GOE programs.

These favorable impacts were partially offset by higher conversion costs, as compared to 2023.

Gross profit for 2025 increased by $1.2 million, which is comparable to 2024.

Our gross profit margin was 37.9%, a decrease of 60 basis points, driven by increased commodity costs including the impact of tariffs, unfavorable product mix, and increased conversion cost including costs to support capacity for future growth, partially offset by pricing actions and CCI program-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 37.9% for 2025.

Selling, general & administrative expense $ 1,500.3 $ 1,521.2

Percent of net sales 21.9 % 22.6 %

Selling, general and administrative (SG&A) expense increased by $42.9 million in 2024 as compared to 2023.

That increase in SG&A expense was primarily a result of increased advertising and promotional spend, increased selling and marketing costs and a higher level of research and development expenses which were partially offset by lower performance-based employee and stock-based compensation expense, all as compared to 2023.

SG&A as a percent of net sales for 2024 increased by 40 basis points from the prior year level, as the net impact of the previously mentioned factors was partially offset by the impact of the higher sales base.

Total special charges $ 9.5 $ 61.2

SG&A expense decreased by $20.9 million in 2025 as compared to 2024, driven primarily by lower performance-based employee compensation expense, lower distribution expense, and CCI-led cost savings including the impact of SG&A streamlining actions, partially offset by increased brand marketing expense and higher selling and marketing costs.

SG&A as a percent of net sales decreased by 70 basis points.

Special charges $ 21.1 $ 9.5

We regularly evaluate whether to implement changes to our organization structure to reduce fixed costs, simplify or improve processes, and improve our competitiveness, and we expect to continue to evaluate such actions in the future.

From time to time, those changes are of such significance in terms of both up-front costs and organizational/structural impact that we obtain advance approval from our Management Committee and classify expenses related to those changes as special charges in our financial statements.

During 2024, we recorded $9.5 million of special charges, consisting principally of $4.5 million associated with the GOE program and $5.0 million associated with the transition of a manufacturing facility in EMEA.

During 2023, we recorded $61.2 million of special charges, consisting principally of $42.8 million associated with the GOE program, $8.7 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $8.8 million in the Americas region and $0.9 million in the EMEA region.

Details with respect to the composition of special charges are included in the accompanying notes to our financial statements contained in Item 8 of this report.

Operating income $ 1,060.3 $ 963.0

Percent of net sales 15.8 % 14.5 %

Operating income increased by $97.3 million, or 10.1%, from $963.0 million in 2023 to $1,060.3 million in 2024.

Special charges decreased by $51.7 million in 2024, as compared to 2023, positively impacting operating income.

Operating income as a percentage of net sales increased by 130 basis points in 2024, to 15.8% in 2024 from 14.5% in 2023 as a result of the factors previously described.

Excluding the effect of special charges, adjusted operating income was $1,069.8 million in 2024 as compared to $1,024.2 million in 2023, an increase of $45.6 million or 4.5% from the 2023 level.

Adjusted operating income as a percentage of net sales increased by 50 basis points in 2024, to 15.9% in 2024 from 15.4% in 2023.

During 2025, we recorded $21.1 million of special charges, including transaction and integration expenses.

Those expenses consisted principally of $15.9 million of employee severance and related benefits associated with our SG&A streamlining actions, $3.3 million associated with other actions and $1.9 million of transaction and integration costs.

During 2024, we recorded $9.5 million of special charges, consisting principally of $4.5 million associated with the Global Operating Effectiveness program and $5.0 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 the accompanying notes to our financial statements contained in Item 8 of this report.

Interest expense $ 196.2 $ 209.4

Other income, net 38.4 47.4

Interest expense was $1.2 million higher in 2024 as compared to the prior year, as a reduction in average borrowing levels was more than offset by the effects of higher interest rates on borrowings.

Other income increased $3.5 million as compared to the prior period, driven by an increase in interest income, partially offset by a higher level of foreign currency exchange losses.

Interest expense decreased by $13.2 million in 2025 compared to the prior year, due to a reduction in average borrowing levels and lower interest rates on borrowings.

Other income, net, decreased by $9.0 million compared to the prior year primarily due to a lower level of interest income driven by lower interest rates and lower non-service cost income associated with our pension and postretirement benefit plans.

Income from consolidated operations before income taxes $ 913.0 $ 898.3

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Effective tax rate 21.4 % 20.5 %

The effective tax rate for 2024 was 20.5%, compared to 21.8% in 2023.

This reduction in our effective tax rate is primarily due to a higher level of net discrete tax benefits recorded for 2024.

Specifically, net discrete tax benefits amounted to $31.7 million in 2024, an increase of $22.1 million from $9.6 million in 2023.

The effective tax rate for 2025 was 21.4%, compared to 20.5% in 2024, primarily driven by the lower level of net discrete tax benefits recorded for 2025.

Specifically, net discrete tax benefits amounted to $27.6 million in 2025, a decrease of $4.1 million from $31.7 million in 2024.

The $27.6 million of net discrete tax benefits for 2025 principally included (i) $10.1 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) $7.9 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) $3.6 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) $1.1 million of excess tax benefits associated with stock compensation.

The $31.7 million of net discrete tax benefits for 2024 principally included (i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $12.3 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with both the effective settlement from the conclusion of a tax examination and the expiration of statutes of limitations, (iii) $6.0 million of tax benefits resulting from state tax matters, and related deferred taxes, (iv) $1.8 million of tax benefit from an adjustment to a prior year tax accrual and related deferred taxes based on final returns filed, (v) $6.2 million of tax expense associated with the adjustment of valuation allowances due to changes in judgment about the realizability of deferred tax assets, and (vi) $1.8 million of tax expense related to certain unremitted prior year earnings.

The $9.6 million of net discrete tax benefits for 2023 principally included (i) $5.6 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with both the settlement and the expiration of statutes of limitation, (ii) $3.2 million of tax benefit associated with the release of valuation allowances due to changes in judgment regarding the realizability of deferred tax assets, (iii) $0.9 million of tax benefit from an adjustment to a prior year tax accrual and related deferred taxes based on final returns filed, and (iv) $1.8 million of tax expense related to certain unremitted prior year earnings.

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 related to the current fiscal year and future year periods, we do not expect the legislation to have a material impact on our consolidated financial statements.

See Note 12 of notes to our consolidated financial statements for a more detailed reconciliation of the U.S.

federal tax rate with the effective tax rate.

Numerous countries have enacted the Organization of Economic Corporation and Development’s framework on a global 15% minimum tax, referred to as Pillar 2, which are generally effective for our fiscal year ending November 30, 2025.

We do not expect a material increase to our effective tax rate associated with the adoption of these model rules in the countries in which we operate.

Income from unconsolidated operations $ 72.2 $ 74.2

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased $17.8 million in 2024 from the prior year.

The increase was driven by higher earnings of our largest joint venture, McCormick de Mexico.

We own 50% of most of our unconsolidated joint ventures, including McCormick de Mexico, that comprised 95% of the income of our unconsolidated operations for both 2024 and 2023.

We reported diluted earnings per share of $2.92 in 2024, compared to $2.52 in 2023.

The table below outlines the major components of the change in diluted earnings per share from 2023 to 2024.

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, decreased $2.0 million in 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.

We own 50% of most of our unconsolidated joint ventures.

McCormick de Mexico comprised 93% and 95% of the income of our unconsolidated operations in 2025 and 2024, respectively.

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

2024 Earnings per share—diluted

Increase in operating income 0.07

Decrease in special charges, net of taxes 0.15

Increase in other income 0.01

Increase in income from unconsolidated operations 0.06

Increase in special charges, net of taxes (0.04)

Decrease in other income (0.02)

Decrease in income from unconsolidated operations (0.01)

Decrease in interest expense 0.04

Impact of change in effective income tax rate, excluding taxes on special charges (0.03)

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Results of Operations—Segments

We measure the performance of our business segments based on operating income, excluding special charges and transaction and integration expenses related to our acquisitions, as applicable.

See Note 15 of notes to our consolidated financial statements for additional information on our segment measures as well as for a reconciliation by segment of operating income, excluding special charges and transaction and integration expenses related to our acquisitions.

We measure the performance of our business segments based on operating income, excluding special charges.

In the following discussion, we refer to our previously described measure of segment profit as "Segment operating income."

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Net sales $ 3,950.3 $ 3,848.5

Percent - increase 1.1 % 1.3 %

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

Percent growth 2.6 % 1.1 %

Components of percent change in net sales:

Pricing actions 0.3 % — %

Volume and product mix 2.1 % 0.8 %

Divestiture — % (0.5) %

Foreign exchange 0.2 % 0.3 %

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Segment operating income margin 18.6 % 19.2 %

Sales of our consumer segment in 2024 increased by 1.1% as compared to 2023 and increased by 0.8% on an organic basis.

This increase was driven by higher sales of our consumer business in EMEA and the Americas, with a partial offset from a sales decline in the Asia-Pacific region.

Asia-Pacific region sales declines were principally attributable to the macro environment in China.

Higher volume and product mix added 0.8% to net sales, as compared to 2023.

Volume and product mix includes a 0.2% unfavorable impact associated with our decision during 2023 to exit certain low margin business.

A favorable impact from foreign currency rates increased sales by 0.3% compared to the prior year and is excluded from our measure of sales growth of 0.8% on an organic basis.

In the Americas region, consumer sales increased 0.6% in 2024 as compared to 2023 and increased by 0.7% on an organic basis.

Pricing actions, including actions taken in response to price gap management as well as promotional activities, decreased sales by 0.3% as compared to the prior year period.

Favorable volume and product mix, driven by growth across core categories, increased sales by 1.0% as compared to the corresponding period in 2023.

Volume and product mix includes a 0.3% unfavorable impact of our decision to discontinue certain low margin business.

The unfavorable impact of foreign currency rates decreased sales by 0.1% in the year and is excluded from our measure of sales growth of 0.7% on an organic basis.

In the EMEA region, consumer sales increased 7.3% in 2024 as compared to 2023 and increased by 4.3% on an organic basis.

Pricing actions, principally implemented in the prior year, increased sales by 0.6% as compared to 2023.

Favorable volume and product mix increased sales by 3.7% from the prior year level, driven by growth in our major markets across their product categories.

The favorable impact of foreign currency exchange rates increased sales by 3.0% compared to 2023 and is excluded from our measure of sales growth of 4.3% on an organic basis.

In the APAC region, consumer sales decreased 5.1% in 2024 as compared to 2023 and decreased by 4.1% on an organic basis.

Pricing actions, principally implemented in the prior year, increased sales by 0.8% as compared to 2023.

Unfavorable volume and product mix decreased sales by 4.9% from the prior year, as slower demand in China was partially mitigated by growth in other parts of the region.

The unfavorable impact from foreign currency rates decreased sales by 1.0% compared to the year-ago period and is excluded from our measure of sales decline of 4.1% on an organic basis.

Segment operating income for our consumer segment increased by $4.8 million, or 0.7%, in 2024 as compared to 2023.

The increase in segment operating income was driven by the effects of an increase in gross profit, as a higher level of sales volume, CCI-led and GOE cost savings and lower scrapped inventory was partially offset by higher conversion costs.

Segment operating income was also impacted by higher SG&A expenses, including increased advertising and promotional spend, partially offset by lower performance-based employee incentive expenses and lower distribution costs, all as compared to the prior year.

Segment operating margin for our consumer segment decreased by 10 basis points in 2024 to 19.2%, as a decrease in consumer gross profit margin was partially offset by a lower level of SG&A as a percentage of net sales, all as compared to the 2023 level.

On a constant currency basis, segment operating income for our consumer segment increased by 0.7% in 2024, as compared to 2023.

In 2025, sales of our Consumer segment increased by 2.6% as compared to 2024 and increased by 2.4% on an organic basis.

Favorable volume and product mix increased sales by 2.1%, driven by growth across all regions.

Favorable pricing increased sales by 0.3%.

The favorable impact of foreign currency rates increased sales by 0.2% and is excluded from our measure of sales growth of 2.4% on an organic basis.

In the Americas region, Consumer segment sales increased 2.0% in 2025 as compared to 2024 and increased by 2.3% on an organic basis.

Unfavorable pricing decreased sales by 0.1%.

Favorable volume and product mix increased sales by 2.4% driven by growth across core categories.

The unfavorable impact of foreign currency rates decreased sales by 0.3% and is excluded from our measure of sales growth of 2.3% on an organic basis.

In the EMEA region, Consumer segment sales increased 6.0% in 2025 as compared to 2024 and increased by 3.5% on an organic basis.

Favorable pricing impacted sales by 2.1%.

Favorable volume and product mix increased sales by 1.4% driven by growth in France and Poland.

The favorable impact of foreign currency exchange rates increased sales by 2.5% and is excluded from our measure of sales growth of 3.5% on an organic basis.

In the APAC region, Consumer segment sales increased 1.0% in 2025 as compared to 2024 and increased by 1.9% on an organic basis.

Favorable pricing impacted sales by 0.2%.

Favorable volume and product mix increased sales by 1.7% driven by higher sales to foodservice customers in China.

The unfavorable impact from foreign currency rates decreased sales by 0.9% and is excluded from our measure of sales growth of 1.9% on an organic basis.

Segment operating income for our Consumer segment decreased by $5.4 million, or 0.7%, in 2025 as compared to 2024, driven by 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 commodity costs including the impact of tariffs, and increased conversion costs including costs to support increased capacity for future growth, partially offset by higher sales volume, the favorable impact of pricing actions, 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 18.6%.

On a constant currency basis, segment operating income decreased by 0.6%.

Flavor Solutions Segment

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Percent growth 0.5 % 0.7 %

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

Components of percent change in net sales:

Pricing actions 1.3 % 1.2 %

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Sales of our Flavor Solutions segment increased 0.5% in 2025 as compared to 2024 and increased by 1.1% on an organic basis.

Pricing actions, principally implemented in the prior year, increased sales by 1.2% in 2024 and were partially offset by 0.3% of unfavorable volume and product mix, both in comparison to the prior year levels.

In 2024, the divestiture of our Giotti canning business unfavorably impacted sales by 0.5% and a favorable impact from foreign currency rates increased sales by 0.3%, both as compared to the prior year, and are excluded from our flavor solutions segment organic sales growth of 0.9%.

In the Americas region, flavor solutions sales increased by 1.4% during 2024 as compared to 2023 and increased by 1.5% on an organic basis.

Pricing actions, principally implemented in the prior year, favorably impacted sales by 1.6% during 2024.

Unfavorable volume and product mix decreased flavor solutions sales in the Americas by 0.1% during 2024, as compared to the prior year.

An unfavorable impact from foreign currency rates decreased sales by 0.1% compared to 2023 and is excluded from our measure of sales growth of 1.5% on an organic basis.

In the EMEA region, flavor solutions sales in 2024 decreased by 3.5% as compared to 2023 and decreased by 3.6% on an organic basis.

Pricing actions unfavorably impacted sales by 0.3% in 2024 as compared to the prior period level.

Unfavorable volume and product mix decreased segment sales by 3.3% in 2024 as compared to 2023, including the effects of lower sales at quick service restaurants, and a 1.2% unfavorable impact of our decision to exit a low margin business.

The divestiture of our Giotti canning business unfavorably impacted sales by 2.3% and a favorable impact from foreign currency rates increased sales by 2.4%, both as compared to 2023 and are excluded from our measure of sales decline of 3.6% on an organic basis.

In the APAC region, flavor solutions sales increased 4.1% in 2024 as compared to 2023 and increased by 5.1% on an organic basis.

Pricing actions, principally implemented in the prior year, favorably impacted sales by 0.9% as compared to the prior year period.

Favorable volume and product mix increased sales by 4.2%, driven by higher sales to quick service restaurant customers in China.

An unfavorable impact from foreign currency rates decreased sales by 1.0% compared to 2023 and is excluded from our measure of sales growth of 5.1% on an organic basis.

Segment operating income for our flavor solutions segment increased by $40.8 million, or 14.1%, in 2024 as compared to 2023.

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

Segment operating margin for our flavor solutions segment increased by 140 basis points in 2024 to 11.5%, driven by a higher segment gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of net sales, as compared to 2023.

On a constant currency basis, segment operating income for our flavor solutions segment increased by 14.5% in 2024, as compared to 2023.

Favorable pricing increased sales by 1.3% in 2025 driven by pricing actions in the Americas region.

Unfavorable volume and product mix decreased sales by 0.2% driven by the Americas and EMEA regions partially offset by growth in the APAC region.

The unfavorable impact of foreign currency rates decreased sales by 0.6% and is excluded from our measure of sales growth of 1.1% on an organic basis.

In the Americas region, Flavor Solutions segment sales increased by 0.5% during 2025 as compared to 2024 and increased by 1.9% on an organic basis.

Favorable pricing impacted sales by 2.6%.

Unfavorable volume and product mix decreased sales by 0.7%.

The unfavorable impact of foreign currency rates decreased sales by 1.4% and is excluded from our measure of sales growth of 1.9% on an organic basis.

In the EMEA region, Flavor Solutions segment sales in 2025 decreased by 2.2% as compared to 2024 and decreased by 4.3% on an organic basis.

Unfavorable pricing impacted sales by 2.1%.

Unfavorable volume and product mix decreased segment sales by 2.2% driven by the effects of lower sales to packaged food customers.

The favorable impact of foreign currency rates increased sales by 2.1% and is excluded from our measure of sales decline of 4.3% on an organic basis.

In the APAC region, Flavor Solutions segment sales increased 6.2% in 2025 as compared to 2024 and increased by 6.7% on an organic basis.

Unfavorable pricing impacted sales by 1.9%.

Favorable volume and product mix increased sales by 8.6%, driven by growth in China.

The unfavorable impact of foreign currency rates decreased sales by 0.5% and is excluded from our measure of sales growth of 6.7% on an organic basis.

Segment operating income for our Flavor Solutions segment increased by $29.6 million, or 9.0%, in 2025 as compared to 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 commodity costs including the impact of tariffs, and conversion costs including costs to support increased capacity for future growth.

The decrease in SG&A expense was driven primarily by lower performance-based employee compensation expense, lower distribution expense, and CCI-led cost savings, partially offset by higher selling and marketing costs.

Segment operating margin increased by 90 basis points to 12.4%.

On a constant currency basis, segment operating income increased by 10.7%.

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.

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

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

Upon presentation of any such proposed action (generally including details with respect to estimated costs, which typically consist principally of employee severance and related benefits, together with ancillary costs associated with the action that may include a non-cash component, such as an asset impairment, or a component which relates to inventory adjustments that are included in cost of goods sold;

impacted employees or operations;

expected timing;

and expected savings) to the Management Committee and the Committee’s advance approval, expenses associated with the approved action are classified as special charges upon recognition and monitored on an ongoing basis through completion.

Special charges for the year ended November 30, 2022 include a $13.6 million gain associated with the sale of the Kohinoor brand name.

We exited our Kohinoor rice product line in India in the fourth quarter of fiscal year 2021.

Special charges are more fully described in Note 2 of notes to our accompanying consolidated financial statements.

• Transaction and integration expenses associated with acquisitions – We exclude certain costs associated with our acquisitions, including our acquisition of FONA in December 2020, and the subsequent integration into the Company.

Such costs, which we refer to as “Transaction and integration expenses,” include transaction costs associated with the acquisition, as well as integration costs following the acquisition, including the impact of the acquisition date fair value adjustment for inventories, together with the impact of discrete tax items, if any, directly related to the acquisition.

• Gain on sale of Kitchen Basics – We exclude the gain realized upon our sale of the Kitchen Basics business in August 2022.

As more fully described in Note 16 of the notes to the accompanying financial statements, the pre-tax gain associated with the sale was $49.6 million and is included in Other income, net in our consolidated income statement for the year ended November 30, 2022.

Details with respect to the special charges and gain on sale of Kitchen Basics for the years and in the amounts set forth below are included in Notes 2 and 16 of notes to our consolidated financial statements.

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

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

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 consolidated financial statements.

We believe that these non-GAAP financial measures are important.

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2025 2024 2023

Operating income

Gross profit $ 2,592.2 $ 2,591.0 $ 2,502.5

Impact of special charges included in cost of goods sold 2.1 — —

Adjusted gross profit $ 2,594.3 $ 2,591.0 $ 2,502.5

Gross profit margin (1)

37.9 % 38.5 % 37.6 %

Impact of transaction and integration expenses (1)

Impact of special charges (1)

Adjusted gross profit margin (1)

37.9 % 38.5 % 37.6 %

Operating income

$ 1,070.8 $ 1,060.3 $ 963.0

Impact of special charges 23.2 9.5 61.2

Adjusted operating income $ 1,094.0 $ 1,069.8 $ 1,024.2

% increase (decrease) versus prior year 4.5 % 11.6 % (16.7) %

% increase versus prior year 2.3 % 4.5 % 11.6 %

Operating income margin (2)

15.7 % 15.8 % 14.5 %

Impact of transaction and integration expenses and special charges (3)

Impact of special charges (2)

0.3 % 0.1 % 0.9 %

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Income tax expense $ 195.8 $ 184.0 $ 174.5

Impact of transaction and integration expenses (1)

Impact of special charges 5.5 2.4 14.5

2.4 14.5 13.3

Impact of sale of Kitchen Basics — — (11.6)

Adjusted income tax expense $ 201.3 $ 186.4 $ 189.0

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21.4 % 20.5 % 21.8 %

Impact of transaction and integration expenses, special charges, and sale of Kitchen Basics (4)

— % 0.2 % 0.2 %

Impact of special charges 0.1 % — % 0.2 %

Adjusted income tax rate (3)

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Net income $ 789.4 $ 788.5 $ 680.6

Impact of transaction and integration expenses (1)

Impact of special charges 17.7 7.1 46.7

7.1 46.7 38.3

Impact of after-tax gain on sale of Kitchen Basics — — (38.0)

Adjusted net income $ 807.1 $ 795.6 $ 727.3

% increase (decrease) versus prior year 9.4 % 6.3 % (17.0) %

% increase versus prior year 1.4 % 9.4 % 6.3 %

Earnings per share—diluted $ 2.93 $ 2.92 $ 2.52

Impact of transaction and integration expenses (1)

Impact of special charges 0.07 0.03 0.18

0.03 0.18 0.14

Impact of after-tax gain on sale of Kitchen Basics — — (0.14)

Adjusted earnings per share—diluted $ 3.00 $ 2.95 $ 2.70

(1) Transaction and integration expenses include integration expenses associated with our acquisition of FONA.

(2) Special charges are more fully described in Note 2 of notes to our accompanying consolidated financial statements.

Special charges for the year ended November 30, 2022 include a $10.0 million non-cash intangible asset impairment charge associated with our exit of our business operations in Russia.

We exited our Kohinoor rice product line in India in the fourth quarter of fiscal 2021.

Special charges for the year ended November 30, 2022 include a $13.6 million gain associated with the sale of the Kohinoor brand name.

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

% increase versus prior year 1.7 % 9.3 % 6.7 %

(1) Gross 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 transaction and integration expenses, special charges and gain on the sale of Kitchen Basics or $907.8 million, $859.9 million, and $817.0 million for the years ended November 30, 2024, 2023, and 2022, respectively.

Estimate for the year ending November 30, 2025

Earnings per share – diluted $2.99 to $3.04

Impact of special charges 0.04

Adjusted earnings per share – diluted $3.03 to $3.08

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 $936.2 million, $907.8 million, and $859.9 million for the years ended November 30, 2025, 2024, and 2023, respectively.

We are unable to reconcile projected adjusted earnings per share to projected reported earnings per share because our 2026 adjusted earnings per share is a non-GAAP measure that excludes certain elements that will be included in fiscal 2026 GAAP results that cannot be reasonably predicted.

Given the recent acquisition date of an additional 25% ownership in McCormick de Mexico on January 2, 2026, we cannot reasonably predict the amount of special charges, including transaction and integration expenses, or the expected non-cash gain associated with remeasuring our previously held equity interest in McCormick de Mexico to fair value.

Because we are a multi-national company, we are subject to variability of our reported U.S.

dollar results due to changes in foreign currency exchange rates.

Those changes have been volatile over the past several years.

Those changes can be volatile.

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

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

The tables set forth below present our growth in net sales and adjusted operating income on a constant currency basis as follows:

(1) to present our growth in net sales and adjusted operating income for 2024 on a constant currency basis, net sales and adjusted operating income for 2024 for entities reporting in currencies other than the U.S.

dollar have been translated using the average foreign exchange rates in effect for 2023 and compared to the reported results for 2023;

and (2) to present our growth in net sales and adjusted operating income for 2023 on a constant currency basis, net sales and operating income for 2023 for entities reporting in currencies other than the U.S.

dollar have been translated using the average foreign exchange rates in effect for 2022 and compared to the reported results for 2022.

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

For the year ended November 30, 2025

Percentage change

as reported Impact of foreign currency exchange Percentage change on constant currency basis Impact of Acquisitions & Divestitures Percentage change on organic basis

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

Consumer segment:

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Percentage change in net sales 13% to 17%

Impact of unfavorable foreign currency exchange 1 %

Impact of favorable foreign currency exchange 1 %

Percentage change in net sales in constant currency 12% to 16%

Impact of acquisition 11% to 13%

Percentage change in organic net sales 1% to 3%

Percentage change in adjusted operating income 16% to 20%

Impact of unfavorable foreign currency exchange 1 %

Impact of favorable foreign currency exchange 1 %

Percentage change in adjusted operating income in constant currency 15% to 19%

Percentage change in adjusted earnings per share - diluted 2% to 5%

Impact of unfavorable foreign currency exchange 2 %

Impact of favorable foreign currency exchange 1 %

Percentage change in adjusted earnings per share - diluted 1% to 4%

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2025 2024 2023

Net cash provided by operating activities $ 921.9 $ 1,237.3 $ 651.5

Net cash used in investing activities (269.0) (260.5) (146.4)

Net cash used in financing activities (583.1) (1,184.2) (487.2)

Net cash flow provided by operating activities $ 962.2 $ 921.9 $ 1,237.3

Net cash flow used in investing activities (255.2) (269.0) (260.5)

Net cash flow used in financing activities (840.9) (583.1) (1,184.2)

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

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

We use short-term debt, primarily in the form of commercial paper, principally to finance ongoing operations.

This includes our requirements for working capital, which encompasses accounts receivable, prepaid expenses, other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities.

We use short-term debt, primarily in the form of commercial paper, principally to finance ongoing operations, including our requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities).

We are committed to maintaining investment grade credit ratings.

Our cash flows from operations enable us to fund operating projects and investments that are designed to meet our growth objectives, service our debt, fund or increase our quarterly dividends, fund capital projects and other investments, and make share repurchases, when appropriate.

Our cash flow from operations enables us to fund operating projects and investments that are designed to meet our growth objectives, service our debt, fund or increase our quarterly dividends, fund capital projects and other investments, and make share repurchases, when appropriate.

Due to the cyclical nature of a portion of our business, our cash flow from operations has historically been the strongest during the fourth quarter of our fiscal year.

Due to the timing of the interest payments on our debt, interest payments are higher in the first and third quarter 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 or refinancing of debt, working capital needs, planned capital expenditures, and payment of anticipated quarterly dividends for at least the next twelve months.

In the 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.

In addition, in the cash flow statement, the changes in operating assets and liabilities are presented excluding the effect of disposed operating assets and liabilities, as the cash flow associated with dispositions of businesses is presented as an investing activity.

Due to the timing of the interest payments on our debt, interest payments are higher in the first and third quarters of our fiscal year.

We believe that our sources of liquidity, which include existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, and access to capital markets, will provide sufficient liquidity to meet our debt obligations, including any repayment 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 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.

In addition, in the cash flow statement, the changes in operating assets and liabilities are presented excluding the effect of acquired or disposed operating assets and liabilities, as the cash flow associated with acquisition or disposition of businesses is presented as an investing activity.

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.

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subsidiaries and affiliates can be significantly affected by fluctuations in foreign exchange rates between periods.

As of November 30, 2024, the exchange rates for the British pound sterling were higher against the U.S.

As of November 30, 2025, the exchange rates for the Euro, British pound sterling, Canadian dollar, Mexican peso, Chinese renminbi, Polish zloty, and Australian dollar were higher against the U.S.

dollar than on November 30, 2024.

Conversely, as of November 30, 2024, the exchange rates for the Euro, Canadian dollar, Mexican peso, Chinese renminbi, Polish zloty, and Australian dollar were lower against the U.S.

dollar compared to November 30, 2023.

Operating Cash Flow – Operating cash flow was $962.2 million in 2025, $921.9 million in 2024, and $1,237.3 million in 2023.

Net income as well as our working capital management, as more fully described below, impacted operating cash flow.

In 2025, working capital was impacted by a decreased use of cash associated with inventory offset by a lower source of cash associated with accounts payable.

In 2024, the decrease in operating cash flow was primarily driven by higher cash used for working capital, including higher inventory levels and higher employee incentive payments related to the prior year, and the timing of income tax payments partially offset by higher net income.

In 2023, the increase was primarily driven by an improvement in cash provided by working capital, which was driven by the lower inventory levels and the lower amount of employee incentive payments associated with the prior years, as well as an increase in dividends received from unconsolidated affiliates.

In 2023, the increase was primarily driven by an improvement in cash provided by working capital, which was driven by the lower inventory levels and the lower amount of employee incentive payments associated with the prior year, as well as an increase in dividends received from unconsolidated affiliates.

This was partially offset by an increased use of cash associated with accounts payable which partially resulted from our lower level of inventory.

In 2022, the decrease in operating cash flow was primarily driven by lower net income, including the effect of net income associated with the gain on sale of our Kitchen Basics business and an intangible asset that are reflected as investing cash flows as well as the higher amount of employee incentive payments associated with the prior year.

Our working capital management – principally related to inventory, trade accounts receivable, and accounts payable – impacts our operating cash flow.

The change in inventory was a significant use of cash from operations in 2024 and 2022 and a significant source of cash from operations in 2023.

The change in inventory was a moderate source of cash from operations in 2025, a significant use of cash in 2024, and a significant source of cash from operations in 2023.

The change in trade accounts receivable was a moderate use of cash in 2025 and 2024, and a source of cash in 2023.

The change in accounts payable was a significant source of cash in 2024 and 2022 and a use of cash in 2023.

The change in accounts payable was a source of cash in 2025, significant source of cash in 2024, and a use of cash in 2023.

In addition to operating cash flow, we also use a cash conversion cycle (CCC) to measure our working capital management.

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Cash Conversion Cycle 42 36 40

The increase in CCC in 2025 from 2024 was primarily due to an increase in our days in inventory as a result of inventory management including the impacts of strategic forward purchases and inventory acquired in conjunction with the Jurado acquisition.

The decrease in CCC in 2024 from 2023 was primarily due to a reduction in our days in inventory as a result of inventory management based on demand planning.

The decrease in CCC in 2023 from 2022 was primarily due to a reduction in our days in inventory as a result of reducing our inventory based on demand planning and elimination of excess safety stock utilized to remedy service issues associated with the COVID-19 pandemic.

As more fully described in Note 1 of notes to our consolidated financial statements, we participate in a Supply Chain Financing program (SCF) with several global financial institutions (SCF Banks).

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We are not party to those agreements and have no economic interest in a supplier’s decision to sell a receivable.

All outstanding amounts related to suppliers participating in the SCF are recorded within the line item 'Trade accounts payable' in our condensed consolidated balance sheets, and the associated payments are included in operating activities in our consolidated statements of cash flows.

As of November 30, 2024 and 2023, the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $417.4 million and $300.5 million, respectively.

All outstanding amounts related to suppliers participating in the SCF are recorded within the line item 'Trade accounts payable' in our consolidated balance sheets, and the associated payments are included in operating activities in our consolidated cash flow statement.

As of November 30, 2025, 2024, and 2023 the amounts due to suppliers participating in the SCF and included in trade accounts payable were approximately $332.1 million, $417.4 million, and $300.5 million, respectively.

The terms of our payment obligations are not impacted by a supplier's participation in the SCF.

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Investing Cash Flow – Net cash used in investing activities was $255.2 million in 2025, $269.0 million in 2024, and $260.5 million in 2023.

Our primary investing cash flows include cash used for capital expenditures as well as cash provided by the sale of businesses or other assets.

Our primary investing cash flows include cash used for capital expenditures as well as cash used in the acquisition of a business.

Capital expenditures, including expenditures for capitalized software, were $221.8 million in 2025, $274.9 million in 2024, and $263.9 million in 2023.

We expect 2025 capital

expenditures to approximate $300 million.

In 2022, we received $95.2 million net cash proceeds from the sale of our Kitchen Basics business and $13.6 million net cash proceeds from the sale of the Kohinoor brand name.

Cash used for the acquisition of a business was $34.1 million in 2025.

We expect 2026 capital expenditures to approximate $275 million.

Financing Cash Flow – Net cash associated with financing activities was a use of cash of $840.9 million in 2025, $583.1 million in 2024, and $1,184.2 million in 2023.

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2025 2024 2023

Net increase (decrease) in short-term borrowings $ 211.1 $ (964.6) $ 698.3

Net (decrease) increase in short-term borrowings $ (101.4) $ 211.1 (964.6)

Proceeds from issuance of long-term debt, net of debt issuance costs 2.7 494.5 495.3

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Net cash (used in) net borrowing activities $ (366.6) $ (95.5) $ (737.4)

In 2025, we repaid $267.9 million of long-term debt, including the $250.0 million, 3.25% notes that matured in November 2025.

In 2024, we repaid $801.1 million of long-term debt, including the $700.0 million, 3.15% notes that matured in August 2024 as well as $55.0 million, 7.63% to 8.12% notes that matured in August and October 2024.

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We also issued $500.0 million of 4.95% notes due 2033, with net cash proceeds received of $496.4 million.

In 2022, we repaid $772.0 million of long-term debt, including the $750 million, 2.70% notes that matured on August 15, 2022.

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

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Most of our cash is in our subsidiaries outside of the U.S.

We manage our worldwide cash requirements by considering available funds among the many subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed.

We manage our worldwide cash requirements by considering available funds among our subsidiaries through which we conduct our business and the cost effectiveness with which those funds can be accessed.

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

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

The average short-term borrowings outstanding for the years ended

November 30, 2024, 2023, and 2022 were $1,043.1 million, $1,121.9 million, and $1,117.0 million, respectively.

The average short-term borrowings outstanding for the years ended November 30, 2025, 2024, and 2023 were $1,089.7 million, $1,043.1 million, and $1,121.9 million, respectively.

Those average short-term borrowings outstanding for the years ended November 30, 2025, 2024, and 2023 included average commercial paper borrowings of $1,087.2 million, $1,033.8 million, and $1,098.4 respectively.

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

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.

Our committed revolving credit facilities include a five-year $2.0 billion revolving credit facility, which will expire in May 2030.

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 1.50%.

Also, in January 2026, we entered into a 364-day $500 million revolving credit facility, which will expire in January 2027.

The current pricing for the 364-day 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 1.60%.

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 either revolving credit facilities for the foreseeable future.

The pricing of the 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 our revolving credit facilities 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 our revolving credit facilities for the foreseeable future.

The terms of those revolving credit facilities are more fully described in Note 5 of the notes to the consolidated financial statements.

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

In the next year, our most significant debt service obligation is the maturity of our $250.0 million, 3.25% notes due in November 2025.

In the next year, our most significant debt service obligation is the maturity of our $500.0 million, 0.90% notes due in February 2026.

Detail on these contractual obligations follows:

MATERIAL CASH REQUIREMENTS

The following table reflects a summary of our future material c ash requirements as of November 30, 2024:

The following table reflects a summary of our future material cash requirements as of November 30, 2025:

Total Less than

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Our standby letters of credit, leases, and pension and other post-retirement obligations are more fully described in Notes 5, 6, and 10, respectively, of notes to our consolidated financial statements.

On January 2, 2026, we acquired an additional 25% ownership interest in McCormick de Mexico from Grupo Herdez, for $750 million which increased our ownership interest to a 75% controlling interest.

The purchase of the additional 25% ownership interest was funded through a combination of cash on hand and commercial paper.

These obligations impact our liquidity and capital resource needs.

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Across all of our qualified defined benefit pension plans, approximately 16% of assets are invested in equities, 77% in fixed income investments and 7% in other investments.

Assets associated with our nonqualified defined benefit pension plan are primarily invested in corporate-owned life insurance, the value of which approximates an investment mix of 50% in equities and 50% in fixed income investments.

Assets associated

with our nonqualified defined benefit pension plan are primarily invested in corporate-owned life insurance, the value of which approximates an investment mix of 40% in equities and 60% in fixed income investments.

See Note 10 of notes to our consolidated financial statements, which provides details on our pension funding.

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We routinely enter into foreign currency exchange contracts to manage certain of these foreign currency risks.

During 2024, the foreign currency translation component in other comprehensive income was principally related to the impact of exchange rate fluctuations on our net investments in our subsidiaries with a functional currency of the Mexican peso, Euro, Australian dollar, and Chinese renminbi.

During 2025, the foreign currency translation component in other comprehensive income was principally related to the impact of exchange rate fluctuations on our net investments in our subsidiaries with a functional currency of the Mexican peso, Euro, British pound sterling, Swiss franc, Polish zloty, and Chinese renminbi.

We also utilize cross currency interest rate swap contracts, which are designated as net investment hedges, to manage the impact of exchange rate fluctuations on our net investments in subsidiaries with a functional currency of the British pound sterling and Euro.

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dollar 82.3 0.79 (0.3)

dollar Singapore dollar 17.9 1.35 0.1

dollar British pound sterling 45.0 1.31 0.4

dollar Euro 129.9 1.15 0.5

dollar Canadian dollar 21.4 1.41 0.1

Australian dollar Euro 21.6 1.66 (0.3)

dollar Chinese renminbi 289.4 7.04 0.6

Polish zloty Euro 11.4 4.34 (0.2)

Canadian dollar British pound sterling 27.8 1.76 (0.1)

British pound sterling Euro 5.8 0.88 —

dollar Mexican peso 8.5 20.66 (0.1)

We had a number of smaller contracts at November 30, 2025 with an aggregate notional value of $11.6 million to purchase or sell other currencies.

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At November 30, 2024, we had foreign currency exchange contracts with an aggregate notional value of $1,034.2 million to purchase or sell other currencies.

The aggregate fair value of these contracts was a loss of $13.5 million at November 30, 2023.

The aggregate fair value of these contracts was $(7.3) million at November 30, 2024.

We also utilized cross currency interest rate swap contracts that are considered net investment hedges.

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These contracts expire in April 2030.

Interest Rate Risk – Our policy is to manage interest rate risk by entering into both fixed and variable rate debt arrangements.

Interest Rate Risk – Our policy is to manage interest rate risk by entering i nto both fixed and variable rate debt arrangements.

We are exposed to interest rate volatility, with primary exposures related to movements in U.S.

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

As of November 30, 2024 and 2023, we had interest rate swap contracts of $600 million notional value outstanding to receive fixed rate interest and pay variable rate interest.

As of November 30, 2025 and 2024, we had interest rate swap contracts of $500 million and $600 million notional value outstanding, respectively, to receive fixed rate interest and pay variable rate interest.

The table that follows provides principal cash flows and related interest rates, excluding the effect of interest rate swaps and the amortization of any discounts or fees, by fiscal year of maturity at November 30, 2025.

For foreign currency-denominated debt, the

information is presented in U.S.

For foreign currency-denominated debt, the information is presented in U.S.

dollar equivalents.

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Interest rate swaps have the following effects:

• We issued $250 million of 3.25% notes due in 2025 in November 2015.

Forward treasury lock agreements settled upon issuance of these notes effectively set the interest rate on these notes at a weighted-average fixed rate of 3.45%.

Separately, the fixed interest rate on $100 million of the 3.25% notes due in December 2025 was effectively converted to a variable rate by interest rate swaps through the notes maturity in 2025.

Net interest payments are based on USD SOFR plus 1.487% with an effective variable rate of 5.92% as of November 30, 2024.

• We issued $750 million of 3.40% notes due in 2027 in August 2017.

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

In 2024, our most significant raw materials were dairy products, pepper, onion, garlic, capsicums (red peppers and paprika), tomato products, sugar and salts.

In 2025, our most significant raw materials were dairy products, pepper, garlic, onion, capsicums (red peppers and paprika), salt, tomato products, sugar, and soybean oil.

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

We generally have not used derivatives to manage the volatility related to this risk.

Other than soybean oil hedging transactions used by McCormick de Mexico, we generally have not used derivatives to manage the volatility related to this risk.

Credit Risk – The customers of our Consumer segment are predominantly food retailers and food wholesalers.

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Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates, and estimates may vary as new facts and circumstances arise.

In preparing the financial statements, we make

routine estimates and judgments in determining the net realizable value of accounts receivable, inventory, fixed assets and prepaid allowances.

In preparing the financial statements, we make routine estimates and judgments in determining the net realizable value of accounts receivable, inventory, fixed assets and prepaid allowances.

Our most critical accounting estimates and assumptions, which are those that have or are reasonably likely to have a material impact on our financial condition or results of operations, are in the following areas:

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Of the $3,048.8 million in brand name assets and trademarks as of November 30, 2025:

(i) $2,320.0 million relates to the French’s, Frank’s RedHot, and Cattlemen’s brand names and trademarks which we group for purposes of our impairment analysis;

(i) $2,320.0 million relates to the

French’s, Frank’s RedHot, and Cattlemen’s brand names and trademarks which we group for purposes of our impairment analysis;

(ii) $380.0 million relates to the Cholula brand names and trademarks associated with the acquisition of Cholula in November 2020;

and (iii) the remaining $343.9 million represents various other brand name assets and trademarks with individual carrying values ranging from $106.4 million to $0.2 million.

The percentage excess of estimated fair value over respective book values for each of our brand names and trademarks exceeded 20% as of our fourth quarter annual impairment assessment except for one brand name that has a carrying value of $4.6 million.

and (iii) $348.8 million represents various other brand name assets and trademarks with individual carrying values ranging from $0.2 million to $106.4 million.

The percentage excess of estimated fair value over respective book values for each of our brand names and trademarks exceeded 20% as of our fourth quarter annual impairment assessment except for three brand names that have an aggregate carrying value of $45.0 million.

We estimate income taxes and file tax returns in each taxing jurisdiction where we operate and are required to do so.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis