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Item 2. Management’s Discussion and Analysis

2026-03-31 compared with 2025-10-07 · 271 added, 244 removed, 299 unchanged (63% of the section changed)

7 unchanged sentences

McCormick is a global leader in flavor.

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

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

In fiscal year 2025, approximately 39% of our sales were generated outside of the U.S.

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

We also are partners in a number of joint ventures involved in the manufacture and sale of flavorful products.

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.

Recent Events

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.

The acquisition is described in detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.

On February 20, 2026 the U.S.

Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) by the executive branch are not lawful, but did not provide guidance on how importers may claim refunds of IEEPA tariffs previously paid.

On March 4, 2026, the Court of International Trade (CIT) ordered U.S.

Customs and Border Protection (CBP) to begin the refund process for all importers who were subject to IEEPA duties.

The situation continues to evolve, and further legislative, regulatory, or judicial developments may affect the ultimate outcome and the availability or timing of any refunds.

We are currently evaluating the impact that the ruling may have on our consolidated financial statements.

On March 31, 2026, we entered into an Agreement and Plan of Merger with Unilever PLC (the “Merger Agreement”), pursuant to which Unilever will separate its Unilever Foods business, excluding its food businesses in India, Nepal and Portugal, and Unilever Foods will merge with a wholly owned subsidiary of McCormick in a transaction intended to qualify as a Reverse Morris Trust transaction.

The transaction is generally expected to be tax-free to Unilever’s shareholders for U.S.

federal income tax purposes, except to the extent that cash is paid to Unilever’s shareholders in lieu of fractional shares and provided that Unilever does not make the U.S.

Asset Sale Election.

Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever shareholders and Unilever in the same proportion as is currently held by our shareholders.

The transactions contemplated by the Merger Agreement are expected to result in current Unilever shareholders owning approximately 55.1% of the combined company, our current shareholders owning approximately 35.0% of the combined company, and Unilever retaining approximately 9.9% of the total outstanding equity of the combined company, assuming Unilever does not elect under the Merger Agreement to dispose of such interest.

The proposed transaction is subject to the satisfaction or waiver of certain customary closing conditions, including shareholder and regulatory approvals.

For additional information regarding the proposed transaction, see Note 12 of the notes to our accompanying condensed consolidated financial statements.

Executive Summary

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%.

The Consumer segment experienced favorable volume and product mix of 2.2% and the Flavor Solutions segment experienced unfavorable volume and product mix of 0.3%.

In the first quarter of 2026, we achieved net sales growth of 16.7% as compared to the same quarter of 2025, due to the following factors:

• Volume and product mix unfavorably impacted net sales by 0.7%.

The Consumer segment experienced unfavorable volume and product mix of 0.4% and the Flavor Solutions segment experienced unfavorable volume and product mix of 1.0%.

• Pricing favorably impacted net sales by 1.9%.

• 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.

The Consumer segment experienced favorable pricing of 2.2% and the the Flavor Solutions segment experienced favorable pricing of 1.5%.

• The impact of our acquisition of McCormick de Mexico contributed 12.4% of our net sales growth.

• Fluctuations in currency rates positively impacted net sales by 3.1%.

Fluctuations in currency rates positively impacted our Consumer segment sales growth by 2.9% and our Flavor Solutions segment sales growth by 3.3%.

Operating income was $227.5 million in the first quarter of 2026, compared to $225.2 million in the same period of 2025, reflecting an increase of 1.0%.

Our gross profit margin increased by 20 basis points driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in cost of goods sold as the related inventory was sold, favorable pricing, and cost savings from the Company's Comprehensive Continuous Improvement (CCI) program, partially offset by increased commodity costs driven primarily by the impact of tariffs.

Excluding the effects of special charges included in cost of goods sold, our adjusted gross profit margin increased by 100 basis points.

Selling, general, and administrative (SG&A) expense as a percentage of sales increased by 70 basis points, primarily driven by increased investments in technology and increased brand marketing expense.

Excluding special charges, adjusted operating income was $267.6 million in the first quarter of 2026, reflecting an increase of 18.8% compared to $225.2 million in the 2025 period, primarily driven by the impact of the acquisition of McCormick de Mexico.

In constant currency, adjusted operating income increased by 16.0%.

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 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, 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 primarily associated with a second quarter 2025 acquisition.

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% as compared to 20.5% in 2024.

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

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

Diluted earnings per share for 2025 is projected to range from $2.95 to $3.00.

Diluted earnings per share was $3.77 and $0.60 in the first quarters of 2026 and 2025, respectively.

The gain on remeasurement of our previously held equity interest in McCormick de Mexico increased diluted earnings per share by $3.22 and special charges, including transaction and integration costs, lowered diluted earnings per share by $0.11.

Excluding the effects of the remeasurement gain and special charges, adjusted diluted earnings per share was $0.66 and $0.60 in the first quarters of 2026 and 2025, respectively.

The increase in adjusted diluted earnings per share was driven by favorable operating income, partially offset by an increase in the effective tax rate, higher income attributable to noncontrolling interests and a decrease in other income.

A detailed review of our first quarter 2026 performance compared to the first quarter of fiscal 2025 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 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 are unable to reconcile projected adjusted earnings per share to projected reported earnings per share due to the same factors affecting reported operating income.

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 increased investments in technology, 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 $0.05, is projected to range from $3.00 to $3.05 in 2025.

We expect adjusted diluted earnings per share to increase by 2% to 4%, which includes a 2% unfavorable impact from currency rates, or to increase by 4% to 6% 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 – COMPANY

Three months ended August 31,

Nine months ended August 31,

Three months ended

February 28, 2026 February 28, 2025

Net sales $ 1,873.9 $ 1,605.5

Percent increase (decrease) 2.7 % (0.3) % 1.3 % 0.3 %

Percent increase 16.7 % 0.2 %

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

1 unchanged sentence

Volume and product mix (0.7) % 2.2 %

Divestitures — % (0.3) % — % (0.3) %

Acquisition 12.4 % — %

Foreign exchange 3.1 % (1.8) %

1 unchanged sentence

Gross profit margin 37.8 % 37.6 %

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 1.2% 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%.

Sales for the first quarter of 2026 increased by 16.7% from the same period in 2025 and increased by 1.2% on an organic basis (that is, excluding the impact of acquisitions and foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures).

The acquisition of McCormick de Mexico added 12.4% to net sales.

Pricing favorably impacted sales by 1.9% with favorable pricing from our Consumer and Flavor Solutions segments of 2.2% and 1.5%, respectively.

Unf avorable volume and product mix decreased sales by 0.7% with unfavorable volume and product mix from our Flavor Solutions and Consumer segments of 1.0% and 0.4%, respectively.

Foreign currency rates increased sales by 3.1%.

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 1.5%, driven by growth across all three regions in our Consumer segment.

Foreign currency rates decreased sales by 0.5%.

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,

Gross profit for the first quarter of 2026 increased by $104.9 million, or 17.4%, from the same period of 2025.

Our gross profit margin was 37.8%, an increase of 20 basis points, driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in cost of goods sold as the related inventory was sold, favorable pricing, and CCI-led cost savings, partially offset by increased commodity costs driven primarily by the impact of tariffs.

Excluding the impact of special charges included in cost of goods sold, adjusted gross margin was 38.6% for the first quarter of 2026, or an increase of 100 basis points.

Three months ended

February 28, 2026 February 28, 2025

Selling, general & administrative (SG&A) expense $ 456.3 $ 378.8

Percent of net sales 24.3 % 23.6 %

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 August 31,

Nine months ended August 31,

SG&A expense increased by $77.5 million in the first quarter of 2026 as compared to the same period in 2025, driven primarily by the impact of the McCormick de Mexico acquisition, increased investments in technology, and increased brand marketing expense.

SG&A as a percentage of net sales increased by 70 basis points.

Three months ended

February 28, 2026 February 28, 2025

Special charges $ 25.1 $ —

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.

During the three months ended February 28, 2026, we recorded $25.1 million of special charges, including transaction and integration expenses.

Those expenses consisted of $16.2 million associated with employee severance and related benefits associated with our SG&A streamlining actions, $7.9 million of transaction and integration costs, and $1.0 million associated with other actions.

Details with respect to the composition of special charges, including transaction and integration expenses, are included in Note 3 of the notes to the accompanying condensed consolidated financial statements.

Three months ended August 31,

Nine months ended August 31,

Three months ended

February 28, 2026 February 28, 2025

Interest expense $ 47.3 $ 48.5

Other income, net 4.8 9.8

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,

Interest expense decreased by $1.2 million in the first quarter of 2026 as compared to the same period in 2025 driven by the effects of lower interest rates, partially offset by the impact of higher average borrowing levels.

Other income, net, decreased by $5.0 million in the first quarter of 2026 as compared to the same period in 2025 due to a lower level of interest income driven primarily by the impact of the acquisition of McCormick de Mexico on our average cash balance

during the period.

Three months ended

February 28, 2026 February 28, 2025

Income from consolidated operations before income taxes $ 185.0 $ 186.5

4 unchanged sentences

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

Income tax expense for the three months ended 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 tax expense for the three months ended February 28, 2026 was not impacted by discrete tax items.

In addition to the effect of lower discrete tax items compared to the prior year period, the increase in effective tax rate was impacted by a change in the geographic mix of pre-tax earnings following the acquisition of McCormick de Mexico, resulting in a greater proportion of income generated in jurisdictions with higher income tax rates.

Income tax expense for the three months ended February 28, 2025, included $5.2 million of net discrete tax benefits consisting principally of a $5.0 million net tax benefit resulting from the revaluation of deferred taxes associated with enacted legislation.

Three months ended

February 28, 2026 February 28, 2025

Income from unconsolidated operations $ 886.0 $ 18.5

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.

Income from unconsolidated operations increased by $867.5 million in the first quarter of 2026 compared to the same period of 2025.

This increase was primarily driven by a gain of $866.8 million on the remeasurement of our previously held equity interest in McCormick de Mexico, which is described in more detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.

Three months ended

February 28, 2026 February 28, 2025

Net income attributable to noncontrolling interests $ 6.1 $ 1.1

Net income attributable to noncontrolling interests increased by $5.0 million in the first quarter of 2026 compared to the same period in 2025.

This increase was driven by the net income attributable to our noncontrolling interest in McCormick de Mexico.

The following table outlines the major components of the change in diluted earnings per share from 2025 to 2026:

Three months ended August 31,

Nine months ended August 31,

Three months ended February 28,

2025 Earnings per share – diluted $ 0.60

1 unchanged sentence

Increase in special charges (0.11)

Decrease in interest expense 0.01 0.02

Decrease in other income, net (0.01)

Decrease in income from unconsolidated operations — (0.01)

After tax gain on remeasurement of a previously held equity interest in McCormick de Mexico 3.22

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

Impact of net income attributable to noncontrolling interest $ (0.02)

2026 Earnings per share – diluted $ 3.77

4 unchanged sentences

CONSUMER SEGMENT

Three months ended August 31,

Nine months ended August 31,

Three months ended February 28,

Net sales $ 1,145.0 $ 919.2

Percent increase 3.8 % — % 2.2 % 0.2 %

Percent increase (decrease) 24.5 % (0.2) %

Segment operating income $ 179.6 $ 146.7

Segment operating income margin 15.7 % 16.0 %

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 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%.

In the first quarter of 2026, sales of our Consumer segment increased by 24.5% compared to the first quarter of 2025 and increased by 1.8% on an organic basis.

The acquisition of McCormick de Mexico increased sales by 19.8%.

Unfavorable volume and product mix decreased sales by 0.4%, driven by declines in the Americas region which were partially offset by growth in the EMEA and APAC regions.

Favorable pricing impacted sales by 2.2% primarily driven by pricing actions in the Americas region.

The favorable impact of foreign currency rates increased sales by 2.9%.

In the Americas region, Consumer segment sales increased by 30.4% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 1.2% on an organic basis.

The acquisition of McCormick de Mexico increased sales by 28.9%.

Unfavorable volume and product mix decreased sales by 1.6%, which included the unfavorable impact of price elasticity.

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 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 0.4%.

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 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.

On a constant currency basis, segment operating income increased by 3.2%.

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.

The favorable impact of foreign currency rates increased sales by 0.3%.

In the EMEA region, Consumer segment sales increased by 15.5% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 3.7% on an organic basis.

Favorable volume and product mix increased sales by 2.4%, driven by higher sales of our core products in France.

Favorable pricing impacted sales by 1.3%.

The favorable impact from foreign currency rates increased sales by 11.8%.

In the APAC region, Consumer segment sales increased by 6.2% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 2.2% on an organic basis.

Favorable volume and product mix increased sales by 2.1%, driven by higher sales in China.

Favorable pricing impacted sales by 0.1%.

The favorable impact from foreign currency rates increased sales by 4.0%.

Segment operating income for our Consumer segment for the first quarter of 2026 increased by $32.9 million, or 22.4%, compared to the same period of 2025 driven by an increase in gross profit partially offset by an increase in SG&A expense.

The increase in gross profit was driven by the impact of our acquisition of McCormick de Mexico, favorable pricing and CCI-led cost savings partially offset by increased commodity costs primarily driven by tariffs.

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

Segment operating margin decreased by 30 basis points to 15.7%.

On a constant currency basis, segment operating income decreased by 1.4%.

On a constant currency basis, segment operating income increased by 20.5%.

FLAVOR SOLUTIONS SEGMENT

Three months ended August 31,

Nine months ended August 31,

Three months ended

February 28, 2026 February 28, 2025

Net sales $ 728.9 $ 686.3

Percent increase (decrease) 1.2 % (0.7) % 0.2 % 0.5 %

Percent increase 6.2 % 0.8 %

Segment operating income $ 88.0 $ 78.5

Segment operating income margin 12.1 % 11.4 %

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.

In the first quarter of 2026, sales of our Flavor Solutions segment increased by 6.2% as compared to the first quarter of 2025 and increased by 0.5% on an organic basis.

The acquisition of McCormick de Mexico increased sales by 2.4%.

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

Favorable pricing increased sales by 1.5%.

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 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.

The favorable impact of foreign currency rates increased sales by 3.3%.

In the Americas region, Flavor Solutions sales increased by 6.1% in the first quarter of 2026 compared to the first quarter of 2025 and increased by 0.8% on an organic basis.

The acquisition of McCormick de Mexico increased sales by 3.4%.

Unfavorable volume and product mix decreased sales by 1.7% 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 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.

Favorable pricing impacted sales by 2.5%.

The favorable impact from foreign currency rates increased sales by 1.9%.

In the EMEA region, Flavor Solutions sales increased by 7.3% in the first quarter of 2026 compared to the first quarter of 2025 and decreased by 0.5% on an organic basis.

Unfavorable volume and product mix decreased sales by 0.5%.

The favorable impact from foreign currency rates increased sales by 7.8%.

In the APAC region, Flavor Solutions sales increased by 5.1% in the first quarter of 2026 compared to the first quarter of 2025, and increased by 0.5% on an organic basis.

Favorable volume and product mix increased sales by 2.6%, primarily driven by growth in China.

Pricing unfavorably impacted sales by 2.1%.

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 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 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.

The favorable impact from foreign currency rates increased sales by 4.6%.

Segment operating income for our Flavor Solutions segment for the first quarter of 2026 increased by $9.5 million, or 12.1%, compared to the same period of 2025 driven by an increase in gross profit partially offset by an increase in SG&A expense.

The increase in gross profit was driven by the impact of our acquisition of McCormick de Mexico, favorable pricing and CCI-led cost savings, partially offset by increased commodity costs primarily driven by tariffs.

The increase in SG&A expense was driven by the impact of the McCormick de Mexico acquisition and increased investments in technology.

Segment operating margin increased by 70 basis points to 12.1%.

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MARKET RISK SENSITIVITY

We utilize derivative financial instruments to enhance our ability to manage risk, including foreign exchange and interest rate exposures, which exist as part of our ongoing business operations.

We utilize derivative financial instruments to enhance our ability to manage risk, including foreign exchange, interest rate, and commodity exposures, which exist as part of our ongoing business operations.

We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instrument.

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

August 31, 2025 November 30, 2024

February 28, 2026 November 30, 2025

Forward foreign currency:

Notional value $ 1,121.5 $ 1,018.2

Unrealized net (loss) (2.5) (7.3)

Unrealized net (loss) gain (3.5) 5.8

Cross currency swaps:

Notional value 1,030.4 1,011.9

Unrealized net (loss) gain (14.4) 36.8

Unrealized net loss (19.4) (9.6)

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.

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

August 31, 2025 November 30, 2024

February 28, 2026 November 30, 2025

Notional value $ 500.0 $ 500.0

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

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

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

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

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

Our use of commodity derivatives is currently limited to swaps, futures, and options to reduce our exposure to the price volatility of soybean oil.

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

February 28, 2026 November 30, 2025

Notional value $ 344.1 $ —

Unrealized net gain 26.8 —

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

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NON-GAAP FINANCIAL MEASURES

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.

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.

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

• Gain on remeasurement of previously held equity interest - On January 2, 2026, we completed the acquisition of an additional 25% ownership interest in McCormick de Mexico which increased our ownership to a 75% controlling interest.

Prior to the acquisition of the additional ownership interest, we accounted for our 50% ownership interest as an equity method investment.

The acquisition of the additional ownership interest resulted in the consolidation of McCormick de Mexico's financial results.

As a result of the consolidation, the carrying value of our previously held 50% ownership interest was remeasured to fair value resulting in a gain.

Details with respect to the composition of special charges, including transaction and integration expenses, set forth below are included in Note 3 of the notes to our accompanying condensed consolidated financial statements.

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

Details with respect to our gain on the revaluation of a previously held equity interest in McCormick de Mexico are included in Note 2 of the notes to our accompanying condensed consolidated financial statements.

Details with respect to the composition of special charges, including transaction and integration expenses, for the year ended November 30, 2025 are included in Note 2 of the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended November 30, 2025.

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

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

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

For the year ended November 30, 2025 For the three months ended

February 28, 2026 February 28, 2025

Gross profit $ 2,592.2 $ 708.9 $ 604.0

Impact of special charges included in cost of goods sold

— 1.0 — 1.0 —

Adjusted gross profit $ 2,594.3 $ 723.9 $ 604.0

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Impact of special charges (1)

— % 0.8 % — %

Adjusted gross profit margin (1)

2 unchanged sentences

Impact of special charges

9.5 4.9 1.9 17.7 7.9

Adjusted operating income $ 1,094.0 $ 267.6 $ 225.2

2 unchanged sentences

Impact of special charges (2)

0.3 % 2.2 % — %

Adjusted operating income margin (2)

2 unchanged sentences

Impact of special charges

2.4 1.3 0.6 4.3 2.1

Adjusted income tax expense $ 201.3 $ 58.6 $ 41.6

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21.5 % 26.0 % 22.3 %

Net income $ 788.5 $ 225.5 $ 223.1 $ 562.8 $ 573.3

Impact of special charges

7.1 3.6 1.3 13.4 5.8

Net income attributable to McCormick & Company $ 789.4 $ 1,016.2 $ 162.3

Impact of special charges, net of non-controlling interest (4)

Gain on remeasurement of previously held equity interest — (866.8) —

Adjusted net income $ 807.1 $ 176.9 $ 162.3

Earnings per share – diluted $ 2.92 $ 0.84 $ 0.83 $ 2.09 $ 2.13 $2.95 to $3.00

Earnings per share – diluted $ 2.93 $ 3.77 $ 0.60

Impact of special charges 0.07 0.11 —

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

Gain on remeasurement of previously held equity interest — (3.22) —

Adjusted earnings per share – diluted $ 3.00 $ 0.66 $ 0.60

(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.

The impact of special charges included in cost of goods sold represents the step-up of acquired inventory recognized in cost of goods sold as the related inventory was sold.

(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 $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 $225.1 million and $186.5 million for the three months ended February 28, 2026 and 2025, 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 $936.2 million for the year ended November 30, 2025.

(4) The impact of special charges, net of noncontrolling interests, for the three months ended February 28, 2026 represents a $2.6 million non-controlling interest effect associated with the step-up of acquired inventory recognized in cost of goods sold as the related inventory was sold.

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

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

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

Consumer segment:

Americas 2.7 % — % 2.7 %

EMEA 11.4 % 7.0 % 4.4 %

APAC — % 0.8 % (0.8) %

Total Consumer 3.8 % 1.2 % 2.6 %

Flavor Solutions segment:

Americas 0.1 % (0.8) % 0.9 %

EMEA 2.1 % 5.2 % (3.1) %

APAC 7.7 % 1.4 % 6.3 %

Total Flavor Solutions 1.2 % 0.6 % 0.6 %

Total net sales 2.7 % 0.9 % 1.8 %

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

Three months ended February 28, 2026

Percentage change as reported Impact of foreign currency exchange Percentage change on a constant currency basis Impact of acquisition Percentage change on an organic basis

Consumer segment:

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Total net sales 16.7 % 3.1 % 13.6 % 12.4 % 1.2 %

Three months ended August 31, 2025

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

Adjusted operating income:

Consumer segment 3.7 % 0.5 % 3.2 %

Flavor Solutions segment (1.8) % (0.2) % (1.6) %

Total adjusted operating income 1.8 % 0.2 % 1.6 %

Nine months ended August 31, 2025

Three months ended February 28, 2026

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

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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 in constant currency- diluted 1% to 4%

LIQUIDITY AND FINANCIAL CONDITION

Nine months ended

August 31, 2025 August 31, 2024

Three months ended

February 28, 2026 February 28, 2025

Net cash provided by operating activities $ 50.9 $ 115.5

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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 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, 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.

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

We expect that the proposed combination with Unilever Foods is likely to result in a material increase in our debt and liquidity needs that will impact our capital needs prior to and after the closing of such transaction.

Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever and its shareholders and make a one-time cash payment of $15.7 billion to Unilever, subject to certain adjustments, which we intend to fund through the Bridge Facility and, to the extent available, the Permanent Financing.

See "Bridge Commitment Letter and Financing Arrangements" in the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

We believe that our sources of liquidity, which include existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, access to capital markets and the committed debt financing related to the proposed transaction with Unilever Foods, 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 one-time cash payment to Unilever in connection with the proposed transaction, 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

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 $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.

Operating Cash Flow — Net cash provided by operating activities of $50.9 million for the three months ended February 28, 2026, decreased $64.6 million as compared to $115.5 million for the corresponding 2025 period.

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

The higher use of cash associated with working capital, net of effect of business acquired, was driven by an increased use of cash associated with accounts payable, partially offset by a source of cash associated with inventory in 2026 compared to a use of cash in the 2025 period.

Investing Cash Flow — Cash used in investing activities of $762.4 million for the three months ended February 28, 2026 increased by $725.3 million as compared to $37.1 million for the corresponding period in 2025.

Our primary investing cash flows included cash used in the acquisition of a business and cash used for capital expenditures.

Capital expenditures, including expenditures for capitalized software decreased from the 2025 level of $37.1 million to $32.5 million.

Cash used for the acquisition of a business, net of cash acquired was $729.9 million.

We expect 2026 capital expenditures to approximate $275 million.

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

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.

Financing Cash Flow — Financing activities provided cash of $781.7 million for the three months ended February 28, 2026 as compared to a use of cash of $155.2 million for the corresponding period in 2025.

The year-over-year change was primarily driven by fluctuations in net borrowings, share repurchase activity, and dividend payments, as further described below.

The following table outlines our net borrowing activities:

Nine months ended

August 31, 2025 August 31, 2024

Net increase in short-term borrowings $ 13.2 $ 908.6

Three months ended

February 28, 2026 February 28, 2025

Net increase in short-term borrowings (repayments), net $ 928.5 $ (25.9)

Repayments of long-term debt (502.2) (11.5)

Long-term debt borrowings 2.4 —

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

Long-term debt borrowings (net of debt issuance costs of $0.5) 497.4 —

Net cash provided by (used in) borrowing activities $ 923.7 $ (37.4)

In the first quarter of 2026 the increase in short-term borrowings was principally to fund investing cash requirements.

We repaid $502.2 million of long-term debt, including the $500 million, 0.90% notes that matured in February 2026.

We also issued $500 million of 4.150% notes due 2029, with net proceeds received of $497.1 million.

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

Nine months ended

August 31, 2025 August 31, 2024

Three months ended

February 28, 2026 February 28, 2025

Number of shares of common stock repurchased (in thousands) 154 224

Dollar amount (in millions) $ 10.9 $ 17.2

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.

As of February 28, 2026, approximately $403 million remained of the $600 million share repurchase program that was authorized by the Board of Directors in November 2019.

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

During the nine months ended August 31, 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.

During the three months ended February 28, 2026, we received proceeds of $12.6 million from exercised stock options as compared to $6.7 million received in the corresponding 2025 period.

We repurchased $9.2 million and $6.7 million of common stock during the three months ended February 28, 2026 and 2025, respectively, in conjunction with employee tax withholding requirements associated with our stock compensation plans.

Dividends paid increased to $128.9 million, or a per share quarterly dividend of $0.48, in the first three months of 2026 from $120.7 million, or a per share quarterly dividend of $0.45, of dividends paid in the same period last year.

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

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

At August 31, 2025 and 2024, we temporarily used $652.2 million and $609.0 million, respectively, of cash from our non-U.S.

At February 28, 2026 and 2025, we temporarily used $439.3 million and $607.3 million, respectively, of cash from our non-U.S.

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

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

The average short-term borrowings outstanding for the 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 average short-term borrowings outstanding for the three months ended February 28, 2026 and 2025 were $1,286.7 million and $981.3 million, respectively.

Total average debt outstanding for the three months ended February 28, 2026 and 2025 was $4,920.0 million and $4,781.3 million, respectively.

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

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.

At February 28, 2026, 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, 2025.

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

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

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

The pricing of the revolving credit facility is based on a credit rating grid that contains a fully drawn maximum pricing of the credit facility equal to Term SOFR plus 1.50%.

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

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

In February 2026, we issued $500 million aggregate principal amount of 4.150% unsecured senior notes due 2029.

Interest is payable semiannually in February and August of each year.

The net proceeds received from the issuances of these notes of $497.1 million were used to repay a portion of the outstanding $500 million, 0.90% notes due in February 2026.

Our committed revolving credit facilities include a five-year $2.0 billion revolving credit facility expiring in May 2030 and a 364-day $500 million revolving credit facility expiring in January 2027.

Pricing for both facilities, on a fully drawn basis, is currently Term SOFR plus 1.125% and is based on a credit rating grid, with a maximum fully drawn rate of 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.

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

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

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

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.

In addition, in connection with the proposed transaction with Unilever Foods, we will be obligated to make a one-time cash payment of $15.7 billion to Unilever, subject to certain adjustments.

These obligations impact our liquidity and capital resource needs.

To meet those cash requirements, we intend to use our existing cash, cash equivalents and internally generated funds, to borrow under our existing credit facilities or under other short-term borrowing facilities and depending on market conditions and upon the significance of the cost of a particular debt maturity to our then-available sources of funds, to obtain additional short- and long-term financing.

To meet those cash requirements, we intend to use our existing cash, cash equivalents and internally generated funds, to borrow under our existing credit facilities or under other short-term borrowing facilities , to utilize the committed debt financing we have obtained in connection with the proposed transaction, and depending on market conditions and upon the significance of the cost of a particular debt maturity to our then-available sources of funds, to obtain additional short- and long-term financing.

We believe that the cash provided from these sources will be adequate to meet our future cash requirements.

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These estimates can also affect supplemental information disclosed by us, including information about contingencies, risk and financial condition.

We believe, given current facts and circumstances, our estimates and assumptions are reasonable, adhere to GAAP and are consistently applied.

We believe, given current facts and circumstances, our estimates

and assumptions are reasonable, adhere to GAAP and are consistently applied.

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.

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Our most critical accounting estimates and assumptions are included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2025.

There have been no changes in our critical accounting estimates and assumptions included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2024.

There have been no changes in our critical accounting estimates and assumptions included in our Annual Report on Form 10-K for the fiscal year ended November 30, 2025 except as follows.

Business Combinations

We use the acquisition method in accounting for acquired businesses.

Under the acquisition method, our financial statements reflect the operations of an acquired business starting from the closing of the acquisition.

The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition.

The fair value of any noncontrolling interest is estimated based on the implied value derived from the consideration transferred adjusted for any control premium.

Any excess of the purchase consideration over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets, and noncontrolling interest.

We generally obtain the assistance of a third-party valuation specialist in estimating fair values of tangible and intangible assets as well estimating the fair value of any noncontrolling interest.

The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants.

While management believes those expectations and assumptions are reasonable, they are inherently uncertain.

Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions.

Determining the useful lives of intangible assets also requires judgment.

Certain intangibles are expected to have indefinite lives, including brand intangibles based on their history and our plans to continue to support and build the acquired brands, and reacquired rights based on their ability to contribute cash flows for the foreseeable future without substantive limiting factors.

Other acquired intangible assets such as customer relationships are expected to have determinable useful lives.

Our estimates of the useful lives of definite-lived intangible assets are primarily based upon historical experience, the competitive and macroeconomic environment, and our operating plans.

The costs of definite-lived intangibles are amortized to expense over their estimated life.

FORWARD-LOOKING INFORMATION

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These statements may relate to:

the anticipated benefits of, and our plans, strategies and objectives relating to, the proposed transaction with Unilever Foods, including:

due to the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction, including changes in relevant tax and other applicable laws;

the failure to obtain necessary regulatory approvals, approval of our shareholders, anticipated tax treatment or any required financing, or to satisfy any of the other conditions to the proposed transaction;

the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies could impact the value or expected benefit of, timing or pursuit of the proposed transaction;

the risks and costs of the pursuit and/or implementation of the anticipated separation of Unilever Foods business prior to closing, including the anticipated timing required to complete the separation, any adjustment to the terms of the separation and any changes to the configuration of the businesses included in the separation if implemented;

the financing of the proposed transaction, including with respect to the Bridge Commitment and any other subsequent financing;

the effectiveness of a registration statement on Form S-4 and our receipt of shareholder approval for the proposed transaction and certain related matters;

the anticipated ownership percentages of McCormick shareholders, Unilever shareholders and Unilever following the closing of the proposed transaction;

the effect of the announcement or pendency of the proposed transaction on Unilever Foods’ or McCormick’s business relationships, competition, business, financial condition and operating results;

the ability of McCormick to successfully integrate Unilever Foods’ operations and implement its plans, forecasts and other expectations with respect to Unilever Foods’ business or the combined business after the closing of the proposed transaction;

the ability of McCormick to manage additional debt and successfully de-lever following the transaction;

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

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

the expected results of operations of businesses acquired, including the additional 25% ownership interest in McCormick de Mexico;

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

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

the expected impact of pricing

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

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

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

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

the impact of ongoing conflicts, including those between Russia and Ukraine and the war/conflict in the Middle East, including the potential for broader economic disruption, in particular related to fuel prices;

expected working capital improvements;

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negative employee relations;

risks related to the proposed transaction, including:

direct transaction costs and substantial transition and integration-related costs associated with the proposed transaction with Unilever Foods;

the parties' ability to meet expectations regarding the timing, completion and accounting and tax treatments of the transaction, and the occurrence of any event, change or other circumstance that could give rise to the termination of the transaction agreement;

the failure to obtain necessary regulatory approvals, anticipated tax treatment or any required financing, or to satisfy any of the other conditions to the transaction;

the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies could adversely impact the value or expected benefit of, timing or pursuit of the transaction;

the risks and costs of the pursuit and/or implementation of the anticipated separation of Unilever Foods' business prior to closing;

uncertainties as to access to available financing to consummate the transaction upon acceptable terms and on a timely basis or at all;

the failure to obtain the effectiveness of a registration statement on Form S-4 or our receipt of shareholder approval for the transaction;

the effect of the announcement or pendency of the transaction on Unilever Foods' or McCormick's business relationships, competition, business, financial condition and operating results, including risks that the transaction disrupts current plans and operations of Unilever Foods or McCormick;

the ability of Unilever Foods or McCormick to retain and hire key personnel, risks related to diverting either management team's attention from ongoing business operations, and risks associated with third-party contracts containing consent and/or other provisions that may be triggered by the transaction;

the ability of McCormick to successfully integrate Unilever Foods' operations and implement its plans, forecasts and other expectations with respect to Unilever Foods' business or the combined business after the closing of the transaction;

the ability of McCormick to manage additional debt and successfully de-lever following the transaction;

the outcome of any legal proceedings that may be instituted against Unilever

Foods or McCormick related to the transaction;

and other risks as described herein under Part II, Item 1A “Risk Factors—Risks Relating to the Proposed Transaction”;

and other risks described in the Company's filings with the Securities and Exchange Commission.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis