McCormick Reports Strong Sales And Profit Growth In Third Quarter And Updates 2017 Financial Outlook

Operating income was $169 million in the third quarter compared to $168 million in the year-ago period.  This increase was due to higher sales, a shift in the portfolio to more value added products, CCI-led cost savings and favorable selling, general and administrative costs, offset in part by an increase in transaction and integration expenses from the acquisition of RB Foods.  The company recognized $30 million of transaction and integration expenses in operating income related to the RB Foods acquisition in the third quarter of 2017.  The company recorded $5 million of special charges in the third quarter of 2017 related to organization and streamlining actions versus $4 million in 2016.  Excluding transaction and integration expenses as well as special charges adjusted operating income was $204 million compared to $172 million of adjusted operating income in the year-ago period.  In constant currency, the company grew adjusted operating income 19%.

Earnings per share was $0.85 in the third quarter of 2017 compared to $1.00 in the year-ago period. Transaction and integration expenses, including $15 million of other debt costs, as well as special charges lowered earnings per share by $0.27 and $0.03 in 2017 and 2016, respectively.  The decrease in earnings per share was driven by the RB Foods' transaction and integration expenses.  Excluding the impact of transaction and integration expenses as well as special charges, adjusted earnings per share was $1.12 in the third quarter of 2017 compared to $1.03 in the year-ago period.  The increase in adjusted earnings per share was driven primarily by higher operating income.

The company continues to generate strong cash flow.  Year-to-date net cash provided by operating activities through the third quarter of 2017 was $303 million compared to $322 million for the first three   quarters of 2016.  The decrease was mainly due to the timing of income tax payments and incentive compensation payments related to 2016's financial performance as well as payments related to the RB Foods' transaction expenses.

2017 Financial Outlook

For the 2017 fiscal year, McCormick updated its financial outlook to reflect its year-to-date performance and growth momentum, the acquisition of RB Foods and a lower impact from unfavorable foreign currency on earnings per share.

In 2017, McCormick expects to grow sales 9% to 10% compared to 2016.  Excluding the impact of unfavorable currency rates, the projected growth is 10% to 11%.  The company expects to drive sales growth with new products, brand marketing, expanded distribution and the incremental sales impact of acquisitions.  Sales growth is also expected to be driven by pricing actions that are intended to offset an anticipated mid-single digit increase in material costs.  The company has plans to achieve at least $105 million of CCI and intends to use these savings to improve margins, fund a high-single digit increase in brand marketing, and as a further offset to increased material costs.

Operating income in 2017 is expected to grow 10% to 11% from $641 million of operating income in 2016.  Transaction and integration expenses from the RB Foods acquisition of approximately $62 million are currently projected to impact operating income for 2017.  Special charges of approximately $22 million are currently projected for 2017 that related to previously announced organization and streamlining actions. Excluding the impact of transaction and integration expenses as well as special charges in 2017 and 2016, the expected growth in adjusted operating income is 20% to 21% from adjusted operating income of $657 million in 2016.  Excluding the estimated impact of unfavorable currency rates, the expected year on year increase in adjusted operating income is 21% to 22%.

McCormick projects 2017 earnings per share to be in the range of $3.69 to $3.73 compared to $3.69 of earnings per share in 2016.  Excluding an estimated $0.51 impact of transaction and integration expenses, including other debt costs, from RB Foods as well as special charges in 2017, the company's adjusted earnings per share is projected to be in the range of $4.20 to $4.24.  This is an increase of 11% to 12% from adjusted earnings per share of $3.78 in 2016.  This range of growth includes an estimated unfavorable impact of 1 percentage point from currency rates.  For fiscal year 2017, the company projects another year of strong cash flow, with plans to return a significant portion to McCormick's shareholders through dividends and to pay down debt.

Business Segment Results

Consumer Segment

The company grew consumer segment sales 5% when compared to the third quarter of 2016 with minimal impact from currency.

• Consumer sales in the Americas rose 7% with minimal impact from currency and RB Foods contributing 3% to sales growth. The company also increased sales driven by pricing, new products and expanded distribution. Growth was achieved across the portfolio including McCormick and Lawry's brand spices and seasonings, Grill Mates, Gourmet Garden and Stubb's products as well as McCormick brand recipe mixes. Partially offsetting the growth was sales weakness in Zatarain's products.
• Consumer sales in Europe, Middle East and Africa (EMEA) increased 1%. In constant currency, sales decreased 2% from the year-ago period mainly due to weak sales in the U.K. where the retail environment has been challenging.
• Third quarter consumer sales in the Asia/Pacific region rose 2% and in constant currency, sales rose 3%. The sales growth was led by China and India.

Consumer segment operating income, excluding transaction and integration expenses and special charges, rose 10% to $140 million for the third quarter of 2017 compared to $127 million in the year-ago period.  In constant currency, adjusted operating income rose 9%.  The favorable impact of higher sales, CCI-led cost savings and favorable selling, general and administrative costs more than offset the unfavorable impact of increases in material costs and brand marketing.

Industrial Segment

Industrial segment sales increased 14% from the third quarter of 2016 with minimal impact from currency and increases in each of the company's three regions.

• Industrial sales in the Americas drove broad based growth of 10% from the year-ago period with minimal impact from currency. This was led by continued growth momentum in branded foodservice in addition to sales growth with packaged food companies and quick service restaurants. Incremental sales from RB Foods contributed 4% to sales growth.
• In EMEA, industrial sales grew 27% in the third quarter. In constant currency, sales rose 31%, with sales from Giotti contributing 25% to this growth. Sales to both quick service restaurants and packaged food companies increased during the period. Industrial sales in this region were unfavorably impacted by the discontinuation of a lower margin business.
• Industrial sales in the Asia/Pacific region increased 16% in the third quarter of 2017 versus the same period in 2016 and in constant currency, the increase was 17%. The growth was driven by new products and promotional activities of quick service restaurants.

Industrial segment operating income, excluding transaction and integration expenses and special charges, rose 43% to $64 million for the third quarter of 2017 compared to $45 million in the year-ago period.  In constant currency, adjusted operating income rose 44%.  The favorable impact of higher sales, product mix, CCI-led cost savings and favorable selling, general and administrative costs, more than offset the unfavorable impact of increases in material costs and brand marketing.

Non-GAAP Financial Measures

The tables below include financial measures of adjusted operating income, adjusted net income and adjusted diluted earnings per share, each excluding the impact of special charges for each of the periods presented.  These financial measures also exclude the impact of items associated with our acquisition of RB Foods on August 17, 2017 (in particular, the amortization of the acquisition-date fair value adjustment of inventories that is included in cost of goods sold, transaction and integration expenses, and other debt costs) as these items significantly impact comparability between years.  Adjusted operating income, adjusted net income and adjusted diluted earnings per share 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.

In our consolidated income statement, we include the amortization of the acquisition-date inventory fair value adjustment within cost of goods sold as acquired inventory is sold.  In our consolidated income statement, we include a separate line items captioned "Special charges" and "Transaction and integration expenses" in arriving at our consolidated operating income.  In our consolidated income statement, we include a separate line item captioned "Other debt costs" in arriving at our consolidated net income.  Special charges consist of expenses associated with certain actions undertaken by the company 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, comprised of our Chairman, President and Chief Executive Officer; Executive Vice President and Chief Financial Officer; President Global Industrial Segment and McCormick International; President Global Consumer Segment and North America; Senior Vice President, Human Relations; and Senior Vice President, Strategy and Global Enablement. Upon presentation of any such proposed action (including details with respect to estimated costs, which generally consist principally of employee severance and related benefits, together with ancillary costs associated with the action that may include a non-cash component or a component which relates to inventory adjustments that are included in cost of goods sold; impacted employees or operations; expected timing; and expected benefits) 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 on-going basis through completion.

Transaction and integration expenses consists of expenses associated with the acquisition or integration of the RB Foods business.  These costs are anticipated to be incurred through fiscal 2018 and primarily consist of amortization of the acquisition-date fair value adjustment of inventories that is included in cost of goods sold; outside advisory, service and consulting costs; employee-related costs; and other costs related to the acquisition, including the costs related to the Bridge financing commitment that is included in other debt costs.

We believe that these non-GAAP financial measures are important.  The exclusion of special charges, the impact of the acquisition date-inventory fair value adjustment on cost of goods sold, transaction and integration expenses, and other debt costs provide additional information that enables enhanced comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. This information is also used by management to measure the profitability of our ongoing operations and analyze our business performance and trends.

These non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.  In addition, these non-GAAP financial measures may not be comparable to similarly titled measures of other companies because other companies may not calculate them in the same manner that we do.  We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.  A reconciliation of these non-GAAP financial measures to the related GAAP financial measures is provided below:

(in millions except per share data)	Three Months Ended								Nine Months Ended
	8/31/2017				8/31/2016				8/31/2017				8/31/2016
Operating income	$	168.7			$	167.8			$	435.5			$	421.9
Impact of transaction and integration expenses (1)	30.4 Werbung Mehr Nachrichten zur McCormick (Non Voting) Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 09:54 - PR Newswire Datang Intnl Pwr Gen - First Quarterly Report of 2024 08:28 - PR Newswire Samson Rock Capital LLP - Form 8.3 - Mattioli Woods plc 08:27 - PR Newswire Samson Rock Capital LLP - Form 8.3 - Network International Holdings Plc Sehen Sie sich dieses Unternehmen an:    Foto: andreas160578 - Pixabay Rasanter Aufstieg, Branchenrevolution und Jahresumsatz von 50 Mio. $ weiterlesen» Anzeige wo-site-teaser-box-16764_site-teaser-box_2024-04-26_09%253A00%253A00_2024-04-27_09%253A00%253A59