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McCormick (MKC) Q1 Earnings Top Estimates, Sales Increase Y/Y
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McCormick & Company, Incorporated (MKC - Free Report) reported first-quarter fiscal 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate, and the former increased year over year.
Quarter in Detail
Adjusted earnings of 59 cents per share declined from 63 cents in the year-ago quarter. However, the metric surpassed the Zacks Consensus Estimate of 49 cents per share. The year-over-year decrease was a result of increased interest costs and an elevated adjusted effective tax rate.
McCormick & Company, Incorporated Price, Consensus and EPS Surprise
This global leader in flavor generated sales of $1,565.5 million, up 3% year over year. Constant-currency (cc) sales increased 5% on 11% growth from pricing actions, somewhat offset by a 2% decline in volumes. The top line came ahead of the Zacks Consensus Estimate of $1,545 million.
The volume decline stemmed from the Kitchen Basics divestiture, reduced consumption in China due to the pandemic, the exit of the Consumer business in Russia and a 3% decline from all other volumes and a product mix.
MKC’s gross profit margin contracted 80 basis points due to escalated cost inflation and higher other supply-chain expenses. These were somewhat countered by cost savings from the Comprehensive Continuous Improvement (“CCI”) and Global Operating Effectiveness (“GOE”) programs, along with pricing actions.
The adjusted operating income was $227 million, in line with the year-ago quarter figure. At cc, the adjusted operating income rose 2%, backed by increased sales, partly negated by a gross margin decline.
Segment Details
Consumer: Sales went down 2% to $909.5 million, while cc sales increased 1% due to a 9% rise in pricing, somewhat offset by soft volumes. The volume decline included the adverse impacts of the Kitchen Basics divestiture, reduced consumption in China due to the pandemic and the exit of Consumer the business in Russia. Sales increased 3% in the Americas, while the same tumbled 9% in the EMEA and 15% in the Asia/Pacific.
Flavor Solutions: Sales in the segment advanced 10% to $656 million. On a cc basis, sales grew 12% due to solid pricing actions, partly negated by soft volumes and a product mix. Flavor Solutions’ sales in the Americas grew 13%. Flavor Solutions sales in the EMEA rose by 7%. Sales in the Asia/Pacific market dipped 1% year over year.
Financial Update
McCormick exited the quarter with cash and cash equivalents of $356.8 million, long-term debt of $3,619.8 million and total shareholders’ equity of $4,887.7 million. For the three months ended Feb 28, 2023, net cash provided by operating activities amounted to $103.4 million.
Fiscal 2023 Guidance
McCormick anticipates fiscal 2023 to witness a solid underlying business performance, backed by sales growth. It expects the GOE Program and the lapping of pandemic-led hurdles to have a positive effect on the fiscal 2023 operating income, which is likely to be somewhat negated by the impacts of the Kitchen Basics divestiture and a rise in employee incentive compensation costs.
Management anticipates currency movements to have a minimal impact on fiscal 2023 net sales, operating income and earnings per share (EPS).
For fiscal 2023, net sales are expected to increase 5-7% from the fiscal 2022 levels. Management expects sales growth to be fueled by pricing actions, which, along with cost savings, are likely to help it counter inflationary headwinds. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement.
The adjusted operating income is likely to grow 9-11%. Management envisions the adjusted EPS in the band of $2.63-$2.68 in fiscal 2023.
The company expects adjusted earnings in the band of $2.56-$2.61 per share in fiscal 2023, suggesting 1-3% growth. The bottom line is likely to be fueled by a solid operating performance, partly offset by increased interest expenses and a higher projected adjusted effective tax rate.
This Zacks Rank #5 (Strong Sell) stock has tumbled 11.1% in the past three months compared with the industry’s 3.4% decrease.
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 34.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 111.3% from the year-ago reported number.
General Mills, a branded consumer foods company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 5.7% and 6.9%, respectively, from the corresponding year-ago reported figures.
Vital Farms, which provides pasture-raised products, currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 53.3%, on average.
The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales suggests an increase of 25.4% from the year-ago reported number.
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McCormick (MKC) Q1 Earnings Top Estimates, Sales Increase Y/Y
McCormick & Company, Incorporated (MKC - Free Report) reported first-quarter fiscal 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate, and the former increased year over year.
Quarter in Detail
Adjusted earnings of 59 cents per share declined from 63 cents in the year-ago quarter. However, the metric surpassed the Zacks Consensus Estimate of 49 cents per share. The year-over-year decrease was a result of increased interest costs and an elevated adjusted effective tax rate.
McCormick & Company, Incorporated Price, Consensus and EPS Surprise
McCormick & Company, Incorporated price-consensus-eps-surprise-chart | McCormick & Company, Incorporated Quote
This global leader in flavor generated sales of $1,565.5 million, up 3% year over year. Constant-currency (cc) sales increased 5% on 11% growth from pricing actions, somewhat offset by a 2% decline in volumes. The top line came ahead of the Zacks Consensus Estimate of $1,545 million.
The volume decline stemmed from the Kitchen Basics divestiture, reduced consumption in China due to the pandemic, the exit of the Consumer business in Russia and a 3% decline from all other volumes and a product mix.
MKC’s gross profit margin contracted 80 basis points due to escalated cost inflation and higher other supply-chain expenses. These were somewhat countered by cost savings from the Comprehensive Continuous Improvement (“CCI”) and Global Operating Effectiveness (“GOE”) programs, along with pricing actions.
The adjusted operating income was $227 million, in line with the year-ago quarter figure. At cc, the adjusted operating income rose 2%, backed by increased sales, partly negated by a gross margin decline.
Segment Details
Consumer: Sales went down 2% to $909.5 million, while cc sales increased 1% due to a 9% rise in pricing, somewhat offset by soft volumes. The volume decline included the adverse impacts of the Kitchen Basics divestiture, reduced consumption in China due to the pandemic and the exit of Consumer the business in Russia. Sales increased 3% in the Americas, while the same tumbled 9% in the EMEA and 15% in the Asia/Pacific.
Flavor Solutions: Sales in the segment advanced 10% to $656 million. On a cc basis, sales grew 12% due to solid pricing actions, partly negated by soft volumes and a product mix. Flavor Solutions’ sales in the Americas grew 13%. Flavor Solutions sales in the EMEA rose by 7%. Sales in the Asia/Pacific market dipped 1% year over year.
Financial Update
McCormick exited the quarter with cash and cash equivalents of $356.8 million, long-term debt of $3,619.8 million and total shareholders’ equity of $4,887.7 million. For the three months ended Feb 28, 2023, net cash provided by operating activities amounted to $103.4 million.
Fiscal 2023 Guidance
McCormick anticipates fiscal 2023 to witness a solid underlying business performance, backed by sales growth. It expects the GOE Program and the lapping of pandemic-led hurdles to have a positive effect on the fiscal 2023 operating income, which is likely to be somewhat negated by the impacts of the Kitchen Basics divestiture and a rise in employee incentive compensation costs.
Management anticipates currency movements to have a minimal impact on fiscal 2023 net sales, operating income and earnings per share (EPS).
For fiscal 2023, net sales are expected to increase 5-7% from the fiscal 2022 levels. Management expects sales growth to be fueled by pricing actions, which, along with cost savings, are likely to help it counter inflationary headwinds. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement.
The adjusted operating income is likely to grow 9-11%. Management envisions the adjusted EPS in the band of $2.63-$2.68 in fiscal 2023.
The company expects adjusted earnings in the band of $2.56-$2.61 per share in fiscal 2023, suggesting 1-3% growth. The bottom line is likely to be fueled by a solid operating performance, partly offset by increased interest expenses and a higher projected adjusted effective tax rate.
This Zacks Rank #5 (Strong Sell) stock has tumbled 11.1% in the past three months compared with the industry’s 3.4% decrease.
Solid Consumer Staple Picks
Some better-ranked consumer staple stocks are Post Holdings (POST - Free Report) , General Mills (GIS - Free Report) and Vital Farms (VITL - Free Report) .
Post Holdings, which operates as a consumer-packaged goods company, currently sports a Zacks Rank #1 (Strong Buy). POST has a trailing four-quarter earnings surprise of 34.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current fiscal-year EPS suggests an increase of 111.3% from the year-ago reported number.
General Mills, a branded consumer foods company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 5.7% and 6.9%, respectively, from the corresponding year-ago reported figures.
Vital Farms, which provides pasture-raised products, currently carries a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 53.3%, on average.
The Zacks Consensus Estimate for Vital Farms’ current fiscal-year sales suggests an increase of 25.4% from the year-ago reported number.