McCormick shares pop on Q1 top and bottom line beat

McCormick (MKC) shares pop on Q1 top and bottom line beat


McCormick & Co. (NYSE:MKC) outperformed earnings expectations in its Q1 report, sending its shares rising nearly 6% in premarket trading Tuesday.

The food company posted first-quarter earnings per share (EPS) of $0.63, beating the consensus estimates of $0.57. Revenue came in at $1.6 billion, against a forecast of $1.55 billion.

Its gross profit margin improved to 37.4% from 36% year-over-year, also above the estimated 36.9%.

Looking ahead, McCormick forecasts its 2024 EPS to lie between $2.76 and $2.81, showing growth from the 2023 EPS of $2.52. Special charges are anticipated to reduce the 2024 EPS by $0.04. However, adjusting for these charges, the company’s 2024 adjusted EPS is expected to be between $2.80 and $2.85, compared to the consensus projection of $2.83.

Sales for 2024 are projected to vary from a 2% decrease to no change compared to 2023, or a 1% decrease to a 1% increase on a constant currency basis.

McCormick anticipates an 8% to 10% increase in operating income. After adjusting for special charges in both years, the adjusted operating income is projected to rise by 3% to 5%, or 4% to 6% on a constant currency basis, bolstered by gross margin expansion despite increased investments in brand marketing.

«We are pleased to start the year with strong first quarter performance, which reflects the early success of our prioritized investments to drive impactful results,” said Brendan M. Foley, the company’s President and CEO.

«We drove sequential improvement in volumes in our Consumer and Flavor Solutions segments.»

Commenting on the report, analysts at Goldman Sachs said they “expect shares to react positively to the FY1Q top and bottom line upside.”

“We expect focus on the 8am ET conference call to center on MKC’s outlook for volume improvement over the balance of the year, notably in core US spices/recipe mixes as well as cited areas of pressure in US mustard, hot sauce, and prepared foods,” analysts noted.

They are also looking forward to insights on the expected progression of gross margins for the rest of fiscal year 2024, with the second fiscal quarter predicted to see a modest year-on-year increase compared to a 140 basis points improvement in the first quarter, along with the company’s strategies for capital allocation.


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