McCormick Reports First Quarter Financial Results, Reaffirms 2013 Outlook

  McCormick Reports First Quarter Financial Results, Reaffirms 2013 Outlook

PR Newswire

SPARKS, Md., April 2, 2013

SPARKS, Md., April 2, 2013 /PRNewswire/ -- McCormick & Company, Incorporated
(NYSE: MKC), a global leader in flavor, today reported first quarter financial
results for fiscal year 2013 and reaffirmed its 2013 outlook.

  oNet sales rose 3% to $934 million, led by 7% growth in consumer business
    sales on strong volume and product mix.
  oReported earnings per share of $0.57 compared to $0.55 in the first
    quarter of 2012. Cash flow from operations rose to $32 million from $23
    million in the prior year.
  oReaffirmed outlook for 3% to 5% sales growth in local currency and 2013
    earnings per share of $3.15 to $3.23.

Alan D. Wilson, Chairman, President and CEO, commented, "Our financial results
for the first quarter included strong growth in our consumer business,
earnings per share slightly ahead of our initial outlook and a great start to
cash flow for 2013. We were pleased to achieve these results in a challenging
environment, and I thank employees throughout McCormick who are delivering
high performance and contributing to our success.

"We grew consumer business sales 7% with innovation in spices and seasonings,
recipe mixes and our 'regional leaders' such as Zatarain's in the U.S. and
Vahine in France. Digital media, in-store merchandising and other brand
marketing support also drove our growth in the first quarter. We had
particularly strong performance in emerging markets where we increased
consumer business sales 14%. As expected, our industrial business had a
slower start to the year. Compared to a 13% rate of sales growth in the first
quarter of 2012, industrial business sales declined 2% in the first quarter of
2013. Demand has been weak in certain markets, including quick service
restaurants in the U.S. and China, although we expect some recovery in the
upcoming quarters. We reaffirm our overall expectation to increase sales 3% to
5% and achieve earnings per share of $3.15 to $3.23."

McCormick's first quarter sales rose 3%, led by pricing actions taken in
response to higher material costs. Volume and product mix added 1% to sales
growth. In the first quarter of 2013, the company had expected the increase
in volume and product mix for its consumer business to exceed that of the
industrial business. Volume and product mix for the consumer business grew
5%, driven mainly by product innovation and brand marketing support, with
increases in each of the three geographic regions: the Americas, Europe,
Middle East and Africa (EMEA) and Asia/Pacific. For the industrial business,
volume and product mix declined 5%, largely due to weaker demand from quick
service restaurants and comparison to a strong growth rate in the first
quarter of 2012.

Operating income of $112 million was comparable to the year ago period, with
higher sales and cost savings from McCormick's Comprehensive Continuous
Improvement program, (CCI), offset by the unfavorable impact of higher
material costs and an increase of approximately $5 million in retirement
benefit expense. While brand marketing support was $4 million lower in the
first quarter of 2013, the company spent an additional $3 million for
increased price promotions and paid allowances to gain distribution for new
items. Earnings per share grew to $0.57 from $0.55 in the first quarter of
2012, due in part to a favorable tax rate, higher income from unconsolidated
operations and reduced shares outstanding.

Cash flow from operations was $32 million in the first quarter of 2013
compared to $23 million in the year-ago period. This improvement was mainly
the result of a slight decrease in inventory in this period versus the first
quarter of 2012, when inventory was a use of cash. Due to the seasonality of
McCormick's business, cash flow from operations typically increases
significantly in the second half of the fiscal year.

The company reaffirmed its expectation to grow sales 3% to 5% in local
currency, largely from higher volume and product mix and expects a minimal
impact of foreign currency exchange rates based on current rates. The company
also reaffirmed guidance for a 6% to 8% increase in operating income,
including projected CCI cost savings of at least $45 million. The company's
outlook for 2013 earnings per share continued to be in a range of $3.15 to
$3.23. This includes the projected unfavorable impact of $0.11 from increased
retirement benefit expenses. In the second quarter of 2013, the company plans
to increase brand marketing support approximately $5 million. Also in the
second quarter of 2013, the company expects the continuation of higher
material costs and an unfavorable impact of approximately $5 million from
increased retirement benefit expense. As a result of the unfavorable impact
of these factors, earnings per share in the second quarter of 2013 are
expected to be comparable to $0.60 earnings per share that the company
reported in the second quarter of 2012. With the higher cash flow achieved in
the first quarter, the company expects another year of strong cash generation
in 2013. The company plans to update its 2013 fiscal year outlook upon the
completion of the previously announced agreement to acquire Wuhan Asia Pacific
Condiments Co., Ltd., which is expected to occur in mid-2013.

Business Segment Results
Consumer Business
(in millions)             Three Months Ended
                         2/28/13        2/29/12
 Net sales          $569.8         $534.2
 Operating income   87.7           81.4

Consumer business sales grew 7% when compared to the first quarter of 2012.
Higher volume and product mix contributed 5% of the increase and pricing 2%.
The impact of foreign currency exchange rates on sales growth was minimal
this period.

  oConsumer sales in the Americas rose 7%, with minimal impact from foreign
    currency exchange. This increase was mainly driven by volume and product
    mix, with pricing actions adding 1%. Initiatives driving this unit growth
    included consumer marketing, promotional activity and in-store
    merchandising for spices, herbs and seasonings in both the U.S. and
    Canada. In addition, product innovation led to an increase in sales of
    recipe mixes, as well as Grill Mates, Zatarain's and Simply Asia brand
  oConsumer sales in EMEA rose 4%, and in local currency increased 2%. Both
    higher volume and product mix, and pricing actions contributed to this
    increase. During the first quarter the company grew sales of Vahine and
    Ducros brand products in France, and its Schwartz brand in the U.K., and
    gained new distribution of Kamis items in Russia.
  oFirst quarter sales in the Asia/Pacific region grew 13%, and in local
    currency the increase was 15%. China was the largest contributor to this
    increase with 20% sales growth in local currency, driven by strong sales
    execution, revitalized packaging and expanded advertising. Sales of
    Kohinoor products in India grew 19% in local currency, which was the net
    impact of pricing actions taken in response to a steep rise in the cost of
    basmati rice, a primary ingredient, offset in part by lower volume and
    product mix.

For the first quarter, operating income for the consumer business was $88
million, an 8% increase from the first quarter of 2012. The company overcame
increases in material costs and retirement benefit expenses with higher sales,
as well as cost savings from its CCI program. A $4 million decrease in brand
marketing support reported as selling, general and administrative expense was
partially offset by a $3 million increase in price promotions and allowances
to gain distribution for new items reported in net sales.

Industrial Business
(in millions)  Three Months Ended
                                              2/28/13  2/29/12
 Net sales                                 $364.6    $372.5
 Operating income                          24.3      31.1

In the first quarter of 2013, industrial business sales declined 2% when
compared to the year ago period, and in local currency, sales declined 3%.
Volume and product mix decreased 5%, offset in part by pricing actions. The
company had expected weaker results in the first quarter of 2013 due to a
decrease in demand from quick service restaurants in certain markets and a
comparison to a 13% increase in the first quarter of 2012. This situation is
expected to improve by the second half of 2013.

  oIndustrial sales in the Americas declined 3%, with minimal impact from
    currency in the first quarter of 2013. Pricing added 3% to sales, while
    lower volume and product mix reduced sales 6%. The majority of the
    decline in volume and product mix related to quick service restaurants
    where the company is being impacted by lower demand. While sales to food
    manufacturers declined slightly in the first quarter, the company has a
    solid 2013 new product pipeline for these customers that includes
    seasonings for snacks and meal preparation kits.
  oIn EMEA, industrial sales rose 7%, with minimal impact from currency.
    This increase was led by demand from quick service restaurants in this
    region which grew throughout 2012 and continued into the first quarter of
    2013. Higher prices added 2% to sales growth in this region.
  oIn the Asia/Pacific region, sales decreased 12%, and in local currency
    declined 13%. In China, lower consumer traffic in quick service
    restaurants impacted industrial business sales in the first part of 2013.
    Sales are expected to improve in the upcoming quarters as a result of
    customers' plans for promotions, new products and additional restaurant
    locations in China.

Operating income for the industrial business was $24 million in the first
quarter of 2013 compared to $31 million in the year ago period. This
reduction in operating income was the result of lower sales, an unfavorable
mix across regions and the impact of increased retirement benefit expenses,
which were offset in part by cost savings from the company's CCI program.

Live Webcast
As previously announced, McCormick will hold a conference call with analysts
today at 8:00 a.m. ET. The conference call will be webcast live via the
McCormick web site. Go to and follow directions to listen to
the call and access the accompanying presentation materials. At this same
location, a replay of the call will be available following the live call.
Past press releases and additional information can be found at this address.

Forward-looking Information
Certain information contained in this release, including statements concerning
expected performance such as those relating to net sales, earnings, cost
savings, acquisitions and brand marketing support, are "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act
of 1934. These statements may be identified by the use of words such as
"may," "will," "expect," "should," "anticipate," "believe" and "plan." These
statements may relate to: the expected results of operations of businesses
acquired by us, the expected impact of raw material costs and our pricing
actions on our results of operations and gross margins, the expected
productivity and working capital improvements, expected trends in net sales
and earnings performance and other financial measures, the expectations of
pension and postretirement plan contributions, the holding period and market
risks associated with financial instruments, the impact of foreign exchange
fluctuations, the adequacy of internally generated funds and existing sources
of liquidity, such as the availability of bank financing, our ability to issue
additional debt or equity securities and our expectations regarding purchasing
shares of our common stock under the existing authorizations.

These and other forward-looking statements are based on management's current
views and assumptions and involve risks and uncertainties that could
significantly affect expected results. Results may be materially affected by
external factors such as damage to our reputation or brand name, business
interruptions due to natural disasters or similar unexpected events, actions
of competitors, customer relationships and financial condition, the ability to
achieve expected cost savings and margin improvements, the successful
acquisition and integration of new businesses, fluctuations in the cost and
availability of raw and packaging materials, changes in regulatory
requirements, and global economic conditions generally which would include the
availability of financing, interest, inflation rates and investment return on
retirement plan assets, as well as foreign currency fluctuations, risks
associated with our information technology systems, the threat of data
breaches or cyber attacks, and other risks described in the company's filings
with the Securities and Exchange Commission.

Actual results could differ materially from those projected in the
forward-looking statements. The company undertakes no obligation to update or
revise publicly, any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required by law.

About McCormick
McCormick & Company, Incorporated is a global leader in flavor. With $4
billion in annual sales, the company manufactures, markets and distributes
spices, seasoning mixes, condiments and other flavorful products to the entire
food industry – retail outlets, food manufacturers and foodservice businesses.

Every day, no matter where or what you eat, you can enjoy food flavored by
McCormick. McCormick Brings Passion to Flavor™.

To learn more please visit us at

For information contact:

Investor Relations:
Joyce Brooks (410) 771-7244 or

Corporate Communications:
Lori Robinson (410) 527-6004 or

(Financial tables follow)

First Quarter Report
                                                          McCormick & Company,
Consolidated Income
Statement (Unaudited)
(In millions except per
share data)
                             Three Months Ended
                             February 28,   February 29,
                             2013           2012
Net sales                    $        $      
                              934.4         906.7
Cost of goods sold           572.7          551.4
Gross profit                 361.7          355.3
Gross profit margin          38.7%          39.2%
Selling, general and         249.7          242.8
administrative expense
Operating income             112.0          112.5
Interest expense             13.9           13.5
Other income, net            0.6            0.9
Income from consolidated
operations before income     98.7           99.9
Income taxes                 28.1           30.0
Net income from consolidated 70.6           69.9
Income from unconsolidated   5.4            4.6
Net income                   $        $      
                               76.0         74.5
Earnings per share - basic   $        $      
                               0.57         0.56
Earnings per share - diluted $        $      
                               0.57         0.55
Average shares outstanding - 132.5          133.1
Average shares outstanding - 134.0          134.5

First Quarter Report
                                          McCormick & Company, Incorporated
Consolidated Balance Sheet (Unaudited)
(In millions)
                                          February 28, 2013  February 29, 2012
Cash and cash equivalents                 $          $        
                                          68.6               54.4
Trade accounts receivable, net            403.9              381.1
Inventories                               606.5              640.4
Prepaid expenses and other current        132.5              116.9
Total current assets                      1,211.5            1,192.8
Property, plant and equipment, net        532.5              523.4
Goodwill                                  1,693.0            1,697.4
Intangible assets, net                    321.3              355.0
Investments and other assets              327.8              311.1
Total assets                              $             $     
                                          4,086.1           4,079.7
Short-term borrowings and current         $           $       
portion of long-term debt                 453.8              283.1
Trade accounts payable                    340.2              342.3
Other accrued liabilities                 321.5              334.5
Total current liabilities                 1,115.5            959.9
Long-term debt                            776.0              1,028.7
Other long-term liabilities               469.8              398.5
Total liabilities                         2,361.3            2,387.1
Shareholders' equity
Common stock                              921.9              840.9
Retained earnings                         948.3              869.0
Accumulated other comprehensive loss      (163.0)            (35.6)
Non-controlling interests                 17.6               18.3
Total shareholders' equity                1,724.8            1,692.6
Total liabilities and shareholders'       $             $     
equity                                    4,086.1           4,079.7

First Quarter Report
                                          McCormick & Company, Incorporated
Consolidated Cash Flow Statement
(In millions)
                                          Three Months Ended
                                          February 28, 2013  February 29, 2012
Operating activities
Net income                                $          $        
                                          76.0               74.5
Adjustments to reconcile net income to
cash provided by operating activities:
 Depreciation and amortization          26.2               25.8
 Stock-based compensation               2.8                2.6
 Income from unconsolidated operations  (5.4)              (4.6)
 Changes in operating assets and        (69.8)             (76.3)
Dividends from unconsolidated affiliates  1.8                0.5
 Net cash provided by operating         31.6               22.5
Investing activities
Acquisition of businesses                 (0.8)              -
Capital expenditures                      (12.4)             (15.1)
Proceeds from sale of property, plant     1.9                0.2
and equipment
 Net cash used in investing activities  (11.3)             (14.9)
Financing activities
Short-term borrowings, net                60.8               64.2
Long-term debt repayments                 (0.4)              (4.2)
Proceeds from exercised stock options     10.5               14.4
Common stock acquired by purchase         (60.2)             (42.3)
Dividends paid                            (45.1)             (41.4)
 Net cash used in financing activities  (34.4)             (9.3)
Effect of exchange rate changes on cash
cash equivalents                          3.7                2.2
(Decrease) increase in cash and cash      (10.4)             0.5
Cash and cash equivalents at beginning    79.0               53.9
of year
Cash and cash equivalents at end of       $          $        
period                                    68.6               54.4

SOURCE McCormick & Company, Incorporated

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