McCormick & Co. (NYSE: MKC) reported Q2 EPS of $0.82, $0.06 better than the analyst estimate of $0.76. Revenue for the quarter came in at $1.11 billion versus the consensus estimate of $1.1 billion.

GUIDANCE:

McCormick & Co. sees FY2017 EPS of $4.05-$4.13, versus the consensus of $4.07.

• For the 2017 fiscal year, McCormick updated its financial outlook to reflect a lower impact from unfavorable foreign currency exchange rates on net sales and a higher impact of special charges. Excluding this impact, the company reaffirmed its expected constant currency growth rates for sales, adjusted operating income and adjusted earnings per share.
• In 2017, McCormick expects to grow sales 4% to 6% compared to 2016. Excluding the impact of unfavorable currency rates, the projected growth remains 5% to 7%. The company expects to drive sales growth with new products, brand marketing, expanded distribution and the incremental sales impact of acquisitions completed in fiscal year 2016 and from Giotti, acquired in December 2016. 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 $100 million of cost savings and intends to use these savings to improve margins, fund a mid to high-single digit increase in brand marketing, and as a further offset to increased material costs.
• Operating income in 2017 is expected to grow 8% to 10% from $641 million of operating income in 2016. The company's three year MGE initiative will generate savings of approximately $30 million to $40 million annually once fully implemented. While the company is still finalizing the details of its operating model, the expected cost to implement MGE will be approximately $55 million to $65 million of special charges over the course of the three year initiative. The impact of MGE is the primary driver for the increased 2017 special charge projection to approximately $20 million from $11 million. Excluding the impact of special charges in 2017 and 2016, the company expects to grow adjusted operating income 8% to 10% from adjusted operating income of $657 million in 2016. Excluding the estimated impact of unfavorable currency rates, the expected year to year increase in adjusted operating income remains 9% to 11%.
• McCormick projects 2017 earnings per share to be in the range of $3.94 to $4.02 compared to $3.69 of earnings per share in 2016. Excluding an estimated $0.11 impact of special charges in 2017, the company reaffirms projected adjusted earnings per share of $4.05 to $4.13. This is an increase of 7% to 9% from adjusted earnings per share of $3.78 in 2016. This range of growth includes an estimated unfavorable impact of 2 percentage points from unfavorable 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 share repurchases, absent any acquisitions

For earnings history and earnings-related data on McCormick & Co. (MKC) click here.