McCormick & Co. (MKC) Tops Q3 EPS by 1c, Offers Guidance, Plans 2-for-1 Stock Split

McCormick & Co. (NYSE: MKC) reported Q3 EPS of $1.53, $0.01 better than the analyst estimate of $1.52. Revenue for the quarter came in at $1.43 billion versus the consensus estimate of $1.39 billion.

GUIDANCE:

McCormick & Co. sees FY2020 EPS of $5.64-$5.72, versus the consensus of $5.76.

Fiscal Year 2020 Financial Outlook

McCormick previously withdrew its fiscal 2020 guidance on March 31, 2020. While recognizing the operating environment continues to evolve and there remains a degree of uncertainty about the pace and shape of the COVID-19 recovery, the company believes the shift in consumer demand to at home consumption will continue. The company expects it will drive growth in this dynamic environment as evidenced by its strong year-to-date fiscal 2020 performance and its momentum entering its fourth quarter. With McCormick's increased visibility to the balance of its fiscal year, the company is resuming guidance.

In 2020, the company expects to grow sales compared to 2019 at the upper end of a 4% to 5% range, which in constant currency is a 5% to 6% projected growth rate. This increase consists entirely of organic growth and reflects growth driven by new products, brand marketing and expanded distribution as well the net impact of the consumer shift in demand as a result of COVID-19 and the consumer's sustained preference for cooking at home. Sales growth is also expected to include the impact of pricing at the beginning of the year, which in conjunction with cost savings, is expected to offset an anticipated mid-single digit inflationary pressure.

Operating income in 2020 is expected to grow from 6% to 7% from $958 million of operating income in 2019. The company projects COVID-19 related costs as well as a higher level of incentive compensation consistent with the company's commitment to a pay-for-performance philosophy across the organization will reduce growth in operating income. Special charges of approximately $7 million are currently projected for 2020 that relate to previously announced organization and streamlining actions. Excluding the impact of special charges in 2020 and 2019, adjusted operating income is expected to increase from 4% to 5%, which in constant currency is 5% to 6%, from adjusted operating income of $979 million in 2019.

McCormick projects 2020 earnings per share to be in the range of $5.60 to $5.68 compared to $5.24 of earnings per share in 2019. Excluding an estimated $0.04 impact of special charges in 2020, the company projects 2020 adjusted earnings per share to be in the range of $5.64 to $5.72 which is an expected increase of 5% to 7%, or in constant currency 6% to 8%.

Stock Split

The company announced a 2-for-1 stock split of the company's common stock and common stock non-voting shares. The additional shares will be distributed on November 30, 2020 to stockholders of record as of November 20, 2020. The split will double the number of outstanding common and common non-voting shares. Common and common non-voting shares and per-share data in this press release have not been adjusted for the impact of the split. We expect trading will begin on a split-adjusted basis on December 1, 2020.

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

You May Also Be Interested In

• Grainger (GWW) Tops Q1 EPS by 2c, provides guidance
• Cullen/Frost Bankers (CFR) Misses Q1 EPS by 3c
• Integer Holdings Corp (ITGR) Tops Q1 EPS by 2c ; Offers Guidance