2 0 2 4 A N N U A L R E P O R T
M C C O R M I C K I S . . .
END-TO-END
FLAVOR
03 L E T T E R TO S H A R E H O L D E R S
1 0 D I R E C TO R S A N D O F F I C E R S
1 3 F O R M 1 0 - K
I N V E S TO R I N F O R M AT I O N O N I N S I D E B AC K C O V E R
TA B L E O F C O N T E N T S
Pumpkin Pie Spice is a true McCormick original since 1934. A warm and comforting
blend of ginger, cinnamon, nutmeg, and allspice, it is synonymous with autumn.
It is a versatile ingredient that brings out the flavor in everything from holiday
desserts to your favorite beverages. This hearty flavor is a favorite of both our
consumers and customers. In 2024, we completed 90 remarkable years of delivering
this iconic fall flavor! As you leaf through this year’s annual report, enjoy the cozy
aroma of Pumpkin Pie Spice on our pages.
D E A R S H A R E H O L D E R S ,
As I reflect on 2024, I am inspired by our accomplishments and the renewed sense of urgency across the organization to drive
high-quality growth. We achieved a meaningful milestone by delivering total positive volume growth for the year. We enter 2025
in a position of strength, and I believe it will be a year of continued momentum as we further invest to drive profitable growth
and deliver on our best-in-class long-term objectives.
D R I V I N G D I F F E R E N T I A T E D R E S U L T S
Global demand for flavor remains strong; it is the foundation of our sales growth. Despite continued macroeconomic uncertainty
impacting consumers, we grew net sales by 1%. Our Consumer segment delivered volume-led sales growth of 1%, while sales in our
Flavor Solutions segment rose by 1% driven by pricing actions to offset inflation.
Adjusted operating income1 grew 5% versus 2023, driven by strong gross margin improvement, reflecting cost savings from
our Comprehensive Continuous Improvement program. On the bottom line, adjusted earnings per share1 increased 9% to $2.95,
driven by adjusted operating income growth, a favorable tax rate, and an increase in unconsolidated income, primarily driven
by our McCormick de México joint venture.
Cash flow from operations in 2024 was strong, reaching $922 million. We remain committed to a balanced use of cash, funding investments
to drive profitable growth, returning a significant portion to shareholders through dividends, and maintaining a strong and flexible balance
sheet. Our strong cash flow performance in 2024 enabled us to reduce our debt and meet our targeted leverage ratio. At the end of 2024,
our Board of Directors authorized a 7% increase in the quarterly dividend, marking our 101st year of continuous dividend payments and the
39th consecutive year we have increased the quarterly dividend.
1. These are Non-GAAP financial results excluding items affecting comparability. The details of these adjustments are provided in the Non-GAAP Financial Measures section
within Management’s Discussion and Analysis in the Company’s 10-K.
03
McCormick is flavor. It is our history, and it is our future. We are
differentiated from our peers as we do not compete for calories, we flavor
them. The demand for flavor remains strong. We are building on a strong
foundation and, with our proven strategies and growth initiatives, we are
well positioned to drive continued success and build shareholder value.”
W I N N I N G W I T H C O N S U M E R S A N D C U S T O M E R S
At McCormick, we deliver and create flavors that enhance the taste of food and beverages. We’ve been a trusted name in flavor for
135 years. Our two segments, Consumer and Flavor Solutions, complement each other and reinforce our differentiation. The scale,
insights, and technology that we leverage from both segments are meaningful in driving sustainable growth. Our portfolio includes
some of the leading flavor brands in the food industry. Our broad portfolio also leverages our global heat platform. Heat is not merely
a trend; it is a sustainable flavor profile that is ubiquitous in food and beverage categories. The integration of our heat capabilities
from the farm to our research labs to product development and factory production creates a unique set of competitive advantages,
enabling us to win with consumers and customers alike. We serve a wide breadth of customers, deliver flavor across markets, and
operate across every channel, from traditional brick-and-mortar to e-commerce, from foodservice to consumer packaged goods
manufacturers. Simply put, we flavor every sip and bite.
In our Consumer segment, our 2024 investments in category management, innovation, and brand marketing, supported and enhanced
through data and analytics, propelled our volume growth. We drove sequential volume improvement in each quarter of 2024. We expanded
distribution, met consumers where they were with the right value, and addressed their needs for convenience and flavor exploration.
We delivered more innovation faster and drove consumers to the shelf, as well as to our categories, with products like our Flavor Maker
blends, limited-time collection of exclusive Holiday Finishing Sugars, Frank’s RedHot squeeze and mini formats, and Cholula salsas and
recipe mixes in the Americas. In Europe, Middle East, and Africa (EMEA), we delighted consumers with innovation highlighting our partnerships
with celebrity chefs including our Schwartz range of spices and seasonings with Nadiya Hussain and our Ducros recipe mixes with Juan
Arbeláez. In Asia/Pacific (APAC), we continued the rollout of our new consumer-preferred packaging for our core spices and seasonings.
We are ending 2024 with great momentum in the Consumer segment, and we are excited to continue this trajectory in 2025.
In our Flavor Solutions segment, we drove top-line growth and meaningful margin improvement in 2024. Within our diverse Flavor
Solutions portfolio, we are targeting opportunities in attractive, high-growth categories. In our Flavors product category, our focus is to
be the partner of choice across four taste competencies: savory, heat, naturally sweet, and citrus and fruit. These are areas of deep expertise
and strength and where we are recognized as leaders within the flavor industry. We are the chocolate flavor for a new protein shake,
the lemon flavor for a popular seltzer, or the spicy seasoning on your favorite snack chip. We flavor iconic brands and more. In branded
foodservice, we are helping our customers win in a challenging environment. We are providing unique solutions that demonstrate our
extensive customer knowledge, leverage our consumer insights, and build upon our strong brand equity. Our talent, technologies, and
expertise are at the heart of our Flavor Solutions business, and we are well positioned to drive continued growth in this segment.
McCormick is end-to-end flavor. We are intentionally focused on the high-growth categories
of Spices and Seasonings, Condiments and Sauces, Branded Foodservice, and Flavors
as they are critical to driving our profitable sales growth and strengthening our flavor leadership.
I am proud of our success in 2024 and excited about our continued momentum in 2025.
We have a long runway for growth ahead.
W I N N I N G W I T H P U R P O S E - L E D P E R F O R M A N C E
We remain dedicated to our Purpose-led Performance commitment, which includes driving top-tier financial results while doing what
is right for people, communities, and the planet. Since 2015, we have grown total sales at a 6% compounded annual growth rate, which
is at the high end of our long-term target. Our results reflect industry-leading organic growth, complemented by compelling acquisitions
and an expanded portfolio in attractive categories that are further reinforcing and strengthening our flavor leadership. Additionally,
our total annual shareholder return over this period has risen 10%, exceeding both the packaged food index and our flavor house peers
and accentuating the effectiveness of our balanced approach.
McCormick is a growth company. In 2024, we reaffirmed our long-term growth objectives for Net Sales of 4% to 6%, Operating Income
of 7% to 9%, and Earnings Per Share of 9% to 11%. Our strategies have proven to be effective at driving growth and compounding that
growth over the years. I am confident we have the team in place to deliver on our long-term objectives with industry-leading performance.
We are proud of the progress we have made against our Purpose-led Performance commitments and the recognition we have received
for these accomplishments. As we continue our momentum, we understand our role as a global corporate citizen and continue to pursue
growth that is balanced, transparent, and sustainable.
05
W I N N I N G W I T H T A L E N T A N D E N G A G E M E N T
It takes a great organization, a strong culture of growth, and a great leadership team to deliver performance. Our high-performance and
people-first culture is rooted in our shared values and respect for the contributions of each employee. Our employees drive our success,
and I am grateful to our global workforce for their passion and commitment to our growth.
Our leadership team has deep experience, and each member brings a unique perspective and skills to the leadership table. Over the
past year, we saw several changes to our leadership team and Board of Directors. Lawrence Kurzius, who served as CEO for over seven
years before transitioning to the role of Executive Chairman in 2023, will be retiring from the Board of Directors as of the date of our
Annual Meeting. We thank Lawrence for his dedication, leadership, and contributions to the Company. I am honored to have been
named McCormick’s new Chairman of the Board effective December 1, 2024.
In addition, Patricia Little will be retiring from our Board of Directors as of the date of our annual
meeting. Patricia has served as a director since 2010, and we sincerely appreciate her contributions
and service. We are pleased that Valarie Sheppard, former Executive Vice President, Controller and
Treasurer of The Procter & Gamble Company, was appointed to our board. Her extensive global
finance and accounting experience further strengthens our already impressive board.
In December, Mike Smith stepped down from his role as Executive Vice President & CFO with plans
to retire in early 2025. Mike has been an integral leader at McCormick for more than three decades,
serving as CFO since 2016. Marcos Gabriel was named Executive Vice President & CFO effective
December 1, 2024. Marcos is a proven global leader with over 25 years of experience in the
Consumer Products industry and has served in key leadership roles at McCormick since 2017.
A D V A N C I N G O U R L E A D E R S H I P
A N D D I F F E R E N T I A T I O N
I take immense pride in all we have accomplished in 2024. The organization rallied around the five
key priorities to advance our leadership and differentiation that I introduced last year. These included
strengthening our global leadership, driving profitable growth, accelerating our digital transformation,
elevating our power of people culture, and strengthening and expanding our system of competitive
advantages. We have made significant progress on these priorities, and we’re on track with
our expectations.
On behalf of the McCormick Board of Directors and the executive team, I would like to thank you
for your support and confidence.
Brendan M. Foley
Chairman, President & Chief Executive Officer
A N E W O R L E A N S T R A D I T I O N S I N C E 1 8 8 9
A N E W O R L E A N S T R A D I T I O N S I N C E 1 8 8 9
A N E W O R L E A N S T R A D I T I O N S I N C E 1 8 8 9
A N E W O R L E A N S T R A D I T I O N S I N C E 1 8 8 9
Bertie
O U R T R U S T E D B R A N D S
A T R I B U T E T O M I K E S M I T H
Executive Vice President & Chief Financial Officer,
September 2016 - December 2024
At the end of February 2025, Mike Smith will conclude
a remarkable 33-year career at McCormick, starting in 1991
as the Hunt Valley Plant Controller and rising to CFO.
Under his leadership, sales grew at an industry-leading pace
of over 50% and McCormick delivered significant shareholder
value. His strategic leadership and focus on value creation
have been instrumental in driving top-tier organic growth
and many successful acquisitions, including iconic brands like
Frank’s RedHot, French’s, and Cholula as well as Flavor
capabilities with Giotti and FONA.
Mike’s extensive knowledge of both the Consumer and Flavor
Solutions businesses, coupled with his deep knowledge of the
Company’s global organization and effective execution of the
Comprehensive Continuous Improvement program and other
transformation initiatives, have fueled investments to deliver
long-term, differentiated, and profitable growth. A strong
believer in talent development, Mike was instrumental in helping
McCormick build a world-class global finance organization.
Mike is the embodiment of McCormick’s values and teamwork
and will be missed by employees throughout the organization.
Congratulations to him on a successful career and best wishes
in retirement from the entire McCormick family.
07
I N V E S T O R D A Y 2 0 2 4
On October 22nd, 2024, McCormick held an Investor Day at the Company’s Global Headquarters in Hunt Valley, Maryland. The event
provided a platform for Brendan Foley, Chairman, President & CEO, along with Operating Committee members to highlight how
the Company continues to advance its leadership and differentiation. They shared the Company’s strategy and growth initiatives,
which leverage its competitive advantages, and emphasized the high-performance, people-first culture that remains fundamental
to McCormick.
Brendan stated, “Together, we’re harnessing the collective expertise of our talented team across the world with a renewed sense
of urgency and speed to execute on our strategies, tackle challenges, seize opportunities, and deliver on our priorities with agility
and confidence, and always with a collaborative spirit. This, in turn, drives continued long-term, sustainable, profitable growth
and ensures that we remain competitive and continue to deliver value to shareholders.”
For a video replay of the event, please visit www.mccormickinvestorday.com.
Brendan M. Foley
Chairman, President
& Chief Executive Officer
Marcos Gabriel
Executive Vice President
& Chief Financial Officer
Mike Smith
Executive Vice President
Sarah Piper
Chief Human Relations Officer
Ana Sanchez
President, Europe, Middle East
& Africa (EMEA)
Andrew Foust
President, Americas
Kasey Jenkins
Chief Growth Officer
Jeffery Schwartz
Vice President, General
Counsel & Corporate Secretary
Sumeet Vohra
President, Asia/Pacific (APAC)
Josh Chou
Chief Supply Chain Officer
Tabata Gomez
Chief Marketing Officer
Anju Rao
Chief Science Officer
Guy Peri
Chief Information
& Digital Officer
O P E R A T I N G C O M M I T T E E
W E A R E E N D - T O - E N D F L A V O R
2024 SALES BY PRODUCT CATEGORY
Consumer Segment
Spices & Seasonings
Recipe Mixes
Condiments & Sauces
Flavor Solutions Segment
Flavors
Branded Foodservice
Custom Condiments
Regional Leaders
Coatings, Bulk Spices, & Herbs
2024 SALES BY REGION
Consumer Segment
Americas
Europe, Middle East & Africa
Asia/Pacific
Flavor Solutions Segment
Americas
Europe, Middle East & Africa
Asia/Pacific
09
B O A R D O F D I R E C T O R S
E X E C U T I V E O F F I C E R S
BRENDAN M. FOLEY
Chairman, President & Chief
Executive Officer
MARCOS GABRIEL
Executive Vice President & Chief
Financial Officer
MIKE SMITH
Executive Vice President
SARAH PIPER
Chief Human Relations Officer
ANA SANCHEZ
President - Europe, Middle East
& Africa (EMEA)
ANDREW FOUST
President - Americas
KASEY JENKINS
Chief Growth Officer
JEFFERY SCHWARTZ
Vice President, General Counsel
& Corporate Secretary
BRENDAN M. FOLEY
Age: 59
Chairman, President & Chief Executive
Officer, McCormick & Company, Inc.,
Director since 2023
MICHAEL A. CONWAY
Age: 58
Former Chief Executive Officer, Starbucks
North America, Director since 2015
Nominating & Corporate Governance Committee
MICHAEL D. MANGAN
Age: 68
Former President, Worldwide Power
Tools & Accessories, The Black & Decker
Corporation, Director since 2007
Compensation & Human Capital Committee, Nominating
& Corporate Governance Committee, Lead Director
LAWRENCE E. KURZIUS
Age: 66
Former Chairman & Chief Executive Officer,
McCormick & Company, Inc.,
Director since 2015
PATRICIA LITTLE
Age: 64
Former Senior Vice President & Chief
Financial Officer, The Hershey Company,
Director since 2010
Nominating & Corporate Governance Committee
GARY M. RODKIN
Age: 72
Former Chief Executive Officer, ConAgra
Foods, Inc., Director since 2017
Audit Committee
MARGARET M.V. PRESTON
Age: 67
Managing Director, Cohen Klingenstein, LLC,
Director since 2003
Nominating & Corporate Governance Committee
MARITZA G. MONTIEL
Age: 73
Former Deputy Chief Executive
Officer & Vice Chairman, Deloitte LLP,
Director since 2015
Audit Committee
TERRY S. THOMAS
Age: 55
Chief Growth Officer, Flowers Foods,
Director since 2024
Audit Committee
W. ANTHONY VERNON
Age: 68
Former Chief Executive Officer, Kraft Foods
Group, Inc., Director since 2017
Compensation & Human Capital Committee
VALARIE SHEPPARD
Age: 61
Former Executive Vice President, Controller
& Treasurer, The Procter & Gamble Company,
Director since 2024
Audit Committee
JACQUES TAPIERO
Age: 66
Former Senior Vice President & President,
Emerging Markets, Eli Lilly & Company,
Director since 2012
Compensation & Human Capital Committee
ANNE L. BRAMMAN
Age: 57
Former Chief Financial & Growth Officer,
Circana Inc., Director since 2020
Audit Committee
2024 Annual Report 11
Table of Contents to Form 10-K
PART I
Page
Item 1
Business
15
Item 1A
Risk Factors
18
Item 1B
Unresolved Staff Comments
28
Item 1C
Cybersecurity
28
Item 2
Properties
29
Item 3
Legal Proceedings
29
Item 4
Mine Safety Disclosures
29
PART II
Item 5
Market For Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
30
Item 6
[Reserved]
30
Item 7
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
31
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
44
Item 8
Financial Statements and Supplementary Data
45
Report of Management
45
Report of Independent Registered Public Accounting Firm
46
Consolidated Income Statements
49
Consolidated Statements of Comprehensive Income
49
Consolidated Balance Sheets
50
Consolidated Cash Flow Statements
51
Consolidated Statements of Shareholders’ Equity
52
Notes to Consolidated Financial Statements
53
Item 9
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
75
Item 9A
Controls and Procedures
75
Item 9B
Other Information
75
Item 9C
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
75
PART III
Item 10
Directors, Executive Officers and Corporate Governance
76
Item 11
Executive Compensation
76
Item 12
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
76
Item 13
Certain Relationships and Related Transactions, and
Director Independence
76
Item 14
Principal Accountant Fees and Services
76
PART IV
Item 15
Exhibits, Financial Statement Schedules
76
THIS PAGE LEFT INTENTIONALLY BLANK
2024 Annual Report 13
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended November 30, 2024
OR
£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission file number 001-14920
McCORMICK & COMPANY, INCORPORATED
(Exact name of registrant as specified in its charter)
Maryland
52-0408290
(State or other jurisdiction of
(IRS Employer
incorporation or organization)
Identification No.)
24 Schilling Road, Suite 1, Hunt Valley, Maryland
21031
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (410) 771-7301
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 per share
MKC.V
New York Stock Exchange
Common Stock Non-Voting, Par Value $0.01 per share
MKC
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Not applicable.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Q No £
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes £ No Q
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes Q No £
14 McCormick & Company, Inc.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes Q No £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Check one:
Large Accelerated Filer Q
Accelerated Filer
£
Non-accelerated Filer £ (Do not check if a smaller reporting company)
Smaller Reporting Company
£
Emerging Growth Company
£
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £
Indicate by check mark if the registrant has filed a report on and attestation on its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. Q
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. £
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). £
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No Q
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the
price at which the common equity was last sold, or the average bid and asked prices of such common equity, as of the last business
day of the registrant’s most recently completed second fiscal quarter.
The aggregate market value of the Voting Common Stock held by non-affiliates at May 31, 2024: $1,153,048,198
The aggregate market value of the Non-Voting Common Stock held by non-affiliates at May 31, 2024: $18,200,459,672
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
Class
Number of Shares Outstanding
Date
Common Stock
15,636,290
December 31, 2024
Common Stock Non-Voting
252,517,977
December 31, 2024
DOCUMENTS INCORPORATED BY REFERENCE
Document
Part of 10-K into Which Incorporated
Proxy Statement for
McCormick’s March 26, 2025
Annual Meeting of Stockholders
(the “2025 Proxy Statement”)
Part III
2024 Annual Report 15
PART I.
As used herein, references to “McCormick,” “we,” “us,” and “our”
are to McCormick & Company, Incorporated and its consolidated
subsidiaries or, as the context may require, McCormick & Company,
Incorporated only.
ITEM 1. BUSINESS
McCormick is a global leader in flavor. We manufacture, market, and
distribute spices, seasoning mixes, condiments, and other flavorful
products to the entire food industry: retailers, food manufacturers,
and foodservice businesses. We also are partners in a number of joint
ventures that are involved in the manufacture and sale of flavorful
products, the most significant of which is McCormick de Mexico.
Our major sales, distribution, and production facilities are located in
North America, Europe, and China. Additional facilities are based in
Australia, Central America, Thailand, and South Africa.
Business Segments
We operate in two business segments: consumer and flavor solutions.
Demand for flavor is growing globally, and across both segments, we
have the customer base and product breadth to participate in all types
of eating occasions. Our products deliver flavor when cooking at home,
dining out, purchasing a quick service meal, or enjoying a snack. We
offer our customers and consumers a range of products, extending
from premium to value-priced, to meet the increasing demand for cer
tain product attributes such as clean-label, organic, natural, reduced
sodium, gluten-free, and non-GMO (genetically modified organisms).
Consistent with market conditions in each segment, our consumer
segment has a higher overall profit margin than our flavor solutions seg
ment. In 2024, the consumer segment contributed approximately 57%
of consolidated net sales and 69% of consolidated operating income,
and the flavor solutions segment contributed approximately 43% of
consolidated net sales and 31% of consolidated operating income.
Consumer Segment. From locations around the world, our brands
reach consumers in approximately 150 countries and territories. Our
leading brands in the Americas include McCormick®, French’s®, Frank’s
RedHot®, Lawry’s®, Cholula Hot Sauce®, and Club House®, as well as
brands such as Gourmet Garden® and OLD BAY®. We also market
authentic regional and ethnic brands such as Zatarain’s®, Stubb’s®,
Thai Kitchen®, and Simply Asia®. In the Europe, Middle East, and
Africa (EMEA) region, our major brands include the Ducros®,
Schwartz®, Kamis®, and La Drogheria® brands of spices, herbs, and
seasonings and an extensive line of Vahiné® brand dessert items. In
the Asia/Pacific (APAC) region, we market our spices and seasonings
under the McCormick brand, DaQiao®, as well as other brands, our
dessert products under the Aeroplane® brand, and packaged chilled
herbs under the Gourmet Garden® brand.
Approximately two-thirds of our consumer segment sales are spices
and seasonings and condiments and sauces. Within the spices and
seasoning category, we are the brand leader globally and a category
leader in our key markets. In the condiments and sauces category,
we are one of the brand leaders globally and in the U.S. There are
numerous competitive brands of spices and seasonings and con
diments and sauces in the U.S., as well as additional brands in
international markets. Some are owned by large food manufacturers,
while others are supplied by small privately-owned companies. In this
competitive environment, we are leading with innovation and brand
marketing, applying our analytical tools to help customers optimize the
profitability of their sales of these categories, while simultaneously
working to increase our own sales and profit.
Our customers span a variety of retailers that include grocery, mass mer
chandise, warehouse clubs, discount and drug stores, and e-commerce
retailers, served directly and indirectly through distributors or wholesal
ers. In addition to marketing our branded products to these customers,
we are a leading supplier of private label items, also known as store
brands. In our businesses in China, foodservice sales are managed by
and reported in our consumer segment.
Flavor Solutions Segment. In our flavor solutions segment, we provide a
wide range of products to multinational food manufacturers and food
service customers. The foodservice customers are supplied with
branded, packaged products both directly by us and indirectly through
distributors, with the exception of our businesses in China, where food
service sales are managed by and reported in our consumer segment.
We supply food manufacturers and foodservice customers with custom
ized flavor solutions, and many of these customer relationships have
been active for decades. Our range of flavor solutions remains one of
the broadest in the industry and includes seasoning blends, spices and
herbs, condiments, coating systems, and compound flavors. In addition
to a broad range of flavor solutions, our long-standing customer rela
tionships are evidence of our effectiveness in building customer inti
macy. Our customers benefit from our expertise in many areas, including
sensory testing, culinary research, food safety, and flavor application.
Our flavor solutions segment has a number of competitors. Some
tend to specialize in a particular range of products and have a limited
geographic reach. Other competitors include large publicly held
flavor companies that are more global in nature and tend to focus on
providing integrated solutions extending beyond flavor through the use
of other functional and nutritional ingredients.
Raw Materials
The most significant raw materials used in our business are dairy
products, pepper, onion, garlic, capsicums (red peppers and paprika),
tomato products, sugar and salts. Pepper and other spices and herbs
are generally sourced from countries other than the U.S. Other raw
materials, like dairy products and onion, are primarily sourced locally,
either within the U.S. or from our international locations. Because
these raw materials are agricultural products, they are subject to fluc
tuations in market price and availability caused by weather, growing
and harvesting conditions, market conditions, including inflationary
cost increases, and other factors beyond our control.
We respond to this volatility in a number of ways, including strategic
raw material purchases, purchases of raw material for future delivery,
customer price adjustments, and cost savings from our Comprehensive
Continuous Improvement (CCI) program. There has been, and there
could continue to be, a difference between the timing of when these
customer price adjustments and cost savings impact our results of
operations and when the impact of cost inflation occurs. Additionally,
in some instances, the pricing actions we take have been impacted by
price elasticity which unfavorably impacts our sales volume and mix.
16 McCormick & Company, Inc.
In addition, we rely on third-party transportation providers to deliver
raw materials and our products to our customers. There has been, and
could continue to be, reduced availability of transportation capacity
due to labor shortages and higher fuel costs, which have caused and
may continue to cause an increase in transportation costs for us and
our suppliers.
Customers
Our products are sold directly to customers as well as through brokers,
wholesalers, and distributors. In the consumer segment, products are
then sold to consumers under a number of brands through a variety
of retail channels, including grocery, mass merchandise, warehouse
clubs, discount and drug stores, and e-commerce. In the flavor solu
tions segment, products are used by food and beverage manufacturers
as ingredients in their finished goods and by foodservice customers
for menu items, as well as provided to their own customers for dine-
in and take-out occasions, all to enhance the flavor of their foods.
Customers in the flavor solutions segment include food manufacturers
and the foodservice industry, supplied through a variety of channels,
including directly and indirectly through distributors, wholesale food
service suppliers, and e-commerce.
We have a large number of customers for our products. Sales to one
of our consumer segment customers, Wal-Mart Stores, Inc., accounted
for consolidated sales of approximately 12% in 2024, 2023 and 2022.
Sales to one of our flavor solutions segment customers, PepsiCo, Inc.,
accounted for consolidated sales of approximately 13% in 2024, 13%
in 2023, and 11% in 2022. In 2024, 2023, and 2022, the top three
customers in our flavor solutions segment represented between 47%
and 49% of our global flavor solutions sales.
Trademarks, Licenses and Patents
We own a number of trademark registrations. Although in the
aggregate these trademarks are material to our business, the loss of
any one of those trademarks, with the exception of our “McCormick,”
“French’s,” “Frank’s RedHot,” “Lawry’s,” “Zatarain’s,” “Cholula,”
“Stubb’s,” “Club House,” “Ducros,” “Schwartz,” “Vahiné,” “OLD BAY,”
“Simply Asia,” “Thai Kitchen,” “Kamis,” “La Drogheria,” “DaQiao,”
and “Gourmet Garden” trademarks, would not have a material adverse
effect on our business. The “Mc – McCormick” trademark is extensively
used in connection with the sale of our food products in the U.S. and
certain non-U.S. markets. The terms of the trademark registrations are
prescribed by law, and the registrations will be renewed as long as we
deem them useful.
We have entered into a number of license agreements authorizing
the use of our trademarks by affiliated and non-affiliated entities. The
loss of these license agreements would not have a material adverse
effect on our business. The term of the license agreements is generally
two-to-three years or until such time as either party terminates the
agreement. Those agreements with specific terms may be renewable
upon agreement of the parties.
We also own various patents, none of which are individually material
to our business.
Seasonality
Due to seasonal factors inherent in the business, our sales, operating
income, and cash from operations are generally higher in the fourth
quarter because of the holiday season. This seasonality reflects customer
and consumer buying patterns, primarily in the consumer segment.
Working Capital
In order to meet increased demand for our consumer products during our
fourth quarter, we usually build our inventories during the third quarter
of the fiscal year. We generally finance working capital items (inventory
and receivables) through short-term borrowings, which include the use
of lines of credit and the issuance of commercial paper. For a descrip
tion of our liquidity and capital resources, see Note 5 of the notes to
our consolidated financial statements and the “Liquidity and Financial
Condition” section of “Management’s Discussion and Analysis.”
Competition
Each segment operates in highly competitive markets around the
world. In this environment, our growth strategies include customer
engagement and product innovation based on consumer insights. In
the consumer segment, we are building brand recognition and loyalty
through advertising and promotions. In our flavor solutions segment,
we differentiate ourselves through culinary and consumer-inspired
flavor development, as well as the breadth of our product offering and
customer engagement.
Governmental Regulation
We are subject to numerous laws and regulations around the world
that apply to our global businesses. In the U.S., the safety, production,
transportation, distribution, advertising, labeling, and sale of many of
our products and their ingredients are subject to the Federal Food, Drug,
and Cosmetic Act; the Food Safety Modernization Act; the Federal Trade
Commission Act; state consumer protection laws; competition laws;
anti-corruption laws; customs and trade laws; federal, state and local
workplace health and safety laws; privacy laws; federal, state, and
local environmental protection laws; and other federal, state, and local
statutes and regulations. Outside the U.S., our business is subject to
numerous similar statutes, laws, and regulatory requirements.
Human Capital
We believe in the power of people—fostering a culture for our
employees that embodies respect and collaboration across the
organization. Our high-performance culture is rooted in shared values
and respect for all contributions of every employee. Our key human
capital objectives are to attract, retain, and develop the highest quality
talent. We employ various human resource programs in support of
these objectives. We believe diversity, equity, and inclusion are at
the core of our values and strategic business priorities. Throughout
our business, we champion equality, supporting parity for women and
under-represented groups, as we work to create ethical, safe, and sup
portive workplaces where our employees thrive. We believe a diverse
and inclusive workplace results in business growth and encourages
increased innovation, retention of talent, and a more engaged work
force. We have various employee ambassador groups that provide a
supportive and collaborative space for employees to come together
and promote inclusion. We prioritize the mental health and wellness
of our employees by offering and encouraging participation in various
programs and initiatives. Respect for human rights is fundamental to
our business and its commitment to ethical conduct.
We had approximately 14,100 full-time employees worldwide as of
November 30, 2024. Our operations have not been affected significantly
by work stoppages, and, in the opinion of management, employee rela
tions are good. We have approximately 400 employees in the U.S. who
are covered by a collective bargaining contract. At our subsidiaries
outside the U.S., approximately 2,500 employees are covered by collec
tive bargaining agreements or similar arrangements.
2024 Annual Report 17
Through our continuous listening strategy, we measure employee
engagement on an ongoing basis to solicit feedback and understand
the views of our employees, work environment, and culture. The results
from these surveys are used to implement programs and processes
designed to enhance employee engagement and improve the overall
employee experience.
We are committed to the safety, health, and security of our employees.
We believe a hazard-free environment is a critical enabler for the
success of our business. Throughout our operations, we strive to ensure
that all of our employees have access to safe workplaces that allow
them to succeed in their jobs.
Information about our Executive Officers
In addition to the executive officers indicated in the 2025 Proxy
Statement incorporated by reference in Part III, Item 10 of this Report,
the other executive officers of McCormick are Marcos M. Gabriel,
Katherine A. Jenkins, and Ana G. Sanchez.
Mr. Gabriel is 53 years old and, during the last five years has held the
following positions within McCormick: December 2024 to present –
Executive Vice President and Chief Financial Officer; March 2024 to
November 2024 – Senior Vice President Global Finance and Capital
Markets; June 2023 to February 2024 – Senior Vice President, Finance
and Global Business Services; August 2022 to May 2023 – Chief
Transformation Officer; and August 2017 to July 2020 – Chief Financial
Officer Americas.
Ms. Jenkins is 56 years old and, during the last five years, has held
the following positions with McCormick: June 2023 to present – Chief
Growth Officer; June 2022 to May 2023 – Chief Strategy Officer &
Senior Vice President, Investor Relations; and January 2017 to June
2022, Vice President, Investor Relations.
Ms. Sanchez is 49 years old and, during the last five years, has held
the following positions with McCormick: February 2022 to present –
President, EMEA; February 2020 to January 2022 – Vice President
Consumer, EMEA, and November 2018 to January 2020 – Vice
President Marketing, EMEA.
Operations Outside of the U.S.
We are subject in varying degrees to certain risks typically associated
with a global business, such as local economic and market conditions,
exchange rate fluctuations, and restrictions on investments, royalties,
and dividends. In fiscal year 2024, approximately 39% of sales were
from non-U.S. operations. For information on how we manage some of
these risks, see the “Market Risk Sensitivity” section of “Management’s
Discussion and Analysis.”
Forward-Looking Information
Certain statements contained in this report, including statements con
cerning expected performance such as those relating to net sales, gross
margin, earnings, cost savings, special charges, acquisitions, brand
marketing support, volume and product mix, income tax expense, and the
impact of foreign currency rates are “forward-looking statements” within
the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. These statements may be identified by the use of words such
as “may,” “will,” “expect,” “should,” “anticipate,” “intend,” “believe,”
“plan,” and similar expressions. These statements may relate to: general
economic and industry conditions, including consumer spending rates,
recessions, interest rates, and availability of capital; expectations
regarding sales growth potential in various geographies and markets,
including the impact of brand marketing support, product innovation, and
customer, channel, category, heat platform, and e-commerce expansion;
expected trends in net sales, earnings performance, and other financial
measures; the expected impact of pricing actions on the Company’s
results of operations, including our sales volume and mix as well as
gross margins; the expected impact of the inflationary cost environment
on our business; the anticipated effects of factors affecting our supply
chain, including the availability and prices of commodities and other supply
chain resources such as raw materials, packaging, labor, and transpor
tation; the expected impact of productivity improvements, including
those associated with our CCI program and the Global Business Services
operating model initiative; the ability to identify, attract, hire, retain,
and develop qualified personnel and the next generation of leaders;
the impact of ongoing conflicts, including those between Russia and
Ukraine and the war in the Middle East, particularly regarding the
potential for broader economic disruption; expected working capital
improvements; the anticipated timing and costs of implementing our
business transformation initiative, which includes the implementation of
a global enterprise resource planning (ERP) system; the expected impact
of accounting pronouncements; expectations regarding pension and
postretirement plan contributions and anticipated charges associated
with those plans; 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; the anticipated sufficiency of
future cash flows to enable payments of interest, repayment of short-
and long-term debt, working capital needs, planned capital expenditures,
quarterly dividends, and our ability to obtain additional short- and
long-term financing or issue additional debt securities; and expectations
regarding purchasing shares of McCormick’s common stock under the
existing repurchase authorization.
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 factors such as: the Company’s ability to drive revenue
growth; the Company’s ability to increase pricing to offset, or partially
offset, inflationary pressures on the cost of our products; damage to the
Company’s reputation or brand name; loss of brand relevance; increased
private label use; the Company’s ability to drive productivity improve
ments, including those related to our CCI program and other streamlining
actions; product quality, labeling, or safety concerns; negative publicity
about our products; actions by, and the financial condition of, competitors
and customers; the longevity of mutually beneficial relationships with our
large customers; the ability to identify, interpret and react to changes in
consumer preference and demand; business interruptions due to natural
disasters, unexpected events or public health crises; issues affecting the
Company’s supply chain and procurement of raw materials, including
fluctuations in the cost and availability of raw and packaging materials;
labor shortage, turnover and labor cost increases; the impact of the
ongoing conflicts between Russia and Ukraine and the war in the Middle
East, including the potential for broader economic disruption; govern
ment regulation, and changes in legal and regulatory requirements and
enforcement practices; the lack of successful acquisition and integration
of new businesses; global economic and financial conditions generally,
availability of financing, interest and inflation rates, and the imposition
of tariffs, quotas, trade barriers and other similar restrictions; foreign cur
rency fluctuations; the effects of our amount of outstanding indebtedness
and related level of debt service as well as the effects that such debt
service may have on the Company’s ability to borrow or the cost of any
18 McCormick & Company, Inc.
such additional borrowing, our credit rating, and our ability to react to
certain economic and industry conditions; impairments of indefinite-lived
intangible assets; assumptions we have made regarding the investment
return on retirement plan assets, and the costs associated with pension
obligations; the stability of credit and capital markets; risks associated
with the Company’s information technology systems, including the threat
of data breaches and cyber-attacks; the Company’s inability to success
fully implement our business transformation initiative; fundamental
changes in tax laws; including interpretations and assumptions we have
made, and guidance that may be issued, and volatility in our effective tax
rate; climate change; Environmental, Social and Governance (ESG)
matters; infringement of intellectual property rights, and those of
customers; litigation, legal and administrative proceedings; the Company’s
inability to achieve expected and/or needed cost savings or margin
improvements; negative employee relations; and other risks described
herein under Part I, Item 1A “Risk Factors.”
Actual results could differ materially from those projected in the
forward-looking statements. We undertake 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.
Available Information
Our principal corporate internet website address is:
www.mccormickcorporation.com. We make available free of charge
through our website our Annual Report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after such documents
are electronically filed with, or furnished to, the U.S. Securities and
Exchange Commission (the SEC). The information and other content
contained on our website are not part of (or incorporated by reference
in) this report or any other document we file with the SEC. The SEC
maintains an internet website at www.sec.gov that contains reports,
proxy and information statements, and other information regarding
McCormick. Our website also includes our Corporate Governance
Guidelines, Business Ethics Policy and charters of the Audit Committee,
Compensation & Human Capital Committee, and Nominating/
Corporate Governance Committee of our Board of Directors.
ITEM 1A. RISK FACTORS
The following are certain risk factors that could affect our business,
financial condition and results of operations. These risk factors should
be considered in connection with evaluating the forward-looking state
ments contained in this Annual Report on Form 10-K because these
factors could cause the actual results and conditions to differ materi
ally from those projected in forward-looking statements. Before you
buy our Common Stock or Common Stock Non-Voting, you should know
that making such an investment involves risks, including the risks
described below. It is not possible for management to predict all such
risks, nor can management assess the impact of all such risks on our
business or the extent to which any risk, or combination of risks, may
cause actual results to differ materially from those contained in any
forward-looking statements. Additional risks and uncertainties that are
not presently known to us or are currently deemed to be immaterial
also may materially adversely affect our business, financial condition,
or results of operations in the future. If any of the risks actually occur,
our business, financial condition or results of operations could be neg
atively affected. In that case, the trading price of our securities could
decline, and you may lose part or all of your investment.
Risks Related to Our Company, Business and Operations
Deterioration of global economic conditions, an economic
recession or slow growth, periods of inflation, or economic
uncertainty in our key markets may adversely affect customer
and consumer spending as well as demand for our products.
Global economic conditions can be uncertain and volatile. Our business
and results of operations have in the past been, and may continue
to be, adversely affected by changes in global economic conditions
including inflation, changes in prevailing interest rates, bank failures,
the impact of any potential U.S. federal government shutdown, changes
in governmental rules and approaches to taxation, fluctuations in
foreign currency interest rates, availability of capital markets, consumer
spending rates, energy availability and costs, the negative impacts
caused by pandemics and other local and global public health issues,
as well as the potential impacts of geopolitical uncertainties and
international conflicts, including the ongoing conflicts between Russia
and Ukraine, the war in the Middle East, rising tensions between China
and Taiwan, and the effect of governmental initiatives to manage
economic conditions. As global economic conditions continue to be
volatile or economic uncertainty remains, trends in consumer spending
also remain unpredictable and subject to reductions due to credit
constraints and uncertainties about the future. We are a manufacturer
and distributor of flavor products. As such, many of our products are
purchased by our customers based on end-user demand from consum
ers. Some of the factors that may influence consumer spending include
general economic conditions, high levels of unemployment, pandemics
and public health crises, higher consumer debt levels, reductions in net
worth based on market declines and uncertainty, home foreclosures
and reductions in home values, fluctuating interest and foreign currency
exchange rates and credit availability, fluctuating fuel and other energy
costs, fluctuating commodity prices, inflationary pressure, tax rates and
general uncertainty regarding the overall future economic environment.
Unfavorable economic conditions may lead customers and consumers
to delay or reduce purchases of our products. Consumer demand for
our products may not reach our targets, or may decline, when there is
an economic downturn or economic uncertainty in our key markets. Our
sensitivity to economic cycles and any related fluctuation in customer
and consumer demand may have a material negative impact on our
business, financial conditions or results of operations.
Damage to our reputation or brand name, loss of brand
relevance, increase in use of private label or other competitive
brands by customers or consumers, or product quality or
safety concerns could negatively impact our business,
financial condition or results of operations.
We have many iconic brands with long-standing consumer recognition.
Our success depends on our ability to maintain our brand image for our
existing products, extend our brands to new platforms, and expand our
brand image with new product offerings.
We continually make efforts to maintain and improve relationships
with our customers and consumers and to increase awareness and
relevance of our brands through effective marketing and other mea
sures. From time to time, our customers reevaluate their mix of product
offerings, and consumers have the option to purchase private label
or other competitive products instead of our branded products. In the
event that we are unable to supply our products to customers in the
time frame and quantities that they desire, whether due to increased
demand or other factors, our customers may discontinue all or a por
tion of their purchases from us and source competitive brands. Certain
2024 Annual Report 19
competitors may also be more successful at utilizing data analytics,
artificial intelligence, and other new and emerging technologies and
digital experiences as part of their advertising practices. We must also
be able to respond successfully to technological advances (including
artificial intelligence and machine learning, which may become critical
in interpreting consumer preferences in the future), and failure to do
so could compromise our competitive position and negatively impact
our product sales. If a significant portion of our branded business
was switched to private label or competitive products, it could have a
material negative impact on our consumer segment.
Our reputation for manufacturing high-quality products is widely
recognized. In order to safeguard that reputation, we have adopted
rigorous quality assurance and quality control procedures which are
designed to ensure the safety of our products. A serious breach of our
quality assurance or quality control procedures, deterioration of our
quality image, impairment of our customer or consumer relationships
or failure to adequately protect the relevance of our brands may lead
to litigation, customers purchasing from our competitors or consumers
purchasing other brands or private label items that may or may not
be manufactured by us, any of which could have a material negative
impact on our business, financial condition or results of operations.
The food industry generally is subject to risks posed by food spoilage
and contamination, product tampering, product recall, import alerts and
consumer product liability claims. For instance, we may be required to
recall certain of our products should they be mislabeled, contaminated
or damaged. Additionally, certain of our raw materials could be blocked
from entering the country if they were subject to government-imposed
actions. We have and may continue to become involved in lawsuits
and legal proceedings if it is alleged that the consumption of any of our
products could cause injury or illness, or that any of our products are
mislabeled or fail to meet applicable legal requirements (even if the
allegation is untrue). A product recall, import alert or an adverse result
in any such litigation, or negative perceptions regarding food products
and ingredients, could result in our having to pay fines or damages,
incur additional costs or cause customers and consumers in our
principal markets to lose confidence in the safety and quality of certain
products or ingredients, any of which could have a negative effect on
our business or financial results and, depending upon the significance
of the affected product, that negative effect could be material to our
business or financial results. Negative publicity about these concerns,
whether or not valid, may discourage customers and consumers from
buying our products or cause disruptions in production or distribution
of our products and adversely affect our business, financial condition
or results of operations.
The rising popularity of social networking and other consumer-oriented
technologies has increased the speed and accessibility of information
dissemination (whether or not accurate), and, as a result, negative,
inaccurate, or misleading posts or comments on websites may gener
ate adverse publicity that could damage our reputation or brands.
Customer consolidation, consumer behaviors, and competitive,
economic and other pressures facing our customers, may
impact our financial condition or results of operations.
A number of our customers, such as supermarkets, warehouse
clubs and food distributors, have consolidated in recent years and
consolidation could continue. Such consolidation could present a
challenge to margin growth and profitability in that it has produced
large, sophisticated customers with increased buying power who are
more capable of operating with reduced inventories; resisting price
increases; demanding lower pricing, increased promotional programs
and specifically tailored products; and shifting shelf space currently
used for our products to private label and other competitive products.
The economic and competitive landscape for our customers is con
stantly changing, such as the emergence of new sales channels like
e-commerce, and our customers’ responses to those changes could
impact our business. The continued growth of e-commerce, which has
encouraged the entry of new competitors and business models, and its
impact of consumer habits and preferences has accelerated in many
of the markets we serve and our financial results may be impacted if
we are unable to adapt to changing consumer preferences and market
dynamics. In addition, our flavor solutions segment may be impacted
if the reputation or perception of the customers of our flavor solutions
segment declines. These factors could have an adverse impact on our
business, financial condition or results of operations.
The inability to maintain mutually beneficial relationships with
large customers could adversely affect our business, financial
condition and results of operations.
We have a number of major customers, including two large customers
that, in the aggregate, constituted approximately 25% of consoli
dated sales in 2024. The loss of either of these large customers due
to events beyond our control, or a material negative change in our
relationship with these large customers or other major customers
could have an adverse effect on our business, financial condition and
results of operations.
Issues regarding procurement of raw materials may negatively
impact us.
Our purchases of raw materials are subject to fluctuations in market
price and availability caused by inflationary pressures, weather,
growing and harvesting conditions, climate change, market conditions,
governmental actions and other factors beyond our control, including
outbreaks of illnesses, pandemics or other local or global health
issues. The most significant raw materials used by us in our business
are dairy products, pepper, onion, garlic, capsicums (red peppers
and paprika), tomato products, sugar and salts. While future price
movements of raw material costs are uncertain, we seek to mitigate
the market price risk in a number of ways, including strategic raw
material purchases, purchases of raw material for future delivery,
customer price adjustments and cost savings from our CCI program.
We generally have not used derivatives to manage the volatility
related to this risk. To the extent that we have used derivatives for
this purpose, it has not been material to our business. Any actions
we take in response to market price fluctuations may not effectively
limit or eliminate our exposure to changes in raw material prices.
Therefore, we cannot provide assurance that future raw material price
fluctuations will not have a negative impact on our business, financial
condition or operating results.
In addition, we may have very little opportunity to mitigate the risk of
availability of certain raw materials due to the effect of weather on crop
yield, fire, natural disasters, growing and harvesting conditions, govern
ment actions, political unrest in producing countries, action or inaction
by suppliers in response to laws and regulations, changes in agricultural
programs and other factors beyond our control. Therefore, we cannot
provide assurance that future raw material availability will not have a
negative impact on our business, financial condition or operating results.
20 McCormick & Company, Inc.
Political, socio-economic, cultural, and geopolitical (including instabil
ity and international conflicts such as the ongoing conflicts between
Russia and Ukraine, the war in the Middle East, and rising tensions
between China and Taiwan) conditions, as well as disruptions caused
by terrorist activities or otherwise, could also create additional risks
for regulatory compliance. Although we have adopted rigorous quality
assurance and quality control procedures which are designed to
ensure the safety of our imported products, we cannot provide assur
ance that such events will not have a negative impact on our business,
financial condition or operating results.
Disruption of our supply chain could adversely affect our
business.
Our ability to make, move, and sell products is critical to our success.
Damage or disruption to or reduction or termination of raw material
supplies or our manufacturing or distribution capabilities due to
weather, climate change, natural disaster, fire, international disputes,
geopolitical tensions or conflict, terrorism, cyber-attack, health
epidemics, pandemics or other contagious outbreaks, governmental
restrictions or mandates, strikes, import/export restrictions, or other
factors could impair our ability to manufacture or sell our products.
Production of certain of our products is highly concentrated, and some
are manufactured at a single location. The failure of third parties on
which we rely, including those third parties who supply our ingredi
ents, packaging, capital equipment and other necessary operating
materials, contract manufacturers, commercial transport, distributors,
contractors, and external business partners, to meet their obligations
to us, or significant disruptions in their ability to do so, may negatively
impact our operations. Our suppliers’ policies and practices can dam
age our reputation and the quality and safety of our products. Disputes
with significant suppliers, including disputes regarding pricing or
performance, could adversely affect our ability to supply products to
our customers and could materially and adversely affect our sales,
financial condition, and results of operations. Failure to take adequate
steps to mitigate the likelihood or potential impact of such events, or
to effectively manage such events if they occur, particularly when a
product is manufactured from a single location, could adversely affect
our business and results of operations, as well as require additional
resources to restore our supply chain.
Moreover, short term or sustained increases in consumer demand at
our customers may exceed our production capacity or otherwise strain
our supply chain. Our failure to meet the demand for our products
could adversely affect our business and results of operations.
Our results of operations can be adversely affected by labor
shortages, turnover and labor cost increases or any failure to
effectively manage changes in our workforce.
Labor is a primary component of operating our business. A number of
factors may adversely affect the labor force available to us or increase
labor costs such as hybrid or remote work arrangements, higher
unemployment subsidies, other government regulations and general
macroeconomic factors. A sustained labor shortage or increased
turnover rates within our employee base could lead to increased costs,
such as increased overtime to meet demand and increased wage rates
and employee benefits costs to attract and retain employees and could
negatively affect our ability to efficiently operate our manufacturing
and distribution facilities and overall business. If we are unable to
hire and retain employees capable of performing at a high-level,
or if mitigation measures we may take to respond to a decrease in
labor availability, such as overtime and third-party outsourcing, have
negative effects, our business could be adversely affected. In addition,
we distribute our products and receive raw materials primarily by
truck. Reduced availability of trucking capacity due to shortages of
drivers has caused an increase in the cost of transportation for us and
our suppliers. An overall labor shortage, lack of skilled labor, increased
turnover or labor inflation could have a material adverse impact on our
business, financial condition or operating results.
We may not be able to increase prices to fully offset inflationary
pressures on costs, such as raw and packaging materials, labor
and distribution costs, which may impact our financial condition
or results of operations.
As a manufacturer and distributor of flavor products, we rely on raw
materials, packaging materials, plant labor, distribution resources, and
transportation providers. During recent years, we have experienced
significantly elevated commodity and supply chain costs, including
the costs of raw materials, packaging materials, labor, energy, fuel,
transportation and other inputs necessary for the production and distri
bution of our products, and we expect inflation to continue in 2025 at
a similar level to that experienced in 2024 but at a more modest rate
than experienced since 2022. In addition, many of these materials and
costs are subject to price fluctuations from a number of factors, includ
ing, but not limited to, market conditions, demand for raw materials,
weather, growing and harvesting conditions, climate change, energy
costs, currency fluctuations, supplier capacities, governmental actions,
import and export requirements (including tariffs), armed hostilities
(including the ongoing conflicts between Russia and Ukraine and Israel
and Hamas) and other factors beyond our control.
Our attempts to offset these cost pressures, such as through increases
in the selling prices of some of our products, may not be successful.
Higher product prices may result in reductions in sales volume. Con
sumers may be less willing to pay a price differential for our branded
products and may increasingly purchase lower-priced offerings, or
may forego some purchases altogether, during an economic downturn
or times of increased inflationary pressure. To the extent that price
increases or packaging size decreases are not sufficient to offset
these increased costs adequately or in a timely manner, and/or if they
result in significant decreases in sales volume, our business, financial
condition or operating results may be adversely affected. Furthermore,
we may not be able to fully offset any cost increases through our
productivity or efficiency initiatives.
Our profitability may suffer as a result of competition in our
markets.
The food industry is intensely competitive. Competition in our product
categories is based on price, product innovation, product quality, brand
recognition and loyalty, effectiveness of marketing and promotional
activity, and the ability to identify and satisfy consumer preferences.
Weak economic conditions, recessions, significant inflation and other
factors, such as pandemics, could affect consumer preferences and
demand. From time to time, we may need to reduce the prices for
some of our products to respond to competitive and customer pres
sures, particularly during periods of economic uncertainty or significant
inflation, which may adversely affect our profitability. Such pressures
could reduce our ability to take appropriate remedial action to address
commodity and other cost increases.
2024 Annual Report 21
Ongoing geopolitical conflicts and the related implications may
negatively impact our operations.
The global economy has been negatively impacted by ongoing geo
political conflicts, including the military conflicts between Russia and
Ukraine, the war in the Middle East, as well as rising tensions between
China and Taiwan. Our business, financial condition and results of
operations have been impacted in the past and may be impacted in
the future by disruptions in the global economy associated with these
geopolitical conflicts. Geopolitical instability has, and could result in,
a negative impact on our ability to sell to, ship products to, collect
payments from, and support customers in certain regions based on
trade restrictions, embargoes and export control law restrictions, and
logistics restrictions, and could increase the costs, risks and adverse
impacts from supply chain and logistical challenges.
The scope and duration of such conflicts are uncertain, rapidly chang
ing, and hard to predict. While we expect the impacts of these conflicts
to continue to have an effect on our business, financial condition and
results of operations, we are unable to predict the extent or nature of
these impacts at this time. Further escalation of these geopolitical con
flicts, including increased trade barriers or restrictions on global trade,
could result in, among other things, cyberattacks, supply disruptions,
lower consumer demand, and changes to foreign exchange rates and
financial markets, any of which may adversely affect our business and
supply chain operations. In addition, the effects of the ongoing conflicts
could also heighten many of the other risk factors described herein.
Our operations may be impaired as a result of disasters, business
interruptions or similar events.
We could have an interruption in our business, loss of inventory or
data, or be rendered unable to accept and fulfill customer orders as
a result of a natural disaster, catastrophic event, epidemic, computer
system failure, or cyber-attack. Natural disasters could include an
earthquake, fire, floods, drought, tornado, hurricane or severe storm.
A catastrophic event could include a terrorist attack. A health epidemic,
pandemic, or other contagious outbreak could affect our operations,
major facilities or employees’ and consumers’ health. In addition,
some of our inventory and production facilities are located in areas
that are susceptible to harsh weather; a severe storm, flood, wildfires,
heavy snowfall or other similar event could prevent us from delivering
products in a timely manner and negatively impact consumer spending
and demand in affected areas. Production of certain of our products is
highly concentrated, and some are manufactured at a single location.
We cannot provide assurance that our disaster recovery plan will
address all of the issues we may encounter in the event of a disaster
or other unanticipated issue, and our business interruption insurance
may not adequately compensate us for losses that may occur from any
of the foregoing. In the event that a natural disaster, terrorist attack
or other catastrophic event were to destroy any part of our facilities
or interrupt our operations for any extended period of time, or if harsh
weather or health conditions prevent us from delivering products in a
timely manner, our business, financial condition or operating results
could be adversely affected.
We may not be able to successfully consummate and manage
ongoing acquisition, joint venture and divestiture activities which
could have an impact on our results.
From time to time, we may, based on an evaluation of our business
portfolio, acquire other businesses and/or divest existing businesses.
These acquisitions, joint ventures and divestitures may present finan
cial, managerial and operational challenges, including diversion of man
agement attention from existing businesses, difficulty with integrating
or separating personnel and financial and other systems, increased
expenses and raw material costs, assumption of unknown liabilities
and indemnities, and potential disputes with the buyers or sellers.
In addition, we may be required to incur asset impairment charges
(including charges related to goodwill and other intangible assets) in
connection with acquired businesses, which may reduce our profitabil
ity. If we are unable to consummate such transactions, or successfully
integrate and grow acquisitions and achieve contemplated revenue
synergies and cost savings, our financial results could be adversely
affected. Additionally, joint ventures inherently involve a lesser degree
of control over business operations, thereby potentially increasing the
financial, legal, operational, and/or compliance risks.
An impairment of the carrying value of goodwill or other
indefinite-lived intangible assets could adversely affect
our results.
As of November 30, 2024, we had approximately $5.2 billion of good
will and approximately $3.0 billion of other indefinite-lived intangible
assets. Goodwill and indefinite-lived intangible assets are initially
recorded at fair value and not amortized but are tested for impairment
at least annually or more frequently if impairment indicators arise.
We test goodwill at the reporting unit level by comparing the carrying
value of the net assets of the reporting unit, including goodwill, to the
unit’s fair value. Similarly, we test indefinite-lived intangible assets
by comparing the fair value of those assets to their carrying values. If
the carrying values of the reporting unit or indefinite-lived intangible
assets exceed their fair value, the goodwill or indefinite-lived intan
gible assets are considered impaired and reduced to their estimated
fair value. Factors that could result in an impairment include a change
in revenue growth rates, operating margins, weighted average cost
of capital, future economic and market conditions, higher income tax
rates, or assumed royalty rates. The impairment of our goodwill or
indefinite-lived intangible assets would have a negative impact on our
consolidated results of operations.
Streamlining actions to reduce fixed costs, simplify or improve
processes, and improve our competitiveness may have a negative
effect on employee relations.
We regularly evaluate whether to implement changes to our organiza
tion structure to reduce fixed costs, simplify or improve processes, and
improve our competitiveness, and we expect to continue to evaluate
such actions in the future. From time to time, those changes are of such
significance that we may transfer production from one manufacturing
facility to another; transfer certain selling and administrative functions
from one location to another; eliminate certain manufacturing, selling
and administrative positions; and exit certain businesses or lines of
business. These actions may result in a deterioration of employee
relations at the impacted locations or elsewhere in our business.
If we are unable to fully realize the benefits from our CCI program
or streamlining actions to reduce fixed costs, simplify or improve
our competitiveness, our financial results could be negatively
affected.
Our future success depends in part on our ability to be an efficient pro
ducer in a highly competitive industry, including our plan to eliminate
costs under our CCI program. Any failure by us to achieve our planned
cost savings and efficiencies under our CCI program, an ongoing
22 McCormick & Company, Inc.
initiative to improve productivity and reduce costs throughout the
organization, or other similar programs, could have an adverse effect
on our business, results of operations and financial position.
Fluctuations in foreign currency markets may negatively
impact us.
We are exposed to fluctuations in foreign currency in the following
main areas: cash flows related to raw material purchases; the transla
tion of foreign currency earnings to U.S. dollars; the effects of foreign
currency on loans between subsidiaries and unconsolidated affiliates
and on cash flows related to repatriation of earnings of unconsoli
dated affiliates. We have both translation and transaction exposures
to the fluctuation of exchange rates. Translation exposures relate to
exchange rate impacts of measuring income statements of foreign
subsidiaries that do not use the U.S. dollar as their functional currency.
Transaction exposures relate to the impact from input costs that are
denominated in a currency other than the local reporting currency and
the revaluation of transaction-related working capital balances or
loans between subsidiaries and unconsolidated affiliates denominated
in currencies other than the functional currency. Historically, weaken
ing of certain foreign currencies versus the U.S. dollar have resulted
in significant foreign exchange impacts leading to lower net sales, net
earnings and cash flows. Primary exposures include the U.S. dollar
versus the Euro, British pound sterling, Chinese renminbi, Canadian
dollar, Australian dollar, Polish zloty, Singapore dollar, Swiss franc, and
Mexican peso, as well as the Euro versus the British pound sterling
and Australian dollar, and Polish zloty, and finally the Canadian dollar
versus British pound sterling. We routinely enter into foreign currency
exchange contracts to facilitate managing certain of these foreign
currency risks. However, these contracts may not effectively limit or
eliminate our exposure to a decline in operating results due to foreign
currency exchange changes. Therefore, we cannot provide assurance
that future exchange rate fluctuations will not have a negative impact
on our business, financial position or operating results.
We face risks associated with certain pension assets and
obligations.
We hold investments in equity and debt securities in our qualified
defined benefit pension plans and in a rabbi trust for our U.S.
non-qualified pension plan. Deterioration in the value of plan assets
resulting from a general financial downturn or otherwise, or an
increase in the actuarial valuation of the plans’ liability due to a low
interest rate environment, could cause (or increase) an underfunded
status of our defined benefit pension plans, thereby increasing our
obligation to make contributions to the plans. An obligation to make
contributions to pension plans could reduce the cash available for
working capital and other corporate uses, and may have an adverse
impact on our operations, financial condition and liquidity.
Climate change, or legal, regulatory or market measures to
address climate change, may negatively affect our business,
financial condition and results of operations.
Unseasonable or unusual weather or long-term climate changes may
negatively impact the price or availability of spices, herbs and other
raw materials. Scientific consensus shows that greenhouse gases
in the atmosphere have an adverse impact on global temperatures,
weather patterns and the frequency and severity of extreme weather
and natural disasters, which may result in more intense effects. In the
event that such climate change has a negative effect on agricultural
productivity or practices, we may be subject to decreased availability
or less favorable pricing for certain commodities that are necessary for
our products. As a result of climate change, we may also be subjected
to decreased availability of water, deteriorated quality of water or
less favorable pricing for water, which could adversely impact our
manufacturing and distribution operations. In addition, such climate
change may result in modifications to the eating preferences of
the ultimate consumers of certain of our products, which may also
unfavorably impact our sales and profitability. The physical effects and
transitional costs of climate change and the legal, regulatory or market
initiatives to address climate change could have a negative impact on
our business, financial condition, and results of operations.
There has been an increased focus by foreign, federal, state and local
regulatory and legislative bodies regarding environmental policies
relating to climate change, regulating greenhouse gas emissions
(including carbon pricing, cap and trade systems, or carbon taxes)
and imposing mandatory reporting requirements, energy policies, and
sustainability. Increased compliance costs and expenses due to the
impacts of climate change and additional legal or regulatory require
ments regarding climate change that are designed to reduce or miti
gate the effects of carbon dioxide and other greenhouse gas emissions
on the environment may cause disruptions in, or an increase in the
costs associated with, the running of our manufacturing facilities and
our business, as well as increase distribution and supply chain costs.
Moreover, compliance with any such legal or regulatory requirements
may require us to make significant changes in our business operations
and strategy, which will likely require us to devote substantial time
and attention to these matters and cause us to incur additional costs.
Even if we make changes to align ourselves with such legal or regu
latory requirements, we may still be subject to significant penalties
or potential litigation if such laws and regulations are interpreted and
applied in a manner inconsistent with our practices. The effects of
climate change and legal or regulatory initiatives to address climate
change could have a long-term adverse impact on our business and
results of operations.
Additionally, we might fail to effectively address increased attention
from the media, stockholders, activists and other stakeholders on
climate change and related environmental sustainability matters. Such
failure, or the perception that we have failed to act responsibly regard
ing climate change, whether or not valid, or based in fact, could result
in adverse publicity and negatively affect our business and reputation.
Moreover, from time to time we establish and publicly announce goals
and commitments, including to reduce our impact on the environment.
For example, we established science-based target 2025 – 2030 goals
for Scope 1, 2 and 3 greenhouse gas emissions. Our ability to achieve
any stated goal, target or objective is subject to numerous factors and
conditions, many of which are outside of our control. Examples of such
factors include evolving regulatory requirements affecting sustainability
standards or disclosures or imposing different requirements, the pace
of changes in technology, the availability of requisite financing and
the availability of suppliers that can meet our sustainability and other
standards and changing business dynamics including acquisitions.
Furthermore, standards for tracking and reporting such matters continue
to evolve. Our selection of voluntary disclosure frameworks and stan
dards, and the interpretation or application of those frameworks and
standards, may change from time to time or differ from those of others.
Methodologies for reporting these data may be updated and previously
reported data may be adjusted to reflect improvement in availability
and quality of third-party data, changing assumptions, changes in the
2024 Annual Report 23
nature and scope of our operations (including from acquisitions and
divestitures), and other changes in circumstances, which could result in
significant revisions to our current goals, reported progress in achieving
such goals, or ability to achieve such goals in the future. If we fail to
achieve, or are perceived to have failed or been delayed in achieving, or
improperly report our progress toward achieving these goals and com
mitments, it could negatively affect consumer or customer preference
for our products or investor confidence in our stock, as well as expose
us to enforcement actions and litigation.
In addition, we could be criticized by environmental, social and gover
nance (ESG) detractors for the scope or nature of our ESG initiatives or
goals or for any revisions to these goals. We could also be subjected
to negative responses by governmental actors (such as anti-ESG
legislation or retaliatory legislative treatment) or consumers (such as
boycotts or negative publicity campaigns) that could adversely affect
our reputation, business, financial performance and growth.
ESG issues, including those related to climate change and
sustainability, may have an adverse effect on our business,
financial condition and results of operations and damage our
reputation.
Companies across all industries are facing increasing scrutiny relating
to their ESG policies. If we are unable to meet our ESG goals or evolv
ing investor, industry or stakeholder expectations and standards, or if
we are perceived to have not responded appropriately to the growing
concern for ESG issues or negative incidents, it could erode customer
confidence and customers and consumers may choose to stop pur
chasing our products or purchase products from another company or a
competitor, and our reputation, business or financial condition may be
adversely affected. Increased focus and activism on ESG topics may
hinder our access to capital, as investors may reconsider their capital
investment as a result of their assessment of our ESG practices. In
particular, these constituencies are increasingly focusing on environ
mental issues, including climate change, water use, deforestation,
plastic waste, and other sustainability concerns. Changing consumer
preferences may result in increased demands regarding plastics and
packaging materials, including single-use and non-recyclable plastic
packaging, and other components of our products and their environ
mental impact on sustainability; a growing demand for natural or
organic products and ingredients; or increased consumer concerns or
perceptions (whether accurate or inaccurate) regarding the effects of
ingredients or substances present in certain consumer products. These
demands could impact the profitability of some of our products or
cause us to incur additional costs, to make changes to our operations
to make additional commitments, set targets or establish additional
goals and take actions to meet them, which could expose us to market,
operational and execution costs or risk.
In addition to environmental issues these constituencies are also
focused on social and other governance issues, including matters
such as, but not limited to, human capital and social issues. We have
established diversity, equity and inclusion goals as part of our ESG
initiative. Our initiatives extend from individuals to entire communities,
including those we serve and, just as importantly, those from which
we source. Failure to attract, hire, develop, motivate and retain highly
qualified and diverse executive and employee talent, especially in light
of changing worker expectations and talent marketplace variability
regarding flexible and hybrid work models, to meet our goals relating
to fostering a diverse and inclusive culture or to adequately address
potential increased scrutiny of our diversity, equity and inclusion
initiatives could impact our ability to achieve our business objectives
and adversely affect our future success.
Concern over climate change, including plastics and packaging
materials, in particular, may result in new or increased legal and
regulatory requirements. Increased regulatory requirements related to
environmental causes, and related ESG disclosure rules may result in
increased compliance costs or increased costs of energy, raw materials
or compliance with emissions standards, which may cause disruptions
in the manufacture of our products or an increase in operating costs.
Any failure to achieve our ESG goals or a perception (whether or not
valid) of our failure to act responsibly with respect to the environmen
tal, human capital, or social issues, or to effectively respond to new, or
changes in, legal or regulatory requirements concerning environmental
or other ESG matters, or increased operating or manufacturing costs
due to increased regulation or environmental causes could adversely
affect our business and reputation and increase risk of litigation.
Risks Relating to Credit and Capital Markets, Our Credit
Rating, Borrowings and Dividends
Increases in interest rates or changes in our credit ratings
may negatively impact us.
On November 30, 2024, we had total outstanding variable rate debt of
approximately $449 million at a weighted-average interest rate of
approximately 4.7%. The interest rates under our revolving credit facil
ities can vary based on our credit ratings. We also regularly access the
commercial paper markets for ongoing funding requirements. A down
grade in our credit ratings would increase our borrowing costs and could
affect our ability to issue commercial paper. Additionally, disruptions in
the commercial paper market or other effects of volatile economic condi
tions on the credit markets could also reduce the amount of commercial
paper that we could issue and raise our borrowing costs. Our policy is
to manage our interest rate risk by entering into both fixed and variable
rate debt arrangements. We also use interest rate swaps to minimize
worldwide financing cost and to achieve a desired mix of fixed and
variable rate debt. On November 30, 2024, we had total outstanding fixed
to variable interest rate swaps with a notional value of $600 million.
We utilize derivative financial instruments to enhance our ability to
manage risk, including interest rate exposures that exist as part of our
ongoing business operations. We do not enter into contracts for trading
purposes, nor are we a party to any leveraged derivative instruments.
Our use of derivative financial instruments is monitored through regular
communication with senior management and the utilization of written
guidelines. However, our use of these instruments may not effectively
limit or eliminate our exposure to changes in interest rates. Therefore,
we cannot provide assurance that future credit rating or interest rate
changes will not have a material negative impact on our business, finan
cial position or operating results.
Our credit ratings impact the cost and availability of future
borrowings and, accordingly, our cost of capital.
Our credit ratings reflect each rating organization’s opinion of our
financial strength, operating performance and ability to meet our debt
obligations. Any reduction in our credit ratings may limit our ability
to borrow as well as the interest rates that are associated with any
such borrowing. If our credit ratings are downgraded or put on watch
for a potential downgrade, we may not be able to sell additional debt
securities or borrow money in the amounts, at the times or interest
rates, or upon the more favorable terms and conditions that might be
available if our current credit ratings were maintained.
24 McCormick & Company, Inc.
We may incur additional indebtedness to finance our acquisitions
that may limit our ability to, among other matters, issue additional
indebtedness, meet our debt service requirements, react to rising
interest rates, comply with certain covenants and compete with
less highly leveraged competitors.
We have a significant amount of indebtedness outstanding. As of
November 30, 2024, our indebtedness of McCormick and its subsidiar
ies is approximately $4.3 billion. This substantial level of indebtedness
could have important consequences to our business, including, but not
limited to:
• increasing our debt service obligations, making it more difficult for
us to satisfy our obligations;
• limiting our ability to borrow additional funds;
• increasing our exposure to negative fluctuations in interest rates;
• subjecting us to financial and other restrictive covenants, the
non-compliance with which could result in an event of default;
• increasing our vulnerability to, and reducing our flexibility to respond
to, general adverse economic and industry conditions;
• limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate; and
• placing us at a competitive disadvantage as compared to our
competitors, to the extent that they are not as highly leveraged.
The deterioration of credit and capital markets may adversely
affect our access to sources of funding.
We rely on our revolving credit facilities, or borrowings backed by
these facilities, to fund a portion of our working capital needs and
other general corporate purposes, including funding of acquisitions. If
any of the banks in the syndicates backing these facilities were unable
to perform on its commitments, our liquidity could be impacted, which
could adversely affect funding of seasonal working capital require
ments. We engage in regular communication with all of the banks
participating in our revolving credit facilities. During these commu
nications, none of the banks have indicated that they may be unable
to perform on their commitments. In addition, we periodically review
our banking and financing relationships, considering the stability of
the institutions, pricing we receive on services and other aspects of
the relationships. Based on these communications and our monitoring
activities, we believe the likelihood of one of our banks not performing
on its commitment is remote.
In addition, global capital markets have experienced volatility in the
past, including related to recession, financial instability or inflation,
that has tightened access to capital markets and other sources of
funding, and such volatility and tightened access could reoccur in the
future. In the event that we need to access the capital markets or
other sources of financing, there can be no assurance that we will be
able to obtain financing on acceptable terms or within an acceptable
time period. Our inability to obtain financing on acceptable terms or
within an acceptable time period could have an adverse impact on our
operations, financial condition and liquidity.
Uncertain global economic conditions expose us to credit risks
from customers and counterparties.
Consolidations in some of the industries in which our customers oper
ate have created larger customers, some of which are highly leveraged.
In addition, competition has increased with the growth in alternative
channels through our customer base. These factors have caused some
customers to be less profitable and increased our exposure to credit
risk. Current credit markets are volatile, and some of our customers
and counterparties are highly leveraged. A significant adverse change
in the financial and/or credit position of a customer or counterparty
could require us to assume greater credit risk relating to that customer
or counterparty and could limit our ability to collect receivables. This
could have an adverse impact on our financial condition and liquidity.
The declaration, payment and amount of dividends is made at
the discretion of our board of directors and depends on a number
of factors.
The declaration, payment and amount of any dividends is made pur
suant to our dividend policy and is subject to final determination each
quarter by our board of directors in its discretion based on a number
of factors that it deems relevant, including our financial position,
results of operations, available cash resources, cash requirements
and alternative uses of cash that our board of directors may conclude
would be in the best interest of the company and our stockholders. Our
dividend payments are subject to solvency conditions established by
the Maryland General Corporation Law. Accordingly, there can be no
assurance that any future dividends will be equal or similar in amount
to any dividends previously paid or that our board of directors will not
decide to reduce, suspend or discontinue the payment of dividends at
any time in the future.
Risks Related to Intellectual Property, Information
Technology, and Cyber-Security
Our intellectual property rights, and those of our customers,
could be infringed, challenged or impaired, and reduce the value
of our products and brands or our business with customers.
We possess intellectual property rights that are important to our
business, and we are provided access by certain customers to partic
ular intellectual property rights belonging to such customers. These
intellectual property rights include ingredient formulas, trademarks,
copyrights, patents, business processes and other trade secrets which
are important to our business and relate to some of our products, our
packaging, the processes for their production, and the design and
operation of equipment used in our businesses. We protect our
intellectual property rights, and those of certain customers, globally
through a variety of means, including trademarks, copyrights, patents
and trade secrets, third-party assignments and nondisclosure agree
ments, and monitoring of third-party misuses of intellectual property in
traditional retail and digital environments. If we fail to obtain or ade
quately protect our intellectual property (and the intellectual property
of customers to which we have been given access), the value of our
products and brands could be reduced and there could be an adverse
impact on our business, financial condition and results of operations.
Our operations and reputation may be impaired if our information
technology systems fail to perform adequately or if we are the
subject of a data breach or cyber-attack.
Our information technology systems are critically important to operating
our business. We rely on our information technology systems, some of
which are or may be managed or hosted by or outsourced to third party
service providers, to manage our business data, communications, sup
ply chain, order entry and fulfillment, and other business processes. If
we do not allocate and effectively manage the resources necessary to
build, sustain, and protect appropriate information technology systems
2024 Annual Report 25
and infrastructure, or we do not effectively implement system upgrades
or oversee third party service providers, our business or financial results
could be negatively impacted. The failure of our information technology
systems to perform as we anticipate could disrupt our business and
could result in transaction or reporting errors, processing inefficiencies
and the loss of sales and customers, causing our business and results
of operations to suffer.
Furthermore, our information technology systems, and the systems
of our customers, vendors, suppliers, and other third-party service
providers, are subject to cyber-attacks or other security incidents
including computer viruses or other malicious codes, phishing attacks,
unauthorized access attempts, cyber extortion, business email com
promise, deepfake or social engineering schemes, denial of service
attacks, hacking, ransomware, or other cyberattacks attempting to
exploit vulnerabilities. Cybercriminals have increasingly demonstrated
advanced capabilities, such as use of zero-day vulnerabilities, and
rapid integration of new technology such as generative artificial
intelligence. Continued geographical turmoil, including the ongoing
conflicts between Russia and Ukraine, the war in the Middle East, and
rising tensions between China and Taiwan, has heightened the risk
of cyberattack. Such incidents could result in unauthorized access to
information including customer, consumer or other company confiden
tial data as well as disruptions to operations. We, and the third-parties
we do business with, have experienced in the past, and expect to
continue to experience, cybersecurity threats and attacks, although
to date none had a material impact on our operations or business. To
address the risks to our information technology systems and data, we
maintain an information security program that includes updating tech
nology, developing security policies and procedures, implementing and
assessing the effectiveness of controls, monitoring and routine testing
of our information systems, conducting risk assessments of third-party
service providers and designing business processes to mitigate the
risk of such breaches. We believe that these preventative actions
provide adequate measures of protection against security breaches
and generally reduce our cybersecurity risks. However, cyber-threats
are constantly evolving, are becoming more sophisticated and are
being made by groups of individuals with a wide range of expertise
and motives, which increases the difficulty of detecting and success
fully defending against them. There can be no assurance that these
measures will prevent or limit the impact of a future incident. More
over, the development and maintenance of these measures requires
continuous monitoring as technologies change and efforts to overcome
security measures evolve. Additionally, we rely on services provided
by third-party vendors for certain information technology processes
and functions, which makes our operations vulnerable to a failure by
any one of these vendors to perform adequately or maintain effective
internal controls. If we are unable to prevent or adequately respond
to and resolve an incident, it may have a material, negative impact on
our operations or business reputation, and we may experience other
adverse consequences such as loss of assets, remediation costs,
litigation, regulatory investigations, and the failure by us to retain or
attract customers following such an event.
If we are not able to successfully implement our business
transformation initiative or utilize information technology systems
and networks effectively, our ability to conduct our business may
be negatively impacted.
We continue to implement our multi-year business transformation
initiative to execute significant change to our global processes, capa
bilities and operating model, including in our Global Business Services
(GBS) operating model initiative, in order to provide a scalable plat
form for future growth, while reducing costs. As technology provides
the backbone for greater process alignment, information sharing
and scalability, we are also making investments in our information
systems, including the multi-year program to replace our enterprise
resource planning (ERP) system currently underway, which includes the
transformation of our financial processing systems to enterprise-wide
systems solutions. These systems implementations are part of our
ongoing business transformation initiative, and we currently plan to
implement these systems throughout all parts of our businesses. If
we do not allocate and effectively manage the resources necessary to
build and sustain the proper information technology infrastructure, or
if we fail to achieve the expected benefits from this initiative, it may
impact our ability to process transactions accurately and efficiently
and remain in step with the changing needs of our business, which
could result in the loss of customers and revenue. In addition, failure
to either deliver the applications on time or anticipate the necessary
readiness and training needs, could lead to business disruption and
loss of customers and revenue. In connection with these implementa
tions and resulting business process changes, we continue to enhance
the design and documentation of business processes and controls,
including our internal control over financial reporting processes, to
maintain effective controls over our financial reporting.
We utilize cloud-based services and systems and networks managed
by third-party vendors to process, transmit and store information and
to conduct certain of our business activities and transactions with
employees, customers, vendors and other third parties. Our utilization
of these cloud-based services and systems will increase as we imple
ment our business transformation initiatives. If any of these third-party
service providers or vendors do not perform effectively, or if we fail
to adequately monitor their performance (including compliance with
service-level agreements or regulatory or legal requirements), we may
have to incur additional costs to correct errors made by such service
providers, our reputation could be harmed or we could be subject to
litigation, claims, legal or regulatory proceedings, inquiries or investi
gations. Depending on the function involved, such errors may also lead
to business disruption, processing inefficiencies, the loss of or damage
to intellectual property or sensitive data through security breaches or
otherwise, incorrect or adverse effects on financial reporting, litigation
or remediation costs, or damage to our reputation, which could have a
negative impact on employee morale. In addition, the management of
multiple third-party service providers increases operational complexity
and decreases our control.
Risks Related to Our Global Business, Litigation, Laws and
Regulations
Laws and regulations could adversely affect our business.
Food products are extensively regulated in most of the countries in
which we sell our products. We are subject to numerous laws and
regulations relating to the growing, sourcing, manufacturing, storage,
labeling, marketing, advertising and distribution of food products,
as well as laws and regulations relating to financial reporting
requirements, the environment, consumer protection, product design,
competition, anti-corruption, privacy, machine learning and artificial
intelligence, relations with distributors and retailers, foreign supplier
verification, customs and trade laws, including the import and export
of products and product ingredients, employment, and health and
safety. The recent change in the presidential administration could
impact U.S. trade and other policies and result in substantial changes
26 McCormick & Company, Inc.
that may impact our business. Enforcement of existing laws and regu
lations, including changes in the enforcement priorities of regulators,
changes in legal requirements, and/or evolving interpretations of
existing regulatory requirements may result in increased compliance
costs and create other obligations, financial or otherwise, that could
adversely affect our business, financial condition or operating results.
Increased regulatory scrutiny of, and increased litigation involving,
product claims and concerns regarding the attributes of food products
and ingredients may increase compliance costs and create other
obligations that could adversely affect our business, financial condi
tion or operating results. Governments may also impose requirements
and restrictions that impact our business, such as labeling disclosures
pertaining to ingredients. For example, “Proposition 65, the Safe Drink
ing Water and Toxic Enforcement Act of 1986,” in California exposes
all food companies to the possibility of having to provide warnings on
their products in that state. If we were required to add warning labels
to any of our products or place warnings in locations where our prod
ucts are sold in order to comply with Proposition 65, the sales of those
products and other products of our company could suffer, not only in
those locations but elsewhere.
In addition, there are various compliance obligations for companies
that process personal data of certain individuals, including such
obligations required by the European Union’s General Data Protection
Regulation (GDPR), which affects all member states of the European
Economic Area, and the California Consumer Privacy Act (CCPA). These
types of data privacy laws create a range of compliance obligations
for companies that process personal data of certain individuals and
increases financial penalties for non-compliance. Our efforts to comply
with these privacy and data protection laws may not be successful, or
may be perceived to be unsuccessful, which could adversely affect our
business in the U.S., the European Union and in other countries.
In the U.S., for example, the CCPA imposes requirements on compa
nies that do business in California and collect personal information
from certain individuals, including notice, consent and service provider
requirements. The CCPA also provides for civil penalties for companies
that fail to comply with these requirements, as well as a private right
of action for data breaches. Further, the California Privacy Rights Act
(CPRA) went into full effect on January 1, 2023 (with a ‘look-back’
to January 1, 2022). The CPRA builds on the CCPA and among other
things, requires the establishment of a dedicated agency to regulate
privacy issues. In 2021, Virginia, Colorado, Connecticut and Utah
adopted laws which have now taken effect introducing new privacy
obligations, which have required us to develop additional compli
ance mechanisms and processes. Many other states are considering
similar legislation. A broad range of legislative measures also have
been introduced at the federal level. There also is a wide range of
enforcement agencies at both the state and federal levels that can
review companies for privacy and data security concerns based on
general consumer protection laws. The Federal Trade Commission and
state Attorneys General all are aggressive in reviewing privacy and
data security protections for consumers. Accordingly, failure to comply
with federal and state laws (both those currently in effect and future
legislation) regarding privacy and security of personal information
could expose us to fines and penalties under such laws. There also
is the threat of consumer class actions related to these laws and the
overall protection of personal data. Even if we are not determined to
have violated these laws, government investigations into these issues
typically require the expenditure of significant resources and generate
negative publicity, which could harm our reputation and our business.
Similarly, outside of the U.S., there are various laws and regulations
governing the collection, use, disclosure, transfer, or other process
ing of personal data. For instance, the GDPR, which applies to the
processing of personal data of individuals in the European Union, is
wide-ranging in scope and imposes numerous requirements on com
panies that process personal data, including strict rules on the transfer
of personal data to countries outside the European Union, including
the U.S. Beyond GDPR, there are privacy and data security laws in a
growing number of countries around the world (including in the United
Kingdom as a result of Brexit). While many loosely follow GDPR as a
model, other laws contain different or conflicting provisions. These
laws may impact our ability to conduct our business activities and the
costs associated with these activities.
Litigation, legal or administrative proceedings could have an
adverse impact on our business and financial condition or
damage our reputation.
We are party to a variety of legal claims and proceedings in the ordi
nary course of business. Since litigation is inherently uncertain, there
is no guarantee that we will be successful in defending ourselves
against such claims or proceedings, or that management’s assessment
of the materiality or immateriality of these matters, including any
reserves taken in connection with such matters, will be consistent
with the ultimate outcome of such claims or proceedings. In the event
that management’s assessment of the materiality or immateriality of
current claims and proceedings proves inaccurate, or litigation that is
material arises in the future, there may be a material adverse effect on
our financial condition. Any adverse publicity resulting from allega
tions made in litigation claims or legal or administrative proceedings
(even if untrue) may also adversely affect our reputation. These factors
and others could have an adverse impact on our business and financial
condition or damage our reputation.
Our international and cross-border operations are subject to
additional risks.
We operate our business and market our products internationally. In
fiscal year 2024, approximately 39% of our sales were generated in
countries other than the U.S. Our international operations are subject
to additional risks, including fluctuations in currency values, foreign
currency exchange controls, discriminatory fiscal policies, compli
ance with U.S. and foreign laws, enforcement of remedies in foreign
jurisdictions and other economic or political uncertainties. Several
countries within the European Union continue to experience sovereign
debt and credit issues, which causes more volatility in the economic
environment throughout the European Union and the U.K. Additionally,
sales in countries other than the U.S., together with finished goods
and raw materials imported into the U.S., are subject to risks related
to fundamental changes to tax laws as well as the imposition of
tariffs, quotas, trade barriers and other similar restrictions. All of these
risks could result in increased costs or decreased revenues, which
could adversely affect our profitability.
2024 Annual Report 27
The global nature of our business, changes in tax legislation and
the resolution of tax uncertainties create volatility in our effective
tax rate.
As a global business, our tax rate from period to period can be affected
by many factors, including changes in tax legislation, our global mix of
earnings, the tax characteristics of our income, acquisitions and dispo
sitions, adjustments to our reserves related to uncertain tax positions,
changes in valuation allowances and the portion of the income of
international subsidiaries that we expect to remit to the U.S. and that
will be taxable.
In addition, significant judgment is required in determining our effec
tive tax rate and in evaluating our tax positions. We establish accruals
for certain tax contingencies when, despite the belief that our tax
return positions are appropriately supported, the positions are uncer
tain. The tax contingency accruals are adjusted in light of changing
facts and circumstances, such as the progress of tax audits, case
law and emerging legislation. Our effective tax rate includes the
impact of tax contingency accruals and changes to those accruals,
including related interest and penalties, as considered appropriate by
management. When particular matters arise, a number of years may
elapse before such matters are audited and finally resolved. Favorable
resolution of such matters could be recognized as a reduction to our
effective tax rate in the year of resolution. Unfavorable resolution
of any particular issue could increase the effective tax rate and may
require the use of cash in the year of resolution.
28 McCormick & Company, Inc.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Cybersecurity risk management is overseen both as a critical compo
nent of our overall Enterprise Risk Management program and as a
standalone program. We have implemented a risk-based, multilayered
approach to assessing, identifying, and managing cybersecurity
threats and incidents, while also implementing controls and proce
dures that provide for the prompt escalation of certain cybersecurity
incidents.
The team devotes significant resources to our cybersecurity risk man
agement, which focuses on developing and implementing strategies
and processes to protect the confidentiality, integrity, and availability
of our assets and those of our consumers, customers and employees
and seeks to continually improve our policies and practices to protect
our platforms, adapt to changes in regulations, identify potential and
emerging security risks and develop mitigation strategies for those
risks. As part of this effort, the team periodically benchmarks our
practices against the NIST Cyber Security and Privacy Frameworks,
and other good practice control methods, which include updating tech
nology, developing data privacy and security policies and procedures,
implementing and assessing the effectiveness of controls, monitoring
and routine testing of our information systems, conducting risk as
sessments of third-party service providers, providing data privacy and
cybersecurity awareness training to employees and designing business
processes to protect private data and mitigate the risk of cybersecurity
incidents. We periodically conduct tests on our systems to help
discover potential vulnerabilities, which enable improved decision-
making and prioritization and promote monitoring and reporting across
compliance functions. We believe that these actions provide adequate
measures of protection against security breaches and generally reduce
our cybersecurity risks, and we have not had a material cybersecurity
threat or attack to date.
Our processes also address cybersecurity risks associated with our use
of third-party service providers including suppliers, and software and
cloud-based service providers. We proactively evaluate the cybersecu
rity risk of our third-party service providers by utilizing a repository of
risk assessments, external monitoring sources, threat intelligence and
predictive analytics to better inform ourselves during contracting and
vendor selection processes. Third-party service providers security issues
are documented, tracked, and monitored in order to mitigate risk.
Our employees, including part-time and temporary employees, under
take an annual cybersecurity training program, which is augmented by
additional training and communications on information security and
data privacy matters throughout the year.
We have adopted an incident response plan that applies in the event
of a cybersecurity threat or incident to provide a standardized frame
work for responding to such cybersecurity threats or incidents. The
plan sets out a coordinated approach to investigating, containing, doc
umenting, and mitigating incidents, including reporting findings and
keeping our Management Committee, the Audit Committee, the Board,
and other key stakeholders informed and involved as appropriate. The
plan is aligned to NIST guidance. It also includes the involvement of
any personnel who may detect incidents, respond to incidents, resolve
incidents, and manage communications and responsibilities with
authorities about those incidents. The plan applies to all personnel
(including third-party contractors, vendors, and partners) that perform
functions or services requiring access to secure Company information,
and to all devices and network services that are owned or managed
by us.
Further, we currently maintain a cybersecurity insurance that provides
coverage for certain types of incidents; however, such insurance may
not be sufficient in type or amount to cover claims related to all cyber
threats or risks.
While we have not experienced any material cybersecurity threats
or incidents that have materially affected or are reasonably likely to
materially affect us, including our business strategy, results of oper
ations or financial condition, as of the date of this Annual Report on
Form 10-K, there can be no guarantee that we will not be the subject
of future threats or incidents. Additional information on cybersecurity
risks we face can be found in Item 1A, Risk Factors, which should be
read in conjunction with the foregoing information.
Governance and Oversight
Our Board and the Audit Committee are actively engaged in the over
sight of our cybersecurity and data privacy program. The Board, at
least annually, and the Audit Committee, periodically throughout the
year, receive regular reports from our Chief Information Security
Officer (“CISO”) and members of the information security team on,
among other things, recent developments, the state of the information
security program, assessments of risks and threats to our information
security systems, information security considerations arising with
respect to our peers and third parties, third-party and independent
reviews, and processes to maintain and strengthen information secu
rity systems. Under the oversight of the Audit Committee, we engage
third-party experts to assess the state of our cybersecurity and data
privacy program. The Audit Committee also provides regular updates
to the Board, and the Board would be notified between such updates
regarding significant new cybersecurity threats or incidents.
We have protocols by which certain cybersecurity incidents that meet
established reporting thresholds are escalated internally and, where
appropriate, reported to the Management Committee, the Audit
Committee or the Board in a timely manner.
We have an Executive Cybersecurity Steering Committee that is facil
itated by our CISO, which is designed to engage business leadership
and employ best practices, including ongoing enhancements to gover
nance, risk and compliance. Our internal audit function also performs
independent testing on aspects of the operations of our cybersecurity
program and the supporting controls based upon its risk-based internal
audit plan and reports the results of these audits in its periodic reports
to the Audit Committee. Our CISO currently reports to our Chief Infor
mation and Digital Officer and is responsible for training and leading
a dedicated information security team tasked with protecting data
and preventing, identifying, and appropriately addressing cyberse
curity threats. The CISO is a Certified Information Systems Security
Professional with over 20 years of experience developing and maturing
information security programs, including experience with leading
privacy, enterprise risk, records management, business continuity and
operational risk programs, among others.
2024 Annual Report 29
ITEM 2. PROPERTIES
Our principal executive offices and primary research facilities are
leased and owned, respectively, and are located in suburban
Baltimore, Maryland.
The following is a list of our principal manufacturing properties, all
of which are owned except for the facilities in Commerce, California;
Lakewood, New Jersey; Melbourne, Australia; Florence, Italy; and a
portion of the facility in Littleborough, England, which are leased. The
manufacturing facilities that we own in Guangzhou, Shanghai and
Wuhan, China are each located on land subject to long-term leases:
United States:
Hunt Valley, Maryland–consumer and flavor solutions
(3 principal plants)
Gretna, Louisiana–consumer and flavor solutions
South Bend, Indiana–consumer and flavor solutions
Atlanta, Georgia–flavor solutions
Commerce, California–consumer
Irving, Texas–flavor solutions
Lakewood, New Jersey–flavor solutions
Geneva, Illinois–flavor solutions
Springfield, Missouri–consumer and flavor solutions
Belcamp, Maryland–consumer and flavor solutions
Canada:
London, Ontario–consumer and flavor solutions
Mexico:
Cuautitlán de Romero Rubio–flavor solutions
United Kingdom:
Haddenham, England–consumer and flavor solutions
Littleborough, England–flavor solutions
Peterborough, England–flavor solutions
France:
Carpentras–consumer and flavor solutions
Monteux–consumer and flavor solutions
Poland:
Stefanowo–consumer
Italy:
Florence–consumer and flavor solutions (2 principal plants)
China:
Guangzhou–consumer and flavor solutions
Shanghai–consumer and flavor solutions
Wuhan–consumer and flavor solutions
Australia:
Melbourne–consumer and flavor solutions
Palmwoods–consumer
Thailand:
Chonburi–consumer and flavor solutions
In addition to distribution facilities and warehouse space available at
our manufacturing facilities, we lease the following regional distribu
tion facilities: (i) U.S.: Baltimore, Maryland; Salinas, California; Byhalia,
Mississippi; Irving, Texas; and Springfield, Missouri; (ii) Canada:
Mississauga and London, Ontario; (iii) Heywood, U.K.; and (iv) Compans,
France. We also own a distribution facility in Monteux, France. In addi
tion, we own, lease, or contract other properties used for manufactur
ing consumer and flavor solutions products and for sales, warehousing,
distribution, and administrative functions.
We believe our plants are well maintained and suitable for their
intended use. We further believe that these plants generally have ade
quate capacity or the ability to expand, and can accommodate seasonal
demands, changing product mixes, and additional growth.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings in which we or any
of our subsidiaries are a party or to which any of our or their property
is the subject.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
30 McCormick & Company, Inc.
PART II.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our Common Stock and Common Stock Non-Voting are listed and traded on the New York Stock Exchange (NYSE). Our Common Stock and Common
Stock Non-Voting trade under the ticker symbols MKC.V and MKC, respectively. We have disclosed the information related to the dividends declared
and paid on our classes of common stock in Note 16 of the accompanying financial statements. The market price of our common stock at the close of
business on December 31, 2024 was $75.80 per share for the Common Stock and $76.24 per share for the Common Stock Non-Voting.
The approximate number of holders of our common stock based on record ownership as of December 31, 2024 was as follows:
Title of class
Approximate number
of record holders
Common Stock, par value $0.01 per share
2,100
Common Stock Non-Voting, par value $0.01 per share
8,600
The following table summarizes our purchases of Common Stock (CS) and Common Stock Non-Voting (CSNV) during the fourth quarter of 2024:
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total number of
shares purchased
Average price
paid per share
Total number of
shares purchased
as part of publicly
announced plans
or programs
Approximate dollar
value of shares that
may yet be purchased
under the plans or
programs
September 1, 2024 to
CS-0
—
—
$472 million
September 30, 2024
CSNV-0
—
—
October 1, 2024 to
CS-298,310
$80.64
298,310
$448 million
October 31, 2024
CSNV-0
—
—
November 1, 2024 to
CS-437
$78.51
437
$448 million
November 30, 2024
CSNV-0
—
—
Total
CS-298,747
$80.64
298,747
$448 million
CSNV-0
—
—
On October 9, 2024, we repurchased 55,538 shares of our CS from our U.S. pension plan to facilitate the plan’s rebalancing of its asset allocation.
Additionally, on October 10, 2024, October 11, 2024, October 15, 2024 and October 16, 2024, we purchased 55,000 shares each day, for a total of
220,000 shares of our CS from our U.S. pension plan to facilitate the plan’s rebalancing of its asset allocation. The prices paid per share represented the
average of the high and low prices of the common shares on October 9, 2024, October 10, 2024, October 11, 2024, October 15, 2024, and October 16,
2024, respectively.
On October 2, 2024, we purchased 22,772 shares of our CS from our U.S. defined contribution retirement plan to manage shares, based upon
participant activity, in the plan’s company stock fund. The price paid per share represented the closing price of the CS on October 2, 2024.
As of November 30, 2024, approximately $448 million remained of a $600 million share repurchase authorization approved by the Board of Directors in
November 2019. The timing and amount of any shares repurchased is determined by our management based on its evaluation of market conditions and
other factors.
In certain circumstances, we issue shares of CS in exchange for shares of CSNV, or issue shares of CSNV in exchange for shares of CS, in either case
pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. Typically, these exchanges are made
in connection with the administration of our employee benefit plans, executive compensation programs and dividend reinvestment/direct purchase
plans. The number of shares issued in an exchange is generally equal to the number of shares received in the exchange, although the number may
differ slightly to the extent necessary to comply with the requirements of the Employee Retirement Income Security Act of 1974. During fiscal 2024, we
issued 1,028,181 shares of CSNV in exchange for shares of CS and issued 14,083 shares of CS in exchange for shares of CSNV.
ITEM 6. [RESERVED]
2024 Annual Report 31
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following Management’s Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) is intended to help the
reader understand McCormick & Company, Incorporated, our operations,
and our present business environment from the perspective of man
agement. MD&A is provided as a supplement to, and should be read in
conjunction with, our financial statements and the accompanying notes
thereto contained in Item 8 of this report. We use certain non-GAAP
information—more fully described below under the caption Non-GAAP
Financial Measures—that we believe is important for purposes of
comparison to prior periods and development of future projections and
earnings growth prospects. This information is also used by manage
ment to measure the profitability of our ongoing operations and analyze
our business performance and trends. The dollar and share information
in the charts and tables in MD&A are in millions, except per share data.
McCormick is a global leader in flavor. We manufacture, market, and
distribute spices, seasoning mixes, condiments and other flavorful
products to the entire food and beverage industry–retailers, food man
ufacturers and foodservice businesses. We manage our business in
two operating segments, consumer and flavor solutions, as described
in Item 1 of this report.
Our long-term annual growth objectives in constant currency are to
increase sales 4% to 6%, increase adjusted operating income 7% to
9% and increase adjusted earnings per share 9% to 11%. Our actual
annual results can vary from our long-term growth objectives.
Over time, we expect to grow sales with similar contributions from:
1) our base business—driven by brand marketing support, category
management, and differentiated customer engagement; 2) new
products; and 3) acquisitions.
Base Business—We expect to drive sales growth by optimizing
our brand marketing investment through improved speed, quality,
and effectiveness. We measure the return on our brand marketing
investment and identify digital marketing as one of our highest return
investments in brand marketing support. Through digital marketing,
we are connecting with consumers in a personalized way to deliver
recipes, provide cooking advice, and help them discover new products.
New Products—For our consumer segment, we believe that scalable
and differentiated innovation continues to be one of the best ways to
distinguish our brands from our competition, including private label.
We are introducing products for every type of cooking occasion, from
gourmet, premium items to convenient and value-priced flavors.
For flavor solutions customers, we are developing seasonings for
snacks and other food products, as well as flavors for new menu
items. We have a strong pipeline of flavor solutions products aligned
with our customers’ new product launch plans, many of which
include clean-label, organic, natural, and “better-for-you” innovation.
With over 20 product innovation centers around the world, we are
supporting the growth of our brands and those of our flavor solutions
customers with products that appeal to local consumers.
Acquisitions—Acquisitions are expected to approximate one-third
of our sales growth over time. We focus on acquisition opportunities
that meet the growing demand for flavor and health. Geographically,
our focus is on acquisitions that build scale where we currently have
presence in both developed and emerging markets.
Executive Summary
In 2024, we achieved net sales growth of 0.9% over the 2023 level due
to the following factors:
• Volume and product mix favorably impacted our net sales growth by
0.3%, exclusive of divestitures. The consumer segment experienced
favorable volume and product mix of 0.8% and the flavor solutions
segment experienced unfavorable volume and product mix of 0.3%.
• Pricing actions contributed 0.5% to the increase in net sales, driven
by the favorable impact of pricing actions in our flavor solutions
segment.
• Divestitures negatively impacted our net sales by 0.2%.
• Net sales were favorably impacted by fluctuations in currency rates
by 0.3%.
• Excluding the impact of divestitures and fluctuations in currency
rates, we grew sales, on an organic basis, by 0.8% over the prior
year.
Operating income was $1,060.3 million in 2024 and $963.0 million in
2023. We recognized $9.5 million and $61.2 million of special charges
in 2024 and 2023, respectively, related to organization and streamlining
actions. In 2024, operating income was positively impacted by the
higher level of sales and an improvement in our gross profit margin as a
percentage of sales of 90 basis points as compared to the prior year. The
gross profit margin improvement was driven by the effects of favorable
pricing actions, favorable product and customer mix, less scrapped in
ventory, and cost savings led by our CCI and Global Operating Effective
ness (GOE) programs which were partially offset by higher conversion
costs, all as compared to the prior year. A higher level of SG&A expens
es resulted in a 40 basis point increase in SG&A as a percentage of
sales with approximately half of that basis point increase attributable to
an increase in advertising and promotion spend. In addition, the higher
level of SG&A expenses was driven by increased selling and marketing
costs and a higher level of research and development expenses that
were partially offset by, lower performance-based employee and stock
based compensation expense and cost savings led by our CCI and GOE
programs, all as compared to the prior year. Excluding special charges,
adjusted operating income was $1,069.8 million in 2024, representing a
4.5% increase compared to $1,024.2 million in 2023. In constant curren
cy, adjusted operating income increased 4.6%. For further details and
a reconciliation of non-GAAP to reported amounts, see the subsequent
discussion under the heading “Non-GAAP Financial Measures”.
Diluted earnings per share was $2.92 in 2024 and $2.52 in 2023. In
2024, diluted earnings per share growth was driven primarily by higher
operating income, which included the effects of lower special charges,
an increase in income from unconsolidated operations and a decrease
in the effective tax rate. Special charges lowered earnings per share by
$0.03 and $0.18 in 2024 and 2023, respectively. Excluding the effects
of special charges, adjusted diluted earnings per share was $2.95 in
2024, compared to $2.70 in 2023, representing an increase of 9.3%.
Net cash provided by operating activities was $921.9 million, $1,237.3
million, and $651.5 million in 2024, 2023, and 2022, respectively. In
2024, we continued to have a balanced use of cash for debt repay
ment, capital expenditures, and the return of cash to shareholders
through dividends and share repurchases. We are using our cash to
fund shareholder dividends, with annual increases in each of the past
32 McCormick & Company, Inc.
39 years, and to fund capital expenditures and acquisitions. In 2024,
the return of cash to our shareholders through dividends and share
repurchases was $504.1 million.
A detailed review of our fiscal 2024 performance compared to fiscal
2023 appears in the section titled “Results of Operations—2024
Compared to 2023.” A detailed review of our fiscal 2023 performance
compared to our fiscal 2022 performance is set forth in Part II, Item 7
of our Form 10-K for the fiscal year ended November 30, 2023 under
the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Results of Operations—2023
Compared to 2022,” which is incorporated herein by reference.
2025 Outlook
In 2025, we expect net sales to grow between 0% and 2% compared
to our 2024 net sales, including a 1% unfavorable impact from for
eign currency rates, or to grow from 1% to 3% on an organic basis.
We anticipate that sales in 2025 will benefit from favorable volume
and product mix.
We expect our 2025 gross profit margin to improve by 50 to 100 basis
points from the 38.5% gross profit margin reported in 2024. This pro
jected increase is primarily driven by (i) positive effects from product
mix changes, (ii) anticipated cost savings from our Comprehensive
Continuous Improvement (CCI) program, and (iii) a low single-digit
percentage impact of inflation in 2025 compared to 2024.
For 2025, we anticipate an increase in operating income of 3% to
5% over the 2024 level, including a 1% unfavorable impact from
foreign currency rates. This anticipated increase in operating income
reflects the expected rise in our gross profit margin and SG&A cost
savings from our CCI program, although these will be partially offset
by investments aimed at driving volume growth, particularly in brand
marketing. We project our brand marketing investments in 2025 to
rise by high-single digits compared to 2024. Additionally, we expect
approximately $15 million in special charges related to previously
announced organizational and streamlining actions; in 2024, special
charges totaled $9.5 million. Excluding these special charges, we
expect adjusted operating income in 2025 to increase by 3% to 5%,
which includes a 1% unfavorable impact from foreign currency rates,
or to increase by 4% to 6% on a constant currency basis.
We estimate that our 2025 effective tax rate, including the net
favorable impact of anticipated discrete tax items, although at a lower
amount than in 2024, will be 22.0% as compared to 20.5% in 2024. Ex
cluding projected taxes associated with special charges, we estimate
that our adjusted effective tax rate will be approximately 22.0% in
2025, as compared to an adjusted effective tax rate of 20.5% in 2024.
We also expect that our income from unconsolidated operations,
including the performance of our largest joint venture, McCormick de
Mexico, will decline by a mid-teen percentage rate from the 2024 level,
reflecting the strengthening of the U.S. dollar against the Mexican peso.
Diluted earnings per share was $2.92 in 2024. Diluted earnings per
share for 2025 is projected to range from $2.99 to $3.04. Excluding
the per share impact of special charges, adjusted diluted earnings per
share was $2.95 in 2024. Adjusted diluted earnings per share, exclud
ing an estimated per share impact from special charges of $0.04, is
projected to range from $3.03 to $3.08 in 2025. We expect adjusted
diluted earnings per share to increase by 3% to 5%, which includes a
2% unfavorable impact from currency rates, or to increase by 5% to
7% on a constant currency basis over adjusted diluted earnings per
share of $2.95 in 2024.
RESULTS OF OPERATIONS—2024 COMPARED TO 2023
2024
2023
Net sales
$6,723.7
$6,662.2
Percent growth
0.9%
4.9%
Components of percent growth in net sales–
increase (decrease):
Volume and product mix
0.3%
(2.6)%
Pricing actions
0.5%
8.5%
Divestiture
(0.2)%
(0.4)%
Foreign exchange
0.3%
(0.6)%
Sales for 2024 increased by 0.9% from 2023 and by 0.8% on an organic
basis (that is, excluding the impact of divestitures and foreign currency
exchange as more fully described under the caption, Non-GAAP Financial
Measures). Pricing actions, primarily implemented during the prior year,
increased sales by 0.5% as compared to 2023. Favorable volume and
product mix increased sales by 0.3%. The divestiture of our Giotti can
ning business unfavorably impacted sales by 0.2% as compared to the
prior year. Sales were impacted by favorable foreign currency rates that
increased sales by 0.3% in 2024 as compared to the prior year. Excluding
divestitures and the impact of foreign currency rates, our organic sales
growth was 0.8%, as compared to 2023.
2024
2023
Gross profit
$2,591.0
$2,502.5
Gross profit margin
38.5%
37.6%
In 2024, gross profit increased by $88.5 million, or 3.5%, from 2023.
Our gross profit margin for 2024 was 38.5%, an increase of 90 basis
points from 37.6% in 2023. The increase was driven by the favorable
impact of our pricing actions, favorable product and customer mix, less
scrapped inventory and cost savings led by our CCI and GOE programs.
These favorable impacts were partially offset by higher conversion
costs, as compared to 2023.
2024
2023
Selling, general & administrative expense
$1,521.2
$1,478.3
Percent of net sales
22.6%
22.2%
Selling, general and administrative (SG&A) expense increased by
$42.9 million in 2024 as compared to 2023. That increase in SG&A
expense was primarily a result of increased advertising and promo
tional spend, increased selling and marketing costs and a higher level
of research and development expenses which were partially offset by
lower performance-based employee and stock-based compensation
expense, all as compared to 2023. SG&A as a percent of net sales for
2024 increased by 40 basis points from the prior year level, as the net
impact of the previously mentioned factors was partially offset by the
impact of the higher sales base.
2024
2023
Total special charges
$9.5
$61.2
We regularly evaluate whether to implement changes to our organiza
tion structure to reduce fixed costs, simplify or improve processes, and
improve our competitiveness, and we expect to continue to evaluate
such actions in the future. From time to time, those changes are of
2024 Annual Report 33
such significance in terms of both up-front costs and organizational/
structural impact that we obtain advance approval from our Manage
ment Committee and classify expenses related to those changes as
special charges in our financial statements.
During 2024, we recorded $9.5 million of special charges, consisting prin
cipally of $4.5 million associated with the GOE program and $5.0 million
associated with the transition of a manufacturing facility in EMEA.
During 2023, we recorded $61.2 million of special charges, consisting
principally of $42.8 million associated with the GOE program, $8.7
million associated with the transition of a manufacturing facility in
EMEA, and streamlining actions of $8.8 million in the Americas region
and $0.9 million in the EMEA region.
Details with respect to the composition of special charges are included
in the accompanying notes to our financial statements contained in
Item 8 of this report.
2024
2023
Operating income
$1,060.3
$963.0
Percent of net sales
15.8%
14.5%
Operating income increased by $97.3 million, or 10.1%, from $963.0
million in 2023 to $1,060.3 million in 2024. Special charges decreased
by $51.7 million in 2024, as compared to 2023, positively impacting
operating income. Operating income as a percentage of net sales
increased by 130 basis points in 2024, to 15.8% in 2024 from 14.5%
in 2023 as a result of the factors previously described. Excluding the
effect of special charges, adjusted operating income was $1,069.8
million in 2024 as compared to $1,024.2 million in 2023, an increase of
$45.6 million or 4.5% from the 2023 level. Adjusted operating income
as a percentage of net sales increased by 50 basis points in 2024, to
15.9% in 2024 from 15.4% in 2023.
2024
2023
Interest expense
$209.4
$208.2
Other income, net
47.4
43.9
Interest expense was $1.2 million higher in 2024 as compared to the
prior year, as a reduction in average borrowing levels was more than
offset by the effects of higher interest rates on borrowings. Other
income increased $3.5 million as compared to the prior period, driven
by an increase in interest income, partially offset by a higher level of
foreign currency exchange losses.
2024
2023
Income from consolidated operations
before income taxes
$ 898.3
$798.7
Income tax expense
184.0
174.5
Effective tax rate
20.5%
21.8%
The effective tax rate for 2024 was 20.5%, compared to 21.8% in 2023.
This reduction in our effective tax rate is primarily due to a higher level
of net discrete tax benefits recorded for 2024. Specifically, net discrete
tax benefits amounted to $31.7 million in 2024, an increase of $22.1
million from $9.6 million in 2023.
The $31.7 million of net discrete tax benefits for 2024 principally
included (i) $19.4 million of tax benefits associated with the recog
nition of a deferred tax asset related to an international legal entity
reorganization, (ii) $12.3 million of tax benefit from the reversal of
certain reserves for unrecognized tax benefits and related interest
associated with both the effective settlement from the conclusion of a
tax examination and the expiration of statutes of limitations, (iii) $6.0
million of tax benefits resulting from state tax matters, and related
deferred taxes, (iv) $1.8 million of tax benefit from an adjustment to a
prior year tax accrual and related deferred taxes based on final returns
filed, (v) $6.2 million of tax expense associated with the adjustment of
valuation allowances due to changes in judgment about the realizabil
ity of deferred tax assets, and (vi) $1.8 million of tax expense related
to certain unremitted prior year earnings.
The $9.6 million of net discrete tax benefits for 2023 principally
included (i) $5.6 million of tax benefit from the reversal of certain
reserves for unrecognized tax benefits and related interest associated
with both the settlement and the expiration of statutes of limitation,
(ii) $3.2 million of tax benefit associated with the release of valuation
allowances due to changes in judgment regarding the realizability of
deferred tax assets, (iii) $0.9 million of tax benefit from an adjustment
to a prior year tax accrual and related deferred taxes based on final
returns filed, and (iv) $1.8 million of tax expense related to certain
unremitted prior year earnings.
See Note 12 of notes to our consolidated financial statements for
a more detailed reconciliation of the U.S. federal tax rate with the
effective tax rate.
Numerous countries have enacted the Organization of Economic
Corporation and Development’s framework on a global 15% minimum
tax, referred to as Pillar 2, which are generally effective for our fiscal
year ending November 30, 2025. We do not expect a material increase
to our effective tax rate associated with the adoption of these model
rules in the countries in which we operate.
2024
2023
Income from unconsolidated operations
$74.2
$56.4
Income from unconsolidated operations, which is presented net of
the elimination of earnings attributable to non-controlling interests,
increased $17.8 million in 2024 from the prior year. The increase was
driven by higher earnings of our largest joint venture, McCormick de
Mexico. We own 50% of most of our unconsolidated joint ventures,
including McCormick de Mexico, that comprised 95% of the income of
our unconsolidated operations for both 2024 and 2023.
We reported diluted earnings per share of $2.92 in 2024, compared to
$2.52 in 2023. The table below outlines the major components of the
change in diluted earnings per share from 2023 to 2024.
2023 Earnings per share—diluted
$ 2.52
Increase in operating income
0.13
Decrease in special charges, net of taxes
0.15
Increase in other income
0.01
Increase in income from unconsolidated operations
0.06
Impact of change in effective income tax rate, excluding taxes on
special charges
0.05
2024 Earnings per share—diluted
$2.92
Results of Operations—Segments
We measure the performance of our business segments based on
operating income, excluding special charges and transaction and
integration expenses related to our acquisitions, as applicable. See
Note 15 of notes to our consolidated financial statements for additional
34 McCormick & Company, Inc.
information on our segment measures as well as for a reconciliation
by segment of operating income, excluding special charges and
transaction and integration expenses related to our acquisitions. In the
following discussion, we refer to our previously described measure of
segment profit as “Segment operating income.”
Consumer Segment
2024
2023
Net sales
$3,848.5
$3,807.3
Percent—increase
1.1%
1.3%
Components of percent change in net
sales—increase (decrease):
Pricing actions
—%
6.5%
Volume and product mix
0.8%
(3.9)%
Divestiture
—%
(0.5)%
Foreign exchange
0.3%
(0.8)%
Segment operating income
$ 740.3
$ 735.5
Segment operating income margin
19.2%
19.3%
Sales of our consumer segment in 2024 increased by 1.1% as compared to
2023 and increased by 0.8% on an organic basis. This increase was driven
by higher sales of our consumer business in EMEA and the Americas, with
a partial offset from a sales decline in the Asia-Pacific region. Asia-Pacific
region sales declines were principally attributable to the macro environ
ment in China. Higher volume and product mix added 0.8% to net sales, as
compared to 2023. Volume and product mix includes a 0.2% unfavorable
impact associated with our decision during 2023 to exit certain low margin
business. A favorable impact from foreign currency rates increased sales
by 0.3% compared to the prior year and is excluded from our measure of
sales growth of 0.8% on an organic basis.
In the Americas region, consumer sales increased 0.6% in 2024 as
compared to 2023 and increased by 0.7% on an organic basis. Pricing
actions, including actions taken in response to price gap management
as well as promotional activities, decreased sales by 0.3% as compared
to the prior year period. Favorable volume and product mix, driven by
growth across core categories, increased sales by 1.0% as compared
to the corresponding period in 2023. Volume and product mix includes
a 0.3% unfavorable impact of our decision to discontinue certain low
margin business. The unfavorable impact of foreign currency rates
decreased sales by 0.1% in the year and is excluded from our measure
of sales growth of 0.7% on an organic basis.
In the EMEA region, consumer sales increased 7.3% in 2024 as
compared to 2023 and increased by 4.3% on an organic basis. Pricing
actions, principally implemented in the prior year, increased sales
by 0.6% as compared to 2023. Favorable volume and product mix
increased sales by 3.7% from the prior year level, driven by growth
in our major markets across their product categories. The favorable
impact of foreign currency exchange rates increased sales by 3.0%
compared to 2023 and is excluded from our measure of sales growth
of 4.3% on an organic basis.
In the APAC region, consumer sales decreased 5.1% in 2024 as
compared to 2023 and decreased by 4.1% on an organic basis. Pricing
actions, principally implemented in the prior year, increased sales
by 0.8% as compared to 2023. Unfavorable volume and product mix
decreased sales by 4.9% from the prior year, as slower demand in
China was partially mitigated by growth in other parts of the region.
The unfavorable impact from foreign currency rates decreased sales
by 1.0% compared to the year-ago period and is excluded from our
measure of sales decline of 4.1% on an organic basis.
Segment operating income for our consumer segment increased by
$4.8 million, or 0.7%, in 2024 as compared to 2023. The increase in
segment operating income was driven by the effects of an increase in
gross profit, as a higher level of sales volume, CCI-led and GOE cost
savings and lower scrapped inventory was partially offset by higher
conversion costs. Segment operating income was also impacted by
higher SG&A expenses, including increased advertising and promo
tional spend, partially offset by lower performance-based employee
incentive expenses and lower distribution costs, all as compared to
the prior year. Segment operating margin for our consumer segment
decreased by 10 basis points in 2024 to 19.2%, as a decrease in
consumer gross profit margin was partially offset by a lower level
of SG&A as a percentage of net sales, all as compared to the 2023
level. On a constant currency basis, segment operating income for our
consumer segment increased by 0.7% in 2024, as compared to 2023.
Flavor Solutions Segment
2024
2023
Net sales
$2,875.2
$2,854.9
Percent growth
0.7%
10.1%
Components of percent growth in net
sales–increase (decrease):
Pricing actions
1.2%
11.4%
Volume and product mix
(0.3)%
(1.0)%
Divestiture
(0.5)%
(0.1)%
Foreign exchange
0.3%
(0.2)%
Segment operating income
$ 329.5
$ 288.7
Segment operating income margin
11.5%
10.1%
Sales of our flavor solutions segment increased 0.7% in 2024 as
compared to 2023 and increased by 0.9% on an organic basis. Pricing
actions, principally implemented in the prior year, increased sales
by 1.2% in 2024 and were partially offset by 0.3% of unfavorable
volume and product mix, both in comparison to the prior year levels.
In 2024, the divestiture of our Giotti canning business unfavorably
impacted sales by 0.5% and a favorable impact from foreign currency
rates increased sales by 0.3%, both as compared to the prior year,
and are excluded from our flavor solutions segment organic sales
growth of 0.9%.
In the Americas region, flavor solutions sales increased by 1.4%
during 2024 as compared to 2023 and increased by 1.5% on an
organic basis. Pricing actions, principally implemented in the prior
year, favorably impacted sales by 1.6% during 2024. Unfavorable vol
ume and product mix decreased flavor solutions sales in the Americas
by 0.1% during 2024, as compared to the prior year. An unfavorable
impact from foreign currency rates decreased sales by 0.1% compared
to 2023 and is excluded from our measure of sales growth of 1.5% on
an organic basis.
In the EMEA region, flavor solutions sales in 2024 decreased by
3.5% as compared to 2023 and decreased by 3.6% on an organic
basis. Pricing actions unfavorably impacted sales by 0.3% in 2024 as
compared to the prior period level. Unfavorable volume and product
mix decreased segment sales by 3.3% in 2024 as compared to 2023,
2024 Annual Report 35
including the effects of lower sales at quick service restaurants, and a
1.2% unfavorable impact of our decision to exit a low margin business.
The divestiture of our Giotti canning business unfavorably impacted
sales by 2.3% and a favorable impact from foreign currency rates
increased sales by 2.4%, both as compared to 2023 and are excluded
from our measure of sales decline of 3.6% on an organic basis.
In the APAC region, flavor solutions sales increased 4.1% in 2024 as
compared to 2023 and increased by 5.1% on an organic basis. Pricing
actions, principally implemented in the prior year, favorably impacted
sales by 0.9% as compared to the prior year period. Favorable volume
and product mix increased sales by 4.2%, driven by higher sales to
quick service restaurant customers in China. An unfavorable impact
from foreign currency rates decreased sales by 1.0% compared to
2023 and is excluded from our measure of sales growth of 5.1% on an
organic basis.
Segment operating income for our flavor solutions segment increased
by $40.8 million, or 14.1%, in 2024 as compared to 2023. The increase
in segment operating income was driven by the effects of an increase
in gross profit primarily due to the impacts of pricing actions, product
mix and CCI-led and GOE cost savings which more than offset
increased conversion costs and the higher level of SG&A expenses, all
as compared to the prior year. Segment operating margin for our flavor
solutions segment increased by 140 basis points in 2024 to 11.5%,
driven by a higher segment gross margin, as previously described,
which was partially offset by a higher level of SG&A as a percentage
of net sales, as compared to 2023. On a constant currency basis,
segment operating income for our flavor solutions segment increased
by 14.5% in 2024, as compared to 2023.
NON-GAAP FINANCIAL MEASURES
The following tables include financial measures of organic net sales,
adjusted operating income, adjusted operating income margin,
adjusted income tax expense, adjusted income tax rate, adjusted net
income, and adjusted diluted earnings per share. These represent non-
GAAP financial measures which are prepared as a complement to our
financial results prepared in accordance with United States generally
accepted accounting principles. These financial measures exclude the
impact, as applicable, of the following:
• Special charges—Special charges consist of expenses and income
associated with certain actions undertaken to reduce fixed costs,
simplify or improve processes, and improve competitiveness and are of
such significance in terms of both up-front costs and organizational/
structural impact to require advance approval by our Management
Committee. Upon presentation of any such proposed action (generally
including details with respect to estimated costs, which typically con
sist principally of employee severance and related benefits, together
with ancillary costs associated with the action that may include a non-
cash component, such as an asset impairment, or a component which
relates to inventory adjustments that are included in cost of goods sold;
impacted employees or operations; expected timing; and expected
savings) to the Management Committee and the Committee’s advance
approval, expenses associated with the approved action are classified
as special charges upon recognition and monitored on an ongoing basis
through completion. Special charges for the year ended November 30,
2022 include a $13.6 million gain associated with the sale of the
Kohinoor brand name. We exited our Kohinoor rice product line in India
in the fourth quarter of fiscal year 2021. Special charges are more
fully described in Note 2 of notes to our accompanying consolidated
financial statements.
• Transaction and integration expenses associated with acquisitions—
We exclude certain costs associated with our acquisitions, including
our acquisition of FONA in December 2020, and the subsequent
integration into the Company. Such costs, which we refer to as
“Transaction and integration expenses,” include transaction costs
associated with the acquisition, as well as integration costs following
the acquisition, including the impact of the acquisition date fair value
adjustment for inventories, together with the impact of discrete tax
items, if any, directly related to the acquisition.
• Gain on sale of Kitchen Basics—We exclude the gain realized
upon our sale of the Kitchen Basics business in August 2022. As
more fully described in Note 16 of the notes to the accompanying
financial statements, the pre-tax gain associated with the sale was
$49.6 million and is included in Other income, net in our consolidat
ed income statement for the year ended November 30, 2022.
Details with respect to the special charges and gain on sale of Kitchen
Basics for the years and in the amounts set forth below are included in
Notes 2 and 16 of notes to our consolidated financial statements.
We believe that these non-GAAP financial measures are important.
The exclusion of the items noted above provides additional information
that enables enhanced comparisons to prior periods and, accordingly,
facilitates the development of future projections and earnings growth
prospects. This information is also used by management to measure
the profitability of our ongoing operations and analyze our business
performance and trends.
These non-GAAP financial measures may be considered in addition to
results prepared in accordance with GAAP; however, they should not be
viewed as a substitute for, or superior to, GAAP results. Furthermore,
these non-GAAP financial measures may not be comparable to similarly
titled measures of other companies, as they may calculate them
differently than we do. We intend to continue providing these non-GAAP
financial measures as part of our future earnings discussions, ensuring
consistency in our financial reporting.
36 McCormick & Company, Inc.
A reconciliation of these non-GAAP financial measures to GAAP financial results is provided below:
2024
2023
2022
Operating income
$1,060.3
$ 963.0
$863.6
Impact of transaction and integration expenses(1)
—
—
2.2
Impact of special charges(2)
9.5
61.2
51.6
Adjusted operating income
$ 1,069.8
$1,024.2
$917.4
% increase (decrease) versus prior year
4.5%
11.6%
(16.7)%
Operating income margin(3)
15.8%
14.5%
13.6%
Impact of transaction and integration expenses and special charges(3)
0.1%
0.9%
0.8%
Adjusted operating income margin(3)
15.9%
15.4%
14.4%
Income tax expense
$ 184.0
$ 174.5
$168.6
Impact of transaction and integration expenses(1)
—
—
0.6
Impact of special charges(2)
2.4
14.5
13.3
Impact of sale of Kitchen Basics
—
—
(11.6)
Adjusted income tax expense
$ 186.4
$ 189.0
$170.9
Income tax rate(4)
20.5%
21.8%
20.7%
Impact of transaction and integration expenses, special charges, and sale of Kitchen Basics(4)
—%
0.2%
0.2%
Adjusted income tax rate(4)
20.5%
22.0%
20.9%
Net income
$ 788.5
$ 680.6
$682.0
Impact of transaction and integration expenses(1)
—
—
1.6
Impact of special charges(2)
7.1
46.7
38.3
Impact of after-tax gain on sale of Kitchen Basics
—
—
(38.0)
Adjusted net income
$ 795.6
$ 727.3
$683.9
% increase (decrease) versus prior year
9.4%
6.3 %
(17.0)%
Earnings per share—diluted
$ 2.92
$ 2.52
$ 2.52
Impact of transaction and integration expenses(1)
—
—
0.01
Impact of special charges(2)
0.03
0.18
0.14
Impact of after-tax gain on sale of Kitchen Basics
—
—
(0.14)
Adjusted earnings per share—diluted
$ 2.95
$ 2.70
$ 2.53
(1) Transaction and integration expenses include integration expenses associated with our acquisition of FONA.
(2) Special charges are more fully described in Note 2 of notes to our accompanying consolidated financial statements. Special charges for the year ended November 30,
2022 include a $10.0 million non-cash intangible asset impairment charge associated with our exit of our business operations in Russia. We exited our Kohinoor rice
product line in India in the fourth quarter of fiscal 2021. Special charges for the year ended November 30, 2022 include a $13.6 million gain associated with the sale of
the Kohinoor brand name.
(3) Operating income margin, impact of transaction and integration expenses and special charges, and adjusted operating income margin are calculated as operating
income, impact of transaction and integration expenses and special charges, and adjusted operating income as a percentage of net sales for each period presented.
(4) Income tax rate is calculated as income tax expense as a percentage of income from consolidated operations before income taxes. Adjusted income tax rate is
calculated as adjusted income tax expense as a percentage of income from consolidated operations before income taxes excluding transaction and integration
expenses, special charges and gain on the sale of Kitchen Basics or $907.8 million, $859.9 million, and $817.0 million for the years ended November 30, 2024, 2023, and
2022, respectively.
Estimate for the year ending
November 30, 2025
Earnings per share—diluted
$2.99 to $3.04
Impact of special charges
0.04
Adjusted earnings per share—diluted
$3.03 to $3.08
Because we are a multi-national company, we are subject to variability
of our reported U.S. dollar results due to changes in foreign currency
exchange rates. Those changes have been volatile over the past several
years. The exclusion of the effects of foreign currency exchange, or
what we refer to as amounts expressed “on a constant currency basis,”
is a non-GAAP measure. We believe that this non-GAAP measure pro
vides additional information that enables enhanced comparison to prior
periods excluding the translation effects of changes in rates of foreign
currency exchange and provides additional insight into the underlying
performance of our operations located outside the U.S. It should be
noted that our presentation herein of amounts and percentage changes
on a constant currency basis does not exclude the impact of foreign cur
rency transaction gains and losses (that is, the impact of transactions
denominated in other than the local currency of any of our subsidiaries
in their local currency reported results).
We provide organic net sales growth rates for our consolidated net sales
and segment net sales. We believe that organic net sales growth rates
provide useful information to investors because they provide transparency
to underlying performance in our net sales by excluding the effect that
foreign currency exchange rate fluctuations, acquisitions, and divesti
tures, as applicable, have on year-to-year comparability. A reconciliation
of these measures from reported net sales growth rates, the relevant
GAAP measures, are included in the tables set forth below.
Percentage changes in organic sales and adjusted operating income
expressed on a constant currency basis are presented excluding the
impact of foreign currency exchange. To present this information for
historical periods, current year results for entities reporting in currencies
2024 Annual Report 37
other than the U.S. dollar are translated into U.S. dollars at the average
exchange rates in effect during the prior fiscal year, rather than at the
actual average exchange rates in effect during the current fiscal year.
As a result, the foreign currency impact is equal to the current year
results in local currencies multiplied by the change in the average
foreign currency exchange rate between the current year and the prior
fiscal year. The tables set forth below present our growth in net sales
and adjusted operating income on a constant currency basis as follows:
(1) to present our growth in net sales and adjusted operating income
for 2024 on a constant currency basis, net sales and adjusted operating
income for 2024 for entities reporting in currencies other than the U.S.
dollar have been translated using the average foreign exchange rates in
effect for 2023 and compared to the reported results for 2023; and (2) to
present our growth in net sales and adjusted operating income for 2023
on a constant currency basis, net sales and operating income for 2023
for entities reporting in currencies other than the U.S. dollar have been
translated using the average foreign exchange rates in effect for 2022
and compared to the reported results for 2022.
For the year ended November 30, 2024
Percentage
change
as reported
Impact of
foreign
currency
exchange
Percentage
change on
constant
currency basis
Impact of
Acquisitions &
Divestitures
Percentage
change on
organic basis
Net sales:
Consumer segment:
Americas
0.6%
(0.1)%
0.7%
—%
0.7%
EMEA
7.3%
3.0%
4.3%
—%
4.3%
APAC
(5.1)%
(1.0)%
(4.1)%
—%
(4.1)%
Total Consumer
1.1%
0.3%
0.8%
—%
0.8%
Flavor Solutions segment:
Americas
1.4%
(0.1)%
1.5%
—%
1.5%
EMEA
(3.5)%
2.4%
(5.9)%
(2.3)%
(3.6)%
APAC
4.1%
(1.0)%
5.1%
—%
5.1%
Total Flavor Solutions
0.7%
0.3%
0.4%
(0.5)%
0.9%
Total net sales
0.9%
0.3%
0.6%
(0.2)%
0.8%
For the year ended November 30, 2024
Percentage
change
as reported
Impact of
foreign
currency
exchange
Percentage
change on
constant
currency basis
Adjusted operating income:
Consumer segment
0.7%
—%
0.7%
Flavor Solutions segment
14.1%
(0.4)%
14.5%
Total adjusted operating income
4.5%
(0.1)%
4.6%
38 McCormick & Company, Inc.
For the year ended November 30, 2023
Percentage
change
as reported
Impact of
foreign
currency
exchange
Percentage
change on
constant
currency basis
Impact of
Acquisitions &
Divestitures
Percentage
change on
organic basis
Net sales:
Consumer segment:
Americas
0.4%
(0.4)%
0.8%
(0.7)%
1.5%
EMEA
7.1%
0.9%
6.2%
—%
6.2%
APAC
(1.1)%
(6.2)%
5.1%
—%
5.1%
Total Consumer
1.3%
(0.8)%
2.1%
(0.5)%
2.6%
Flavor Solutions segment:
Americas
10.7%
1.1%
9.6%
—%
9.6%
EMEA
10.3%
(1.9)%
12.2%
(0.7)%
12.9%
APAC
5.6%
(5.4)%
11.0%
—%
11.0%
Total Flavor Solutions
10.1%
(0.2)%
10.3%
(0.1)%
10.4%
Total net sales
4.9%
(0.6)%
5.5%
(0.4)%
5.9%
For the year ended November 30, 2023
Percentage
change
as reported
Impact of
foreign
currency
exchange
Percentage
change on
constant
currency basis
Adjusted operating income:
Consumer segment
3.5%
(0.9)%
4.4%
Flavor Solutions segment
39.7%
1.2%
38.5%
Total adjusted operating income
11.6%
(0.4)%
12.0%
To present the percentage change in projected 2025 net sales,
adjusted operating income, and adjusted earnings per share (diluted)
on a constant currency basis, the projected local currency net sales,
adjusted operating income, and adjusted net income for entities re
porting in currencies other than the U.S. dollar are translated into U.S.
dollars at forecasted exchange rates. These figures are then compared
to the 2025 local currency projected results, which are translated into
U.S. dollars at the average actual exchange rates in effect during the
corresponding months of fiscal year 2024. This comparison determines
what the 2025 consolidated U.S. dollar net sales, adjusted operating
income, and adjusted earnings per share (diluted) would have been if
the relevant currency exchange rates had not changed from those of
the comparable 2024 periods.
Projections for the Year
Ending November 30, 2025
Percentage change in net sales
0% to 2%
Impact of unfavorable foreign currency
exchange
1%
Percentage change in organic net sales
1% to 3%
Percentage change in adjusted operating
income
3% to 5%
Impact of unfavorable foreign currency
exchange
1%
Percentage change in adjusted operating
income in constant currency
4% to 6%
Percentage change in adjusted earnings
per share—diluted
3% to 5%
Impact of unfavorable foreign currency
exchange
2%
Percentage change in adjusted earnings
per share—diluted
5% to 7%
LIQUIDITY AND FINANCIAL CONDITION
2024
2023
2022
Net cash provided by operating
activities
$ 921.9
$ 1,237.3
$ 651.5
Net cash used in investing activities
(269.0)
(260.5)
(146.4)
Net cash used in financing activities
(583.1)
(1,184.2)
(487.2)
The primary objective of our financing strategy is to maintain a pru
dent capital structure that provides the flexibility to pursue our growth
objectives. We use a combination of equity and short- and long-term
debt. We use short-term debt, primarily in the form of commercial
paper, principally to finance ongoing operations. This includes our
requirements for working capital, which encompasses accounts receiv
able, prepaid expenses, other current assets, and inventories, less
accounts payable, accrued payroll, and other accrued liabilities. We
are committed to maintaining investment grade credit ratings.
Our cash flows from operations enable us to fund operating projects and
investments that are designed to meet our growth objectives, service
our debt, fund or increase our quarterly dividends, fund capital projects
and other investments, and make share repurchases, when appropriate.
Due to the cyclical nature of a portion of our business, our cash flow from
operations has historically been the strongest during the fourth quarter of
our fiscal year. Due to the timing of the interest payments on our debt, in
terest payments are higher in the first and third quarter of our fiscal year.
We believe that our sources of liquidity, which include existing cash
balances, cash flows from operations, existing credit facilities, our
commercial paper program, and access to capital markets, will provide
sufficient liquidity to meet our debt obligations, including any repay
ment or refinancing of debt, working capital needs, planned capital
expenditures, and payment of anticipated quarterly dividends for at
least the next twelve months.
2024 Annual Report 39
In the cash flow statement, the changes in operating assets and liabil
ities are presented excluding the translation effects of changes in for
eign currency exchange rates, as these do not reflect actual cash flows.
In addition, in the cash flow statement, the changes in operating assets
and liabilities are presented excluding the effect of disposed operating
assets and liabilities, as the cash flow associated with dispositions
of businesses is presented as an investing activity. Accordingly, the
amounts in the cash flow statement do not agree with changes in the
operating assets and liabilities that are presented in the balance sheet.
The reported values of our assets and liabilities held in non-U.S.
subsidiaries and affiliates can be significantly affected by fluctuations
in foreign exchange rates between periods. As of November 30,
2024, the exchange rates for the British pound sterling were higher
against the U.S. dollar than on November 30, 2023. Conversely, as of
November 30, 2024, the exchange rates for the Euro, Canadian dollar,
Mexican peso, Chinese renminbi, Polish zloty, and Australian dollar
were lower against the U.S. dollar compared to November 30, 2023.
Operating Cash Flow—Operating cash flow was $921.9 million in 2024,
$1,237.3 million in 2023, and $651.5 million in 2022. Net income as
well as our working capital management, as more fully described be
low, impacted operating cash flow. In 2024, the decrease in operating
cash flow was primarily driven by higher cash used for working capital,
including higher inventory levels and higher employee incentive pay
ments related to the prior year, and the timing of income tax payments
partially offset by higher net income. In 2023, the increase was primari
ly driven by an improvement in cash provided by working capital, which
was driven by the lower inventory levels and the lower amount of
employee incentive payments associated with the prior years, as well
as an increase in dividends received from unconsolidated affiliates.
This was partially offset by an increased use of cash associated with
accounts payable which partially resulted from our lower level of inven
tory. In 2022, the decrease in operating cash flow was primarily driven
by lower net income, including the effect of net income associated with
the gain on sale of our Kitchen Basics business and an intangible asset
that are reflected as investing cash flows as well as the higher amount
of employee incentive payments associated with the prior year.
Our working capital management—principally related to inventory,
trade accounts receivable, and accounts payable—impacts our
operating cash flow. The change in inventory was a significant use
of cash from operations in 2024 and 2022 and a significant source of
cash from operations in 2023. The change in trade accounts receivable
was a moderate use of cash in 2024 and 2022 and a source of cash
in 2023. The change in accounts payable was a significant source of
cash in 2024 and 2022 and a use of cash in 2023.
In addition to operating cash flow, we also use a cash conversion
cycle (CCC) to measure our working capital management. This metric
is different than operating cash flow in that it uses average balances
instead of specific point in time measures. CCC is a calculation of the
number of days, on average, that it takes us to convert a cash outlay
for resources, such as raw materials, to a cash inflow from collection
of accounts receivable. Our goal is to lower our CCC over time. We
calculate CCC as follows:
Days sales outstanding (average trade accounts receivable divided
by average daily net sales) plus days in inventory (average inven
tory divided by average daily cost of goods sold) less days payable
outstanding (average trade accounts payable divided by average
daily cost of goods sold plus the average daily change in inventory).
The following table outlines our cash conversion cycle (in days) over
the last three years:
2024
2023
2022
Cash Conversion Cycle
36
40
51
The decrease in CCC in 2024 from 2023 was primarily due to a
reduction in our days in inventory as a result of inventory management
based on demand planning. The decrease in CCC in 2023 from 2022
was primarily due to a reduction in our days in inventory as a result of
reducing our inventory based on demand planning and elimination of
excess safety stock utilized to remedy service issues associated with
the COVID-19 pandemic.
As more fully described in Note 1 of notes to our consolidated financial
statements, we participate in a Supply Chain Financing program (SCF)
with several global financial institutions (SCF Banks). Under the SCF,
qualifying suppliers may elect to sell their receivables from us to an
SCF Bank, enabling participating suppliers to negotiate their receiv
ables sales arrangements directly with the respective SCF Bank. We
are not party to those agreements and have no economic interest in a
supplier’s decision to sell a receivable. All outstanding amounts related
to suppliers participating in the SCF are recorded within the line item
‘Trade accounts payable’ in our condensed consolidated balance
sheets, and the associated payments are included in operating activi
ties in our consolidated statements of cash flows. As of November 30,
2024 and 2023, the amounts due to suppliers participating in the SCF
and included in trade accounts payable were approximately $417.4
million and $300.5 million, respectively.
The terms of our payment obligations are not impacted by a supplier’s
participation in the SCF. Our payment terms with our suppliers for
similar materials within individual markets are consistent between
those suppliers that elect to participate in the SCF and those suppliers
that do not participate. Accordingly, our average days outstanding are
not significantly impacted by the portion of suppliers included in the
SCF. Future changes in our suppliers’ financing policies or economic
developments, such as shifts in interest rates, general market liquidity,
or our creditworthiness relative to participating suppliers, could affect
those suppliers’ participation in the SCF and/or our ability to negotiate
extended payment terms with them. However, any such impacts are
difficult to predict.
Investing Cash Flow—Net cash used in investing activities was
$269.0 million in 2024, $260.5 million in 2023, and $146.4 million in
2022. Our primary investing cash flows include cash used for capital
expenditures as well as cash provided by the sale of businesses or
other assets. Capital expenditures, including expenditures for capi
talized software, were $274.9 million in 2024, $263.9 million in 2023,
and $262.0 million in 2022. We expect 2025 capital expenditures
to approximate $300 million. In 2022, we received $95.2 million net
cash proceeds from the sale of our Kitchen Basics business and $13.6
million net cash proceeds from the sale of the Kohinoor brand name.
Financing Cash Flow—Net cash associated with financing activities
was a use of cash of $583.1 million in 2024, $1,184.2 million in 2023,
and $487.2 million in 2022. The variability between years is principally
a result of changes in our net borrowings, share repurchase activity,
and dividends, all as described below.
40 McCormick & Company, Inc.
The following table outlines our net borrowing activities:
2024
2023
2022
Net increase (decrease) in short-term
borrowings
$ 211.1
$(964.6)
$698.3
Proceeds from issuance of long-term
debt, net of debt issuance costs
494.5
495.3
—
Repayments of long-term debt
(801.1)
(268.1)
(772.0)
Net cash (used in) net borrowing
activities
$ (95.5)
$ (737.4)
$ (73.7)
In 2024, we repaid $801.1 million of long-term debt, including the
$700.0 million, 3.15% notes that matured in August 2024 as well as
$55.0 million, 7.63% to 8.12% notes that matured in August and
October 2024. We also issued $500.0 million of 4.70% notes due
2034, with net cash proceeds received of $495.5 million.
In 2023, we repaid $268.1 million of long-term debt, including the
$250.0 million, 3.50% notes that matured on September 1, 2023. We
also issued $500.0 million of 4.95% notes due 2033, with net cash
proceeds received of $496.4 million.
In 2022, we repaid $772.0 million of long-term debt, including the
$750 million, 2.70% notes that matured on August 15, 2022.
The following table outlines the activity in our share repurchase
program:
2024
2023
2022
Number of shares of common stock
0.7
0.5
0.4
Dollar amount
$53.1
$35.7
$38.8
As of November 30, 2024, $448 million remained of a $600 million
share repurchase program that was authorized by our Board of
Directors in November 2019. The timing and amount of any shares
repurchased is determined by our management based on its evalua
tion of market conditions and other factors.
During 2024, 2023, and 2022, we received proceeds from exercised
stock options of $17.5 million, $16.6 million, and $41.4 million,
respectively. We repurchased $9.0 million, $10.8 million, and $19.4
million of common stock during 2024, 2023, and 2022, respectively, in
conjunction with employee tax withholding requirements associated
with our stock compensation plans.
Our dividend history over the past three years is as follows:
2024
2023
2022
Total dividends paid
$451.0
$418.5
$396.7
Dividends paid per share
1.68
1.56
1.48
Percentage increase per share
7.7%
5.4%
8.8%
In November 2024, the Board of Directors approved a 7.1% increase in
the quarterly dividend from $0.42 to $0.45 per share.
Most of our cash is in our subsidiaries outside of the U.S. We manage
our worldwide cash requirements by considering available funds
among the many subsidiaries through which we conduct our business
and the cost effectiveness with which those funds can be accessed.
Those balances are generally available without legal restrictions to
fund ordinary business operations, capital projects, and future acqui
sitions. As of November 30, 2024, we have $1.6 billion of earnings
from our non-U.S. subsidiaries and joint ventures that are considered
indefinitely reinvested. We have not provided any deferred taxes with
respect to items such as foreign withholding taxes, other income taxes,
or foreign exchange gains or losses with respect to these earnings. It
is not practicable for us to determine the amount of unrecognized tax
expense on these reinvested international earnings.
At November 30, 2024 and 2023, we temporarily used $509.2 million and
$531.4 million, respectively, of cash from our non-U.S. subsidiaries to pay
down short-term debt in the U.S. During the year, our short-term borrow
ings vary, but are lower at the end of a year or quarter. The average short-
term borrowings outstanding for the years ended November 30, 2024,
2023, and 2022 were $1,043.1 million, $1,121.9 million, and $1,117.0
million, respectively. Those average short-term borrowings outstanding
for the years ended November 30, 2024, 2023, and 2022 included aver
age commercial paper borrowings of $1,033.8 million, $1,098.4 million,
and $1,080.4 respectively. The total average debt outstanding for the
years ended November 30, 2024, 2023, and 2022 was $4,966.4 million,
$5,197.8 million, and $5,422.0 million, respectively.
Credit and Capital Markets—The following summarizes the more
significant impacts of credit and capital markets on our business:
CREDIT FACILITIES—Cash flows from operating activities are our
primary source of liquidity for funding growth, share repurchases, div
idends, and capital expenditures. We also rely on our revolving credit
facilities, or borrowings backed by these facilities, to fund working
capital needs and other general corporate requirements.
Our committed revolving credit facilities include a five-year $1.5 billion
revolving credit facility, which will expire in June 2026 and a 364-day
$500 million revolving credit facility, which was entered into in August
2024 and will expire in August 2025. The current pricing for the five-
year credit facility, on a fully drawn basis, is Term SOFR plus 1.25%.
The pricing of that credit facility is based on a credit rating grid that
contains a fully drawn maximum pricing of the credit facility equal
to Term SOFR plus 1.75%. The current pricing for the 364-day credit
facility, on a fully drawn basis, is Term SOFR plus 1.23%. The pricing
of that credit facility is based on a credit rating grid that contains a
fully drawn maximum pricing of the credit facility equal to Term SOFR
plus 1.60%.
The provisions of each revolving credit facility restrict subsidiary
indebtedness and require us to maintain a minimum interest coverage
ratio. We do not expect that this covenant would limit our access to
either revolving credit facilities for the foreseeable future. The terms
of those revolving credit facilities are more fully described in Note 5 of
the notes to the consolidated financial statements.
We generally use our revolving credit facilities to support our issuance
of commercial paper. If the commercial paper market is not available
or viable, we could borrow directly under our revolving credit facilities.
These facilities are made available by a syndicate of banks, with
various commitments per bank. If any of the banks in these syndicates
are unable to perform on their commitments, our liquidity could be
impacted, which could reduce our ability to grow through funding of
seasonal working capital. We engage in regular communication with
all banks participating in our credit facilities. During these commu
nications, none of the banks have indicated that they may be unable
to perform on their commitments. In addition, we periodically review
2024 Annual Report 41
our banking and financing relationships, considering the stability of
the institutions and other aspects of the relationships. Based on these
communications and our monitoring activities, we believe our banks
will perform on their commitments. In addition to our committed
revolving credit facilities, we have uncommitted facilities of $326.8
million as of November 30, 2024 that can be withdrawn based upon
the lenders’ discretion. See Note 5 of notes to our consolidated finan
cial statements for more details on our financing arrangements.
We will continue to have cash requirements to support seasonal work
ing capital needs and capital expenditures, to pay interest, to service
debt, and to fund acquisitions. As part of our ongoing operations, we
enter into contractual arrangements that obligate us to make future
cash payments. Our primary obligations include principal and interest
payments on our outstanding short-term borrowings and long-term
debt. In the next year, our most significant debt service obligation
is the maturity of our $250.0 million, 3.25% notes due in November
2025. Detail on these contractual obligations follows:
MATERIAL CASH REQUIREMENTS
The following table reflects a summary of our future material cash
requirements as of November 30, 2024:
Total
Less than
1 year
1–3
years
3–5
years
More than
5 years
Short-term borrowings
$ 483.1
$483.1 $ —
$ —
$ —
Long-term debt, including
finance leases
3,919.8
265.2
1,269.0
28.3
2,357.3
Interest payments(a)
959.2
124.5
218.5
241.5
374.7
Total contractual cash
obligations
$5,362.1
$872.8 $1,487.5
$269.8
$2,732.0
(a) Interest payments include expected interest payments on long-term debt.
Our short-term borrowings, principally consisting of commercial paper, have
short-term maturities. See Note 5 of notes to our consolidated financial
statements for additional information.
Our other cash requirements at November 30, 2024, include raw
material purchases, lease payments, income taxes, and pension and
postretirement benefits. We acquire various raw materials to satisfy
our obligations to our customers, and these outstanding purchase
obligations can fluctuate throughout the year based on our response
to varying raw material cycles; however, these commitments generally
do not extend past one year. In addition, we also have a series of
commercial commitments, largely consisting of standby letters of
credit. Our standby letters of credit, leases, and pension and other
post-retirement obligations are more fully described in Notes 5, 6 and
10, respectively, of notes to our consolidated financial statements.
These obligations impact our liquidity and capital resource needs. To
meet those cash requirements, we intend to use our existing cash,
cash equivalents and internally generated funds, to borrow under our
existing credit facilities or under other short-term borrowing facilities,
and depending on market conditions and upon the significance of the
cost of a particular debt maturity or acquisition to our then-available
sources of funds, to obtain additional short- and long-term financing.
We believe that cash provided from these sources will be adequate to
meet our future cash requirements.
PENSION ASSETS AND OTHER INVESTMENTS—We hold
investments in equity and debt securities in both our qualified defined
benefit pension plans and through a rabbi trust for our nonqualified
defined benefit pension plan. Cash contributions to pension plans,
including unfunded plans, were $10.0 million in 2024, $9.2 million in
2023, and $11.4 million in 2022. It is expected that the 2025 total pen
sion plan contributions will be approximately $10 million. Future
increases or decreases in pension liabilities and required cash contribu
tions are highly dependent upon changes in interest rates and the actual
return on plan assets. We base our investment of plan assets, in part, on
the duration of each plan’s liabilities. Across all of our qualified defined
benefit pension plans, approximately 18% of assets are invested in equi
ties, 75% in fixed income investments and 7% in other investments.
Assets associated with our nonqualified defined benefit pension plan
are primarily invested in corporate-owned life insurance, the value of
which approximates an investment mix of 50% in equities and 50% in
fixed income investments. See Note 10 of notes to our consolidated
financial statements, which provides details on our pension funding.
CUSTOMERS AND COUNTERPARTIES—See the subsequent
section of this discussion under the heading “Market Risk Sensitivity–
Credit Risk.”
PERFORMANCE GRAPH — SHAREHOLDER RETURN
The following line graph compares the yearly change in McCormick’s
cumulative total shareholder return (stock price appreciation plus rein
vestment of dividends) on McCormick’s Non-Voting Common Stock with
(1) the cumulative total return of the Standard & Poor’s 500 Stock Price
Index, assuming reinvestment of dividends, and (2) the cumulative total
return of the Standard & Poor’s Packaged Foods & Meats Index, assuming
reinvestment of dividends.
*$100 invested on 11/30/19 in stock or index, including reinvestment of dividends.
Fiscal year ending November 30.
Copyright© 2024 Standard & Poor’s, a division of S&P Global. All rights reserved.
McCormick & Co., Inc.
S&P 500
S&P 500 Packaged Foods & Meats
$250
$200
$150
$100
$50
$0
11/19
11/20
11/21
11/22
11/23
11/24
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among McCormick & Co., Inc., the S&P 500 Index
and the S&P 500 Packaged Foods & Meats Index
MARKET RISK SENSITIVITY
We utilize derivative financial instruments to enhance our ability to
manage risk, including foreign exchange and interest rate exposures,
which exist as part of our ongoing business operations. We do not
enter into contracts for trading purposes, nor are we a party to any
leveraged derivative instrument. The use of derivative financial
instruments is monitored through regular communication with senior
management and the utilization of written guidelines. The information
presented below should be read in conjunction with Notes 5 and 7 of
notes to our consolidated financial statements.
Foreign Exchange Risk—We are exposed to fluctuations in foreign
currency in the following main areas: cash flows related to raw
material purchases; the translation of foreign currency earnings to U.S.
dollars; the effects of foreign currency on loans between subsidiaries
and unconsolidated affiliates; and cash flows related to repatriation of
42 McCormick & Company, Inc.
earnings from unconsolidated affiliates. Primary exposures include the
U.S. dollar versus the Euro, British pound sterling, Chinese renminbi,
Canadian dollar, Australian dollar, Polish zloty, Singapore dollar, Swiss
franc, and Mexican peso, as well as the Euro versus the British pound
sterling, Australian dollar, and Polish zloty, and finally the Canadian
dollar versus the British pound sterling. We routinely enter into foreign
currency exchange contracts to manage certain of these foreign
currency risks.
During 2024, the foreign currency translation component in other com
prehensive income was principally related to the impact of exchange
rate fluctuations on our net investments in our subsidiaries with a
functional currency of the Mexican peso, Euro, Australian dollar, and
Chinese renminbi.
We also utilize cross currency interest rate swap contracts, which
are designated as net investment hedges, to manage the impact of
exchange rate fluctuations on our net investments in subsidiaries with
a functional currency of the British pound sterling and Euro. Gains and
losses on these instruments are included in foreign currency transla
tion adjustments in accumulated other comprehensive income (loss).
The following table summarizes the foreign currency exchange
contracts held at November 30, 2024. All contracts are valued in U.S.
dollars using year-end 2024 exchange rates and have been designated
as hedges of foreign currency transactional exposures, firm commit
ments, or anticipated transactions.
FOREIGN CURRENCY EXCHANGE CONTRACTS AT
NOVEMBER 30, 2024
Currency sold
Currency received
Notional
value
Average
contractual
exchange
rate
Fair
value
British pound sterling
U.S. dollar
$245.3
1.27
$(0.7)
Canadian dollar
U.S. dollar
65.9
1.26
1.9
Euro
U.S. dollar
27.6
1.10
0.8
Polish zloty
U.S. dollar
2.8
3.98
0.1
U.S. dollar
Australian dollar
89.9
0.65
0.3
Swiss franc
U.S. dollar
75.0
1.14
(0.9)
U.S. dollar
Singapore dollar
17.9
1.35
0.1
U.S. dollar
Euro
86.5
1.05
0.4
U.S. dollar
Canadian dollar
21.4
1.41
0.1
Australian dollar
Euro
21.6
1.66
(0.3)
U.S. dollar
Chinese renminbi
268.4
7.00
(8.2)
Polish zloty
Euro
5.5
4.34
—
Canadian dollar
British pound sterling
27.8
1.76
(0.1)
British pound sterling
Euro
45.2
0.85
(0.8)
U.S. dollar
Mexican peso
8.5
20.66
(0.1)
We had a number of smaller contracts at November 30, 2024 with an
aggregate notional value of $24.9 million to purchase or sell other cur
rencies. The aggregate fair value of these contracts was $0.1 million
at November 30, 2024.
At November 30, 2023, we had foreign currency exchange contracts
with an aggregate notional value of $1,000.4 million to purchase or
sell other currencies. The aggregate fair value of these contracts was
a loss of $13.5 million at November 30, 2023.
We also utilized cross currency interest rate swap contracts that are
considered net investment hedges.
As of November 30, 2024 and 2023, we had cross currency interest
rate swap contracts of (i) $250 million notional value to receive $250
million at USD Secured Overnight Financing Rate (SOFR) plus 0.907%
and pay £194.1 million at three-month GBP SONIA plus 0.859% and
(ii) £194.1 million notional value to receive £194.1 million at three-
month GBP SONIA plus 0.859% and pay €221.8 million at three-month
Euro EURIBOR plus 0.808%. These cross-currency interest rate swap
contracts expire in August 2027.
As of November 30, 2024 and 2023, we also had cross currency
interest rate swap contracts of (i) $250 million notional value to receive
$250 million at USD SOFR plus 0.684% and pay £184.1 million at GBP
SONIA plus 0.574% and (ii) £184.1 million notional value to receive
£184.1 million at GBP SONIA plus 0.574% and pay €219.2 million at
Euro ESTR plus 0.667%. These contracts expire in April 2030.
Interest Rate Risk—Our policy is to manage interest rate risk by
entering into both fixed and variable rate debt arrangements. We are
exposed to interest rate volatility, with primary exposures related to
movements in U.S. Treasury rates, Secured Overnight Financing Rate
(SOFR), and commercial paper rates.
We also use interest rate swaps to minimize financing costs and to
achieve a desired mix of fixed and variable rate debt. As of November
30, 2024 and 2023, we had interest rate swap contracts of $600 million
notional value outstanding to receive fixed rate interest and pay variable
rate interest. The table that follows provides principal cash flows and
related interest rates, excluding the effect of interest rate swaps and
the amortization of any discounts or fees, by fiscal year of maturity at
November 30, 2024. For foreign currency-denominated debt, the infor
mation is presented in U.S. dollar equivalents. Variable interest rates
are based on the weighted-average rates of the portfolio at the end of
the year presented.
YEARS OF MATURITY AT NOVEMBER 30, 2024
2025
2026
2027
2028
Thereafter
Total
Fair value
Debt
Fixed rate
$ 299.1
$509.3
$759.7
$10.3
$2,375.3
$3,953.7
$3,711.0
Average interest rate
3.29%
0.95%
3.40%
3.46%
3.57%
Variable rate
$449.2
$ —
$ —
$ —
$ —
$ 449.2
$ 449.2
Average interest rate
4.71%
—%
—
—
—
The table above displays the debt, including finance leases, by the terms of the original debt instrument without consideration of fair value, interest
rate swaps, and any loan discounts or origination fees. Interest rate swaps have the following effects:
2024 Annual Report 43
• We issued $250 million of 3.25% notes due in 2025 in November 2015. Forward treasury lock agreements settled upon issuance of these notes
effectively set the interest rate on these notes at a weighted-average fixed rate of 3.45%. Separately, the fixed interest rate on $100 million of
the 3.25% notes due in December 2025 was effectively converted to a variable rate by interest rate swaps through the notes maturity in 2025. Net
interest payments are based on USD SOFR plus 1.487% with an effective variable rate of 5.92% as of November 30, 2024.
• We issued $750 million of 3.40% notes due in 2027 in August 2017. Forward treasury lock agreements settled upon issuance of these notes effec
tively set the interest rate on these $750 million notes at a weighted-average fixed rate of 3.44%. Separately, the fixed interest rate on $250 million
of the 3.40% notes due in August 2027 was effectively converted to a variable rate by interest rate swaps through the notes maturity in 2027. Net
interest payments are based on USD SOFR plus 0.907% with an effective variable rate of 5.73% as of November 30, 2024.
• We issued $500 million of 2.50% notes due April 15, 2030. Forward treasury lock agreements settled upon issuance of these notes effectively set
the interest rate on these $500 million notes at a weighted-average fixed rate of 2.62%. Separately, the fixed interest rate on $250 million of the
2.50% notes due in April 2030 was effectively converted to a variable rate by interest rate swaps through the notes maturity in 2030. Net interest
payments are based on USD SOFR plus 0.684% with an effective variable rate of 5.22% as of November 30, 2024.
• We issued $500 million of 4.95% notes due April 15, 2033. Forward treasury lock agreements settled upon issuance of these notes effectively set
the interest rate on these $500 million notes at a weighted-average fixed rate of 5.00%.
• We issued $500 million of 4.70% notes due October 15, 2034. Forward treasury lock agreements settled upon issuance of these notes effectively set
the interest rate on these $500 million notes at a weighted-average fixed rate of 4.68%.
Commodity Risk—We purchase certain raw materials which are subject
to price volatility caused by weather, market conditions, growing and
harvesting conditions, governmental actions, and other factors beyond
our control. In 2024, our most significant raw materials were dairy prod
ucts, pepper, onion, garlic, capsicums (red peppers and paprika), tomato
products, sugar and salts. While future movements of raw material
costs are uncertain, we respond to this volatility in a number of ways,
including strategic raw material purchases, purchases of raw material
for future delivery, and customer price adjustments. We generally have
not used derivatives to manage the volatility related to this risk.
Credit Risk—The customers of our consumer segment are predom
inantly food retailers and food wholesalers. Consolidations in these
industries have created larger customers. In addition, competition
has increased with the growth in alternative channels including mass
merchandisers, dollar stores, warehouse clubs, discount chains and
e-commerce. This has caused some customers to be less profitable
and increased our exposure to credit risk. Some of our customers and
counterparties are highly leveraged. We continue to closely monitor
the credit worthiness of our customers and counterparties. We feel
that the allowance for doubtful accounts properly recognizes trade
receivables at realizable value. We consider nonperformance credit
risk for other financial instruments to be insignificant.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
New accounting pronouncements are issued periodically that affect
our current and future operations. See Note 1 of notes to our consoli
dated financial statements for further details of these impacts.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
In preparing the financial statements, we are required to make esti
mates and assumptions that have an impact on the assets, liabilities,
revenue, and expenses reported. These estimates can also affect
supplemental information disclosed by us, including information about
contingencies, risk, and financial condition. We believe, given current
facts and circumstances, our estimates and assumptions are reasonable,
adhere to U.S. GAAP and are consistently applied. Inherent in the nature
of an estimate or assumption is the fact that actual results may differ
from estimates, and estimates may vary as new facts and circumstances
arise. In preparing the financial statements, we make routine estimates
and judgments in determining the net realizable value of accounts
receivable, inventory, fixed assets and prepaid allowances. Our most
critical accounting estimates and assumptions, which are those that
have or are reasonably likely to have a material impact on our financial
condition or results of operations, are in the following areas:
Customer Contracts
In several of our major geographic markets, the consumer segment
sells our products by entering into annual or multi-year customer
arrangements. Known or expected pricing or revenue adjustments,
such as trade discounts, rebates, or returns, are estimated at the
time of sale. Where applicable, future reimbursements are estimated
based on current expectations regarding what was earned through
these programs as of the balance sheet date. Key sales terms, such
as pricing and quantities ordered, are established on a frequent basis
such that most customer arrangements and related incentives have
a one-year or shorter duration. Estimates that affect revenue, such
as trade incentives and product returns, are monitored and adjusted
each period until the incentives or product returns are realized.
Certain of our customer arrangements are annual arrangements such
that the degree of estimates that affects revenue reduces as a year
progresses. We do not believe that there will be significant changes
to our estimates of customer consideration when any uncertainties are
resolved with customers.
Goodwill Impairment
Our reporting units are aligned with our operating segments.
Determining the fair value of a reporting unit involves significant
judgment and the use of estimates and assumptions, as detailed
in Note 1 of our consolidated financial statements. We estimate
fair value using a discounted cash flow model, which calculates
this value by present valuing the future expected cash flows of our
reporting units with a market-based discount rate. As required by the
quantitative goodwill impairment test, we then compare the calculated
estimated fair value of each reporting unit to its carrying amount,
including intangible assets and goodwill. If the carrying amount
exceeds the estimated fair value, an impairment charge is recognized.
As of November 30, 2024, we had $5,227.5 million of goodwill recorded
in our balance sheet ($3,583.1 million in the consumer segment and
$1,644.4 million in the flavor solutions segment). Our fiscal year 2024
impairment testing indicated that the estimated fair values of our
reporting units were significantly in excess of their carrying values.
Accordingly, we believe that only significant changes in the cash flow
assumptions would result in an impairment of goodwill. However,
44 McCormick & Company, Inc.
variances between the actual performance of the businesses and the
assumptions that were used in developing the estimates of fair value
could result in impairment charges in future periods.
Indefinite-lived Intangible Asset Impairment
Our indefinite-lived intangible assets consist of brand names and
trademarks. We estimate fair values through the use of the relief-
from-royalty method and then compare those fair values to the related
carrying amounts of the indefinite-lived intangible asset. In the event
that the fair value of any of the brand names or trademarks are less
than their related carrying amounts, a non-cash impairment loss would
be recognized in an amount equal to the difference.
The estimation of fair values of our brand names and trademarks requires
us to make significant assumptions, including expectations regarding
sales and profits of the respective brands and trademarks, related
royalty rates, income tax rates, and appropriate discount rates. These
discount rates are based, in part, on current interest rates, adjusted
for our assessment of reasonable country- and brand-specific risks,
considering both past performance and anticipated future performance
of the related brand names and trademarks. The assumptions used to
assess impairment consider historical trends, macroeconomic conditions,
and projections consistent with our operating strategy. Changes in these
estimates can have a significant impact on the assessment of fair value
which could result in material impairment losses.
As of November 30, 2024, we had $3,043.9 million of brand name
assets and trademarks recognized in our consolidated balance sheet,
and none of the balances exceeded their estimated fair values at that
date. Of the $3,043.9 million in brand name assets and trademarks as of
November 30, 2024: (i) $2,320.0 million relates to the French’s, Frank’s
RedHot, and Cattlemen’s brand names and trademarks which we group
for purposes of our impairment analysis; (ii) $380.0 million relates to the
Cholula brand names and trademarks associated with the acquisition
of Cholula in November 2020; and (iii) the remaining $343.9 million
represents various other brand name assets and trademarks with
individual carrying values ranging from $106.4 million to $0.2 million.
The percentage excess of estimated fair value over respective book
values for each of our brand names and trademarks exceeded 20% as of
our fourth quarter annual impairment assessment except for one brand
name that has a carrying value of $4.6 million.
Income Taxes
We estimate income taxes and file tax returns in each taxing jurisdiction
where we operate and are required to do so. At the end of each year,
we record an estimate for income taxes in our financial statements. Tax
returns are typically filed in the third or fourth quarter of the subsequent
year. At that time, we perform a reconciliation of the estimate to the
final tax return, which may result in changes to the original estimate.
While we believe our tax return positions are appropriately supported,
tax authorities may challenge certain positions. We evaluate our
uncertain tax positions in accordance with GAAP guidance for
uncertainty in income taxes. We recognize a tax benefit when it is more
likely than not that the position will be sustained upon examination,
based on its technical merits. The tax position is measured at the
largest amount of benefit that is greater than 50 percent likely to be
realized upon ultimate settlement. Any change in judgment regarding
the expected resolution of uncertain tax positions is recognized in
earnings in the quarter of such change. We believe our reserve for
uncertain tax positions, including related interest and penalties,
is adequate.
As of November 30, 2024, the Company had $20.6 million of unrecog
nized tax benefits, including interest and penalties, recorded in Other
long-term liabilities. The amounts ultimately paid upon resolution of
audits could differ materially from those previously included in our
income tax expense, potentially impacting our tax provision, net income,
and cash flows. We have also recorded valuation allowances to reduce
our deferred tax assets to the amount that is more likely than not to be
realized. In making this assessment, we have considered future taxable
income and tax planning strategies, both of which involve a number of
estimates, as more fully described in Note 1 of notes to our consolidated
financial statements.
Pension Benefits
Pension plan costs require the use of assumptions regarding
discount rates, investment returns, projected salary increases, and
mortality rates. We review the actuarial assumptions used in our
pension benefit reporting annually and compare them with external
benchmarks to ensure they accurately reflect our future pension
benefit obligations. While we believe these assumptions are
appropriate, changes in various factors—such as actual returns on
plan assets versus expected returns, as well as projected future rates
of return—can affect the pension expense or income recognized.
Specifically, a 1% increase or decrease in the actuarial assumption for
the discount rate would impact our 2025 pension benefit expense by
approximately $0.1 million. Similarly, a 1% increase or decrease in the
expected return on plan assets would affect the 2025 pension expense
by approximately $9.5 million.
We will continue to evaluate the appropriateness of the assumptions
used in the measurement of our pension benefit obligations. In addition,
see Note 10 of notes to our consolidated financial statements for
a discussion of these assumptions and the effects on the financial
statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
This information is set forth in the “Market Risk Sensitivity” section
of “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and in Note 7 of our notes to consolidated
financial statements.
2024 Annual Report 45
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF MANAGEMENT
We are responsible for the preparation and integrity of the consol
idated financial statements appearing in our Annual Report. The
consolidated financial statements were prepared in conformity with
United States generally accepted accounting principles and include
amounts based on our estimates and judgments. All other financial
information in this report has been presented on a basis consistent
with the information included in the financial statements.
We are also responsible for establishing and maintaining adequate
internal control over financial reporting. We maintain a system of
internal control that is designed to provide reasonable assurance as to
the fair and reliable preparation and presentation of the consolidated
financial statements, as well as to safeguard assets from unauthorized
use or disposition.
Our control environment is the foundation for our system of internal
control over financial reporting and is embodied in our Business Ethics
Policy. It sets the tone of our organization and includes factors such
as integrity and ethical values. Our internal control over financial
reporting is supported by formal policies and procedures which are
reviewed, modified and improved as changes occur in business
conditions and operations.
The Audit Committee of the Board of Directors, which is composed
solely of independent directors, meets periodically with members of
management, the internal auditors and the independent registered
public accounting firm to review and discuss internal control over
financial reporting and accounting and financial reporting matters. The
independent registered public accounting firm and internal auditors
report to the Audit Committee and accordingly have full and free
access to the Audit Committee at any time.
We conducted an assessment of the effectiveness of our internal
control over financial reporting based on the framework in Internal
Control—Integrated Framework issued by the Committee of Sponsor
ing Organizations of the Treadway Commission (2013 framework). This
assessment included review of the documentation of controls, evalu
ation of the design effectiveness of controls, testing of the operating
effectiveness of controls and a conclusion on this assessment.
Although there are inherent limitations in the effectiveness of any
system of internal control over financial reporting, based on our assess
ment, we have concluded with reasonable assurance that our internal
control over financial reporting was effective as of November 30, 2024.
Our internal control over financial reporting as of November 30, 2024
has been audited by Ernst & Young LLP.
Brendan M. Foley
Chairman, President &
Chief Executive Officer
Marcos M. Gabriel
Executive Vice President &
Chief Financial Officer
Gregory P. Repas
Vice President & Controller
46 McCormick & Company, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of McCormick &
Company, Incorporated
Opinion on Internal Control Over Financial Reporting
We have audited McCormick & Company, Incorporated’s internal
control over financial reporting as of November 30, 2024, based on
criteria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion,
McCormick & Company, Incorporated (the Company) maintained, in all
material respects, effective internal control over financial reporting as
of November 30, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (PCAOB), the con
solidated balance sheets of the Company as of November 30, 2024 and
2023, the related consolidated income statements, statements of compre
hensive income, cash flow statements and statements of shareholders’
equity for each of the three years in the period ended November 30, 2024,
and the related notes and the financial statement schedule listed in the
Index at item 15(2) and our report dated January 23, 2025 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the
accompanying Report of Management. Our responsibility is to express
an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial
Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the main
tenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets
that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Baltimore, Maryland
January 23, 2025
2024 Annual Report 47
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of McCormick &
Company, Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of
McCormick & Company, Incorporated (the Company) as of November 30,
2024 and 2023, the related consolidated income statements, state
ments of comprehensive income, cash flow statements and statements
of shareholders’ equity for each of the three years in the period ended
November 30, 2024, and the related notes and financial statement
schedule listed in the Index at item 15(2) (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial
position of the Company at November 30, 2024 and 2023, and the
results of its operations and its cash flows for each of the three years in
the period ended November 30, 2024, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (PCAOB), the
Company’s internal control over financial reporting as of November 30,
2024, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) and our report dated
January 23, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our
audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from
the current period audit of the financial statements that was communi
cated or required to be communicated to the audit committee and that:
(1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective or
complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing a separate opinion on the critical
audit matter or on the account or disclosures to which it relates.
48 McCormick & Company, Inc.
Valuation of Indefinite-lived Intangible Assets
Description of
the Matter
At November 30, 2024, the Company’s indefinite-lived intangible assets consist of brand names and trademarks with an aggre
gate carrying value of approximately $3.0 billion. As explained in Note 1 to the consolidated financial statements, these assets
are assessed for impairment at least annually using the relief-from-royalty methodology to determine their fair values. If the fair
value of any brand name or trademark is less than its carrying amount, an impairment loss is recognized in an amount equal to
the difference.
Auditing the Company’s impairment assessments is complex due to the significant estimation required in determining the fair
value of the brand names and trademarks. Significant management judgment is also involved in determining whether individual
brand names and trademarks should be grouped for purposes of the fair value determination or must be evaluated individually.
The Company’s methodologies for estimating the fair value of these assets involve significant assumptions and inputs, including
projected financial information for net sales and operating profit by brand, royalty rates, and discount rates, all of which are
sensitive to and affected by economic, industry, and company-specific qualitative factors. These significant assumptions and
inputs are forward-looking and could be affected by future economic and market conditions.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls over the
Company’s indefinite-lived intangible asset impairment assessments, including controls over management’s review of its asset
groupings and the significant assumptions described above. We tested controls over the review of methodologies used, significant
assumptions and inputs, asset groupings, and completeness and accuracy of the data used in the measurements.
To test the estimated fair value of the Company’s indefinite-lived intangible assets, we performed audit procedures that included,
among others, evaluating the asset groupings used by the Company to perform its impairment assessments, assessing the meth
odologies, and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses.
We compared the significant assumptions to current industry, market and economic trends, to the Company’s historical results, to
other guideline companies within the same industry, and to other relevant data. In addition, we evaluated management’s ability to
estimate net sales by comparing the current year actual net sales for certain brand names or trademarks to the estimates made in
the Company’s prior year impairment assessments. We also performed sensitivity analyses of certain significant assumptions to
evaluate the potential change in the fair values of the brand names and trademarks resulting from hypothetical changes in under
lying assumptions. We used an internal valuation specialist to assist in our evaluation of the methodologies used and significant
assumptions and inputs used by the Company to determine the estimated fair value of certain brand names and trademarks.
We have served as the Company’s auditor since 1982.
Baltimore, Maryland
January 23, 2025
2024 Annual Report 49
CONSOLIDATED INCOME STATEMENTS
for the year ended November 30 (millions except per share data)
2024
2023
2022
Net sales
$6,723.7
$6,662.2
$6,350.5
Cost of goods sold
4,132.7
4,159.7
4,076.0
Gross profit
2,591.0
2,502.5
2,274.5
Selling, general and administrative expense
1,521.2
1,478.3
1,357.1
Transaction and integration expenses
—
—
2.2
Special charges
9.5
61.2
51.6
Operating income
1,060.3
963.0
863.6
Interest expense
209.4
208.2
149.1
Other income, net
47.4
43.9
98.3
Income from consolidated operations before income taxes
898.3
798.7
812.8
Income tax expense
184.0
174.5
168.6
Net income from consolidated operations
714.3
624.2
644.2
Income from unconsolidated operations
74.2
56.4
37.8
Net income
$ 788.5
$ 680.6
$ 682.0
Earnings per share—basic
$ 2.94
$ 2.54
$ 2.54
Earnings per share—diluted
$ 2.92
$ 2.52
$ 2.52
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the year ended November 30 (millions)
2024
2023
2022
Net income
$ 788.5
$ 680.6
$ 682.0
Net income attributable to non-controlling interest
7.5
5.5
6.2
Other comprehensive income (loss):
Unrealized components of pension and other postretirement plans
(24.3)
(3.1)
149.2
Currency translation adjustments
(90.7)
92.5
(161.8)
Change in derivative financial instruments
3.3
(6.8)
3.3
Deferred taxes
4.6
8.0
(46.8)
Total other comprehensive income (loss)
(107.1)
90.6
(56.1)
Comprehensive income
$ 688.9
$ 776.7
$ 632.1
See Notes to Consolidated Financial Statements.
50 McCormick & Company, Inc.
CONSOLIDATED BALANCE SHEETS
at November 30 (millions)
2024
2023
Assets
Cash and cash equivalents
$ 186.1
$ 166.6
Trade accounts receivable, net of allowances
587.4
587.5
Inventories
1,239.9
1,126.5
Prepaid expenses and other current assets
125.6
121.0
Total current assets
2,139.0
2,001.6
Property, plant and equipment, net
1,413.0
1,324.7
Goodwill
5,227.5
5,260.1
Intangible assets, net
3,318.9
3,356.7
Other long-term assets
971.9
919.2
Total assets
$13,070.3
$12,862.3
Liabilities
Short-term borrowings
$ 483.1
$ 272.2
Current portion of long-term debt
265.2
799.3
Trade accounts payable
1,238.1
1,119.3
Other accrued liabilities
896.4
908.1
Total current liabilities
2,882.8
3,098.9
Long-term debt
3,593.6
3,339.9
Deferred taxes
840.5
861.2
Other long-term liabilities
436.6
478.8
Total liabilities
7,753.5
7,778.8
Shareholders’ equity
Common stock; 640.0 shares authorized; 15.7 and 16.8 shares issued and
outstanding, respectively
587.6
597.1
Common stock non-voting; 640.0 shares authorized; 252.3 and 251.3 shares issued and
outstanding, respectively
1,649.6
1,602.5
Retained earnings
3,545.0
3,249.7
Accumulated other comprehensive loss
(491.2)
(388.6)
Total McCormick shareholders’ equity
5,291.0
5,060.7
Non-controlling interests
25.8
22.8
Total shareholders’ equity
5,316.8
5,083.5
Total liabilities and shareholders’ equity
$13,070.3
$12,862.3
See Notes to Consolidated Financial Statements.
2024 Annual Report 51
CONSOLIDATED CASH FLOW STATEMENTS
for the year ended November 30 (millions)
2024
2023
2022
Operating activities
Net income
$ 788.5
$ 680.6
$ 682.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
208.8
199.3
200.6
Stock-based compensation
47.4
63.4
60.3
Loss (gain) on the sale of businesses
—
1.2
(63.2)
Asset impairments included in special charges
—
—
10.0
(Gain) loss on sale of assets
(2.1)
0.2
(0.5)
Deferred income tax expense (benefit)
(30.3)
(5.4)
21.8
Income from unconsolidated operations
(74.2)
(56.4)
(37.8)
Changes in operating assets and liabilities (net of effect of businesses
acquired and disposed):
Trade accounts receivable
(20.5)
3.4
(45.8)
Inventories
(125.0)
225.0
(205.3)
Trade accounts payable
135.1
(68.1)
125.3
Other assets and liabilities
(72.6)
109.0
(129.9)
Dividends received from unconsolidated affiliates
66.8
85.1
34.0
Net cash provided by operating activities
921.9
1,237.3
651.5
Investing activities
Proceeds from sale of business
—
1.0
95.2
Proceeds from sale of intangible asset
—
—
13.6
Capital expenditures (including expenditures for capitalized software)
(274.9)
(263.9)
(262.0)
Other investing activities
5.9
2.4
6.8
Net cash used in investing activities
(269.0)
(260.5)
(146.4)
Financing activities
Short-term borrowings (repayments), net
211.1
(964.6)
698.3
Proceeds from issuances of long-term debt
495.5
496.4
—
Payment of debt issuance costs
(1.0)
(1.1)
—
Long-term debt repayments
(801.1)
(268.1)
(772.0)
Proceeds from exercised stock options
17.5
16.6
41.4
Taxes withheld and paid on employee stock awards
(9.0)
(10.8)
(19.4)
Common stock acquired by purchase
(53.1)
(35.7)
(38.8)
Dividends paid
(451.0)
(418.5)
(396.7)
Other financing activities
8.0
1.6
—
Net cash used in financing activities
(583.1)
(1,184.2)
(487.2)
Effect of exchange rate changes on cash and cash equivalents
(50.3)
40.0
(35.6)
Increase (decrease) in cash and cash equivalents
19.5
(167.4)
(17.7)
Cash and cash equivalents at beginning of year
166.6
334.0
351.7
Cash and cash equivalents at end of year
$ 186.1
$ 166.6
$ 334.0
See Notes to Consolidated Financial Statements.
52 McCormick & Company, Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(millions)
Common
Stock
Shares
Common
Stock
Non-Voting
Shares
Common
Stock Amount
Retained
Earnings
Accumulated
Other
Comprehensive
(Loss) Income
Non-controlling
Interests
Total
Shareholders’
Equity
Balance, November 30, 2021
17.8
249.5
$ 2,055.1
$2,782.4
$ (426.5)
$14.5
$4,425.5
Net income
—
682.0
—
—
682.0
Net income attributable to non-controlling interest
—
—
—
6.2
6.2
Other comprehensive income (loss), net of tax
—
—
(54.1)
(2.0)
(56.1)
Dividends
—
(402.3)
—
—
(402.3)
Stock-based compensation
60.3
—
—
—
60.3
Shares purchased and retired
(0.7)
—
(20.0)
(39.6)
—
—
(59.6)
Shares issued
1.4
—
43.2
—
—
—
43.2
Equal exchange
(1.1)
1.1
—
—
—
—
—
Balance, November 30, 2022
17.4
250.6
$ 2,138.6
$3,022.5
$ (480.6)
$18.7
$4,699.2
Net income
—
680.6
—
—
680.6
Net income attributable to non-controlling interest
—
—
—
5.5
5.5
Other comprehensive income (loss), net of tax
—
—
92.0
(1.4)
90.6
Dividends
—
(426.6)
—
—
(426.6)
Stock-based compensation
63.4
—
—
—
63.4
Shares purchased and retired
(0.6)
—
(20.6)
(26.8)
—
—
(47.4)
Shares issued
0.7
—
18.2
—
—
—
18.2
Equal exchange
(0.7)
0.7
—
—
—
—
—
Balance, November 30, 2023
16.8
251.3
$ 2,199.6
$3,249.7
$ (388.6)
$22.8
$5,083.5
Net income
788.5
—
—
788.5
Net income attributable to non-controlling interest
—
—
—
7.5
7.5
Other comprehensive loss, net of tax
—
—
(102.6)
(4.5)
(107.1)
Dividends
—
(459.1)
—
—
(459.1)
Stock-based compensation
47.4
—
—
—
47.4
Shares purchased and retired
(0.9)
—
(29.6)
(34.1)
—
—
(63.7)
Shares issued
0.8
—
19.8
—
—
—
19.8
Equal exchange
(1.0)
1.0
—
—
—
—
—
Balance, November 30, 2024
15.7
252.3
$2,237.2
$3,545.0
$(491.2)
$25.8
$5,316.8
See Notes to Consolidated Financial Statements.
2024 Annual Report 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The financial statements include the accounts of our majority-owned
or controlled subsidiaries and affiliates. Intercompany transactions
have been eliminated. Investments in unconsolidated affiliates, over
which we exercise significant influence, but not control, are accounted
for by the equity method. Accordingly, our share of net income or loss
from unconsolidated affiliates is included in net income.
Foreign Currency Translation
For majority-owned or controlled subsidiaries and affiliates located
outside of the U.S. that use functional currencies other than the U.S.
dollar, asset and liability accounts are translated at the exchange rates
in effect at the balance sheet date. The resulting translation adjust
ments are included in accumulated other comprehensive income (loss),
which is a separate component of shareholders’ equity. Income and
expense items are translated at average monthly exchange rates. Gains
and losses from foreign currency transactions of these majority-owned
or controlled subsidiaries and affiliates—specifically, transactions
denominated in currencies other than their functional currency—are
included in net income, except for intercompany transactions designated
as long-term investments.
Our unconsolidated affiliates located outside the U.S. generally use their
local currencies as their functional currencies. The asset and liability
accounts of those unconsolidated affiliates are translated at the rates
of exchange at the balance sheet date, with the resultant translation
adjustments included in accumulated other comprehensive income (loss)
of those affiliates. Income and expense items of those affiliates are
translated at average monthly rates of exchange. We record our own
ership share of the net assets and accumulated other comprehensive
income (loss) of our unconsolidated affiliates in our consolidated balance
sheet on the lines entitled “Other long-term assets” and “Accumulated
other comprehensive loss,” respectively. We record our ownership share
of the net income of our unconsolidated affiliates, or a gain or loss
associated with the sale of our ownership interest in our unconsolidated
affiliates, in our consolidated income statement on the line entitled
“Income from unconsolidated operations.”
Use of Estimates
Preparation of financial statements that follow accounting principles
generally accepted in the U.S. requires us to make estimates and
assumptions that affect the amounts reported in the financial state
ments and notes. Actual amounts could differ from these estimates.
Cash and Cash Equivalents
All highly liquid investments purchased with an original maturity of
three months or less are classified as cash equivalents.
Inventories
Inventories are stated at the lower of cost or net realizable value.
Cost is determined under the first-in, first-out costing method (FIFO),
including the use of average costs which approximate FIFO.
Property, Plant and Equipment
Property, plant and equipment is stated at historical cost and depreci
ated over its estimated useful life using the straight-line method
for financial reporting and both accelerated and straight-line methods
for tax reporting. The estimated useful lives range from 20 to 50 years
for buildings and 3 to 15 years for machinery, equipment and other
assets. Assets leased under finance leases are depreciated over the
shorter of the lease term or their estimated useful lives unless it is
reasonably certain that we will obtain ownership by the end of the
lease term. Repairs and maintenance costs are expensed as incurred.
Computer Software
We capitalize costs of software developed or obtained for internal
use. Capitalized software development costs include only (1) direct
costs paid to others for materials and services to develop or buy the
software, (2) payroll and payroll-related costs for employees who work
directly on the software development project, and (3) interest costs
while developing the software. Capitalization of these costs stops, and
amortization begins, when the project is substantially complete and
ready for use.
Capitalized software is classified within “Other long-term assets”
in the consolidated balance sheet. Software is amortized using the
straight-line method over estimated useful lives ranging from 3 to 13
years, but not exceeding the expected life of the product.
Goodwill and Other Intangible Assets
We review the carrying value of goodwill and indefinite-lived intan
gible assets and conduct tests of impairment on an annual basis as
described below. We also test goodwill for impairment if events or
circumstances indicate it is more likely than not that the fair value of
a reporting unit is below its carrying amount and test indefinite-lived
intangible assets for impairment if events or changes in circumstances
indicate that the asset might be impaired. Separable intangible assets
that have finite useful lives are amortized over those lives.
Determining the fair value of a reporting unit or an indefinite-lived
purchased intangible asset is judgmental in nature and involves the
use of significant estimates and assumptions. These estimates and
assumptions include revenue growth rates and operating margins used
to calculate projected future cash flows, risk-adjusted discount rates,
assumed royalty rates, future economic and market conditions and
determination of appropriate market comparables. We base our fair
value estimates on assumptions we believe to be reasonable but that
are unpredictable and inherently uncertain. Actual future results may
differ from these estimates.
Goodwill Impairment. Our reporting units used to assess potential
goodwill impairment are the same as our business segments. We
estimate the fair value of a reporting unit by using a discounted cash
flow model and then compare that to the carrying amount of the
reporting unit, including intangible assets and goodwill. An
impairment charge would be recognized to the extent that the carrying
amount of the reporting unit exceeds the estimated fair value of the
reporting unit.
Indefinite-lived Intangible Asset Impairment. Our indefinite-lived
intangible assets consist of acquired brand names and trademarks.
We estimate fair value by using a relief-from-royalty method and then
compare that to the carrying amount of the indefinite-lived intangible
asset. If the carrying amount of the indefinite-lived intangible asset
exceeds its estimated fair value, an impairment charge would be
recorded to the extent the recorded indefinite-lived intangible asset
exceeds the fair value.
54 McCormick & Company, Inc.
Long-lived Asset Impairment
Fixed assets and amortizable intangible assets are reviewed for
impairment as events or changes in circumstances occur indicating that
the carrying value of the asset may not be recoverable. Undiscounted
cash flow analyses are used to determine if an impairment exists. If an
impairment is determined to exist, the loss would be calculated based
on the excess of the asset’s carrying value over its estimated fair value.
Accounts Payable—Supplier Finance Program
In order to manage our cash flow and related liquidity, we work with
our suppliers to optimize our terms and conditions, which include the
extension of payment terms. We offer certain suppliers access to a
third-party Supply Chain Finance program (SCF) with several global
financial institutions (SCF Banks). The terms of our payment obligation
are not impacted by a supplier’s participation in the SCF. Under the
SCF, qualifying suppliers may elect to sell their receivables from us to
a SCF Bank. These participating suppliers negotiate their receivables
sales arrangements directly with the respective SCF Bank. While we
are not party to those agreements, the SCF Banks allow the partici
pating suppliers to utilize our creditworthiness in establishing credit
spreads and associated costs. This generally provides the suppliers
with more favorable terms than they would be able to secure on their
own. We have no economic interest in a supplier’s decision to sell a
receivable. Once a qualifying supplier elects to participate in the SCF
and reaches an agreement with a SCF Bank, the supplier elects which
of our individual invoices they sell to the SCF bank. However, all of our
payments to participating suppliers are paid to the SCF Bank on the
invoice due date, regardless of whether the individual invoice is sold
by the supplier to the SCF Bank. The SCF Bank pays the supplier on the
invoice due date for any invoices that were not previously sold by the
supplier to the SCF Bank.
Our current payment terms with our suppliers, which we deem to be
commercially reasonable, generally range from zero to 180 days
dependent upon their respective industry and geography. All outstand
ing amounts related to suppliers participating in the SCF are recorded
within the line entitled “Trade accounts payable” in our consolidated
balance sheets, and the associated payments are included in operating
activities within our consolidated statements of cash flows. As of
November 30, 2024 and 2023, the amount due to suppliers partic
ipating in the SCF and included in “Trade accounts payable” were
approximately $417.4 million and $300.5 million, respectively.
Leases
We determine whether a contract is or contains a lease at contract
inception based on the presence of identified assets and our right
to obtain substantially all the economic benefit from or to direct the
use of such assets. When we determine a lease exists, we record a
right-of-use (“ROU”) asset and corresponding lease liability on our
consolidated balance sheet. ROU assets represent our right to use
an underlying asset for the lease term. Lease liabilities represent our
obligation to make lease payments arising from the lease. ROU assets
are recognized at the lease commencement date at the value of the
lease liability and are adjusted for any prepayments, lease incentives
received, and initial direct costs incurred. Lease liabilities are recog
nized at the lease commencement date based on the present value of
remaining lease payments over the lease term. As the discount rate
implicit in the lease is not readily determinable in most of our leases,
we use our incremental borrowing rate based on the information
available at the lease commencement date in determining the present
value of lease payments. Our lease terms include options to extend or
terminate the lease when it is reasonably certain that we will exercise
that option. We do not record lease contracts with a term of 12 months
or less on our consolidated balance sheets.
When our real estate lease arrangements include lease and non-lease
components (for example, common area maintenance), we account for
each component separately, based on their relative standalone prices.
For all other asset categories, we combine lease components and non-
lease components into a single lease commitment.
We recognize fixed lease expense for operating leases on a straight-line
basis over the lease term. For finance leases, we recognize amortization
expense over the shorter of the estimated useful life of the underly
ing assets or the lease term. In instances of title transfer, expense is
recognized over the useful life. Interest expense on a finance lease is
recognized using the effective interest method over the lease term.
Revenue Recognition
We manufacture, market and distribute spices, seasoning mixes,
condiments and other flavorful products to the entire food industry—
retailers, food manufacturers and foodservice businesses. Our revenue
arrangements generally include a single performance obligation relating
to the fulfillment of a customer order, which in some cases is governed
by a master sales agreement, for the purchase of our products. We rec
ognize revenue at a point in time when control of the ordered products
passes to the customer, which principally occurs either upon shipment
or delivery to the customer or upon pick-up by the customer, depending
upon terms included in the particular customer arrangement. Revenues
are recorded net of trade and sales incentives and estimated product
returns. Known or expected pricing or revenue adjustments, such as
trade discounts, rebates and returns, are estimated at the time of sale.
All taxes assessed by a governmental authority that are both imposed
on and concurrent with a specific revenue-producing transaction and
collected by us from a customer for sales, value added and other excise
taxes are excluded from net sales. We account for product shipping and
handling activities that occur before the customer has obtained control
of a good as fulfillment activities (i.e., an expense) rather than as a
promised service with costs for these activities recorded within Cost of
goods sold. We expense any incremental costs of obtaining a contract
when the contract is for a period of one year or less.
Amounts billed and due from our customers are classified as accounts
receivable on the balance sheet and require payment on a short-term
basis. Our allowance for doubtful accounts represents our estimate of
probable non-payments and credit losses in our existing receivables,
as determined based on a review of past due balances and other
specific account data.
The following table sets forth our net sales by the Americas, Europe,
Middle East and Africa (EMEA) and Asia/Pacific (APAC) geographic
regions:
(millions)
Americas
EMEA
APAC
Total
2024
$4,801.9
$1,239.3
$682.5
$6,723.7
2023
$4,756.9
$1,212.8
$692.5
$6,662.2
2022
$4,551.7
$1,116.4
$682.4
$6,350.5
2024 Annual Report 55
Performance Obligations. Our revenues primarily result from contracts
or purchase orders with customers, which generally are both short-term
in nature and have a single performance obligation—the delivery of our
products to customers. We assess the goods and services promised in
our customers’ contracts or purchase orders and identify a performance
obligation for each promise to transfer a good or service (or bundle of
goods or services) that is distinct. To identify the performance obliga
tions, we consider all the goods or services promised, whether explicitly
stated or implied based on customary business practices.
Significant Judgments. Sales are recorded net of trade and sales
incentives and estimated product returns. Known or expected pricing
or revenue adjustments, such as trade discounts, rebates or returns,
are estimated at the time of sale. Where applicable, future reimburse
ments are estimated based on a combination of historical patterns
and the Company’s then-current expectations regarding what was
earned through these programs as of the balance sheet date. Key
sales terms, such as pricing and quantities ordered, are established on
a frequent basis such that most customer arrangements and related
incentives have a one-year or shorter duration. Estimates that affect
revenue, such as trade incentives and product returns, are monitored
and adjusted each period until the incentives or product returns are
realized. The adjustments recognized during the years ended November
30, 2024, 2023, and 2022 resulting from updated estimates of revenue
for prior year product sales were not significant. The unsettled portion
remaining in accrued liabilities for these activities was $206.4 million
and $195.3 million at November 30, 2024 and 2023, respectively.
Shipping and Handling
Shipping and handling costs on our products sold to customers related to
activities that occur before the customer has obtained control of a good
are included in cost of goods sold in the consolidated income statement.
Brand Marketing Support
Total brand marketing support costs, which are included in our
consolidated income statement in the line entitled “Selling, general
and administrative expense,” were $265.0 million, $247.1 million and
$240.4 million for 2024, 2023, and 2022, respectively. Brand marketing
support costs include advertising and promotions but exclude trade
funds paid to customers for such activities. All trade funds paid to
customers are reflected in the consolidated income statement as
a reduction of net sales. Promotion costs include public relations,
shopper marketing, social marketing activities, general consumer pro
motion activities and depreciation of assets used in these promotional
activities. Advertising costs include the development, production and
communication of advertisements through television, digital, print and
radio. Development and production costs are expensed in the period in
which the advertisement is first run. All other costs of advertising are
expensed as incurred. Advertising expense was $218.8 million, $198.1
million and $187.2 million for 2024, 2023, and 2022, respectively.
Research and Development
Research and development costs are expensed as incurred and are
included in our consolidated income statement in the line entitled
“Selling, general and administrative expense.” Research and develop
ment expense was $102.9 million, $94.9 million and $87.5 million for
2024, 2023, and 2022, respectively.
Income Taxes
Income taxes are recognized in accordance with the liability method
of accounting. Deferred taxes are recognized for the estimated taxes
ultimately payable or recoverable based on enacted tax law. Inherent
in determining our annual tax rate are judgments regarding business
plans, planning opportunities, and expectations about future outcomes.
Realization of certain deferred tax assets, primarily net operating loss
and other carryforwards, is dependent upon generating sufficient
taxable income in the appropriate jurisdiction prior to the expiration of
the carryforward periods. Changes in enacted tax rates are reflected in
the tax provision as they occur.
We record valuation allowances to reduce deferred tax assets to the
amount that is more likely than not to be realized. When assessing the
need for valuation allowances, we consider future taxable income and
ongoing prudent and feasible tax planning strategies. Should a change
in circumstances lead to a change in judgment about the realizabil
ity of deferred tax assets in future years, we would adjust related
valuation allowances in the period that the change in circumstances
occurs, along with a corresponding adjustment to our provision for
income taxes.
We recognize a tax position in our financial statements when it is
more likely than not that the position will be sustained upon examina
tion based on the technical merits of the position. That position is then
measured at the largest amount of benefit that is greater than 50 per
cent likely of being realized upon ultimate settlement. The resolution
of tax reserves and changes in valuation allowances could be material
to our results of operations for any period but is not expected to be
material to our financial position.
We are subject to a U.S. tax requirement that certain income earned
by foreign subsidiaries, referred to as Global Intangible Low-Taxed
Income (GILTI), must be included in the gross income of the subsidiary’s
U.S. shareholder. Accounting principles generally accepted in the U.S.
provide for an accounting policy election of either recognizing deferred
taxes for temporary differences expected to reverse as GILTI in future
years or recognizing such taxes as a current period expense when
incurred. We have elected to treat GILTI as a current period expense
when incurred.
Stock-Based Compensation
We recognize stock-based compensation expense associated with
options and restricted stock units (RSUs), which contain provisions that
such awards fully vest upon an employee’s retirement, ratably over the
shorter of the vesting period or the employees’ retirement eligibility
date. Accordingly, we recognize stock-based compensation associ
ated with options and RSUs subject to immediate retirement eligible
vesting provisions on the date of grant.
Compensation expense associated with our long-term performance
plan (LTPP) is recorded in the income statement over the three-year
period of the program based on the number of shares ultimately
expected to be awarded using our estimate of the most likely outcome
of achieving the performance objectives.
We recognize stock-based compensation expense associated with
price-vested stock options ratably over the vesting period as such
options do not contain provisions that fully vest these awards upon an
employee becoming retirement eligible.
We estimate forfeitures associated with all stock-based compensation
at the time of grant based on historical experience and revise this
estimate in subsequent periods if actual forfeitures differ.
56 McCormick & Company, Inc.
Derivative Instruments
We record all derivatives on our balance sheet at fair value. The fair value
of derivative instruments is recorded in our consolidated balance sheet
on the lines entitled “Other current assets,” “Other long-term assets,”
“Other accrued liabilities,” or “Other long-term liabilities” depending
on their fair value and maturity. Gains and losses representing either
hedge ineffectiveness, hedge components excluded from the assessment
of effectiveness, or hedges of translational exposure are recorded in
our consolidated income statement in the lines entitled “Other income
(expense), net” or “Interest expense.” In our consolidated cash flow
statement, settlements of cash flow and fair value hedges are classified
as operating activities; settlements of all other derivative instruments,
including instruments for which hedge accounting has been discontinued,
are classified consistent with the nature of the instruments.
Cash flow hedges. Qualifying derivatives are accounted for as cash
flow hedges when the hedged item is a forecasted transaction. Gains
and losses on these instruments are recorded in our consolidated
balance sheet on the line entitled “Accumulated other comprehensive
income (loss)” until the underlying transaction is recorded in earnings.
When the hedged item is realized, gains or losses are reclassified from
“Accumulated other comprehensive income (loss)” in our consolidated
balance sheet to our consolidated income statement on the same line
items as the underlying transactions.
Fair value hedges. Qualifying derivatives are accounted for as fair
value hedges when the hedged item is a recognized asset, liability, or
firm commitment. Gains and losses on these instruments are recorded
in earnings, offsetting gains and losses on the hedged item.
Net investment hedges. Qualifying derivative and nonderivative finan
cial instruments are accounted for as net investment hedges when the
hedged item is a nonfunctional currency investment in a subsidiary.
Gains and losses on these instruments are included in foreign currency
translation adjustments, a component of “Accumulated other compre
hensive income (loss)” in our consolidated balance sheet.
Employee Benefit and Retirement Plans
We sponsor defined benefit pension plans in the U.S. and certain
foreign locations. In addition, we sponsor defined contribution plans
in the U.S. We contribute to defined contribution plans in locations
outside the U.S., including government-sponsored retirement plans.
We also currently provide postretirement medical and life insurance
benefits to certain U.S. employees and retirees.
We recognize the overfunded or underfunded status of our defined
benefit pension plans as an asset or a liability in our balance sheet,
with changes in the funded status recorded through other comprehen
sive income in the year in which those changes occur.
The expected return on plan assets is determined using the expected
rate of return and a calculated value of plan assets referred to as the
market-related value of plan assets. Differences between assumed
and actual returns are amortized to the market-related value of assets
on a straight-line basis over five years.
We use the corridor approach in the valuation of defined benefit pension
and postretirement benefit plans. The corridor approach defers all
actuarial gains and losses resulting from variances between actual
results and actuarial assumptions. Those unrecognized gains and losses
are amortized when the net gains and losses exceed 10% of the greater
of the market-related value of plan assets or the projected benefit obli
gation at the beginning of the year. The amount in excess of the corridor
is amortized over the average remaining life expectancy of retired plan
participants, for plans whose benefits have been frozen, or the average
remaining service period to retirement date of active plan participants.
Accounting Pronouncements Adopted in 2022 and 2023
In March 2020, the FASB issued ASU No. 2020-04 Reference Rate
Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting that provides optional expedients for a
limited period of time for accounting for contracts, hedging relation
ships, and other transactions affected by the London Interbank Offered
Rate (LIBOR) or other reference rates expected to be discontinued.
These optional expedients can be applied from March 2020 through
December 31, 2022. In December 2022, the FASB issued ASU No.
2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset
Date of Topic 848 which deferred the sunset date of Topic 848 from
December 31, 2022 to December 31, 2024. The phase out of LIBOR ref
erence rates occurred at different times and began on January 1, 2022.
During 2022 and 2023, we amended our interest rate swaps expiring
in November 2025 and August 2027, the cross-currency interest rate
swap expiring in August 2027, and our five-year revolving credit facil
ity expiring in July 2026 to no longer use LIBOR. Our adoption of this
standard was completed during 2023. There was no material impact
to our consolidated financial statements associated with adopting this
new standard.
Accounting Pronouncements Partially Adopted in 2023
In September 2022, the FASB issued ASU No. 2022-04: Liabilities—
Supplier Finance Programs (Topic 450-50): Disclosure of Supplier
Finance Program Obligations that requires entities that use supplier
finance programs in connection with the purchase of goods and ser
vices to disclose the key terms of the programs and information about
obligations outstanding at the end of the reporting period, including
a roll forward of those obligations. The guidance does not affect the
recognition, measurement or financial statement presentation of
supplier finance program obligations. The new standard’s requirements
to disclose the key terms of the programs and information about
obligations outstanding are effective for all interim and annual periods
of our fiscal year ending November 30, 2024. We include disclo
sure regarding the key terms of the program and information about
obligations outstanding at the end of the reporting period in Note 1.
The standard’s requirement to disclose a roll forward of obligations
outstanding will be effective for our fiscal year ending November 30,
2025. We have not adopted the disclosure requirements regarding the
roll forward of the obligation. The partial adoption of this standard did
not have a material impact on our consolidated financial statements.
We do not expect the adoption of the future disclosure requirements
will have a material impact on our consolidated financial statements.
Recently Issued Accounting Pronouncements—Pending
Adoption
In November 2023, the FASB issued ASU No. 2023-07: Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclo
sures that requires entities to report incremental information about
significant segment expenses included in a segment’s profit or loss
measure as well as the name and title of the chief operating decision
maker. The guidance also requires interim disclosures related to
reportable segment profit or loss and assets that had previously only
been disclosed annually. The new standard is effective for our annual
period ending November 30, 2025 and our interim periods during the
2024 Annual Report 57
fiscal year ending November 30, 2026. The guidance does not affect
recognition or measurement in our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09: Income Taxes
(Topic 740): Improvements to Income Tax Disclosures that requires
entities to disclose additional information about federal, state, and
foreign income taxes primarily related to the income tax rate reconcili
ation and income taxes paid. The new standard also eliminates certain
existing disclosure requirements related to uncertain tax positions and
unrecognized deferred tax liabilities. The guidance is effective for our
fiscal year ending November 30, 2026. The guidance does not affect
recognition or measurement in our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03: Income State
ment—Reporting Comprehensive Income—Expense Disaggregation
Disclosures that requires more detailed disclosure about certain costs
and expenses presented in the income statement, including inventory
purchases, employee compensation, selling expense and deprecia
tion expense. The guidance is effective for our annual period ending
November 30, 2028 and our interim periods during the fiscal year
ending November 30, 2029. The guidance does not affect recognition
or measurement in our consolidated financial statements.
2. SPECIAL CHARGES
In our consolidated income statement, we include a separate line item
captioned “Special charges” in arriving at our consolidated operat
ing income. Special charges consist of expenses, including related
impairment charges, associated with certain actions undertaken to
reduce fixed costs, simplify or improve processes, and improve our
competitiveness and are of such significance in terms of both up-front
costs and organizational/structural impact to require advance approval
by our Management Committee, comprised of our senior management,
including our Chairman, President and Chief Executive Officer. Upon
presentation of any such proposed action (generally including details
with respect to estimated costs, which typically consist principally of
employee severance and related benefits, together with ancillary costs
associated with the action that may include a non-cash component,
such as an asset impairment, or a component which relates to inven
tory adjustments that are included in cost of goods sold; impacted
employees or operations; expected timing; and expected savings) to
the Management Committee and the Committee’s advance approval,
expenses associated with the approved action are classified as special
charges upon recognition and monitored on an ongoing basis through
completion. Certain ancillary expenses related to these actions
approved by our Management Committee do not qualify for accrual
upon approval but are included as special charges as incurred during
the course of the actions.
The following is a summary of special charges recognized for the years
ended November 30 (in millions):
2024
2023
2022
Employee severance and related benefits in
the income statement
$2.7
$34.4
$33.8
Other costs in the income statement
Cash
6.8
24.6
7.4
Non-Cash
—
2.2
24.0
Total special charges
$9.5 $61.2
$65.2
Gain on sale of exited brand
—
—
(13.6)
Total special charges
$9.5 $61.2
$51.6
The following is a summary of special charges by business segments
for the years ended November 30 (in millions):
2024
2023
2022
Consumer segment
$3.4 $35.8
$23.9
Flavor solutions segment
6.1
25.4
27.7
Total special charges
$9.5 $61.2
$51.6
As of November 30, 2024 and 2023, reserves associated with special
charges of $2.7 million and $25.2 million respectively, are included in
“Other accrued liabilities” in our consolidated balance sheet.
We continue to evaluate changes to our organization structure to
reduce fixed costs, simplify or improve processes, and improve our
competitiveness.
During 2024, we recognized $9.5 million of special charges, consist
ing of $4.5 million associated with our GOE program, as more fully
described below, and $5.0 million associated with the transition of a
manufacturing facility in EMEA, as more fully described below.
During 2023, we recognized $61.2 million of special charges, consist
ing principally of $42.8 million associated with our GOE program, as
more fully described below, $8.7 million associated with the transition
of a manufacturing facility in EMEA, as more fully described below,
and streamlining actions of $8.8 million in the Americas region, and
$0.9 million in the EMEA region.
During 2022, we recognized $51.6 million of special charges,
consisting principally of $23.3 million associated with the exit of our
consumer business in Russia, as more fully described below,
$21.5 million associated with the transition of a manufacturing facility
in EMEA, as more fully described below, and streamlining actions
of $8.0 million in the Americas region, and $7.1 million in the EMEA
region, and $5.6 million associated with a U.S. voluntary retirement
program, as more fully described below. These charges were partially
offset by a $13.6 million gain on the sale of our Kohinoor brand, as
well as a reversal of $2.2 million of estimated costs associated with
the exit of our rice product line in India upon settlement of a supply
agreement related to that product line.
In 2022, our Management Committee approved the GOE program.
The GOE program included a voluntary retirement plan, which includ
ed enhanced separation benefits to certain U.S. employees aged 55
years or older with at least ten years of service to the Company. This
voluntary retirement plan commenced in November 2022 and partic
ipants were required to submit their notifications by December 30,
2022. As of November 30, 2022, we had accrued special charges of
$5.6 million consisting of employee severance and related benefits.
Upon all eligible employees submitting their notifications by the end
of December 2022, we accrued an additional $19.7 million during
the first quarter of 2023. All related payments were made in fiscal
year 2023 as all of the affected employees retired from the Company
in 2023. Other special charges recognized during the year ended
November 30, 2023, under our GOE program included $13.4 million in
severance and related benefits costs and $9.7 million of third-party
expenses and other costs. Other special charges recognized during
the year ended November 30, 2024, under our GOE program included
$4.2 million in severance and related benefit costs and $0.3 million
of third-party expenses and other costs.
58 McCormick & Company, Inc.
In 2022, our Management Committee approved the exit of our
consumer business in Russia. As a result, during the year ended
November 30, 2022, we recognized $23.3 million of special
charges. These special charges included a non-cash impairment
charge of $10.0 million associated with the Kamis brand name to
reduce its carrying value to its estimated fair value, $3.3 million
of employee severance and $2.1 million of other related exit costs
directly associated with the exit plan, and a non-cash $7.9 million
reclassification of the cumulative translation adjustment previously
reflected in accumulated other comprehensive income (loss) to
earnings associated with the exit of our business in Russia.
In 2022, our Management Committee approved an initiative to
consolidate our manufacturing operations in the United Kingdom into
a net-zero carbon condiments manufacturing and distribution center
facility with state-of-the-art technology. We expect to execute these
changes to our supply chain operations and improve profitability,
from a combination of lower headcount and non-headcount costs, by
consolidating our operations into a scalable platform while expanding
our capacity. We expect the cost of the initiative to approximate
$41 million—to be recognized as special charges in our consolidated
income statement through 2024 - including employee severance and
related benefits, non-cash accelerated depreciation, equipment relo
cation costs, decommissioning and other property related lease exit
costs, all directly related to the initiative. During 2024, we recognized
a reversal of $1.5 million associated with severance and related bene
fit costs, based on a change in estimate, and $6.5 million in third-party
expenses and other costs. During 2023, we recognized $1.6 million in
accelerated depreciation and $7.1 million in third party expenses and
other costs. During 2022, we recognized $12.6 million in severance
and related benefits costs, $6.2 million in accelerated depreciation,
and $2.7 million in third-party expenses and other costs.
3. GOODWILL AND INTANGIBLE ASSETS
The following table displays intangible assets as of November 30:
2024
2023
(millions)
Gross
carrying
amount
Accumulated
amortization
Gross
carrying
amount
Accumulated
amortization
Definite-lived
intangible assets
$ 537.5
$262.5
$ 540.4
$229.3
Indefinite-lived
intangible assets:
Goodwill
5,227.5
—
5,260.1
—
Brand names and
trademarks
3,043.9
—
3,045.6
—
8,271.4
—
8,305.7
—
Total goodwill and
intangible assets
$8,808.9
$262.5
$8,846.1
$229.3
As more fully described in Note 2, in 2022, we exited our consumer
business in Russia and recognized a non-cash impairment charge of
$10.0 million associated with the Kamis brand name to reduce its
carrying value to its estimated fair value.
Intangible asset amortization expense was $35.0 million, $34.9 million
and $35.1 million for 2024, 2023, and 2022, respectively. At November 30,
2024, definite-lived intangible assets had a weighted-average remaining
life of approximately 9 years.
The changes in the carrying amount of goodwill by segment for the
years ended November 30 were as follows:
2024
2023
(millions)
Consumer
Flavor
Solutions
Consumer
Flavor
Solutions
Beginning of year
$3,609.6
$1,650.5
$3,568.2
$1,644.7
Decrease from sale of
business
—
—
—
(0.4)
Foreign currency
fluctuations
(26.5)
(6.1)
41.4
6.2
End of year
$3,583.1
$1,644.4
$3,609.6
$1,650.5
4. INVESTMENTS IN AFFILIATES
Income from unconsolidated operations was $74.2 million, $56.4
million, and $37.8 million in 2024, 2023, and 2022, respectively. Our
principal earnings from unconsolidated affiliates are from our 50%
interest in McCormick de Mexico, S.A. de C.V. Profit from this joint
venture represented 95% of income from unconsolidated operations in
2024, 95% in 2023 and 84% in 2022.
Summarized annual and year-end information from the financial
statements of unconsolidated affiliates representing 100% of the
businesses follows:
(millions)
2024
2023
2022
Net sales
$1,281.5
$1,193.2
$998.1
Gross profit
519.3
446.9
338.1
Net income
162.8
124.3
86.5
Current assets
$ 497.4
$ 522.1
$494.8
Noncurrent assets
112.7
122.4
109.7
Current liabilities
304.4
336.5
257.7
Noncurrent liabilities
6.9
7.6
8.4
Royalty income from unconsolidated affiliates was $37.0 million, $35.1
million and $27.3 million for 2024, 2023, and 2022, respectively.
5. FINANCING ARRANGEMENTS
Our outstanding debt, including finance leases, was as follows at
November 30:
(millions)
2024
2023
Short-term borrowings
Commercial paper
$ 431.3
$ 269.4
Other
51.8
2.8
$ 483.1
$ 272.2
Weighted-average interest rate of short-term
borrowings at year-end
4.7%
5.5%
Long-term debt
3.15% notes due 8/15/2024
$
—
$ 700.0
3.25% notes due 11/15/2025(1)
250.0
250.0
0.90% notes due 2/15/2026
500.0
500.0
3.40% notes due 8/15/2027(2)
750.0
750.0
2.50% notes due 4/15/2030(3)
500.0
500.0
1.85% notes due 2/15/2031
500.0
500.0
4.95% notes due 4/15/2033(4)
500.0
500.0
4.70% notes due 10/15/2034(5)
500.0
—
4.20% notes due 8/15/2047
300.0
300.0
7.63%–8.12% notes due 2024
—
55.0
Other, including finance leases
119.8
159.1
Unamortized discounts, premiums, debt issuance
costs and fair value adjustments(6)
(61.0)
(74.9)
3,858.8
4,139.2
Less current portion
265.2
799.3
$3,593.6
$3,339.9
2024 Annual Report 59
(1) Interest rate swaps, settled upon the issuance of these notes, effectively
set the interest rate on the $250 million notes at a weighted-average
fixed rate of 3.45%. Separately, the fixed interest rate on $100 million of
the 3.25% notes due in 2025 is effectively converted to a variable rate by
interest rate swaps through 2025. Net interest payments are based on
USD SOFR plus 1.487% (previously U.S. three-month LIBOR plus 1.22%)
with an effective variable rate of 5.92% as of November 30, 2024.
(2) Interest rate swaps, settled upon the issuance of these notes, effectively
set the interest rate on the $750 million notes at a weighted-average
fixed rate of 3.44%. Separately, the fixed interest rate on $250 million of
the 3.40% notes due in 2027 is effectively converted to a variable rate by
interest rate swaps through 2027. Net interest payments are based on
USD SOFR plus 0.907% (previously U.S. three-month LIBOR plus 0.685%)
with an effective rate of 5.73% as of November 30, 2024.
(3) Interest rate swaps, settled upon the issuance of these notes, effectively
set the interest rate on the $500 million notes at a weighted-average
fixed rate of 2.62%. Separately, the fixed interest rate on $250 million of
the 2.50% notes due in 2030 is effectively converted to a variable rate by
interest rate swaps through 2030. Net interest payments are based on
USD SOFR plus 0.684% with an effective rate of 5.22% as of November
30, 2024.
(4) Treasury lock agreements, settled upon issuance of these notes,
effectively set the interest rate on these $500 million notes at a
weighted-average fixed rate of 5.00%.
(5) Treasury lock agreements, settled upon issuance of these notes,
effectively set the interest rate on these $500 million notes at a
weighted-average fixed rate of 4.68%.
(6) Includes unamortized discounts, premiums, and debt issuance costs of
$(26.0) million and $(25.4) million as of November 30, 2024 and 2023,
respectively. Includes fair value adjustment associated with interest rate
swaps designated as fair value hedges of $(35.0) million and $(49.5)
million as of November 30, 2024 and 2023, respectively.
Maturities of long-term debt, including finance leases, during the
fiscal years subsequent to November 30, 2024 are as follows (in
millions):
2025
$ 265.2
2026
509.3
2027
759.7
2028
10.3
2029
18.0
Thereafter
2,357.3
In October 2024, we issued $500 million aggregate principal amount of
4.70% unsecured senior notes due 2034. Interest is payable semi-
annually in April and October each year, beginning on April 15, 2025.
As part of the issuance of new debt, we entered and settled treasury
locks in a notional amount of $150 million to manage our interest rate
risk associated with the issuance of the unsecured senior notes. We
designated the treasury lock arrangements as cash flow hedges with
the realized gain of $0.9 million to be amortized to interest expense
over the life of the underlying debt.
In April 2023, we issued $500 million aggregate principal amount of
4.95% unsecured senior notes due 2033. Interest is payable semi-
annually in April and October of each year, beginning on October 15,
2023. As part of the issuance of new debt, we entered and settled
treasury locks in a notional amount of $250.0 million to manage
our interest rate risk associated with the issuance of the unsecured
senior notes. We designated the treasury lock arrangements as cash
flow hedges with the realized loss of $2.6 million to be amortized to
interest expense over the life of the underlying debt.
We have available credit facilities with domestic and foreign banks for
various purposes. Some of these lines are committed lines and others
are uncommitted lines and could be withdrawn at various times. Our
committed lines include a five-year $1.5 billion revolving credit facility,
which will expire in June 2026 and a 364-day $500 million revolving
credit facility, which was entered into in August 2024 and expires
in August 2025. We previously maintained a 364-day $500 million
revolving credit facility that was entered into in June 2023 and expired
in June 2024. Upon entering into the June 2023 364-day $500 million
revolving credit facility, we simultaneously cancelled the 364-day $500
million revolving credit facility which was entered into in July 2022
and was set to expire in July 2023. In the second quarter of 2023, we
amended our five-year revolving credit facility expiring in June 2026 to
no longer use LIBOR. The current pricing for the five-year credit facility,
on a fully drawn basis, is Term SOFR plus 1.25% (previously LIBOR plus
1.25%). The pricing of that credit facility is based on a credit rating
grid that contains a fully drawn maximum pricing of the credit facility
equal to Term SOFR plus 1.75% (previously LIBOR plus 1.75%). The
current pricing for the 364-day credit facility, on a fully drawn basis,
is Term SOFR plus 1.23%. The pricing of that 364-day credit facility
is based on a credit rating grid that contains a fully drawn maximum
pricing of the credit facility equal to Term SOFR plus 1.60%. These
credit facilities require a fee, and commitment fees were $2.3 million,
$2.4 million and $2.1 million for 2024, 2023, and 2022, respectively.
These credit facilities support our commercial paper program and,
after $431.3 million was used to support issued commercial paper,
we have $1,568.7 million of capacity at November 30, 2024. The
provisions of these revolving credit facilities restrict subsidiary indebt
edness and require us to maintain a minimum interest coverage ratio.
As of November 30, 2024, our capacity under both revolving credit
facilities was not affected by these covenants. We do not expect that
these covenants would limit our access to our revolving credit facilities
for the foreseeable future.
In addition, we have several uncommitted lines totaling $326.8 million,
which have a total unused capacity at November 30, 2024 of $308.9
million. These lines, by their nature, can be withdrawn based on the
lenders’ discretion.
In 2023, we executed a nonrecourse accounts receivable sale program
whereby certain eligible U.S. receivables are sold to third party finan
cial institution in exchange for cash. The program provides us with
an additional means for managing liquidity. Under the terms of the
arrangement, we act as the collecting agent on behalf of the financial
institution. We account for the transfer of receivables as a sale at the
point control is transferred through derecognition of the receivable on
our consolidated balance sheet. The outstanding amount of receiv
ables sold under this program were approximately $106.9 million and
$19.6 million as of November 30, 2024 and 2023, respectively. The
incremental costs of factoring receivables under this arrangement
were insignificant in 2024 and 2023. The proceeds from the sales of
receivables are included in cash flows from operating activities on
the consolidated cash flow statement. As collecting agent on the sold
receivables, we had $9.6 million of cash collected that was not yet
remitted to the third party financial institution as of November 30,
2024. This obligation is reported within other accrued liabilities on
the consolidated balance sheet as of November 30, 2024 and within
cash flows from financing activities on the consolidated cash flow
statement.
60 McCormick & Company, Inc.
At November 30, 2024, we had no outstanding guarantees with
terms of one year or less. As of November 30, 2024 and 2023, we had
outstanding letters of credit of $61.5 million and $62.4 million, respec
tively. These letters of credit typically act as a guarantee of payment to
certain third parties in accordance with specified terms and conditions.
The unused portion of our letter of credit facility was $13.7 million at
November 30, 2024.
6. LEASES
Our lease portfolio primarily consists of (i) certain real estate, including
those related to a number of administrative, distribution and manu
facturing locations; (ii) certain machinery and equipment, including
forklifts; and (iii) automobiles, delivery trucks and other vehicles.
A limited number of our lease agreements include rental payments
that are adjusted periodically based on a market rate or index. Our
lease agreements generally do not contain residual value guarantees
or material restrictive covenants, with the exception of the non-
cancellable synthetic lease discussed below.
The following presents the components of our lease expense for the
years ended November 30 (in millions):
2024
2023
2022
Operating lease cost
$75.7
$74.6
$47.0
Finance lease cost:
Amortization of ROU assets
9.0
9.0
9.0
Interest on lease liabilities
3.7
3.9
4.1
Net lease cost(1)
$88.4
$87.5
$60.1
(1) Net lease cost does not include short-term leases or sublease income, both of which
are immaterial.
Supplemental balance sheet information related to leases as of
November 30 were as follows (in millions):
Leases
Classification
2024
2023
Assets:
Operating lease ROU
assets
Other long-term assets
$211.0
$220.0
Finance lease ROU
assets
Property, plant and
equipment, net
86.1
94.8
Total leased assets
$297.1
$314.8
Liabilities:
Current
Operating
Other accrued liabilities
$ 55.7
$ 53.3
Finance
Current portion of
long-term debt
8.8
8.3
Non-current
Operating
Other long-term liabilities
166.6
179.9
Finance
Long-term debt
94.5
103.0
Total lease liabilities
$325.6
$344.5
In October 2020, we entered into a non-cancellable synthetic lease
to consolidate as well as expand our distribution footprint in the
mid-Atlantic region. We began to utilize this facility in September
2022. The five-year lease term will expire in November 2027. As of
November 30, 2024, the total ROU asset associated with this facility
was $50.6 million with a related lease obligation of $52.5 million,
of which $16.9 million was included in the other accrued liabilities
and $35.6 million was included in other long-term liabilities. As
of November 30, 2023, the total ROU asset associated with this
building was $64.9 million with a related lease obligation of
$68.0 million, of which $16.2 million was included in other accrued
liabilities and $51.8 million was included in other long-term liabili
ties. Rental payments include both a fixed and a variable component.
The variable component is based on SOFR plus a margin, based on
our credit rating. During the years ended November 30, 2024, 2023
and 2022, we recognized $28.8 million, $27.9 million, and $5.2
million, respectively, of rent expense related to the leased asset.
The lease contains options to negotiate a renewal of the lease or
to purchase or request the lessor to sell the facility at the end of
the lease term. The lease arrangement contains a residual value
guarantee of 76.5% of the lessor’s total construction cost, which
approximated $310 million. We do not believe it is probable that any
material amounts will be owed under these guarantees. Therefore,
no material amounts related to the residual value guarantees are
included in the lease payments used to measure the right-of-use as
sets and lease liabilities. The lease also contains covenants that are
consistent with our revolving credit facilities, as disclosed in Note 5.
Our Corporate functions, Americas’ leadership, and U.S. staff operate
out of our Hunt Valley, Maryland headquarters office building. The
15-year lease for that building began in April 2019 and is recognized as
a finance lease. During each of the years ended November 30, 2024,
2023, and 2022, we recognized amortization expense of $8.7 million
related to the leased asset. As of November 30, 2024, the total lease
obligation associated with this building was $100.9 million, of which
$8.5 million was included in the current portion of long-term debt and
$92.4 million was included in long-term debt. As of November 30,
2023, the total lease obligation was $108.9 million, of which
$8.0 million was included in the current portion of long-term debt and
$100.9 million was included in long-term debt.
Information regarding our lease terms and discount rates as of November 30 were as follows:
2024
2023
Weighted-average
remaining lease term
(years)
Weighted-average
discount rate
Weighted-average
remaining lease term
(years)
Weighted-average
discount rate
Operating leases
5.2
3.9%
5.7
3.9%
Finance leases
10.2
3.4%
11.2
3.4%
2024 Annual Report 61
The future maturity of our lease liabilities as of November 30, 2024
were as follows (in millions):
Operating
leases
Finance
leases
Total
2025
$ 63.9
$ 11.8
$ 75.7
2026
58.1
12.0
70.1
2027
52.3
12.2
64.5
2028
20.6
12.5
33.1
2029
13.9
12.7
26.6
Thereafter
40.1
69.0
109.1
Total lease payments
248.9
130.2
379.1
Less: Imputed interest
26.6
26.9
53.5
Total lease liabilities
$222.3
$103.3
$325.6
Supplemental cash flow and other information related to leases for the
years ended November 30 were as follows (in millions):
2024
2023
2022
Cash paid for amounts included in the
measurements of lease liabilities:
Operating cash flows used for operating
leases
$66.8
$64.5
$ 41.4
Operating cash flows used for finance
leases
3.7
3.9
4.1
Financing cash flows used for finance
leases
8.0
7.6
7.3
ROU assets obtained in exchange for lease
liabilities
Operating leases
$47.6
$52.1
$133.8
7. FINANCIAL INSTRUMENTS
We use derivative financial instruments to enhance our ability to man
age risk, including foreign currency and interest rate exposures, which
exist as part of our ongoing business operations. We do not enter into
contracts for trading purposes, nor are we a party to any leveraged
derivative instrument and all derivatives are designated as hedges.
We are not a party to master netting arrangements, and we do not
offset the fair value of derivative contracts with the same counterparty
in our financial statement disclosures. The use of derivative financial
instruments is monitored through regular communication with senior
management and the use of written guidelines.
Foreign Currency
We are potentially exposed to foreign currency fluctuations affecting
net investments in subsidiaries, transactions (both third-party and inter
company) and earnings denominated in foreign currencies. Management
assesses foreign currency risk based on transactional cash flows and
translational volatility and may enter into forward contract and currency
swaps with highly-rated financial institutions to reduce fluctuations in
the long or short currency positions. Forward contracts are generally
less than 12 months duration. Currency swap agreements are estab
lished in conjunction with the terms of the underlying debt issues.
The following is a summary of the notional amounts of outstanding
foreign currency exchange contracts as of November 30, 2024 and 2023:
(millions)
2024
2023
Fair value hedges
$ 818.1
$ 765.4
Cash flow hedges
216.1
235.0
Total
$1,034.2
$1,000.4
All of these contracts were designated as hedges of anticipated
purchases denominated in a foreign currency or hedges of foreign
currency denominated assets or liabilities. Hedge ineffectiveness was
not material. All foreign currency exchange contracts outstanding at
November 30, 2024 have durations of less than 12 months, including
$200.1 million of notional contracts that have durations of less than
one month and are used to hedge short-term cash flow funding.
Contracts which are designated as hedges of foreign currency denom
inated assets are considered fair value hedges. These foreign currency
exchange contracts manage both exposure to currency fluctuations in
certain intercompany loans between subsidiaries as well as currency
exposure to third-party non-functional currency assets or liabilities.
Gains and losses from contracts that are designated as hedges of
assets, liabilities or firm commitments are recognized through income,
offsetting the change in fair value of the hedged item. Contracts which
are designated as hedges of anticipated purchases denominated in a
foreign currency (generally purchases of raw materials in U.S. dollars by
operating units outside the U.S.) are considered cash flow hedges. The
gains and losses on these contracts are deferred in accumulated other
comprehensive income until the hedged item is recognized in cost of
goods sold, at which time the net amount deferred in accumulated other
comprehensive income is also recognized in cost of goods sold.
We also utilize cross currency interest rate swap contracts that are
designated as net investment hedges. Any gains or losses on net
investment hedges are included in foreign currency translation adjust
ments in accumulated other comprehensive loss.
As of November 30, 2024 and 2023, we had cross currency interest
rate swap contracts of (i) $250 million notional value to receive
$250 million at USD SOFR plus 0.907% and pay £194.1 million at
three-month GBP SONIA plus 0.859% and (ii) £194.1 million notional
value to receive £194.1 million at three-month GBP SONIA plus
0.859% and pay €221.8 million at three-month Euro EURIBOR plus
0.808%. These cross-currency interest rate swap contracts expire in
August 2027. In conjunction with the phase-out of LIBOR, during 2023
we amended the terms of this cross currency swap such that, effective
February 15, 2023, we pay and receive at USD SOFR plus 0.907%
(previously USD LIBOR plus 0.685%).
As of November 30, 2024, we also had cross currency interest rate
swap contracts of $250 million notional value to receive $250 million
at USD SOFR plus 0.684% and pay £184.1 million at GBP SONIA plus
0.574% and (ii) £184.1 million notional value to receive £184.1 million
at GBP SONIA plus 0.574% and pay €219.2 million at Euro ESTR plus
0.667%, both of which expire in April 2030.
Interest Rates
We finance a portion of our operations with both fixed and variable rate
debt instruments, primarily commercial paper, notes and bank loans. We
utilize interest rate swap agreements to minimize worldwide financing
costs and to achieve a desired mix of variable and fixed rate debt.
62 McCormick & Company, Inc.
The following is a summary of our outstanding interest rate swaps as of November 30, 2024 and 2023 ($ amounts in millions).
Fair value hedge of changes in fair value of:
$250 3.25% notes due 2025
$750 3.40% notes due 2027
$500 2.50% notes due 2030
Notional
$100.0
$250.0
$250.0
Receive rate
3.25%
3.40%
2.50%
Pay rate
SOFR + 1.487%(1)
SOFR + 0.907%(2)
SOFR + 0.684%
Expiration
November 2025
August 2027
April 2030
(1) In 2023, we amended our $100 million interest rate swaps which expire in November 2025 such that, effective February 15, 2023, we pay and receive at USD SOFR plus 1.487% (previously
U.S. three-month LIBOR plus 1.22%).
(2) In 2023, we amended our $250 million interest rate swaps which expire in August 2027 such that, effective February 15, 2023, we pay and receive at USD SOFR plus 0.907% (previously U.S.
three-month LIBOR plus 0.685%).
Any unrealized gain or loss on these swaps was offset by a corresponding increase or decrease in the value of the hedged debt. Hedge ineffectiveness
was not material.
The following tables disclose the notional amount and fair values of derivative instruments on our consolidated balance sheet:
As of November 30, 2024:
(millions)
Asset Derivatives
Liability Derivatives
Derivatives
Balance sheet location
Notional amount
Fair value
Balance sheet location
Notional amount
Fair value
Interest rate contracts
Other current
assets/Other long-term assets
$ —
$ —
Other accrued liabilities/
Other long-term liabilities
$600.0
$37.9
Foreign exchange contracts Other current assets
374.4
5.2
Other accrued liabilities
659.8
12.5
Cross currency contracts
Other current assets/
Other long-term assets
945.5
36.8
Other accrued liabilities/
Other long-term liabilities
—
—
Total
$42.0
$50.4
As of November 30, 2023:
(millions)
Asset Derivatives
Liability Derivatives
Derivatives
Balance sheet location
Notional amount
Fair value
Balance sheet location
Notional amount
Fair value
Interest rate contracts
Other current assets/
Other long-term assets
$ —
$ —
Other accrued liabilities/
Other long-term liabilities
$ 600.0
$ 52.8
Foreign exchange contracts
Other current assets
161.3
2.5
Other accrued liabilities
839.1
16.0
Cross currency contracts
Other current assets/
Other long-term assets
719.6
24.6
Other accrued liabilities/
Other long-term liabilities
238.9
7.5
Total
$27.1
$76.3
The following tables disclose the impact of derivative instruments on other comprehensive income (OCI), accumulated other comprehensive income
(AOCI) and our consolidated income statement for the years ended November 30, 2024, 2023, and 2022:
Fair value hedges (millions)
Income statement
location
Income (expense)
Derivative
2024
2023
2022
Interest rate contracts
Interest expense
$(19.7)
$(17.7)
$ 4.0
Income statement
location
Gain (loss) recognized in income
Income statement
location
Gain (loss) recognized in income
Derivative
2024
2023
2022
Hedged Item
2024
2023
2022
Foreign exchange contracts
Other income, net
$(9.0)
$(16.2)
$ 6.6
Intercompany loans
Other income, net
$ 4.0
$ 15.6
$ (6.3)
Cash flow hedges (millions)
Gain (loss)
recognized in OCI
Income statement location
Gain (loss)
reclassified from AOCI
Derivative
2024
2023
2022
2024
2023
2022
Interest rate contracts
$ —
$ (2.6)
$ 18.7
Interest expense, Other income, net
$ (0.6)
$ 0.1
$ 19.2
Foreign exchange contracts
(0.1)
(0.7)
5.3
Cost of goods sold
1.6
0.2
1.6
Total
$(0.1)
$ (3.3)
$24.0
$ 1.0
$ 0.3
$20.8
2024 Annual Report 63
In March 2022, we entered into treasury lock arrangements with
a notional amount totaling $200 million in order to manage our
interest rate risk associated with the anticipated issuance of at least
$200 million of fixed rate debt by August 2022. These treasury locks
had a maturity date of August 12, 2022 and an average fixed rate of
1.89%. We designated these treasury lock arrangements as cash flow
hedges with any unrealized gain, prior to settlement, recognized in
accumulated other comprehensive income. In July 2022, we settled
the $200 million notional treasury locks upon determining we would
not issue fixed rate debt but rather enter into the previously described
$500 million 364-day revolving credit facility. The proceeds received
upon settlement of these treasury lock arrangements were $18.7
million and were recognized in Other income, net in our consolidated
income statements for the year ended November 30, 2022.
The amount of gain or loss recognized in income on the ineffective
portion of derivative instruments is not material. For all cash flow and
settled interest rate fair value hedge derivatives, the net amount of
accumulated other comprehensive income expected to be reclassified
into income related to these contracts in the next twelve months is a
$0.1 million decrease to earnings.
Net investment hedges (millions)
Gain (loss)
recognized in OCI
Income statement location
Gain (loss)
excluded from the assessment of hedge
effectiveness
Derivative
2024
2023
2022
2024
2023
2022
Cross currency contracts
$19.5
$(18.4)
$37.6
Interest expense
$9.1
$11.2
$7.3
For all net investment hedges, no amounts have been reclassified
out of other comprehensive income (loss). The amounts noted in the
tables above for OCI do not include any adjustments for the impact of
deferred income taxes.
Concentrations of Credit Risk
We are potentially exposed to concentrations of credit risk with
trade accounts receivable and financial instruments. The customers
of our consumer segment are predominantly food retailers and food
wholesalers. Consolidations in these industries have created larger
customers. In addition, competition has increased with the growth
in alternative channels including mass merchandisers, dollar stores,
warehouse clubs, discount chains and e-commerce. This has caused
some customers to be less profitable and increased our exposure
to credit risk. We generally have a large and diverse customer base
which limits our concentration of credit risk. At November 30, 2024,
we did not have amounts due from any single customer that exceed
10% of consolidated trade accounts receivable. Current credit markets
are highly volatile and some of our customers and counterparties are
highly leveraged. We continue to closely monitor the credit worthiness
of our customers and counterparties and generally do not require col
lateral. We believe that the allowance for doubtful accounts properly
recognized trade receivables at realizable value. We consider nonper
formance credit risk for other financial instruments to be insignificant.
8. FAIR VALUE MEASUREMENTS
Fair value can be measured using valuation techniques, such as the
market approach (comparable market prices), the income approach
(present value of future income or cash flow) and the cost approach
(cost to replace the service capacity of an asset or replacement cost).
Accounting standards utilize a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value into three
broad levels. The following is a brief description of those three levels:
• Level 1: Observable inputs such as quoted prices (unadjusted) in
active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices that are observable for the
asset or liability, either directly or indirectly. These include quoted
prices for similar assets or liabilities in active markets and quoted
prices for identical or similar assets or liabilities in markets that are
not active.
• Level 3: Unobservable inputs that reflect management’s own
assumptions.
Our population of assets and liabilities subject to fair value measurements on a recurring basis are as follows:
Fair value measurements
using fair value hierarchy as
of November 30, 2024
(millions)
Fair value
Level 1
Level 2
Assets:
Cash and cash equivalents
$186.1
$186.1
$ —
Insurance contracts
129.2
—
129.2
Bonds and other long-term investments
1.3
1.3
—
Foreign currency derivatives
5.2
—
5.2
Cross currency contracts
36.8
—
36.8
Total
$358.6
$187.4
$171.2
Liabilities:
Interest rate derivatives
$ 37.9
$ —
$ 37.9
Foreign currency derivatives
12.5
—
12.5
Total
$ 50.4
$ —
$ 50.4
64 McCormick & Company, Inc.
Fair value measurements
using fair value hierarchy as of
November 30, 2023
(millions)
Fair value
Level 1
Level 2
Assets:
Cash and cash equivalents
$166.6
$166.6
$ —
Insurance contracts
114.7
—
114.7
Bonds and other long-term investments
0.3
0.3
—
Foreign currency derivatives
2.5
—
2.5
Cross currency contracts
24.6
—
24.6
Total
$308.7
$166.9
$141.8
Liabilities:
Interest rate derivatives
$ 52.8
$ —
$ 52.8
Foreign currency derivatives
16.0
—
16.0
Cross currency contracts
7.5
—
7.5
Total
$ 76.3
$ —
$ 76.3
At November 30, 2024 and 2023, we had no financial assets or liabili
ties that were subject to a level 3 fair value measurement.
At November 30, 2024 and 2023, the carrying amount of interest rate
derivatives, foreign currency derivatives, cross currency contracts,
insurance contracts, and bond and other long-term investments are
equal to their respective fair values. Because of their short-term
nature, the amounts reported in the balance sheet for cash and cash
equivalents, receivables, short-term borrowings, and trade accounts
payable approximate fair value. Investments in affiliates are not readily
marketable, and it is not practicable to estimate their fair value.
Insurance contracts, bonds, and other long-term investments are com
prised of fixed income and equity securities held for certain non-qual
ified U.S. employee benefit plans and are stated at fair value on the
balance sheet. The fair values of insurance contracts are based upon
the underlying values of the securities in which they are invested and
are from quoted market prices from various stock and bond exchanges
for similar type assets. The fair values of bonds and other long-term
investments are based on quoted market prices from various stock and
bond exchanges. The fair values for interest rate derivatives, foreign
currency derivatives, and cross currency contracts are based on values
for similar instruments using models with market-based inputs.
The carrying amount and fair value of long-term debt, including the current portion, as of November 30 were as follows:
(millions)
2024
2023
Carrying amount
Fair value
Carrying amount
Fair value
Long-term debt (including current portion)
$3,858.8
$3,677.1
$4,139.2
$3,841.0
Level 1 valuation techniques
3,557.3
3,682.0
Level 2 valuation techniques
119.8
159.0
The fair value for Level 2 long-term debt is determined by using quoted prices for similar debt instruments.
9. ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table sets forth the components of accumulated other comprehensive loss, net of tax where applicable, as of November 30 (in millions):
2024
2023
Accumulated other comprehensive loss, net of tax where applicable
Foreign currency translation adjustment(1)
$(392.0)
$(305.7)
Unrealized net gain on foreign currency exchange contracts
2.1
0.8
Unamortized value of settled interest rate swaps
(1.6)
(2.7)
Pension and other postretirement costs
(99.7)
(81.0)
$(491.2)
$(388.6)
(1) During the year ended November 30, 2024, the foreign currency translation adjustment of accumulated other comprehensive loss increased on a net basis by
$86.3 million, inclusive of $19.5 million of unrealized gains associated with net investment hedges. During the year ended November 30, 2023, the foreign
currency translation adjustment of accumulated other comprehensive loss decreased on a net basis by $(99.6) million, inclusive of $(18.4) million of unrealized
losses associated with net investment hedges. These net investment hedges are more fully described in Note 7.
2024 Annual Report 65
The following table sets forth the amounts reclassified from accumulated other comprehensive income (loss) and into consolidated net income for the
years ended November 30:
(millions)
Affected line items in the consolidated
income statement
Accumulated other comprehensive income (loss) components
2024
2023
2022
(Gains)/losses on cash flow hedges:
Interest rate derivatives
$ 0.6
$(0.1)
$ (0.5)
Interest expense
Treasury lock contracts(1)
—
—
(18.7)
Other income, net
Foreign exchange contracts
(1.6)
(0.2)
(1.6)
Cost of goods sold
Total before taxes
(1.0)
(0.3)
(20.8)
Tax effect
0.2
0.1
4.9
Income taxes
Net, after tax
$(0.8)
$(0.2)
$(15.9)
Amortization of pension and postretirement benefit adjustments:
Amortization of prior service costs(2)
$ 0.3
$ 0.3
$ 0.3
Other income, net
Amortization of net actuarial (gains) losses(2)
(3.4)
(2.1)
9.9
Other income, net
Total before taxes
(3.1)
(1.8)
10.2
Tax effect
0.8
0.4
(2.4)
Income taxes
Net, after tax
$(2.3)
$(1.4)
$ 7.8
(1) The settlement of these treasury locks is further described in Note 7.
(2) This accumulated other comprehensive income (loss) component is included in the computation of total pension expense and total other postretirement expense
(refer to Note 10 for additional details).
10. EMPLOYEE BENEFIT AND RETIREMENT PLANS
We sponsor defined benefit pension plans in the U.S. and certain
foreign locations. In addition, we sponsor defined contribution plans
in the U.S. We contribute to defined contribution plans in locations
outside the U.S., including government-sponsored retirement plans.
We also currently provide postretirement medical and life insurance
benefits to certain U.S. employees and retirees.
We previously froze the accrual of certain defined benefit pension
plans in the U.S., the United Kingdom and Canada with effective dates
of the plan being frozen occurring between December 31, 2016 and
November 30, 2019. Although those plans have been frozen, employ
ees who are participants in the plans retained benefits accumulated
up to the date of the freeze, based on credited service and eligible
earnings, in accordance with the terms of the plans.
Included in our consolidated balance sheet as of November 30, 2024
on the line entitled “Accumulated other comprehensive loss” was
$127.2 million ($99.7 million net of tax) related to net unrecognized
actuarial losses that have not yet been recognized in net periodic
pension or postretirement benefit cost.
Defined Benefit Pension Plans
The significant assumptions used to determine benefit obligations are as follows as of November 30:
United States
International
2024
2023
2024
2023
Discount rate—funded plans
5.3%
6.0%
4.7%
5.1%
Discount rate—unfunded plan
5.3%
6.0%
—%
—%
Salary scale
—%
—%
2.9%
2.9%
The significant assumptions used to determine pension expense for the years ended November 30 are as follows:
United States
International
2024
2023
2022
2024
2023
2022
Discount rate—funded plans
6.0%
5.4%
2.9%
5.1%
4.5%
2.1%
Discount rate—unfunded plan
6.0%
5.4%
2.8%
—%
—%
—%
Salary scale
—%
—%
—%
2.9%
2.9%
2.9%
Expected return on plan assets
6.3%
6.8%
6.8%
5.2%
4.9%
3.7%
Annually, we undertake a process, with the assistance of our external investment consultants, to evaluate the appropriate projected rates of return to
use for our pension plans’ assumptions. We engage our investment consultants’ research teams to develop capital market assumptions for each asset
category in our plans to project investment returns into the future. The specific methods used to develop expected return assumptions vary by asset
category. We adjust the outcomes for the fact that plan assets are invested with actively managed funds and subject to tactical asset reallocation.
66 McCormick & Company, Inc.
Our pension expense (income) for the years ended November 30 was as follows:
United States
International
(millions)
2024
2023
2022
2024
2023
2022
Service cost
$ 1.5
$ 2.0
$ 3.6
$ 0.6
$ 0.6
$ 0.9
Interest costs
37.3
36.1
26.3
10.6
9.9
7.0
Expected return on plan assets
(39.6)
(42.3)
(42.8)
(16.1)
(15.1)
(12.3)
Amortization of prior service costs
0.5
0.5
0.5
0.1
0.1
0.1
Amortization of net actuarial loss (gain)
(0.4)
0.2
8.6
(0.3)
(0.1)
1.3
Settlement loss
—
—
—
—
—
0.3
Total pension expense (income)
$ (0.7)
$ (3.5)
$ (3.8)
$ (5.1)
$ (4.6)
$ (2.7)
A roll forward of the benefit obligation, fair value of plan assets and a reconciliation of the pension plans’ funded status as of November 30, the
measurement date, follows:
United States
International
(millions)
2024
2023
2024
2023
Change in benefit obligation:
Benefit obligation at beginning of year
$645.3
$687.5
$214.0
$ 220.1
Service cost
1.5
2.0
0.6
0.6
Interest costs
37.3
36.1
10.6
9.9
Plan settlements
—
—
—
(0.1)
Actuarial (gain) loss
56.3
(34.7)
7.8
(11.1)
Benefits paid
(45.4)
(45.6)
(13.5)
(13.3)
Foreign currency impact
—
—
(2.6)
7.9
Benefit obligation at end of year
$695.0
$645.3
$216.9
$214.0
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
$630.7
$657.7
$267.0
$ 275.1
Actual return on plan assets
76.2
10.3
21.1
(5.3)
Employer contributions
9.2
8.3
0.8
0.9
Benefits paid
(45.4)
(45.6)
(13.5)
(13.3)
Foreign currency impact
—
—
(3.0)
9.6
Fair value of plan assets at end of year
$670.7
$630.7
$272.4
$267.0
Funded status
$ (24.3)
$ (14.6)
$ 55.5
$ 53.0
Pension plans in which accumulated benefit obligation exceeded plan assets
Projected benefit obligation
$116.3
$ 109.1
$ 14.7
$ 14.0
Accumulated benefit obligation
113.3
105.5
12.3
11.7
Fair value of plan assets
38.0
32.7
1.8
1.6
The accumulated benefit obligation is the present value of pension
benefits (whether vested or unvested) attributed to employee service
rendered before the measurement date and based on employee service
and compensation prior to that date. The accumulated benefit obliga
tion differs from the projected benefit obligation in that it includes no
assumption about future compensation or service levels. The accumu
lated benefit obligation for the U.S. pension plans was $692.0 million
and $641.8 million as of November 30, 2024 and 2023, respectively.
The accumulated benefit obligation for the international pension plans
was $214.5 million and $211.8 million as of November 30, 2024 and
2023, respectively.
Included in the U.S. in the preceding table is a benefit obligation of
$75.1 million and $72.7 million for 2024 and 2023, respectively, related
to our Supplemental Executive Retirement Plan (SERP). The assets
related to this plan, which totaled $73.1 million and $70.2 million as
of November 30, 2024 and 2023, respectively, are held in a rabbi trust
and accordingly have not been included in the preceding table.
Amounts recorded in the balance sheet for all defined benefit pension
plans as of November 30 consist of the following:
United States
International
(millions)
2024
2023
2024
2023
Non-current pension asset
$54.0
$61.7
$68.4
$65.3
Accrued pension liability
78.3
76.4
12.9
12.4
Deferred income tax assets
28.6
23.3
3.8
3.3
Accumulated other comprehensive loss, net of tax
84.8
70.4
31.1
28.6
Our defined benefit pension plans investment strategy is subject to
the asset/liability profiles of the plans in each individual country.
The investment objectives of the defined benefit pension plans are
to provide assets to meet the current and future obligations of the
plans at a reasonable cost to us. Our goal is to optimize the long-
term return on plan assets at a moderate level of risk. The invest
ment policy specifies the type of investment vehicles appropriate
for the plans, asset allocation guidelines, criteria for the selection
2024 Annual Report 67
of investment managers, procedures to monitor overall investment
performance as well as investment manager performance. Higher-
returning assets include mutual, co-mingled and other funds
comprised of equity securities, utilizing both active and passive
investment styles. These more volatile assets are balanced with
less volatile assets, primarily mutual, co-mingled and other funds
comprised of fixed income securities. Professional investment firms
are engaged to provide advice on the selection and monitoring of
investment funds, and to provide advice on the allocation of plan
assets across the various fund managers. This advice is based in part
on the duration of each plan’s liability.
The allocations of U.S. pension plan assets as of November 30, by
asset category, were as follows:
Actual
2024
Asset Category
2024
2023
Target
Equity securities
22.1%
34.3%
25.3%
Fixed income securities
69.9%
53.0%
69.2%
Other
8.0%
12.7%
5.5%
Total
100.0%
100.0%
100.0%
The allocations of the international pension plans’ assets as of
November 30, by asset category, were as follows:
Actual
2024
Asset Category
2024
2023
Target
Equity securities
7.9%
11.3%
7.3%
Fixed income securities
86.4%
83.0%
86.8%
Other
5.7%
5.7%
5.9%
Total
100.0%
100.0%
100.0%
The following tables set forth by level, within the fair value hierarchy
as described in Note 8, pension plan assets at their fair value as of
November 30 for the United States and international plans:
As of November 30, 2024
United States
(millions)
Total
fair
value
Level 1
Level 2
Cash and cash equivalents
$ 4.4
$4.4
$ —
Equity securities:
U.S. equity securities(a)
81.2
—
81.2
International equity securities(b)
50.3
—
50.3
Fixed income securities:
U.S. government/corporate
bonds(c)
417.0
—
417.0
High yield bonds(d)
42.9
—
42.9
Insurance contracts(f)
1.2
—
1.2
Total
$597.0
$4.4
$592.6
Investments measured at net asset
value(i)
Hedge funds(j)
29.6
Private equity funds(k)
16.8
Private debt funds(l)
8.0
Real estate(m)
19.3
Total investments
$670.7
As of November 30, 2024
International
(millions)
Total
fair value
Level 1
Level 2
Cash and cash equivalents
$ 6.4
$6.4
$ —
International equity securities(b)
21.6
—
21.6
Fixed income securities:
International/government/
corporate bonds(e)
220.7
—
220.7
Insurance contracts(f)
14.7
—
14.7
Real estate(g)
9.0
—
9.0
Total investments
$272.4
$6.4
$266.0
As of November 30, 2023
United States
(millions)
Total
fair value
Level 1
Level 2
Cash and cash equivalents
$ 14.2
$ 14.2
$ —
Equity securities:
U.S. equity securities(a)
108.5
35.5
73.0
International equity securities(b)
87.5
—
87.5
Fixed income securities:
U.S./government/corporate bonds(c)
275.2
88.6
186.6
High yield bonds(d)
49.5
—
49.5
Insurance contracts(f)
1.1
—
1.1
Other types of investments:
Real estate (g)
1.6
—
1.6
Natural resources (h)
0.4
—
0.4
Total
$538.0
$138.3
$399.7
Investments measured at net asset value(i)
Hedge funds(j)
49.3
Private equity funds(k)
8.2
Private debt funds(l)
20.4
Real estate(m)
14.8
Total investments
$630.7
As of November 30, 2023
International
(millions)
Total
fair value
Level 1
Level 2
Cash and cash equivalents
$ 10.6
$10.6
$ —
International equity securities(b)
30.2
—
30.2
Fixed income securities:
International/government/
corporate bonds(e)
207.7
—
207.7
Insurance contracts(f)
13.9
—
13.9
Real estate (g)
4.6
4.6
Total investments
$267.0
$10.6
$256.4
(a) This category comprises equity funds and collective equity trust funds
that most closely track the S&P index and other equity indices.
(b) This category comprises international equity funds with varying bench
mark indices.
(c) This category comprises funds consisting of U.S. government and U.S.
corporate bonds and other fixed income securities. An appropriate
benchmark is the Barclays Capital Aggregate Bond Index.
(d) This category comprises funds consisting of a variety of fixed income
securities with varying benchmark indices.
(e) This category comprises funds consisting of international government/
corporate bonds and other fixed income securities with varying bench
mark indices.
(f) This category comprises insurance contracts, the majority of which have
a guaranteed investment return.
(g) This category comprises funds investing in real estate investment trusts
(REIT). Appropriate benchmarks are the MSCI U.S. REIT Index and the
MSCI REALPAC Canada Property Index, for the U.S. and International
holdings, respectively.
68 McCormick & Company, Inc.
(h) This category comprises funds investing in natural resources. An appro
priate benchmark is the Alerian master limited partnership (MLP) Index.
(i) Certain investments that are valued using the net asset value per share
(or its equivalent) as a practical expedient have not been classified in the
fair value hierarchy. These are included to permit reconciliation of the fair
value hierarchy to the aggregate pension plan assets.
(j) This category comprises hedge funds investing in strategies represented
in various HFRI Fund Indices. The net asset value is generally based on
the valuation of the underlying investment. Limitations exist on the
timing from notice by the plan of its intent to redeem and actual redemp
tions of these funds and generally range from a minimum of one month to
several months.
(k) This category comprises private equity, venture capital and limited part
nerships. The net asset is based on valuation models of the underlying
securities as determined by the general partner or general partner’s des
ignee. These valuation models include unobservable inputs that cannot
be corroborated using verifiable observable market data. These funds
typically have redemption periods of approximately 10 years.
(l) This category comprises limited partnerships funds investing in senior
loans, mezzanine and distressed debt. The net asset is based on valua
tion models of the underlying securities as determined by the general
partner or general partner’s designee. These valuation models include
unobservable inputs that cannot be corroborated using verifiable
observable market data. These funds typically have redemption periods
of approximately 10 years.
(m) This category comprises private real estate funds. The net asset is based
on valuation models of the underlying securities as determined by the
general partner or general partner’s designee. These valuation models
include unobservable inputs that cannot be corroborated using verifiable
observable market data. These funds have no redemption restrictions.
For the plans’ hedge funds, private equity funds and private debt
funds, we engage an independent advisor to compare the funds’
returns to other funds with similar strategies. Each fund is required to
have an annual audit by an independent accountant, which is provided
to the independent advisor. This provides a basis of comparability
relative to similar assets.
As of November 30, 2023, equity securities in the U.S. pension plans
included McCormick stock with a fair value of $35.5 million (0.6 million
shares and 5.4% of total U.S. pension plan assets). Dividends paid
on these shares were $0.8 million and $0.9 million in 2024 and 2023,
respectively.
Pension benefit payments in our most significant plans are made
from assets of the pension plans. It is anticipated that future benefit
payments for the U.S. and international plans for the next 10 fiscal
years will be as follows:
(millions)
United States
International
2025
$ 49.7
$12.5
2026
50.6
11.8
2027
51.4
13.1
2028
51.8
12.4
2029
52.4
13.6
2030–2035
257.6
71.0
U.S. Defined Contribution Retirement Plans
For our U.S. qualified and non-qualified defined contribution retirement
plans, we match 100% of a participant’s contribution up to the first 3%
of the participant’s eligible compensation, and 66.7% of the next 3%
of the participant’s salary. In addition, we make contributions of 3% of
the participant’s eligible compensation for all U.S. employees who are
employed on December 31 of each year. Some of our smaller subsidiar
ies sponsor separate 401(k) retirement plans. Our contributions charged
to expense under all U.S. defined contribution retirement plans were
$34.7 million, $29.7 million and $30.5 million in 2024, 2023, and 2022,
respectively.
At the participants’ election, 401(k) retirement plans held 2.1 million
shares of McCormick stock, with a fair value of $159.5 million, at
November 30, 2024. Dividends paid on the shares held in the 401(k)
retirement plans in 2024 and 2023 were $3.6 million and $3.8 million,
respectively.
Postretirement Benefits Other Than Pensions
We currently provide postretirement medical and life insurance
benefits to certain U.S. employees who were covered under the active
employees’ plan and retire after age 55 with at least five years of
service. The subsidy provided under these plans is based primarily on
age at date of retirement. These benefits are not pre-funded but paid
as incurred. Employees hired after December 31, 2008 are not eligible
for a company subsidy. They are eligible for coverage on an access-
only basis.
Our other postretirement benefit expense for the years ended
November 30 follows:
(millions)
2024
2023
2022
Service cost
$ 0.8
$ 1.3
$ 1.8
Interest costs
2.4
2.6
1.6
Amortization of prior service credits
(0.3)
(0.3)
(0.3)
Amortization of actuarial gains
(2.7)
(2.2)
(0.3)
Postretirement benefit expense
$ 0.2
$ 1.4
$ 2.8
Roll forwards of the benefit obligation, fair value of plan assets and
a reconciliation of the plans’ funded status at November 30, the
measurement date, follow:
(millions)
2024
2023
Change in benefit obligation:
Benefit obligation at beginning of year
$ 47.1
$52.9
Service cost
0.8
1.3
Interest costs
2.4
2.6
Participant contributions
2.8
2.5
Actuarial (gain) loss
(1.1)
(5.6)
Benefits paid
(7.0)
(6.6)
Benefit obligation at end of year
$45.0
$ 47.1
Change in fair value of plan assets:
Fair value of plan assets at beginning of year
$ —
$ —
Employer contributions
4.2
4.1
Participant contributions
2.8
2.5
Benefits paid
(7.0)
(6.6)
Fair value of plan assets at end of year
$ —
$ —
Other postretirement benefit liability
$45.0
$ 47.1
Estimated future benefit payments (net of employee contributions) for
the next 10 fiscal years are as follows:
(millions)
Retiree
medical
Retiree life
insurance
Total
2025
$ 3.2
$ 1.4
$ 4.6
2026
3.1
1.4
4.5
2027
3.0
1.3
4.3
2028
2.9
1.3
4.2
2029
2.8
1.2
4.0
2030–2035
13.0
5.5
18.5
2024 Annual Report 69
The assumed discount rate in determining the benefit obligation was
5.2% and 5.4% for 2024 and 2023, respectively.
For 2024, the assumed annual rate of increase in the cost of covered
health care benefits is 7.6% (8.5% last year). It is assumed to decrease
gradually to 4.5% in the year 2034 (4.5% in 2034 last year) and remain
at that level thereafter.
11. STOCK-BASED COMPENSATION
We have four types of stock-based compensation awards: restricted
stock units (RSUs), stock options, company stock awarded as part of
our long-term performance plan (LTPP), and price-vested stock options.
Total stock-based compensation expense for 2024, 2023, and 2022
was $47.4 million, $63.4 million and $60.3 million, respectively. Total
unrecognized stock-based compensation expense related to our RSUs
and stock options at November 30, 2024 was $25.5 million and the
weighted-average period over which this will be recognized is 1.3 years.
All stock-based compensation expense related to our price-vested stock
options was fully recognized as of November 30, 2023. Total unrecog
nized stock-based compensation expense related to our LTPP is variable
in nature and is dependent on the Company’s execution against estab
lished performance metrics under performance cycles related to this
plan. As of November 30, 2024, we have 3.0 million shares of common
stock remaining available for future issuance under our stock-based
compensation programs.
The following summarizes the key terms, a summary of activity, and
the methods of valuation for each of our stock-based compensation
awards.
RSUs
RSUs are valued at the market price of the underlying stock, discounted
by foregone dividends, on the date of grant. Substantially all of the
RSUs granted vest over a three-year term or, if earlier, upon the
retirement eligibility date of the holder.
A summary of our RSU activity for the years ended November 30 follows:
(shares in thousands)
2024
2023
2022
Shares
Weighted-average
price
Shares
Weighted-average
price
Shares
Weighted-average
price
Beginning of year
494
$76.94
480
$77.62
563
$69.52
Granted
282
72.77
264
77.53
208
94.21
Vested
(214)
79.13
(225)
78.16
(251)
71.86
Forfeited
(29)
79.73
(25)
85.21
(40)
85.42
Outstanding—end of year
533
$73.68
494
$76.94
480
$77.62
Stock Options (Other than Price-Vested Stock Options)
Stock options are granted with an exercise price equal to the market
price of the stock on the date of grant. Substantially all of the options,
with the exception of price-vested options detailed below, vest ratably
over a three-year period or, if earlier, upon the retirement-eligibility dates
of the holders and are exercisable over a 10-year period. Upon exercise
of the option, shares are issued from our authorized and unissued shares.
The fair value of the options is estimated with a lattice option pricing
model which uses the assumptions in the following table. We believe
the lattice model provides an appropriate estimate of fair value of our
options as it allows for a range of possible outcomes over an option
term and can be adjusted for changes in certain assumptions over time.
Expected volatilities are based primarily on the historical performance of
our stock. We also use historical data to estimate the timing and amount
of option exercises and forfeitures within the valuation model. The
expected term of the options is an output of the option pricing model
and estimates the period of time that options are expected to remain
unexercised. The risk-free interest rate is based on the U.S. Treasury
yield curve in effect at the time of grant. Compensation expense is
calculated based on the fair value of the options on the date of grant.
The per share weighted-average fair value for all options granted
was $17.63, $19.35 and $22.08 in 2024, 2023, and 2022, respectively.
These fair values were computed using the following range of assump
tions for the years ended November 30:
2024
2023
2022
Risk-free interest rates
4.1%–5.5%
3.5%–4.9%
0.2%–2.5%
Dividend yield
2.3%
1.9%
1.5%
Expected volatility
22.8%
21.8%
21.2%
Expected lives
7.1 years
7.3 years
7.6 years
Under our stock option plans, we may issue shares on a net basis at
the request of the option holder. This occurs by netting the option cost
in shares from the shares exercised.
A summary of our stock option activity for the years ended November 30 follows:
(shares in millions)
2024
2023
2022
Shares
Weighted-average
exercise price
Shares
Weighted-average
exercise price
Shares
Weighted-average
exercise price
Beginning of year
5.3
$70.43
4.8
$67.08
5.0
$59.71
Granted
1.2
72.88
0.9
81.79
0.7
97.26
Exercised
(0.3)
45.69
(0.3)
47.86
(0.8)
47.58
Forfeited
(0.1)
84.00
(0.1)
87.11
(0.1)
88.40
Outstanding—end of year
6.1
72.25
5.3
70.43
4.8
67.08
Exercisable—end of year
4.4
$69.91
4.0
$64.74
3.5
$58.03
70 McCormick & Company, Inc.
As of November 30, 2024, the intrinsic value (the difference between the exercise price and the market price) for options currently outstanding was
$60.6 million and for options exercisable was $55.6 million. At November 30, 2024 the differences between options outstanding and options expected
to vest and their related weighted-average exercise prices, aggregate intrinsic values, and weighted-average remaining lives were not material. The
total intrinsic value of all options exercised during the years ended November 30, 2024, 2023, and 2022 was $10.7 million, $11.3 million and $41.0
million, respectively. A summary of our stock options outstanding and exercisable at November 30, 2024 follows:
(shares in millions)
Options outstanding
Options exercisable
Range of
exercise price
Shares
Weighted-average
remaining life (yrs.)
Weighted-average
exercise price
Shares
Weighted-average
remaining life (yrs.)
Weighted-average
exercise price
$38.00–$58.00
1.7
2.2
$49.95
1.7
2.2
$49.95
$58.01–$78.00
2.2
7.3
72.19
1.1
5.4
70.79
$78.01–$98.00
2.2
7.4
88.78
1.6
7.1
89.93
6.1
5.9
$72.25
4.4
4.8
$69.91
Price-Vested Stock Options
In November 2020, we granted approximately 2,482,000 price-vested
stock options to certain employees. The price-vested stock options
were granted with an exercise price of $93.49 which was equal to the
market price of our stock on the date of grant. The price-vested options
are not exercisable until a three year service condition is achieved,
and will become exercisable after that time period only if the average
closing price of our stock price equals or exceeds thresholds of 60%,
80% or 100% appreciation from the exercise price for 30 consecutive
trading days within a five-year period from the date of grant. If the
options become exercisable, they are exercisable up to 10 years from
the date of grant. The options granted were divided equally between
the three appreciation thresholds. Employees who retire vest on a
pro-rata basis over a three-year period if the market condition is met in
the five-year period from the date of grant. If the market conditions are
not met in the five-year period from the date of grant, the options do
not become exercisable and will be forfeited.
The fair value of the price-vested options was estimated using a
lattice model. The per share weighted-average fair value for the
price-vested stock options granted was $11.88, $9.26, and $7.05, for
the 60%, 80% and 100% appreciation thresholds, respectively. These
fair values were computed using the following range of assumptions:
Risk-free interest rates
0.85%
Dividend yield
1.5%
Expected volatility
21.2%
Expected lives
5.6–6.2 years
The following is a summary of our Price-Vested Stock Options activity for the years ended November 30:
(shares in thousands)
2024
2023
2022
Number of
Shares
Weighted-Average
Grant-Date Fair Value
Number of
Shares
Weighted-Average
Grant-Date Fair Value
Number of
Shares
Weighted-Average
Grant-Date Fair Value
Beginning of year
2,055
$9.40
2,107
$9.40
2,193
$9.40
Forfeited
—
—
(52)
9.40
(86)
9.40
Outstanding—end of year
2,055
$9.40
2,055
$9.40
2,107
$9.40
As of November 30, 2024, 2023, and 2022, the outstanding options are divided equally between the three appreciation thresholds.
LTPP
LTPP awards granted in 2024, 2023, and 2022 will be delivered in company stock, with the award attainment calculated as a percentage of target
based on a combination of a performance-based component and a market-based total shareholder return. These awards are valued based on the fair
value of the underlying stock and the estimated fair value associated with the total shareholder return on the date of grant.
A summary of the LTPP award activity for the years ended November 30 follows:
(shares in thousands)
2024
2023
2022
Shares
Weighted-
average price
Shares
Weighted-
average price
Shares
Weighted-
average price
Beginning of year
474
$94.34
451
$106.32
497
$ 83.74
Granted
192
66.49
167
89.00
152
95.00
Vested
(181)
98.30
(176)
86.14
(251)
75.26
Performance adjustment
73
95.00
61
98.30
59
86.14
Forfeited
(19)
84.71
(29)
92.31
(6)
95.37
Outstanding—end of year
539
$83.45
474
$ 94.34
451
$106.32
2024 Annual Report 71
12. INCOME TAXES
The provision for income taxes for the years ended November 30
consists of the following:
(millions)
2024
2023
2022
Income taxes
Current
Federal
$103.0
$ 82.4
$ 62.8
State
16.6
15.1
14.8
International
94.7
82.4
69.2
214.3
179.9
146.8
Deferred
Federal
(15.2)
(2.2)
37.1
State
(6.3)
2.7
(3.2)
International
(8.8)
(5.9)
(12.1)
(30.3)
(5.4)
21.8
Total income tax expense (benefit)
$184.0
$174.5
$168.6
The components of income from consolidated operations before
income taxes for the years ended November 30 follow:
(millions)
2024
2023
2022
Pretax income
United States
$634.8
$569.6
$600.7
International
263.5
229.1
212.1
$898.3
$798.7
$812.8
A reconciliation of the U.S. federal statutory rate with the effective tax
rate for the years ended November 30 follows:
2024
2023
2022
Federal statutory tax rate
21.0%
21.0%
21.0%
State income taxes, net of federal benefits
0.9
1.9
1.2
International tax at different effective rates
0.6
0.3
(0.1)
U.S. tax on remitted and unremitted earnings
1.8
0.9
0.6
Stock compensation expense
—
—
(1.1)
Changes in prior year tax contingencies
(1.4)
(0.8)
(0.8)
Legal entity reorganization
(2.3)
—
—
Valuation allowances
0.7
(0.4)
(0.6)
U.S. research credits
(1.3)
(1.5)
(1.0)
Other, net
0.5
0.4
1.5
Total
20.5%
21.8%
20.7%
Deferred tax assets and liabilities are comprised of the following as of
November 30:
(millions)
2024
2023
Deferred tax assets
Employee benefit liabilities
$ 48.9
$ 46.6
Other accrued liabilities
36.0
38.8
Inventory
18.3
18.9
Tax loss and credit carryforwards
69.0
63.8
Lease liabilities
10.6
13.6
Research expenditures
64.0
31.4
Other
28.0
27.7
Valuation allowance
(33.5)
(25.9)
241.3
214.9
Deferred tax liabilities
Depreciation
96.8
99.5
Intangible assets
849.5
866.8
Lease ROU assets
16.1
13.2
Other
19.7
12.7
982.1
992.2
Net deferred tax liability
$(740.8)
$(777.3)
At November 30, 2024, we have tax loss carryforwards of $178.1 million.
Of these carryforwards, $3.8 million expire in 2025, $13.0 million from
2026 through 2027, $45.5 million from 2028 through 2041, and $115.8
million may be carried forward indefinitely. At November 30, 2024,
we also have U.S. foreign tax credit carryforwards of $21.4 million. Of
these carryforwards, $6.2 million expires in 2030, $8.1 million from 2031
through 2032, and $7.1 million from 2033 through 2034.
A valuation allowance has been provided to cover deferred tax assets
that are not more likely than not realizable. The net increase of
$7.6 million in the valuation allowance from November 30, 2023 to
November 30, 2024 resulted primarily from the net increase of valua
tion allowances for net operating losses and other tax attributes in the
U.S. and certain non-U.S. jurisdictions.
Income taxes are not provided for unremitted earnings of our non-U.S.
subsidiaries and joint ventures where our intention is to reinvest those
earnings indefinitely. As of November 30, 2024, we have $1.6 billion
of earnings that are considered indefinitely reinvested. We have not
provided any deferred taxes with respect to items such as foreign
withholding taxes, other income taxes, or foreign exchange gain or loss
with respect to those earnings. It is not practicable for us to determine
the amount of unrecognized tax expense on these reinvested interna
tional earnings.
The following table summarizes the activity related to our gross unrec
ognized tax benefits for the years ended November 30:
(millions)
2024
2023
2022
Balance at beginning of year
$ 24.0
$25.1
$26.8
Additions for current year tax positions
4.4
3.9
4.7
Additions for prior year tax positions
—
1.3
0.1
Reductions of prior year tax positions
—
(3.6)
(0.8)
Statute expirations
(10.5)
(1.3)
(5.0)
Settlements
—
(1.3)
—
Foreign currency translation
(0.1)
(0.1)
(0.7)
Balance at November 30
$ 17.8
$24.0
$25.1
As of November 30, 2024, 2023, and 2022, if recognized, $17.8 million,
$24.0 million, and $25.1 million, respectively, of the unrecognized tax
benefits would affect the effective rate.
We record interest and penalties on income taxes in income tax
expense. We recognized interest and penalty expense (benefit) of
$(0.9) million, $(0.5) million, and $0.2 million in 2024, 2023, and 2022,
respectively. As of November 30, 2024 and 2023, we had accrued $2.9
million and $3.8 million, respectively, of interest and penalties related
to unrecognized tax benefits.
72 McCormick & Company, Inc.
Tax settlements or statute of limitation expirations could result in a
change to our uncertain tax positions. We believe that the reasonably
possible total amount of unrecognized tax benefits as of November 30,
2024 that could decrease in the next 12 months as a result of various
statute expirations, audit closures and/or tax settlements would not
be material.
We file income tax returns in the U.S. federal jurisdiction and various
state and non-U.S. jurisdictions. The open years subject to tax audits
vary depending on the tax jurisdictions. In the U.S federal jurisdiction,
we are no longer subject to income tax audits by taxing authorities for
years before 2021. In other major jurisdictions, we are no longer sub
ject to income tax audits by taxing authorities for years before 2014.
We are under normal recurring tax audits in the U.S. and in several
jurisdictions outside the U.S. While it is often difficult to predict the
final outcome or the timing of resolution of any particular uncertain tax
position, we believe that our reserves for uncertain tax positions are
adequate to cover existing risks and exposures.
13. CAPITAL STOCK AND EARNINGS PER SHARE
We have 640,000,000 authorized shares of each class of common
stock with an established the par value for each class of common
stock at $0.01 per share. The par value and additional paid in capital
associated with each class of common stock is recorded in Common
stock and Common stock non-voting in our consolidated balance sheet.
Holders of Common Stock have full voting rights except that (1) the
voting rights of persons who are deemed to own beneficially 10% or
more of the outstanding shares of Common Stock are limited to 10%
of the votes entitled to be cast by all holders of shares of Common
Stock regardless of how many shares in excess of 10% are held by
such person; (2) we have the right to redeem any or all shares of
Common Stock owned by such person unless such person acquires
more than 90% of the outstanding shares of each class of our com
mon stock; and (3) at such time as such person controls more than
50% of the votes entitled to be cast by the holders of outstanding
shares of Common Stock, automatically, on a share-for-share basis,
all shares of Common Stock Non-Voting will convert into shares of
Common Stock.
Holders of Common Stock Non-Voting will vote as a separate class
on all matters on which they are entitled to vote. Holders of Common
Stock Non-Voting are entitled to vote on reverse mergers and statutory
share exchanges where our capital stock is converted into other secu
rities or property, dissolution of the Company and the sale of substan
tially all of our assets, as well as forward mergers and consolidation
of the Company or any amendment to our charter repealing the right of
the Common Stock Non-Voting to vote on any such matters.
The reconciliation of shares outstanding used in the calculation of
basic and diluted earnings per share for the years ended November 30
follows:
(millions)
2024
2023
2022
Average shares outstanding—basic
268.5
268.4
268.2
Effect of dilutive securities:
Stock options/RSUs/LTPP
1.1
1.4
2.0
Average shares outstanding—diluted
269.6
269.8
270.2
The following table sets forth the stock options and RSUs for the years
ended November 30 which were not considered in our earnings per
share calculation since they were antidilutive:
(millions)
2024
2023
2022
Antidilutive securities
3.4
2.2
0.9
14. COMMITMENTS AND CONTINGENCIES
During the normal course of our business, we are occasionally involved
with various claims and litigation. Reserves are established in connec
tion with such matters when a loss is probable and the amount of such
loss can be reasonably estimated. At November 30, 2024 and 2023, no
material reserves were recorded. The determination of probability and
the estimation of the actual amount of any such loss are inherently un
predictable, and it is therefore possible that the eventual outcome of
such claims and litigation could exceed the estimated reserves, if any.
However, we do not expect the outcome of the matters currently pend
ing will have a material adverse effect on our financial statements.
15. BUSINESS SEGMENTS AND GEOGRAPHIC AREAS
Business Segments
We operate in two business segments: consumer and flavor solutions.
The consumer and flavor solutions segments manufacture, market and
distribute spices, seasoning mixes, condiments and other flavorful
products throughout the world. Our consumer segment sells to retail
channels, including grocery, mass merchandise, warehouse clubs,
discount and drug stores, and e-commerce under the “McCormick”
brand and a variety of brands around the world, including “French’s,”
“Frank’s RedHot,” “Lawry’s,” “Zatarain’s,” “Simply Asia,” “Thai Kitchen,”
“Ducros,” “Vahiné,” “Cholula,” “Schwartz,” “Club House,” “Kamis,”
“DaQiao,” “La Drogheria,” “Stubb’s,” “OLD BAY,” and “Gourmet Garden.”
Our flavor solutions segment sells to food manufacturers and the
foodservice industry both directly and indirectly through distributors, with
the exception of our businesses in China where foodservice sales are
managed by and reported in our consumer segment.
We measure segment performance based on operating income
excluding special charges as this activity is managed separately from
the business segments. We also exclude transaction and integration
expenses related to our acquisitions, as applicable, from our measure
of segment performance as these expenses are similarly managed sep
arately from the business segments. These transaction and integration
expenses excluded from our segment performance measure include the
amortization of the acquisition-date fair value adjustment of inventories
that is included in cost of goods sold, costs directly associated with
that acquisition and costs associated with integrating the businesses.
Although the segments are managed separately due to their distinct
distribution channels and marketing strategies, manufacturing and
warehousing are often integrated to maximize cost efficiencies. We do
not segregate jointly utilized assets by individual segment for purposes
of internal reporting, performance evaluation, or capital allocation.
We have a large number of customers for our products. Sales to one
of our consumer segment customers, Wal-Mart Stores, Inc., accounted
for approximately 12%, 12%, and 12% of consolidated sales in 2024,
2023, and 2022, respectively. Sales to one of our flavor solutions seg
ment customers, PepsiCo, Inc., accounted for approximately 13%, 13%,
and 11% of consolidated sales in 2024, 2023, and 2022, respectively.
2024 Annual Report 73
Accounting policies for measuring segment operating income and assets are consistent with those described in Note 1. Because of integrated
manufacturing for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost.
Inter-segment sales are not material. Corporate assets include cash, deferred taxes, investments and certain fixed assets.
Business Segment Results
(millions)
Consumer
Flavor
Solutions
Total
segments
Corporate &
other
Total
2024
Net sales
$3,848.5
$2,875.2
$ 6,723.7
$ —
$ 6,723.7
Operating income excluding special charges
740.3
329.5
1,069.8
—
1,069.8
Income from unconsolidated operations
71.2
3.0
74.2
—
74.2
Assets
—
—
12,359.4
710.9
13,070.3
Capital expenditures
—
—
234.1
40.8
274.9
Depreciation and amortization
—
—
161.4
47.4
208.8
2023
Net sales
$3,807.3
$2,854.9
$ 6,662.2
$ —
$ 6,662.2
Operating income excluding special charges
735.5
288.7
1,024.2
—
1,024.2
Income from unconsolidated operations
54.7
1.7
56.4
—
56.4
Assets
—
—
12,233.1
629.2
12,862.3
Capital expenditures
—
—
234.9
29.0
263.9
Depreciation and amortization
—
—
155.4
43.9
199.3
2022
Net sales
$3,757.9
$2,592.6
$ 6,350.5
$ —
$ 6,350.5
Operating income excluding special charges and transaction and integration expenses
710.7
206.7
917.4
—
917.4
Income from unconsolidated operations
33.1
4.7
37.8
—
37.8
Assets
—
—
12,332.9
792.0
13,124.9
Capital expenditures
—
—
220.1
41.9
262.0
Depreciation and amortization
—
—
153.4
47.2
200.6
A reconciliation of operating income excluding special charges and transaction and integration expenses, to operating income for 2024, 2023, and 2022
is as follows:
(millions)
Consumer
Flavor
Solutions
Total
2024
Operating income excluding special charges
$740.3
$329.5
$1,069.8
Less: Special charges
3.4
6.1
9.5
Operating income
$736.9
$323.4
$1,060.3
2023
Operating income excluding special charges
$735.5
$288.7
$1,024.2
Less: Special charges
35.8
25.4
61.2
Operating income
$699.7
$263.3
$ 963.0
2022
Operating income excluding special charges and transaction and integration expenses
710.7
206.7
917.4
Less: Special charges
23.9
27.7
51.6
Less: Transaction and integration expenses
—
2.2
2.2
Operating income
$686.8
$176.8
$ 863.6
Total segment operating income as disclosed in the preceding table represents our consolidated operating income. The reconciliation of that operat
ing income to income from consolidated operations before income taxes, which includes interest expense and other income, net is presented on the
consolidated income statement.
Geographic Areas
We have net sales and long-lived assets in the following geographic areas:
(millions)
United States
EMEA
Other countries
Total
2024
Net sales
$4,103.9
$1,239.3
$1,380.5
$6,723.7
Long-lived assets
8,017.9
1,117.0
824.5
9,959.4
2023
Net sales
$4,083.8
$1,212.8
$1,365.6
$6,662.2
Long-lived assets
7,946.1
1,138.6
856.8
9,941.5
2022
Net sales
$3,921.3
$1,116.4
$1,312.8
$6,350.5
Long-lived assets
7,892.5
1,051.7
854.6
9,798.8
74 McCormick & Company, Inc.
Long-lived assets include property, plant and equipment, good
will and intangible assets, net of accumulated depreciation and
amortization.
Product Categories
Our net sales by product categories consist of the following:
For the year ended November 30 (millions)
2024
2023
2022
Consumer segment:
Spices & seasoning
$1,651.0 $1,578.3
$1,538.7
Recipe mixes
437.7
430.5
428.0
Condiments & sauces
936.6
921.0
858.2
Regional leaders
823.2
877.5
933.0
Flavor solutions segment:
Flavors
1,618.6
1,585.7
1,420.6
Branded foodservice
615.1
598.4
552.9
Custom condiments
336.8
317.1
280.8
Coatings, bulk spices & herbs
304.7
353.7
338.3
Total net sales
$6,723.7 $6,662.2
$6,350.5
16. SUPPLEMENTAL FINANCIAL STATEMENT DATA
Supplemental consolidated information with respect to our income
statement, balance sheet, and cash flow follow:
For the year ended November 30 (millions)
2024
2023
2022
Other income, net
Gain (loss) on sale of business
$ —
$ (1.2)
$49.6
Gain on settlement of treasury locks(1)
—
—
18.7
Pension and other postretirement benefit
income
8.4
10.7
9.6
Interest income
45.9
36.6
17.8
Other
(6.9)
(2.2)
2.6
$47.4
$43.9
$98.3
(1) The settlement of these treasury locks is further described in Note 7.
On August 3, 2022, we sold the Kitchen Basics business for $95.2
million in cash, net of transaction expenses of $3.8 million. Assets dis
posed of principally included inventory, intangible assets ($6.3 million)
and goodwill ($21.5 million). The sale of Kitchen Basics resulted in a
pre-tax gain of $49.6 million.
At November 30 (millions)
2024
2023
Trade accounts receivable allowance for
doubtful accounts
$ 4.7
$ 5.9
Inventories
Finished products
$ 618.3 $ 570.0
Raw materials and work-in-process
621.6
556.5
$ 1,239.9 $1,126.5
Prepaid expenses
$ 51.5 $ 47.6
Other current assets
74.1
73.4
$ 125.6
$ 121.0
Property, plant and equipment
Land and improvements
$ 94.1 $ 93.3
Buildings (including finance leases)
835.8
820.9
Machinery, equipment and other
1,571.2
1,440.3
Construction-in-progress
247.1
223.3
Accumulated depreciation
(1,335.2)
(1,253.1)
$ 1,413.0 $1,324.7
At November 30 (millions)
2024
2023
Other long-term assets
Investments in affiliates
$152.2
$149.1
Long-term investments
130.5
115.0
Right of use asset
211.0
220.0
Software, net of accumulated amortization of
$288.4 for 2024 and $270.1 for 2023
179.1
159.9
Pension asset
122.4
127.1
Other
176.7
148.1
$971.9
$919.2
Other accrued liabilities
Payroll and employee benefits
$192.8
$222.1
Sales allowances
206.4
195.3
Dividends payable
120.7
112.6
Other
376.5
378.1
$896.4
$908.1
Other long-term liabilities
Pension
$ 84.4
$ 81.8
Postretirement benefits
40.5
42.1
Operating lease liability
166.6
179.9
Unrecognized tax benefits
20.6
27.7
Other
124.5
147.3
$436.6
$478.8
For the year ended November 30 (millions)
2024
2023
2022
Depreciation
$143.3
$135.3
$136.3
Software amortization
21.9
19.1
18.9
Interest paid
210.1
203.6
148.8
Income taxes paid
221.0
118.3
192.4
Dividends paid per share were $1.68 in 2024, $1.56 in 2023, and $1.48
in 2022. Dividends declared per share were $1.71 in 2024, $1.59 in
2023, and $1.50 in 2022.
2024 Annual Report 75
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer
and Chief Financial Officer, has evaluated the effectiveness of our disclo
sure controls and procedures, as defined in Rule 13a-15(e) of the Secu
rities Exchange Act of 1934, as of the end of the period covered by this
report. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by
this report, our disclosure controls and procedures were effective.
Internal Control over Financial Reporting
Management’s report on our internal control over financial reporting
and the report of our Independent Registered Public Accounting Firm
on internal control over financial reporting are included in our 2024
financial statements in Item 8 of this Report under the captions enti
tled “Report of Management” and “Report of Independent Registered
Public Accounting Firm.”
ITEM 9B. OTHER INFORMATION
None of our directors or officers (as defined in Rule 16a-1(f) under the
Exchange Act) adopted or terminated a Rule 10b5-1 trading arrange
ment or a non-Rule 10b5-1 trading arrangement (as defined in Item
408(c) of Regulation S-K) during the fourth quarter of fiscal year 2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDIC
TIONS THAT PREVENT INSPECTIONS
Not applicable.
76 McCormick & Company, Inc.
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE
Information responsive to this item is set forth in the sections titled
“Corporate Governance,” “Election of Directors,” and “Insider Trading
Policies and Procedures” in our 2025 Proxy Statement, incorporated by
reference herein, to be filed within 120 days after the end of our fiscal
year.
We have adopted a code of ethics that applies to all employees,
including our principal executive officer, principal financial officer,
principal accounting officer, and our Board of Directors. A copy of the
code of ethics is available on our internet website at
www.mccormickcorporation.com. We will satisfy the disclosure
requirement under Item 5.05 of Form 8-K regarding any material
amendment to our code of ethics, and any waiver from a provision of
our code of ethics that applies to our principal executive officer, princi
pal financial officer, principal accounting officer, or persons performing
similar functions, by posting such information on our website at the
internet website address set forth above.
ITEM 11. EXECUTIVE COMPENSATION
Information responsive to this item is incorporated herein by reference
to the sections titled “Compensation of Directors,” “Compensation
Discussion and Analysis,” “Compensation and Human Capital Commit
tee Report,” “Summary Compensation Table,” “Grants of Plan-Based
Awards,” “Narrative to the Summary Compensation Table,” “Outstand
ing Equity Awards at Fiscal Year-End,” “Option Exercises and Stock
Vested in Last Fiscal Year,” “Retirement Benefits,” “Non-Qualified
Deferred Compensation,” “Potential Payments Upon Termination or
Change in Control,” “Compensation and Human Capital Committee
Interlocks and Insider Participation,” “Policies and Practices Related
to the Grant of Certain Equity Awards Close in Time to the Release
of Material Nonpublic Information”, and “Equity Compensation Plan
Information” in the 2025 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information responsive to this item is incorporated herein by reference to
the sections titled “Principal Stockholders,” “Election of Directors,” and
“Equity Compensation Plan Information” in the 2025 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information responsive to this item is incorporated herein by reference
to the section entitled “Corporate Governance” in the 2025 Proxy
Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is Ernst & Young
LLP, Baltimore, Maryland, PCAOB ID: 00042.
Information responsive to this item is incorporated herein by reference
to the section titled “Report of Audit Committee” and “Fees of
Independent Registered Public Accounting Firm” in the 2025 Proxy
Statement.
PART IV.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
List of documents filed as part of this Report.
1. Consolidated Financial Statements
The Consolidated Financial Statements for McCormick & Company,
Incorporated and related notes, together with the Report of Manage
ment, and the Reports of Ernst & Young LLP dated January 23, 2025,
are included herein in Part II, Item 8.
2. Consolidated Financial Statement Schedule
Supplemental Financial Schedule:
II–Valuation and Qualifying Accounts
Schedules other than that listed above are omitted because of the
absence of the conditions under which they are required or because
the information called for is included in the consolidated financial
statements or notes thereto.
3. Exhibits required to be filed by Item 601 of Regulation S-K
The information called for by this item is incorporated herein by refer
ence from the Exhibit Index included in this Report.
2024 Annual Report 77
EXHIBIT INDEX
The following exhibits are attached or incorporated herein by reference:
Exhibit Number
Description
(3)
(i)
Articles of Incorporation and By-Laws
Restatement of Charter of McCormick & Company,
Incorporated dated April 16, 1990
Incorporated by reference from Exhibit 4 of Registration
Form S-8, Registration No. 33-39582 as filed with the Securities
and Exchange Commission on March 25, 1991.
Articles of Amendment to Charter of McCormick & Company,
Incorporated dated April 1, 1992
Incorporated by reference from Exhibit 4 of Registration
Form S-8, Registration Statement No. 33-59842 as filed with
the Securities and Exchange Commission on March 19, 1993.
Articles of Amendment to Charter of McCormick & Company,
Incorporated dated March 27, 2003
Incorporated by reference from Exhibit 4 of Registration
Form S-8, Registration Statement No. 333-104084 as filed with
the Securities and Exchange Commission on March 28, 2003.
Articles of Amendment to Charter of McCormick & Company,
Incorporated dated April 2, 2021
Incorporated by reference from Exhibit 3(i) of McCormick’s
Form 10-Q for the quarter ended May 31, 2021, File
No. 1-14920, as filed with the Securities and Exchange
Commission on July 1, 2021.
(ii)
By-Laws
By-Laws of McCormick & Company, Incorporated Amended
and Restated on November 26, 2019
Incorporated by reference from Exhibit 99.1 of McCormick’s
Form 8-K dated November 26 2019, File No. 1-14920, as filed
with the Securities and Exchange Commission on
November 26, 2019.
(4)
Instruments defining the rights of security holders, including indentures
(i)
See Exhibit 3 (Restatement of Charter and By-Laws)
(ii)
Summary of Certain Exchange Rights, incorporated by reference from Exhibit 4.1 of McCormick’s Form 10-Q for the quarter ended
August 31, 2001, File No. 1-14920, as filed with the Securities and Exchange Commission on October 12, 2001.
(iii)
Indenture dated July 8, 2011 between McCormick and U.S. Bank National Association, incorporated by reference from Exhibit 4.1
of McCormick’s Form 8-K dated July 5, 2011, File No. 1-14920, as filed with the Securities and Exchange Commission on July 8,
2011.
(iv)
Form of 3.25% Notes due 2025, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated November 3, 2015, File
No. 1-14920, as filed with the Securities and Exchange Commission on November 6, 2015.
(v)
Form of 3.40% Notes due 2027, incorporated by reference from Exhibit 4.4 of McCormick’s Form 8-K dated August 7, 2017, File
No. 1-14920, as filed with the Securities and Exchange Commission on August 11, 2017.
(vi)
Form of 4.20% Notes due 2047, incorporated by reference from Exhibit 4.5 of McCormick’s Form 8-K dated August 7, 2017, File
No. 1-14920, as filed with the Securities and Exchange Commission on August 11, 2017.
(vii)
Form of 2.50% Notes due 2030, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated April 13, 2020, File
No. 1-14920, as filed with the Securities and Exchange Commission on April 16, 2020.
(viii)
Form of 0.90% Notes due 2026, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated February 11, 2021, File
No. 1-14920, as filed with the Securities and Exchange Commission on February 11, 2021.
(ix)
Form of 1.85% Notes due 2031, incorporated by reference from Exhibit 4.3 of McCormick’s Form 8-K dated February 11, 2021, File
No. 1-14920, as filed with the Securities and Exchange Commission on February 11, 2021.
(x)
Form of 4.95% Notes due 2033, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated April 6, 2023, File
No. 1-14920, as filed with the Securities and Exchange Commission on April 6, 2023.
(xi)
Form of 4.70% Notes due 2034, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated October 8, 2024, File
No. 1-14920, as filed with the Securities and Exchange Commission on October 8, 2024.
(xii)
Description of Securities of McCormick & Company, Incorporated, incorporated by reference from Exhibit 4(xiii) of McCormick’s
Form 10-K for the fiscal year ended November 30, 2021, File No. 1-14920, as filed with the Securities and Exchange Commission on
January 27, 2022.
78 McCormick & Company, Inc.
Exhibit Number
Description
(10)
Material contracts
(i)
Deferred Compensation Plan, as restated on January 1, 2000, and amended on August 29, 2000, September 5, 2000 and May 16,
2003, in which directors, officers and certain other management employees participate, a copy of which Plan document and amend
ments was attached as Exhibit 10(viii) of McCormick’s Form 10-Q for the quarter ended August 31, 2003, File No. 1-14920, as filed
with the Securities and Exchange Commission on October 14, 2003, and incorporated by reference herein.*
(ii)
2004 Long-Term Incentive Plan, in which officers and certain other management employees participate, is set forth in Exhibit A
of McCormick’s definitive Proxy Statement dated February 17, 2004, File No. 1-14920, as filed with the Securities and Exchange
Commission on February 17, 2004, and incorporated by reference herein.*
(iii)
Non-Qualified Retirement Savings Plan, with an effective date of February 1, 2017, in which directors, officers and certain other
management employees participate, a copy of which Plan document was attached as Exhibit 10(v) of McCormick’s Form 10-Q for
the quarter ended February 28, 2017, File No. 1-14920, as filed with the Securities and Exchange Commission on March 28, 2017,
and incorporated by reference herein.*
(iv)
The 2007 Omnibus Incentive Plan, in which directors, officers and certain other management employees participate, is set forth in
Exhibit A of McCormick’s definitive Proxy Statement dated February 20, 2008, File No. 1-14920, as filed with the Securities and
Exchange Commission on February 20, 2008, and incorporated by reference herein, as amended by Amendment No. 1 thereto,
which Amendment is incorporated by reference from Exhibit 10(xi) of McCormick’s 10-K for the fiscal year ended November 30,
2008, File No. 1-14920, as filed with the Securities and Exchange Commission on January 28, 2009.*
(v)
The Amended and Restated 2013 Omnibus Incentive Plan, in which directors, officers and certain other management employees
participate, is incorporated by reference from Exhibit A of McCormick’s definitive Proxy Statement dated February 14, 2019, File
No. 1-14920, as filed with the Securities and Exchange Commission on February 14, 2019.*
(vi)
The 2022 Omnibus Incentive Plan, in which directors, officers and certain other management employees participate, is incorporated
by reference from Exhibit A of McCormick’s definitive Proxy Statement dated February 17, 2022, File No. 1-14920, as filed with the
Securities and Exchange Commission on February 17, 2022.*
(vii)
Amendment No. 1 to the 2022 Omnibus Incentive Plan is incorporated by reference from Exhibit 10(vii) of McCormick’s Form 10-Q
for the quarter ended May 31, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on June 29, 2022.*
(viii)
Form of Long-Term Performance Plan Agreement, incorporated by reference from Exhibit 10(i) of McCormick’s Form 8-K/A, as
amended, dated March 30, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on April 5, 2022.*
(ix)
Form of Restricted Stock Units Agreement, incorporated by reference from Exhibit 10(ii) of McCormick’s Form 8-K/A, as amended,
dated March 30, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on April 5, 2022.*
(x)
Form of Restricted Stock Units Agreement for Directors, incorporated by reference from Exhibit 10(iii) of McCormick’s Form 8-K/A,
as amended, dated March 30, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on April 5, 2022.*
(xi)
Form of Non-Qualified Stock Option Agreement, incorporated by reference from Exhibit 10(iv) of McCormick’s Form 8-K/A, as
amended, dated March 30, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on April 5, 2022.*
(xii)
Form of Non-Qualified Stock Option Agreement for Directors, incorporated by reference from Exhibit 10(v) of McCormick’s Form
8-K/A, as amended, March 30, 2022, File No. 1-14920, as filed with the Securities and Exchange Commission on April 5, 2022.*
(xiii)
Form of Non-Qualified Stock Option Agreement, incorporated by reference from Exhibit 10(xii) of McCormick’s Form 10-Q for the
quarter ended May 31, 2024, File No. 1-14920, as filed with the Securities and Exchange Commission on June 27, 2024.*
(xiv)
Form of Non-Qualified Stock Option Agreement for Directors, incorporated by reference from Exhibit 10(xiv) of McCormick’s Form
10-Q for the quarter ended May 31, 2024, File No. 1-14920, as filed with the Securities and Exchange Commission on June 27,
2024.*
(xv)
Form of Stock Option Agreement for the Value Creation Acceleration Program, incorporated by reference from Exhibit 99.1 of
McCormick’s Form 8-K, File No. 1-14920, as filed with the Securities and Exchange Commission on December 3, 2020.*
(xvi)
Form of Indemnification Agreement, incorporated by reference from Exhibit 10(xv) of McCormick’s Form 10-Q for the quarter ended
February 28, 2014, File No. 1-14920, as filed with the Securities and Exchange Commission on March 26, 2014.*
(xvii)
Severance Plan for Executives, incorporated by reference from Exhibit 10(xix) of McCormick’s Form 10-Q for the quarter ended
February 28, 2015, File No. 1-14920, as filed with the Securities and Exchange Commission on March 31, 2015.*
(19)
McCormick Insider Trading Policy
Filed herewith
(21)
Subsidiaries of McCormick
Filed herewith
(23)
Consents of experts and counsel
Filed herewith
2024 Annual Report 79
Exhibit Number
Description
(31)
Rule 13a-14(a)/15d-14(a) Certifications
Filed herewith
(i)
Certification of Brendan M. Foley, Chairman, President, and Chief Executive Officer, pursuant to Rule 13a-14(a) or Rule 15d-14(a)
under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(ii)
Certification of Marcos M. Gabriel, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(a) or Rule
15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)
Section 1350 Certifications
Filed herewith
(i)
Certification of Brendan M. Foley, Chairman, President and Chief Executive Officer, pursuant to Rule 13a-14(b) or Rule 15d-14(b)
under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(ii)
Certification of Marcos M. Gabriel, Executive Vice President and Chief Financial Officer, pursuant to Rule 13a-14(b) or Rule
15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(97)
McCormick Clawback Policy, incorporated by reference from Exhibit 97 of McCormick’s Form 10-K for the fiscal year ended
November 30, 2023, File No. 1-14920, as filed with the Securities and Exchange Commission on January 25, 2024.
(101)
The following financial information from the Annual Report on Form 10-K of McCormick for the year ended November 30, 2024,
filed electronically herewith, and formatted in Inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance
Sheets; (ii) Consolidated Income Statements; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements
of Shareholders’ Equity; (v) Consolidated Cash Flow Statements; and (vi) Notes to Consolidated Financial Statements.
(104)
Inline XBRL for the cover page of this Annual Report on Form 10-K of McCormick for the year ended November 30, 2024, filed
electronically herewith, included in the Exhibit 101 Inline XBRL Document Set.
*
Management contract or compensatory plan or arrangement.
McCormick hereby undertakes to furnish to the Securities and Exchange Commission, upon its request, copies of additional instru
ments of McCormick with respect to long-term debt that involve an amount of securities that do not exceed 10% of the total assets
of McCormick and its subsidiaries on a consolidated basis, pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
80 McCormick & Company, Inc.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, McCormick has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
McCORMICK & COMPANY, INCORPORATED
By:
/s/ Brendan M. Foley
Chairman, President & Chief Executive Officer
January 23, 2025
Brendan M. Foley
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of
McCormick and in the capacities and on the dates indicated.
Principal Executive Officer:
By:
/s/ Brendan M. Foley
Chairman, President & Chief Executive Officer
January 23, 2025
Brendan M. Foley
Principal Financial Officer:
By:
/s/ Marcos M. Gabriel
Executive Vice President & Chief Financial Officer
January 23, 2025
Marcos M. Gabriel
Principal Accounting Officer:
By:
/s/ Gregory P. Repas
Vice President & Controller Principal Accounting Officer
January 23, 2025
Gregory P. Repas
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons, being a majority of
the Board of Directors of McCormick & Company, Incorporated, on the date indicated:
THE BOARD OF DIRECTORS:
DATE:
/s/ Anne L. Bramman
January 23, 2025
Anne L. Bramman
/s/ Michael A. Conway
January 23, 2025
Michael A. Conway
/s/ Brendan M. Foley
January 23, 2025
Brendan M. Foley
/s/ Lawrence E. Kurzius
January 23, 2025
Lawrence E. Kurzius
/s/ Patricia Little
January 23, 2025
Patricia Little
/s/ Michael D. Mangan
January 23, 2025
Michael D. Mangan
/s/ Maritza G. Montiel
January 23, 2025
Maritza G. Montiel
/s/ Margaret M.V. Preston
January 23, 2025
Margaret M.V. Preston
/s/ Gary M. Rodkin
January 23, 2025
Gary M. Rodkin
/s/ Valarie Sheppard
January 23, 2025
Valarie Sheppard
/s/ Jacques Tapiero
January 23, 2025
Jacques Tapiero
/s/ Terry S. Thomas
January 23, 2025
Terry S. Thomas
/s/ W. Anthony Vernon
January 23, 2025
W. Anthony Vernon
2024 Annual Report 81
Supplemental Financial Schedule II Consolidated
McCORMICK & COMPANY, INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
(IN MILLIONS)
Column A
Column B
Column C Additions
Column D
Column E
Description
Balance at
beginning of
period
Charged to
costs and
expenses
Charged to
other
accounts
Deductions(1)
Balance at
end of period
Deducted from asset accounts:
Year ended November 30, 2024:
Allowance for doubtful receivables
$ 5.9
$ 0.3
$(1.2)
$(0.3)
$ 4.7
Valuation allowance on net deferred tax assets
25.9
8.0
0.1
(0.5)
33.5
$31.8
$ 8.3
$ (1.1)
$(0.8)
$38.2
Deducted from asset accounts:
Year ended November 30, 2023:
Allowance for doubtful receivables
$ 7.3
$(0.7)
$ (1.2)
$ 0.5
$ 5.9
Valuation allowance on net deferred tax assets
26.4
3.7
—
(4.2)
25.9
$ 33.7
$ 3.0
$ (1.2)
$ (3.7)
$ 31.8
Deducted from asset accounts:
Year ended November 30, 2022:
Allowance for doubtful receivables
$ 5.2
$ 2.2
$ (0.9)
$ 0.8
$ 7.3
Valuation allowance on net deferred tax assets
32.7
3.2
(1.7)
(7.8)
26.4
$ 37.9
$ 5.4
$ (2.6)
$ (7.0)
$ 33.7
(1) Includes the impact of foreign currency exchange.
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I N V E S T O R I N F O R M A T I O N
GLOBAL HEADQUARTERS
McCormick & Company, Incorporated
24 Schilling Road
Hunt Valley, MD 21031 USA
(410) 771-7301
mccormickcorporation.com
STOCK LISTING
New York Stock Exchange
Symbols: MKC, MKC.V
ANNUAL MEETING
The annual meeting of shareholders will
be conducted exclusively online at
virtualshareholdermeeting.com/MKC2025
at 10:00 a.m., Eastern Time, Wednesday,
March 26, 2025. Please refer to the Proxy
Statement for information concerning the meeting.
TRANSFER AGENT AND REGISTRAR
For questions about your account, statements,
dividend payments, reinvestment, and direct deposit,
and for address changes, lost certificates, stock
transfers, ownership changes, or other administrative
matters, contact our transfer agent and registrar.
EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
(877) 778-6784 or (651) 450-4064
shareowneronline.com
DIVIDENDS
McCormick has paid dividends every year
since 1925. Dividends are normally paid quarterly
in January, April, July, and October.
INVESTOR SERVICES PLAN
(DIVIDEND REINVESTMENT AND DIRECT
PURCHASE PLAN)
We offer an Investor Services Plan, which provides
shareholders of record the opportunity to automatically
reinvest dividends, make optional cash purchases
of stock, place stock certificates into safekeeping,
and sell shares. Individuals who are not current
shareholders may purchase their initial shares directly
through the Plan.
All transactions are subject to the limitations set forth
in the Plan prospectus, which may be obtained by
contacting our transfer agent and registrar.
INVESTOR INFORMATION
For the latest investor information, including annual
reports, press releases, presentations and webcasts,
corporate governance principles, and SEC filings,
please visit ir.mccormick.com.
ELECTRONIC DELIVERY OF ANNUAL REPORT
AND PROXY STATEMENT
If you would like to receive next year’s annual report
and proxy statement electronically, you may enroll
at enroll.icsdelivery.com/mkc.
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Ernst & Young LLP
1201 Wills Street, Suite 310
Baltimore, MD 21231
TRADEMARKS
Use of ® or ™ in this annual report indicates trademarks
including those owned or used by McCormick
& Company, Incorporated, and its subsidiaries
and affiliates. All marks are the property of their
respective owners.
Visit our company and brands on:
McCormick has offset 10,000 pounds
of paper used for the production
of this report by planting 120 trees
in Tanzania.
Please visit printreleaf.com
to learn more.
*Pending availability
*
M C C O R M I C K & C O M PA N Y, I N C O R P O R AT E D
24 Schilling Road, Hunt Valley, MD 21031 USA
mccormickcorporation.com