McCormick (MKC) Fiscal Q3 2026 Earnings Call: Sales Rise 17%, Margin Expands
Source Tradingkey
Key Takeaways
- Third-quarter net sales increased 17% in constant currency, including 2% organic growth. The remaining increase came primarily from the McCormick de Mexico acquisition.
- Adjusted gross margin expanded 180 basis points, supported by acquisition accretion, pricing and Comprehensive Continuous Improvement (CCI) savings, partly offset by higher freight costs.
- Adjusted operating income rose 22%, or 21% in constant currency. Adjusted EPS increased 1% to $0.86 as operating profit growth was partly offset by a higher tax rate.
- Consumer sales increased 24% in constant currency, including 1% organic growth. Flavor Solutions sales grew 6% in constant currency, including 3% organic growth.
- Management maintained its fiscal 2026 outlook, expecting organic growth between the low end and midpoint of its guidance range and gross margin expansion at the high end of the 100–120 basis-point range.
- A packaging component constraint could reduce total company fourth-quarter volume growth by up to 1 percentage point. Management estimated an approximately 30-basis-point impact on full-year organic growth.
Core Financial Data
| Metric | Fiscal Q3 2026 result | Key context |
|---|---|---|
| Net sales growth | 17% constant currency | Included 2% organic growth; balance primarily from McCormick de Mexico |
| Consumer sales growth | 24% constant currency | Included 1% organic growth |
| Flavor Solutions sales growth | 6% constant currency | Included 3% organic growth |
| Adjusted gross margin | +180 bps | Acquisition accretion, pricing and CCI savings partly offset higher freight costs |
| Adjusted operating income | +22% | Up 21% in constant currency |
| Consumer adjusted operating income | +24% | Adjusted operating margin was flat |
| Flavor Solutions adjusted operating income | +18% | Up 16% in constant currency; margin expanded 120 bps |
| Adjusted EPS | $0.86 | Increased 1% year over year |
| Adjusted effective tax rate | 22.6% | Compared with 16.1% in the prior-year quarter |
| Year-to-date operating cash flow | Approximately $600 million | Up from $420 million a year earlier |
| Year-to-date dividends | $387 million | Cash returned to shareholders |
| Year-to-date capital expenditure | $131 million | Capacity, digital transformation and cost optimization investments |
| Quarter-end leverage ratio | Approximately 2.9x | Management expects further debt reduction before the Unilever Foods closing |
Business and Operating Performance
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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