Q1 2021 McCormick & Company Inc Earnings Call
Coffee posted that's upside that I heard that Mccormick dot com currently all participants are in a listen only mode. Following our remarks, we will begin a question and answer session. If you need to reach the operator at any time during the call. Please press star Zero will begin with remarks from Lawrence Kirby's, Chairman, President and CEO and Mike Smith Executive Vice.
President and CFO during our remarks, we will refer to certain non-GAAP financial measures. These include information in constant currency as well as adjusted gross margin adjusted operating income adjusted income tax rate and adjusted earnings per share that exclude the impact from special charges transaction and integration expenses related to the acquisition.
Tula in both reconcile.
Reconciliations to the GAAP results are included in this morning's press release and five.
In our comments certain percentages are rounded please refer to our presentation for complete information. In addition, as a reminder, today's presentation contains projections and other forward looking statements actual results could differ materially from those projected the company undertakes no obligation to update or revise publicly any forward looking statements, whether because of new information.
Future events or other factors. It is important to note. These statements include expectations and assumptions, which will be shared related to the impact from COVID-19 pandemic.
On slide two our forward looking statement also provides information on risk factors, including the impact of COVID-19 that could affect our financial results. It is now my pleasure to turn the discussion over to Lawrence.
Thank you Casey good morning, everyone. Thanks for joining us.
Moving on slide for our first quarter results were outstanding as.
As we said in our year end earnings call in January we have confidence from our strategies and are well positioned to deliver another year of differentiated growth from 2021.
Following an extraordinary year in 2020, and 2021, we expect strong underlying base business performance and recent acquisitions to drive significant sales growth as well as strong operating income growth, even considering extraordinary COVID-19 costs and business transformation investments.
Our focus on profit realization during.
During the first quarter, we delivered double digit sales adjusted operating income and earnings growth.
We expect growth to vary by quarter in 2021, given 2020, the level of demand volatility and the pace of COVID-19 recovery, but importantly, we have started the year with outstanding first quarter performance, giving us confidence in an even stronger outlook for 2021.
As seen on slide five we have a broad and advantaged global flavor portfolio with compelling offerings for every retail and customer strategy across all channels for <unk>.
The reach of our portfolio across segments geographies channels customers and product offerings creates a balanced and diversified portfolio to drive consistency in our performance as evidenced again by our first quarter results.
The sustained shift in consumer behavior to cooking and eating more at home continued to drive substantial increases in our consumer segment demand in all regions as well as increases in our packaged food company customer in our flavor solutions segment.
On the other hand in our Americas, and EMEA regions, we continued to experience reduced demand from our restaurants and other foodservice customers given the pressure on away from home consumption driven by continued COVID-19 government imposed restrictions, which in several areas increased during the first quarter.
Notably our <unk> region had substantial growth in both segments driven not only by lapping the significant disruption last year caused by the COVID-19 related lockdown in China.
But also by the sustained increase in at home consumption and an increase in away from home consumption as restrictions have eased and the recovery momentum is building.
Finally, with the addition of our Tallulah and phone and acquisitions, we have further extended the reach and breadth of our portfolio with new product offerings channels and customers and are excited about their contributions to our first quarter and beyond.
These impacts continued to demonstrate the strength and diversity of our offerings and we are confident our balanced portfolio will continue to differentiate mccormick and sustainably positioned us for growth.
This morning, I'll begin with our first quarter results share some comments on business performance and then discuss our 2021 momentum and growth plans.
After that Mike will go more in depth on our first quarter results and provide an update on our 2021 guidance.
Starting with our outstanding first quarter results as seen on slide six total sales grew 42%, including a 2% favorable impact from currency and constant currency. We grew total sales, 20% with increases in both segments.
Business growth new products and acquisitions are three long term growth drivers all contributed to the increase.
In addition to our topline growth adjusted operating income increased 35%, including a 3% favorable impact from currency and adjusted operating margin expanded by 160 basis points.
Growth from higher sales favorable mix and CCI led cost savings more than offset COVID-19 related costs and higher planned brand marketing investments.
Our first quarter adjusted earnings per share was <unk> 72, compared to <unk> 54 from the prior year driven by our strong operating performance, partially offset by a higher adjusted tax rate.
Turning to our first quarter segment business performance starting on slide seven in our consumer segment, we grew sales by 35% on a constant.
Constant currency, 32% with double digit increases across each of our three regions our.
Our Americas constant currency sales growth was 30% from the first quarter with incremental sales from our Tallulah acquisition contributing 5% from.
Momentum Tallulah carried in from last year continues to be strong with consumption growing at twice the category rate <unk>.
Excluding to our total Mccormick U S branded portfolio as indicated in our IRI consumption data and combined with unmeasured channels grew 15%, which reflects the strength of our category as consumers continue to cook more at home.
For the first time in several quarters, our sales increase was higher than our U S IRI consumption growth.
We are realizing the benefit of our capacity expansion at the end of last year. The difference between shipments and consumption is attributable to beginning to catch up on the under shipment of consumption across all quarters of last year that resulted in depleted retailer and consumer pantry inventory demand has remained high and the steps we've taken.
To increase supply are beginning to show.
As we mentioned in our January earnings call after experiencing real pressure on our U S manufacturing operations throughout 2020 due to elevated demand levels. We ended the calendar year with considerable incremental capacity and restoration plans for products, which had been suspended.
Throughout our first quarter, we removed products from suspension and continues to see service levels improve.
Which combined with our over shipping consumption indicates we are beginning to rebuild the inventory pipeline.
As we've said previously inventory replenishment will progress throughout the year.
We continue to work with all our customers on improving shelf condition and estimate more than half. The suspended products are now back on shelf for level of restoration is very customer specific.
Focusing further on our U S branded portfolio in Spice and seasonings in all other categories. Excluding dry recipe mixes we grew first quarter consumption at double digit rates double digit rates and again increased our household penetration and repeat buy rates.
In the first quarter, we continued to gain share and category is less impacted by supply constraints, including stocks and broth barbecue sauce, let marinate.
An Asian product.
The categories, most impacted by supply constraints, spice and seasonings and dry recipe mixes.
There is a high correlation between our share performance and the shelf conditions, resulting from product suspension for allocation.
Products that have had strong supply and remained on shelf have performed well.
As suspended products are restocked on shelf, we're seeing similar performance.
We anticipate regaining share as conditions continue to improve.
All of our key categories continued to outpace the center of store growth rates favorably impacting not only the Mccormick brand, but smaller brands as well such as subs lotteries simply Asia, Thai kitchen, bathroom and kitchen basics.
And the E Commerce, we had strong double digit pure play growth with Mccormick branded consumption outpacing all major categories.
We continue to use our strong category management capabilities and working with our customers as inventory is replenished throughout the supply chain optimized category shelf sets drives both growth for our customers and for Mccormick I'd like to thank our customers for their partnerships and working together with us a long term solution.
We are well positioned for success in 2021 and has implemented efficient long term solutions and strengthened our supply chain resiliency to support continued growth.
Now turning to EMEA, which continued its momentum with outstanding performance in the first quarter, our constant currency sales rose, 26% with broad based growth across the region.
Each of our markets drove double digit total branded consumption growth with market share gains across the region.
Spices and seasonings consumption was strong in all markets driving our market share gains across total EMEA region, and our <unk> brand in France, again had strong consumption growth.
Paste the homemade desserts category in the U K, both branch Red Hot and French's mustard also had strong consumption and gained share since the beginning of the pandemic. Our EMEA supply chain has been very well positioned to meet the elevated demand and this has contributed to our ability to grow share across the region.
In EMEA, our household penetration and rate of repeat buyers increased again in the first quarter for the fourth consecutive quarter across our major brands and markets compared to last year and we continue to work closely with our customers to ensure that elevated consumer demand will be met even obtaining incremental placement.
For our branded portfolio as other manufacturers and private label faced supply challenges for.
We're excited with our growth trajectory in EMEA following the challenging market conditions in the past.
In the Asia Pacific region, our constant currency sales grew 55% during.
During the first quarter of last year, China's consumption was disrupted by the COVID-19 related lockdown for.
Recovering from that disruption increased sales in the first quarter of 2021 versus last year.
Notwithstanding that recovery for regions still had double digit growth driven by strong China consumer and branded foodservice demand, partially fueled by the Chinese new year holiday as well as strong consumer consumption and the rest of the region for instance in Australia, we continue to see elevated consumption and the brands, where we gained household.
On attrition last year, such as Frank spread Hot Gourmet Garden and Grill mates.
Across all regions, we know second quarter consumption will start to be compared to the highly elevated levels from last year and while we do not expect consumption at those same levels. We do expect continued and long lasting growth from the increase in consumers cooking more at home.
Constant currency sales in our flavor solutions segment grew 3% driven by our Americas and APAC regions.
In the Americas, we drove constant currency sales growth of 2% driven by our phone and tallulah acquisitions as well as growth for our consumer packaged food customers for our at home base for.
But the strength in base business as well as new product momentum.
We continued to shift our portfolio to more value added and technically insulated products.
Only with a combination of phone as flavor portfolio, but also with considerable growth for snack seasonings in the U S and Mexico as well as flavors from both savory and beverage applications.
<unk> from our away from home customer base for branded foodservice and restaurant customers declined and continued to be impacted by the COVID-19 environment.
Sales in our EMEA region for comparable for the first quarter of last year for flavor solutions with demand declined in our away from home.
Customer base.
Set by strong sales for consumer packaged food customers.
This growth was driven by a significant increase in new product growth versus last year as well as continued strength from the base business, partially from our customers' promotional activities.
Our sales growth in the Asia Pacific region was outstanding up 18% in constant currency, both China, excluding the recovery impact from last year's Lockdown and Australia delivered double digit growth from quick service restaurants for <unk> customers. This growth was driven by significant moment.
And limited time offers as well as strength in the core business.
I mentioned, our results related to Tallulah and phone and now I'd like to provide a brief update on their integration status for.
For both acquisitions, our integration activities are progressing according to our plan.
We continued to deliver on opportunities quickly and aggressively to drive growth and are pleased with our momentum on capturing our synergy opportunities. We remain on track to achieve synergies according to plan.
Starting with Tallulah as expected our integration of the business has been straightforward.
As of March one all functions have been integrated into our Mccormick processes and importantly, we are now servicing customers from our Mccormick U S distribution center.
From a consumer commercial perspective, we are expanding distribution and are fueling growth with robust brand marketing investments.
We'll be activating both digital where tallulah was underpenetrated and in store merchandising in the next few weeks for our exciting Cinco de Mayo campaign.
In flavor solutions, we're also expanding distribution with new and existing branded foodservice customers and are leveraging to lula authentic Mexican flavor for increased menu participation, particularly in Cinco de Mayo menu offerings.
Moving to Kona the employees of Corona have been part of building a great business and we are excited to be working with them to collectively integrate the business and drive plans to capitalize on growth opportunities.
Our functional integration is very much on track and is using a best of both approach to ensure we optimize our operating model similar to the approach we have for the RB foods integration.
Alignment of our organization is well underway and we have had significant commercial collaboration yielding quick wins and identifying long term strategic opportunities.
Customer reaction has been extremely positive and were impressed with our early collaboration and excited about the increased customer value proposition created by the combination of Mccormick and boehner, a more comprehensive product offering broader technical platform deep technical and flavor talent and best in class customer collaborations.
<unk> and <unk>.
We are excited with bonus performance, starting the year with great results and a robust momentum across the business for.
Both tallulah and filling up we're pleased with our progress so far and their contribution to our results. Our enthusiasm for these acquisitions and are confident that we will deliver on our acquisition plans accelerate growth for these portfolios and drive shareholder value has only increased over the last few months.
I would like to briefly comment on the conditions for seating in our markets there are potential impact and our 2021 organic growth plans starting on slide 10.
Global demand for flavor remains the foundation for our sales growth we are capitalizing on the growing consumer interest in healthy flavorful coffee trusted brand as well as digital engagement and purpose minded practices.
Long term trends have only accelerated during the pandemic and our alignment with the combined with the breadth and reach of our portfolio sustainably positioned for us for continued growth.
These underlying trends current market conditions, and a robust 2021 plans position us well to successfully execute on our growth strategies in both segments.
Turning to slide 11, starting with our consumer segment around the world. We continue to experience sustained elevated consumer demand, which is real incremental consumption and reflects the trend of consumers cooking more at home.
Across our <unk> region consumer demand continues to be strong.
In China consumer consumption remains strong and we continue to see recovery in foodservice, which in China is in our consumer segment was approximately 90% of restaurants opened during the Chinese new year period in.
In Australia, even restaurant EBIT with restaurant restrictions ease and away from home demand increasing at home consumption has remained elevated.
And as I mentioned earlier, we are retaining household that came into our brands last year and we're also realizing growth with our away from home customers.
And many of our largest markets in EMEA restrictive COVID-19 measures are still in place further fueling at home consumption and we are seeing sustained levels of demand.
In the Americas as restrictions are easing and vaccinations are continuing consumption remains elevated consumers are continuing to come to our brand having a good experience and buying our products again.
Consumers are cooking more from scratch and adding flavored their meal in case.
As long as a key long term trend, which has accelerated during the pandemic.
As we've shared previously our proprietary consumer survey data supported by external research indicates consumers are enjoying the cooking experience as it provides a creative outlook reduces stress and connects the family and consumers feel meals prepared at home for safer healthier better tasting and cost plus.
In a recent consumer survey from February these positive sentiments are not only still true but has strengthened.
Tumors interest in cooking has increased in recent months versus the end of last year, because they want to cook versus have to Cook. For example, approximately 50% of the consumer survey indicated they are cooking more now because they want to try new recipe ingredient cooking method or tool for simply just cook from scratch.
And approximately 40% also indicated they were trying to recreate restaurant meals at home.
Importantly over two thirds of consumers surveyed claims day was maintained or increased their current level of cooking at home, even if like for it to return to normal next week whatever normal Navy.
We continue to believe the consumer behavior and sentiment driving an increased and sustained preference for cooking at home will continue globally and persist beyond the pandemic.
Further driving consumer demand for our products in 2021 and beyond fueled by robust brand marketing differentiated new products and our strong category management initiatives.
Our category management initiatives are designed to continue to strengthen our category leadership by driving growth for both us and our customers in.
In the U S. In 2020, we began our initiative to reinvent the in store experience for spices, and seasonings consumers for introducing new merchandising elements to improve navigation and drive inspiration.
Transforming and at times confusing shelf to three <unk> sections.
Rollout has continued in 2021 with plans to implement and thousands of stores and the early indication is positive, but the category and Mccormick branded growth outpacing the rest of the market and transformed stores.
We are also investing in e-commerce to drive Mccormick and category growth in the first quarter, we delivered over 90% Global E Commerce growth with particular strength in Omnichannel, we are investing in content retailers search and innovation, specifically for E Commerce, Trialing, new items and packaging and the.
Direct to consumer channel first for.
For example in the Americas, we've launched unique flavor inspiration products, such as strength Red Hot everything bagel seasoning and in China, we're launching already to utility pace on our direct to consumer platform.
In EMEA following the successful launch of the innovative Street food Seasonings last year, we're now accelerating online growth with variety bundle packs and multi by offered on our main e-commerce channels.
Turning to global brand marketing, we continue to increase our investments across our entire portfolio as evidenced in our 17% increase in the first quarter and plan for another significant increase in the second quarter.
Our investments have proven to be effective and we will continue to connect with consumers online current real time insights into action by targeting messaging focused on providing information inspiration, we expect our brand marketing investments combined with our valuable brand equities strong digital consumer engagement will continue.
To drive growth with existing consumers and millions of consumers gain in 2020.
Highlighting some of our first quarter investments in the Americas and EMEA regions on slide 12.
Turning with the Americas, We continued our advertising campaign, it's going to be great with a focus on consumers continuing traditions and preparing their families signature holiday dishes, even if their celebrations looks different.
Our Frac Super Bowl campaign integrated across digital social online video and TV for.
Third fan favorite Eli Manning promoting Frank's red Hot as appropriately Hot and was our best Super Bowl campaign, yet garnering record high impressions.
As part of our <unk> bold like that campaign, we partnered with new Orleanian, author and poet Cleo Wade to promote virtual Mardi Gras celebrations with authentic New Orleans flavors hashtag veterans ports Party.
And recognizing virtual celebrations replace live Mardi Gras event, we supported culture, eight NOLA and organization, which distributes food hospitality workers impacted by pandemic restrictions.
Turning to EMEA, where we have invested a substantial portion of branch of our brand marketing our digital marketing and promotional activities included our holiday campaign, featuring our best of Gold cap Limited edition packaging, which drove strong holiday results in our made for markets.
In the U K with our new year flavor resolutions campaign, we inspire consumers with recipes and products to flavor theyre healthy kick whether it be through the heater Frank's our spicing it up for Schwartz.
And in France, we're giving family another reason to celebrate in 2021 and.
In 2020 birthday celebration for not just the piece of paper so with the inspiration of our taxi birthday marketing campaign consumers can celebrate their birthdays complete with <unk> launch of a decimal combo sales Campbell top their cases paid for their bye have a baking products.
Looking at adjusted few of our second quarter plant in the Americas will inspire restaurant quality cooking for the herd is going to be great campaign our.
Our Vahine brand in EMEA is sponsoring a primetime French banking program, which will showcase our homemade dessert line in both regions, we launched Easter campaigns to bring the family together with baking in crafting ideas.
And moving to grilling season, we will acknowledge the importance of connecting through outdoor grilling occasions with campaigns targeting products, such as French's and grill mates in the U S and France in the U K.
Finally, our plans include support of a robust new product launches.
New products from integral to our growth in our consumer segment, new product innovation differentiates our brands and strengthens our relevance with our consumers are.
Our 2020 launches 15th exceptional trial and are providing significant momentum into this year and.
And in 2021, we have a robust global pipeline of new product launches and I'm happy to share some of our first half launches as seen on slide 13.
We are meeting consumers at the intersection of flavor and health <unk>.
We're launching justify dry recipe mixes in the U S Gibson dressing mixes and flavors like French onion, and Homestyle ranch with crude and short ingredient statements.
Five simple ingredients delivering a classic flavor experience and.
And in France, we are expanding our range of organic products and our Vahine homemade dessert line when it comes to heat for continuing to broaden our French portfolio globally, and the U S for expanding French wind sources with a milder turnkey buffalo flavor and a garlic buffalo flavor for combining savory garlic spicy.
Also in the U S. We have just launched Tallulah wings sauces, and two flavor Mexicali, cilantro, lime and kellyanne Tate spicy, our volt effort and a unique bottle with the iconic wooden cap.
And in the U K, we are launching <unk> craft addition.
Capitalizing on interest in Frank's heat with differentiated flavors, such as roasted jalapeno and growth hub in euro.
We are responding to consumers' demand for convenience and flavor.
In the U S. Our launch of frozen appetizers, providing hot chicken bites and Buffalo chicken depth with Frank's flavor that already in minutes is gaining momentum with one of our best new product starts.
We're excited to launch our new grill mates all purpose grilling seasoning for consumers, who want to respect for meat simple course ground seasonings for the open point that claim to the meat and lock ins you've seen us.
Finally, our innovation is not only all about flavor, but also staying relevant for their consumers for our packaging innovation, we're continuing the rollout of our first choice model with its consumer preferred transparent and functional design modern look and a reinforcement of fresh flavor into our eastern European markets. These mark.
Have predominantly been sachet markets for spices, and seasonings and perceived the bottle packaging as a premium offering and.
And in Canada, we're beginning the relaunch of our Gourmet line and the first choice bottle as well as adding new flavor varieties.
In the U K not only are we building on our Schwartz recipe mix momentum with the introduction of flavor for line extensions. We're also advancing on our sustainable packaging commitment with sachet packaging patents for 100% recyclable.
Once will be the first France, and the UK dry recipe mix category with recyclable packaging.
And in France, with the redesign of our new CRO grinder. Its appearance not only has a greater consumer appeal, but it also reduces our carbon footprint.
Turning to flavor solutions in this segment, we have a diverse customer base and I've seen a variety of various stages of recovery.
From a food and home perspective, our flavor solutions growth varies by packaged food customers. Overall, we are carrying our growth momentum with these customers into 2021, driven by strength in their iconic core products as well as new product and bigger better innovation in 2021.
Overall, the sell in of our new product launches in Big bet innovation from these customers slowed in 2020 due to the focus on keeping core items on shelf.
They're still new product launches and in many cases, they were smaller expansions of the core and more channel oriented.
Moving into 2021, we're excited about the momentum of the 2020 launches that EBIT more excited about the robust 2021 pipeline our customer a bigger bet innovations in their plant and we look forward to.
Collaborating with them and driving growth from those launches.
A key enabler driving our success in developing winning flavors for our customers is our insight on consumer and culinary trends leap.
We've been at the forefront of forecasting emerging flavors for 21 years due to the Mccormick flavor forecast, we have a history of identifying the top trends and ingredients shaping the future of flavor many of which have stood the test of time, whether it was with tumor for pumpkin pie spices for flavor of Chipotle for dishes with quinoa.
In April we'll be launching our newest edition that will shake up the way, we cook flavor. Indeed will feature new trend flavors and recipes that will not only flavor, our consumer segment innovation, but also drive wins with our flavor solutions customers.
And our away from home portion of this segment as I mentioned earlier, we're seeing growth from our restaurant and other foodservice customers and our APG region as restrictions have eased.
For <unk>, our demand momentum continues to strengthen particularly as they continue to expand their menu options with limited time offers and are increasing promotional activities.
Branded foodservice demand as it relates to entertainment stadium for hospitality venues for instance is recovering at a slower pace.
And in EMEA and the Americas during the first quarter, our restaurants and other foodservice customers were still impacted by government imposed COVID-19 restrictions in many markets.
Theres no optimism with many of these customers related to restrictions easing and reopening plan.
Focus has shifted from adapting operating models that supply chain preparedness for the second half of the year, we're collaborating with our customers to ensure a strong recovery with pent up demand being met.
We expect the recovery of some of our branded food customers.
We'll start to begin similar to what we've seen in APG as.
<unk> customers are oriented less the dine in their recovery will be at a faster pace than the rest of the restaurant and foodservice industry. We have positive fundamentals in place to navigate through this period and are excited about the recovery momentum.
Across our entire flavor solutions portfolio, we were advantaged by our differentiated customer engagement and plan on driving further wins for both us and our customers in fiscal 2021.
With our customer intimacy approach, we will continue to drive new product wins collaborate on opportunities and solutions vantage the recovery plant and importantly, further strengthen our customer partnerships.
When we collaborate with our customers and our technical innovation Center, we have a high win rate since we could not connect and personally during 2020, we adapted to new ways of collaborating through creative digital and virtual solutions.
Interactive experience for our customers built their excitement awareness and confidence in our unique capabilities in an engaging and inspiring way.
We continue to not only strengthen our engagements in 2020, but we also proved we can maintain our high win rate whether physically in our innovation centers are not and have carried that momentum into 2021.
In our flavor solutions segment, the execution of our strategy and by great our portfolio to more technically insulated and value added categories will continue in 2021.
The top line opportunities gained from our investments to expand flavor scale, our momentum in flavor categories as well as opportunities from our <unk> acquisition, we expect to realize further results from this strategy.
Lastly, we continue to be recognized for our efforts, we're doing what's right for people communities and the planet our purpose led performance.
Following being named by corporate Knights in their 2021 Global 100, most sustainable corporations index as number one in the packaged food and processed foods and ingredients sector. Mccormick was also recently named to Barron's 2021, 100, most sustainable companies list for the fourth consecutive year.
As we continue our sustainability journey I'm excited to announce that later this week, we will begin using 100% renewable electricity and all our Maryland, and New Jersey based facilities. This includes our manufacturing operations distribution centers offices and technical innovation Center in.
And will result in an 11% reduction in our global greenhouse gas emissions.
Moving to slide 16 in summary, we continue to capture the momentum.
For a gain in our consumer segment and for their flavor solutions at home customers.
Positive fundamentals in place to navigate through the flavor solutions away from foam recovery.
And are excited about our tallulah and phone and acquisitions all of which bolster our confidence for continued growth in 2021.
Our fundamentals momentum and growth outlook are stronger than ever our achievements in 2020, our effective strategies, a robust operating momentum and the breadth and reach of our portfolio reinforced our confidence in delivering another strong year of growth and performance in 2021.
Following an extraordinary year in 2020 or 2021 outlook reflects both our strong underlying base business performance and acquisitions driving significant sales growth as well as strong operating income growth, even considering extraordinary COVID-19 costs and our business transformation investments, which high.
<unk> our focus on profit realization.
Our top tier long term growth objectives remain unchanged and we're positioned for continued success.
Importantly, mccormick employees around the world drive our momentum and success and I would like to thank them for their dedicated efforts and engagement now I'll turn it over to Mike.
Thanks, Lawrence and good morning, everyone I'll now provide some additional comments on our first quarter performance and an update on our 2021 outlook.
As Lawrence mentioned, our first quarter results were outstanding starting with our top line growth as seen on slide 18, we grew sales 20% in constant currency during the first quarter.
Higher volume and product mix acquisitions and pricing each contributed to the increase in.
For organic sales growth was 16% driven by our consumer segment and incremental sales from actual Lula and <unk> acquisitions contributed 4% across both segments.
The consumer segment sales grew 32% in constant currency with double digit growth in all three regions.
For sustained shift in consumer consumption continues to drive increased demand for our consumer product.
Fueled by our brand marketing.
And category management initiatives and resulted in higher volume and mix in each region.
On slide 19 consumer segment sales in the Americas increased 30% in constant currency versus the first quarter of 2020 with 5% of the increase from the acquisition of true.
The remaining increase from higher volume and product mix was broad based across the majority of categories and brands as well as private label products with particular strength in the Mccormick strength Red Hot Grinches Veterans now recently Asia and Gourmet Garden brands.
In EMEA constant currency consumer sales groups grew 26% from a year ago with double digit growth in all countries and categories across the region.
The most significant volume and mix growth drivers for Schwartz <unk> branded spices, and seasonings vahine homemade dessert products packaging products and our <unk> branded products in Poland.
Consumer sales in the Asia Pacific region increased 55% in constant currency, driven primarily by the recovery from the disruption in China consumption last year as Lawrence mentioned.
Excluding that recovery impact for region had double digit growth due to strong China consumer and branded foodservice demand.
Partially driven by the timing of Chinese new year and related holiday promotions as.
As well as continued strength in Australia.
Turning to our flavor solutions segment and slide 22.
We grew first quarter constant currency sales, 3%.
In the Americas flavor solutions constant currency sales grew 2% driven by the phone and true acquisitions.
Percentage increase as well as pricing to offset cost increases.
Volume and product mix declined due to a reduction in demand from branded foodservice and.
In other restaurant customers.
Firstly offset by higher demand from packaged food companies.
Particular strength in snack seasonings and savory flavors.
In EMEA constant currency sales were comparable to last year as pricing actions offset cost increases.
Volume and product mix declined due to lower sales to branded foodservice and other restaurant customers, partially offset by sales growth with packaged food companies with strength in snack seasonings.
In the Asia Pacific region flavor solutions sales rose, 18% in constant currency driven by higher sales for <unk> in China and Australia.
Firstly due to our customers and limited time offers and promotional activities as well as the China recovery impact from last year's COVID-19 related Lockdowns.
As seen on slide 26, adjusted operating income, which excludes transaction and integration costs related to the true Lula and <unk> acquisitions as well as special charges increased 35% or in constant currency, 32%.
In the first quarter versus the year ago period the cash.
Segment, adjusted operating income grew 59% to $190 million.
The 54% constant currency growth from higher sales favorable mix and CCI led cost savings more than offset COVID-19 related costs and a 17% increase in brand marketing.
In our flavor solutions segment, adjusted operating income declined 4% to $73 million with minimal impact from currency.
Higher sales and CCI led cost savings were more than offset by unfavorable manufacturing cost.
As seen on slide 27, adjusted gross profit margin expanded 60 basis points in the first quarter versus the year ago period due to favorable mix, both within the consumer segment and due to the sales shift between segments.
In addition, CCI led cost savings were partially offset by COVID-19 related costs.
Our selling general and administrative expense as a percentage of net sales was down year on year by 100 basis points from the first quarter of last year.
Leverage from sales growth for the decline.
Firstly offset by the increase in brand marketing I mentioned a moment ago.
With the growth gross margin expansion and SG&A leverage adjusted operating margin expanded 160 basis points from the first quarter of 2020.
Turning to income taxes on slide 28, our first quarter adjusted effective tax rate was 22, 7% compared to 18, 4% in the year ago period.
The first quarter adjusted tax rate in 2020 was significantly impacted by a favorable discrete item related to a refinement of our entity structure.
Income from unconsolidated operations increased 28% in the first quarter of 2021 due to strong underlying performance of our joint venture in Mexico.
At the bottom line as shown on slide 31st quarter 2021, adjusted earnings per share was <unk> 72.
As compared to <unk> 54 for the year ago period.
The increase was due to our higher adjusted operating income performance.
Firstly offset by a higher adjusted income tax rate.
On slide 31, we've summarized highlights for cash flow and the balance sheet.
Our cash flow from operations was an outflow of $32 million for the first quarter of 2021.
Compared to an inflow of $45 million in the first quarter of 2020.
This change was primarily due to a lower level of cash generated from working capital.
Associated with increased sales higher incentive compensation payments and the payment of transaction and integration costs related to our recent trans acquisition.
In February we raised $1 billion for the issuance of five year, 9% notes and 10 year, 185% notes.
We took the opportunity in a low interest rate environment to optimize our long term financing following our true and Santa acquisitions.
Yes.
We also returned $91 million of cash to our shareholders through dividends and used $49 million for capital expenditures this quarter.
We expect 2021 to be another year of strong cash flow driven by profit and working capital initiatives and our priority is to continue to have a balanced use of cash.
Funding investments to fuel growth, returning a significant portion to our shareholders through dividends and paying down debt.
Now I would like to discuss our 2021 financial outlook on slide 32 and 33.
With our broad and advantaged flavor portfolio and robust operating momentum and effective growth strategies, we are well positioned for another year of differentiated growth and performance.
And our 2021 outlook, we're projecting top line and earnings from our strong base business and acquisition contribution.
If anything from a partially offset by incremental COVID-19 costs and ERP investment as.
As well as a higher projected adjusted effective tax rate.
We also expect there will be an estimated two percentage point favorable impact of currency rates on sales adjusted operating income and adjusted earnings per share.
At the top line due to our first quarter results and robust operating momentum we are increasing our expected constant currency sales growth to 6% to 8%.
<unk> to 5% to 7% previously.
Which continues to include the incremental impact of the Tula and photo acquisitions at the projected range of three 5% to 4%.
We anticipate our organic growth will be primarily led by higher volume and product mix.
Driven by our category management brand marketing, new products and customer engagement growth plans.
As Lawrence mentioned earlier.
We expect sales growth to vary by region and quarter in 2021, given 2000 twenty's level of demand volatility and the pace of the COVID-19 recovery.
And importantly, we continue to expect we will drive overall organic sales growth for the full year in both of our segments.
We are now projecting our 2021 adjusted growth gross profit margin to be comparable to 2020 due to increasing inflationary pressure, mainly due to transportation costs.
Other inflation expectation for the full year remains a low single digit increase.
Our adjusted gross margin projections effects margin accretion from the Tula Inferno acquisition as well as unfavorable sales mix between segments and COVID-19 costs.
Our estimate for COVID-19 costs remains unchanged at $60 million in 2021 as compared to $50 million from 2020.
And weighted to the first half of the year.
As a reminder, fiscal 2020 once COVID-19 costs are largely from third party manufacturing costs.
Reflecting the increase in our sales outlook.
We're also increasing our expected constant currency adjusted operating income growth.
Our adjusted operating income growth rate reflects expected strong underlying performance from our base business and acquisitions.
Rejected to be 11% to 13% constant currency growth compared to 10% to 12% previously.
This was partially offset by a 1% impact from increased COVID-19 costs compared to 2020.
3% impact of the estimated incremental ERP investment.
This results in total projected adjusted operating income growth rate of 7% to 9% in constant currency <unk>.
Increased from 6% to 8% previously.
This project from the effects of the inflationary pressure I, just mentioned as well as our CCI led cost savings target of approximately $110 million.
We also continue to expect a low single digit increase in brand marketing investments, which will be heavier in the first half for the year.
We also reaffirm our 2021 adjusted effective income tax rate projected to be approximately 23%.
This outlook versus our 2020 adjusted effective tax rate is expected to be a headwind to our 2021 adjusted earnings per share growth of approximately 4%.
We are increasing our 2021 adjusted earnings per share expectations to growth of 5% to 7%, which includes a favorable impact from currency.
This increase reflects our higher adjusted operating profit outlook.
And the impact from optimizing our long term financing, which I mentioned earlier.
Our guidance range for the adjusted earnings per share in 2021 is now $2 97 to $3 <unk> compared to $2 91.
For $2 96 previously.
This compares to $2 83 of adjusted earnings per share in 2020.
This growth reflects strong base business and acquisition performance growth of 11% to 13% in constant currency.
Offset by the impacts I, just mentioned related to COVID-19 costs are incremental ERP investment and the tax headwind.
Based on the expected timing of some expense items, such as COVID-19, and brand marketing investments.
Well as a low tax rate in the first half of last year.
We expect our earnings growth to be weighted to the second half of the year.
Our first quarter performance with a strong start to the year and we are optimistic for the balance of the year.
But we recognize we are lapping a very strong earnings performance in the second quarter of 2020, while also making investments to drive growth in 2021.
In summary, we are projecting strong underlying base business performance and growth from acquisitions in our 2021 outlook.
With earnings growth, partially offset by incremental COVID-19 costs ERP.
ERP investment as well as a higher projected effective tax rate.
I'd like to now turn it back to Lawrence for some additional remarks before we knew for your questions.
Thank you Mike the other.
Mike has shared our financial results and outlook in more detail I'd like to recap the key takeaways as seen on slide 34.
Our first quarter results with double digit sales adjusted operating income and earnings growth for an outstanding start for the year and bolster our confidence in a stronger 2021 outlook.
We have a strong foundation and a balanced portfolio, which drives consistency in our performance we are confident in the.
The sustainability of higher at home consumption will persist beyond the pandemic and we are well positioned to capitalize on accelerating consumer trends as well as prepared for away from home consumption recovery.
So lula and <unk> have both started the year with strong momentum and results are enthusiastic for these acquisitions and our confidence that we will deliver on our plant has only strengthened over the last few months.
Our fundamentals momentum and growth outlook are stronger than ever our 2021 outlook reflects another year of differentiated growth and performance, while also making investments for the future. We are confident we will continue on a growth trajectory in 2021 and beyond now, let's turn to your questions.
Thank you for that.
Conducting a question and answer session.
To ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
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One moment, please we poll for questions.
Thank you first question comes from the line of Andrew <unk> with Barclays. Please proceed with your questions Hey, Good morning, everybody good morning, Andrew.
Hi, there.
I guess first off it sounds like you are making as expected good progress on getting many of the suspended items and skus back on the shelf as your capacity comes on stream.
It sounds like there is still some more to go as you as you move through the year I guess, particularly in <unk> is there any way you can maybe dimensionalize that a bit.
How significant that refill might be in <unk>, even if it's like versus the magnitude of what you saw in <unk>.
Just to try and put some context around it.
And have you had any any challenges in getting some of those suspended items back on the shelf at all because I know that in Europe. You mentioned, you had actually benefited from incremental shelf placement at the expense of some competitors that had some capacity issues I didn't know if the reverse had been an issue for you here and then I'm just kind of follow up.
Sure Andrew well as we've gone through that.
Home prices in 2020, we under ship consumption every quarter, because we were not able to keep up with the extended.
Elevated levels.
NAND overall.
And in order to keep our best selling items, our core items and in particular as we got to the fall protect the holiday items.
We did sustain a substantial number of items and as we've added capacity.
Steadily restoring them.
As we've gone through this.
First quarter of this year.
And I would say that right now we probably are.
The halfway point in terms of getting items back on the shelf, but any other you or anyone on this call and certainly by for instance family who had for me about this endlessly.
I'll go into any store and find that there are a lot of holes on the shelf and a lot of our our products that are not yet.
And for distribution and even within a given account the store by store situation it might be different.
For the supply chain aspects to it there's a retail work aspect to getting on the shelf and I think that this is going to be a steady rebuild.
As we go through the rest of the year, we've made a good start on it.
In Q1, but.
Quite a long way to go and it's hard I would hesitate to get overly precise above and I would expect to see the shelf getting restore as we go through the year I think one other big variables for US Andrew is just the strength of the consumer demand.
Consumer demand has been higher than we originally planned.
So we're actually not as far along on a restoration plans as we would've hoped.
Just because as fast as we.
Supply the market consumers are pulling for the product through.
And do you think that.
It's hard I'd say, it's hard for us too.
Dimensionalize I will emphasize its in Americas problem.
Most of the world.
We are shipping to consumption.
Supply chain is.
Well caught up.
<unk> levels.
Our solid and its in the Americas, where we've got cut from got.
<unk> got some catching up to do and in most categories here in the Americas.
We're also shipping to consumption as well, it's primarily herbs and spices and recipe mixes.
I think you're going to see a big change in net.
<unk> as we go through the coming weeks.
And I think that's it.
Sure we've hit bottom on that <unk> already turned the corner just because of the restoration efforts.
I think John just to add to that too we're being a little debt, we're optimistic but prudent for a second quarter of last year. As you remember we grew total consumer sales, 28%, 36% in the Americas. So it's a tough comp as we look forward.
We're optimistic interest.
And thank you for the TDP comment that leads into just a quick follow up which is.
Where do you what's your best guess at where Tdp's might end up like once we get to a steady state, let's say versus 2019.
Im assuming.
Would be down a bit just as you have come through this and maybe in a more efficient shelf going forward, even though I know they probably reached obviously more depth.
The actual pandemic and then as you recover but would you expect GDP to be down maybe a couple of percent going forward.
Great.
Very astute observation as we've gone through this we've not only suspended skus, but we've also rationalized skus.
We've eliminated a couple of hundred.
Skus that were slower moving or what the items that we have now are much higher velocity on.
On average we're also continuing the aisle reinvention program and setting store shelves.
And in spite of Nymex for the Covid situation last year and all of the restrictions around working to shelf, we were able to reset over 5000 stores we expect.
At least that many this year.
And we're definitely getting a lift from that and at the same time, it does reducing SKU count.
Thanks, Tim for efficient set.
Great. Thank you very much for everybody.
Our next question is from the line of Ken Goldman with Jpmorgan. Please proceed with your question.
Hi, Thank you.
You have a unique perspective, because you see broadly across so many retail and foodservice categories.
I'm curious you know in the U S restaurant sales were doing better right Americans are traveling much more but at the same time, we're seeing overall food at home takeaway really remains strong I think probably better than what some may have expected, obviously down on a weekly basis, but still better on a two year. So I'm just curious.
Are you surprised and how do you reconcile the improved foodservice sales that we're seeing across the entire industry with what I would consider is still impressive at home trends and I never want to bet against the simplest explanation which is that.
Can you just eating more but I think the total implied increase in food numbers.
It is notable and Im just curious for your thoughts there for <unk>.
Thanks, and by the way you win the award for the best headlines on your screen.
Awesome.
All the short term Mad at me for Overstating. It so it works both ways right.
Yes.
I would say first of all the food at home consumption really is strong we're seeing that.
Ourselves and our business of course.
Also in our flavor solutions business, where.
The other CPG companies are our customers.
We see for we're seeing a lot of strength there, particularly on the abreast on restaurant, it's actually a mixed bag.
For the kiosks at quick service restaurants are doing well.
I think during the first quarter there were a lot of.
Everyone thinks about the state we're in today, but let's think about December and January there were a lot of.
New Lockdowns that were put in place restrictions have been lifted were reinstated so I'd say that the for branded foodservice side for the restaurant customers might be off to a little bit slower start.
For the year.
Everyone.
Maybe thinking I do think there was a lot of optimism among restaurant operators as we can.
Go into.
Second quarter revenues.
Vaccination rates go up and many of these restrictions are lifted and I think for that group will come back come back strong growth, but certainly for the beginning of the year they were off to a little bit of a slower start.
Okay. Thank you and I know, we're running a little long, but I wanted to sneak one more in which as you know.
It's always dangerous to ask.
Mass on earnings calls, but back of the envelope. It seems you're implying now that for the last nine months of the year right to Q2, <unk> organic sales growth.
He's actually going to be a little bit less than what you anticipated a few months ago and I am just basing this on some of your guidance items. So is it fair to say that the first quarter over shipment was so strong that it may be pulled forward.
Some of your expected shipments ahead or am I really parsing that info to finally, and you're not really making any implied.
It's our intent was to reflect the sales growth.
Over delivery that we got.
In the first quarter, which was which was which was high but.
But but but we really did not change our outlook for the rest of the year to go for the total constant dollar organic as we call. It is basically the same it's plus or minus 1%.
For the year, because we call it our base of the range is two five to four.
Up 1%, but you're right year to goes basically what we said before we haven't called it out.
I know there is the two year for two year CAGR or what's really impressive part that as we start measuring this and looking at lapping things. So that those are actually above our organic growth guidance long term and that we're seeing now.
And it is just on the first quarter. So we're trying to be both for.
We express our optimism because I mean, the business is very strong, but also be a bit.
Net prudent I mean, we're lapping a big second quarter lot of luxury second quarter volume.
Understood. Thank you.
Our next question is from the line of Robert Moskow with Credit Suisse. Please proceed with your question.
Hi, Thank you.
Hi.
Hi, good morning.
I don't think you are in the practices of giving us your COVID-19 costs.
But I was wondering if they now need to be higher this year than expected because you need to rely on third parties more than you thought and if you can maybe compare that to 2020.
I'm also wondering if I could look at second quarter in a different way.
I know the year over year is difficult to to look at but sequentially. You you typically have higher sales in <unk> than you have in <unk>.
And higher and.
And higher profit, but I think consensus is assuming that that wont happen. So.
I know you've given us first half second GAAP guidance, but wondering for a little more clarity on how <unk> compares to <unk> maybe sequentially. Thanks. Yeah. This is Mike on the Covid costs, We said previously and we haven't changed from that we spent about $50 million last year.
And we're going to spend about $60 million. This year, so up about non pan out the timing of that is a little different it's going to be first half heavily weighted in 2021, a lot of that is the co man cost we talked about.
Before kind of leading into your second question Youre net clue man was coming in the first quarter. It wasn't a full impact of the <unk> cost as we ramp things up so really the second quarters where could it.
Every month, we will have had the full co man call, so thats a little bit of a.
Headwind in the second quarter.
We talked about the first quarter, our consumer A&P was up around 17%, we're going to have another.
Investment in A&P in the second quarter to drive sales as we expense again thats part of the first half second half story.
I think Q2 has a bit of a headwind from an expense perspective in a COVID-19 A&P cost perspective.
And also the tax range youre going down to the EPS line.
Okay.
I'll leave it there I think if anything I'd say, maybe summarize it we've talked about the year being a first half second half story within the first half there was a first quarter in our second story for the second quarter story think of it that way.
And again first half EPS still up versus a year ago, yes.
Okay.
Great. Thanks, a lot.
Next question is from the line of Alexia Howard with Bernstein. Please proceed with your question.
Good morning, everyone.
Alright.
Hi that.
So you mentioned e-commerce briefly in the prepared remarks did you give us a little bit more color region by region.
You talked about strong double digit growth and I'm just wondering how that buried in the various.
Parts of the World.
And are you seeing a slowdown in some of those areas. At this point is that as reopening happened and then I have a follow up.
Sure well first of all E Commerce is strong everywhere.
We talked last year about triple digit and at the end of the year, We said e-commerce.
Total was around I think it was 136%.
Increased year on year, it's not quite triple digits, but it's for.
<unk> very strong double digit increase.
<unk>.
In the first quarter again on top of the strong performance last year. So so.
Say that that's still pretty explosive growth.
We have no disappointment about that I'd say, the omnichannel, particularly is very strong.
Hi.
I think that while the numbers may be slightly different region to region at the current at the same direction globally.
Great. Thank you for it.
Consumers have had a good experience shopping habits that theyre going to continue using teams. What we are seeing some of our consumer research.
Okay. That's very helpful. And then in terms of new product launches it sounds as though you've.
We obviously got an impressive lineup for 2021.
Is your potential to sales from new products on trending upwards I imagine it was slower last year because of the pandemic.
Whether you can quantify exactly what percentage of sales from new products, you're anticipating this year and how that compares to.
Anywhere a year ago.
Mike speak to the numbers I think it's more of a you can think of it as a more normal year in a normal year.
Talking about seven or 8% of our.
Products introduced in the last three years make up our sales base it would've been less last year because of the pandemic.
And have a strong ramp of new products in the 2021 as you've seen that we get back to more than normal.
Longer term numbers.
Yes.
Number of the items that we launched last year, we got we got less placement on it because of the focus on core.
Items, not just by us for by the retailers.
On the other hand.
They did get into distribution.
They've got an extraordinary amount of trial.
Some of the items that we did launch last year, one of our best performing.
New items.
Awhile.
We're really treating 2021 is a continuation of the launch year for further.
In PD, we introduced last year. So it gives us quite a pipeline for this year.
Great. Thank you very much I'll pass it on.
Our next.
Question is from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.
Yes, thanks, good morning, everyone.
And I don't think so.
I just wanted to clarify two clarification questions first.
Relative to the earnings call in January the expectations on raw materials and cost inflation.
Were unchanged and just be clear just in terms of what youre seeing in terms of freight packaging variety of raw material ingredients.
That is something where you've had enough contracted.
And not expose non exposed to the spot market to insulate you for fiscal 'twenty, one or is it just your over your aggregate commodity basket really hasn't moved that much because I mean more broadly it seems.
Yes. This is Mike I mean, we haven't changed our guidance for the year. So low single digits, obviously lot of commodities and packaging to your point. It is already contracted and freights variable that we've talked about and you know one other reasons, we've set a while we've had really great growth.
And mix and things like that in the long term debt optimization, we didn't drop it off through to the bottom line because of some pressure from increased inflation from transportation just like every other company has been seeing recently.
As we recognize we've recognized that in our forecast and our guidance.
Still low single digits generally.
That's really helpful and then the second clarification just.
You talked about over shipping Americas consumption growth of 15% and I'm just trying to make sure.
In the slides the Americas volume price mix, our product mix is up 25 25, 25%.
Is that apples to apples versus the 15 or what's the I'm just trying to understand the magnitude of how much you were actually over shipping in the period.
A year ago.
And a year ago from the.
First quarter of last year.
It seems like a lifetime ago.
In the Americas were actually under ship consumption in the first quarter a.
A year ago. So average at the time, we said there's about a 4% impact on the Americas. So I think you should factor that out.
And so the over shipment versus consumption might be a little bit less than that.
Seeds.
Okay actually to build for.
Rebuilt stocks and the trade more than we did in the consumption for its strong.
Alright, that's all that's all really helpful. I'll pass it on thank you for it.
Yes.
We are nearing the end of our question and answer session for today and have time for one additional question, which is coming from the line of Chris Growe with Stifel. Please proceed with your questions.
Hi, good morning.
Chris Hi.
Hi.
I'll make it quick here I know we're at the end of the specific real quickly just to understand as we think about those third party co manufacturing costs and there's a weight on the gross margin.
Those continue all through the year just understand like are you using third parties just to rebuild inventory and then you kind of shut that down or is this something that will be ongoing in terms of your supply of our products in the future.
Hey, Chris It's Mike one were always using for the manufacturers.
Part of our supply chain as we've talked about though for the year, we really stretch some of their strategic co Packers to help us out shorter term really focused on the first six months of the year very volume dependent.
So our the way we are thinking now is again in the second quarter will be the heaviest spend there'll be some some some probably rolls into the third quarter or so, but we will see what volume as to what consumption consumption continues as something we would assess as we always do and as our supply chain continues to recover.
The other variables that could speed speed it up or slow it down. So those are all considered in our guidance now.
Right.
And then just a quick one on as I think about what's happening in China.
You saw double digit consumption and consumer sales and I think that even excludes the branded foodservice yourselves products yourself as well as a really strong recovery in foodservice I guess I just want understand make sure. Those numbers are accurate and then to the degree to which that is somewhat of a predictor of what can happen in the U S. As we said the lap.
The tougher comps from the consumer side with the easy comps from the foodservice side are you learn anything from what's happening in China as an indicator for the U S.
Well I think that the interesting thing in China is that even though they are well past that.
Uh huh.
The COVID-19 impact and are for.
For a long recovery.
Consumption of food at home remains strong even as even as food services recovered.
No.
I think it's interesting to look around the region also because what we're talking about the Asia Pacific region.
Just China, that's the biggest market there, but markets like Australia.
Which is also pretty far along in recovery, even though food services has rebounded it's not back to the same level that it once was and consumption of food at home has continued to be very strong.
Okay. Thank.
Thank you for it goes to the point that we have.
You have been making which is that this has been a long term trend anyway for consumers to cook more at home and more from scratch at home.
When they do.
The COVID-19 situation reinforced that behavior.
Helped a whole new generation of cooks learn how to cook their their family recipes that maybe they relied on mom or grandma or new eating occasions lunch whole new eating occasions like lunch as people work remotely.
I think theres a lot of reasons to believe that consumption for the kantar.
To be elevated.
Okay. Thank you.
Thank you I'll now turn the flow ranch loan securities for closing remarks.
Like to thank everyone for your questions and for participating in today's call I apologize to those that we didn't get to it in the Q. We did have a very long script today, we had a lot of information.
To get out for <unk>.
<unk> is differentiated by the breadth and reach of our balanced portfolio, which is sustainably positioned us for growth. We're very pleased with our outstanding first quarter operating performance, which proves the strength of our business model with value for product and our capabilities as a company.
We expect to drive even further growth as we continued to execute on our long term growth performance and people strategies actively respond to changing consumer behavior.
Capitalize on new opportunities our investments provide a new foundation for growth, while enhancing our agility and our relevance with consumers and customers, which positions us well for continued success and long term shareholder value creation.
Thank you Lawrence and thanks to everybody for joining today's call and again, we apologize for those who did not get it and I would be happy to follow up with you. After the call for any further questions from anybody regarding today's information. Please feel free to contact me. This concludes this morning's conference call. Thank you very much.