Q3 2023 McCormick & Co Inc Earnings Call

Speaker 1: Good morning, this is Fatim Freiha, VP of Investor Relations. Thank you for joining today's third quarter earnings.

Good morning. This is Boston, Frank Huh VP of Investor Relations. Thank you for joining today's third quarter earnings call to accompany this call. We have posted a set of slides on our IR website.

Speaker 1: To accompany this call, we have posted a set of slides on our IR website.

Speaker 1: With me this morning are Brendan Foley, President and CEO , Mike Smith, Executive Vice President and CFO , and Tacey Jenkins, Chief Growth Officer.

With me. This morning are Brendan Foley, President and CEO , Mike Smith, Executive Vice President and CFO , and Kasey Jenkins Chief growth officer. During this call we will refer to certain non-GAAP financial measures the nature of those non-GAAP financial measure and the related reconciliations to the GAAP results are included.

Speaker 1: During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slide.

In this morning's press release and slides.

Speaker 1: In our comments, certain percentages are rounded. Please refer to our presentation for complete information.

In our comments certain percentages are rounded.

Please refer to our presentation for complete information.

Speaker 1: 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. Please refer to our forward-looking slide.

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. Please refer to our forward looking statements slide.

Speaker 1: for more information. I'll now turn the discussion over to Brenda.

For more information I'll now turn the discussion over to Brendan.

Speaker 2: Good morning, everyone, and thank you for joining us. Let me start by saying how pleased I am to join you today for my first earnings call as president and CEO . Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation. Let's turn to our results.

Good morning, everyone and thank you for joining US let me start by saying how pleased I am to join you today for my first earnings call as President and CEO just.

Just over one month into my new role I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation, let's turn to our results.

Speaker 2: We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solution segment.

We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solutions segments.

Speaker 2: Our results were in line with our expectations across our business.

Our results were in line with our expectations across our business notwithstanding challenges for our consumer segment in Asia Pacific or APAC.

Speaker 2: Notwithstanding challenges for our consumer segment in Asia Pacific, or APAC, where the pace of China's economic recovery has been slower than previously anticipated.

Where the pace of China's economic recovery has been slower than previously anticipated.

Speaker 2: Let me start with the highlights for the third quarter. We delivered solid constant currency sales growth. We continue to realize effective price realization. And importantly, volume performance, excluding China, has improved each quarter throughout the year. We continue to see top-line momentum in our business, positioning McCormick for sustained growth.

Let me start with the highlights for the third quarter.

We delivered solid constant currency sales growth, we continued to realize effective price realization and importantly volume performance, excluding China has improved each quarter throughout the year. We continued to see top line momentum in our business positioning Mccormick for sustained growth.

Speaker 2: We drove meaningful year-over-year margin expansion, underscoring our focus on profit realiz opioids.

We drove meaningful year over year margin expansion underscoring our focus on profit realization.

Speaker 2: Year-to-date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements.

Year to date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements.

Speaker 2: Our performance demonstrates the strength of our business fundamentals and the effective execution of our proven strategies, while leveraging the sustained demand for flavor.

Our performance demonstrates the strength of our business fundamentals and the effective execution of our proven strategies, while leveraging the sustained demand for flavor.

Speaker 2: Turning to slide five, in the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio.

Turning to slide five.

In the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio.

Speaker 2: our constant currency growth reflected strong business performance.

Our constant currency growth reflected strong business performance with an 8% contribution from pricing and a 2% decline in volume and product mix. This.

Speaker 2: with an 8% contribution from pricing and a 2% decline in volume in product mix.

This decline in volume was driven by two factors.

Speaker 2: A 1% volume decline attributable to the impact of a slower than expected economic recovery in China.

A 1% volume decline attributable to the impact of a slower than expected economic recovery in China.

Speaker 2: and a 1% decline related to the divestiture of kitchen basics, the exit of our consumer business in Russia, and the pruning of low margin business to optimize our portfolio.

And a 1% decline related to the divestiture of kitchen basics, the exit of our consumer business in Russia, and the pruning of low margin business to optimize our portfolio.

Speaker 2: All other underlying volume in mixed performance was flat for the quarter, which is the sequential improvement from the second quarter, where total underlying volume growth was down approximately 1%.

All other underlying volume and mix performance was flat for the quarter, which is a sequential improvement from the second quarter, where total underlying volume growth was down approximately 1%.

Speaker 2: I would like to now share a few highlights on gross margin and operating income for the quarter, which Mike will cover in more detail.

I would like to now share a few highlights on gross margin and operating income for the quarter, which Mike will cover in more details.

Speaker 2: We drove strong gross margin improvement year over year, reflecting continued recovery of the cost inflation our pricing lag last year, and cost savings from our CCI and GOE program.

We drove strong gross margin improvement year over year, reflecting continued recovery of the cost inflation, our pricing lagged last year and cost savings from our CCI and <unk> programs.

Speaker 2: We remain focused on improving our margins over the long term and believe that our recovery will be a continuous build. And we expect to return to historical levels and believe there is a runway beyond that, recognizing it will take some time.

We remain focused on improving our margins over the long term and believe that our recovery will be a continuous build.

Operator: Good morning.

And we expect to return to historical levels and believe there is a runway beyond that recognizing it will take some time.

Faten Freiha: This is Faten Freiha, VP of Investor Relations. Thank you for joining today's third quarter, earnings call. To accompany this call, we have posted a set of slides on our IR website. With me this morning, our Brendan Foley, President and CEO, Mike Smith, Executive Vice President and CFO, and T.C. Jenkins, Chief Growth Officer. During this call, we will refer to certain non-gap financial measures, the nature of those non-gap financial measures, and the related reconciliation to the gap results are included in this morning's press release and slides.

Speaker 2: Higher gross profit for the quarter was partially offset by lower than expected performance in China as well as higher SG&A. As planned, we continue to build back incentive compensation and increased brand marketing investments.

Higher gross profit for the quarter was partially offset by lower than expected performance in China as well as higher SG&A as planned we continued to build back incentive compensation and increased brand marketing investments.

Speaker 2: The net impact was a 5% increase in adjusted operating income versus the prior year.

The net impact was a 5% increase in adjusted operating income versus the prior year.

Speaker 2: Overall, we are pleased with our execution and results year to date. These results, combined with the strong demand we continue to expect across our portfolio and our focused approach to optimizing our cost structure, reinforce our confidence in our growth trajectory during the fourth quarter and beyond. Moving into the fourth quarter...

Overall, we are pleased with our execution and results year to date. These results combined with the strong demand we continue to expect across our portfolio.

Faten Freiha: In our comments, certain percentages are rounded. Please refer to our presentation for complete information. 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. Please refer to our forward-looking statement slide for more information.

And our focused approach to optimizing our cost structure reinforce our confidence in our growth trajectory during the fourth quarter and beyond.

Moving into the fourth quarter, we can continue to expect.

Speaker 2: top-line momentum across our portfolio, including growth in China as we lap the COVID-related disruption.

Topline momentum across our portfolio, including growth in China, as we lap the COVID-19 related disruptions.

Speaker 2: China's growth, however, is expected to be less than originally anticipated, which when combined with its year-to-date performance, has led to a lower full-year 2023 benefit than we originally expected.

This growth however is expected to be less than originally anticipated, which way combined with this year to date performance has led to a lower full year 2023 benefit than we originally expected.

Brendan Foley: I'll now turn the discussion over to Brendan. Good morning everyone, and thank you for joining us.

Brendan Foley: Let me start by saying how pleased I am to join you today for my first earnings call as President and CEO. Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation. Let's turn to our results. We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solution segments. Our results were in line with our expectations across our business, notwithstanding challenges for our consumer segment in Asia-Pacific, or APAC, where the pace of China's economic recovery has been slower than previously anticipated.

Speaker 2: Despite this impact, however, we are reaffirming our sales outlook. And now anticipate our results will be closer to the middle of our guidance range.

Despite this impact however, we are reaffirming our sales outlook.

We now anticipate our results will be closer to the middle of our guidance range.

Speaker 2: We are reaffirming our operating income outlook, which highlights stronger than originally expected profit realization on our business, excluding China. Demand is strong. We are driving improvement in our margin profile and are optimizing our cost structure effectively. Now for our performance.

We are reaffirming our operating income outlook, which highlight stronger than originally expected profit realization on our business excluding China.

Demand is strong we are driving improvement in our margin profile and are optimizing our cost structure effectively.

Now for our performance by segment.

Speaker 2: Starting with our consumer segment on slide seven, we saw solid results across the Americas and EMEA, which were tempered by our APAC region due to China. As I mentioned earlier.

Starting with our consumer segment on slide seven we saw solid results across the Americas, and EMEA, which were tempered by our APAC region due to China as I mentioned earlier.

Speaker 2: Notwithstanding China, we are pleased with our underlying performance. Now for some highlights by region.

Notwithstanding China, we are pleased with our underlying performance.

Brendan Foley: Let me start with the highlights for the third quarter. We delivered solid constant currency sales growth. We continued to realize effective price realization, and importantly, volume performance, excluding China, has improved each quarter throughout the year. We continue to see top-wide momentum in our business positioning for sustained growth. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Year-to-date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements.

Now for some highlights by regions.

First in the Americas.

Speaker 2: Our total US branded portfolio consumption has indicated by our IRI consumption data and combined with unmeasured channels who epox approximately 4%. Excluding the year-over-year impact of the kitchen-basics divestiture and the exit of DSD direct-sorted delivery of our back to spanish spice.

Our total U S branded portfolio consumption as indicated by our IRI consumption data and combined with unmeasured channels through Approx approximately 4%.

Excluding the year over year impact of the kitchen basics divestiture and the exit of DSD direct store delivery of our bag. Hispanic spices.

Speaker 2: There is a minor difference between our sales and consumption, which is attributable to listing fees, for a significant increase in new distribution and new product.

There was a minor difference between our sales and consumption, which is attributable to listing fees for a significant increase in new distribution and new products. For example, our neutral Lula and Scotts items and tablets Brown line extensions.

Brendan Foley: Our performance demonstrates the strength of our business, fundamentals, and the effective execution of our 5. In the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio. Our constant currency growth reflected strong business performance, with an 8% contribution from pricing, and a 2% decline in volume in product mix.

Speaker 2: For example, our new Chalula and Stubbs items and Tabitha Brown line extend.

Speaker 2: Importantly, our categories remain advanced in terms of growth relative to overall macro trends, and we are well positioned to drive future growth.

Importantly, our categories remain advantaged in terms of growth relative to overall macro trends and we are well positioned to drive future growth.

Speaker 2: The fundamental strength of the Spices and Seasings category is evident as cooking at home has remained elevated since pre-COVID and consumers have an increase in demand for flavor.

The fundamental strength of the spices and seasonings category is evident as cooking at home has remained elevated since pre COVID-19 and consumers have an increase in demand for flavor.

Speaker 2: U.S. Spices and Seasonings Growth is continuing to outpace the total edible category in units and dollars.

U S spices and seasonings growth is continuing to outpace the total edible category in units and dollars.

Brendan Foley: This decline in volume was driven by two factors. A 1% decline attributable to the impact of a slower than expected economic recovery in China, and a 1% decline related to the the bestiture of kitchen basics, the exit of our consumer business in Russia, and the perning of low-margin business to optimize our portfolio. All other underlying volume and mixed performance was flat for the quarter, which is the sequential improvement from the second quarter, where total underlying volume growth was down approximately 1%.

Speaker 2: We have the right plans in place and are taking new white actions to grow market share in this very attractive and competitive category. We have made progress and shown improvement relative to the beginning of the year.

We have the right plans in place and are taking the right actions to grow market share. It is very attractive and competitive category we.

We have made progress and shown improvement relative to the beginning of the year.

Speaker 2: We continue to restore distribution which was lost because of supply issues.

We continue to restore distribution, which was lost because of supply issues.

Speaker 2: As we look at our performance and our trends, we are happy to see total distribution of point growth in the third quarter. We also continue to be pleased that our sortment on shell is more productive than pre-COVID.

As we look at our performance and our trends we are happy to see total distribution point growth in the third quarter. We also continue to be pleased that our assortment on shelf is more productive than pre COVID-19.

Brendan Foley: I would like to now share a few highlights on gross margin and operating income for the quarter, which might we'll cover in more detail. We drove strong gross margin improvement year over year, reflecting continued recovery of the cost inflation our pricing lag last year, and cost savings from our CCI and GOE programs. We remain focused on improving our margins over the long term, and believe that our recovery will be a continuous build.

Speaker 2: In addition, we have significant new distribution and innovation that is starting to come online as customers respect their shelves.

In addition, we have significant new distribution and innovation that is starting to come online as customers reset their shelves.

Speaker 2: As we've said before, restoration will take some time and we expect the drive growth as we continue to progress.

As we've said before restoration will take some time and we expect to drive growth as we continue to progress.

Speaker 2: In addition to driving distribution gains, we have a continued focus on supporting our brands and optimising price.

In addition to driving distribution gains we have a continued focus on supporting our brands and optimizing pricing.

Speaker 2: As you would expect, this has become a more important part of our category management efforts in recent years.

As you would expect this.

This has become a more important part of our category management efforts in recent years, our diverse portfolio allows us flexibility to optimize our pricing effectiveness.

Brendan Foley: And we expect to return to historical levels and believe there is a runway beyond that, recognizing it will take some time. Higher gross profit for the quarter was partially offset by lower than expected performance in China, as well as higher SGNA. As planned, we continued to build back incentive compensation and increased brand marketing investments. The net impact was a 5% increase in adjusted operating income versus the prior year. Overall, we are pleased with our execution and results year-to-date.

Speaker 2: Our diverse portfolio allows us flexibility to optimize our pricing effect.

Speaker 2: We look at both our everyday price and our promotional returns, as well as using innovation, including price pack architecture to drive growth. Our efforts are yielding results.

Brendan Foley: These results, combined with a strong demand, we continue to expect across our portfolio, and our focused approach to optimizing our cost structure, reinforce our confidence in our growth trajectory during the fourth quarter and beyond. Moving into the fourth quarter, we can continue to expect top line momentum across our portfolio, including growth in China as we drove, however, is expected to be less than originally anticipated, which way, combined with its year-to-date performance, has led to a lower full-year 2023 benefit than we originally expected.

We look at both our everyday price and our promotional returns as well as user innovation, including price pack architecture to drive growth our efforts are yielding results.

Speaker 2: The renovation of our U.S. Corps every day, Spice and Nerve Portfolio, is rolling out according to plan.

The renovation of our U S core everyday spice and Herb portfolio is rolling out according to plan.

Speaker 2: At the end of the third quarter, we have shift about 40% of our renovated SKUs. And notably, products that have transitioned on shelf have seen high teams improvement in velocity.

At the end of the third quarter, we have shipped about 40% of our renovated skus and notably products that have transitioned on shelf have seen high teens improvement in velocity.

Speaker 2: and our significant brand marketing campaign. Featuring the benefits of the new packaging, ramped up at the end of the third quarter, leading into the holiday season.

And our significant brand marketing campaign, featuring the benefits of the new packaging ramped up at the end of the third quarter, leading into the holiday season.

Our larger size Super deal herbs, and spices continues to gain share.

Speaker 2: Our larger size superdeal, herbs and spices continues to gain share. We saw strong performance in the third quarter driven by pricing and higher unit volumes.

Saw strong performance in the third quarter, driven by pricing and higher unit volume.

Speaker 2: Expanded distribution has been a major driver for our performance, as well as consumers that are seeking value and trading up to larger sizes.

Expanded distribution has been a major driver for our performance as well as consumers that are seeking value and trading up to larger sizes.

Speaker 2: We have the right assortment in this environment. Our household penetration on larger sizes is greater than pre-COVID.

We have the right assortment in this environment, our household penetration on larger sizes is greater than pre COVID-19.

Brendan Foley: Despite this impact, however, we are reaffirming our sales outlook, and now anticipate our results will be closer to the middle of our guidance range. We are reaffirming our operating income outlook, which highlights stronger than originally expected profit realization on our business, excluding China. The demand is strong, we are driving improvement in our margin profile, and are optimizing our cost structure effectively.

Speaker 2: We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

Our drilling performance was strong this quarter supported by our fire up campaign as well as contribution for new product launches that we discussed on our earnings call in June .

Speaker 2: Our grilling performance was strongest quarter, supported by our fire up campaign, as well as contribution for new product launches that we discussed on our hearings call in June . Frank's red hot sauces, French's mustard, and scum's barbecue sauce grouts, as well as louries marinate, all delivered significant growth in the third quarter relative to the prior year.

Frank's Red Hot sauces, French's mustard, and Stubbs barbecue sauce, grubs as well as Lori Smith Marinates, all delivered significant growth in the third quarter relative to the prior year.

Brendan Foley: Now for performance by segment. Starting with our consumer segment on slide 7, we saw solid results across the Americas and EMEA, which were tempered by our APEC region due to China, as I mentioned earlier. Notwithstanding China, we are pleased with our underlying performance.

Speaker 2: We drove double-digit sales growth with contributions from pricing and volume across our total grilling portfolio.

We drove double digit sales growth with contributions from pricing and volume across our total grilling portfolio.

Speaker 2: And we drove market share gains and mustard barbecue sauce and marinades in the third quarter.

And we drove market share gains and mustard barbecue sauce and <unk> in the third quarter.

Brendan Foley: Now for some highlights by regions. First in the Americas, our total US branded portfolio consumption has indicated by our IRI consumption data and combined with unmeasured channels through approximately 4%. Excluding the year-over-year impact of the kitchen-basics divestiture and the exit of DSD direct storage delivery of our back-to-spanic spices. There is a minor difference between our sales and consumption, which is attributable to listing fees for a significant increase in new distribution and new products.

Speaker 2: Our expansion into the fast growing Mexican aisle with new Chalula Taco recipe mixes and falsas is continuing to build distribution and performance today without performing our expectations.

Our expansion into the fast growing Mexican aisle with mutual Lula Taco recipe mixes and <unk> is continuing to build distribution and performance to date is outperforming our expectations.

Speaker 2: Finally in the Americas, we continue to drive double digit consumption growth in e-commerce, led by spices and seeds.

Finally in the Americas, we continued to drive double digit consumption growth in E. Commerce led by spices and seasonings. We are realizing high returns on our investments gaining new customers and growing with new products.

Speaker 2: We are realizing high returns in our investments, gaining new customers and growing with new products.

Speaker 2: Turning to EMEA, where we delivered a great quarter, are strongness quarterly sales performance in more than two years with double-digit sales growth. Notably, in the UK and France, we drove volume growth as pricing remained elevated.

Turning to EMEA, where.

Where we delivered a great quarter, our strongest quarterly sales performance in more than two years with double digit sales growth.

Brendan Foley: For example, our new Chalula and Stubbs items and Tabitha Brown line extents. Matthew Smith, Adam Samuelson, Peter Galbo, Robert Dickerson and Peter Galbo, Robert Dickerson and Optimize in pricing. As you would expect, this has become a more important part of our category management efforts in recent years. Our diverse portfolio allows us flexibility to optimize our pricing effectiveness. We look at both our everyday price and our promotional returns, as well as using innovation, including price pack architecture to drive growth.

Notably in the UK and France, we drove volume growth as pricing remained elevated.

Speaker 2: In both countries, we delivered significant growth in the discount channel driven by expanded distribution with new and existing customers.

In both countries, we delivered significant growth in the discount channel driven by expanded distribution with new and existing customers.

Speaker 2: In other parts of the region, you're also making meaningful progress in the fast-growing channel. We grew our business in the discount channel by over 30% across EMEA in the third quarter.

In other parts of the region. We are also making meaningful progress in this fast growing channel.

We grew our business in the discount channel by over 30% across EMEA in the third quarter.

Speaker 2: Our grilling activations with key retailers in France and our promotional activities in the UK, along with brand marketing support, Joe Strong third quarter growth across the grilling portfolio. He commerce also contributed meaningfully to our growth in both countries.

Our grilling activations with key retailers in France, and our promotional activities in the UK, along with brand marketing support drove strong third quarter growth across the grilling portfolio.

E Commerce also contributed meaningfully to our growth in both countries.

Speaker 2: Confunction data continues to indicate that the consumer is holding up well in our categories. With consumption trends continues to accelerate across the region.

Consumption data continues to indicate that the consumer is holding up well in our categories with consumption trends continues to accelerate across the region. We grew share in herbs spices and seasonings for our total EMEA business with the UK Eastern Europe , Italy, and France, all contributing France grew share for the first time.

Speaker 2: We grew share in herbs, spices, and seasonings for our total EMEA business. With the UK, Eastern Europe , Italy, and France all contributing. France grew share for the first time in two years.

In two years.

Speaker 2: In UK recipe mixes, we extended our leading share position during a third quarter. New products and effective in-store promotions drove share.

And U K recipe mixes, we extended our leading share position during the third quarter, new products and effective in store promotions drove share gains. We also continued to drive hot sauce category growth in the U K with Tallulah, leading the growth in the third quarter.

Speaker 2: We also continue to drive Haasos category growth in the UK, with Chalula leading to growth in the third quarter. And we are also building distribution of Chalula in France.

And we are also building distribution of Cholewa in France.

Speaker 2: In our APAC region, while the pace of recovery in this business has been slower than expected, we continue to believe in the long-term growth trajectory of our business in China.

In our APAC region, while the pace of recovery in this business has been slower than expected. We continue to believe in the long term growth trajectory of our business in China.

Speaker 2: Notwithstanding the slow recovery in China. In all regions in our consumer segment, our investments in brand marketing, category management initiatives, and new products are proving to be effective and driving strong growth across our categories.

Notwithstanding the slower recovery in China in all regions and our consumer segment, our investments in brand marketing category management initiatives and new products are proven to be effective in driving strong growth across our categories.

Brendan Foley: Our efforts are yielding results. The renovation of our U.S, core everyday spice and herb portfolio is rolling out according to plan. At the end of the third quarter, we have shift about 40% of our renovated SKUs. And notably, products that have transitioned on shelf have seen high teams improvement in velocity. And our significant brand marketing campaign, featuring the benefits of the new packaging, ramped up at the end of the third quarter, leading into the holiday season.

Speaker 2: We are making sequential improvement on volume, advancing our heat platform, and our pleas with our performance.

We are making sequential improvement on volume advancing our heat platform and are pleased with our performance.

Speaker 2: We continue the PUR growth with the power of our brands and increased innovation in brand marketing. We are also forming strategic partnerships to reach and enhance brand awareness with loyal built-in audience.

We continue to fuel our growth with the power of our brands and increased innovation and brand marketing.

We are also forming strategic partnerships to reach and enhance brand awareness with loyal Hilton audiences.

Speaker 2: Building on the success we have with our Tapefuck the Brown partnership and light up new products in the US.

Building on the success, we have with our tap of the Brown partnership in light of new products in the U S where growth continues to accelerate we are partnering with 90 <unk> Hussain.

Brendan Foley: Our larger size superdeal, herbs and spices continues to gain share. We saw strong performance in the third quarter, driven by pricing and higher unit volume. Expanded distribution has been a major driver for our performance, as well as consumers that are seeking value and trading up to larger sizes. We have the right assortment in this environment. Our household penetration on larger sizes is greater than pre-COVID. We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

Speaker 2: Regret continues to accelerate. We are partnering with Nadia Hussein.

Speaker 2: A celebrity British chef who won the sixth series of BDC's The Great British Bake Off in the A.

Celebrity British US who won the six series of Bdcs, the great British bake off in EMEA.

Speaker 2: We are launching a delicious range of short seasonings, recipe mixes, and meal kits with Nadia. And are helping build the confidence of UK consumers in the kitchen with cook along videos and recipe items.

We are launching a delicious range of Schwartz seasonings recipe mixes and meal kits with not yet.

And are helping build the confidence of UK consumers in the kitchen with cook on videos and recipe ideas.

Speaker 2: We are thrilled to partner with Nadia and preliminary results are very positive.

We are thrilled to partner with Nordea and preliminary results are very positive.

Speaker 2: We are looking forward to working with her on various future initiatives across the region. To expand our brand awareness and accelerate new product growth.

Brendan Foley: Our growing performance was strong this quarter, supported by our fire up campaign, as well as contribution for new product launches that we discussed on our earnings call in June. Frank's red hot sauces, French's mustard and stubs barbecue sauce grouts, as well as lorries marinate, all delivered significant growth in the third quarter, relative to the prior year. We drove double-digit sales growth with contributions from pricing and volume across our total grilling portfolio, and we drove market share gains in mustard barbecue sauce and marinades in the third quarter.

We are looking forward to working with her on various future initiatives across the region to expand our brand awareness and accelerate new product growth.

Speaker 2: Our brand marketing efforts continues to drive awareness and strength in our brands. As you may have seen in July , we partnered with Mars and launched a limited edition French's mustard flavor Skittles. The objective of the campaign was to create top of mind awareness for French's to a buzzwordy moment to further strengthen the power of our brand. And of course, you could always have fun with mustard.

Our brand marketing efforts continued to drive awareness and strengthen our brands as you may have seen in July we partnered with Mars and launched a limited edition French's mustard flavors skittles. The objective of the campaign was to create top of mind awareness for Frenchies through our Buzzworthy moment to further strengthen the power of our brand and of course.

You could always have fun with mustard.

We are thrilled that this was our most successful earned campaign to date with a record 5 billion impressions.

Speaker 2: We are thrilled that this was our most successful earned campaign to date with a record 5 billion impressions.

Brendan Foley: Our expansion into the fast growing Mexican aisle with new Chalula taco recipe mixes and falsas is continuing to build distribution and performance to date is outperforming our expectations. Finally in the Americas, we continue to drive double-digit consumption growth in e-commerce led by spices and seasonings. We are realizing high returns on our investments, gaining new customers and growing with new products.

Speaker 2: is also a perfect example of how we leverage our strengths across both segments, underscoring their complementary nature. Our flavor solutions team created the mustard flavor for this limited edition product, which built awareness for both our consumer and food service businesses.

It is also a perfect example of how we leverage our strengths across both segments underscoring their complementary nature, our flavor solutions team created the mustard flavor for this limited edition product, which builds awareness for both our consumer and foodservice businesses or segments are working together to further bolster.

Speaker 2: Our segments are working together to further bolster french's success.

French's success.

Speaker 2: I am passionate about how our two segments, consumer and flavor solutions, complement each other, reinforcing what differentiates McCormick and enabling us to drive sustainable growth.

I am passionate about how our two segments consumer and flavor solutions complement each other reinforces reinforcing what differentiates mccormick and enabling us to drive sustainable growth.

Brendan Foley: Turning to EMEA, where we delivered a great quarter, our strongest quarterly sales performance in more than two years with double-digit sales growth. Notably, in the UK and France, we drove volume growth as pricing remained elevated. In both countries, we delivered significant growth in the discount channel, driven by expanded distribution with new and existing customers. In other parts of the region, we are also making meaningful progress in the fast growing channel. We grew our business in the discount channel by over 30% across EMEA in the third quarter.

Looking ahead to the fourth quarter, we are excited about the holiday season, and our related brand marketing plans across all regions importantly, with our supply issues resolved we are better positioned than we were last year entering this season.

Speaker 2: Looking ahead to the fourth quarter, we are excited about the holiday season and our related brand marketing plans across all regions. Importantly, with our supply issues resolved, we are better positioned than we were last year entering the season.

Speaker 2: We are increasing our merchandising levels to one similar to pre-COVID. And are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong...

We are increasing our merchandising levels to one similar to pre Covid and are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong holiday season.

Brendan Foley: Our grilling activations with key retailers in France and our promotional activities in the UK, along with brand marketing support, drove strong third quarter growth across the growing portfolio. E-commerce also contributed meaningfully to our growth in both countries. Consumption data continues to indicate that the consumer is holding up well in our categories. With consumption trends continues to accelerate across the region. We grew share in herbs, spices and seasonings for our total EMEA business.

Wrapping up the consumer update our year to date results bolster our confidence that we will continue to drive sales growth as we have in the past the supply issues. We experienced last year are resolved and we are using our strength in category management to increase distribution and drive Mccormick and category growth.

Speaker 2: Driving up the consumer update, our year-to-date results bolster our confidence that we will continue to drive sales growth as we have in the past. The supply issues we experienced last year are resolved, and we are using our strength in category management to increase distribution and drive McCormick and category growth.

Speaker 2: We believe the execution of our growth plans will be a win for consumers, customers, our categories, and the requirements.

We believe the execution of our growth plans will be a win for consumers customers or categories and Mccormick.

Speaker 2: which differentiates us even more and strengthening our leadership in our core categories.

Which differentiates us even more and strengthening our leadership in our core categories.

Brendan Foley: With the UK, Eastern Europe, Italy and France all contributing. France grew share for the first time in two years. In UK recipe mixes, we extended our leading share position during a third quarter. New products and effective in-store promotions drove share gains. We also continued to drive Haasos category growth in the UK, with Chalula leading to growth in the third quarter. And we are also building distribution of Chalula in France.

Now turning to flavor solutions on slide 10.

Speaker 2: Our growth momentum in this segment continues to be exceptional. The third quarter marks our tenth consecutive quarter with double-digit constant currency sales growth. Our growth was led by pricing action.

Our growth momentum in this segment continues to be exceptional the.

Third quarter marks our 10th consecutive quarter with double digit constant currency sales growth.

Our growth was led by pricing actions in all three regions, where price to cover current year inflation and are continuing to recover the cost inflation, our pricing lagged the last two years.

Speaker 2: We are priced to cover current year inflation and are continuing to recover. The cost inflation are pricing lagged the last two years.

Speaker 2: We remain committed to restoring our flavor solutions profitability. And in the third quarter, we again drove significant margin expansion versus prior year, and expect continued progress toward our objective to build back our margin in this segment. Let me turn to...

We remain committed to restoring our flavor solutions profitability.

Brendan Foley: In our APAC region, while the pace of recovery in this business has been slower than expected, we continue to believe in the long-term growth trajectory of our business in China. Notwithstanding the slow recovery in China, in all regions in our consumer segment, our investments in brand marketing, category management initiatives and new products are proving to be effective and driving strong growth across our categories. We are making sequential improvement on volume, advancing our heat platform and our pleas with our performance.

And in the third quarter, we again drove significant margin expansion versus prior year and expect continued progress toward our objective to build back our margin in this segment.

Let me turn to our highlights by region.

Speaker 2: Our America's third quarter strong sales growth was led by pricing, with an increase in volume contributing as well.

Our Americas third quarter strong sales growth was led by pricing with an increase in volume contributing as well.

Speaker 2: Both the flavors and branded food service product categories grew by Devil Digi.

Both our flavors and branded foodservice product categories grew by double digits.

Speaker 2: With flavors, our seasonings growth was strong, including volume growth related to new products. We are helping our customers grow with the strength of our brains.

With flavors or seasonings growth was strong including volume growth related to new products, we are helping our customers grow with the strength of our brands.

Brendan Foley: We continue to fuel our growth with the power of our brands and increase innovation in brand marketing. We are also forming strategic partnerships to reach and enhance brand awareness with loyal built-in audiences. Building on the success we have with our tap at the Brown Partnership and light of new products in the US, where growth continues to accelerate. We are partnering with Nadia Hussein, a celebrity British chef who won the sixth series of BDCs, The Great British Bake Off in the MIA.

Speaker 2: Our continued success with providing the seasonings for co-branded items included new ones with Franks Redhide and Stubbs this quarter. Contributed to our growth.

Our continued success with providing the seasonings for co branded items included new ones with Frank's Red Hot and stubs this quarter contributed to our growth.

Speaker 2: Strengthen our customers' iconic products also contributed to our seasoning scrub, particularly related to our heat platform.

Strengthen our customers iconic products also contributed to our seasonings growth, particularly related to our heat platform.

Speaker 2: We also have strong momentum in flavors for performance nutrition beverages and health and market applications. Our growth is outpacing the market due to the advantages of our proprietary technology.

We also have strong momentum in flavors for our performance nutrition beverages, and health and market applications are growth is outpacing the market fueled by the advantages of our proprietary technologies.

Brendan Foley: We are launching a delicious range of short-seasonings, recipe mixes and meal kits with Nadia, and are helping build the confidence of UK consumers in the kitchen with cook-a-long videos and recipe items. Matthews. We are thrilled to partner with Nadia and preliminary results are very positive. We are looking forward to working with her on various future initiatives across the region to expand our brand awareness and accelerate new product growth. Our brand marketing efforts continues to drive awareness and strengthen our brands.

Speaker 2: Importantly, we are winning with new products for existing and new customers.

Importantly, we are winning with new products for existing and new customers largely across our mid market customer base, who are category leaders in specific markets or a high growth innovators and whose growth is outpacing larger customers.

Speaker 2: largely across our mid-market customer base, who are category leaders in specific markets or a high growth innovators, and whose growth is outpacing larger customers.

Speaker 2: We continue to have a robust pipeline of new products and our conversion rate is strong. We are creating preferred flavors, enabling our customers to continue to win in the market.

We continue to have a robust pipeline of new products and our conversion rate is strong.

We're creating preferred flavors, enabling our customers to continue to win in the marketplace.

Speaker 2: In branded food service, we gained share of spices and seasonings this quarter.

In branded foodservice, we gained share in spices and seasonings this quarter.

Brendan Foley: As you may have seen in July we partnered with Mars and launched a limited edition French's Mustard Flavor Skittles. The objective of the campaign was to create top of our brand awareness for French's through a buzz wordy moment to further strengthen the power of our brand and of course you can always have fun with Mustard. We are thrilled this was our most successful earned campaign to date with a record 5 billion impressions.

Speaker 2: Additionally, our recent new products, Frank's mild sauce and Frank's Nashville hot seasoning are performing very well and are exceeding our expectations.

Additionally, our recent new products, Frank Smiled source, and Frank's Nashville Hot seasoning are performing very well and are exceeding our expectations.

Speaker 2: They have both been well received by our customers, reinforcing that the demand for heat is growing at both the mild and hot end of the spectrum.

We have both a well received by our customers reinforcing that the demand for heat is growing at both the miles and hot end of the spectrum.

Speaker 2: We are excited for continued growth in these items, as well as the overall breadth of opportunity in heat.

We are excited for continued growth in these items as well as the overall breadth of opportunity and heat.

Brendan Foley: It is also a perfect example of how we we leverage our strengths across both segments, underscoring their complimentary nature. Our flavor solutions team created the Mustard Flavor for this limited edition product which built awareness for both our consumer and food service businesses. Our segments are working together to further bolster French's success.

Speaker 2: Moving to EMBA, we continue to drive broad base growth across the portfolio. With strong growth in both our quick service restaurant and package food and beverage customers.

Moving to EMEA, we continue to drive broad based growth across the portfolio with strong growth in both our quick service restaurant and packaged food and beverage customers pricing drove the growth as some of our customers in both channels continue to experience softness in the volume within their own businesses.

Speaker 2: pricing drove the growth of some of our customers in both channels. Continue to experience softness in the volume within their own business.

Brendan Foley: I am passionate about how our two segments, consumer and flavor solutions complement each other, reinforcing what differentiates McCormick and enabling us to drive sustainable growth.

Speaker 2: As we continue to prune low margin business in our flavor solution segment, while it did not impact the third quarter, I want to mention that we divested a small canning business which was part of our GeoDi operations in Italy.

As we continue to prune low margin business in our flavor solutions segment, while it did not impact the third quarter I want to mention that we divested a small canning business, which was part of our <unk> operations in Italy. This.

Brendan Foley: Looking ahead to the fourth quarter we are excited about the holiday season and our related brand marketing plans across all regions. Importantly with our supply issues resolved we are better positioned than we were last year entering this season. We are increasing our merchandising levels to one similar to pre-COVID and are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong holiday season. Driving up the consumer update our year-to-date results bolster our confidence that we will continue to drive sales growth as we have in the past.

Speaker 2: This to best sure allows us to focus our resources on our core flavors product category and drive further growth.

This divestiture allows us to focus our resources on our core flavors product category and drive further growth.

Speaker 2: Michael have more in the future impact of this to best sure on the EMMA region in a few minutes.

Mike will have more in the future impact of this divestiture on the EMEA region in a few minutes.

Speaker 2: and an A-PAC, while the economic recovery in China was not as strong as anticipated, China contributed to the regional pricing and volume growth.

And in APAC, while the economic recovery in China was not as strong as anticipated China contributed to the regional pricing and volume growth.

Speaker 2: Across the region, we've benefited from our QSR customers increase in promotional activities.

Across the region, we benefited from our <unk> customers increase in promotional activity.

Speaker 2: The strength of our Flavor Solutions portfolio and capabilities, including our differentiated customer engagement and culinary inspired innovation, are driving outstanding Flavor Solutions momentum.

The strength of our flavor solutions portfolio and capabilities, including our differentiated customer engagement and culinary inspired individuals innovation are driving outstanding flavor solutions momentum.

Brendan Foley: The supply issues we experienced last year are resolved and we are using our strengths and category management to increase distribution and drive McCormick and category growth. We believe the execution of our growth plans will be a win for consumers, customers, our categories and McCormick, which differentiates us even more and strengthening our leadership in our core categories.

Speaker 2: Our flavors product category are 100% focus on flavor, our breads and reach, our arrivals consumer insights, and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value-redded part of our portfolio. Drive and growth in advancing our flavor leaders.

Our flavors product category are 100% focus on flavor, our breadth and reach our unrivaled consumer insights and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value added part of our portfolio drive.

Brendan Foley: Turning to flavor solutions on slide 10. Our growth momentum in this segment continues to be exceptional. The third quarter marks our tenth consecutive quarter with double-digit constant currency sales growth. Our growth was led by pricing actions in all three regions. We are priced to cover current year inflation and are continuing to recover the cost inflation our pricing lagged the last two years.

Driving growth and advancing our flavor leadership.

Speaker 2: and in branded food service, we expect new products, increased many penetration, culinary partnerships, in our expertise in heat, to drive continued growth.

And in branded Foodservice, we expect new products increased menu penetration culinary partnerships and our expertise in heat to drive continued growth.

Speaker 2: Our robust growth plans and flavor solutions and effective execution of our proven strategies bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership as well as margin restoration.

Our robust growth plans in flavor solutions and effective execution of our proven strategies bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership as well as margin restoration.

Brendan Foley: We remain committed to restoring our flavor solutions profitability and in the third quarter we again drove significant margin expansion versus prior year and expect continued progress toward our objective to build back our margin in this segment. Let me turn to our highlights by region. Our America's third quarter strong sales growth was led by pricing with an increase in volume contributing as well. Both the flavors and branded food service product categories grew by double digits.

Speaker 2: Now, I'd like to turn it over to Mike to provide details on our financial performance. Thanks for...

Now I'd like to turn it over to Mike to provide details on our financial performance.

Thanks, Brendan and good morning, everyone.

Speaker 2: Starting on slide 13, our top line constant currency sales for a grew 6% compared to the third quarter of last year, reflecting 8% from pricing, partially all set with a 2% volume and next decline. As Brendan already mentioned, there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of kitchen basics, the exit of our consumer business in Russia, and strategic decisions we made related to optimizing the profitability of our portfolio.

Starting on slide 13, our topline constant currency sales growth grew 6% compared to the third quarter of last year, reflecting 8% from pricing, partially offset with a 2% volume and mix decline at.

As Brendan already mentioned there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of kitchen basics, the exit of our consumer business in Russia, and strategic decisions, we made related to optimizing the portfolio of profitability of our portfolio.

Brendan Foley: With flavors our seasonings growth was strong, including boring growth related to new products. We are helping our customers grow with the strength of our brains. Williams. Our continued success with providing the seasonings for co-branded items included new ones with Franks Red High and Stubbs this quarter, contributed to our growth. Strengthen our customers' iconic products also contributed to our seasonings growth, particularly related to our heat platform. We also have strong momentum in flavors for performance nutrition beverages and health and market applications.

Speaker 2: as a result at the total company level, excluding these items, underlying zong performance was flat for the quarter and improved sequentially from the second quarter.

As a result at the total company level. Excluding these items underlying volume performance was flat for the quarter and improved sequentially from the second quarter.

Speaker 2: In our consumer segment, constant currency sales increased by 1%. Reflecting a 5% increase in pricing actions, partially outset by a 4% volume decline.

In our consumer segment constant currency sales increased by 1%, reflecting a 5% increase in pricing actions, partially offset by a 4% volume decline.

Speaker 2: included in this volume decline R, a 2% decline due to a lower than expected recovery in China, and a 2% decline attributable to the kitchen basics to Vetschister, our business exit in Russia, and Hispanic product DSDX to optimize.

Included in this volume decline or a 2% decline due to a lower than expected recovery in China, and a 2% decline attributable to the kitchen basics divestiture, our business exit in Russia, and the Hispanic product DSD exit to optimize margins.

Brendan Foley: Our growth is outpacing the market fueled by the advantages of our proprietary technologies. Importantly, we are winning with new products for existing and new customers, largely across our mid-market customer base, who are category leaders in specific markets or a high-growth innovators, and whose growth is outpacing larger customers. We continue to have a robust pipeline of new products and our conversion rate is strong. We are creating preferred flavors enabling our customers to continue to win in the marketplace.

Speaker 2: On slide 14, consumer sales in the America's increased 2% in constant currency and included a 4% increase in pricing actions, partially offset by a 2% volume decline due to the kitchen basics to vestiture and DST items I just mentioned.

On slide 14 consumer sales in the Americas increased 2% in constant currency and included a 4% increase from pricing actions, partially offset by a 2% volume decline due to the kitchen basics divestiture and DSD items I just mentioned.

Speaker 2: In the EMEA, constant currency consumer sales increased 10% with a 13% increase in pricing actions, closely offset by a 3% volume decline primarily from exwing rush.

In EMEA constant currency consumer sales increased 10% with a 13% increase from pricing actions, partially offset by a 3% volume decline primarily from exiting Russia.

Brendan Foley: In branded food service, we can share in spices and seasonings this quarter. Additionally, our recent new products, Franks mild sauce and Franks Nashville hot seasoning are performing very well and are exceeding our expectations. They have both been well received by our customers, reinforcing that the demand for heat is growing at both the mild and hot end of the spectrum. We are excited for continued growth in these items, as well as the overall breadth of opportunity in heat.

Speaker 2: Excluding Russia, sales growth was broad-based across all markets and categories.

Excluding Russia sales growth was broad based across all markets and categories.

Speaker 2: Concentrously consumer sales in the APEC region decreased 11% driven by a 15% volume decrease. Primarily due to a slower than expected recovery in China.

Constant currency consumer sales in the APAC region decreased 11% driven by a 15% volume decrease primarily due to a slower than expected recovery in China.

Speaker 2: Also contributing to the decline, but the impact of laughing strong China demand in the prior year, following significant extended lockdowns during the second quarter of last year.

Also contributing to the decline was the impact of lapping strong China demand in the prior year following significant extended lockdowns during the second quarter of last year.

Brendan Foley: Moving to EMBA, we continue to drive broad-based growth across the portfolio, with strong growth in both our quick service restaurant and package food and beverage customers. Crising growth with growth as some of our customers in both channels continue to experience softness in the volume within their own businesses.

Speaker 2: Turning to our flavor solution segment and slide 17. We grew third quarter constant currency sales 11%, reflecting a 10% increase from pricing, and a 1% increase from volume and product mix. Our volume growth was partially all set by the pruning of low margin business.

Turning to our flavor solutions segment, and slide 17, we grew third quarter constant currency sales, 11%, reflecting a 10% increase from pricing and a 1% increase from volume and product mix. Our volume growth was partially offset by the pruning of low margin business.

Brendan Foley: As we continue to prune low-margin business in our flavor solution segment, while it did not impact the third quarter, I want to mention that we divested a small canning business, which was part of our GIDI operations in Italy. This divestiture allows us to focus our resources on our core flavor's product category and drive further growth. Michael will have more in the future impact of this divesture on the EMBA region in a few minutes.

Speaker 2: In the Americas, labor solutions' constant currency sales grows 10%, reflecting a 9% increase in pricing at a 1% volume and product mixed growth.

In the Americas flavor solutions constant currency sales rose, 10%, reflecting a 9% increase from pricing and a 1% volume and product mix growth.

Speaker 2: Grows with broad base across the portfolio, with strength and flavors, including seedlings and specialty flavors, as well as branded food sur.

Growth was broad based across the portfolio with strength in flavors, including seasonings and specialty flavors as well as branded foodservice.

Speaker 2: In EMEA, Consecurrency Sales increased 15%. With pricing actions partially all set by lower volume and product mix, including a 1% impact from exiting the private label product line mentioned earlier.

In EMEA constant currency sales increased 15% with pricing actions, partially offset by lower volume and product mix, including a 1% impact from exiting the private label product line mentioned earlier.

Brendan Foley: And in APEC, while the economic recovery in China was not as strong as anticipated, China contributed to the regional pricing and volume growth. Across the region, we benefited from our QSR customers' increase in promotional activity. The strength of our flavor solution portfolio and capabilities, including our differentiated customer engagement and culinary inspired innovation, are driving outstanding flavor solutions momentum. Our flavor's product category are 100% focused on flavor, our breadth and reach, our enrivaled consumer insights, and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value-rated part of our portfolio. Driving growth and advancing our flavor leadership, and in branded food service, we expect new products, increased penetration, culinary partnerships, and our expertise in heat to drive continued growth.

Speaker 2: Outside of this product is continuation. Buying to client due to softness in some of our customers' volume within their own business.

Outside of this product discontinuation volumes declined due to softness in some of our customers' volume within their own businesses.

Speaker 2: Regarding the divestiture of the GeoDiChanning Business Brendan mentioned earlier, we expect this divestiture to impact EMEA flavor solutions by approximately 3% starting in the fourth quarter of 2023 to the third quarter of 2024.

Regarding the divestiture of the <unk> business Brendan mentioned earlier, we expect this divestiture to impact EMEA flavor solutions by approximately 3% starting in the fourth quarter of 2023 through the third quarter of 2024.

Speaker 2: for the total flavor solution segment, we expect an approximately 1% impact. And for the total company, less than one.

For the total flavor solutions segment, we expect an approximately 1% impact and for the total company less than 1%.

Speaker 2: In the APEC region, flavor solution sales grew 13% in constant currency, with a 7% contribution from pricing and 6% volume growth driven by our customers' promotional activities and limited time offers across the region.

In the APAC region flavor solutions sales grew 13% in constant currency with a 7% contribution from pricing and 6% volume growth driven by our customers' promotional activities and limited time offers across the region.

Speaker 2: A scene on slide 21, Chris Proffitmarge and expanded 150 basis points in the third quarter versus the year ago period, reflecting our steadfast focus on increasing profit realization.

As seen on slide 21, gross profit margin expanded 150 basis points in the third quarter versus the year ago period.

Michael Smith: Our robust growth plans and flavor solutions, and effective execution of our proven strategies, bolster our confidence in continuing our growth trajectory, and driving our flavor solutions' leadership Now, I'd like to turn it over to Mike to provide details on our financial performance. Thanks, Brendan, and good morning, everyone. Starting on slide 13, our top line constant currency sales grew 6% compared to the third quarter of last year, reflecting 8% from pricing partially all set with a 2% volume and next decline.

Collecting our steadfast focus on increasing profit realization.

Speaker 2: Favorable drivers in the quarter were our CCI and GOE programs, and the continued recovery of the cost inflation are pricing lagged over the past two years.

Favorable drivers in the quarter, where our CCI and <unk> programs and the continued recovery of the cost inflation, our pricing lagged over the past two years.

Speaker 2: We expect to finish 2023 meeting the cost recovery plans we set as we entered the year.

We expect to finish 2023 meeting the cost recovery plans, we set as we entered the year.

Speaker 2: We are very pleased with our gross margin expansion for the quarter. Historically, our third quarter gross margin has been higher than the second quarter. This year, however, they were comparable at approximately 37% because we realized our highest level of both pricing and cost recovery from prior years in the second quarter.

We are very pleased with our gross margin expansion for the quarter historically, our third quarter gross margin has been higher than the second quarter.

This year. However, they were comparable at approximately 37% because we realized our highest level of both pricing and cost recovery from prior years and the second quarter.

Michael Smith: As Brendan already mentioned, there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of kitchen basics, the exit of our consumer business in Russia and strategic decisions we made related to optimizing the profitability of our portfolio. As a result, at the total company level, excluding these items, underlying volume performance was flat for the quarter and improved sequentially from the second quarter. In our consumer segment, constant currency sales increased by 1%, reflecting a 5% increase in pricing actions, partially all set by a 4% volume decline.

Speaker 2: We expect to continue to drive margin improvement in the balance of the year. And as evident by our full year outlook and year-to-date results, we expect a higher gross margin in the fourth quarter compared to the third quarter of this year, as well as an expansion from the fourth quarter of 2020.

We expect to continue to drive margin improvement in the balance of the year and as evidenced by our full year outlook and year to date results. We expect a higher gross margin in the fourth quarter compared to the third quarter of this year as well as an expansion from the fourth quarter of 2022.

Speaker 2: Now moving to slide 22, selling general and administrative expenses or SGNA, increased relative to the third quarter of last year. As higher employee incentive compensation expenses and distribution costs, but partially I'll set by CCI lead and GOE cost savings.

Now moving to slide 'twenty, two selling general and administrative expenses or SG&A increased relative to the third quarter of last year as higher employee incentive compensation expenses and distribution costs were partially offset by CCI led cost savings.

Michael Smith: Included in this volume decline are a 2% decline due to a lower than expected recovery in China, and a 2% decline attributable to the kitchen basics to venture sure, our business exit in Russia, and Hispanic product DSD exit to optimize margins. On slide 14, consumer sales in the Americas increased 2% in constant currency, and included a 4% increase in pricing actions, partially all set by a 2% volume decline due to the kitchen basics to venture sure, and DSD items I just mentioned.

Speaker 2: Brand marketing also increased compared to the third quarter of last year. And we continue to expect a low single digit increase in brand marketing for the full year.

Brand marketing also increased compared to the third quarter of last year, and we continue to expect a low single digit increase in brand marketing for the full year.

Speaker 2: As a percentage of net sales, S-GNA increased 160 B.

As a percentage of net sales SG&A increased 160 basis points.

Speaker 2: Strong sales growth and gross margin expansion, partially offset by higher S-UNAD costs, resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2020.

Strong sales growth and gross margin expansion, partially offset by higher SG&A costs resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2022.

Speaker 2: in constant currency, adjusted operating income into consumer segment, which was impacted by the slower China recovery and brand marketing investments to clients 5%. And in the flavor solution segment, adjusted operating income increased 42%.

In constant currency adjusted operating income in the consumer segment, which was impacted by the slower China recovery and brand marketing investments declined 5% and in the flavor solutions segment adjusted operating income increased 42%.

Michael Smith: In the EMEA, constant currency consumer sales increased 10% with a 13% increase in pricing actions, partially all set by a 3% volume decline primarily from exiting Russia. Excluding Russia, sales growth was broad based across all markets and categories. Concentrously consumer sales in the APEC region decreased 11%, driven by a 15% volume decrease. Primarily due to a lower than expected recovery in China, also contributing to the decline for the impact of laughing strong China demand in the prior year following significant extended lockdowns during the second quarter of last year.

Speaker 2: Turning to interest expense and the income taxes on slide 2020-23, our interest expense increased significantly over the third quarter of 2022. Driven by the higher interest rate environment.

Turning to interest expense and income taxes on slide 2023, our interest expense increased significantly over the third quarter of 2022, driven by the higher interest rate environment and.

Speaker 2: and quickly touching on tax, our third quarter adjusted affected tax rate was 21.4%. Compared to 21.2% in the year ago period.

And quickly touching on tax our third quarter adjusted effective tax rate was 21, 4% compared to 21, 2% in the year ago period.

Speaker 2: Our income from unconsolidated operations in the third quarter reflects a strong performance in our largest joint venture. McCormick and Max.

Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture Mccormick de Mexico.

Michael Smith: Turning to our flavor solution segment, and slide 17, we grew 3rd quarter constant currency sales 11%, reflecting a 10% increase in pricing and a 1% increase in volume and product mix. Our volume growth was partially all set by the pruning of low margin business. In the Americas, flavor solutions constant currency sales rose 10%, reflecting a 9% increase in pricing and a 1% volume and product mix growth. Growth was broad based across the portfolio, with strength and flavors, including seasonings and specialty flavors, as well as branded food service.

Speaker 2: We are the market leader with the McCormick Bay branded mayonnaise, marmalade, and mustard product lines in Mexico. And the business continues to contribute meaningfully to our net income and operating cash flow results.

We are a market leader with the Mccormick branded mayonnaise marmalades and muster product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash flow results.

Speaker 2: At the bottom line, as shown on slide 25, third quarter 2023 adjusted earnings per share with 65 cents. As compared to 69 cents for the year ago period.

At the bottom line as shown on slide 25 third quarter 2023 adjusted earnings per share was <unk> 65.

As compared to 69 for the year ago period the.

Speaker 2: The decrease was driven by laughing at favorable impacts primarily related to an optimization of our death portfolio included in other income in the third quarter of last year. This impact is also a headwind to a-

The decrease was driven by lapping a favorable impact primarily related to an optimization of our debt portfolio included in other income in the third quarter of last year.

Michael Smith: In EMEA, Concentrously sales increased 15%, with pricing actions partially all set by lower volume and product mix, including a 1% impact from exiting the private label product line mentioned earlier. Outside of this product discontinuation, volumes decline due to softness in some of our customers' volume within their own businesses. Regarding the investiture of the geodicanting business brand and mentioned earlier, we expect this investiture to impact EMEA flavor solutions by approximately 3% starting in the 4th quarter of 2023 to the 3rd quarter of 2024, for the total flavor solution segment, we expect an approximately 1% impact and for the total company less than 1%.

This impact is also a headwind to our full year results.

Speaker 2: On slide 26, we've summarized highlights for cashflow and the quarter end balance sheet.

On slide 26, we've summarized highlights for cash flow in the quarter end balance sheet.

Speaker 2: A cash flow from operations year to date was very strong. $660 million in 2023 compared to $250 million for the same period last year. A 164% in-

Our cash flow from operations year to date was very strong $660 million in 2023 compared to $250 million for the same period last year.

164% increase the.

Speaker 2: The increase was primarily driven by higher operating income and working capital improvements, including lower-ended-

The increase was primarily driven by higher operating income and working capital improvements, including lower inventory.

Speaker 2: We return $314 million of cash to our shareholders through dividends and use $187 million of cash for capital expenditures through the third quarter.

We returned $314 million of cash to our shareholders through dividends and used $187 million of cash for capital expenditures through the third quarter.

Speaker 2: We expect 2023 to be a very strong year of cash flow as evidenced by our 2023 year-to-day cash flow from operations of $660 million, which is already slightly higher than our all-year cash flow in 2022.

Michael Smith: In the APAC region, flavor solution sales grew 13% in constant currency, with a 7% contribution from pricing and 6% volume growth driven by our customers' promotional activities and limited time offers across the region. As seen on slide 21, first profit margin expanded 150 basis points in the third quarter versus the year ago period, reflecting our steadfast focus on increasing profit realization. Favorable drivers in the quarter were our CCI and GOE programs and the continued recovery of the cost inflation are pricing lagged over the past two years.

We expect 2023 to be a very strong year of cash flow as evidenced by our 2023 year to date cash flow from operations of $660 million, which is already.

Already slightly higher than our full year cash flow in 2022.

Speaker 2: Our priority is to continue to have a balance use of cash, funding investments to drive growth, returning a significant portion to our shareholders' sub-dividence, and paying down debt.

Our priority is to continue to have a balanced use of cash funding investments to drive growth returning a significant portion to our shareholders through dividends and paying down debt.

Speaker 2: We remain committed to a strong investment-grade rating. With our improving growth margin and lower inventory, we are well positioned to continue paying down debt. And we now expect to do ever to approximately three times. Earlier in 2024, then we originally expect.

We remain committed to a strong investment grade rating.

With our improving gross margin and lower inventory, we are well positioned to continue paying down debt and we now expect to de lever to approximately three times earlier in 2024 than we originally expected.

Michael Smith: We expect to finish 2023 meeting the cost recovery plans we set as we entered the year. We are very pleased with our gross margin expansion for the quarter. Historically, our third quarter gross margin has been higher than the second quarter. This year, however, they were comparable at approximately 37% because we realized our highest level of both pricing and cost recovery from prior years in the second quarter. We expect to continue to drive margin improvement in the balance of the year and as evident by our full year outlook and year-to-date results, we expect a higher gross margin.

Speaker 2: Now turning to our updated 2023 financial outlook on slide 27.

Now turning to our updated 2023 financial outlook on slide 27.

Speaker 2: Our 2023 outlook reflects our continued positive top line growth momentum. And with the optimization of our cost structure, increased profit realization.

Our 2023 outlook reflects our continued positive topline growth momentum and with the optimization of our cost structure increased profit realization.

Speaker 2: We expect to drive margin expansion with strong sales and adjusted operating income growth.

We expect to drive margin expansion with strong sales and adjusted operating income growth adjusted.

Speaker 2: Adjustive operating income growth is expected to be personally offset by higher interest expense and a higher projected effective tax rate.

Operating income growth is expected to be partially offset by higher interest expense and a higher projected effective tax rate.

Speaker 2: We also anticipate minimal impact from currency rates, although there will be a timing aspect as we realized an unfavorable impact year-to-date through the third quarter, and project a favorable impact in the fourth.

We also anticipate minimal impact from currency rates, although there will be a timing aspect as we realized an unfavorable impact year to date through the third quarter and project a favorable impact in the fourth quarter.

Michael Smith: We expect to continue to drive margin improvement in the fourth quarter compared to the third quarter of this year as well as expansion from the fourth quarter of 2022. Now moving to slide 22, selling general and administrative expenses or SGNA increased relative to the third quarter of last year. As higher employee incentive compensation expenses and distribution costs were partially all set by CCI led and GOE cost savings. Brand marketing also increased compared to the third quarter of last year and we continue to expect a low single digit increase in brand marketing for the full year.

Michael Smith: As a percentage of net sales SGNA increased 160 basis points. Strong sales growth and gross margin expansion, partially all set by higher SGNA costs resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2022. In constant currency, adjusted operating income into consumer segment which was impacted by the slower China recovery and brand marketing investments declined 5% and in the flavor solution segment adjusted operating income increased 42%.

Speaker 2: We are reaffirming ourselves an operating profit outlook for 2023, despite a slower recovery in China.

We are reaffirming our sales and operating profit outlook for 2023, despite a slower recovery in China.

Speaker 2: We no longer expect a 1% contribution to our sales from lapping last year's COVID disruptions in China. And we're also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis.

We no longer expect a 1% contribution to our sales from lapping last year's Covid disruptions in China.

And we are also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis points.

Speaker 2: At the top line, we continue to expect 5 to 7% growth. And anticipators, our results would be closer to the middle of our guidance range given they're lower than expected China to recover.

At the top line, we continue to expect 5% to 7% growth and anticipate our results will be closer to the middle of our guidance range, given the lower than expected China recovery.

Speaker 2: The wrap of last year's pricing actions, as well as the impact of new ones in 23, are the primary drivers of growth.

The wrap of last year's pricing actions as well as the impact of new ones in 'twenty three are the primary drivers of growth.

Several factors are expected to impact our volume and product mix for the year.

Speaker 2: Several factors are expected to impact our volume and product mix for the year.

Speaker 2: including price elasticity, which are consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment.

Including price Elasticities, which are consistent with 2022 at lower levels than we have historically experienced but in line with the current environment.

Speaker 2: The divestiture of our kitchen-based business in August of last year and the exit of our consumer business in Russia during last year's second quarter.

The divestiture of our kitchen basics business in August of last year, and the exit of our consumer business in Russia during last year's second quarter.

Michael Smith: Turning to interest expense and the income taxes on slide 2023 are interest expense increased significantly over the third quarter of 2022 driven by the higher interest rate environment. And quickly touching on tax, our third quarter adjusted affected tax rate was 21.4% compared to 21.2% in the year ago period. Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture, McCormick in Mexico. We are the market leader with the McCormick Bay branded mayonnaise, normal age and mustard product lines in Mexico and the business continues to contribute meaningfully to our net income and operating cash flow results.

Speaker 2: To continue approving of lower margin business from our portfolio, we continue to estimate the America's consumer segment, the SDXs, and the EMEA's flavor solutions private label discontinuation to be approximately a 1% impact on the year. We began to impact us in the second quarter of 2023.

To continue pruning of lower margin business from our portfolio. We continue to estimate the Americas consumer segment, DSD exit and the EMEA flavor solutions private label discontinuation to be approximately a 1% impact on the year, which began to impact us in the second quarter of 2023.

Speaker 2: And finally, the divestiture of the Vietis County Business, which closed on the first day of the fourth quarter, will have a minimal impact on total company sales for the year.

And finally, the divestiture of the <unk> scanning business, which closed on the first day of the fourth quarter, we will have a minimal impact on total company sales for the year.

Speaker 2: We continue to plan to drive growth through the strength of our brands, as well as our category management, brand marketing, new products, and customer engagement plan.

We continue to plan to drive growth through the strength of our brands as well as our category management brand marketing new products and customer engagement plans.

Michael Smith: At the bottom line, as shown on slide 25, third quarter 2023 adjusted earnings per share with 65 cents as compared to 69 cents for the year ago period. The decrease was driven by lapping a favorable impact primarily related to an optimization of our debt portfolio included in other income in the third quarter of last year. This impact is also a headwind to our four year results. The increase was primarily driven by higher operating income and working capital improvements, including lower inventory.

Speaker 2: Our 2023 Gross Margin is projected to range between 110 to 140 basis points higher than 2022 Compared to our par guidance of 50 to 100 basis

Our 2023 gross margin is projected to range between 110 to 140 basis points higher than 2022 compared to our prior guidance of 50 to 100 basis points. This.

This gross margin expansion reflects a favorable impact from pricing cost savings from our CCI led and <unk> programs and portfolio optimization, partially offset by the anticipated impact of a low to mid teens increase in cost inflation.

Speaker 2: It also reflects more than offsetting cost pressures with pricing actions. As we recover the cost inflation are pricing lagged for last two years.

It also reflects more than offsetting cost pressures with pricing actions as we recover the cost inflation, our pricing lagged the last two years.

Speaker 2: Moving to adjusted operating income, we continue to expect 10 to 12% constant currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth.

Moving to adjusted operating income, we continue to expect 10% to 12% constant currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth.

Speaker 2: First, remaining consistent with our prior outlook, we expect our GUE program to have an 800 basis point stable impact and the kitchen basics the vetressur to have an unfavorable 100 basis point.

First remaining consistent with our prior outlook, we expect our <unk> program to have an 800 basis point favorable impact and the kitchen basics debenture to have an unfavorable 100 basis point impact.

Michael Smith: We returned $314 million of cash to our shareholders through dividends and used $187 million of cash for capital expenditures through the third quarter. We expect 2023 to be a very strong year of cash flow as evidenced by our 2023 year-to-day cash flow from operations of $660 million, which is already slightly higher than our four year cash flow in 2022. Our priority is to continue to have a balance use of cash, funding investments to drive growth, returning a significant portion to our shareholders' dividends and paying down debt.

Speaker 2: Next, I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis.

<unk> I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis points.

Speaker 2: Finally, we expect a 900 basis point unsavorable impact from building back incentive compensation slightly ahead of our prior projection of 800 basis points, given the increase in earnings expectations since the beginning of the year.

Finally, we expect a 900 basis point unfavorable impact from building back incentive compensation slightly ahead of our prior projection of 800 basis points given the increase in earnings expectations since the beginning of the year.

Speaker 2: The net impact of these discrete items is an unfavorable 100 basis.

Michael Smith: We remain committed to a strong investment-grade rating. With our improving growth margin and lower inventory, we are well positioned to continue paying down debt, and we now expect to do ever to approximately three times earlier in 2024 than we originally expected.

The net impact of these discrete items is an unfavorable 100 basis points as compared to a 200 basis point favorable impact than our previous outlook.

Speaker 2: As compared to a 200 basis point favorable impact in our previous

Speaker 2: The reaffirmation of our adjusted operating income outlook, despite the unfavorable change in the impact from discrete items, highlights stronger than originally expected profit realization on our underlying business, which is now expected to be 11 to 13% growth compared to 8% to 10% growth preview.

The reaffirmation of our adjusted operating income outlook, despite the unfavorable change in the impact from discrete items.

Michael Smith: Now turning to our updated 2023 financial outlook on slide 27. Our 2023 outlook reflects our continued positive top-line growth momentum, and with the optimization of our cost structure, increased profit realization. We expect to drive margin expansion with strong sales and adjusted operating income growth. Adjusted operating income growth is expected to be partially offset by higher interest expense and a higher projected effective tax rate. We also anticipate minimal impact from currency rates, although there will be a timing aspect as we realized an unfavorable impact year-to-date through the third quarter, and project a favorable impact in the fourth quarter.

<unk> stronger than originally expected profit realization on our underlying business, which is now expected to be 11% to 13% growth compared to 8% to 10% growth previously.

Speaker 2: We are reaffirming our low single-digit increases in brand marketing investments, our CCI-led cost savings target of approximately $85 million, our interest expense outlook of an estimated range from $200 million to $210 million in 2023, and our 2023 adjusted effective income tax rate projection of approximately 22%.

We are reaffirming our low single digit increases in brand marketing investments, our CCI led cost savings target of approximately $85 million. Our interest expense outlook of an estimated range from $200 million to $210 million in 2023, and our 2023 adjusted effective income tax rate projection of approximately 22%.

Speaker 2: We are increasing our income from unconcelledated operation projection to a 30% expected increase from 2022, reflecting the strong performance we expect in our largest joint venture, McCormick, the Mexico.

We are increasing our income from unconsolidated operations projections to a 30% expected increase from 2022, reflecting the strong performance, we expect in our largest joint venture Mccormick de Mexico.

Michael Smith: We are reaffirming our sales and operating profit outlook for 2023, despite a slower recovery in China. We no longer expect a 1% contribution to our sales from lapping last year's COVID disruptions in China, and we are also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis points. At the top line, we continue to expect 5 to 7% growth, and anticipators, our results, will be closer to the middle of our guidance range given the lower than expected China recovery.

Speaker 2: Two summarized, our 2023 adjusted earnings per share expectations reflects strong underlying business growth of 14 to 16%. Above our prior projection of 10 to 12%.

To summarize our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 14% to 16%.

Above our prior projection of 10% to 12% <unk>.

Speaker 2: Combining this 14 to 16% underlying growth with a 1% unfavorable impact from the discrete items on a just-adjusted operating profit and the combined interest and tax-head wind of 90%.

Combining this 14% to 16% underlying growth with a 1% unfavorable impact from the discrete items on adjusted operating profit and the combined interest and tax headwind of 9% results in an expected increase of 4% to 6% or our projected guidance range of adjusted earnings per share in 2023 of $2 <unk>.

Speaker 2: Result in an expected increase of 4 to 6 percent or projected guidance range of adjusted earnings per share in 2023 Up $2.62 to $2.67

Michael Smith: The wrap of last year's pricing actions, as well as the impact of new ones in 23, are the primary drivers of growth. Several factors are expected to impact our volume and product mix for the year, including price elasticity, which are consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment. The investiture of our kitchen-based business in August of last year and the exit of our consumer business in Russia during last year's second quarter.

<unk> two <unk> to $2 67.

Speaker 2: We are projecting strong operating performance in 2023 with continued top line momentum, significant optimization of our cost structure and strong adjusted operating profit growth, as well as margin expansion and strong cash flow. We remain confident in the underlying strength of our business and delivering on the profitable growth respected in our 2023 financial out.

We are projecting strong operating performance in 2023 with continued topline momentum significant optimization of our cost structure and strong adjusted operating profit growth as.

As well as margin expansion and strong cash flow.

We remain confident in the underlying strength of our business and delivering on the profitable growth reflected in our 2023 financial outlook.

Michael Smith: The continual pruning of lower margin business from our portfolio. We continue to estimate the America's consumer segment, the SD exit, and the EMEA's flavor solutions' private label discontinuation to be approximately a 1% impact on the year. We should begin to impact us in the second quarter of 2023, and finally, the divestiture of the Audi's candy business, which closed on the first day of the fourth quarter, will have a minimal impact on total company sales for the year.

Speaker 2: Thank you, Mike. Before we turn it over to Q&A, I would like to provide some closing comments.

Thank you Mike before we turn it over to Q&A I would like to provide some closing comments global.

Speaker 2: Global demand for flavor remains the foundation of our sales growth. And we have intentionally focused on great fast-growing categories.

Global demand for flavor remains the foundation of our sales growth and we are intentionally focused on great fast growing categories.

Speaker 2: Our alignment with long-term consumer trends, healthy and flavorful cooking, trusted brands, increased digital engagement, and purpose-minded practices continue to create a tailwind for growth.

Our alignment with long term consumer trends healthy and flavorful cooking trusted brands increased digital engagement and purpose minded practices continue to create a tailwind for growth.

Michael Smith: We continue to plan to drive growth through the strength of our brands, as well as our category management, brand marketing, new products and customer engagement plans. We require guidance of 50 to 100 basis points. This gross margin expansion reflects a favorable impact from pricing, cost savings from our CCI led and GOE programs and portfolio optimization, partially offset by the anticipated impact of a low to mid-teens increase in cost inflation. It also reflects more than offsetting cost pressures with pricing actions, as we recover the cost inflation are pricing lagged for the last two years.

Speaker 2: Well, Cormac is uniquely positioned to capitalize on this demand for great flavor. With the breadth and reach of our strong global flavor portfolio, we are end to end flavor for our consumers and customers.

<unk> is uniquely positioned to capitalize on this demand for great flavor with the breadth and reach of our strong global flavor portfolio. We are end to end flavor for our consumers and customers.

Speaker 2: We remain a different kind of CPG company, one differentiated by our growth platform, the results that we have achieved over the last years and our culture.

We remain a different kind of CPG company, one differentiated by our growth platform. The results that we have achieved over the last years and our culture.

Speaker 2: We play in great and fast-growing categories. Our two segments, consumer and flavor solutions, complement each other, reinforcing our differentiation.

We play in great in fast growing categories are two segments consumer and flavor solutions complement each other reinforcing our differentiation.

Speaker 2: Scale, insights and technology that we leverage from both segments are meaningful in driving sustainable growth.

Scale insights and technology that we leverage from both segments are meaningful and driving sustainable growth.

Speaker 2: We continue to leverage the strength of our culture and the power of people to drive success.

We continue to leverage the strength of our culture and the power of people to drive success.

Michael Smith: Moving to adjusted operating income, we continue to expect 10 to 12% cost and currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth. First, remaining consistent with our prior outlook, we expect our GOE program to have an 800 basis point, stable impact and the kitchen basics divestiture to have an unfavorable 100 basis point impact. Next, I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis points.

Speaker 2: I want to thank McCormick employees worldwide as their energy and excitement for the business is coming through in our results.

I want to thank Mccormick employees worldwide as their energy and excitement for the business is coming through in our results now.

Speaker 2: Now to recap the key takeaways as seen on slide 30.

Michael Smith: Finally, we expect a 900 basis point unfavorable impact from building back incentive compensation, slightly ahead of our prior projection of 800 basis points, given the increase in earnings expectations since the beginning of the year. The net impact of these discrete items is an unfavorable 100 basis points, as compared to a 200 basis point favorable impact in our previous outlook. The reaffirmation of our adjusted operating income outlook, despite the unfavorable change in the impact from discrete items, highlights stronger than originally expected profit realization on our underlying business.

Now to recap the key takeaways as seen on slide 30.

Speaker 2: Our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strat.

Our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strategies.

Speaker 2: and our following performance, excluding China, continued to improve.

And our volume performance, excluding China continued to improve.

We drove meaningful year over year margin expansion underscoring our focus on profit realization.

Speaker 2: We drove meaningful year over year margin expansion, underscoring our focus on profit realization.

Speaker 2: Are your date cash flow from operation results was strong? Already equal to our full year 2022 results.

Our year to date cash flow from operation results was strong already equal to our full year 2022 results.

Speaker 2: I'll reaffirm sales and operating profit guidance. Despite lower than expected China recovery, highlights the growing strength of the rest of the business.

I'll reaffirm sales and operating profit guidance, despite lower than expected China recovery highlights the growing strength of the rest of the business.

Speaker 2: The strength of our business model, the value of our products and capabilities, and execution of our proven strategies bolsters our confidence in our growth trajectory over the long term. Now for your questions.

The strength of our business model the value of our products and capabilities and execution of our proven strategies bolsters, our confidence in our growth trajectory over the long term.

Now for your questions.

Thank you.

Ill be conducting a question and answer session.

Speaker 3: If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line in the question queue. You may press star two.

If you'd like to ask a question today. Please press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press star two if you'd like to remove your question from the queue.

Michael Smith: Which is now expected to be 11 to 13% growth compared to 8 to 10% growth previously. We are reaffirming our low single-digit increases in brand marketing investments, our CCI-led cost savings target of approximately $85 million. Our interest expense outlook of an estimated range from $200 million to $210 million in 2023, and our 2023 adjusted effective income tax rate projection of approximately 22%. We are increasing our income from unsolidated operation projection to a 30% expected increase from 2022, reflecting the strong performance we expect in our largest joint venture, McCormick de Mexico.

Speaker 3: If you're using speaker equipment, maybe necessary to pick up your handset before pressing the star keys. One.

Participants are using speaker equipment may be necessary to pick up your handset before pressing the star keys.

One moment please poll for questions. Thank you.

Speaker 3: Thank you, now, first question is coming from the line of Andrew Lazar with Barclays. Please receive your questions. Right, thanks.

Thank you and our first question is coming from the line of Andrew Lazar with Barclays. Please proceed with your question.

Great. Thanks, very much good morning, everybody.

Speaker 4: Good morning. Good morning. I guess we just start off with McCormack obviously, as you mentioned, saw some sequential volume improvement in consumer America's in the fiscal third quarter. And you're lapping easier, I need even easier, I guess, down 11 volume decline in the year ago period in the fourth quarter.

Good morning.

Just start off with Mccormick, obviously as you mentioned saw some sequential volume improvement in consumer Americas in the fiscal third quarter.

And easier and even easier I guess down 11.

Some decline in the year ago period in the fourth quarter. So I guess my question is would you expect volume in the consumer Americas segment, two to flip positively in the fourth quarter.

Speaker 4: So I guess my question is, would you expect volume in the consumer America segment to flip positively?

Michael Smith: To summarize, our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 14 to 16%. Above our prior projection of 10 to 12%. Combining this 14 to 16% underlying growth with a 1% unfavorable impact from the discrete items on adjusted operating profit and the combined interest and tax headwind of 9%. Result in an expected increase of 4 to 6%. Or projected guidance range of adjusted earnings per share in 2023, up $2.62 to $2.67.

Speaker 4: in the fourth quarter. And if not, I guess, what would be the key factors that would keep you from doing so? Obviously, all in the context of an industry volume backdrop that remains kind of sub...

If not I guess, what would be the key factors that would that would keep you from doing so obviously all in the context of an industry volume backdrop that remains kind of subdued.

Speaker 2: Well, thanks Andrew for the question. Just to maybe speak first to last year's fourth quarter. Um,

Well Thanks, Andrew for your question, just maybe speak first to last year's fourth quarter.

Speaker 2: I think our sales growth back in 2022 was down about 1.7% of thick on sales. And that was up without kitchen basics. We were lapping the 2021 retail inventory build in a high level.

I think our sales grows back back in 2022 was down about.

One 7% pick on sales.

That was up without kitchen basics, we were lapping the 2021 retail inventory build and a high level.

Michael Smith: Francis. We are projecting strong operating performance in 2023 with continued top line momentum, significant optimization of our cost structure, and strong adjusted operating profit growth, as well as margin expansion and strong cash flow. We remain confident in the underlying strength of our business and delivering on the profitable growth respected in our 2023 financial outlook.

Speaker 2: I think we, as we talked about on that call, entered the 2022 holiday, which just watched stronger inventory than we were counting on or predicting or forecast.

I think we as we talked about on that call entered the 2022 holiday with just what stronger inventory that we have.

We're counting on are predicting or forecasting.

Speaker 2: So the way we're looking at it is the net sales impact really was up about 4.5, a little over 4% in the fourth quarter last year. So we were not seeing that necessarily as an easy comparison overall, but just talking to dollars first, that's kind of our view is just, we're still looking at a pretty robust fourth quarter from a year ago, just knowing that we had that comparison in the...

So.

The way, we're looking at it as the net sales impact really was up about four a little over 4% in the fourth quarter last year. So we are.

Michael Smith: Thank you, Mike.

Brendan Foley: Before we turn it over to Q&A, I would like to provide some closing comments. Global demand for flavor remains the foundation of our sales growth, and we have intentionally focused on great fast growing categories. Our alignment with long-term consumer trends, healthy and flavorful cooking, trusted brands, increased digital engagement, and purpose-minded practices continue to create a tailwind for growth. McCormick is uniquely positioned to capitalize on this demand for great flavor with the breadth and reach of our strong global flavor portfolio.

Not seeing that necessarily as an easy comparison.

Overall, but just talking to $1 <unk>.

That's kind of our view is just we're still looking at a pretty robust fourth quarter from a year ago, just knowing that we had that comparison.

Speaker 2: Now, we look at this year's fourth quarter. As we said on the call here earlier, you will see the impact of that DSD continuation in our Hispanic act spices part of our business. It just tends to be, that business tends to be heavier in the fourth quarter because of the holidays, so that'll be a little bit stronger than...

The fourth quarter now let me look at this year's fourth quarter.

As we said on the call here earlier, you will see the impact of that DSD continuation in our Hispanic bag spices part of our business. It just tends to be that business tends to be heavier in the fourth quarter because of the holidays, so that'll be a little bit stronger than.

Brendan Foley: We are end to end flavor for our consumers and customers. We remain a different kind of CPG company, one differentiated by our growth platform, the results that we have achieved over the last years and our culture. We play in great and fast growing categories. Our two segments, consumer and flavor solutions complement each other reinforcing our differentiation. The scale, insights and technology that we leverage from both segments are meaningful and driving sustainable growth. We continue to leverage the strength of our culture and the power of people to drive success. I want to thank McCormick employees worldwide as their energy and excitement for the businesses coming through in our results.

Speaker 2: But to our spices and seasoning business, we continue to see improving trends in that part of our portfolio. And you should expect to see that in the fourth quarter, that sequential improvement in performance overall.

But to our spices and seasonings business, we continue to see improving trends in that part of our portfolio and you should expect to see that.

In the fourth quarter that sequential improvement in performance overall.

Speaker 2: and people feel like we're going to have a strong holiday. I mean, I think the reasons why we feel good about the direction of that part of our portfolio is, you know, when you heard it on the call. We're gaining share and we're gaining distribution on superdeal or spices.

And we feel like we're going to have a strong holiday.

I think the reasons why we feel good about the direction of that part of our portfolio is when you heard it on the call, we're gaining share and we're gaining distribution on super deal herbs and spices on.

Speaker 2: on the LiREZ opening price point platform was still getting really good performance for that. It's still also building out distribution. And...

On the <unk> opening price point platform, we're still getting really good performance with assets still also building out distribution and.

Speaker 2: We have one value retailer that we've only begun just starting with shipment's on and they'll start to build out, you know, and fill out more store locations because we have like just in that particular account, you know, 85% of locations still yet to come. So we still see distribution build happening behind Lowry's.

We have one value retailer that we've only begun just starting shipments on and they'll start to build out and fill out more store locations.

Brendan Foley: Now to recap the key takeaways as seen on slide 30. Our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strategies, and our following performance, excluding China, continued to improve. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Our year-to-date cash flow from operation and results was strong, already equal to our full year 2022 results. Our reaffirmed sales and operating profit guidance, despite lower than expected China recovery, highlights the growing strength of the rest of the business. The strength of our business model, the value of our products and capabilities, and execution of our proven strategies bolsters our confidence in our growth trajectory of the long term.

Operator: Now for your questions. Thank you.

Because we have like just in that one particular account 85% of locations still yet to come so we still see distribution build happening behind lower.

Overall.

Speaker 2: And that renovation that we'd launched here this year, we talked about in the second quarter.

And that renovation that we launched here this year, we talked about in the second quarter.

Speaker 2: It's doing really well where we see it getting on shelf. Now we shift about 40%.

He is doing really well, where we see it getting on shelf that we shipped about 40%, but what's appearing on shelf is probably just a little bit different because we don't really have that data, but what we're seeing with when we see that new package come on shelf is that the washing improves quite a bit. So we're really encouraged by our performance there and we're definitely seeing strong consumer reaction to two.

Speaker 2: But, you know, what's appearing on shelf is probably just a little bit different because we don't really have that data. But what we're seeing with, when we see that new package come on shelf, is that the WASC improves quite a bit.

Speaker 2: So we're really encouraged by our performance there and we're definitely seeing strong consumer reaction to

Speaker 2: to the new package and so that will obviously continue to build in the fourth quarter. And we're also turning on our media right now.

The new package and so that will obviously continue to build in the fourth quarter and we're also turning on our media right now.

Speaker 2: you know, advertising, you know, the benefits of the package, but then we're also having holiday campaigns start to run too. So, if you like, there's a lot of good momentum in the pipeline. Obviously, a lot of that will carry into 2024, but we still feel really good about the strength of that part of our business going into the fourth quarter.

Advertising is the benefits of the package, but then we're also having holiday campaigns starting to run too. So we feel like there's a lot of good momentum in the pipeline. Obviously a lot of that will carry into 2024, but we still feel really good about the strength of that part of our business going into the fourth quarter.

Operator: Well now we conduct a question and answer session. If you'd like to ask a question today, please press star one from your telephone keypad and a confirmation tone indicate your line in the question queue. You may press star two if you like to remove your question from the queue. For participants that are using speaker equipment, maybe necessary to pick up your handset before pressing the star keys. One moment please will be pulled for questions. Thank you.

Speaker 2: You know, what's also helping us though is that, you know, our core categories are performing a little bit stronger than overall total edible in the grocery store. So we see it can continue strength there, system of categories.

It's also helping US though is that our core categories are performing a little bit stronger than overall total eligible in the grocery stores. So we see continued strength.

Strength, there just from a category standpoint.

Andrew Lazar: Thank you, and our first question is coming from the line of Andrew Lazar with Barclays. Please receive your question. Great. Thanks very much.

Speaker 2: We have good performance across other core categories like resty mix, condiments and sauces, so we expect pretty good performance there. But there are some categories where we participate in one of our food fears.

We had good performance across our other core categories like recipe mix.

Condiments and sauces, so we expect pretty good performance there.

Brendan Foley: Good morning everybody. I guess we'll just start off with McCormack obviously. As you mentioned, it saw some sequential volume improvement in consumer America's in the fiscal third quarter. In your lap being easier, and even easier, I guess, down 11 volume decline in the year ago period in the fourth quarter. So I guess my question is, would you expect volume in the consumer America's segment to flip positively in the fourth quarter? And if not, I guess what would be the key factors that would keep you from doing so?

But there are some categories brewer can be participate along with our food peers.

Speaker 2: probably had a much smaller scale, but these are, you know, categories like frozen or the ancient category.

We had a much smaller scale, but these are categories like frozen or the Asian category.

Speaker 2: where we seem more volume decline like we've seen in the rest of the center of store a nap part of our business. That's just one part of the portfolio. I just gave you some color on it. We're seeing definitely the type of softness that you're seeing in other categories.

We've seen more volume decline like we've seen in the rest of the center of store and that part of our business.

As just one part of the.

The portfolio I'll, just give you some color on what we're seeing definitely the type of softness that youre seeing in other categories.

Speaker 2: But the fundamental trends have not shifted, you know, despite this recovery in China, being a lot slower, US and Europe are performing as expected. And if you heard in the call, we kind of reaffirmed our guidance on sales, despite China, which is meant to indicate we still see a strength in the performance of our business overall. Great, thanks. I'll pass it on and leave it there. Thanks so much.

But the fundamental trends have not shifted despite this recovery in China being a lot slower U S and Europe are performing as expected and as you heard in the call the kind of reaffirmed our guidance on sales despite China, which this meant to indicate that we still see a strengthening of the performance of our business overall.

Brendan Foley: Obviously, all in the context of an industry volume backdrop that remains kind of to- Well, thanks, Andrew, for your question. Just to maybe speak first to last year's fourth quarter. I think our sales growth back in 2022 was down about 1.7% thick on sales, and that was up without kitchen basics. And we were lapping the 2021 retail inventory build in a high level. I think we, you know, as we talked about on that call, entered the 2022 holiday with just a watch stronger inventory than we were counting on or predicting or forecasting.

Great. Thanks, I'll pass it on and leave it there. Thanks so much.

Our next questions come from the line of Alexia Howard with Bernstein. Please proceed with your question.

Good morning, everyone. Good morning.

Speaker 5: Can I ask about the market share trends that we're seeing in America's consumer? It's obviously been under pressure sometime because of the distribution losses and so on. But I'm wondering if there's light at the end of the tunnel in terms of when either the comparables get easier or innovation helps return it around and just wondering what the the outlook is there and then I have a follow.

And can I ask about the market share trend that we're seeing in Americas C&I.

W think that under pressure for some time because of the distribution losses, and so on but I'm wondering instead light at the end of the tunnel in terms of when either the comparable got easier.

Brendan Foley: So the way we're looking at it is the net sales impact really was up about 4.5% over 4% in the fourth quarter last year. So we're not seeing that necessarily isn't easy comparison overall. But just talking to dollars first, you know, that's kind of our view is just we're still looking at a pretty robust fourth quarter from a year ago just knowing that we had that comparison in the fourth quarter. Now, look at this year's fourth quarter.

Innovation helps to turn it around and just wondering what the.

The outlook is there and then I have a follow up.

Speaker 2: Thanks, Alexia. Yeah, I think, um, you know, we take a look at our performance and overall in terms of shares, et cetera, you know, just talking maybe specifically the spices and seasonings. You know, dollars are a bit tricky because we're seeing private label and our competitors take more price right now in the last couple of months to catch up to the pricing that we take.

Thanks, Alexia, Yes, I think no.

As we take a look at our performance overall in terms of shares et cetera, just talking maybe even specifically the spices and seasonings.

Or a bit tricky, because we're seeing private label and our competitors take more price right now in the last couple of months to catch up with the pricing that we've taken in the marketplace. So this is helpful. Obviously, because it starts to closed price gaps.

Brendan Foley: As we said on the call here earlier, you know, you will see the impact of that DSD continuation in our Hispanic back spices part of our business. It just tends to be that business tends to be heavier in the fourth quarter because of the holiday. So that'll be a little bit stronger than. But to our spices and seasonings business, we continue seeing improving trends in that part of our portfolio and you should expect to see that in the fourth quarter that sequential improvement and performance overall.

Speaker 2: in the marketplace. But this is helpful, obviously, because it starts to close price gap.

Speaker 2: And so, you know, I think you're seeing some stronger dollar performance there, but from a unit standpoint, we believe that performing even better, that lag is even less. And so as we then look to the pipeline activities that we have going on, much like I just mentioned on.

And.

So I think youre seeing some stronger dollar performance there, but from a unit standpoint, we believe we're performing even better.

That lag is even less and so as we then look to the pipeline of activities that we have going on much like I just mentioned.

Speaker 2: on the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum. We've seen a strong pipeline across that part of our portfolio as well as just stronger overall marketing initiatives now that we have really secure supply across all of our portfolio.

On the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum.

Brendan Foley: And we feel like we're going to have a strong holiday. I mean, I think the reasons why we feel good about the direction of that part of our portfolio is, you know, when you heard it on the call. We're gaining share and we're gaining distribution on super deal or spices on the Lowry's opening price point platform. We're still getting really good performance for that. That's still also building out distribution. And we have one value retailer that we've only begun just starting shipments on and they'll start to build out, you know, fill out more store locations.

We see a strong pipeline across that part of our portfolio as well as just stronger overall.

Marketing initiatives now that we have really.

Assured supply across all of our portfolio. So when we talk about light at the end of the tunnel, we just see a sequential improvement over the course of time as we claw back on distribution points, which we've grown this quarter.

Speaker 2: So when we talk about light again, the tunnel we just seek sequential improvement over the course of time as we fall back on distribution points, which we've grown this quarter.

Speaker 2: as well as just the pipeline of activity and renovation that we have across our portfolio. You're seeing a good view of that right now, but there's more to come. And so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories.

As well as just the pipeline of activity in renovation that we have across our portfolio. You are seeing a good a good view of that right now, but there's more to come and so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories. I think too we think that some of the same things we've done in <unk>.

Brendan Foley: Because we have like just in that particular account, you know, 85% of locations still yet to come. So we still see distribution build happening behind Lowry's overall. And that renovation that we launched here this year, we talked about in the second quarter. It's doing really well. We'll see it getting on shelf. Now we shift about 40%. But, you know, what's appearing on shelf is probably just a little bit different because we don't really have that data.

Speaker 2: Two, we think some of the same things we've done in Europe , for example, we've had, as we mentioned today, the call really good share performance and volume performance in markets like you pay in France, which are similar to the US. So those type of activities we're doing, whether it's innovation.

Europe for example, where they had as we mentioned today on the call really good share performance and volume performance in markets like UK, and France, which are similar to the U S. So those type of.

The activities, we're doing whether it's innovation.

Brendan Foley: But what we're seeing with when we see that new package come on shelf is that the washing improves quite a bit. So we're really encouraged by our performance there and we're definitely in strong consumer reaction to the new package. And so that will obviously continue to build in the fourth quarter. And we're also turning on our media right now, you know, advertising. You know, the benefits of the package, but then we're also having holiday campaigns start to run too.

Speaker 2: So upgrading and renovating the mine that have had a confessor over there.

Upgrading renovating the mine and have had success over there too.

Speaker 5: Great, thank you. And just as a quick follow up, you talked about the free cash flow allowing you to de-level more quickly than expected. What's your level of appetite for acquisitions next year and where are the priorities? Is it consumer, is it flavor solutions, domestic, international, just wondering how you're thinking about the pipeline on the M&A side and I'll pass it on. Thank you.

Great. Thank you and just as a quick follow up you talked about the free cash flow, allowing you to delever more quickly than expected.

The level of appetite for acquisitions next year, what are the priorities.

CMA the flavor solutions domestic international.

I'm, just wondering how youre thinking about the pipeline on the M&A side and I'll pass it on thank you.

Brendan Foley: So if you like, there's a lot of good momentum in the pipeline. Obviously a lot of that will carry into 2024, but we still feel really good about the strength of that part of our business going into the fourth quarter. You know, what's also helping us though is that, you know, our core categories are performing a little bit stronger than overall total edible in the grocery store. So we see continued strength there just in my category standpoint.

Speaker 2: No, let's see, as you said, we're having a really good success on our covering cash flow. We're really excited about that. As we've said in the call today, we're going to be lever faster than we thought to get back to our three times target. We're always looking at acquisitions. We have a corporate development team that is always working with internally to look at those assets.

Yes Alexia.

As you said to me.

Haven't really good success on our operating cash flow, we're really excited about that as we said on the call today, we're going to delever faster than we thought it could get back to our three times target. We're always looking at acquisitions I mean, we have a corporate development team is always working with internally to look at those those assets.

Brendan Foley: We have good performance across the other core categories like recipe mix, you know, condiments and sauces. So we think pretty good performance there. But, you know, there are some categories where we participate in one of our food peers. Probably had a much smaller scale, but these are, you know, categories like frozen or the Asian category where we seem more volume to kind like we've seen in the rest of the center of store.

Speaker 2: We have an appetite as part of a long-term growth algorithm. You know, a third or a four to six percent long-term growth algorithm is M&A. However, you know, we're still in the process of paying down that. I think the fourth quarter is our biggest cash flow quarter, generally.

We have an appetite as part of our long term growth algorithm, a third of our 4% to 6% long term growth algorithm is M&A. However, we're still in the process of paying down debt I think the fourth quarter is our biggest cash flow quarter generally.

Speaker 2: As we get into next year though, as we get closer to our target, I think.

As we get into next year, though as we get closer to our targets I think as assets come up that are attractive and whether they're consumer flavor solutions domestic U S. International we really look for things that.

Speaker 2: as assets come up that are attractive. Whether they're consumer-flavored solutions to U.S. international, we really look for things that, you know, don't dilute our sales growth. You know, our top line is really important to us. And you look at the past with Chalula and Phona and RB, those are the type of assets we really like. Would we like it to be a bit more international? Yes.

Brendan Foley: And that part of our business, that's just one part of the portfolio. I just gave you some color on it. You know, we're seeing definitely the type of softness that you're seeing in other categories. But the fundamental trends have not shifted. Despite this recovery in China, being a lot slower, US and Europe are performing as expected. And as you heard in the call to kind of reaffirmed our guidance on sales, despite China, which this meant to indicate that we still see a strength in the performance of our business overall. Great, thanks.

Don't dilute our sales growth our top line is really important to us and you look at the past with <unk> and Kona and R&D. Those are the type of assets really like we will be likely to be a bit more international yes.

Speaker 2: The flavor solutions now also is an area where we really really like that and look at photo and Geode as past acquisitions were really happy with folks.

Flavor solutions now also is an area, where we really really like that and look at photos and she Audi is past acquisitions, we're really happy with.

Speaker 2: So after a long-winded answer, I think we're getting back to where we want to be to get back in the M&A market and as long as it meets those strategies in both consumer-favorite solutions.

Sorry for the long winded answer, but I think we're getting back to where we wanted to be to get enter back in the M&A market and as long as it meets their strategies and in both consumer and flavor solutions for attractive assets will be will be buyers hopefully at the right price, but right now paying down our debt as a priority.

Operator: I'll pass it on and leave it there. Thanks so much.

Alexia Howard: Our next question is come from the line of Alexia Howard with Bernstein. Please continue with your question. Good morning, everyone. Good morning. Can I ask about the market share trends that we're seeing in America's consumer? It's obviously then under pressure to some time because of the distribution losses and so on.

Speaker 2: for attractive assets will be buyers hopefully at the right price. But right now, paying down our debt is our priority.

Okay.

Thank you very much I'll pass it on.

Speaker 3: Our next question is from the line of Max Gumpert with BMP Parma. We should see you.

Our next question is from the line of Max comfort with BNP Parma. Please proceed with your question.

Brendan Foley: But I'm wondering if there's light at the end of the tunnel in terms of when either the comparables get easier or innovation helps return it around and just wondering what the outlook is there and then I have a follow-up. Thanks, Alexia. I think we take a look at our performance and overall in terms of shares, et cetera, just talking, making specifically, despises and seasonings. Dollars are a bit tricky because we're seeing pride of label and our competitors take more price right now in the last couple of months to catch up to the pricing that we've taken in the marketplace.

Speaker 6: Hey, thanks for the question. A number of your broader US package food broadly about how value seeking behaviors impacting your business.

Hey, Thanks for the question a number of your broader U S. Packaged food peers have been talking about value seeking behavior, whether it's moving down to cheaper brands and private label our channel shifting.

Buying less units.

I mentioned some comments.

Earlier about the movement to larger package sizes that youre seeing that I'm curious if you can talk more broadly about how value seeking behavior is impacting your business.

Speaker 6: Partically given you're also a large producer of private labour spaces.

Particularly given Europe , often a large producer of private label spices and seasonings, thanks very much.

Speaker 2: Thanks for the question. Receive value play out through many different types of actions from consumers.

Thanks for the question.

Brendan Foley: But this is $200 performance there. But from a unit standpoint, we believe that performing even better, that lag is even less. And so as we then look to the pipeline and activities that we have going on, much like I just mentioned on on the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum, we see a strong pipeline across that part of our portfolio as well as just stronger overall marketing initiatives now that we have really secured supply across all of our portfolio.

We're seeing value play out.

Through many different types of actions.

From the consumer.

Speaker 2: Some are going to larger sizes and we see that quite a bit and as an example of where we're taking an opportunity to continue growing and need more quickly.

Some are going to larger sizes, and we see that quite a bit.

As an example of where we're taking an opportunity to continue growing even more quickly.

Speaker 2: In that part of our portfolio, we're definitely seeing a sustainable, continued, trans towards larger size.

That part of our portfolio, we're definitely seeing.

Sustainable continued trends towards larger sizes.

Speaker 2: It was also interesting about larger sizes, at least in the categories of it, that we have, especially spices and seasonings, is that the purchase rate is still just as fast as it was with a smaller size. So people are going through when they have it in the household, they're going through a little bit, you know, just as fast.

Also interesting about larger sizes at least into categories with that.

That we have.

Especially spices and seasonings is that the purchase rate is still just as fast as it was with a smaller size. So people are going through when they have it in the house will be going through a little bit.

Brendan Foley: So when we talk about light at the end of the tunnel, we just see sequential improvement over the course of time as we claw back on distribution points, which we've grown this quarter, as well as just the pipeline of activity and renovation that we have across our portfolio. You're seeing a good view of that right now. But there's more to come. And so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories.

Just as fast or more quickly, but the other way value kind of.

Speaker 2: But the only way you value kind of presents itself to is opportunities like this opening price point, with the pricing that happened in the market as you've talked about before.

Presents itself to us opportunities like this opening price point with the pricing Thats happened in the market as we've talked about before.

Speaker 2: It created price pocket that we feel like we needed to fill with a brand like Louries And so now that's planning a role in our portfolio that's offering a brand to consumers and a lot of consumers still prefer brand

It created price pocket that we feel like we needed to fill with a brand like lotteries and so that'll that's playing a role in our portfolio, that's offering a brand to consumers and a lot of consumers still.

Brendan Foley: I think, too, we think some of the same things we've done in Europe, for example, where we had, as we mentioned today, the call, really good share performance and volume performance in markets like you pay in France, which are similar to the US. So those type of activities we're doing, whether it's innovation, upgrading, renovating the mine and have had some stress over there, too. Great. Thank you.

<unk> brands, and it's allowing them to move towards a brand thats, a lower opening price point and fills the need and were seeing a lot of success with that too, but the other way we're really.

Speaker 2: and it's allowing them to move towards a brand that's a lower opening price point and feels the need. We're seeing a lot of success with that too.

Speaker 2: The other way we're really talking a lot about value is directly to the consumer.

Talking a lot about value is directly to the consumer.

Speaker 2: especially if you think about a lot of our communication right now over the past year, has to evaluate it. And we're talking about the role that, you know, our portfolio plays in terms of providing flavor for pennies of serving. And that is really having a positive impact. Plus, a lot of our content is also focusing on how consumers can continue to save money by creating, let's say, for example, just larger batch sizes of food so they can have leftovers for a couple nights in the row.

Especially if you think about a lot of our communication right now over the past year has to be value oriented and we're talking about the role that.

Brendan Foley: And just as a quick follow-up, you talked about the free cash flow allowing you to de-level more quickly than expected. What's your level of appetite for acquisitions next year? And where are the priorities? Is it consumer? Is it flavor solutions? Domestic international? Just wondering how you're thinking about the pipeline on the M&A side, and I'll pass it on. Thank you. No, let's see. As you said, we have really good success on our covering cash flow.

Our portfolio plays in terms of providing flavor for pennies of serving and that is really having a positive impact plus a lot of our content is also focusing on how consumers continue to save money by creating let's say for example, just larger batch sizes of food. So they can have leftovers for a couple of nights in a row or.

Speaker 2: or tricks and hacks like that that allow consumers to create a more value and stretch the food dollar further. That's what we see our category really playing a role in the household, especially during this kind of...

Tricks and hacks like that that allow consumers to create even more value and stretch their food dollar even further that's where we see our category really playing a role in the household, especially during this kind of.

Brendan Foley: We're really excited about that. As we've said in the call today, we're going to de-level faster than we've thought to get back to our three times target. We're always looking at acquisitions. I mean, we have a corporate development team that is always working internally to look at those assets. We have an appetite as part of our long-term growth algorithm. A third or four to six percent long-term growth algorithm is M&A. However, we're still in the process of paying down that.

Speaker 2: with there's a lot of consumer concern around inflation, our categories are playing a helpful role in that. So we're looking at it from a number of different angles, but I just illustrated three right there that we are hitting pretty hard during this period of time.

Where theres a lot of consumer concern around inflation or categories, you're playing a helpful role in that so.

We're looking at it from a number of different angles, but I just illustrated three right. There that we are hitting pretty hard during this period of time.

Brendan Foley: I think the fourth quarter is our biggest cash flow quarter, generally. As we get into next year, though, as we get closer to our targets, I think, as assets come up that are attractive, whether they're consumer flavor solutions, the US international, we really look for things that don't dilute our sales growth. Our top line is really important to us. You look at the past with Chalula and Phona and RB. Those are the types of assets we really like.

Thanks, very helpful I'll pass it along.

Speaker 3: Thank you. Our next question is from the line of Adam Samuel with Goldman Sachs. Please excuse your question. Yes, thank you.

Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.

Yes, Thank you and good morning, everyone.

Speaker 7: one word. I guess maybe trying to take Andrew's question and maybe a slightly different kind of light Brendan is there any way to help frame the distribution kind of gains that you're seeing and expect to see?

Good morning, I guess, maybe just trying to take Andrew's question, and maybe a slightly different kind of light.

And then is there any way to help frame the distribution gains that youre seeing and expect to see.

Brendan Foley: Would we like it to be a bit more international? Yes. If flavor solutions now also is an area where we really like that and look at Phona and Geode as past acquisitions we're really happy with. So, sorry for the long-winded answer, but I think we're getting back to where we want to be to get enter back in the M&A market and as long as it meets those strategies in both consumer flavor solutions for attractive assets will be buyers, hopefully, at the right price. But right now, paying down our debt is our priority. Thank you very much.

Speaker 7: Over the incoming quarters, anyway to quantify how we should think about total distribution growth and where that will peak from a TDP perspective into 2024. It's harder to fully see that expansion in the scanner data. And so I'm wondering if part of it is growth in certain non-mesmer channels or value retailers that aren't captured in the future.

<unk>.

Coming quarters any way to quantify kind of how we should think about total distribution growth and where that will peak from TDP perspective.

The 2024.

It's harder to fully see that expansion in the scanner data and so I'm wondering if part of it is growth in non measured channels, our value retailers that arent captured.

Nielsen.

Speaker 2: Well, Adam, just a few things around TDPs. I'm not going to be talking about what to expect in 2024, just because we'll talk about that guidance as we look at early next year.

Well, Adam just a few things around <unk>.

Going to be talking about what to expect in 2024, because we'll talk about that guidance as we look at.

Operator: I'll pass it on.

Max Gumport: Our next question is from the line of Max Gumport with BMP Parama. Let me just use your question. Hey, thanks for the question. A number of your broader US-packaged food theorists have been talking about value-seeking behavior, whether it's moving down to cheaper brands in private label, or channel shifting, or simply buying less units of food. If you mentioned some comments earlier about the movement to larger package sizes that you're seeing, but I'm curious if you can talk more broadly about how value-seeking behaviors impacting your business, particularly given you're also a large producer of private label spaces and seasons.

Early next year.

Speaker 2: But I'm just talking a little bit more about TDP performance. It remains an important area of focus for us. And we've been taking a lot of action to restore distribution.

Just talking a little bit more about GDP performance. It remains an important area of focus for us and we've been taking a lot of actions at the store distribution, which was really lost the supply over the last two years I think it's an important reminder, that about half of those TDP losses are a result of just proactive discontinuation that we've made.

Max Gumport: Thanks very much. Thanks for the question. You know, receive value play out through many different types of actions, you know, from consumer. Some are going to larger sizes, and we see that quite a bit. And as an example of where we're taking an opportunity to continue growing even more quickly, and that part of our portfolio, we're definitely seeing, you know, sustainable continued transports larger sizes. And it's also interesting about larger sizes, at least in the categories of it, that we have, especially spices and seasonings, is that the purchase rate is still just as fast as it was with a smaller size.

Speaker 2: which really lost the supply over the last, you know, one or two years. I think it's an important reminder that about half of those TPP losses are resolved or just proactive discontinuations that we made.

Speaker 2: And those are not likely to be restored, but we are starting to see TDP growth, something which we said would start to come this year in the third quarter. And we believe that performance is improved versus like the previous two quarters.

And those are not likely to be restored, but we are starting to see GDP growth something which we said will start to come this year and the third quarter and we believe that that performance.

Improved versus like the previous two quarters of the year.

Speaker 2: And I would also just share with you that our assortment on shelf now is even more productive than it was for pre-COVID. So that velocity, those turns that we get on shelf from that assortment there is actually even more productive, not only for the macaque, but also for the retailer. And so that's something really important to pass along.

And I would also just share with you that our assortment on shelf now has even more productive and that was versus pre COVID-19. So that velocity those terms that we get on shelf from that.

Assortment, there is actually even more productive not only for Mccormick, but also for the retailer and so thats something really important to pass along.

Speaker 2: And we'll start to see more distribution come online as retailers reset their shelves. We're seeing a bit of that happen right now as we speak going into the fourth quarter, but we expect to see the more of that as we go into 24. So that's one, I think, context around PDPs and distribution that we think provides context and color.

And we'll start to see more distribution come online as retailers reset their shelves, we're seeing a better back half of it right now as we speak going into the fourth quarter, but we expect to see even more of that as we go into 'twenty four so thats one.

Think context around Tdp's in distribution.

We think provides context and color.

Max Gumport: So, you know, people are going through when they have it in the household, they're growing through a little bit, you know, just as faster and more quickly. But the other way, you know, value kind of, you know, presents itself too, is opportunities like this opening price point. You know, with the pricing that's happening in the market, as we've talked about before, it created price pocket that we feel like we needed to fill with a brand like Lowry's.

Speaker 2: We will continue to accelerate innovation. And that's something that we did in 2023. We'll continue to do that in future fiscal years. That's what also build on the sort of the KDP momentum and distribution growth that we see. I think, you know,

We will continue to accelerate innovation and Thats something that we did in 2023, we'll continue to do that in future fiscal years. That's we'll also build on the sort of the GDP momentum in distribution growth that we see I think.

Speaker 2: Those are some of the points I think that are, you know, without calling out a specific PDP member in game, you know, to assess. We continue to see them continue improvements, sequential improvement, as we look at this over time.

Those are some of the points that I think that without calling out a specific TDP number and gain to access we continue to see continued improvement sequential improvement as we look at this over time.

Max Gumport: And so that's playing a role in our portfolio. That's offering a brand to consumers and a lot of consumers still, you know, prefer brands. It's allowing them to move towards a brand that's a lower opening price point and fills the need. And we're seeing a lot of success with that too. But the other way we're really, you know, talking a lot about value is directly to the consumer, especially if you think about a lot of our communication right now over the past year, has the value oriented.

Speaker 2: And as we mentioned in previous calls, it will take a little bit of time to get it back, but we are still making for progress.

And as we mentioned in previous calls it will take a little bit of time to get it back, but we are still making forward progress on this.

Speaker 7: Okay, that's helpful. I'm just going to ask a separate question on the flavor solution segment. And as you think about some of the different customer types that you have in geographies, how would you frame kind of recent and bound kind of bit activity in RFPs and contract win rates where you're seeing your customers?

Okay. That's helpful and if I could just ask a separate question on the flavor solutions segment and as you think about some of the different customer types that you have in geographies, how do you how would.

Would you frame kind of recent inbound kind of bid activity in rfps and contract win rates.

Max Gumport: And we're talking about the role that, you know, our portfolio plays in terms of providing flavor for pennies is serving. And that is really having a positive impact. Plus, a lot of our content is also focusing on how consumers continue to save money by creating what's safe, for example, just larger batch sizes of food as they can have leftovers for a couple nights in the row, or tricks in hacks like that that allow consumers to create even more value and stretch the food dollar even further.

Are you seeing your customers accelerate their innovation agenda to.

Speaker 7: accelerate their innovation agenda to drive growth in their business or is activity levels slowing down and just any color. I just think about that pipeline of new business wins kind of. How would you frame?

Tried to drive growth in their business.

Or is activity levels slowing down and just any color I, just think what that pipeline of new business wins kind of how would you frame that.

Speaker 2: You know, it's point to our performance in the Americas as an example as to how to think about our curbing men on our flavor of his.

I'd point to our performance in the Americas as an example, as to how to think about our current momentum on our flavor business.

Speaker 2: You know, we had really good sales growth, but we also had some volume growth. And that's an example of what we're seeing, not only through our flavors business, but also branded food service. And we are starting to, we are growing share in a number of the strong categories that we've participated. We talked about performance nutrition or the health and market. You know, we see it happening there or even in alcoholic beverages. We have been seeing some nice growth and gain.

Max Gumport: That's what we see our category really playing a role in the household, especially during, you know, this kind of, you know, there's a lot of consumer concern around inflation. Our categories are playing a helpful role in that.

They had really good sales growth, while we also had some volume growth and that's an example of what we're seeing not.

Not only through our flavors business, but also branded foodservice and we are starting to we are growing share in a number of the.

Brendan Foley: So we're looking at it from a number of different angles, but I just illustrated three right there that we are hitting pretty hard during this period of time. Thanks, very helpful. I'll pass that along. Thank you.

Strong categories that we participate in we've talked about performance nutrition or the.

The health and market, we see it happening there where even in alcoholic beverages.

We have been seeing some nice growth and gains in that part of our business that was there anything particularly unique at this point in the year versus what it was like early in the year No I don't think I can point to anything that's terribly unique that we haven't already talked about before but this has been an element of a sort of continued sequential improvement in performance.

Speaker 2: in that part of our business sells, or anything particularly unique at this point in the year versus what it was like early in the year. No, I don't think I can point to anything that's terribly unique that we haven't already talked about before, but this has been an element of sort of continued sequential improvement of performance. We've been able to grow a little bit of volume here, probably because of strength of our products and technology that go into the categories we play in.

Adam Samuelson: Our next question is from the line of Adam Samuelson with Goldman Sachs. Please Thank you.

Brendan Foley: Good morning, everyone. Good morning. I guess maybe trying to take Andrew's question and maybe a slightly different kind of light. Brendan, is there any way to help frame the distribution kind of gains that you're seeing and expect to see over the incoming quarters? Any way to quantify kind of how we should think about total distribution growth and where that will peak from the TDP perspective into 2024? It's harder to fully see that expansion in the scanner data and so I'm wondering if part of it is growth and certain non-measured canals or value retailers that aren't captured in Wilson? Well, Adam, just a few things around TDPs.

<unk> been able to grow a little bit of volume here, probably because of the strength of our products and technology that goes into the categories. We plan.

Speaker 2: And so that's, I think some of the context there, we're happy to be growing share. We believe that we have the right plan. Now if you look at elsewhere within flavor solutions.

And so that's I think some of the context, there we're happy to be growing share.

Believe that we have the right plans now if you look at elsewhere within flavor solutions.

Speaker 2: You know, in our EMEA business, tends to be more heavily weighted towards the QSR part of our port, you know, but we're accustomed to the base.

In our EMEA business tends to be more heavily weighted towards the <unk> part of R.

Our customer base, they're not seeing or type of traffic and promotions that they have in let's say the prior year. So we still see a little bit of pressure on overall volumes there convert.

Speaker 2: They're not seeing the type of traffic and promotions that they have in, let's say, the prior year. So we still see a little bit of pressure on overall volume.

Brendan Foley: I'm not going to be talking about what to expect in 2024 because we'll talk about that guidance as we look at early next year. But just talking a little bit more about TDP performance, it remains an important area of focus for us and we've been taking a lot of action to restore distribution, which we've really lost the supply over the last one to two years. I think it's an important reminder that about half of those TDP losses are resolved with just proactive discontinuations that we made.

Speaker 2: Conversely, in Asia-Pacific, our QSR business there is actually doing quite well. Customers are turning back on promotions. They're trying to drive more traffic in their stores. And so we, as a result of also seeing some some nice volume growth.

Conversely in Asia Pacific Our <unk> business, there is actually doing quite well customers are turning back on promotions. They are trying to drive more traffic in their stores and so we as a result of also seeing some some nice volume growth in that part of our portfolio in flavor solutions with dialing back to.

Speaker 2: and that part of our portfolio and our flavor solutions. But dialing back to, you know, sort of that flavor part of our category, we're pleased with the performance that we've made so far this year. And it's continued momentum, but nothing that there's sort of new inflections point to share with you. Okay, I appreciate all that color, I'll pass it on. Thanks. Our next questions.

Sort of that flavor part of our category.

Pleased with the performance that we've.

We've made so far this year and it's continued momentum, but nothing that renewables inflection point to share with you.

Brendan Foley: And those are not likely to be restored. But we are starting to see TDP growth, something which we said would start to come this year in the third quarter. And we believe that performance has improved versus like the previous two quarters of the year. And I would also just share with you that our assortment on shelf now is even more productive than it was versus pre-COVID. So that velocity, those turns that we get on shelf from that assortment there is actually even more productive, not only for McCormick, but also for the retailer.

Okay I appreciate all that color I'll pass it on thanks.

Our next questions come from the line of Steve powers with Deutsche Bank. Please proceed with your question.

Hey, great and good morning, Thank you Steve.

Speaker 2: So I wanted to ask on the incremental gross margin improvement that you see in your outlook, this quarter, building on a raise that happened last quarter as well. And just if you could put a little bit.

Hey, so I wanted to ask on.

The incremental gross margin improvement that you do.

You see in your outlook this quarter building on.

Brendan Foley: And so that's something really important to pass along. And we'll start to see more distribution come online as retailers reset their shelves. We're seeing a bit of that happened right now as we speak going into the fourth quarter, but we expect to see the more of that is going to 24. So that's one, I think context around TDPs and distribution that we think provides context and color. We will continue to accelerate innovation and that's something that we did in 2023 will continue to do that in future fiscal years.

Arrays that happened last quarter as well and just if you could put a little bit.

Speaker 2: of context and detail around exactly what's driving that incremental gross margin upside question number one. And question number two is as we've seen that gross margin pick up over the balance of the year, we haven't seen you change your your your reinvestment strategy in terms of brand marketing. Just want a little bit of color and context as to why that isn't a source of reinvestment as you do realize that gross margin.

Yes.

Context, some detail around exactly what's driving that incremental gross margin upside question number. One question number two is as we've seen that gross margin tick up over the balance of the year. We haven't seen you change your.

Our reinvestment strategy in terms of brand marketing.

I, just wanted a little bit of color and context as to as to.

Why that isn't a source of reinvestment as you do realize that gross margin upside.

Brendan Foley: That's will also build on the sort of the TDP momentum and distribution growth that we see. I think those are some of the points that I think that are without calling out a specific TDP member and gain to assess. We continue to see continued improvements, sequential improvement, as we look at this over time. And as we mentioned in previous calls, it will take a little bit of time to get it back, but we are still making forward progress on this.

Well. Thanks, Steve This is Mike I'll take that one I'm surprised it took five questions to get to the gross margin. So thanks for asking that question.

Speaker 2: Well, thanks, Steve. This is Mike. I'll take that one. I'm surprised it's a pro-questions to get to Gross Margin. So thanks for asking that question. Now, well, Gross Margin, really pleased for the Gross Margin performance this year.

First of all we're really pleased with the gross margin performance. This year, yes, we've had improvement we had a strong third quarter you think about the things we're doing with the cost recovery through our pricing, which we've really been successful this year.

Speaker 2: Yeah, we've had improvement. We have strong third quarter. You think about the things we're doing with the cost recovery through our pricing, which we've really been successful at this year. You know, the GLE and CTAC commitments to put out the beginning of the year were really happy with our performance there. Across both segments, that's the other thing. These margin improvements are having both in the consumer and flavor solution size, which is...

Joey in CCI commitments, we put out at the beginning of the year, we're really happy with our performance there across both segments. That's the other thing is <unk>.

Brendan Foley: Okay, that's helpful. I think you just asked a separate question on the flavor solution segment. And as you think about some of the different customer types that you have in geographies, how would you frame kind of recent and bound kind of bit activity in RFP? And contract win rates, are you seeing your customers accelerate their innovation agenda to drive growth in their business? Or is activity levels slowing down? I just think about that pipeline of new business wins, kind of how would you frame it?

Margin improvements are happening both in our consumer and flavor solutions side, which is really which is which is great.

Speaker 2: which is great. As far as raising for the year, as you know,

As far as raising for the year as you know.

Speaker 2: We've had good performance here today, and even with some of the challenges in China, our strong underlying performance has really held through. So as to why we wouldn't raise really the AMP spend, I mean, we feel really comfortable where we are from AMP with our current guide.

We've had good performance year to date.

Even with with some of the challenges in China, and our strong underlying performance has really held through so.

As to why we wouldn't raise really the A&P spend I mean, we feel really comfortable where we are from A&P with our current guide.

Speaker 7: The third quarter was up 8% and it was the highest dollar amount we've ever spent in the third quarter. So we feel very effective.

Yes, the third quarter was up 8% and it was the highest dollar amount we've ever spent in the third quarter. So we feel we're very effective there.

Brendan Foley: that. You know, it's point to our performance in the Americas as an example as to how to think about our, our current momentum on our flavor of business. You know, we had really good sales growth, but we also had some volume growth. And that's an example of what we're seeing not only through our flavors business, but also branded food service. And we are starting to, we are growing share in the number of the, you know, strong categories that we've participated.

Speaker 2: Actually, CCI is a topic, we get savings across all costs of goods, so we're together on that too. An AMP is an area where the teams have gotten real cost savings or efficiencies on our advertising program. So it's even higher than you see from a dollar perspective.

CCI as a topic, we get savings across our cost of goods sold but it again it on SG&A and A&P is an area, where the teams have gotten real cost savings or efficiencies on our advertising program. So it's even higher than you see.

From a dollar perspective, so I think we're confident where we are in gross margin. We were building back. If you go back to pre <unk> 19 or <unk>.

Speaker 2: You know, I think we're confident where we are in gross margin. You know, we've built them back. You know, if you go back to pre-19 or pre-COVID in 2019, a gross margin is around 40 percent.

Brendan Foley: We talked about performance nutrition or, you know, the health end market. You know, we see it happening there or even an alcoholic beverages. We have been seeing some some nice growth and gains in that part of our business sales. Are anything particularly unique at this point in the year versus what it was like it, you know, early in the year? No, I don't think I can point to anything that's terribly unique that we haven't already talked about before.

<unk> in 2019, our gross margins were around 40% keeping our implied guidance. This year gets you.

Speaker 2: Even our applying guidance this year gets you around 37%.

Around 37%.

Speaker 2: You know, the interesting thing is you look, if you look at the map on the pricing dilution that has happened, it's been, it means over 500 basis points headwind to us, which you can see we're down 300 basis points. So during that time through CCI and other things, we've built, we capture some of that back, which we continue to see in the future as we get back to those pre-COVID gross margin and operating profit level.

Yes. The interesting thing is if you look at the map on the pricing dilution that has happened it's been admits over over 500 basis point headwind to us, which you can see we're down 300 basis points. So during that time, three CCI and other things. We've built we capture some of that back which we continue to see in the future as we get back to those pre COVID-19 gross margin and <unk>.

Brendan Foley: But this has been an element of sort of continued sequential improvement of performance. We've been able to grow a little bit of volume here probably because the strength of our products and technology to go into the categories we plan. And so that's, I think some of the context there. We're happy to be growing share where believe that we have the right plans. Now, if you look at elsewhere within flavor solutions, you know, in our EMEA business tends to be more heavily weighted towards the QSR part of our port, you know, or our customer base.

Operating profit levels.

Speaker 2: Steve, I'm a, there was a question in there about ANP, too. And just to really kind of build on that, you know, in that...

Let's see if I could there was a question in there about A&P too and just really kind of build on that.

And that.

Speaker 2: You know, we are up significantly in the third quarter. I don't understand. I'm at a 58 percent, but we, it's probably our highest historical spend, right? So we're really putting a lot more, and the AMP is sort of called out, and we'll have a strong level again in the fourth quarter, and these are going into a lot of important campaigns right now. So I just want to bring forth a think-up. We are seeing still an increase in spend in that part of our.

So we were up significantly in the third quarter understandably at 8% that was probably our highest historical spend rates. So we're really putting a lot more the A&P as we sort of called out and we will have a strong level again in the fourth quarter and these are going into a lot of important campaigns right now so I just wanted to reinforce a inc.

Brendan Foley: They're not seeing the type of traffic and promotions that they have in, let's say, the prior year. So we still see a little bit of pressure on overall volumes there. Conversely, in Asia-Pacific, our QSR business there is actually doing quite well. Customers are turning back on promotions. They're trying to drive more traffic in their stores. And so we as a result of also seeing some some nice volume growth in that part of our portfolio and flavor solutions.

We are seeing still.

Increase in spend in that part of our.

And that line in the P&L.

Speaker 8: Okay, that's great. So I guess that's helpful. Thank you. Mike, could you just playing back?

Okay, that's great.

I guess.

That's helpful. Thank you, Mike So just playing back.

Speaker 8: the various puts and takes on gross margin. Is it fair to say that the biggest sort of upside surprise for you over the course of the year has just been successful price realization or

There's puts and takes on gross margin is it fair to say that the biggest sort of upside surprise for you over the course of the year has just been successful price realization or.

Brendan Foley: But dialing back to, you know, sort of that flavor part of our category, we're pleased with the performance that we've made so far this year. And it's continued momentum, but nothing that there's sort of new inflections like to share with you.

Speaker 8: are elements of business mix or other other other drivers there because it feels like the productivity has come in solidly but roughly in line with I think original expectations cost completion hasn't changed.

Are there elements of business mix or other other.

Brendan Foley: Okay, I appreciate all that color. I'll pass it on.

Other drivers there cause it feels like the productivity has come in.

Steve Powers: Thanks.

Lee, but roughly in line with I think original expectations cost completion hasnt changed materially. So it seems like the buckets has to be price here or there.

Speaker 2: So it seems like the bucket has to be pricing or It's the everything is gonna move in the right direction. We were successful getting our post recovery We got some pricing earlier as you probably infer from some of our pricing numbers So we were we're got our pricing faster than last year, which was helpful

Rob Dickerson: Our next question comes from the line of Steve Powers with Deutsche Bank. Please do your third question. Hey, great and good morning. Thank you. Let's see. So I wanted to ask on the incremental gross margin improvement that you see in your outlook, this quarter, building on a raise that happened last quarter as well. And just if you could put a little bit of context and detail around exactly what's driving that incremental gross margin upside.

Say it seems everything is kind of a move in the right direction and we were successful getting our cost recovery. We got some pricing earlier as you can probably infer from some of our pricing numbers. So we got our pricing faster than last year, which was helpful.

Speaker 2: You knew GLE and CCI programs like I said have met targets and frankly we're a bit prudent this year You know I think as we said as we gave guidance in January After last year we wanted to make sure we hit our numbers There was a lot of big assumptions going in into 2023 pricing GLE programs things like that and and we do the China Yeah, we were counting on a China recovery which impacts not only gross margin but operating profits

Joey in CCI programs like I said I've met targets and frankly, we are a bit prudent this year I think as we said as we gave guidance in January after last year, we wanted to make sure. We hit our numbers. There was a lot of big assumptions going into 2023 pricing Doa program things like that and we knew that China, we were counting on it.

Rob Dickerson: Question number one. And question number two is, as we've seen that gross margin kick up over the balance of the year, we haven't seen you change your your your reinvestment strategy in terms of brand marketing. Just want a little bit of color and context as to why that isn't a source of reinvestment as you do realize that gross margin upside. Well, thanks, Steve. This is Mike. I'll take that one. I'm surprised it took five questions to get the gross margin.

China recovery, which impacts not only gross margin or operating profit.

Speaker 8: So we thought at this time after Q3, where we see us ending for the year, we felt very good line of sight, the commodity cost things like that too, which gave us the comfort to.

So we thought at this time after Q3.

Where we see us ending for the year, we felt like we had good line of sight to the commodity commodity costs things like that to which gave us the comfort to get there. The other thing too is as you think about it when Brandon was talking a little bit about the strong pro form our underlying performance in things like spices and seasonings. When you look at our performance in other markets, we've had really good portfolio.

Speaker 8: Get there. The other thing too is as you think of it when branding was talking a little bit about the strong performance or underlying performance and things like spices and seasonings and you look at performance in other markets.

Rob Dickerson: So thanks for asking that question. Now, first of all, please, for the gross margin performance this year that we've had improvement. We have strong third quarter. You think about the things we're doing with the cost recovery through our pricing, which we've really been successfulized years this year is a GLE and CTA commitment to put out the beginning of the year. We're really happy with our performance there across both segments. That's the other thing.

Rob Dickerson: These margin improvements are happening both in the consumer and flavor solution size, which is really which is which is great. As far as raising for the year, as you know, we've had good performance here today and even with some of the challenges in China, our strong underlying performance has really held through. So why we wouldn't raise really the AMP spend? I mean, we feel really comfortable where we are from AMP with our current guide.

Speaker 2: We had really good portfolio, a really good portfolio next.

So really good portfolio mix and some of the things we're doing around portfolio optimization with pruning low margin business does help gross margins also and will help us as we go into the future.

Speaker 2: And some of the things we're doing are fully optimization with pruning low margin business, does help grow margins also, and we'll help us as we go into the future. Yeah, okay, very good. Thank you so much.

Okay very good thank you so much.

Our next question comes from the line of Matt Smith with Stifel. Please proceed with your question.

Hi, good morning, Thanks for taking my question.

Speaker 2: If I could follow up on the margin commentary in the headwind from pricing dilution. As we look at the flavor solutions business you've been making margin recovery progress there but can you talk about the factors that are keeping the current margin for an herb basis points or so below historical levels and how much of that is the mechanical pricing impact versus other factors and then what supports the margin recovery from here? Yeah.

Thanks, Mike and good morning.

If I could follow up on the margin commentary and the headwind from pricing dilution as we look at the flavor solutions business, you've been making margin recovery progress there, but can you talk about the factors that are keeping the current margin 400 basis points are still below historical levels and how much of that is the mechanical pricing impact versus other factors.

Rob Dickerson: The third quarter was up eight percent and it was the highest dollar amount we've ever spent in the third quarter. So we feel very effective there. Actually, CCI is a topic. We get savings across all costs to get sold, but we're together on actually an AMP is an area where the teams have gotten real cost savings or efficiencies in our advertising program. So it's even higher than you see from a dollar perspective.

And then what supports the margin recovery from here.

Yes, it's a great question Matt.

Speaker 2: If you think about it pre-COVID, we are at 14 and a half percent operating process. Which at the time we were really happy with because we came from a low of around 6% several years before. But we also did acknowledge that as we migrainer portfolio, we get higher aspirations to get higher than that, as we migrated to more flavor type products.

If you think about it pre COVID-19, we were at 14, 5% operating profit, which at the time, we were really happy with because we came from a low of around 6% several years before but we also did acknowledge that as we migrate our portfolio, we have higher aspirations to get.

A higher than that as we migrate into more flavor type products.

Rob Dickerson: So I think we're confident where we are in gross margin. If you go back to pre-COVID in 2019 in gross margins for around 40 percent, using our implied guidance this year, gets you around 37 percent. The interesting thing is if you look at the map on the pricing delusion that has happened, it's been, it means over 500 basis points headwind to us, which you can see we're down 300 basis points. So during that time through CCI and other things, we've built, we capture some of that back, which we continue to see in the future as we get back to those pre-COVID gross margin and operating profit levels.

Speaker 2: COVID has been in the cost related to that. It really has been a big challenge to us ahead when also the huge cost increases by the fifth flavor solution. So last year we were 8% as you know. This year we're looking to build back here to date. We're around 10%. So probably around that for the end of the year. So 200 basis point improvement this year. Back to the, you know, if you.

Yes.

And the costs related to that it really been a big big.

Challenged us a headwind and also the huge cost increases benefit flavor solutions. So last year, we were at 8% as you know this year with them.

We're looking to build back year to date were around 10%, so probably around that for the end of the year. So 200 basis point improvement this year.

Back to you.

Speaker 8: In a back to your question on dilution at the operating process level, we've had about a 300 basis point map dilution impact on flavor solution.

Back to your question on dilution at the operating profit level, we've had about a 300 basis point math dilution impact on flavor solutions. So theoretically if that didn't happen I don't know if it did happen, but that 10% would become 13%. So we're about 150 basis points short of that pre 19 or pre COVID-19.

Speaker 2: So theoretically, if that didn't happen, I don't know what did happen, but that 10% would become 13%.

Rob Dickerson: Charles. Now Steve, there was a question in there about A&P, too, and just to really kind of build on that, you know, in that, you know, we are up significantly in the third quarter, I don't understand it, but we, it's probably our highest historical spend, right? So, we're really putting a lot more in the A&P as we sort of called out, and we'll have a strong level again in the fourth quarter, and these are going into a lot of important campaigns right now, so I just wanted to reinforce, I think, we are seeing still an increase in spend in that part of our, in that line of the P&O.

Speaker 8: So we're about 150 basis points short of that pre-19 or pre-COVID-19 margin improvement.

Improvement in things like we've done with <unk>, which.

Speaker 2: And things like we've done with GUI, which we see continuing and wrapping it to next year.

Which we see continuing are wrapping into next year.

Speaker 2: The dual running costs were having primarily in our flavor solutions business in the UK manufacturing facility That goes away partially next year and the year after it's totally gone which is great

The dual running costs were having primarily in our flavor solutions business and our U K manufacturing manufacturing facility.

It goes away, partially next year and the year after is totally gone which is great.

Speaker 8: continue TCI. So these type of things will get us back to and and and portfolio migration, community with low margin business. We talked about some of the private label food service.

Continued CCI to those type of things will get us back to Anna.

Portfolio migration pruning of low margin business, we talked about some of the private label food service business in EMEA. This call those type of things, we're focused really really well on getting our margins up and some of the things when Brandon talks about performance nutrition and beverage those are the flavor type of items.

Speaker 2: business in the A.S. call. Those type of things were focused really, really well on getting our marks.

Rob Dickerson: Okay, that's great. And so, I guess that's helpful. Thank you. Mike, could you just plain back the various puts and takes on gross margin? Is it fair to say that the biggest sort of upside surprise for you over the course of the year has just, has been successful price realization or other elements of business mix or other other, other[inaudible] to be able to do that. I think we're going to be able to do that.

Rob Dickerson: [inaudible] We're going to be able to do that. I think we're going to be able to do that. [inaudible] I think we're going to be able to do that. Thank you for that. I can pass it on. Hi, thanks for the question. Good morning. I wanted to know about the guide, the implied guide for organic sales growth in fourth quarter. It was the first three quarters. And then even when we try to look at that on a four-year basis, just using like 2019, ask the base, it's again a big decline.

Speaker 2: And some of the things when Brandon talks about performance, nutrition, and beverage, those are the flavor type of items that are growing faster. We really like those, and they can have margin off our whole flavors, solutions, portfolio. But we do like the progress we're making independent of.

Growing faster, we really like those or they can help margin off of our whole flavors solutions portfolio, but we do like the progress we're making independent of.

Speaker 2: price and pollution just on overall improvement in the margin there. So we do believe we're moving in the right direction. Okay, thank you for that. I can pass it on.

Question dilution.

On an overall improvement in the margin there. So we do believe we're moving in the right direction.

Okay. Thank you for that I can pass it on.

Okay. Thanks, Matt.

Our next questions come from the line of Robert Moskow with TD Cowen. Please proceed with your question.

Hi, Thanks for the question Rob.

Speaker 4: Hi, thanks for the question. Rob. Rob. Morning. I wanted to know about the guide, the implied guide for organic sales growth in fourth quarter. It looks like it's about 3%. And that marks a substantial deceleration from the first three quarters. And then even when we try to look at that on a four-year basis, just using like 2019 has the base.

Good morning.

I wanted to know about the guide the implied guide for organic sales growth in fourth quarter. It looks like it's about 3% and that marks.

A substantial deceleration from the first three quarters and then even when we try to.

Look at that on a four year basis, just using like 2019 as the base.

Speaker 4: It's again, you know, a big decline. We're all looking at the US retail data in Nielsen and IRI. It's all decelerating. Are you taking that into account in your guide? And, you know, if so, it sounds a little, like a disconnect from the expectations for a very strong holiday.

Again, a big decline.

We're all looking at the U S retail data and Nielsen and IRI its all decelerating.

Are you taking that into account in your guide.

If so it sounds a little like.

Like a disconnect from expectations for a very strong holiday season.

Okay.

Speaker 8: Hey Rob, just to clarify, I used to mention the word number 3%. Our implied guide is in the midpoint is 37 to 11.2.

Hey, Rob just to clarify you mentioned the number of 3%.

Implied guide is in the midpoint is three 7% to 11 two.

Speaker 4: which implies seven and a half. I'm just trying to get to your, I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of five to seven. A first six percent for the...

Which implies a seven and a half.

I'm just trying to get I'm, just trying to get to your I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of a five to seven six.

6% for the year, Yes, I think Rob Brendan.

Speaker 2: Yeah, I think Rob Brennan, the thing to keep in mind, I think, for the fourth quarter, it's our largest quarter.

Things to keep in mind, I think for the fourth quarter, our largest quarter. So.

Speaker 2: We're not able to provide a precise estimate, but I think some broad concepts to consider is we do expect some growth in China.

We're not able to provide a precise estimate but I think some broad concepts to consider is we do expect some growth in China.

Speaker 2: and consumer in the fourth quarter, if you recall, we're laughing over a pretty severe lockdown at that time, you know, this time of year ago, up overall. We still expect to have a reasonable impact from the DSD discontinuation in the Americas, heavier because it's during the holiday season.

In consumer in the fourth quarter, if you recall, we're lapping over a pretty severe lockdown.

At that time this time a year ago overall, we still expect it to have a reasonable impact from the DSD discontinuation in the Americas heavier because it's during the holiday season.

Speaker 2: We still expect some softness in play solutions demand that will persist, that will certainly be there, but we will also laugh the impact of the kitchen basics to bestiture as well as the consumer business exit in Russia. So those are just some

We still expect some softness in flavor solutions demand that will persist that will certainly be there, but we will also lapped.

The impact of the kitchen basics divestiture as well as the consumer.

This exit in Russia. So those are just some.

Speaker 2: You know, considerations I think we take a look at fourth quarter sales. I think Ralph just follow up on my-

Considerations I think when we take a look at fourth quarter sales, Yes, I think Roger just a follow up on my point before.

Speaker 2: from a reported basis or applied fourth quarter guidance is 3.7 at the low end to 11.2%. That includes about 2% effects favorable because that affects the backload of their rule of share. So constant currency is in 5 to 5 and a half.

From a reported basis, our implied fourth quarter guidance of $3 seven at the low end to 11, 2% that includes about 2% FX favorable because FX was backloaded favorable this year so constant currency.

Five to five and a half range.

Speaker 2: Not sure where the grease comes in Trump for the fourth quarter you mentioned.

So im not sure where the three is coming from for the fourth quarter you mentioned that.

Speaker 4: Make sure to follow up with bot 9kc. We can make sure your model's okay. That's fine. So maybe that answers the question, Mike. So you're not expecting any kind of diesel in US retail conditions in fourth quarter. You know, in fact, yeah. Yeah, we believe we're having, again, underlying improvement. We've mentioned this in the last few quarters and we've continued the progress there. Got it. Got it. Okay. Thank you. Are you okay? Bye bye.

And maybe as a follow up with Bottomline Casey we can we can make sure. Your models. Okay. That's fine so maybe that answers. The question, Mike So youre not expecting any kind of <unk> in U S retail conditions in the fourth quarter no in fact.

Yes.

Do believe we're having again underlying improvement.

We've mentioned this the last few quarters and we continue to progress there. Okay got it got it okay. Thank you.

Yeah.

Okay.

Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.

Speaker 2: Great, thanks so much. I just want to ask you a question about

Great. Thanks, so much.

I just wanted to ask a question about the renovated skus.

Speaker 2: I heard you saying that prepared remarks about...

I think I heard you say in the prepared remarks about.

Speaker 2: 40% of the renovated skews may be our own shelf. Maybe just as a reminder, this curious kind of, you know, we think about total skews selection. It sounds like maybe it's more spice and seasoning, kind of what percent is being renovated.

I think it's 40%.

Renovated skus.

Maybe your own shelf.

Maybe just as a reminder, this.

Curious kind of.

When you think about total SKU selection it sounds like maybe it's more spice and seasoning kind of what percentage is being renovated in them.

Speaker 2: It'll kind of what's the feedback so far as to why that's driving velocities. It's just consumers are more attracted to different packaging or it doesn't sound like these are different.

Kind of what's the what's.

What's the feedback so far as to why that's driving velocity.

Consumers are more attracted to different packaging or it doesn't sound like these are different skus.

Speaker 2: Thanks for the question. It just to make sure I clarify what we said in the prepared remarks.

Thanks for the question it just to make sure.

Clarify what we said in the prepared remarks.

Speaker 2: About 40% of those skews are shipping and the skews we're talking about is part of our Our core earth and spices line these tend to be those Straight fill items meaning it's La Cumin or about Lucina men etc. So that's what we're calling those strength little spice

About 40% of those Skus are shifting into the Skus, we're talking about as part of our core herbs and spices lines. These tend to be those the straight sale items, meaning it's.

Unlike human or with sentiment et cetera. So that's what we're calling the strip fills spices than.

Speaker 2: And we have this ability to peskies that are being shipped. It's not as easy to track exactly what has hit shelves yet. And that's really dependent on, you know, the retail splines. But where we know what it has.

And we have visibility to the skus that are being shipped.

Not as easy to track exactly what has hit shelf yet.

And thats really dependent on the retailers' plans, but where we know it has.

Speaker 2: There's really been an improvement in velocity.

There's really been an improvement in velocity.

Speaker 2: overall and where the drivers of that just there's a lot of different benefits from this new package. We talked about it before but it is nitrogen plus so there's even you know we're providing there's just greater long-term freshness you know until you open up that package you know we're really securing the freshness of that product.

Overall and what are the drivers is that just theres a lot of different benefits from this new package, we've talked about it before but.

Rob Dickerson: We're all looking at the U.S, retail data in Nielsen and IRI. It's all decelerating. Are you taking that into account in your guide? If so, it sounds a little like a disconnect from the expectations for a very strong holiday season. Hey, Rob, just to clarify, I used to mention the word number three percent. Our implied guide is in the midpoint is three seven to eleven two. So I'm not which implies seven and a half.

It is nitrogen flush so theres even.

We're providing there is greater long term freshness.

Until you open up that package, we're really securing the freshness of that product there is sort of a nice click and snap with the cap that really kind of tells the consumer not only just through seeing but also listening there is a real sort of snap to disclosure.

Speaker 2: There's a nice click and snap with the cap that really tells the consumer not only just to stay, but also listening, there's a real snap to this closure that creates to retain freshness.

Again creates to retain freshness.

Speaker 2: And the packages 50% post-consumerable cycle plastic, so it also has a big sustainability benefit. And it just has a great appearance on the shelf overall. And so, you know, we knew that this was a strong packaging innovation because we've launched another market around the world like an ENEA.

The packages, 50% post consumer recycled plastics, so it all signs of big sustainability benefit and just as a great appearance on the shelf overall and so.

Rob Dickerson: I'm just trying to get to your, I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of five to seven for six percent for the year. Yeah, I think the thing is to keep in mind, I think for the fourth quarter, it's our largest quarter. So, you know, we're not able to provide a precise estimate, but I think some broad concepts to consider is we do expect some growth in China in consumer in the fourth quarter, if you recall.

We knew that this was a.

Strong packaging innovation, because we've launched it in other markets around the world like in EMEA.

Speaker 2: and also it's also growing also in Asia Pacific too. So we have some experience with this fact to see how it performs in pursuing.

And also it's also growing also in Asia Pacific too. So we have some some experience with this package and how it performs and we are seeing similar if not better velocity performance as we get started here on U S. Shelves, so that's a little bit of context around.

Speaker 2: Similar, if not better, velocity performance as we get started here on U.S. Shell.

Speaker 2: So that's a little bit of context around what we're seeing from that renovation in our product.

Rob Dickerson: We're laughing over a pretty severe lockdown at that time, you know, this time year ago, overall. We still expected there to have a reasonable impact from the DSD discontinuation in the Americas, heavier because it's during the holiday season. We still expect some softness in play solutions demand that will persist, that will certainly be there, but we will also laugh the impact of the kitchen basics to vestiture as well as the consumer business exit in Russia.

What we're seeing from that renovation in our product line.

Speaker 4: And just to reauthorize that 40% is really shipped. I mean, if you walk into the store today, might be 10% of the items are 5% or 20% depending on the stores, but it depends sometimes on their supply chain too. So we see, I go.

And just to reemphasize that that 40% is really shift.

If you can walk into a store today it might be 10% of the items are 5% or 20% depending on the stores, but it depends sometimes on their supply chain. So we see good tailwind into next year from those two.

Speaker 2: Got it. Okay, super. Thanks. Um, and maybe just quickly, kind of simplistically on SGNA. Um,

Got it okay Super Thanks, and then maybe just quickly.

Simplistically on SG&A.

Speaker 2: Q3, you ran for total us DNA about 22% of revenues, clearly that's up, but kind of in line-ish, relative to maybe the kind of prior four or five years. As we think about Q4, and then I guess kind of going forward is like 22% of sales is that kind of fair, or could there be certain court, court of movement? Thanks.

Rob Dickerson: So, those are just some, you know, considerations, I think, when we take a look at fourth quarter sales. Yeah, I think, Ralph, they just follow up on my point before, from a reported basis, our implied fourth quarter guidance is 3.7 at the low end, to 11.2 percent. That includes about a 2 percent FX favorable, because FX is backloaded at their rulers here, so constant currency is in 5 to 5.5 range. So, not sure where the 3 is coming from, for the fourth quarter you mentioned.

Q3, you ran for total SG&A is about 22% of revenues.

Clearly that's up kind of in line ish right relative to maybe the kind of prior.

Four or five years as we think about Q4.

And then I guess kind of going forward is like 22% of sales is that kind of fair.

Or could there be certain quarter to quarter movement.

Speaker 4: Yeah, I mean, third quarter, I think it was a bit of a high watermark rescue.

Yes, I mean third quarter I think.

Rob Dickerson: To make it as a follow-up of 5.9 KC, we can make sure your model is okay. That's fine. So, maybe that answers the question, Mike. So, you're not expecting any kind of diesel in U.S, retail conditions in fourth quarter. Well, in fact, yeah. Yeah, we believe we're having, again, underlying improvement. We've mentioned this in the last few quarters and we've continued the progress there. Yeah, we've got it. Got it. Okay, thank you.

A high watermark for SG&A.

Speaker 4: you know, we had a big incentive comp, as we talked about in the call, you know, a set of comp comp build back for a couple reasons. And remember last year's third quarter was way down. So the incentive comp was getting adjusted then. So.

Had a big incentive comp as we talked about on the call Center Comcast build back for a couple of reasons I remember last year's third quarter was way down.

Having accomplished we're getting adjusts events so to build back this year was a big part of SG&A on a smaller quarter than the fourth quarter. So you got to think about it in mathematical terms, two and really that incentive comp was driven not only by the EPS improvement with everyone in the company, which is great within our regions the mix of our regional underlying <unk>.

Speaker 4: The build back this year was a big part of the SQA on a smaller quarter than the fourth quarter. So you got to think about it in that mathematical terms too.

Speaker 4: I really think that a set of prompts was driven not only by the EPS improvement, but it's everyone in the company which is great.

Rob Dickerson: Our next question comes from the line of Rob Dickerson, which jeffries. Please excuse your question. Great, thanks so much.

Speaker 4: within our regions, the mix of our regional underlying strength of our Americans, and you may have region did drive a bit more.

<unk>.

Because in the EMEA region did drive a bit more niv or excuse me incentive comp, but also the great working capital performance and people forget that sometimes I mean were Eva economic value added company, we have a working capital charge component of our incentive compensation. So last year when working working capital wasn't great.

Rob Dickerson: I just wanted to ask you a question about the renovated SKUs. I heard you saying the prepared remarks about, I think it's 40% of the renovated SKUs, maybe our own shelf. Maybe just as a reminder, this curious kind of, you know, we think about total SKUs selection. It sounds like maybe it's more spice and seasoning, kind of what percent is being renovated and then, you know, kind of what's the, what's the feedback so far as to, you know, what's the feedback.

Speaker 4: and I be receiving a center of comp, but also the great working capital performance. And people forget that sometimes, I mean we're an EVA economic value added company. We have a working capital charge component of our incentive compensation. So.

Rob Dickerson: Why that's driving velocity. It's just consumers are more attracted to different packaging or, you know, it doesn't feel like these are different SKUs. Thanks. Thanks for the question. It just to, you know, make sure I clarify, you know, what we said in the prepared remarks. About 40% of those SKUs are shipping and the SKUs we're talking about as part of our core earth and spices lines. These tend to be those, those straight fill items, meaning it's on the human or about the cinnamon.

Speaker 4: Last year when working capital wasn't great, we all got ding for it this year. We're doing great and just coming through incentive comp. So it's just another reason.

Rob Dickerson: And etc. So that's what we're calling those straight fill spices. And we have disability to the skis that are being shipped. It's not as easy to track exactly what has hit shelf yet. And that's really dependent on, you know, the retail splines. But where we know what it has, there's really been an improvement in velocity overall. And where are the drivers of that? Just, there's a lot of different benefits from this new package.

We all got going for us this year are doing great.

And just coming through incentive comp. So it's just another reason.

Speaker 4: driving cash and really those type of activities help us to lever down things like that which are really great. So a bit more of that impact is in the third quarter. And then brand marketing, we mentioned up 8%. It's a really strong performance there. And for the year we stick to our guide as a low single digit.

Driving cash and it really is those type of activities or help us lever down and things like that which are really great. So a bit more of that impact in the third quarter, and then brand marketing, we mentioned up 8% so really strong performance there.

For the year, we stick to our guidance is low single digits.

A&P.

And maybe if I could just sneak one last one in.

Speaker 9: And maybe if I could just sneak one last one in.

Uh huh.

Speaker 2: pack, you know, clearly understand what you're talking about in terms of just getting as low as trying to recovery. I think, you know, you call it out maybe, you know, a few kind of worn off drivers, but maybe it's more, uh, in the driven, um, kind of net net, right, each pack in consumer. You know, it was still down the quarter, but clearly, the pack, uh, the flavor solutions are doing better and I realize.

Asia Pac.

I understand what you're talking about in terms of just kind of a slower China recovery.

And I think you called out maybe.

Kind of one off drivers, but maybe its more EMEA driven.

Kind of net net right each of pack in consumer.

Still down in the quarter, but clearly Asia Pac flavor.

Flavor solutions is doing better and I realize.

Speaker 9: Part of your China business is in consumer, but maybe it's still somewhat food service. So I'm just trying to understand kind of the comparison between kind of Asia-packed consumer versus Asia-packed flavor solutions and what's driving the Delta. That's all thanks.

Part of your China business as a consumer but like maybe it's still somewhat foodservice. So I'm just trying to understand kind of the.

The comparison.

Between kind of.

Asia Pac consumer versus Asia, Pac flavor solutions, and what's driving the Delta Michelle Thanks.

Rob Dickerson: We talked about it before, but it is, you know, nitrogen flush. So there's even, you know, we're providing there's just greater long term freshness, you know, until you open up that package, you know, we're really securing the freshness of that product. There's sort of a nice click and snap with the cap that really kind of tells the consumer not only just to stay, but also listening. There's a real sort of snap to disclosure that, you know, kind of, again, creates to retain freshness.

Speaker 2: Well, I appreciate the question there Rob on China. It's probably worth unpacking that a little bit. I would say though, despite the pace of recovery in this business, having been slower than expected, we can pay the lead in a long-term growth trajectory about business. And...

Well I appreciate the question there Rob on China, It's probably worth.

Impacting that a little bit.

I would say, though despite the pace of recovery in this business, having been slower than expected. We continue to believe in the long term growth trajectory.

Trajectory of that business and.

Speaker 2: And it's also when you step back on a constant currency basis, we are growing this business. Versus a year ago, we've grown sales in the high single digits. So, yeah, we're disappointed that the pace of recovery wasn't what we expected it to be, but nevertheless, we are growing sales year over year. And even despite the volatility since 2019.

It's also when you step back on a constant currency basis, we are growing this business versus a year ago, we've grown sales in the high single digits. So.

Rob Dickerson: And the packages 50% post-consumerable cycle plastic. So it also has a big sustainability benefit and just has a great appearance on the shelf overall. And so, you know, we knew that this was a strong packaging innovation because we've launched another market around the world like an ENEA. And also, it's also going also in Asia Pacific too. So we have some experience with this package and how it performs. And we're seeing similar, if not better, velocity performance as we get started here on US shelves.

Yes, we are disappointed that the pace of recovery wasn't what we expected it to be but nevertheless, we are growing sales year over year and even despite the volatility since 2019.

Speaker 2: We've grown our total China business at a 3% Kager on a constant currency basis, which is kind of in line with the long-term algorithm. So...

We have grown our total China business at a 3% CAGR on a constant currency basis, which is kind of in line with the long term algorithm. So.

Speaker 2: This is really an element of

This is really.

An element of an economy that certainly is.

Speaker 2: An economy that certainly is recovering more slowly than what we would have expected. And where we see that now, this kind of goes into sort of how we're thinking about labor solutions versus consumer.

Rob Dickerson: So that's a little bit of context around, you know, what we're seeing from that renovation in our product line. Yeah, and just to reiterate that 40% is really shift. I mean, you know, if you walk into the store today, it might be 10% of the items are 5% or 20% depending on the stores, but it depends sometimes on their supply chain too. So we see like a tailwind in the next year from this too. Got it. Okay, super thanks.

<unk> more slowly than what we would've expected and where we see that now in this kind of goes into sort of how we're thinking about flavor solutions versus consumer.

Speaker 2: And part of that consumer business isn't the crude service channel, but people are just simply not necessarily going out.

And part of our consumer businesses in the foodservice channel that people are just simply not necessarily going out.

Speaker 2: to a lot of the catering and upside dining events that we've seen in the past, and that's just been a slower recovery overall. We're also seeing that also happening in retail. Consumer spending is just soft right now. Overall in China, we're seeing that play out. Where we start to see, and this was actually more of a change in this quarter, just more of the typical promotional activity or limited time offers that we tend to see in the QSAR.

Two allows the catering.

Outside dining events that we've seen in the past and that's just been a slower recovery. Overall, we're also seeing that also happening in retail consumer spending is just soft right now overall in China, and we're seeing that play out where we start to see and this was actually more of a change in this quarter just more.

Rob Dickerson: And then maybe just quickly and kind of simplistically on SGNA, you know, Q3, you ran for 10 to less, you know, about 22% of revenues. You know, clearly that's up, but kind of in line is right relative to maybe the kind of prior four or five years, you know, as we think about, you know, Q4. And then I guess kind of going forward is like 22% of sales that kind of fair or could there be, you know, certain quarter quarter movement.

The typical promotional activity or limited time offers that we tend to see in.

<unk> segment.

Speaker 2: have begun to come back a little bit more. So that gives us some reason to believe that this is just a slower recovery than what we planned, but the fundamentals that drive that business are still there and it's just gonna take a little bit more time to get back to what we expect.

Please turn to come back a little bit more so that gives us. Some reason to believe that this is just a slower recovery than what we planned but the fundamentals that drive that business are still there and it's just going to take a little bit more time to get back to what we expect.

Rob Dickerson: Yeah, I mean, third quarter I think is, you know, it was a bit of a high watermarked rest, you know, we had a big incentive comp, as we talked about in the call, you know, set up comp top build back for a couple of reasons. And remember last year's third quarter was weighed down, so the incentive comp was getting adjusted then. So, the build back this year was a big part of the engineering on a smaller quarter than the fourth quarter.

Speaker 2: you know, from this part of our business.

From this part of our business.

Business.

Alright, thanks, so much.

Speaker 3: We reach the end of the question in the answer session. I'll turn the call over to Fatten Trayha for closing.

Thank you we've reached the end of the question and answer session and I will turn the call over to Terry for closing remarks.

Speaker 1: Thank you all for joining today's call. If you have any further questions regarding today's information, feel free to contact me. And that concludes this morning's conference call. Thank you.

Thank you all for joining today's call. If you have any further questions regarding today's information. Please feel free to contact me not conclude this morning's conference call. Thank you.

Rob Dickerson: So, you got to think about it in mathematical terms too. And really that incentive comp was driven, you know, not only by the, you know, the EPS improvement, which is everyone in the company, which is great within our regions, the mix of our regional underlying strength of our Americans near me, a region did drive a bit more. And I'd be receiving a cent of comp, but also the great working capital performance and people forget that sometimes, I mean, we're an EVA economic value added company, we have a working capital charge component of our incentive compensation.

Rob Dickerson: So, last year when working capital wasn't great, we all got ding for it this year, we're doing great and just coming through incentive comp. So, it's just another reason we're driving cash and really this type of activities help us, you know, to lever down things like that, which are really great. So, a bit more of that impact in the third quarter. And then brand marketing, we mentioned up 8%, so really strong performance there.

Brendan Foley: And for the year, we stick to our guidance, low single digit, and maybe if I could just sneak one last one in. Asia PAC, you know, clearly understand what you're talking about in terms of just getting as well as trying to recovery. I think, you know, you called out maybe, you know, you kind of worn off drivers, but maybe it's more in the driven kind of net net, right, Asia PAC and consumer, you know, we still down the quarter, but clearly, Asia PAC, labor solutions is doing better, and I realize like part of your China business is in consumer, but like maybe it's still somewhat food service.

Brendan Foley: I'm just trying to understand kind of the, you know, the comparison between kind of, you know, Asia PAC, consumer versus Asia PAC, labor solutions and what's driving the Delta, that's all thanks. Well, I appreciate that question there Rob on China, you know, it's probably worth, you know, unpacking that a little bit. I would say though, despite the pace of recovery in this business, you know, having been slower than expected, we continue to believe in a long-term growth trajectory about business.

Brendan Foley: And, you know, it's also when you step back on a constant currency basis, we are growing this business versus a year ago, we've grown sales in the high single digits. So, yeah, we're disappointed that the pace of recovery wasn't what we expected it to be, but nevertheless, we are growing sales, you know, year over year. And even despite the volatility since 2019, we've grown our total China business at a 3% keger on a constant currency basis, which is kind of in line with the long-term algorithm.

Brendan Foley: So, this is, you know, really an element of an economy that certainly is recovering more slowly than what we would have expected. And where we see that now, this kind of goes into sort of how we're thinking about labor solutions versus consumer. And part of that consumer business isn't the crude service channel, but people are just simply not necessarily going out to a lot of the catering and outside dining events that, you know, we've seen in the past.

Brendan Foley: And that's just been a slower recovery overall. We're also seeing that also happening in retail. Consumer spending is just soft right now. Overall, in China, we're seeing that play out. Where we start to see, and this was actually more of a change in this quarter, just more of the typical promotional activity or limited time offers that we tend to see in the QSR segment, and have begun to come back a little bit more.

Brendan Foley: So that gives us some reason to believe that this is just a slower recovery than what we planned, but the fundamentals that drive that business are still there, and it's just going to take a little bit more time to get back to what we expect, you know, from this part of our business. Thank you.

[music].

Speaker 10: No.

[music].

Speaker 10: Really.

Speaker 1: Good morning. This is Boston Freighthouse, VP of Investor Relations. Thank you for joining today's third quarter, earning.

Good morning, this is fast and free Huh VP of Investor Relations. Thank you for joining today's third quarter earnings call to accompany this call. We have posted a satisfies on our IR website.

Speaker 1: To accompany this call, we have posted a set of slides on our IR website.

Speaker 1: With me this morning, our Brendan Poley, president and CEO , Mike Smith, executive vice president and CFO , and T.C. Jenkins, chief growth office.

With me. This morning are Brendan Foley, President and CEO , Mike Smith, Executive Vice President and CFO , and Stacy Jenkins Chief growth officer. During this call we will refer to certain non-GAAP financial measures the nature of those non-GAAP financial measure and the related reconciliations to the GAAP results are included.

Speaker 1: During this call, we will refer to certain non- GAAP financial measures. The nature of those non- GAAP financial measures and the related reconciliation to the gap results are included in this morning's press release and slide.

In this morning's press release and slides.

Speaker 1: In our comments, certain percentages are rounded. Please refer to our presentation for complete information.

In our comments certain percentages are rounded.

Please refer to our presentation for complete information 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.

Speaker 1: 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 statement, whether because of new information, future events, or other factors. Please refer to our forward-

Future events or other factors. Please refer to our forward looking statements slide.

Speaker 1: for more information. I'll now turn the discussion over to Brenda.

For more information I will now turn the discussion over to Brendan.

Good morning, everyone and thank you for joining US let me start by saying how pleased I am to join you today for my first earnings call as President and CEO just.

Speaker 2: Good morning, everyone, and thank you for joining us. Let me start by saying how pleased I am to join you today for my first earnings call as President and CEO . Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation. Let's turn to our results.

Just over one month into my new role I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation, let's turn to our results.

Speaker 2: We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solution segments.

We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solutions segments.

Speaker 2: Our results weren't lined with our expectations across our business. Notwithstanding challenges for our consumer segment in Asia-Pacific or APEC, where the pace of China's economic recovery has been slower than previously anticipated.

Our results were in line with our expectations across our business notwithstanding challenges for our consumer segment in Asia Pacific or APAC.

Where the pace of China's economic recovery has been slower than previously anticipated.

Speaker 2: Let me start with the highlights for the third quarter. We delivered solid constant currency sales growth. We continue to realize effective price realization, and importantly, volume performance, excluding China, has improved each quarter throughout the year. We continue to see top-wide momentum in our business positioning McCormick for sustained growth.

Let me start with the highlights for the third quarter.

We delivered solid constant currency sales growth, we continued to realize effective price realization and importantly volume performance, excluding China has improved each quarter throughout the year. We continued to see top line momentum in our business positioning Mccormick for sustained growth.

Speaker 2: We drove meaningful year-over-year margin expansion, underscoring our focus on profit realizing.

We drove meaningful year over year margin expansion underscoring our focus on profit realization.

Speaker 2: Here's a day cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvement.

Year to date cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements.

Speaker 2: Our performance demonstrates the strength of our business, fundamentals, and the effective execution of our proven strategies, while leveraging the sustained demand for flavor.

Our performance demonstrates the strength of our business fundamentals and the effective execution of our proven strategies, while leveraging the sustained demand for flavor.

Speaker 2: Turning to slide five. In the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio.

Turning to slide five.

In the third quarter, we drove 6% sales growth in constant currency, demonstrating the strength of our broad global portfolio.

Speaker 2: Our constant courage to growth reflected strong business performance.

Our constant currency growth reflected strong business performance with.

Speaker 2: with an 8% contribution from pricing and a 2% decline in volume in product mix. This decline in volume was just...

With an 8% contribution from pricing and a 2% decline in volume and product mix.

This decline in volume was driven by two factors.

Speaker 2: A 1% bond decline attributable to the impact of a slower than expected economic recovery in China.

A 1% volume decline attributable to the impact of a slower than expected economic recovery in China.

Speaker 2: And a 1% decline related to the divestiture of kitchen basics, the exit of our consumer business in Russia, and the perning of low margin business to optimize our portfolio.

And a 1% decline related to the divestiture of kitchen basics, the exit of our consumer business in Russia, and the pruning of low margin business to optimize our portfolio.

All other underlying volume and mix performance was flat for the quarter, which is a sequential improvement from the second quarter, where total underlying volume growth was down approximately 1%.

Speaker 2: All other underlying volume in mixed performance was flat for the quarter, which is the sequential improvement from the second quarter, where total underlying volume growth was down approximately 1%.

Speaker 2: I would like to now share a few highlights on gross margin and operating income for the quarter, which might will cover in more detail.

I would like to now share a few highlights on gross margin and operating income for the quarter, which Mike will cover in more details.

Speaker 2: We drove strong gross margin improvement year over year, reflecting continued recovery of the cost inflation our pricing lag last year, and cost savings from our CCI and GOE program.

We drove strong gross margin improvement year over year, reflecting continued recovery of the cost inflation, our pricing lagged last year and cost savings from our CCI and <unk> programs.

Speaker 2: We remain focused on improving our margins over the long term and believe that our recovery will be a continuous build. And we expect to return to historical levels and believe there is a runway beyond that. Recognizing it will take some time.

We remain focused on improving our margins over the long term and believe that our recovery will be a continuous build.

And we expect to return to historical levels and believe there is a runway beyond that recognizing it will take some time.

Speaker 2: Higher gross profit for the quarter was partially offset by lower than expected performance in China as well as higher SGNA. As planned, we continued to build back incentive compensation and increased brand marketing and thus

Higher gross profit for the quarter was partially offset by lower than expected performance in China as well as higher SG&A as planned we continued to build back incentive compensation and increased brand marketing investments.

Speaker 2: The net impact was a 5% increase in adjusted operating income versus the prior year.

The net impact was a 5% increase in adjusted operating income versus the prior year.

Speaker 2: Overall, we are pleased with our execution and results year to date. These results combine with a strong demand we continue to expect across our portfolio and our focused approach to optimizing our cost structure. Re-enforce our confidence in our growth trajectory during the fourth quarter and beyond. Moving into the fourth quarter.

Overall, we are pleased with our execution and results year to date. These.

These results combined with the strong demand, we continue to expect across our portfolio and.

And our focused approach to optimizing our cost structure reinforce our confidence in our growth trajectory during the fourth quarter and beyond.

Moving into the fourth quarter, we can continue to expect.

Speaker 2: Top line momentum across our portfolio, including growth in China, as we laughed at covered related disrupts.

Topline momentum across our portfolio, including growth in China, as we lap the COVID-19 related disruptions.

Speaker 2: China's growth, however, is expected to be less than originally anticipated, which, way combined with its year-to-date performance, has led to a lower-full year 2023 benefit than we originally expected.

This growth however is expected to be less than originally anticipated, which way combined with this year to date performance has led to a lower full year 2023 benefit than we originally expected.

We've reached the end of the question, the answer session.

Speaker 2: Despite this impact, however, we are reaffirming our sales outlook. And now, anticipate our results will be closer to the middle of our guidance range.

Despite this impact however, we are reaffirming our sales outlook.

And now anticipate our results will be closer to the middle of our guidance range.

I'll turn the call over to Faten Freiha for closing remarks. Thank you all for joining today's call.

Speaker 2: We are reaffirming our operating income outlook, which highlights stronger than originally expected profit realization on our business, excluding China. Demand is strong. We are driving improvement in our margin profile, and are optimizing our cost structure effectively. Now for our performance.

We are reaffirming our operating income outlook, which highlights stronger than originally expected profit realization on our business excluding China.

If you have any further questions regarding today's information, feel free to contact me and that concludes this morning's conference call. Thank you. Matthew Smith, Adam Samuelson, Thomas Palmer, Michael Smith, Faten Freiha, Robert Dickerson[inaudible] Matthew Smith, Thomas Palmer, Faten Freiha, Robert Dickerson, Thomas Palmer, Faten Freiha, Robert Dickerson, Thomas Palmer, Faten Matthew Smith, Thomas Palmer, Faten Freiha, Robert Dickerson, Thomas Palmer, Faten Freiha, Robert Dickerson, Thomas Palmer, Faten[inaudible] Matthew Smith, Adam Samuelson, Andrew Lazar, Robert Dickerson, Michael Smith, Michael Smith, Faten Freiha Matthew Smith, Adam Samuelson, Andrew Lazar, Robert Dickerson, Michael Smith, Faten Freiha Matthew Smith, Adam Samuelson, Andrew Lazar, Robert Dickerson, Michael Smith, Faten Freiha James Jenkins, Chief Growth Officer.

During this call, we will refer to certain non-gap financial measures. The nature of those non-gap financial measures and the related reconciliation to the gap results are included in this morning's press release and slides. In our comments, certain percentages are rounded.

Demand is strong we are driving improvement in our margin profile and are optimizing our cost structure effectively.

Now for our performance by segment.

Please refer to our presentation for complete information. 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. Please refer to our forward-looking statement slide for more information. I'll now turn the discussion over to Brendan. Good morning everyone and thank you for joining us.

Speaker 2: Starting with our consumer segment on slide seven, we saw solid results across the Americas and EMEA, which were tempered by our A-PAC region due to China. As I mentioned earlier.

Starting with our consumer segment on slide seven we saw solid results across the Americas, and EMEA, which were tempered by our APAC region due to China as I mentioned earlier.

Speaker 2: Notwithstanding China, we are pleased with our underlying performance. Now for some highlights by region.

Notwithstanding China, we are pleased with our underlying performance.

Let me start by saying how pleased I am to join you today for my first earnings call as President and CEO. Just over one month into my new role, I am energized by our underlying business trends, which reinforce our competitive advantages and differentiation. Let's turn to our results. We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our consumer and flavor solution segments. Our results were in line with our expectations across our business, notwithstanding challenges for our consumer segment in Asia Pacific or APEC, where the pace of China's economic recovery has been slower than previously anticipated.

Let me start with the highlights for the third quarter. We delivered solid constant currency sales growth. We continue to realize effective price realization and importantly, volume performance, excluding China, has improved each quarter throughout the year. We continue to see top-wide momentum in our business positioning McCormick for sustained growth. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Year-to-day cash flow from operations more than doubled relative to the prior year due to higher operating income and working capital improvements.

Now for some highlights by regions.

First in the Americas.

Speaker 2: Our total U.S. branded portfolio consumption has indicated by our IRI consumption data and combined with unmeasured channels who epochs approximately 4%. Excluding the year-over-year impact of the kitchen basics to bestiture and the exit of DSD direct storage delivery of our back to spanish spice.

Our total U S branded portfolio consumption as indicated by our IRI consumption data and combined with unmeasured channels through Approx approximately 4%.

Excluding the year over year impact of the kitchen basics divestiture and the exit of DSD direct store delivery of our bag. Hispanic spices.

Speaker 2: There is a minor difference between our sales and consumption, which is attributable to listing fees, for a significant increase in new distribution and new product.

There was a minor difference between our sales and consumption, which is attributable to listing fees for a significant increase in new distribution and new products.

Our performance demonstrates the strength of our business, fundamentals, and the effective execution of our proven strategies while leveraging the sustained demand for flavor. Turning to slide five, in the third quarter we drove six percent sales growth in constant currency, demonstrating the strength of our broad global portfolio. Our constant currency growth reflected strong business performance, with an 8 percent contribution from pricing and a 2 percent decline in volume in product mix. This decline in volume was driven by two factors.

Speaker 2: For example, our new Chalula and Stubbs items and tap up the brown line extension.

For example, our neutral Lula and Scotts items and tablet for Brown line extensions and.

Speaker 2: Importantly, our categories remain advanced in terms of growth relative to overall macro trends, and we are well positioned to drive future growth.

Importantly, our categories remain advantaged in terms of growth relative to overall macro trends and we are well positioned to drive future growth.

Speaker 2: The fundamental strength of the Spices and Seasings category is evident as cooking at home has remained elevated since pre-COVID and consumers have an increasing demand for flavor.

The fundamental strength of the spices and seasonings category is evident as cooking at home has remained elevated since pre COVID-19 and consumers have an increase in demand for flavor.

Speaker 2: U.S. Spices and Seasonings Grove is continuing to outpace the total edible category in units and dollars.

U S spices and seasonings growth is continuing to outpace the total edible category in units and dollars.

A 1 percent volume decline attributable to the impact of a slower than expected economic recovery in China. And a 1 percent decline related to the divestiture of kitchen basics, the exit of our consumer business in Russia, and the pruning of low margin business to optimize our portfolio. All other underlying volume in mixed performance was flat for the quarter, which is the sequential improvement from the second quarter where total underlying volume growth was down approximately 1 percent.

Speaker 2: We have the right plans in place and are taking the right actions to grow market share in this very attractive and competitive category. We have made progress and shown improvement relative to the beginning of the year.

We have the right plans in place and are taking the right actions to grow market share in this very attractive and competitive category we.

We have made progress and shown improvement relative to the beginning of the year.

Speaker 2: We continue to restore distribution which was lost because of supply issues.

We continue to restore distribution, which was lost because of supply issues.

Speaker 2: As we look at our performance and our trends, we are happy to see total distribution of point growth in the third quarter. We also continue to be pleased that our assortment on Shell is more productive than pre-COVID.

As we look at our performance and our trends were happy to see total distribution point growth in the third quarter. We also continue to be pleased that our assortment on shelf is more productive than pre COVID-19.

Speaker 2: In addition, we have significant new distribution and innovation that are starting to come online as customers reset their shelves.

I would like to now share a few highlights on growth margin and operating income for the quarter, which might will cover in more details. We drove strong growth margin improvement year over year, reflecting continued recovery of the cost inflation our pricing lag last year, and cost savings from our CCI and GOE programs. We remain focused on improving our margins over the long term and believe that our recovery will be a continuous build.

In addition, we have significant new distribution and innovation that is starting to come online as customers reset their shelves.

Speaker 2: As we said before, restoration will take some time and we expect to drive growth as we continue to progress.

As we've said before restoration will take some time and we expect to drive growth as we continued to progress.

Speaker 2: In addition to driving distribution gains, we have a continued focus on supporting our brands and optimizing pricing. As you would expect, this has become a more important part of our category management efforts in recent years.

In addition to driving distribution gains we have a continued focus on supporting our brands and optimizing pricing as you would expect.

This has become a more important part of our category management efforts in recent years, our diverse portfolio allows us flexibility to optimize our pricing effectiveness.

And we expect to return to historical levels and believe there is a runway beyond that, recognizing it will take some time. Higher growth profit for the quarter was partially offset by lower than expected performance in China as well as higher SGNA. As planned, we continued to build back incentive compensation and increased brand marketing investments. The net impact was a 5 percent increase in adjusted operating income versus the prior year. Overall, we are pleased with our execution and results year-to-date.

Speaker 2: Our diverse portfolio allows us flexibility to optimize our pricing effect.

Speaker 2: We look at both our everyday price and our promotional returns, as well as using innovation, including price pack architecture to drive growth. Our efforts are yielding results.

We look at both our everyday price and our promotional returns as well as using innovation, including price pack architecture to drive growth our efforts are yielding results.

Speaker 2: The renovation of our U.S. Corps every day, Spice and herb portfolio is rolling out according to plan.

The renovation of our U S core everyday spice and Herb portfolio is rolling out according to plan.

Speaker 2: At the end of the third quarter, we have shift about 40% of our renovated SKUs. And notably, products that have transitioned on shelf have seen high teams improvement in velocity.

At the end of the third quarter, we have shipped about 40% of our renovated skus and notably products that have transitioned on shelf have seen high teens improvement in velocity.

These results, combined with a strong demand, we continue to expect across our portfolio and our focused approach to optimizing our cost structure, reinforce our confidence in our growth trajectory during the fourth quarter and beyond. John. Moving into the fourth quarter, we can continue to expect top-line momentum across our portfolio, including growth in China as we left the COVID-related disruptions. China's growth, however, is expected to be less than originally anticipated, which way combined with its year-to-date performance has led to a lower full-year 2023 benefit than we originally expected.

Speaker 2: and our significant brand marketing campaign. Featuring the benefits of the new packaging, ramped up at the end of the third quarter, leading into the holiday season.

And our significant brand marketing campaign, featuring the benefits of the new packaging ramped up at the end of the third quarter, leading into the holiday season.

Speaker 2: Our larger size superdeal, herbs and spices continues to gain share. We saw strong performance in the third quarter driven by pricing and higher unit volumes.

Our larger size Super deal herbs, and spices continues to gain share we saw strong performance in the third quarter, driven by pricing and higher unit volume.

Speaker 2: Expanded distribution has been a major driver for our performance. As well as consumers that are seeking value and trading up to larger sizes.

Expanded distribution has been a major driver for our performance as well as consumers that are seeking value and trading up to larger sizes.

Speaker 2: We have the right assortment in this environment. Our household penetration on larger sizes is greater than pre-COVID.

We have the right assortment in this environment, our household penetration on larger sizes is greater than pre COVID-19.

Despite this impact, however, we are reaffirming our sales outlook, and now anticipate our results will be closer to the middle of our guidance range. We are reaffirming our operating income outlook, which highlights stronger than originally expected profit realization on our business, excluding China. Demand is strong. We are driving improvement in our margin profile, and are optimizing our cost structure effectively. Now for our performance by segment. Starting with our consumer segment on slide seven, we saw solid results across the Americas and EMEA, which were tempered by our APAC region due to China, as I mentioned earlier.

Speaker 2: We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

Speaker 2: Our grilling performance was strong this quarter, supported by our fire up campaign, as well as contribution for new product launches that we discussed on our earnings call in June . Frank's red hot sauces, French's mustard, and scum's barbecue sauce grub, as well as long resmed marinates, all delivered significant growth in the third quarter relative to the prior year.

Our drilling performance was strong this quarter supported by our fire up campaign as well as contribution for new product launches that we discussed on our earnings call in June .

<unk> Red Hot sauces, French's mustard, and Stubbs barbecue sauce, grubs as well as Lori Smith Marinates, all delivered significant growth in the third quarter relative to the prior year.

Speaker 2: We drove double-digit sales growth with contributions from pricing and volume across our total grilling portfolio.

We drove double digit sales growth with contributions from pricing and volume across our total grilling portfolio.

Speaker 2: And we drove market share gains in mustard, barbecue sauce, and marinades in the third quarter.

And we drove market share gains and mustard barbecue sauce and <unk> in the third quarter.

Notwithstanding China, we are pleased with our underlying performance. Now for some highlights by regions. First in the Americas, our total U.S.-branded portfolio consumption has indicated by our IRI consumption data and combined with unmeasured channels, who are approximately 4%, excluding the year-over-year impact of the kitchen-basics divestiture and the exit of DSD direct stored delivery of our back Hispanic spices. There is a minor difference between our sales and consumption, which is attributable to listing fees for a significant increase in new distribution and new products.

Speaker 2: Our expansion into the fast-growing Mexican aisle with new Cholula taco recipe mixes and salsas is continuing to build distribution and performance to date is outperforming our expectations.

Our expansion into the fast growing Mexican aisle with mutual Lula Taco recipe mixes and <unk> is continuing to build distribution and performance to date is outperforming our expectations.

Speaker 2: Finally, in the Americas, we continue to drive double-digit consumption growth in e-commerce led by spices and seasonings.

Finally in the Americas, we continue to drive double digit consumption growth in E. Commerce led by spices and seasonings. We are realizing high returns on our investments gaining new customers and growing with new products.

Speaker 2: We are realizing high returns on our investments, gaining new customers, and growing with new products.

Speaker 2: Turning to EMEA, where we delivered a great quarter, are strongness quarterly sales performance in more than two years with double-digit sales growth. Notably, in the UK and France, we drove volume growth as pricing remained elevated.

Turning to EMEA.

Where we delivered a great quarter, our strongest quarterly sales performance in more than two years with double digit sales growth notably.

For example, our new Chalula and Stubbs items and Tabitha Brown line extensions. Importantly, our categories remain advantaged in terms of growth relative to overall macro trends, and we are well positioned to drive future growth. The fundamental strength of the spices and seasonings category is evident as cooking at home has remained elevated since pre-COVID and consumers have an increase in demand for flavor. U.S, spices and seasonings growth is continuing to outpace the total edible category in units and dollars.

Notably in the UK and France, we drove volume growth as pricing remained elevated.

Speaker 2: In both countries, we delivered significant growth in the discount channel driven by expanded distribution with new and existing customers.

In both countries, we delivered significant growth in the discount channel driven by expanded distribution with new and existing customers.

Speaker 2: In other parts of the region, we are also making meaningful progress in the fast-growing channel. We grew our business in the discount channel by over 30% across EMEA in the third quarter.

In other parts of the region. We are also making meaningful progress in this fast growing channel.

We grew our business in the discount channel by over 30% across EMEA in the third quarter.

Speaker 2: Are grilling activations with kitty retailers in France and are promotional activities in the UK, along with brand marketing support, Joe strong third quarter growth across the grilling portfolio. He commerce also contributed meaningfully to our growth in both countries.

Our grilling activations with key retailers in France, and our promotional activities in the UK along the brand marketing support drove strong third quarter growth across the grilling portfolio.

We have the right plans in place and are taking the right actions to grow market share in this very attractive and competitive category. We have made progress and shown improvement relative to the beginning of the year. We continue to restore distribution which was lost because of supply issues. As we look at our performance and our trends, we are happy to see total distribution point growth in the third quarter. We also continue to be pleased that our assortment on Chal is more productive than pre-COVID.

E Commerce also contributed meaningfully to our growth in both countries.

Speaker 2: Consumption data continues to indicate that the consumer is holding up well in our categories, with consumption trends continues to accelerate across the region.

Consumption data continues to indicate that the consumer is holding up well in our categories.

With consumption trends continues to accelerate across the region. We grew share in herbs spices and seasonings for our total EMEA business with the UK Eastern Europe , Italy, and France, all contributing.

Speaker 2: We grew Cher in herbs, spices, and seasonings for our total EMEA business, with the UK, Eastern Europe , Italy, and France all contributing. France grew Cher for the first time in two years.

In addition, we have significant new distribution and innovation that is starting to come online as customers reset their shelves. As we said before, restoration will take some time and we expect to drive growth as we continue to progress. In addition to driving distribution gains, we have a continued focus on supporting our brands and optimizing pricing. As you would expect, this has become a more important part of our category management efforts in recent years.

<unk> grew share for the first time in two years.

Speaker 2: In UK recipe mixes, we extended our leading share position during the third quarter. New products and effective in-store promotions drove share games.

And UK recipe mixes, we extended our leading share position during the third quarter, new products and effective in store promotions drove share gains. We also continued to drive hot sauce category growth in the U K with Tallulah, leading the growth in the third quarter.

Speaker 2: We also continue to drive Haasos category growth in the UK, with Chalula leading to growth in the third quarter. And we are also building distribution of Chalula in France.

And we are also building distribution of Cholewa in France.

Speaker 2: In our APAC region, while the pace of recovery in this business has been slower than expected, we continue to believe in the long-term growth trajectory of our business in China.

In our APAC region, while the pace of recovery in this business has been slower than expected. We continue to believe in the long term growth trajectory of our business in China.

Our diverse portfolio allows us flexibility to optimize our pricing effectiveness. We look at both our everyday price and our promotional returns, as well as using innovation, including price pack architecture to drive growth. Our efforts are yielding results. The renovation of our U.S, core everyday spice and herb portfolio is rolling out according to plan. At the end of the third quarter, we have shift about 40% of our renovated SKUs, and notably, products that have transitioned on shelf have seen high teams improvement in velocity, and our significant brand marketing campaign featuring the benefits of the new packaging ramped up at the end of the third quarter, leading into the holiday season.

Speaker 2: Notwithstanding the slow recovery in China. In all regions in our consumer segment, our investments in brand marketing, category management initiatives, and new products are proving to be effective and driving strong growth across our categories.

Notwithstanding the slower recovery in China in all regions and our consumer segment, our investments in brand marketing category management initiatives and new products are proven to be effective in driving strong growth across our categories.

Speaker 2: We are making sequential improvement on volume, advancing our heat platform, and are pleased with our performance.

We are making sequential improvement on volume advancing our heat platform and are pleased with our performance.

Speaker 2: We continue to fuel our growth with the power of our brands and increased innovation in brand marketing. We are also forming strategic partnerships to reach and enhance brand awareness with loyal built-in audience.

We continue to fuel our growth with the power of our brands and increased innovation and brand marketing.

We are also forming strategic partnerships to reach and enhance brand awareness with loyal bilton audiences.

Building on the success, we have with our tap of the Brown partnership in light of new products in the U S where growth continues to accelerate we are partnering with 90 <unk> Hussain.

Speaker 2: Building on the success we have with our Tap of the Brown partnership in light of new products in the US.

Our larger size, superdeal, herbs and spices continues to gain share. We saw strong performance in the third quarter, driven by pricing and higher unit volume. Expanded distribution has been a major driver for our performance, as well as consumers that are seeking value and trading up to larger sizes. We have the right assortment in this environment. Our household penetration on larger sizes is greater than pre-COVID. We are confident this product line will continue to drive growth as we expand distribution further and launch new line extensions.

Speaker 2: Worker of continues to accelerate. We are partnering with Nadia Hussein.

Speaker 2: A celebrity British chef who won the sixth series of BDC's The Great British Bake Off in the A.

A celebrity British US who won the six series of Bdcs, the great British bake off in EMEA.

Speaker 2: We are launching a delicious range of short seasonings, recipe mixes, and meal kits with Nadia. And are helping build the confidence of UK consumers in the kitchen with cook along videos and recipe items.

We are launching a delicious range of Schwartz seasonings recipe mixes and meal kits with non yet and are helping build the confidence of UK consumers in the kitchen with cook along videos and recipe ideas.

Speaker 2: We are thrilled to partner with Nadia and preliminary results are very positive.

We are thrilled to partner with nausea, and preliminary results are very positive we.

Our growing performance was strong this quarter, supported by our fire up campaign, as well as contribution for new product launches that we discussed on our hearings call in June. Frank's red hot sauces, French's mustard and scum's barbecue sauce grubs, as well as long resmed marinates, all delivered significant growth in the third quarter relative to the prior year. We drove double-digit sales growth with contributions from pricing and volume across our total growing portfolio.

Speaker 2: We are looking forward to working with her on various future initiatives across the region. To expand our brand awareness and accelerate new product growth.

We are looking forward to working with her on various future initiatives across the region to expand our brand awareness and accelerate new product growth.

Speaker 2: Our brand marketing efforts continues to drive awareness and strength in our brands. As you may have seen in July , we partnered with Mars and launched a limited edition French's mustard flavor skittles. The objective of the campaign was to create top of mind awareness for French's to a buzzwordy moment to further strengthen the power of our brand. And of course, you can always have fun with mustard.

Our brand marketing efforts continued to drive awareness and strengthen our brands as you may have seen in July we partnered with Mars and launched a limited edition French's mustard flavors schedules. The objective of the campaign was to create top of mind awareness for Frenchies through a buzzworthy moment to further strengthen the power of our brand and of course.

And we drove market share gains in mustard, barbecue sauce and marinates in the third quarter. Our expansion into the fast growing Mexican aisle with new Chalula taco recipe mixes and falsas, is continuing to build distribution and performance to date without performing our expectations. Finally, in the Americas, we continue to drive double-digit consumption growth in e-commerce led by spices and seasonings. We are realizing high returns in our investments, gaining new customers and growing with new products.

You could always have fun with mustard.

Speaker 2: We are thrilled that this was our most successful earned campaign to date with a record $5 billion in pressure.

We are thrilled that this was our most successful earned campaign to date with a record 5 billion impressions.

Speaker 2: is also a perfect example of how we leverage our strengths across both segments, underscoring their complementary nature. Our flavor solutions team created the mustard flavor for this blended addition product, which built awareness for both our consumer and food service businesses.

It is also a perfect example of how we leverage our strengths across both segments underscoring their complementary nature, our flavor solutions team created the mustard flavor for this limited edition product, which builds awareness for both our consumer and foodservice businesses or segments are working together to further bolster.

Speaker 2: Our segments are working together to further bolster french's success.

French's success.

Speaker 2: I am passionate about how our two segments, consumer and flavor solutions, complement each other, reinforcing what differentiates McCormick, and enabling us to drive sustainable growth.

I am passionate about how our two segments consumer and flavor solutions complement each other reinforces reinforcing what differentiates mccormack and enabling us to drive sustainable growth.

Turning to EMEA, where we delivered a great quarter, are strong this quarter sales performance in more than two years with double-digit sales growth. Notably, in the UK and France, we drove volume growth as pricing remained elevated. In both countries, we delivered significant growth in the discount channel driven by expanded distribution with new and existing customers. In other parts of the region, we are also making meaningful progress in the fast growing channel.

Speaker 2: Looking ahead to the fourth quarter, we are excited about the holiday season and our related brand marketing plans across all regions. Importantly, with our supply issues resolved, we are better positioned than we were last year entering this season.

Looking ahead to the fourth quarter, we are excited about the holiday season, and our related brand marketing plans across all regions.

Fortunately with our supply issues resolved, we are better positioned than we were last year entering this season.

Speaker 2: We are increasing our merchandising levels to one similar to pre-COVID. And are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong...

We are increasing our merchandising levels to one similar to pre Covid and are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong holiday season.

We grew our business in the discount channel by over 30% across EMEA in the third quarter. Our grilling activations with key retailers in France and our promotional activities in the UK, along with brand marketing support, drove strong third quarter growth across the grilling portfolio. E-commerce also contributed meaningfully to our growth in both countries. Consumption data continues to indicate that the consumer is holding up well in our categories. With consumption trends continues to accelerate across the region.

Speaker 2: Driving up the consumer update, our year-to-date results bolster our confidence that we will continue to drive sales growth as we have in the past. The supply issues we experienced last year are resolved, and we are using less strength and category management to increase distribution and drive McCormick and category growth.

Wrapping up the consumer update our year to date results bolster our confidence that we will continue to drive sales growth as we have in the past the supply issues. We experienced last year are resolved and we are using our strengths and category management to increase distribution and drive Mccormick and category growth.

Speaker 2: We believe the execution of our growth plans will be a win for consumers, customers, our categories, and the requirements.

We believe the execution of our growth plans will be a win for consumers customers or categories and Mccormick.

We grew share in herbs, spices, and seasonings for our total EMEA business with the UK, Eastern Europe, Italy and France all contributing. France grew share for the first time in two years. And we are also building distribution of Cholula in France. In our APAC region, while the pace of recovery in this business has been slower than expected, we continue to believe in the long-term growth trajectory of our business in China. Notwithstanding the slow recovery in China, in all regions in our consumer segment, our investments in brand marketing, category management initiatives and new products are proving to be effective and driving strong growth across our categories.

Speaker 2: which differentiates us even more and strengthening our leadership in our core categories.

Which differentiates us even more and strengthening our leadership in our core categories.

Now turning to flavor solutions on slide 10.

Speaker 2: Our growth momentum in this segment continues to be exceptional. A third quarter marks our tenth consecutive quarter with double digit constant currency sales growth. Our growth was led by pricing action.

Our growth momentum in this segment continues to be exceptional.

The third quarter marks our 10th consecutive quarter with double digit constant currency sales growth.

Our growth was led by pricing actions in all three regions. We are price to cover current year inflation and are continuing to recover the cost inflation, our pricing lagged the last two years.

Speaker 2: We are priced to cover current year inflation and are continuing to recover. The cost inflation are pricing lagged for last two years.

Speaker 2: We remain committed to restoring our flavor solutions profitability.

We remain committed to restoring our flavor solutions profitability.

Speaker 2: And in the third quarter, we again drove significant margin expansion versus prior year, and expect continued progress toward our objective to build back our margin in the segment. Let me turn to...

And in the third quarter, we again drove significant margin expansion versus prior year and expect continued progress toward our objective to build back our margin in this segment.

Let me turn to our highlights by region.

Speaker 2: Our America's third quarter strong sales growth was led by pricing, with an increase in volume contributing as well.

Our Americas third quarter strong sales growth was led by pricing with an increase in volume contributing as well.

Speaker 2: Both the flavors and branded food service product categories grew by double digits.

Both our flavors and branded foodservice product categories grew by double digits.

We are making sequential improvement on volume, advancing our heat platform and our police with our performance. We continue to fuel our growth with the power of our brands and increased innovation in brand marketing. We are also forming strategic partnerships to reach and enhance brand awareness with loyal built-in audiences. Building on the success we have with our tap at the Brown Partnership and light of new products in the US, where growth continues to accelerate.

Speaker 2: With flavors, our seasonings growth was strong, including buying growth related to new products. We are helping our customers grow with the strength of our brains.

With flavors or seasonings growth was strong including volume growth related to new products, we are helping our customers grow with the strength of our brands.

Speaker 2: Our continued success with providing the seasonings for co-graded items included new ones with Franks Redhide and Stubbs this quarter. Contributed to our growth.

Our continued success with providing the seasonings for co branded items included new ones with Frank's Red Hot and stubs this quarter contributed to our growth.

Speaker 2: Strengthen our customers' iconic products also contributed to our seasoning scrub, particularly related to our heat platform.

Strengthen our customers iconic products also contributed to our seasonings growth, particularly related to our heat platform.

We are partnering with Nadia Hussein, a celebrity British chef who won the sixth series of BDC's The Great Britain. We are launching a delicious range of short-seasonings, recipe mixes and meal kits with Nadia, and are helping build the confidence of UK consumers in the kitchen with cook along videos and recipe ideas. We are thrilled to partner with Nadia and preliminary results are very positive. We are looking forward to working with her on various future initiatives across the region to expand our brand awareness and accelerate new product growth.

Speaker 2: We also have strong momentum in flavors for performance nutrition beverages and health and market applications. Our growth is outpacing the market fueled by the advantages of our proprietary technology.

We also have strong momentum in flavors for our performance nutrition beverages, and health and market applications are growth is outpacing the market fueled by the advantages of our proprietary technologies.

Speaker 2: Importantly, we are winning with new products for existing and new customers.

Importantly, we are winning with new products for existing and new customers largely across our mid market customer base, who are category leaders in specific markets or a high growth innovators and whose growth is outpacing larger customers.

Speaker 2: Largely across our mid-market customer base, who are category leaders in specific markets or a high growth innovators, and whose growth is outpacing larger customers.

Speaker 2: We continue to have a robust pipeline of new products and our conversion rate is strong. We are creating preferred flavors enabling our customers to continue to win in the market.

We continue to have a robust pipeline of new products and our conversion rate is strong.

We're creating preferred flavors, enabling our customers to continue to win in the marketplace.

Our brand marketing efforts continues to drive awareness and strength in our brands. As you may have seen in July, we partnered with Mars and launched a limited edition French's mustard flavor skittles. The objective of the campaign was to create top of mind awareness for French's through a buzzwordy moment to further strengthen the power of our brand. And of course, you can always have fun with mustard. We are thrilled that this was our most successful earned campaign to date with a record 5 billion impressions.

In branded foodservice, we gained share in spices and seasonings this quarter.

Speaker 2: In branded food service, we gained share in splices and seasonings this quarter.

Speaker 2: Additionally, our recent new products, Frank's mild sauce and Frank's Nashville hot seasoning are performing very well and are exceeding our expectations.

Additionally, our recent new products, Frank's mild sauce, and Frank's Nashville Hot seasoning are performing very well and are exceeding our expectations.

Speaker 2: They have both been well received by our customers, reinforcing that the demand for heat is growing at both the miles and hot end of the spectrum.

We have both been well received by our customers reinforcing that the demand for heat is growing at both the miles and hot end of the spectrum.

Speaker 2: We are excited for continued growth in these items, as well as the overall breadth of opportunity in heat.

We are excited for continued growth in these items as well as the overall breadth of opportunity and heat.

It is also a perfect example of how we leverage our strengths across both segments, underscoring their complementary nature. Our flavor solutions team created the mustard flavor for this limited edition product, which built awareness for both our consumer and food service businesses. Our segments are working together to further bolster French's success. I am passionate about how our two segments consumer and flavor solutions complement each other, reinforcing, reinforcing what differentiates McCormick and enabling us to drive sustainable growth.

Speaker 2: Moving to EMBA, we continue to drive broad-based growth across the portfolio. With strong growth in both our quick service restaurant and package food and beverage customers.

Moving to EMEA, we continue to drive broad based growth across the portfolio with strong growth in both our quick service restaurant and packaged food and beverage customers pricing drove the growth as some of our customers in both channels continue to experience softness in the volume within their own businesses.

Speaker 2: pricing drove the growth as some of our customers in both channels continue to experience softness and the volume within their own business.

Speaker 2: As we continue to prune low margin business in our flavor solution segment, while it did not impact the third quarter, I want to mention that we divested a small canning business, which was part of our GIIDI operations in Italy.

As we continue to prune low margin business in our flavor solutions segment, while it did not impact the third quarter I want to mention that we divested a small canning business, which was part of our <unk> operations in Italy.

Looking ahead to the fourth quarter, we are excited about the holiday season and our related brand marketing plans across all regions. Importantly, with our supply issues resolved, we are better positioned than we were last year entering this season. We are increasing our merchandising levels to one similar to pre-COVID and are supporting our portfolio with holiday brand marketing campaigns across all regions. We are expecting a strong holiday season. Driving up the consumer update, our year-to-date results bolster our confidence that we will continue to drive sales growth as we have in the past.

Speaker 2: This divestiture allows us to focus our resources on our core flavors product category and drive further growth.

This divestiture allows us to focus our resources on our core flavors product category and drive further growth.

Speaker 2: Michael have more on the future impact of this to best sure on the EMMA region in a few minutes.

Mike will have more in the future impact of this divestiture on the EMEA region in a few minutes.

Speaker 2: and an A-PAC, while the economic recovery in China was not as strong as anticipated, China contributed to the regional pricing and volume growth.

And in APAC, while the economic recovery in China was not as strong as anticipated China contributed to the regional pricing and volume growth.

Speaker 2: Across the region, we've benefited from our QSR customers increase in promotional activity.

Across the region, we benefited from our <unk> customers increase in promotional activity.

Speaker 2: The strength of our Flavor Solution portfolio and capabilities, including our differentiated customer engagement and culinary inspired innovation, are driving outstanding Flavor Solution's momentum.

The strength of our flavor solutions portfolio and capabilities, including our differentiated customer engagement and culinary inspired and avail innovation are driving outstanding flavor solutions momentum our.

The supply issues we experienced last year are resolved and we are using less strength in category management to increase distribution and drive McCormick and category growth. We believe the execution of our growth plans will be a win for consumers, customers, our categories and McCormick which differentiates us even more and strengthening our leadership in our core categories. Now turning to flavor solutions on slide 10. Our growth momentum in this segment continues to be exceptional.

Speaker 2: Our flavors product category are 100% focus on flavor, our breadth and reach, our enrivaled consumer insights, and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value-redded part of our portfolio. Drive and growth and advancing our flavor leadership. And in branded food service, we expect new products, increased manufacturing, culinary partnerships and our expertise in heat to drive continued growth.

Our flavors product category are 100% focus on flavor, our breadth and reach our unrivaled consumer insights and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value added part of our portfolio.

Driving growth and advancing our flavor leadership.

And in branded Foodservice, we expect new products increased menu penetration culinary partnerships and our expertise in heat to drive continued growth.

The third quarter marks our tenth consecutive quarter with double-digit constant currency sales growth. Our growth was led by pricing actions in all three regions. We are priced to cover current year inflation and are continuing to recover the cost inflation our pricing lagged the last two years. We remain committed to restoring our flavor solutions profitability and in the third quarter we again drove significant margin expansion versus prior year and expect continued progress toward our objective to build back our margin in this segment.

Speaker 2: Our robust growth plans and flavor solutions and effective execution of our proven strategies bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership as well as margin restoration.

Our robust growth plans in flavor solutions and effective execution of our proven strategies bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership as well as margin restoration.

Speaker 2: Now, I'd like to turn it over to Mike to provide details on our financial performance. Thanks for...

Now I'd like to turn it over to Mike to provide details on our financial performance.

Thanks, Brendan and good morning, everyone.

Speaker 4: Starting on slide 13, our top line constant currency sales for a few six percent compared to the third quarter of last year, reflecting eight percent from pricing, partially all set with a two percent volume and next decline. As Brendan already mentioned, there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of kitchen basics, the exit of our consumer business in Russia and strategic decisions we made related to optimizing the profitability of our portfolio.

Starting on slide 13, our topline constant currency sales growth grew 6% compared to the third quarter of last year, reflecting 8% from pricing, partially offset with a 2% volume and mix decline at.

Let me turn to our highlights by region. Our America's third quarter strong sales growth was led by pricing with an increase in volume contributing as well. Both the flavors and branded food service product categories grew by double digits. With flavors, our seasonings growth was strong, including volume growth related to new products. We are helping our customers grow with the strength of our brands. Our continued success with providing the seasonings for co-branded items included new ones with Franks Redhaw and Stubbs this quarter contributed to our growth.

As Brendan already mentioned there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of kitchen basics, the exit of our consumer business in Russia, and strategic decisions, we made related to optimizing the portfolio of profitability of our portfolio.

Speaker 7: as a result at the total company level, excluding these items, underlying zong performance was flat for the quarter and improved sequentially from the second quarter.

As a result at the total company level. Excluding these items underlying volume performance was flat for the quarter and improved sequentially from the second quarter.

Speaker 7: In our consumer segment, constant currency sales increased by 1%. Reflecting a 5% increase in pricing actions, partially outset by a 4% volume decline.

Strengthen our customers' iconic products also contributed to our seasonings growth particularly related to our heat platform. We also have strong momentum in flavors for performance nutrition beverages and health and market applications. Our growth is outpacing the market fueled by the advantages of our proprietary technologies. Importantly, we are winning with new products for existing and new customers. Largely across our mid-market customer base, who are category leaders in specific markets or a high-growth innovators and whose growth is outpacing larger customers.

In our consumer segment constant currency sales increased by 1%, reflecting a 5% increase in pricing actions, partially offset by a 4% volume decline.

Speaker 7: Included in this volume decline are a 2% decline due to a lower than expected recovery in China and a 2% decline attributable to the kitchen basics to that gesture business exit in Russia and Hispanic product DSD exit to optimize

Included in this volume decline or a 2% decline due to a lower than expected recovery in China, and a 2% decline attributable to the kitchen basics divestiture, our business exit in Russia, and the Hispanic product DSD exit to optimize margins.

Speaker 2: On slide 14, consumer sales in the America's increased 2% in constant currency and included a 4% increase in pricing actions, partially also set by a 2% volume decline due to the kitchen basics to vestiture and DFT items I just mentioned.

On slide 14 consumer sales in the Americas increased 2% in constant currency and included a 4% increase from pricing actions, partially offset by a 2% volume decline due to the kitchen basics divestiture and DFT items I just mentioned.

We continue to have a robust pipeline of new products and our conversion rate is strong. We are creating preferred flavors enabling our customers to continue to win in the marketplace. In branded food service, we can share in spices and seasonings this quarter. Additionally, our recent new products Franks mild sauce and Franks Nashville hot seasoning are performing very well and are exceeding our expectations. They have both been well received by our customers reinforcing that the demand for heat is growing at both the mild and hot end of the spectrum.

Speaker 7: In the EMEA, constant currency consumer sales increased 10%, with a 13% increase in pricing actions, closely offset by 3% volume decline primarily from exwing Russian.

In EMEA constant currency consumer sales increased 10% with a 13% increase from pricing actions, partially offset by a 3% volume decline primarily from exiting Russia.

Speaker 7: Excluding Russia, sales growth was broad-based across all markets and categories.

Excluding Russia sales growth was broad based across all markets and categories.

Speaker 7: Concentrously consumer sales in the APEC region decreased 11% driven by a 15% volume decrease. Primarily due to a slower than expected recovery in China.

Constant currency consumer sales in the APAC region decreased 11% driven by a 15% volume decrease primarily due to a slower than expected recovery in China.

Speaker 7: Also contributing to the decline, but the impact of laughing is strong China demand in the prior year following significant expended lock downs during the second quarter of last.

Also contributing to the decline was the impact of lapping strong China demand in the prior year following significant extended lockdowns during the second quarter of last year.

We are excited for continued growth in these items as well as the overall breadth of opportunity in heat. Moving to EMBA, we continue to drive broad-based growth across the portfolio with strong growth in both our quick service restaurant and package food and beverage customers. Crising Drove the Growth as some of our customers in both channels continue to experience softness in the volume within their own businesses. As we continue to prune low margin business in our flavor solution segment, while it did not impact the third quarter, I want to mention that we divested a small canning business, which was part of our giadi operations in Italy.

Speaker 7: Turning to our flavor solution segment and slide 17. We grew third quarter constant currency sales 11%, reflecting a 10% increase from pricing, and a 1% increase from volume and product mix. Our volume growth was partially all set by the pruning of low margin business.

Turning to our flavor solutions segment, and slide 17, we grew third quarter constant currency sales, 11%, reflecting a 10% increase from pricing and a 1% increase from volume and product mix. Our volume growth was partially offset by the pruning of low margin business.

Speaker 7: In the Americas, labor solutions' constant currency sales grows 10%, reflecting a 9% increase in pricing at a 1% volume and product mixed growth.

In the Americas flavor solutions constant currency sales rose, 10%, reflecting a 9% increase from pricing and a 1% volume and product mix growth.

Speaker 7: Grotes with broad base across the portfolio, with strengths and flavors, including seasonings and specialty flavors, as well as branded food serve.

Growth was broad based across the portfolio with strength in flavors, including seasoning their specialty flavors as well as branded foodservice.

This divestiture allows us to focus our resources on our core flavors product category and drive further growth. Michael will have more on the future impact of this divestiture on the EMEA region in a few minutes. And an A-pack, while the economic recovery in China was not as strong as anticipated, China contributed to the regional pricing and volume growth. Across the region we benefited from our QSR customers increase in promotional activity. The strength of our flavor solution portfolio and capabilities, including our differentiated customer engagement, and culinary inspired innovation, are driving outstanding flavor solutions momentum.

Speaker 7: In EMEA, Concentration Sales increased 15%, with pricing actions partially offset by lower volume and product mix, including a 1% impact from exiting the private label product line mentioned earlier.

In EMEA constant currency sales increased 15% with pricing actions, partially offset by lower volume and product mix, including a 1% impact from exiting the private label product line mentioned earlier.

Speaker 7: Outside of this product is continuation. Buying to client due to softness in some of our customers' volume within their own business.

Outside of this product discontinuation volumes declined due to softness in some of our customers' volume within their own businesses.

Speaker 7: Regarding the divestiture of the GeoDiChanning Business Brendan mentioned earlier, we expect this divestiture to impact EMEA flavor solutions by approximately 3% starting in the fourth quarter of 2023 to the third quarter of 2024.

Regarding the divestiture of the <unk> business Brendan mentioned earlier, we expect this divestiture to impact EMEA flavor solutions by approximately 3% starting in the fourth quarter of 2023 through the third quarter of 2024.

Speaker 7: for the total flavor solution segment, we expect an approximately 1% impact. And for the total company, less than one.

For the total flavor solutions segment, we expect an approximately 1% impact and for the total company less than 1%.

Our flavor's product category are 100% focus on flavor, our breadth and reach, our enrivaled consumer insights, and our proprietary technology platform gives us an advantage and positions us well to continue to win in the technically insulated and value-redded part of our portfolio, driving growth and advancing our flavor leadership. And in branded food service, we expect new products, increased penetration, culinary partnerships, and our expertise in heat to drive continued growth. Our robust growth plans and flavor solutions and effective execution of our proven strategies bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership, as well as margin restoration.

Speaker 7: In the APAC region, flavor solution sales grew 13% in constant currency, with a 7% contribution from pricing and 6% volume growth driven by our customers, promotional activities and limited time offers across the region.

In the APAC region flavor solutions sales grew 13% in constant currency with a 7% contribution from pricing and 6% volume growth driven by our customers' promotional activities and limited time offers across the region.

Speaker 7: A scene on slide 21, first profit margin expanded 150 basis points in the third quarter versus the year ago period, reflecting our steadfast focus on increasing profit realization.

I've seen on slide 21, gross profit margin expanded 150 basis points in the third quarter versus the year ago period.

Collecting our steadfast focus on increasing profit realization.

Speaker 7: Favorable drivers in the quarter where our CCI and GOE programs and the continued recovery of the cost inflation are pricing lagged over the past two years.

Favorable drivers in the quarter, where our CCI and <unk> programs and the continued recovery of the cost inflation, our pricing lagged over the past two years.

Speaker 7: We expect to finish 2023 meeting the cost recovery plans we set as we entered the year.

Now, I'd like to turn it over to Mike to provide details on our financial performance. Thanks, Brendan, and good morning, everyone. Starting on slide 13, our top line constant currency sales grew 6% compared to the third quarter of last year, reflecting 8% from pricing, partially all set with a 2% volume and next decline. As Brendan already mentioned, there were impacts of volume related to the slower than expected recovery in the China consumer business, the divestiture of click and basics.

We expect to finish 2023 meeting the cost recovery plans, we set as we entered the year.

Speaker 7: We are very pleased with our gross margin expansion for the quarter. Historically, our third quarter gross margin has been higher than the second quarter. This year, however, they were comparable at approximately 37%. Because we realized our highest level of both pricing and cost recovery from prior years in the second quarter.

We are very pleased with our gross margin expansion for the quarter historically, our third quarter gross margin has been higher than the second quarter.

This year. However, they were comparable at approximately 37% because we realized our highest level of both pricing and cost recovery from prior years and the second quarter.

Speaker 7: We expect to continue to drive margin improvement in the balance of the year. And as evident by our full year outlook and year-to-date results, we expect a higher gross margin in the fourth quarter compared to the third quarter of this year, as well as expansion from the fourth quarter of 2020.

We expect to continue to drive margin improvement in the balance of the year and as evidenced by our full year outlook and year to date results. We expect a higher gross margin in the fourth quarter compared to the third quarter of this year as well as the expansion from the fourth quarter of 2022.

The exit of our consumer business in Russia and strategic decisions we made related to optimizing the profitability of our portfolio. As a result, at the total company level, excluding these items, underlying volume performance was flat for the quarter and improved sequentially from the second quarter. In our consumer segment, constant currency sales increased by 1%, reflecting a 5% increase in pricing actions, partially all set by a 4% volume decline. Included in this volume decline are a 2% decline due to a lower than expected recovery in China, and a 2% decline attributable to the kitchen basics, divestiture, our business exit in Russia, and Hispanic product DST exit to optimize margins.

Speaker 7: Now moving to slide 22, selling general and administrative expenses or SGNA, increased relative to the third quarter of last year. As higher employee incentive compensation expenses and distribution costs, reportedly are set by CCI-led and GOE cost savings.

Now moving to slide 'twenty, two selling general and administrative expenses or SG&A increased relative to the third quarter of last year as higher employee incentive compensation expenses and distribution costs were partially offset by CCI led cost savings.

Speaker 7: Brand marketing also increased compared to the third quarter of last year. And we continue to expect a low single digit increase in brand marketing for the full year.

Brand marketing also increased compared to the third quarter of last year, and we continue to expect a low single digit increase in brand marketing for the full year.

Speaker 7: As a percentage of net sales, SGNA increased 160 base.

As a percentage of net sales SG&A increased 160 basis points.

On slide 14, consumer sales in the Americas increased 2% in constant currency, and included a 4% increase in pricing actions, partially all set by a 2% volume decline due to the kitchen basics, divestiture, and DST items I just mentioned. In the EMEA, constant currency consumer sales increased 10%, with a 13% increase in pricing actions, partially all set by a 3% volume decline primarily from exwing Russia. Sasha. Excluding Russia, sales growth was broad-based across all markets and categories.

Speaker 7: Strong sales growth and growth margin expansion, partially offset by higher S-UNA costs, resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2020.

Strong sales growth and gross margin expansion, partially offset by higher SG&A costs resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2022.

Speaker 7: in constant currency, adjusted operating income into consumer segment, which was impacted by the slower China recovery and brand marketing investments declines 5%. And in the flavor solution segment, adjusted operating income increased 42%.

In constant currency adjusted operating income in the consumer segment, which was impacted by a slower China recovery and brand marketing investments declined 5%.

And in the flavor solutions segment adjusted operating income increased 42%.

Turning to interest expense and income taxes on slide 2023, our interest expense increased significantly over the third quarter of 2022, driven by the higher interest rate environment.

Speaker 7: Turning to interest expense and the income taxes on slide 2023, our interest expense increased significantly over the third quarter of 2022, driven by the higher interest rate environment.

Consequently, consumer sales in the APEC region decreased 11 percent, driven by a 15 percent volume decrease, primarily due to a slower than expected recovery in China, also contributing to the decline for the impact of lasting strong China demand in the prior year following significant extended lockdowns during the second quarter of last year. Turning to our flavor solution segment and slide 17, we grew third quarter constant currency sales 11 percent, reflecting a 10 percent increase from pricing and a 1 percent increase from volume and product mix.

Speaker 7: and quickly touching on tax, our third quarter adjusted affected tax rate was 21.4%. Compared to 21.2% in the year of their period.

And quickly touching on tax our third quarter adjusted effective tax rate was 21, 4% compared to 21, 2% in the year ago period.

Speaker 7: Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture. McCormick de Mech.

Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture Mccormick de Mexico.

Speaker 7: We are the market leader with the McCormick Bay branded, mayonnaise, formulae, and mustard product lines in Mexico. And the business continues to contribute meaningfully to our net income and operating cash flow results.

We are a market leader with the Mccormick branded mayonnaise marmalades and muster product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash flow results.

Our volume growth was partially all set by the pruning of low margin business. In the Americas, flavor solutions constant currency sales grows 10 percent, reflecting a 9 percent increase from pricing at a 1 percent volume and product mix growth. Growth was broad-based across the portfolio with strengths and flavors, including seasonings and specialty flavors, as well as branded food service. In EMEA, constant currency sales increased 15 percent, with pricing actions partially all set by lower volume and product mix, including a 1 percent impact from exiting the private label product line mentioned earlier.

Speaker 7: at the bottom line, as shown on slide 25, third quarter 2023 adjusted earnings per share with 65 cents, as compared to 69 cents for the year ago period.

At the bottom line as shown on slide 25 third quarter 2023 adjusted earnings per share was <unk> 65.

As compared to 69 per the year ago period the.

Speaker 7: The decrease was driven by laughing at favorable impacts primarily related to an optimization of our death portfolio included in other income in the third quarter of last year. This impact is also a headwind to a-

The decrease was driven by lapping a favorable impact primarily related but related to an optimization of our debt portfolio included in other income in the third quarter of last year.

This impact is also a headwind to our full year results.

Speaker 7: On slide 26, we've summarized highlights for cashflow and the quarter end balance sheet.

On slide 26, we've summarized highlights for cash flow in the quarter end balance sheet.

Speaker 7: A cash flow from operations, your date was very strong. $660 million in 2023, compared to $250 million for the same period last year. A 164% increase.

Outside of this product discontinuation, volumes declined due to softness of some of our customers' volume within their own businesses. Regarding the divestiture of the geodicanting business brand and mentioned earlier, we expect this divestiture to impact EMEA flavor solutions by approximately 3 percent starting in the fourth quarter of 2023 to the third quarter of 2024. For the total flavor solution segment, we expect an approximately 1 percent impact, and for the total company less than 1 percent.

Our cash flow from operations year to date was very strong $660 million in 2023 compared to $250 million for the same period last year.

164% increase the.

Speaker 7: The increase was primarily driven by higher operating income and working capital improvements, including lower infant-

The increase was primarily driven by higher operating income and working capital improvements, including lower inventory.

Speaker 7: We return $314 million of cash to our shareholders through dividends and used $187 million of cash for capital expenditures through the third quarter.

We returned $314 million of cash to our shareholders through dividends and used $187 million of cash for capital expenditures through the third quarter.

Speaker 7: We expect 2023 to be a very strong year of cash flow as evidenced by our 2023 year-to-day cash flow from operations of $660 million, which is already slightly higher than our four-year cash flow in 2022.

In the APEC region, flavor solution sales grew 13 percent in constant currency, with a 7 percent contribution from pricing and 6 percent volume growth driven by our customers' promotional activities and limited time offers across the region. As seen on slide 21, first profit margin expanded 150 basis points in the third quarter of the year go period, reflecting our steadfast focus on increasing profit realization. Favorable drivers in the quarter were our CCI and GOE programs, and the continued recovery of the cost inflation are pricing lagged over the past two years.

We expect 2023 to be a very strong year of cash flow as evidenced by our 2023 year to date cash flow from operations of $660 million, which is already slightly higher than our full year cash flow in 2022.

Speaker 7: Our priority is to continue to have a balance use of cash, funding investments to drive growth, returning a significant portion to our shareholders' significance, and paying down debt.

Our priority is to continue to have a balanced use of cash funding investments to drive growth returning a significant portion to our shareholders through dividends and paying down debt.

Speaker 7: We remain committed to a strong investment-grade rating. With our improving growth margin and lower inventory, we are well positioned to continue paying down debt. And we now expect to do ever to approximately three times. Earlier in 2024, then we originally expect.

We remain committed to a strong investment grade rating with our improving gross margin and lower inventory, we are well positioned to continue paying down debt and we now expect to delever to approximately three times earlier in 2024 than we originally expected.

We expect to finish 2023 meeting the cost recovery plans we set as we entered the year. We are very pleased with our gross margin expansion for the quarter. Historically, our third quarter of gross margins have been higher than the second quarter. This year, however, they were comparable at approximately 37 percent because we realized our highest level of both pricing and cost recovery from prior years in the second quarter. We expect to continue to drive margin improvement in the balance of the year, and as evident by our full year outlook and year-to-date results, we expect a higher gross margin in the fourth quarter compared to the third quarter of this year as well as expansion from the fourth quarter of 2022.

Speaker 7: Now turning to our updated 2023 financial outlook on slide 27.

Now turning to our updated 2023 financial outlook on slide 27.

Speaker 7: Our 2023 Outlook Reflects are continued positive top line growth momentum and with the optimization of our cost structure increased profit realization

Our 2023 outlook reflects our continued positive topline growth momentum and with the optimization of our cost structure increased profit realization.

Speaker 7: We expect to drive margin expansion with strong sales and adjusted operating income growth.

We expect to drive margin expansion with strong sales and adjusted operating income growth.

Speaker 7: Adjustive operating income growth is expected to be partially all set by higher interest expense and a higher projected effective tax rate.

Adjusted operating income growth is expected to be partially offset by higher interest expense and a higher projected effective tax rate.

Speaker 7: We also anticipate minimal impact from currency rates. Although there will be a timing aspect as we realize an unfavorable impact year-to-date through the third quarter and project a favorable impact in the fourth.

We also anticipate minimal impact from currency rates, although there will be a timing aspect as we realized an unfavorable impact year to date through the third quarter and project a favorable impact in the fourth quarter.

Now moving to slide 22, selling general and administrative expenses for SGNA increased relative to the third quarter of last year. A higher employee incentive compensation expenses and distribution costs were partially offset by CCI led and GOE cost savings. Brand Marketing also increased compared to the third quarter of last year, and we continue to expect a low single-digit increase in brand marketing for the full year. As a percentage of net sales, SGNA increased 160 basis points.

We are reaffirming our sales and operating profit outlook for 2023, despite a slower recovery in China.

Speaker 7: We are reaffirming ourselves an operating profit outlook for 2023, despite a slower recovery in China.

Speaker 7: We no longer expect a 1% contribution to our sales from lapping last year's COVID disruptions in China. And we're also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis.

We no longer expect a 1% contribution to our sales from lapping last year's Covid disruptions in China.

And we are also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis points.

Speaker 7: At the top line, we continue to expect 5 to 7% growth. And anticipators, our results will be closer to the middle of our guidance range given they're lower than expected China recovery.

At the topline we continue to expect 5% to 7% growth and anticipate our results will be closer to the middle of our guidance range, given the lower than expected China recovery.

Strong sales growth and growth margin expansion, partially offset by higher SGNA costs resulted in a constant currency increase in adjusted operating income of 5% compared to the third quarter of 2022. In constant currency, adjusted operating income into consumer segment, which was impacted by the slower China recovery and brand marketing investments declined 5%, and in the flavor solution segment adjusted operating income increased 42%. Turning to interest expense in the income taxes on slide 2023, our interest expense increased significantly over the third quarter of 2022 driven by the higher interest rate environment, and quickly touching on tax, our third quarter adjusted affected tax rate was 21.4%, compared to 21.2% in the year-to-year period.

Speaker 7: The wrap of last year's pricing actions, as well as the impact of new ones in 23, are the primary drivers of growth.

The wrap of last year's pricing actions as well as the impact of new ones in 'twenty three are the primary drivers of growth.

Speaker 7: Several factors are expected to impact our volume and product mix for the year.

Several factors are expected to impact our volume and product mix for the year.

Speaker 4: including price elasticity, which are consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment.

Including price Elasticities, which are consistent with 2022 at lower levels than we have historically experienced but in line with the current environment.

Speaker 7: The divestiture of our kitchen-based business in August of last year and the accident of our consumer business in Russia during last year's second quarter.

The divestiture of our kitchen basics business in August of last year, and the exit of our consumer business in Russia during last year's second quarter.

Speaker 7: To continue approving of lower margin business from our portfolio, we continue to estimate the America's consumer segment, the SDXs, and the EMEA's flavor solutions private label discontinuation to be approximately a 1% impact on the year. We should begin to impact this in the second quarter of 2023.

The continual pruning of lower margin business from our portfolio. We continue to estimate the Americas consumer segment, DSD exit and the EMEA flavor solutions private label discontinuation to be approximately a 1% impact on the year, which began to impact us in the second quarter of 2023.

Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture, McCormick in Mexico. We are the market leader with the McCormick Bay branded mayonnaise, marmalade, and mustard product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash flow results. At the bottom line, as shown on slide 25, third quarter 2023 adjusted earnings per share was 65 cents, as compared to 69 cents per year-to-year period.

Speaker 4: And finally, the divestiture of the Vietis County business, which posed on the first day of the fourth quarter, will have a minimal impact on total company sales for the year.

And finally, the divestiture of <unk> business, which closed on the first day of the fourth quarter, we will have a minimal impact on total company sales for the year.

Speaker 7: We continue to plan to drive growth through the strength of our brands, as well as our category management, brand marketing, new products, and customer engagement plans.

We continue to plan to drive growth through the strength of our brands as well as our category management brand marketing new products and customer engagement plans.

Speaker 4: Our 2023 Gross Margin is projected to range between 110 to 140 basis points higher than 2022 compared to our prior guisines of 50 to 100 basis.

Our 2023 gross margin is projected to range between 110 to 140 basis points higher than 2022 compared to our prior guidance of 50 to 100 basis points.

The decrease was driven by lapping a favorable impact primarily related to an optimization of our debt portfolio included in other income in the third quarter of last year. This impact is also a headwind to our four-year results. On slide 26, we've summarized highlights for cash flow and the quarter end balance sheet. Our cash flow from operations year-to-date was very strong. $660 million in 2023, compared to $250 million for the same period last year, a 164% increase.

Speaker 7: Disgrace margin expansion reflects a favorable impact from pricing, cost savings from our CCI-led and GLEE programs, and portfolio optimization, partially offset by the anticipated impact of a low-to-mid-teens increase in cost and flight.

This gross margin expansion reflects a favorable impact from pricing cost savings from our CCI led and <unk> programs and portfolio optimization, partially offset by the anticipated impact of a low to mid teens increase in cost inflation.

Speaker 7: It also reflects more than offsetting cost pressures with pricing actions. As we recover the cost inflation, our pricing lagged the last two weeks.

It also reflects more than offsetting cost pressures with pricing actions as we recover the cost inflation, our pricing lagged the last two years.

The increase was primarily driven by higher operating income and working capital improvements, including lower inventory. We returned $314 million of cash to our shareholders through dividends and used $187 million of cash for capital expenditures through the third quarter. We expect 2023 to be a very strong year of cash flow, as evidenced by our 2023 year-to-date cash flow from operations of $660 million, which is already slightly higher than our four-year cash flow in 2022.

Speaker 7: Moving to adjusted operating income, we continue to expect 10 to 12% constant currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth.

Moving to adjusted operating income, we continue to expect 10% to 12% constant currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth.

Speaker 7: First, remaining consistent with our prior outlook, we expect our GUE program to have an 800 basis point favorable impact and the kitchen basics the vetial sure to have an unfavorable 100 basis point.

First remaining consistent with our prior outlook, we expect our <unk> program to have an 800 basis points April impact and the kitchen basics debenture to have an unfavorable 100 basis point impact.

Speaker 7: Next, I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis.

Next I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis points.

Speaker 4: Finally, we expect a 900 basis point unsavvable impact from building back incentive compensation slightly ahead of our prior projection of 800 basis points, given the increase in earnings expectations since the beginning of the year.

Finally, we expect a 900 basis point unfavorable impact from building back incentive compensation slightly ahead of our prior projection of 800 basis points given the increase in earnings expectations since the beginning of the year.

Our priority is to continue to have a balance use of cash, funding investments to drive growth, returning a significant portion to our shareholders through dividends, and paying down debt. We remain committed to a strong investment grade rating. With our improving growth margin and lower inventory, we are well positioned to continue paying down debt, and we now expect to do ever to approximately three times earlier in 2024 than we originally expected. Now, turning to our updated 2023 financial outlook on slide 27.

Speaker 7: The net impact of these discrete items is an unfavorable 100 basis.

The net impact of these discrete items is an unfavorable 100 basis points as compared to a 200 basis point favorable impact in our previous outlook.

Speaker 7: As compared to a 200 basis point favorable impact in our previous

Speaker 7: The reaffirmation of our adjusted operating income outlook, despite the unfavorable change in the impact from discrete items, highlights stronger than originally expected profit realization on our underlying business, which is now expected to be 11 to 13% growth compared to 8 to 10% growth previous.

The reaffirmation of our adjusted operating income outlook. Despite the unfavorable change in the impact from discrete items highlight stronger than originally expected profit realization on our underlying business, which is now expected to be 11% to 13% growth compared to 8% to 10% growth previously.

Our 2023 outlook reflects our continued positive top-line growth momentum, and with the optimization of our cost structure, increased profit realization. We expect to drive margin expansion with strong sales and adjusted operating income growth. Adjusted operating income growth is expected to be partially offset by higher interest expense and a higher projected effective tax rate. We also anticipate minimal impact from currency rates, although there will be a tiny aspect as we realize an unfavorable impact year to date through the third quarter and project a favorable impact in the fourth quarter.

Speaker 7: We are reaffirming our low single-digit increases in brand marketing investments, our CCI-led cost savings target of approximately $85 million, our interest expense outlook of an estimated range from $200 million to $210 million in 2023, and our 2023 adjusted effective income tax rate projection of approximately 22%.

We are reaffirming our low single digit increases in brand marketing investments, our CCI led cost savings target of approximately $85 million. Our interest expense outlook of an estimated range from $200 million to $210 million in 2023, and our 2023 adjusted effective income tax rate projection of approximately 22 <unk>.

<unk>.

Speaker 7: We are increasing our income from unconcelledated operation projection to a 30% expected increase from 2022, reflecting the strong performance we expect in our largest joint venture, McCormick, DeMexico.

We are increasing our income from unconsolidated operations projection to a 30% expected increase from 2022, reflecting the strong performance, we expect in our largest joint venture Mccormick de Mexico.

We are reaffirming our sales and operating profit outlook for 2023 despite a slower recovery in China. We no longer expect a 1% contribution to our sales from laughing last year's COVID disruptions in China. And we are also revising the benefit from a China recovery to our operating income from 300 basis points to 100 basis points. At the top line, we continue to expect 5% to 7% growth and anticipate our results will be closer to the middle of our guidance range given the lower than expected China recovery.

Speaker 7: Two summarized are 2023 adjusted earnings per share expectations reflects strong underlying business growth of 14 to 16%. Above our prior projection of 10 to 12%.

To summarize our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 14% to 16%.

<unk>, our prior projection of 10% to 12%.

Speaker 7: Combining this 14 to 16% underlying growth with a 1% unfavorable impact from the discrete items on a just-adoccurring profit and the combined interest and tax-head wind of 9%.

Combining this 14% to 16% underlying growth with a 1% unfavorable impact from the discrete items on adjusted operating profit and the combined interest and tax headwind of 9%, resulting in an expected increase of 4% to 6% or our projected guidance range of adjusted earnings per share in 2023 of $2 <unk>.

Speaker 7: Result in an expected increase of 4 to 6 percent or projected guidance range of adjusted earnings per share in 2023 of $2.62 to $2.67.

The wrap of last year's pricing actions, as well as the impact of new ones in 23, are the primary drivers of growth. Several factors are expected to impact our volume and product mix for the year, including price elasticity, which are consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment. The divestiture of our kitchen-based business in August of last year and the exit of our consumer business in Russia during last year's second quarter.

62, <unk> to $2 67.

Speaker 4: We are projecting strong operating performance in 2023 with continued top line momentum, significant optimization of our cost structure and strong adjusted operating profit growth, as well as margin expansion and strong cash flow. We remain confident in the underlying strength of our business and delivering on the profitable growth respected in our 2023 financial out.

We are projecting strong operating performance in 2023 with continued topline momentum significant optimization of our cost structure and strong adjusted operating profit growth as well as margin expansion and strong cash flow.

We remain confident in the underlying strength of our business and delivering on the profitable growth reflected in our 2023 financial outlook.

The continual pruning of lower margin business from our portfolio. We continue to estimate the America's consumer segment, the SD exit, and the EMEA's flavor solutions private label discontinuation to be approximately a 1% impact on the year, which began to impact us in the second quarter of 2023. And finally, the divestiture of Viadis County Business, which closed on the first day of the fourth quarter, will have a minimal impact on total company sales for the year.

Thank you Mike before we turn it over to Q&A I would like to provide some closing comments global.

Speaker 2: Thank you, Mike. Before we turn it over to Q&A, I would like to provide some closing comments.

Speaker 2: Global demand for flavor remains the foundation of our sales growth. And we have intentionally focused on great fast growing categories.

Global demand for flavor remains the foundation of our sales growth and we are intentionally focused on great fast growing categories.

Speaker 2: Our alignment with long-term consumer trends, healthy and flavorful cooking, trusted brands, increased digital engagement, and purpose-minded practices continue to create a tailwind for growth.

Our alignment with long term consumer trends healthy and flavorful cooking trusted brands increased digital engagement and purpose minded practices continued to create a tailwind for growth.

We continue to plan to drive growth through the strength of our brands, as well as our category management, brand marketing, new products, and customer engagement plans. Our 2023 Gross Margin is projected to range between 110 to 140 basis points higher than 2022, compared to our prior guidance of 50 to 100 basis points. This gross margin expansion reflects a favorable impact from pricing, cost saving from our CCI-led and GOE programs, and portfolio optimization, partially offset by the anticipated impact of a low-to-mid-teens increase in cost inflation.

Speaker 2: Well, Cormac is uniquely positioned to capitalize on this demand for great flavor. With the breadth and reach of our strong global flavor portfolio, we are end to end flavor for our consumers and customers.

<unk> is uniquely positioned to capitalize on this demand for great flavor with the breadth and reach of our strong global flavor portfolio. We are end to end flavor for our consumers and customers.

Speaker 2: We remain a different kind of CQG company, one differentiated by our growth platform, the results that we have achieved over the last years and our culture.

We remain a different kind of CPG company, one differentiated by our growth platform. The results that we have achieved over the last years and our culture.

Speaker 2: We play in great and fast-growing categories. Our two segments, consumer and flavor solutions, complement each other, reinforcing our differentiation.

We play in great in fast growing categories are two segments consumer and flavor solutions complement each other reinforcing our differentiation the.

Speaker 2: Scale, insights and technology that we leverage from both segments are meaningful in driving sustainable growth.

The scale insights and technology that we leverage from both segments are meaningful and driving sustainable growth.

It also reflects more than offsetting cost pressures with pricing actions, as we recover the cost inflation or pricing lagged the last two years. Moving to adjusted operating income, we continue to expect 10 to 12% constant currency growth. There are some discrete items expected to impact our 2023 adjusted operating profit growth. First, remaining consistent with our prior outlook, we expect our GOE program to have an 800 basis point stable impact and the kitchen basis divestiture to have an unfavorable 100 basis point impact.

Speaker 2: We continue to leverage the strength of our culture and the power of people to drive success.

We continue to leverage the strength of our culture and the power of people to drive success.

Speaker 2: I want to thank McCormick employees worldwide as their energy and excitement for the business is coming through in our results.

I want to thank Mccormick employees worldwide as their energy and excitement for the business is coming through in our results.

Next, I already mentioned the expected 100 basis point benefit related to China, which is lower than the originally anticipated 300 basis points. Finally, we expect a 900 basis point unfavorable impact from building back incentive compensation, slightly ahead of our prior projection of 800 basis points, given the increase in earnings expectations since the beginning of the year. The net impact of these discrete items is an unfavorable 100 basis point, as compared to a 200 basis point favorable impact in our previous outlook.

Speaker 2: Now to recap the key takeaways as seen on flight 30.

Now to recap the key takeaways as seen on slide 30.

Speaker 2: Our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strat.

Our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strategies.

Speaker 2: and our following performance, excluding China, continued to improve.

And our volume performance, excluding China continued to improve.

Speaker 2: We drove meaningful year over year margin expansion, underscoring our focus on profit realization.

We drove meaningful year over year margin expansion underscoring our focus on profit realization.

Speaker 2: Are your today cash flow from operation results was strong already equal to our full year 2022 results?

Our year to date cash flow from operation results with strong already equal to our full year 2022 results.

Speaker 2: I'll reaffirm sales and operating profit guidance. Despite lower than expected China recovery, highlights the growing strength of the rest of the business.

I'll reaffirm sales and operating profit guidance, despite lower than expected China recovery highlights the growing strength of the rest of the business.

Speaker 11: The strength of our business model, the value of our products and capabilities, and execution of our proven strategies bolsters our confidence in our growth trajectory of the long term. Now for your questions.

The strength of our business model the value of our products and capabilities and execution of our proven strategies bolsters, our confidence in our growth trajectory over the long term.

Now for your questions.

Thank you we'll.

The reaffirmation of our adjusted operating income outlook, despite the unfavorable change in the impact from discrete items, highlights stronger than originally expected profit realization on our underlying business, which is now expected to be 11 to 13% growth compared to 8 to 10% growth previously. We are reaffirming our low single-digit increases in brand marketing investments, our CCI led cost savings target of approximately 85 million dollars, our interest expense outlook of an estimated range from 200 million to 210 million dollars in 2023, and our 2023 adjusted effective income tax rate projection from approximately 22%.

We'll now be conducting a question and answer session.

Speaker 3: If you'd like to ask a question today, please press star one from your telephone keypad, and a confirmation tone will indicate your line in the question queue. You may press star two.

If you'd like to ask a question today. Please press star one from your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

You May press star two if you'd like to remove your question from the queue.

Speaker 3: As for the reading speaker equipment, maybe necessary to pick up your handset before pressing the star keys. One.

For participants are using speaker equipment may be necessary to pick up your handset before pressing the star keys.

One moment. Please so we poll for questions. Thank you.

Thank you and our first question is coming from the line of Andrew Lazar with Barclays. Please proceed with your question great.

Speaker 3: Thank you, our first question is from the line of Andrew Lazar with Barclays. Please receive your questions.

Alright, thanks, very much good morning, everybody.

Speaker 7: Good morning. I guess we'll just start off with McCormack obviously, as you mentioned, saw some sequential vine improvement in consumer America's in the fiscal third quarter. And you're lapping an even easier, I guess, down 11 vine decline in the year ago period in the fourth quarter.

Good morning, Andrew Good morning, I guess, maybe just start off with Mccormick, obviously as you mentioned and saw some sequential volume improvement in consumer Americas in the fiscal third quarter.

We are increasing our income from unconsolidated operation projection to a 30% expected increase from 2022, reflecting the strong performance we expect in our largest joint venture, McCormick the Mexico. To summarize, our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 14 to 16%, above our prior projection of 10 to 12%. Combining this 14 to 16% underlying growth with a 1% unfavorable impact from the discrete items on a adjusted operating profit and the combined interest and tax headwind of 9%, result in an expected increase of 4 to 6%, or projected guidance range of adjusted earnings per share in 2023 of $2.62 to $2.67.

Youre lapping an easier and even easier I guess down 11.

<unk> decline in the year ago period in the fourth quarter. So I guess my question is would you expect volume in the consumer Americas segment, two to flip positively in the fourth quarter.

Speaker 12: So I guess my question is, would you expect volume in the consumer America segment to flip positively?

Speaker 12: in the fourth quarter. And if not, I guess, what would be the key factors that would keep you from doing so? Obviously, all in the context of an industry volume backdrop that remains kind of...

And if not I guess, what would be the key factors that would that would keep you from doing so obviously all in the context of an industry volume backdrop that remains kind of.

Dude.

Speaker 2: Well, thanks Andrew for the question. Just to maybe speak first to last year's fourth quarter.

Well Thanks, Andrew for your question, just maybe speak first to last year's fourth quarter.

Speaker 11: I think her sales go back back in 2022, was down about 1.7% of thick on sales. And that was up without kitchen basics. And we were lapping the 2021 retail inventory build in a high level.

I think our sales goes back back in 2022 was down about one.

One 7% pick on sales.

And that was up without kitchen basics that we were lapping the 2021 retail inventory build and a high level.

We are projecting strong operating performance in 2023 with continued top line momentum, significant optimization of our cost structure, and strong adjusted operating profit growth, as well as margin expansion and strong cash flow. We remain confident in the underlying strength of our business and delivering on the profitable growth respected in our 2023 financial outlook. Thank you, Mike. Before we turn it over to Q&A, I would like to provide some closing comments. Global demand for flavor remains the foundation of our sales growth, and we have intentionally focused on great fast growing categories.

Speaker 11: I think we, as we talked about in that call, entered the 2022 holiday, which just watched stronger inventory than we were counting on our forecast.

I think we.

As we talked about on that call entered the 2022 holiday with just what's stronger inventory that we have.

We're counting on are predicting or forecasting.

Speaker 11: So the way we're looking at it is the net sales impact really was up about 4.5 over 4% in the fourth quarter last year. So we're not seeing that necessarily as an easy comparison overall, but just talking to dollars first, that's kind of our view is just, we're still looking at a pretty robust fourth quarter from a year ago, just knowing that we had that comparison

So.

The way, we're looking at it as the net sales impact really was up about four a little over 4% in the fourth quarter last year. So we're not seeing that necessarily as an easy comparison.

Overall, but just talking to $1 <unk>.

Our view is just we're still looking at a pretty robust fourth quarter from a year ago, just knowing that we had that comparison.

Our alignment with long-term consumer trends, healthy and flavorful cooking, trusted brands, increased digital engagement, and purpose-minded practices continue to create a tailwind for growth. McCormick is uniquely positioned to capitalize on this demand for great flavor, with the breadth and reach of our strong global flavor portfolio. We are end-to-end flavor for our consumers and customers. We remain a different kind of CPG company, one differentiated by our growth platform, the results that we have achieved over the last years and our culture.

The fourth quarter now they look at this year's fourth quarter.

Speaker 11: Now, we look at this year's fourth quarter. As we said on the call here earlier, you will see the impact of that DSD continuation in our Hispanic act spices part of our business. It just tends to be, that business tends to be heavier in the fourth quarter because of the holidays, so that'll be a little bit stronger than...

As we said on the call here earlier, you will see the impact of that DSD continuation in our Hispanic bag spices part of our business. It just tends to be that business tends to be heavier in the fourth quarter because of the holidays, so that'll be a little bit stronger than <unk>.

Speaker 11: But to our spices and seasoning business, we continue seeing improving trends in that part of our portfolio. And you should expect to see that in the fourth quarter, that sequential improvement in performance overall.

Thanks to our spices and seasonings business, we continue to see improving trends in that part of our portfolio and you should expect to see that.

We play in great and fast growing categories. Our two segments, consumer and flavor solutions complement each other, reinforcing our differentiation. The scale, insights and technology that we leverage from both segments are meaningful in driving sustainable growth. We continue to leverage the strength of our culture and the power of people to drive success. I want to thank McCormick employees worldwide as their energy and excitement for the business is coming through in our results.

In the fourth quarter that sequential improvement in performance overall.

Speaker 11: and we feel like we're going to have a strong holiday. I mean, I think the reasons why we feel good about the direction of that part of our portfolio is, you know, and you heard it on the call. We're gaining share and we're gaining distribution on superdeal or some spices.

And we feel like we're going to have a strong holiday.

The reasons why we feel good about the direction of that part of our portfolio is when you heard it on the call, we're gaining share and we're gaining distribution on super deal herbs and spices.

Speaker 11: on the Lowry's opening price point platform was still getting really good performance for that. So it's still also building out distribution. And...

On the <unk> opening price point platform, we're still getting really good performance with assets still also building out distribution and.

Speaker 11: We have one value retailer that we've only begun just starting shipments on and those start to build out, you know, and fill out more store locations because we have like just in that particular account, you know, 85% of locations still yet to come. So if we still see distribution build happening behind Laura Rees.

We have one value retailer that we've only begun just starting shipments on and they'll start to build out and fill out more store locations.

Now to recap the key takeaways as seen on Flight 30, our third quarter performance was strong reflecting sustained demand and the effective execution of our growth strategies, and our following performance, excluding China, continued to improve. We drove meaningful year-over-year margin expansion, underscoring our focus on profit realization. Our year-to-date cash flow from operation and results was strong, already equal to our full year 2022 results. A reaffirmed sales and operating profit guidance, despite lower than expected China recovery, highlights the growing strength of the rest of the business.

Because we have like just in that one particular count 85% of locations still yet to come so we still see distribution build happening behind lower.

Overall.

Speaker 11: And that renovation that we'd launched here this year, we talked about in the second quarter.

And that renovation that we launched here this year, we talked about in the second quarter.

Speaker 11: It's doing really well when we see it getting on shelf. That we shift about 40%.

He is doing really well, where we see it getting on shelf that we shipped about 40%, but what's appearing on shelf is probably just a little bit different because we don't really have that data, but what we're seeing with when we see that new package come on shelf is that the washing improves quite a bit. So we're really encouraged by our performance there and we're definitely seeing strong consumer reaction to two.

Speaker 11: But, you know, what's appearing on shelf is probably just a little bit different because we don't really have that data. But what we're seeing with, when we see that new package come on shelf, is that the WASI improves quite a bit.

Speaker 11: So we're really encouraged by our performance there and we're definitely seeing strong consumer reaction to.

The strength of our business model, the value of our products and capabilities, and the execution of our proven strategies bolsters our confidence in our growing trajectory of the long term. Now for your questions. Thank you. Well now we conducted the question and answer session. If you'd like to ask a question today, please press star one from your telephone keypad and a confirmation tone indicate your line in the question queue. You may press star two if you'd like to remove your question from the queue.

Speaker 11: to the new package and so that will obviously continue to build in the fourth quarter. And we're also turning on our media right now.

The new package and so that will obviously continue to build in the fourth quarter and we're also turning on our media right now.

Speaker 11: you know, advertising, you know, the benefits of the package, but then we're also having holiday campaigns start to run too. So, if you like, there's a lot of good momentum in the pipeline. Obviously, a lot of that will carry into 2024, but we still feel really good about the strength of that part of our business going into the fourth quarter.

Advertising has been.

This is a package, but then we're also having holiday campaigns starting to run too. So we feel like there's a lot of good momentum in the pipeline. Obviously a lot of that will carry into 2024, but we still feel really good about the strength of that part of our business going into the fourth quarter.

For participants who are using speaker equipment, maybe necessary to pick up your handset before pressing the star keys. One moment please, so we pull for questions. Thank you. Thank you, our first question is coming from the line of Andrew Lazar with Barclays. Please receive your questions. Great. Thanks very much. Good morning, everybody. Good morning. I guess we'll just start off with McCormack. Obviously, as you mentioned, saw some sequential volume improvement in consumer America is in the fiscal third quarter.

Speaker 11: You know, what's also helping us though is that, you know, our core categories are performing a little bit stronger than overall total edible in the grocery stores. So we see it can continue strength there just from our categories.

It's also helping US though is that our core categories are performing a little bit stronger than overall total elbow in the grocery stores. So we see continued strength.

Strength, there just from a category standpoint.

Speaker 2: We have good performance across other core categories, like recipe mix, condiments and sauces. So we've seen that pretty good performance there. But there are some categories where we're going to participate in one of our food peers.

We had good performance across our other core categories like recipe mix.

Condiments and sauces, so we expect pretty good performance there.

But there are some categories, where work can be participate along with our food peers.

And you're laughing easier and even easier, I guess, down 11 volume decline in the year ago period in the fourth quarter. So I guess my question is, would you expect volume in the consumer America segment to flip positively in the fourth quarter? And if not, I guess what would be the key factors that would keep you from doing so? Obviously, all in the context of an industry volume backdrop that remains kind of subdued.

Speaker 11: Probably had a much smaller scale, but these are, you know, categories like frozen or the ancient category.

We had a much smaller scale, but these are categories like frozen or the Asian category.

Speaker 11: where we see more volume decline like we've seen in the rest of the center of store and that part of our business. That's just one part of the portfolio. I just gave you some color on it. We're seeing definitely the type of softness that you're seeing in other categories.

We've seen more volume decline like we've seen in the rest of the center of store and that part of our business.

As just one part of.

The portfolio I'll, just give you some color on it we're seeing definitely the type of softness that youre seeing in other categories.

Speaker 12: But the fundamental trends have not shifted. Despite this recovery in China being a lot slower, US and Europe are performing as expected. And as you heard in the call, we kind of reaffirmed our guidance on sales, despite China, which this meant to indicate that we still see a strength in the performance of our business overall. Great, thanks. I'll pass it on and leave it there. Thanks so much.

But the fundamental trends have not shifted despite this recovery in China being a lot slower U S and Europe are performing as expected and as you heard in the call the kind of reaffirmed our guidance on sales, despite China, which meant to indicate that we still see a strengthening the performance of our business overall.

Well, thanks Andrew for the question. Just to maybe speak first to last year's fourth quarter. I think our sales growth back in 2022 was down about 1.7% of thick on sales. And that was up without kitchen basics. And we were lapping the 2021 retail inventory build in a high level. I think we, you know, as we talked about in that call, entered the 2022 holiday, which is a lot stronger inventory than we have, you know, we're counting on or predicting or forecasting.

Great. Thanks, I'll pass it on and leave it there. Thanks so much.

Our next questions come from the line of Alexia Howard with Bernstein. Please proceed with your question.

Good morning, everyone. Good morning.

Speaker 5: Can I ask about the market share trends that we're seeing in America's consumer? It's obviously been under pressure for some time because of the distribution losses and so on. I'm wondering if there's light at the end of the tunnel in terms of when either the comparables get easier or innovation helps return it around and just wondering what the outlook is there and then I have a follow.

And can I ask about the market share trends that we're seeing in Americas Kenai.

W think that under pressure for some time because of the distribution losses, and so on but I'm wondering if there's light at the end of the tunnel in terms of when either the comparables get easier or.

So the way we're looking at it is the net sales impact really was up about 4.00 over 4% in the fourth quarter last year. So we're not seeing that necessarily is an easy comparison overall, but they're just talking to dollars first. You know, that's kind of our view is just we're still looking at a pretty robust fourth quarter from the year ago, just knowing that we had that comparison in the fourth quarter.

Innovation helps to turn it around and just wondering what the.

The outlook is there and that I have a follow up.

Speaker 11: Thanks, Alexia. Yeah, I think, you know, as we take a look at our performance and overall in terms of shares, et cetera, you know, just talking maybe specifically, despises and seasonings. And dollars are a bit tricky because we're seeing private label and our competitors take more price right now in the last couple of months to catch up to the pricing that we take.

Thanks Alexia.

I think no.

As we take a look at our performance overall in terms of shares et cetera, just talking maybe even specifically to spices and seasonings.

Or a bit tricky, because we're seeing private label and our competitors taking more price right now in the last couple of months to catch up with the pricing that we've taken in the marketplace. So this is helpful. Obviously, because it starts to closed price gaps.

Now, we look at this year's fourth quarter. As we said on the call here earlier, you know, you will see the impact of that DSD continuation in our Hispanic act spices part of our business. It just tends to be that business tends to be heavier in the fourth quarter because of the holiday. So that'll be a little bit stronger than. But to our spices and seasonings business, we continue seeing improving trends in that part of our portfolio and you should expect to see that in the fourth quarter that sequential improvement and performance overall.

Speaker 11: in the marketplace. But this is helpful, obviously, because it starts to close price gap.

Speaker 11: And so, you know, I think you're seeing some stronger dollar performance there, but from a unit standpoint, we believe that performing even better, that lag is even less. And so as we then look to the pipeline activities that we have going on, much like I just mentioned on.

And.

So I think youre seeing some stronger dollar performance there, but from a unit standpoint, we believe we're performing even better.

That lag is even less and so as we then look to the pipeline of activities that we have going on much like I just mentioned.

Speaker 11: on the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum. We've seen a strong pipeline across that part of our portfolio as well as just stronger overall marketing initiatives now that we have really secured supply across all of our portfolio.

On the previous question, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum.

And we feel like we're going to have a strong holiday. I mean, I think the reasons why we feel good about the direction of that part of our portfolio is, you know, when you heard it on the call. We're gaining share and we're gaining distribution on super deal or some spices on the Lowry's opening price point platform was still getting really good performance for that. That's still also building out distribution. And we have one value retailer that we've only begun just starting shipments on and those start to build out, you know, fill out more store locations.

We see a strong pipeline across that part of our portfolio as well as just stronger overall.

Marketing initiatives now that we have really assured supply across all of our portfolio. So when we talk about light at the end of the tunnel, we did see sequential improvement over the course of time as we claw back on distribution points, which we've grown this quarter.

Speaker 11: So when we talk about light again, the tunnel we just seek sequential improvement over the course of time as we fall back on distribution points, which we've grown this quarter.

Speaker 11: as well as just the pipeline of activity and renovation that we have across our portfolio. You're seeing a good view of that right now, but there's more to come. And so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across our other category.

As well as just the pipeline of activity in renovation that we have across our portfolio. You are seeing a good a good view of that right now, but there's more to come and so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories. I think too we think that some of the same things we've done in <unk>.

Because we have like just in that particular account, you know, 85% of locations still yet to come. So if we still see distribution bill happening behind Lowry's overall. And that renovation that we launched here this year, we talked about in the second quarter. It's doing really well. We'll see it getting on shelf. Now we shift about 40%. But, you know, what's appearing on shelf is probably just a little bit different because we don't really have that data.

Speaker 4: Two, we think some of the same things we've done in Europe , for example, where they had, as we mentioned today, they call really good share performance and volume performance in markets like you pay in France, which are similar to the US. So those type of activities we're doing, whether it's innovation.

Europe for example, where they had as we mentioned today on the call really good share performance and volume performance in markets like UK, and France, which are similar to the U S. So those type of.

Activities, we're doing whether it's innovation.

But what we're seeing with when we see that new package come on shelf is that the WASC improves quite a bit. So we're really encouraged by our performance there and we're definitely seeing strong consumer reaction to the new package. And so that will obviously continue to build in the fourth quarter. And we're also turning on our media right now, you know, advertising. You know, the benefits of the package, but then we're also having holiday campaigns start to run too.

Speaker 7: to renovating the line which I've had to stress that we're there

Upgrading renovating the line and have had success over there too.

Speaker 5: Great, thank you. And just as a quick follow up, you talked about the free cash flow allowing you to de-leber more quickly than expected. What's your level of appetite for acquisitions next year and where are the priorities? Is it consumers, it's labor solutions, domestic, international, just wondering how you're thinking about the pipeline on the M&A side and I'll pass it on. Thank you.

Great. Thank you and just as a quick follow up you talked about the free cash flow, allowing you to delever more quickly than expected.

What's your level of appetite for acquisitions next year, where the priority in Disney consumer and flavor solutions domestic international.

Just wondering how youre thinking about the pipeline on the M&A side and I'll pass it on thank you.

So we feel like there's a lot of good momentum in the pipeline. Obviously a lot of that will carry into 2024. But we still feel really good about the strength of that part of our business going into the fourth quarter. You know, what's also helping us though is that, you know, our core categories are performing a little bit stronger than overall total edible in the grocery store. So we see continued strength there just from a category standpoint.

Speaker 7: No, let's see, as you said, the mean we're having really good success on our covering cash flow. We're really excited about that. As we said in the call today, we're going to be lever faster than we thought to get back to our three times target. We're always looking at acquisitions. We have a corporate development team that's always working with internally to look at those assets.

Yeah Alexia.

As you said to be weak.

We're having really good success on our operating cash flow, we're really excited about that as we said on the call today, we're going to delever faster than we thought.

To get back to our three times target, we're always looking at acquisitions I mean, we have a corporate development team that is always working with internally to look at those assets.

We have good performance across other core categories like recipe mix, you know, condiments and sauces. So we expect pretty good performance there. But, you know, there are some categories where we participate in one of our food peers, probably at a much smaller scale. But these are, you know, categories like frozen or the Asian category where we see more volume decline like we've seen in the rest of the center of store. And that part of our business, that's just one part of the portfolio.

Assets.

Speaker 4: We have an appetite as part of a long-term growth algorithm. You know, a third or a four to six percent long-term growth algorithm is M&A. However, you know, we're still in the process of paying down that. I think the fourth quarter is our biggest cash flow quarter, generally.

We have an appetite as part of our long term growth algorithm, a third of our 4% to 6% long term growth algorithm is M&A. However, we're still in the process of paying down debt I think fourth quarter is our biggest cash flow quarter generally.

Speaker 4: As we get into next year though, as we get closer to our targets, I think.

As we get into next year, though as we get closer to our targets I think.

Speaker 4: as assets come up that are attractive. Whether they're consumer-flavored solutions to US international, we really look for things that don't dilute our sales growth. Our top line is really important to us. You look at the past with Chalula and Phona and RB, those are the types of assets we really like. Would we like it to be a bit more international? Yes.

As assets come up that are attractive and whether they're consumer flavor solutions domestic U S. International we really look for things that.

I just gave you some color on it. You know, we're seeing definitely the type of softness that you're seeing in other categories, but the fundamental trends have not shifted, you know, despite this recovery in China being a lot slower, US and Europe are performing as expected. And if you heard in the call, we kind of reaffirmed our guidance on sales, despite China, which is meant to indicate that we still see a strength in the performance of our business overall.

Don't dilute our sales growth our top line is really important to us and you look at the past with Chula and Kona and <unk>. Those are the type of assets really like will be likely to be a bit more international yes.

Speaker 4: The flavor solutions now also is an area where we really really like that and look at photo and Geode as past acquisitions were really happy with that.

Flavor solutions now also is an area, where we've really really.

We like that and look at the photo and CRT is past acquisitions, we're really happy with.

Speaker 4: So, after a long-winded answer, I think we're getting back to where we want to be to get back in the M&A market and as long as it meets those strategies in both consumer-flavor solutions.

Sorry for the long winded answer, but I think we're getting back to where we want to be able to get <unk> back in the M&A market and as long as it meets their strategies.

Great, thanks. I'll pass it on and leave it there. Thanks so much. Our next question is come from the line of Alexia Howard with Bernstein. Please excuse your questions. Good morning, everyone. Good morning. Can I ask about the market share trends that we're seeing in America's consumer? It's obviously then under pressure to some time because of the distribution losses and so on. But I'm wondering if there's light at the end of the tunnel in terms of when either the comparables get easier or innovation helps to turn it around and just wondering what the outlook is there and then I have a follow up.

In both consumer flavor solutions for attractive assets will be will be buyers hopefully at the right price right now paying down our debt as a priority okay.

Speaker 11: for attractive assets will be buyers, hopefully, at the right price. But right now, paying down our debt is our priority.

Thank you very much I'll pass it on.

Speaker 3: Our next question is from the line of Max Gumpert with BNP Parma. Please excuse me.

Our next question is from the line of Max comfort with BNP Parma. Please proceed with your question.

Speaker 6: Hey, thanks for the question. A number of your broader US package food theorists have been talking about value-seeking behavior, whether it's moving down to cheaper brands in private label or channel shifting or simply buying less units of food. If you mentioned some comments earlier about the movement to larger package sizes that you're seeing, but I'm curious if you can talk more broadly about how value-seeking behavior is impacting your business.

Hey, Thanks for the question a number of your broader U S. Packaged food Terry had been talking about value seeking behavior, whether it's moving down and cheap by brands and private label our channel shifting our.

Thanks, Alexia. Yeah, I think, you know, we take a look at our performance and overall in terms of shares, et cetera, you know, just talking, maybe specifically, despite this and seasonings. And the dollars are a bit tricky because we're seeing private label and our competitors take more price right now in the last couple of months to catch up to the pricing that we've taken in the marketplace. But this is helpful, obviously, because it starts to close price gaps.

Simply buying less units.

You mentioned some comments.

Earlier about the movement to larger package sizes that youre seeing that I'm curious if you can talk more broadly about how value seeking behavior is impacting your business.

Speaker 6: Partically given, you're also a large producer of private label spaces.

Particularly given Europe , often a large producer of private label spices and seasonings, thanks very much.

Speaker 11: Thanks for the question. Receive value play out through many different types of actions from consumer.

And and so, you know, I think you're seeing some stronger dollar performance there, but from a unit standpoint, we believe the performing even better that lag is even less. And so as we then look to the pipeline activities that we have going on, much like I just mentioned on on the previous question, you know, whether it's parts of our product line that are really starting to build momentum or distribution that builds momentum.

Well thanks for the question.

We're seeing value play out.

Through many different types of actions.

From consumer some are going to larger sizes, and we see that quite a bit.

Speaker 11: Some are going to larger sizes and we see that quite a bit. And as an example of where we're taking an opportunity to continue growing even more quickly, and that part of our portfolio, we're definitely seeing sustainable, continue trends towards larger sizes.

As an example of where we're taking an opportunity to continue growing even more quickly.

That part of our portfolio, we're definitely seeing.

Sustainable continued trends towards larger sizes.

You know, we see a strong pipeline, you know, across, you know, that part of our portfolio, as well as just stronger overall, you know, marketing initiatives now that we have really secured supply across all of our portfolio. So when we talk about light again, the tunnel, we just seek sequential improvement over the course of time, as we fall back on distribution points, which we've grown this quarter, as well as just the pipeline of activity and renovation that we have across our portfolio.

Speaker 11: It was also interesting about larger sizes, at least in the categories of it, that we have, especially spices and seasonings, is that the purchase rate is still just as fast as it was with a smaller size. So, you know, people are going through, when they have it in the household, they're going through a little bit, you know, just as fast or more quick.

Also interesting about larger sizes at least into categories with.

That we have.

Especially spices and seasonings is that the purchase rate is still just as fast as it was with a smaller size. So people are going through when they have it in the house will be going through a little bit.

Just as faster more quickly, but the other way value kind of.

Speaker 11: But the other way value presents itself to is opportunities like this opening price point. With the pricing that happened in the market, as we've talked about before.

Presents itself to us opportunities like this opening price point with the pricing that has happened in the market as we've talked about before.

You're seeing a good, a good view of that right now, but there's more to come. And so we do feel pretty confident about our ability to continue driving sequential improvement, whether it's in spices and seasonings or across other categories. Then too, we think some of the same things we've done in Europe, for example, we had, as we mentioned today in the call, really good share performance and going performance in markets like you can France, which are similar to US.

Speaker 11: It created a price pocket that we feel like we needed to fill with a brand like Louries And so that's planning a role in our portfolio That's offering a brand to consumers and a lot of consumers still prefer brand

It created price pocket that we feel like we needed to fill with a brand like lotteries and so that'll that's playing a role in our portfolio, that's offering a brand to consumers and a lot of consumers still.

For our brands and it's allowing them to move towards a brand thats.

Speaker 11: It's allowing them to move towards a brand that's at a lower opening price point and fills the need. We're seeing a lot of success with that too.

A lower opening price point and fills the need and were seeing a lot of success with that too, but the other way, we're really talking a lot about value is directly to the consumer.

So there's a type of activities we're doing, whether it's innovation, upgrading and renovating the line that has been stress over there too. Great, thank you. And just as a quick follow up, you talked about the free cash flow, allowing you to deliver more quickly than expected. What's your level of appetite for acquisitions next year? And where are the priorities? Is it consumer? Is it flavor solutions, domestic, international? Just wondering how you're thinking about the pipeline on the M&A side, and I'll pass it on.

Speaker 11: The other way we're really talking a lot about value is directly to the consumer.

Speaker 11: especially if you think about a lot of our communication right now over the past year has been value oriented and we're talking about the role that you know our portfolio plays in terms of providing flavor for pennies of serving and that is really having a positive impact.

Especially if you think about a lot of our communication right now over the past year has to be value oriented and we're talking about the role that.

Our portfolio plays in terms of providing flavor for pennies of serving them.

And that is really having a positive impact plus a lot of our content is also focusing on how consumers continue to save money by creating let's say for example, just larger batch sizes of food. So they can have leftovers for a couple of nights in a row or tricks and hacks like that that allow consumers to create even more value in it.

Speaker 11: A lot of our content is also focusing on how consumers continue to save money by creating what's safe, for example, just larger batch sizes of food so they can have leftovers for a couple nights in the row.

Thank you. No, let's see, as you said, we're having a really good success on our operating cash flow. We're really excited about that. As we said in the call today, we're going to deliver faster than we thought to get back to our three times target. We're always looking at acquisitions. I mean, we have a corporate development team that is always working internally to look at those assets. We have an appetite. It's part of our long-term growth algorithm.

Speaker 11: or tricks and hacks like that that allow consumers to create even more value and stretch the food dollar further.

<unk> dollar even further that's where we see our category really playing a role in the households, especially during this kind of.

Speaker 11: That's what we see our category really playing a role in the household, especially during this kind of...

Speaker 11: with there's a lot of consumer concern around inflation, our categories are playing a helpful role in that. So we're looking at it from a number of different angles, but I just illustrated three right there that we are hitting pretty hard during this period of time.

Where theres a lot of consumer concern around inflation, our categories are playing a helpful role in that so we're looking at it from a number of different angles, but I just illustrated three right. There that we are hitting pretty hard during this period of time.

A third of our four to six percent long-term growth algorithm is M&A. However, we're still in the process of paying down that. I think the fourth quarter is our biggest cash flow quarter, generally. As we get into next year, though, as we get closer to our targets, I think assets come up that are attractive. Whether they're consumer, flavor solutions, domestic, US, international. We really look for things that don't dilute our sales growth.

Thanks, very helpful I'll pass it along.

Speaker 3: Thank you. Our next question from anoyed of Adam Samuelson with Goldman Sachs. Please use your for yes.

Thank you. Our next question comes from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.

Yes, Thank you and good morning, everyone.

Speaker 13: one word. um... i guess they need to take and your question and maybe a slightly different kind of light and uh... anyway to help frame the distribution kind of gains that you you're seeing and expect to see

Good morning, I guess, maybe just trying to take Andrew's question, and maybe a slightly different kind of light.

Our top line is really important to us. You look at the past with Chalula and Phona and RB. Those are the types of assets we really like. Would we like it to be a bit more international? Yes. We're getting back to where we want to be, to get back in the M&A market. As long as we meet their strategies in both consumer, flavor solutions for attractive assets, we'll be buyers, hopefully, at the right price.

And then is there any way to help frame the distribution gains that you are seeing and expect to see.

Speaker 13: Over the incoming quarters, anyway to quantify how we should think about total distribution growth and where that will peak from a TDP perspective into 2024. It's harder to fully see that expansion in the scanner data. And so I'm wondering if part of it is growth and certain non-measured channels or values retailers that aren't captured in the future.

Over.

In coming quarters, any way to quantify kind of.

How we should think about total distribution growth and where that will peak from TDP perspective.

2024.

It's harder to fully see that expansion and in the scanner data and so I'm wondering if part of it is growth in non measured channels, our value retailers that arent captured.

Nielsen.

Right now, paying down our debt is our priority. Thank you very much, I'll pass it on. Our next question is from the line of Max Gumport with BMP Parama. Let me just use your question. Hey, thanks for the question. A number of your broader US package food theorists have been talking about value-seeking behavior, whether it's moving down to cheaper brands in private label or channel shifting or simply buying less units of food.

Speaker 11: Well, Adam, just a few things around TDPs. I'm not going to be talking about what to expect in 2024, just because we'll talk about that guidance as we look at early next year.

Well, Adam just a few things around <unk>.

Going to be talking about what to expect in 2024.

We'll talk about that guidance as we look at.

Early next year.

Speaker 11: By just talking a little bit more about TDP performance, it remains an important area of focus for us, and we've been taking a lot of action to restore distribution.

Just talking a little bit more about GDP performance. It remains an important area of focus for us and we've been taking a lot of action to the store distribution.

Speaker 11: which really lost the supply over the last one or two years. I think it's an important reminder that about half of those TPP losses are resulted just perlact as discontinuations that we made.

Which was really lost the supply over the last one or two years I think it's an important reminder, that about half of those TDP losses are a result of just proactive discontinuation that we made.

If you mentioned some comments earlier about the movement to larger package sizes that you're seeing, but I'm curious if you can talk more broadly about how value-seeking behavior is impacting your business, particularly given you're also a large producer of private label spaces and seasonings. Thanks very much. Thanks for the question. Receive value play out through many different types of actions from consumer. Some are going to larger sizes and we see that quite a bit.

Speaker 11: And those are not likely to be restored. But we are starting to see TDP growth, something which we said would start to come this year in the third quarter. And we believe that performance is improved versus like the previous two quarters.

And those who are not likely to be restored, but we are starting to see GDP growth something which we said will start to come this year and the third quarter and we believe that the performance.

Improved versus like the previous two quarters of the year.

Speaker 11: And I would also just share with you that our assortment on shelf now is even more productive than it was for pre-COVID. So that velocity, those turns that we get on shelf from that assortment there is actually even more productive, not only for McCormick, but also for the retailer. And so that's something really important to pass along.

And I would also just share with you that our assortment on shelf now has even more productive and that was versus pre COVID-19. So that philosophy of those turns that we get on shelf from that.

Assortment, there is actually even more productive not only for Mccormick, but also for the retailer and so thats something really important to pass along.

As an example of where we're taking an opportunity to continue growing and eating more quickly in that part of our portfolio, we're definitely seeing sustainable continued trends towards larger sizes. It's also interesting about larger sizes, at least in the categories of it, that we have, especially spices and seasonings, is that the purchase rate is still just as fast as it was with a smaller size. People are going through when they have it in the household, they're going through a little bit just as fast or more quickly.

Speaker 11: And we'll start to see more distribution come online as retailers reset their shelves. We're seeing a bit of that happen right now as we speak going into the fourth quarter, but we expect to see the more of that as we go into 24. So that's one, I think, you know, context around TDPs and distribution that we think provides context in color.

We will start to see more distribution come online as retailers reset their shelves, we're seeing a better back half of it right now as we speak going into the fourth quarter, but we expect to see even more of that as we go into 'twenty four so thats, one I think context around PDP and distribution.

<unk> provides context and color.

Speaker 11: We will continue to accelerate innovation. And that's something that we did in 2023. We'll continue to do that in future fiscal years. That's what also build on the sort of the GDP momentum and distribution growth that we see. I think, you know,

We will continue to accelerate innovation and that's something that we did in 2023, we'll continue to do that in future fiscal years. That's we'll also build on the sort of the GDP momentum in distribution.

Your value presents itself, too, is opportunities like this opening price point. With the pricing that's happening in the market, as we've talked about before, it created a price pocket that we feel like we needed to fill with a brand like Lowry's. That's playing a role in our portfolio. That's offering a brand to consumers and a lot of consumers still prefer brands. It's allowing them to move towards a brand that's a lower opening price point and fills the need.

Growth that we see I think.

We're seeing a lot of success with that, too. The other way we're really talking a lot about value is directly to the consumer, especially if you think about a lot of our communication right now over the past year, it has to be value oriented. We're talking about the role that our portfolio plays in terms of providing flavor for pennies of serving. That is really having a positive impact. Plus, a lot of our content is also focusing on how consumers continue to save money by creating, let's say, for example, just larger batch sizes of foods that they can have leftovers for a couple nights in the row, or tricks in hacks like that that allow consumers to create more value and stretch the food further.

Speaker 11: Those are some of the points I think that are, you know, without calling out a specific PDP member in game, you know, to excess. We continue to see them continue improvements, sequential improvement, as we look at this over time.

Those are some of the points that I think that without calling out a specific TDP number and gain to access we continue to see continued improvement sequential improvement as we look at this over time and as we mentioned in previous calls it will take a little bit of time to get it back, but we are still making forward progress on this.

Speaker 11: And as we mentioned in previous calls, it will take a little bit of time to get it back, but we are still making for progress.

Speaker 13: Okay, that's helpful. And if I could just ask a separate question on the flavor solution segment. And as you think about some of the different customer types that you have in geographies, how would you frame kind of recent and bound kind of bit activity in RFPs and contract win rates? Are you seeing your customers?

Okay. That's helpful and if I could just ask a separate question on the flavor solutions segment and as you think about some of the different customer types that you have in geographies. How do you how would you frame kind of recent inbound kind of bid activity in rfps and contract win rates.

Are you seeing your customers accelerate their innovation agenda to try.

Speaker 13: accelerate their innovation agenda to drive growth in their business or is activity levels slowing down and just any color. I just think about that pipeline of new business wins kind of. How would you frame this?

Tried to drive growth in their business.

Or is activity levels slowing down and just any color I, just think what that pipeline of new business wins kind of how would you frame that.

Speaker 11: You know, it's point to our performance in the Americas as an example as to how to think about our curma men on our flavor of physics.

I would point to our performance in the Americas as an example, as to how to think about our current momentum on our flavor business.

That's what we see our category really playing a role in the household, especially during this kind of, with a lot of consumer concern around inflation, our categories are playing a helpful role in that. We're looking at it from a number of different angles, but I just illustrated three right there that we are hitting pretty hard during this period of time. Thanks, very helpful. I'll pass that along. Thank you. Our next question is from the line of Adam Samuelson with Goldman Sachs.

Speaker 11: You know, we had really good sales growth, but we also had some volume growth. And that's an example of what we're seeing, not only through our flavors business, but also branded food service. And we are starting to, we are growing share in a number of the strong categories that we've participated. We talked about performance nutrition or the health and market. We see it happening there, or even in alcoholic beverages. We have been seeing some nice growth and gains.

We had really good sales growth, while we also had some volume growth and that's an example of what we're seeing not.

Not only through our flavors business, but also branded foodservice and we are starting to we are growing share in a number of the.

Strong categories that we participate in and we've talked about performance nutrition or the.

The health and market, we see it happening there or even an alcoholic beverages.

We have been seeing some nice growth and gains in that part of our business that was there anything particularly unique at this point in the year versus what it was like early in the year No I don't think I can point to anything that's terribly unique that we haven't already talked about before but this has been an element of sort of continued sequential improvement in performance.

Speaker 11: And that part of our business sells, or anything particularly unique at this point in the year versus what it was like early in the year. No, I don't think I can point to anything that's terribly unique that we haven't already talked about before, but this has been an element of sort of continued sequential improvement of performance.

Pleasure to see you here. Thank you. Good morning, everyone. Good morning. I guess maybe trying to take Andrew's question and maybe a slightly different kind of light. Brendan, is there any way to help frame the distribution kind of gains that you're seeing and expect to see over the incoming quarters? Anyway, to quantify kind of how we should think about total distribution growth and where that will peak from a GDP perspective into 2024.

Speaker 11: been able to grow a little bit of volume here, probably because of the strength of our products and technology to go into the categories we play in.

<unk> been able to grow a little bit of volume here, probably because of the strength of our products and technology that goes into the categories. We plan.

Speaker 11: And so that's, I think some of the context there, we're happy to be growing share, where I believe that we have the right plans. Now, if you look at elsewhere within flavor solutions.

And so that's I think some of the context, there we're happy to be growing share ware.

I believe that we have the right plans now if you look at elsewhere within flavor solutions.

It's harder to fully see that expansion in the scanner data and so I'm wondering if part of it is growth in certain non-measured canals or value retailers that aren't captured in Wilson? Well, Adam, just a few things around TDPs. I'm not going to be talking about what to expect in 2024 just because we'll talk about that guidance as we look at early next year. By just talking a little bit more about TDP performance, it remains an important area of focus for us and we've been taking a lot of action to restore distribution, which we've really lost the supply over the last one of two years.

Speaker 11: You know, in our EMEA business, tends to be more heavily weighted towards the QSR part of our course, you know, or our customer base.

Our EMEA business tends to be more heavily weighted towards the <unk> part of our.

But where our customer base, they're not seeing or type of traffic and promotions that they have in let's say the prior year. So we still see a little bit of pressure on overall volumes there.

Speaker 11: They're not seeing the type of traffic and promotions that they have in, let's say, the prior year. So we still see a little bit of pressure on overall volume.

I think it's an important reminder that about half of those TDP losses are resulted just proactive discontinuations that we made. And those are not likely to be restored, but we are starting to see TDP growth, something which we said would start to come this year in the third quarter. And we believe that performance has improved versus like the previous two quarters of the year. And I would also just share with you that our assortment on shelf now is even more productive than it was versus pre-COVID.

Speaker 2: Conversely, in Asia-Pacific, our QSR business there is actually doing quite well. Customers are turning back on promotions. They're trying to drive more traffic in their stores. And so we, as a result of also seeing some nice volume growth.

Conversely in Asia Pacific Our <unk> business, there is actually doing quite well customers are turning back on promotions. They are trying to drive more traffic in their stores and so we as a result, we're also seeing some some nice volume growth in that part of our portfolio in flavor solutions with dialing back to.

Speaker 14: and that part of our portfolio and flavor solutions. But dialing back to sort of that flavor part of our category, we're pleased with the performance that we've made so far this year, and it's continued momentum, but nothing that there's certain new inflections point to share with you. Okay, I appreciate all that color, I'll pass it on. Thanks. Our next questions.

Sort of that flavor part of our category, we're pleased with the performance that we've.

We have made so far this year and it's continued momentum, but nothing that sort of a new inflection point to share with you.

Okay I appreciate all that color I'll pass it on thanks.

Our next questions come from the line of Steve powers with Deutsche Bank. Please proceed with your question.

So that velocity those turns that we get on shelf from that assortment there is actually even more productive, not only for McCormick, but also for the retailer. And so that's something really important to pass along. And we'll start to see more distribution come online as retailers reset their shelves. We're seeing a bit of that happened right now as we speak going into the fourth quarter, but we expect to see the more of that as we go into 24.

Hey, great and good morning, Thank you Steve.

Speaker 8: So I wanted to ask on the incremental gross margin improvement that you see in your outlook, this quarter, building on a raise that happened last quarter as well. And just if you could put a little bit...

Hey, so I wanted to ask on.

The incremental gross margin improvement that you do.

You see in your outlook this quarter building on.

Arrange that happened last quarter as well and just if you could put a little bit.

Speaker 8: of context and detail around exactly what's driving that incremental gross margin upside question number one. And question number two is as we've seen that gross margin kick up over the balance of the year, we haven't seen you change your your your reinvestment strategy in terms of brand marketing. Just want a little bit of color and context is to as to why that isn't a source of reinvestment as you do realize that gross margin.

Of.

Context, some detail around exactly what's driving that incremental gross margin upside question number one.

Question number two is as we've seen that gross margin tick up over the balance of the year. We haven't seen you change your your your reinvestment strategy in terms of brand marketing.

So that's one, I think context around TDPs and distribution that we think provides context and color, we will continue to accelerate innovation. And that's something that we did in 2023. We'll continue to do that in future fiscal years. That's what also build on the sort of the TDP momentum and distribution growth that we see. I think those are some of the points that I think that are without calling out a specific TDP member and gain to excess.

I, just wanted a little bit of color and context as to as to.

Why that isn't a source of reinvestment as you do realize that gross margin upside.

Speaker 4: Well, thanks, Steve. This is Mike. I'll take that one. I'm surprised it took five questions to get to Gross Margin. So thanks, Rick. Yes, you're welcome. That's a good question. Now, well, Gross Margin, really pleased for the Gross Margin performance this year.

Well. Thanks, Steve This is Mike I'll take that one I'm surprised it took five questions to get the gross margins. So thanks for asking that.

First of all we're really pleased with the gross margin performance. This year, yes, we've had improvement we had a strong third quarter you think about the things we're doing with the cost recovery through our pricing, which we've really been successful this year.

Speaker 4: Yeah, we've had improvement. We have strong third quarter. You think about the things we're doing with the cost recovery through our pricing, which we've really been successful at this year. You know, the GLE and CTA commitment to put out the beginning of the year were really happy with our performance there. Across both side, we've set the other thing. These margin improvements are happening both in the consumer and flavor solution side, which is...

We continue to see a continued improvement sequential improvement as we look at this over time. And as we mentioned in previous calls, it will take a little bit of time to get it back, but we are still making forward progress on this. Okay, that's helpful. And if I could just ask a separate question on the flavor solution segment. And as you think about some of the different customer types that you have and geographies, how would you frame kind of recent and bound kind of bit activity?

Joey in CCI commitments, we put out at the beginning of the year, we're really happy with our performance there across both segments. That's the other thing is <unk>.

Margin improvements are happening both in our consumer and flavor solutions side, which is really which is which is great.

Speaker 4: really, which is great. As far as raising for the year, as you know, we've had good performance here.

As far as raising for the year as you know.

We've had good performance year to date and.

Speaker 4: you know, even with some of the challenges in China, we know our strong underlying performance has really held through. So that's why we wouldn't raise.

And RFPs and contract win rates? Are you seeing your customers accelerate their innovation agenda to drive growth in their business? Or is activity levels slowing down and just any color? I think about that pipeline of new business wins kind of. How would you frame? that. You know, it's point to our performance in the Americas as an example as to how to think about our, our current momentum on our flavor of business.

Even with with some of the challenges in China are strong underlying performance. There has really held through so as to why we wouldn't raise really the A&P spend I mean, we feel really comfortable where we are from A&P with our current guide.

Speaker 4: really the AMP spent. I mean we feel really comfortable where we are from and with our current guide.

Speaker 4: The third quarter was up 8%, and it was the highest dollar amount we've ever spent in the third quarter. So we feel very effective.

The third quarter was up.

8% and it was the highest dollar amount we've ever spent in the third quarter. So we feel we're very effective there.

Speaker 4: Actually, CCI is a topic, we get savings across all costs of goods, so we're together on that screening, too. An AMP is an area where the teams have gotten real cost savings or...

CPI is a topic, we get savings across all cost of goods sold but it again it on SG&A and A&P is an area, where the teams have gotten real cost savings or efficiencies on our advertising program. So it's even higher than you see.

You know, we had really good sales growth, but we also had some balling growth. And that's an example of what we're seeing not only through our flavors business, but also branded food service. And we are starting to, we are growing share in a number of the, you know, strong categories that we've participated in. We talked about performance with nutrition or, you know, the health and market. You know, we see it happening there, or even in alcoholic beverages.

Speaker 4: efficiencies in our advertising program. So it's even higher than you see from a dollar perspective.

From a dollar perspective, so I think we're confident where we are in gross margin. We were building back. If you go back to pre <unk> 19 or <unk>.

Speaker 4: you know, I think we're confident where we are in gross margin. You know, we've we've we've built them back yet. If you go back to you know, pre 19 or pre COVID in 2019, a gross margins were around 40 percent.

<unk> in 2019, our gross margins were around 40% given our implied guidance. This year gets you.

We have been seeing some some nice growth and gains in that part of our business sales, or anything particularly unique at this point in the year versus what it was like it, you know, early in the year. No, I don't think I can point to anything that's terribly unique that you, we haven't already talked about before, but this has been an element of sort of continued sequential improvement of performance. We've been able to grow a little bit of volume here probably because of strength of our products and technology to go into the categories we plan.

Speaker 4: Even our implied guidance this year gets you around 37%.

Around 37%.

Speaker 4: The interesting thing is if you look at the map on the pricing dilution that has happened, it's been, it means over 500 basis points headwind to us, which you can see we're down 300 basis points. So during that time through CCI and other things, we've built, we've captured some of that back, which we continue to see in the future as we get back to those pre-COVID gross margin and operating profit level.

The interesting thing is you can look if you look at the map on the pricing dilution that has happened it's been it means over over 500 basis point headwind to us, which you can see we're down 300 basis points. So during that time, three CCI and other things. We've built we capture some of that back which we continue to see in the future as we get back to those pre COVID-19 gross margin and <unk>.

Operating profit levels.

Speaker 11: Now Steve, I'm, there was a question in there about ANP2 and just to really kind of build on that, you know, in that...

And so that's, I think some of the context there. We're happy to be growing share, where I believe that we have the right plans. Now, if you look at elsewhere within flavor solutions, you know, in our EMEA business, tends to be more heavily weighted towards the QSR part of our or our customer base. They're not seeing the type of traffic and promotions that they have in, let's say, the prior year. So we still see a little bit of pressure on overall volumes there.

Let's see if I can.

There was a question in there about A&P too and just to really kind of build on that.

And that.

Speaker 11: We are up significantly in the third quarter, I understand, at 8%, but we, it's probably our highest historical spend, right? So we're really putting a lot more, and the AMP is sort of called out, and we'll have a strong level again in the fourth quarter, and these are going into a lot of important campaigns right now. So I just want to reinforce, I think, we are seeing still an increase in spend in that part of our.

We were up significantly in the third quarter I understand about 8%, but was probably our highest historical spend rates. So we're really putting a lot more the A&P as we sort of called out and we will have a strong level again in the fourth quarter and these are going into a lot of important campaigns right now so I just wanted to reinforce a inc.

We are seeing still.

Conversely, in Asia-Pacific, our QSR business there is actually doing quite well. Customers are turning back on promotions. They're trying to drive more traffic in their stores. And so we, as a result of also seeing some some nice volume growth in that part of our portfolio or flavor solutions. But dialing back to, you know, sort of that flavor part of our category, we're pleased with the performance that we've made so far this year.

The increase in spend in that part of our.

And that line in the P&L.

Speaker 8: Okay, that's great. And so I guess that's helpful. Thank you. I just plain back the various puts and takes on gross margin. Is it fair to say that the biggest sort of upside surprise for you over the course of the year has just been successful price realization or

Okay, that's great.

I guess.

That's helpful. Thank you, Mike just playing back.

But there is puts and takes on gross margin is it fair to say that.

Sort of upside surprise for you over the course of the year has just been <unk>.

Successful price realization or.

Speaker 2: are elements of business mix or other other other drivers there because it feels like the productivity has come in solidly but roughly in line with I think original expectations cost completion hasn't changed.

And it's continued momentum. But nothing that there's sort of a new inflection point to share with you. Okay, I appreciate all that color. I'll pass it on. Thanks. Our next question comes from the line of Steve Powers with Deutsche Bank. Please hear if there are questions. Hey, great and good morning. Thank you. So I wanted to ask on the incremental gross margin improvement that you see in your outlook, this quarter building on, you know, a raise that happened last quarter as well.

Are there elements of business mix or other other other drivers there because it feels like the productivity has come in solidly but roughly in line with I think original expectations cost completion hasnt changed materially. So it seems like the buckets has to be pricing or the way to say it seems everything is kind of move in the right direction and we were.

Speaker 4: materially, so it seems like the bucket has to be pricing or or doing it. So as they have said, Steve, everything is going to move in the right direction. We were successful getting our post recovery. We got some pricing earlier as you probably infer from some of our pricing numbers. So we got our pricing faster than last year, which was helpful.

Successful getting our cost recovery, we got some pricing earlier as you can probably infer from some of our pricing numbers. So we got our pricing faster than last year, which was helpful.

And just if you could put a little bit of context and detail around exactly what's driving that incremental gross margin upside question number one. And question number two is as we've seen that gross margin kick up over the balance of the year, we haven't seen you change your, your your reinvestment strategy in terms of brand marketing. Just want a little bit of color and context as to why that isn't a source of reinvestment as as you do realize that gross margin upside.

Speaker 4: You knew GLE and CCI programs like I said have met targets and frankly we're a bit prudent this year You know, I think as we said as we gave guidance in January After last year we wanted to make sure we hit our numbers There was a lot of big assumptions going in into 2023 pricing GLE program things like that and and we do the China Yeah, we were counting on a China recovery which impacts not only gross margin but operating profit

Joey in CCI programs like I said I've met targets and frankly, we are a bit prudent this year I think as we said as we gave guidance in January of after last year. We wanted to make sure. We hit our numbers. There was a lot of big assumptions going in into 2023 pricing Doa program things like that and we knew that China, we were counting.

China recovery, which impacts not only gross margin or operating profit.

Speaker 4: So we thought at this time after Q3, where we see us spending for the year, we felt very good line of sight, the commodity cost things like that too, which gave us the comfort to to.

So we thought at this time after Q3.

Where we see us ending for the year, we felt we had good line of sight to the commodity.

Commodity costs things like that to which gave us the comfort to get there. The other thing too is as you think of that and when Brandon will talk a little bit about the strong performance of our underlying performance in things like spices and seasonings. When you look at our performance in other markets. We've had really good portfolio really good portfolio mix and some of the things we're doing around portfolio optimization.

Speaker 7: Get there. The other thing too is, as you think of then, when branding was talking a little bit about the strong performance or underlying performance and things like spices and seasonings and you look at performance in other markets.

Well, thanks, Steve. It's a mic. I'll take that one. I'm surprised it's a lot of questions to get to gross margin. So thanks for asking that question. No, well, first of all, we're really pleased with the gross margin performance this year. Yeah, we've had improvement. We have strong third quarter. You think about the things we're doing with the cost recovery through our pricing, which we've really been successful at this year. You know, the GLE and CTA commitment to put out the beginning of the year were really happy with our performance there across both segments.

Speaker 4: We had really good portfolio, a really good portfolio mix.

Speaker 8: And some of the things we're doing are totally optimization with pruning low margin business, it does help grow the margins also, and we'll help us as we go into the future. Yeah, okay, very good. Thank you so much.

Pruning low margin business. It does help gross margins also and will help us as we go into the future.

Okay very good thank you so much.

That's the other thing. These margin improvements are having both in the consumer and flavor solution side, which is great. As far as raising for the year, as you know, we've had good performance here today. Even with some of the challenges in China, our strong underlying performance has really held through. So why we wouldn't raise really the AMP spend? We feel really comfortable where we are from AMP with our current guide. The third quarter was up 8% and it was the highest dollar amount.

Yes.

Our next question comes from the line of Matt Smith with Stifel. Please proceed with your questions.

Hi, Good morning, Thank you for taking my question.

Speaker 11: If I could follow up on the margin commentary in the headwind from pricing dilution. As we look at the flavor solutions business, you've been making margin recovery progress there, but can you talk about the factors that are keeping the current margin for an or basis points or so below historical levels? And how much of that is the mechanical pricing impact versus other factors? And then what supports the margin recovery from here? Yeah. Yeah.

Thanks, Mike and good morning.

If I could follow up on the margin commentary and the headwind from pricing dilution as we look at the flavor solutions business, you've been making margin recovery progress there, but can you talk about the factors that are keeping the current margin 400 basis points are still below historical levels and how much of that is the mechanical pricing impact versus other factors.

And then what supports the margin recovery from here.

We've ever spent in the third quarter. So we feel we're very effective there. Actually, CCI is a topic. We get savings across all costs of goods all but we get it on actually an AMP is an area where the teams have gotten real cost savings or efficiencies in our advertising program. So it's even higher than you see from a dollar perspective. So I think we're confident where we are in gross margin.

Yes, it's a great question Matt.

Speaker 7: If you think about it pre-COVID, we are at 14 and a half percent operating process. Which at the time we were really happy with because we came from a low of around 6% several years before. But we also did acknowledge that as the migrator portfolio, we had higher aspirations to get higher than that as we migrated to more flavor-type products.

If you think about it pre COVID-19, we were at 14, 5% operating profit, which at the time, we were really happy with because we came from a low of around 6% several years before but we also did acknowledge that as we migrate our portfolio, we had higher aspirations to get.

A higher than that as we migrate into more flavor type products.

Speaker 4: You know, COVID has been in the cost related to that. It really has been a big challenge to us ahead when, and also the huge cost increases by the fifth flavor solution. So last year we were 8% as you know. This year, we're looking to build back here to date, we're around 10%. So probably around that for the end of the year. So 200 basis point improvement this year, back to the, you know, if you...

We've built them back. If you go back to pre-COVID in 2019 in gross margins, we're around 40%. These are our implied guidance this year. It gets you around 37%. The interesting thing is if you look at the map on the pricing delusion that has happened, it's over 500 basis points headwind to us, which you can see we're down 300 basis points. So during that time through CCI and other things, we've built, we've captured some of that back, which we continue to see in the future as we get back to those pre-COVID gross margin and operating profit levels.

Yes.

And the costs related.

Related to that it really been a big big.

Challenged us a headwind and also the huge cost increases benefit flavor solutions. So last year, we were at 8% as you know this year with.

We are looking to build back year to date were around 10%. So.

Around that for the end of the year, So 200 basis point improvement this year.

Back to that.

Speaker 7: In a back to your question on dilution, at the operating process level, we've had about a 300 basis point math dilution impact on flavor solution.

And back to your question on dilution at the operating profit level, we've had about a 300 basis point math dilution impact on flavor solutions. So theoretically if that didn't happen I don't know if it did happen, but that 10% will become 13%. So we're about 150 basis points short of that pre 19 or pre COVID-19.

Speaker 7: So theoretically, if that didn't happen, I don't know what did happen, but that 10% would become 13%.

Miles. Steve, there was a question in there about ANP, too, and just to really kind of build on that, you know, in that we are up significantly in the third quarter, I understand, 98%, but we are probably our highest historical spend, right? So, we're really putting a lot more in the ANP as we sort of called out, and we'll have a strong level again in the fourth quarter, and these are going into a lot of important campaigns right now, so I just want to reinforce the pink gut.

Speaker 4: So about 150 basis points short of that pre-19 or pre-COVID-19 margin improvement.

<unk> margin improvement and things like we've done with Joey which we see continuing are wrapping into next year.

Speaker 7: And things like we've done with GUI, which we see continuing and wrapping it to next year.

Speaker 7: The dual running costs were primarily in our flavor solutions business in the UK manufacturing facility. That goes away partially next year and the year after it's totally gone, which is great.

The dual running costs, we're having it primarily in our flavor solutions business and our U K manufacturing manufacturing facility.

It goes away, partially next year and the year after is totally gone which is great.

Speaker 7: continue TCI. So these type of things will get us back to and and and portfolio migration. Community of the low margin business we talked about some of the private label food service.

Continued CCI today's type of things will get us back to.

We are seeing still an increase in spend in that part of our, in that line of the panel. Okay, that's great. So, I guess that's helpful. Thank you. Mike could just plain back the various puts and takes on gross margin. Is it fair to say that the biggest sort of upside surprise for you over the course of the year has just, has been successful price realization, or are elements of business mix or other other, other drivers there?

Portfolio migration pruning of low margin business, we talked about some of the private label foodservice business in EMEA. This call those type of things, we're focused really really well on getting our margins up and some of the things when Brandon talks about performance nutrition and beverage those are the flavor type of items.

Speaker 4: business in the United States. This call, those type of things were focused really, really well on getting our marks.

Speaker 11: And some of the things when Brandon talks about performance, nutrition, and beverage, those are the flavor type of items that are growing faster. We really like those. And they can help margin up our whole flavors, solutions portfolio. But we do like the progress we're making independent of.

Growing faster, we really like those or they can help margin up our whole flavor solutions portfolio, but we do like the progress, we're making independent of price.

Cause it feels like the productivity has come in solidly, but roughly in line with, I think original expectations, cost inflation hasn't changed materially. So, it seems like the bucket has to be priced here, or... No, it seems that everything is going to move in the right direction. We were successful getting our cost recovery. We got some pricing earlier, as you probably infer from some of our pricing numbers, so we were, we were going to pricing faster than last year, which was helpful.

Speaker 11: question pollution just on overall improvement in the margin there. So we do believe we'll move into the right direction. Okay, thank you for that. I can pass it on.

<unk> dilution just an overall improvement in the margin there. So we do believe we're moving in the right direction.

Okay. Thank you for that I can pass it on.

Thanks, Mike.

Our next questions come from the line of Robert Moskow with TD Cowen. Please proceed with your question.

Speaker 12: Hi, thanks for the question. See you, Bob. Good morning. I wanted to know about the guide, the implied guide for organic sales growth in fourth quarter. It looks like it's about 3%. And that marks a substantial deceleration from the first three quarters. And then even when we try to look at that on a four-year basis, just using like 2019 has to base.

Hi, Thanks for the question Rob.

Good morning.

I wanted to know about the guide the implied guide for organic sales growth in fourth quarter. It looks like it's about 3% and that marks.

You know, GOE and CCI programs, like I said, have met targets. And frankly, we're a bit prudent this year. You know, I think as we said, as we gave guidance in January, after last year, we wanted to make sure we hit our numbers. There was a lot of big assumptions going into 2023 pricing, GUI program, things like that. And we knew the China, you know, we were counting on a China recovery, which impacts not only gross margin of the operating profit.

Substantial deceleration from the first three quarters and then even when we try to.

Look at that on a four year basis, just using like 2019 as the base.

Speaker 3: It's again, you know, a big decline. We're all looking at the US retail data in Nielsen and IRI. It's all decelerating. Are you taking that into account in your guide? And, you know, if so, it sounds a little like a disconnect from the expectations for a very strong holiday.

Again, a big decline.

We're all looking at the U S retail data and Nielsen and IRI its all decelerating.

So, we thought at this time, after Q3, you know, where we see us spending for the year, we felt, we made a good line of sight, the commodity cost, commodity cost, things like that too, which gave us the comfort to get there. The other thing too is, as you think of then, when branding was talking a little bit about the strong performance, or underlying performance, and things like spices and seasonings, and you look at our performance in other markets, we've had really good portfolio, really good portfolio mix.

Are you taking that into account in your guide.

If so it sounds a little like.

Like a disconnect from expectations for a very strong holiday season.

Okay.

Speaker 4: Hey Rob, just to clarify, I used to mention the number of 3%. You know, our implied guide is in the midpoint, is 37 to 11, too.

Hey, Rob just to clarify you mentioned the number of 3%.

Implied guide is in the midpoint is three 7% to 11 two.

And some of the things we're doing on portfolio optimization, with pruning low margin business, it does help produce margins also, and we'll help us as we go into the future. Yeah. Okay. Very good. Thank you so much. Nice questions come from the line of Matt Smith with Steve. Let's just see with your questions. Hi. Good morning. Thank you for taking my question. Thanks. If I could follow up on the margin commentary and the headwind from pricing delusion, as we look at the flavor solutions business, you've been making margin recovery progress there, but can you talk about the factors that are keeping the current margin, and for the basis points are still below historical levels, and how much of that is the mechanical pricing impact versus other factors, and then what supports the margin recovery from here?

So im not which implies a seven five.

Speaker 15: I'm not which implies seven and a half. I'm just trying to get to your, I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of five to seven, of six percent for the...

I'm just trying to I'm, just trying to get to your I'm, just trying to plug in a fourth quarter organic sales number to get.

Get to your midpoint of.

A 5% to seven six.

6% for the year, Yes, I think Rob Brendan.

Speaker 11: Yeah, I think the thing is to keep in mind, I think, for the fourth quarter, our largest quarter.

Things that keep in mind, I think for the fourth quarter, our largest quarter. So.

Speaker 11: We're not able to provide a precise estimate, but I think some broad concepts to consider is we do expect some growth in China.

We're not able to provide a precise estimate but I think so broad concepts to consider is we do expect some growth in China.

Speaker 11: in consumer in the fourth quarter, if you recall, we're laughing over a pretty severe lockdown at that time, you know, this time of year ago, up overall. We still expect you to have a reasonable impact from the DSD discontinuation in the Americas, heavier because it's during the holiday season.

In consumer in the fourth quarter, if you recall, we're lapping over a pretty severe lockdown.

At that time this time a year ago overall, we still expect it to have a reasonable impact from the DSD discontinuation in the Americas heavier because it's during the holiday season.

Yeah. That's a great question, Matt. If you think about it pre-COVID, we were at 14.5% operating process, which at the time we were really happy with, because we came from a low of around 6% several years before. But we also did acknowledge that as we migrate our portfolio, we had higher aspirations to get higher than that, as we migrated to more flavor-type products. You know, the COVID has been, and the cost related to that have really been a big challenge to us, the headwind, and also the huge costing increases benefit flavor solutions.

Speaker 11: We still expect some softness in flavor solutions demand that will persist, that will certainly be there, but we will also laugh the impact of the kitchen basics to best mature as well as the consumer. Business exit in Russia. So those are just some.

We still expect some softness in flavor solutions demand that will persist that will certainly be there, but we will also lapped the imp.

The impact of the kitchen basics divestiture as well as the consumer.

This exit in Russia. So those are just some.

Speaker 11: You know, considerations I think we take a look at fourth quarter sales. I think Ralph just follow up on my...

Considerations I think when we take a look at fourth quarter sales.

Yes, I think Roger just a follow up on my point before.

Speaker 7: from a reported basis or applied for the quarter guidance is 3.7 at the low end to 11.2%. That includes about 2% effects favorable because that's what's included in the rule this year. So the constant currency is in 5 to 5 and a half.

On a reported basis.

Our implied fourth quarter guidance and three seven at the low end to 11, 2% that includes about a 2% FX favorable because FX is backloaded favorable this year so constant currency is.

So last year, we were at 8%, as you know. This year, we're looking to build back year to date, we're around 10%, so probably around that for the end of the year. So 200 basis point improvement this year, back to the, you know, in a back-year question on delusion, at the operating process level, we've had about a 300 basis point map delusion impact on flavor solutions. So theoretically, if that didn't happen, I don't know, it did happen, but that 10% will become 13%.

Yeah, five to five five range.

Speaker 7: Not sure where the grease coming from for the fourth quarter you mentioned.

So im not sure where the three is coming from for the fourth quarter you mentioned.

Speaker 16: Make sure to follow up with bot 9kc. We can make sure your model's okay. That's fine. So maybe that answers the question, Mike. So you're not expecting any kind of D cell in US retail conditions in fourth quarter. You know, in fact, yeah. Yeah, we believe we're having, again, underlying improvement. We've mentioned this in the last few quarters and we've continued to progress better. Yeah, it's good. Got it. Okay, thank you. Thanks.

And maybe as a follow up with Bottomline Casey we can we can make sure your models.

So maybe that answers the question, Mike So youre not expecting any kind of diesel in U S retail conditions in fourth quarter no in fact, yet.

So we're about 150 basis point short of that pre-19, or pre-COVID-19 margin improvement, and things like we've done with GUI, which we see continuing and wrapping it to next year. The dual running costs, we're having primarily in our flavor solutions business, you know, UK manufacturing facility, that goes away partially next year in the year after it's totally gone, which is great. Continued TCI, so these type of things will get us, you know, back to, and a portfolio migration community of low margin business, we talked about some of the private label food service business in the ABA this call.

We do believe we're having again underlying improvement we've mentioned this the last few quarters and we continue to progress there. Okay got it got it okay. Thank you.

Thanks.

Our next question comes from the line of Rob Dickerson with Jefferies. Please proceed with your question.

Speaker 11: Great, thanks so much. I just want to ask a question about

Great. Thanks, so much.

I just wanted to ask a question about the renovated skus.

Speaker 9: I heard you saying the prepared remarks about...

I think I heard you say in the prepared remarks about.

Speaker 9: I think it's 40% of the renovated skews, maybe our own shelf. So maybe this is a reminder, this curious kind of, we think about total skews selection. It sounds like maybe it's more spice and seasoning, kind of what percent is being renovated.

I think it's 40% of the renovated skus.

Maybe your own shelf.

So maybe just as a reminder.

Those type of things were focused really, really well on getting our margins up. And, you know, some of the things, when Brandon talks about performance nutrition and beverage, those are the flavor tech, and they're growing faster. We really like those, and they can have margin up our whole flavors solutions portfolio. But we do like the progress we're making independent of price and delusion, just on overall improvement in the margin there. So we do believe we're moving the right direction.

Just curious kind of.

When you think about total SKU selection it sounds like maybe it's more spice and seasoning kind of what percent is being renovated and then kind.

Speaker 9: It don't kind of what's the feedback so far as to why that's driving velocities. It's just consumers are more attracted to different packaging or it doesn't sound like these are different.

Whats the.

What's the feedback so far as to why that's driving velocities.

Consumers are more attracted to different packaging or it doesn't sound like these are different skus.

Speaker 11: Thanks for the question. It just to make sure I clarify what we said in the prepared remarks.

Thanks for the question it just to make sure.

I clarify what we said in the prepared remarks.

Thank you for that. I can pass it on. Hi, thanks for the question. Good morning. I wanted to know about the guide, the implied guide for organic sales growth in fourth quarter. It is just using like 2019 as the base. It's again, you know, a big decline. We're all looking at the U.S, retail data in Nielsen and IRI. It's all decelerating. Are you taking that into account in your guide? And, you know, if so, it sounds a little like a disconnect from the expectations for a very strong holiday season.

Speaker 2: About 40% of those skews are shipping and the skews we're talking about is part of our Core Earth and spices line these tend to be those Straight fill items meaning it's On Lecumen or about Lucidimus and etc. So that's what we're calling those straight fill spices

About 40% of those Skus are shifting in the Skus, we're talking about as part of our core herbs and spices lines. These tend to be those with straight sale items, meaning it's.

By law, human or with sentiment et cetera. So that's what we're calling the strict fill spices than.

Speaker 2: And we have this ability to discuss that are being shipped. It's not as easy to track exactly what has hit shelf yet. And that's really dependent on, you know, the retail splines. But where we know what it has.

And we have visibility to the skus that are being shipped.

Not as easy to track exactly what has hit shelf yet.

And thats really dependent on the retailers' plans, but where we know it has.

Speaker 2: There's really been an improvement in velocity.

There's really been an improvement in velocity.

Speaker 2: overall and where the drivers of that just there's a lot of different benefits from this new package. We talked about it before but it is nitrogen flush so there's even you know we're providing there's just greater and more freshness you know until you open up that package you know we're really securing the freshness of that product.

Overall and what are the drivers is that just theres a lot of different benefits from this new package, we've talked about it before but.

It is nitrogen flush so theres even.

We're providing there is greater long term freshness until you open up that package, we're really securing the freshness of that product. There is sort of a nice click and snap with the cap that really kind of tells the consumer not only just youre seeing but also listening there is a real sort of snap to disclosure that kind of again creates to retained freshness.

Speaker 2: There's a nice click and snap with the cap that really tells the consumer not only just through seeing but also listening, there's a real snap to this closure that creates to retain freshness.

Hey, Rob, just to clarify, I used to mention the word number three percent. You know, our implied guide is in the midpoint is three, seven to eleven, two. I'm not which implies seven and a half. I'm just trying to get to your, I'm just trying to plug in a fourth quarter organic sales number to get to your midpoint of five to seven for six percent for the year. Yeah, I think the thing is to keep in mind, I think for the fourth quarter, it's our largest quarter.

Speaker 2: And the packages 50% post-consumerable fecal plastic, so it also has a big sustainability benefit. It just has a great appearance on the shelf overall. And so, you know, we knew that this was a strong packaging innovation because we've launched another march around the world like an ENEA.

And the packages, 50% post consumer recycled plastics, so it all signs of big sustainability benefit and just as a great appearance on the shelf overall and so.

We knew that this was a.

Strong packaging innovation, because we've launched it in other markets around the world like in EMEA.

So, you know, we're not able to provide a precise estimate, but I think some broad concepts to consider is we do expect some growth in China in consumer in the fourth quarter. If you recall, we're laughing over a pretty severe lockdown at that time, you know, this time year ago, overall, we still expected to have a reasonable impact from the DSD discontinuation in the Americas heavier because it's during the holiday season.

Speaker 2: and also it's also glowing also in Asia Pacific too. So we have some experience with this fact and how it performs in Christine.

And also it's also growing also in Asia Pacific too. So we have some experience with this package and how it performs and we are seeing similar if not better velocity performance as we get started here on U S. Shelves, so that's a little bit of context around.

Speaker 2: Similar, if not better, velocity performance as we get started here on U.S. Shell.

Speaker 2: So that's a little bit of context around what we're seeing from that renovation in our product.

What we're seeing from that renovation in our product lines.

Speaker 7: And just to re-emphasize that 40% is really shift. I mean, if you walk into the store today, it might be 10% of the items are 5% or 20% of the tenning on the stores, but it depends sometimes on their supply chain too. So we see, I go.

Yeah, and just to reemphasize that.

So that 40% is really shifts.

If you can walk into a store today it might be 10% of the items are 5% or 20% depending on the stores, but it depends sometimes on their supply chain too. So we see a good tailwind into next year from those two.

We still expect some softness in play solutions demand that will persist, that will certainly be there, but we will also laugh at the impact of the kitchen basics to bestiture as well as the consumer business exit in Russia. So, those are just some, you know, considerations, I think we take a look at fourth quarter sales. Yeah, I think, Ralph, just a follow-up on my point before, from a reported basis, our applied fourth quarter guidance is 3.7 at the low end to 11.2 percent.

Speaker 9: Got it. Okay, super. Thanks. And then maybe just quickly and kind of simplically on SGNA.

Got it okay Super Thanks, and then maybe just quickly.

Simplistically on SG&A.

Speaker 11: Q3, you ran for total us, you know, about 22% of revenues, you know, clearly that's up, but kind of in line-ish, right, relative to maybe the kind of prior four or five years, as we think about Q4.

Q3, you ran for total SG&A is about 22% of revenues.

Clearly that's up but kind of in line ish right relative to maybe the prior four five years as we think about Q4.

Speaker 9: And then I guess kind of going forward is like 22% of sales that kind of fair or could there be certain court-to-quart movement? Thanks.

That includes about 2 percent FX favorable, because FX is not included in the rule of the year. So, the constant currency is getting five to five and a half range. So, I'm not sure where the three is coming from for the fourth quarter you mentioned. So, making that a follow-up on my case, we can make sure your model is okay. That's fine. So, maybe that answers the question, Mike. So, you're not expecting any kind of diesel in U.S, retail conditions in fourth quarter.

And then I guess kind of going forward is like 22% of sales is that kind of fair.

Or could there be certain quarter to quarter movement.

Speaker 4: Yeah, I mean, third quarter, I think it was a bit of a high watermark rescue.

Yes, I mean third quarter I think.

A high watermark for SG&A.

Speaker 7: you know, we had a big incentive comp, as we talked about in the call, you know, a set of comp comp build back for a couple reasons. And remember last year's third quarter was way down. So the incentive comp was getting adjusted then. So.

A big incentive comp as we talked about on the call Center Comcast build back for a couple of reasons I remember last year's third quarter was way down.

No, in fact, yeah. Yeah, we believe we're having, again, underlying improvement. We've mentioned this in the last few quarters, and we've continued to progress better. Yeah, it's good. Got it. Okay. Thank you. Our next question comes from the line of Rob Dickerson with Jeffries. Please excuse your question. Great. Thanks so much. I'm going to have to question about I heard you say in the prepared remarks about, I think it's 40% of the renovated skews maybe our own shelf, maybe just as a reminder, this curious kind of, you know, we think about total skews selection, it sounds like maybe it's more spice and seasoning kind of what percent is being renovated and then, you know, kind of what's the feedback so far as to, you know, why that's driving velocities.

<unk> accomplished with getting adjust event so to build back this year was a big part of SG&A on a smaller quarter than the fourth quarter. So you got to think about it in mathematical terms, two and really that incentive comp was driven not only by the EPS improvement with every one of the.

Speaker 7: The build back this year was a big part of the SQA on a smaller quarter than the fourth quarter. So you got to think about it in mathematical terms too.

Speaker 7: I really think that the set of comp was driven not only by the EPS improvement, but it's everyone in the company which is great.

Which is great within our regions the mix of our regional underlying strength of our Americas and EMEA region did drive that a bit more niv or excuse me incentive comp, but also the great working capital performance and people forget that sometimes I mean were Eva economic value added company, we have a working capital charge component of.

Speaker 7: within our regions, the mix of our regional underlying strength of our Americans, and you may have region did drive a bit more.

Speaker 7: and I be receiving a center comp, but also the great working capital performance. And people forget that sometimes, I mean we're an EVA economic value added company. We have a working capital charge component of our incentive compensation. So.

Our incentive compensation, so last year when working working capital wasn't great. We all got going for US This year are doing great.

Speaker 7: Last year when working capital wasn't great, we all got ding for it this year. We're doing great and just coming through incentive comp. So it's just another reason.

And just coming through incentive comp. So it's just another reason.

Speaker 7: that were driving cash and really those type of activities that help us, you know, lever down things like that, which are really great. So a bit more of that impact in the sort of quarter. And then brand marketing, we mentioned update percent. It's a really strong performance there. And for the year, we stick to our guide as a low single digit.

Driving cash and it really is those type of activities or help us lever down and things like that which are really great. So a bit more of that impact in those in the third quarter, and then brand marketing, we mentioned up 8% so really strong performance there.

It's just consumers are more attracted to different packaging or, you know, it doesn't feel like these are different skews to say. Thanks for the question. It just to, you know, make sure I clarify, you know, what we said in the prepared remarks, about 40% of those skews are shipping and the skews we're talking about as part of our core herbs and spices lines. These tend to be those straight fill items, meaning it's a bottle of cumin or a bottle of cinnamon, et cetera, so that's what we're calling those straight fill spices.

For the year, we stick to our guidance is low single digit A&P.

Speaker 9: And maybe if I could just sneak one last one in.

And maybe if I could just sneak one last one in.

Speaker 9: pack, you know, clearly understand what you're talking about in terms of just getting as low as trying to recovery. I think, you know, you call it out maybe, you know, a few kind of war off drivers, but maybe it's more in the driven kind of net net, right? Each pack and consumer, you know, it was still down in the quarter, but clearly the pack, uh, the play resolution was doing better and I realized.

Asia Pac.

Totally understand what you're talking about in terms of just kind of a slower China recovery.

And I think you called out maybe.

Kind of one off drivers, but maybe its more.

Driven.

Kind of net net right. These are packed in consumer.

And we have disability to the skews that are being shipped. It's not as easy to track exactly what has had shelf yet, and that's really dependent on, you know, the retail splines, but where we know what it has, there's really been an improvement in velocity overall. And where are the drivers of that? Just there's a lot of different benefits from this new package. We talked about it before, but it is, you know, nitrogen flush.

Still down in the quarter, but clearly to pack and flavor.

Flavor solutions is doing better and I realize.

Speaker 2: Part of your China business is in consumer, but maybe it's still somewhat food service. So I'm just trying to understand kind of the comparison between kind of Asia-packed consumer versus Asia-packed flavor solutions and what's driving the Delta. That's all thanks.

Part of your China business, and consumer, but like maybe it's still somewhat foodservice.

Trying to understand kind of the.

The comparison.

Between kind of.

Asia Pac consumer versus Asia, Pac flavor solutions, and what's driving the Delta that's all thanks.

So there's even, you know, we're providing there's just greater long-term freshness, you know, until you open up that package, you know, we're really securing the freshness of that product. There's sort of a nice click and snap with the cap that really kind of tells the consumer not only just through staying, but also listening. There's a real sort of snap to this closure that, you know, kind of, again, creates to retain freshness.

Speaker 4: Well, I appreciate the question there Rob on China. It's probably worth unpacking that a little bit.

Well I appreciate the question there Rob on China, It's probably worth.

Impacting that a little bit.

Speaker 2: I would say though, despite the pace of recovery in this business, you know, having been slower than expected, we can pay the lead in a long-term growth trajectory that is.

I would say, though despite the pace of recovery in this business, having been slower than expected. We continue to believe in the long term growth.

Trajectory of that business and.

Speaker 2: And it's also when you step back on a constant currency basis, we are growing this business. Versus a year ago, we've grown sales in the high single digits. So, yeah, we're disappointed that the pace of recovery wasn't what we expected it to be, but nevertheless, we are growing sales year over year. And even despite the volatility since 2019.

It's also when you step back on a constant currency basis, we are growing this business versus a year ago, we've grown sales in the high single digits. So.

And the package is 50% post-consumer of a fecal plastic, so it also has a big sustainability benefit. It just has a great appearance on the shelf overall. And so, you know, we knew that this was a strong packaging innovation because we've launched another marches around the world like an ENEA, and also, it's also going also in Asia-Pacific, too. So we have some experience with this package, and how it performs, and we're seeing similar, if not better, velocity performance as we get started here on U.S, shelves.

Yes, we are disappointed that the pace of recovery wasn't what we expected it to be but nevertheless, we are growing sales year over year and even despite the all the volatility since 2019.

Speaker 2: We've grown our total China business at a 3% keger on a constant currency basis, which is kind of in line with the long-term algorithm.

We have grown our total China business at a 3% CAGR on a constant currency basis, which is kind of in line with the long term algorithm. So.

Speaker 4: This is really an element of...

This is really.

An element of an economy that certainly is recovering more slowly than what we would've expected and where we see that now in this kind of goes into sort of how we're thinking about flavor solutions versus consumer and part of our consumer businesses in the foodservice channel that people are just simply not necessarily going out.

Speaker 2: An economy that certainly is recovering more slowly than what we would have expected. And where we see that now, this kind of goes into sort of how we're thinking about labor solutions versus consumer.

So just, that's a little bit of context around, you know, what we're seeing from that renovation in our product line. Yeah, and just to re-enterize that, that's 40% is really shipped. I mean, you know, if you walk into the store today, it might be 10% of the items or 5% or 20% detaining on the stores, but it depends sometimes on their supply chain, too. So we see, like a good tailwind in the next year for this, too.

Speaker 2: And part of that consumer business isn't the crude service channel, but people are just simply not necessarily going out.

Speaker 2: to allow the catering and upside dining events that we've seen in the past, and that's just been a slower recovery overall. We're also seeing that also happening in retail. Consumer spending is just soft right now. Overall in China, we're seeing that play out. Where we start to see, and this is actually more of a change in this quarter, just more of the typical promotional activity or limited time offers that we tend to see continuing Konstapski. In the queue of zij.

Two allows the catering.

Outside dining events that we've seen in the past and Thats just been a slower recovery overall, we're also seeing that.

Yeah, okay, super thanks. And then maybe just quickly, and kind of simplistically on SG&A, Q3, you ran for total SG&A, about 22% of revenues, you know, clearly that's up, but kind of in line-ish, right, relative to maybe kind of prior or five years. You know, as we think about, you know, Q4, and then I guess kind of going forward, is like 22% of sales, is that kind of fair? Or could there be, you know, certain quality, Q4 movement?

Also happening in retail consumer spending is just soft right now overall in China, and we're seeing that play out where we start to see and this was actually more of a change in this quarter just more of a typical promotional activity or limited time offers that we tend to see.

The <unk> segment.

Speaker 2: We've gone to come back a little bit more. So that gives us some reason to believe that this is just a slower recovery than what we planned, but the fundamentals that drive that business are still there and it's just gonna take a little bit more time to get back to what we expect.

Please turn to come back a little bit more so that gives us. Some reason to believe that this is just a slower recovery than what we planned but the fundamentals that drive that business are still there and it's just going to take a little bit more time to get back to what we expect.

Thanks. Yeah, I mean, third quarter, I think, you know, it was a bit of a high watermarked breast DNA. You know, we had a big incentive comp, as we talked about in the call, you know, a set of comp top build back for a couple of reasons, and remember, last year's third quarter was way down, because an incentive comp was getting adjusted then, so the build back this year was a big part of the DNA on a smaller quarter than the fourth quarter, so you got to think about it in mathematical terms too, and really then a set of comp was driven, you know, not only by the EPS improvement, which is everyone in the company, which is great.

Speaker 14: from this part of our business.

From this part of our business.

Alright, thanks, so much.

Speaker 3: Thank you. We've reached the end of the question, the answer session. I'll turn the call over to Fatten Trayha for closing.

Thank you we've reached the end of the question and answer session I will turn the call over to Terry for closing remarks.

Speaker 1: Thank you all for joining today's call. If you have any further questions regarding today's information, feel free to contact me. And that concludes this morning's conference call. Thank you.

Thank you all for joining today's call. If you have any further questions regarding today's information. Please feel free to contact me that concludes this morning's conference call. Thank you.

Within our regions, the mix of our regional underlying strength of our Americans, and you may have region, did drive a bit more MIB, or excuse me, incentive comp, but also the great working capital performance, and people forget to sometimes, I mean, we're an EVA economic value added company, we have a working capital charge component of our incentive compensation. So, last year when working capital wasn't great, we all got things for it this year, we're doing great, and just coming through incentive comp, so it's just another reason we're driving cash and really those type of activities that help us, you know, lever down things like that, which are really great.

So a bit more of that impact in the third quarter, and then brand marketing, we mentioned up 8%. It's a really strong performance there, and for the year, we've stick to our guys as a low single digit fan fee. And maybe if I could just sneak one last one in, Asia PAC, you know, clearly understand what you're talking about, you know, in terms of just getting as low as trying to recovery, I think, you know, you called out maybe, you know, you kind of wore off drivers, but maybe it's more in the driven, kind of net net, right, Asia PAC and consumer.

You know, it was still down in the quarter, but clearly, Asia PAC and flavor solutions are doing better, and I realize, like part of your China business is in consumer, but like maybe it's still somewhat food service, so I'm just trying to understand kind of the, you know, the comparison between, kind of, you know, Asia PAC and consumer versus Asia PAC, flavor solutions and what's driving the Delta, that's all thanks. Well, I appreciate the question there Rob on China, you know, it's probably worth, you know, unpacking that a little bit.

I would say though, despite the pace of recovery in this business, you know, having been slower than expected, we can pay the lead in a long-term growth trajectory of that business. And, you know, it's also when you step back on a constant currency basis, we are growing this business versus a year ago, we've grown sales in the high single digits. So, yeah, we're disappointed that the pace of recovery wasn't what we expected it to be, but nevertheless, we are growing sales year over year, and even despite the volatility since 2019, we've grown our total China business at a 3% keg or on a constant currency basis, which is, you know, kind of in line with the long-term algorithm, so this is, you know, really an element of an economy that certainly is, you know, recovering more slowly than what we would have expected, and where we see that now, this kind of goes into sort of how we're thinking about flavor solutions versus consumer, and product consumer business isn't the crude service channel, but people are just simply not necessarily going out to a lot of the catering and outside dining events that, you know, we've seen in the past, and that's just been a slower recovery, you know, overall, and we're also seeing that also happening in retail, consumer spending is just soft right now, overall in China, and we're seeing that play out.

Where we start to see, and this was actually more of a change in this quarter, just more of the typical promotional activity or limited time offers that we tend to see in the QSR segment have begun to come back a little bit more, so that gives us some reason to believe that this is just a slower recovery than what we plan, but the fundamentals that drive that business are still there, and it's just going to take a little bit more time to get back to what we expect, you know, from this part of our business. Thanks so much.

Thank you. We've reached the end of the question, the answer session. I'll turn the call over to Faten Freiha for closing remarks. Thank you all for joining today's call. If you have any further questions regarding today's information, feel free to contact me. That concludes this morning's conference call. Thank you.