Q2 2024 McCormick & Co Inc Earnings Call

June 27, 2024

Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's second quarter earnings call. To accompany this call, we've posted a set of slides on our IR website, ir.mccormick.com.

Speaker Change: With me this morning are Brendan Foley, President and CEO , Mike Smith, Executive Vice President and CFO , and Marcos Gabriel, Senior Vice President, Global Finance and Capital Markets.

Speaker Change: 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 slides.

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

Faten Freiha: Good morning, this is Faten Freiha, VP of Investor Relations. Thank you for joining today's second quarter earnings call. To accompany this call, we've posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO; Mike Smith, Executive Vice President and CFO; and Marcos Gabriel, Senior Vice President, Global Finance and Capital Marketing. 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 slides. In our comments, certain percentages are rounded.

Speaker Change: 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.

Speaker Change: Whether because of new information, future events, or other factors, please refer to our forward-looking statement on slide 2 for more information. I will now turn the discussion over to Brendan.

Brendan M. Foley: Good morning, everyone, and thank you for joining us. We are pleased with our second quarter performance, particularly as we continue to navigate a changing and complex consumer landscape.

Brendan M. Foley: Our differentiated results demonstrate the success of our prioritized investments to accelerate volume churns and further capitalize on the underlying growth of our categories.

Faten Freiha: Please refer to our presentation for complete information. Today's presentation contains projections and other forward-looking statements. However, actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking information, whether because of new information, future events, or other factors. Please refer to our forward-looking statement on slide 2 for more information. I will now turn the discussion over to Brendan. Good morning, everyone, and thank you for joining us.

Brendan M. Foley: McCormick remains a growth company.

Brendan M. Foley: And 2024 continues to be an important investment year, as planned, as we have activated many of our initiatives and we are starting to see results that support our confidence in delivering on our long-term objectives.

Brendan M. Foley: We are pleased with our second quarter performance, particularly as we continue to navigate a changing and complex consumer landscape. Our differentiated results demonstrate the success of our prioritized investments to accelerate volume trends and further capitalize on the underlying growth of our category. McCormick remains a growth company, and 2024 continues to be an important investment year, as planned, as we have activated many of our initiatives, and we are starting to see results that support our confidence in delivering on our long-term objectives.

Brendan M. Foley: Mike will then go into more depth on the second quarter financial results and review our 2024 outlook. And finally, before your questions, I will have some closing comments.

Brendan M. Foley: Turning now to our results on slide 4.

Brendan M. Foley: In the second quarter, sales declined by 1% in constant currency, reflecting flat pricing, and a 1% decline in volume and product mix.

Brendan M. Foley: This morning, I will begin my remarks with an overview of our second quarter results, focusing on the top line drivers. Next, I will provide perspective on industry trends, highlight some areas of success, as well as areas we continue to work on, and review our growth plans with a focus on innovation. Mike will then go into more detail on the second quarter financial results and review our 2024 outlook. And finally, before your questions, I will have some closing comments. Turning now to our results on slide four, in the second quarter, sales declined by 1% in constant currency, reflecting flat pricing and a 1% decline in volume and product mix.

Brendan M. Foley: Although certain parts of our flavor solutions business are pressured, given our collaboration and strong innovation pipeline with our customers, we expect volume trends to improve during the second half of the year.

Brendan M. Foley: In our consumer segment, volumes improved substantially from the first quarter across our major markets and delivered volume growth.

Brendan M. Foley: Volume growth in our consumer segment was offset by declines in flavor solutions related to softness in some of our quick-serve restaurant, or QSR, and packaged food customers' volumes, as well as the timing of customer activities, as expected. However, although certain parts of our flavor solutions business are pressured, given our collaboration and strong innovation pipeline with our customers, we expect volume trends to improve during the second half of the year. In our consumer segment, volumes improved substantially from the first quarter across our major markets and delivered volume growth.

Brendan M. Foley: In EMEA, we drove positive volume growth across our major markets and core categories for the second consecutive quarter. We expanded distribution in the grocery, discounter, and e-commerce channels, and realized benefits from new product innovation.

Brendan M. Foley: In Asia-Pacific, outside of China, we delivered strong volume-led sales growth as we executed the rollout of our new consumer-preferred packaging for our core spices and seasonings portfolio and realized distribution gains.

Unknown Executive: In our consumer segment, volumes improved substantially from the first quarter across our major markets and delivered volume growth. In the Americas, we delivered solid sequential volume improvement from three consecutive quarters, and our pricing in the second quarter reflects the activation of our price gap management plans to support improved volumes in the second half as planned. In E&A, we drove positive volume growth across our major markets and core categories for the second consecutive quarter. We expanded distribution in the grocery, discounts, and e-commerce channels, and realized benefits from new product innovation. In Asia Pacific, outside of China, we delivered strong volume lead sales growth, as we executed the roll out of our new consumer preferred packaging for our core spices and seasonings portfolio and realized distribution gains.

Brendan M. Foley: In the Americas, we delivered solid sequential volume improvement for three consecutive quarters, and our pricing in the second quarter reflects the activation of our price gap management plans to support improved volumes in the second half as planned. In EMEA, we drove positive volume growth across our major markets and core categories for the second consecutive quarter. We expanded distribution in the grocery, discounter, and e-commerce channels and realized benefits from new product innovation.

Brendan M. Foley: This performance was tempered by China, as expected, although sequentially volume trends improved in China.

Brendan M. Foley: Results in our consumer businesses reflect continued focus on increased brand marketing investments, accelerating innovation in alignment with consumer trends, and expanding distribution.

Brendan M. Foley: Let me now share our current view on the state of the consumer. Consumers continue to exhibit value-seeking behavior. Financial anxiety remains elevated, particularly in the United States, and especially with mid- to low-income households, due to the compounding impact of inflation.

Brendan M. Foley: In addition, inflation in the food service channel is leading to softness in food away from home consumption and impacting restaurant traffic, particularly with QSRs, across many of our regions.

Unknown Executive: This performance was tempered by China, as expected; although sequentially, volume trends improved in China. Results in our consumer business reflect continuous focus on increased brand marketing investments, accelerating innovation in alignment with consumer trends, and expanding distribution.

Brendan M. Foley: Volumes on the retail side, particularly in the center of store, remain soft. Consumers continue to buy just for what they need and make more frequent trips to the store.

Brendan M. Foley: Results in our consumer business reflect continued focus on increased brand marketing investments, accelerating innovation in alignment with consumer trends, and expanding distribution. Let me now share our current view on the state of the consumer. Consumers continue to exhibit value-seeking behavior. Financial anxiety remains elevated, particularly in the United States, and especially among mid- to low-income households.

Brendan M. Foley: On the other hand, they are increasingly shopping the perimeter and continuing to cook at home.

Unknown Executive: Let me now share our current view on the state of the consumer. Consumers continue to exhibit value-seeking behavior. Financial anxiety remains elevated, particularly in the United States, and especially with mid to low income households due to the compounding impact of inflation. In addition, inflation in the food service channel is leading to softness and food away from home consumption and impacting best traffic, particularly with QSRs across many of our regions. Volume on the retail side, particularly in the center of store, remains soft. Consumers continue to buy just for what they need and make more frequent trips to the store.

Brendan M. Foley: Certain categories, such as spices and seasonings, as well as condiments and sauces, are seeing a benefit amid these trends.

Brendan M. Foley: As consumers are looking to stretch their budgets,

Brendan M. Foley: Our categories represent a fraction of the cost relative to proteins, produce, and carbs, and drive the majority of the flavor.

Brendan M. Foley: Due to the compounding impact of inflation. In addition, inflation in the food service channel is leading to softness in food-away-from-home consumption and impacting restaurant traffic, particularly at QSRs, across many of our regions. Volumes on the retail side, particularly in the center of the store, remain soft, as consumers continue to buy just what they need and make more frequent trips to the store. On the other hand, they are increasingly shopping on the perimeter and continuing to cook at home.

Brendan M. Foley: In fact, in the second quarter, spices and seasonings was the top category in center store growth across measure channels, and McCormick is the leading branded player and driving category unit growth.

Brendan M. Foley: What continues to differentiate McCormick is that we operate in great categories across all channels.

Unknown Executive: On the other hand, they are increasingly shopping the perimeter and continuing to cook at home. Certain categories, such as spices and seasonings, as well as condiments and sauces, are seeing a benefit in these trends. As consumers are looking to stretch their budgets, our categories represent a fraction of the cost relative to proteins, predators, and carbs, and drive the majority of the flavor. In fact, in a second quarter, spices and seasonings was the top category in center store growth across measure channels. And the Quorumic is the leading branded player and driving category unit growth. What continues to differentiate McCormick is that we operate in great categories across all channels.

Brendan M. Foley: We offer products at every price point, from premium to lower price points.

Brendan M. Foley: Certain categories, such as spices and seasonings, as well as condiments and sauces, are seeing a benefit from these trends. Furthermore, as consumers are looking to stretch their budgets, our categories represent a fraction of the cost relative to proteins, produce, and carbs and drive the majority of the flavor. In fact, in the second quarter, spices and seasonings were the top category in center store growth across measured channels, and McCormick is the leading branded player and driving category unit growth. What continues to differentiate McCormick is that we operate in great categories across all channels. We offer products at every price point, from premium to lower price points.

Brendan M. Foley: We have a broad and diversified portfolio to meet evolving consumer demands. We are part of the solution for consumers. Importantly, we believe that we have the right plans in place that are continually informed by what matters most to our consumers and customers.

Brendan M. Foley: Moving to slide 5, let me highlight for the quarter some of the key areas of our success.

Brendan M. Foley: For our global consumer segment, including the Americas, our core categories delivered solid volume growth.

Brendan M. Foley: At Spices and Seasonings, we delivered volume growth across all of our major markets. In the U.S., our share performance improved, resulting in positive gains in unit share for the quarter. In addition, we drove dollar share gains in France and Eastern Europe .

Unknown Executive: We offer products at every price point, from premium to lower price points. We have a broad and diversified portfolio to meet evolving consumer demands. We are part of the solution for consumers.

Brendan M. Foley: We have a broad and diversified portfolio to meet evolving consumer demands. We are part of the solution for consumers. Importantly... We believe that we have the right plans in place that are continually informed by what matters most to our consumers and customers. Moving to slide five, let me highlight for the quarter some of the key areas of our success. For our global consumer segment, including the Americas, our core categories delivered solid volume growth.

Brendan M. Foley: In Recipe Mixes, we continue to strengthen consumption trends in the Americas, particularly in our Mexican product lines.

Unknown Executive: Importantly, we believe that we have the right plans in place that are continually informed by what matters most to our consumers and customers.

Brendan M. Foley: through our price gap management investments as well as distribution growth. In addition, in EMEA, recipe mixes were a significant driver of UK volume growth and we realized dollar market share gains for two consecutive quarters.

Unknown Executive: Moving to slide five, let me highlight for the quarter some of the key areas of our success. For our global consumer segment, including the Americas, our core categories delivered solid volume growth. In spices and seasonings, we deliver volume growth across all of our major markets. And the U.S. are share performance improved, resulting in positive gains in unit share for the quarter. In addition, we drove dollar share gains in France and Eastern Europe. In recipe mixes, we continue to strengthen consumption trends in the Americas, particularly in our Mexican product lines, through our price gap management investments, as well as distribution growth.

Brendan M. Foley: In mustard, we are driving improved unit consumption and unit market share trends across our regions. In the Americas, we expanded distribution and actioned our pricing investments. In addition, innovation is yielding results. Our creamy-dill-tickle mustard performance is exceeding our expectations.

Brendan M. Foley: In Spices and Seasonings, we delivered volume growth across all of our major markets. In the U.S., our share performance improved, resulting in positive gains in unit share for the quarter. In addition, we drove dollar share gains in France and Eastern Europe.

Brendan M. Foley: In Poland, mustard consumption continues to grow and we are realizing dollar market share gains, which strengthened from the first quarter.

Brendan M. Foley: In recipe mixes, we continue to strengthen consumption trends in the Americas, particularly in our Mexican product lines, through our price gap management investments, as well as distribution growth. In addition, in EMEA, recipe mixes were a significant driver of UK volume growth, and we realized dollar market share gains for two consecutive quarters. In Mustard, we are driving improved unit consumption and unit market share trends across our regions. In the Americas, we expanded distribution and acted on our pricing investment. In addition, innovation is yielding results. Our creamy dill pickle muster performance is exceeding our expectations.

Brendan M. Foley: In Flavor Solutions, we had pockets of strength this quarter, and our America's Branded Food Service business, despite softness in the overall market, regrew volumes.

Unknown Executive: In addition, in EMEA, recipe mixes were a significant driver of UK volume growth, and we realized dollar market share gains for two consecutive quarters. In mustard, we are driving improved unit consumption and unit market share trends across our regions. In the Americas, we expanded distribution and action to pricing investments.

Brendan M. Foley: In our America's Flavors business, our performance with high-growth innovator customers remains strong. We grew in non-alcoholic beverages and saw continued strength in performance nutrition.

Brendan M. Foley: In Asia Pacific, including China, we drove strong volume growth as we benefited from new customer products and promotions.

Unknown Executive: In addition, innovation is yielding results; our creamy billed fickle muster performance is exceeding our expectations. In Poland, mustard consumption continues to grow, and we are realizing dollar market share gains, which strengthened fund the first quarter.

Brendan M. Foley: Let me now touch on some areas where we are seeing some pressure.

Brendan M. Foley: In Poland, mustard consumption continues to grow, and we are realizing dollar market share gains, which strengthened from the first quarter. And Flavor Solutions, we had pockets of strength this quarter, and our America's Branded Food Service business, despite softness in the overall market, grew volume. In our America's Flavors business, our performance with high-growth innovator customers remains strong. We grew in non-alcoholic beverages and saw continued strength in performance nutrition. In Asia-Pacific, including China, we drove strong volume growth as we benefited from new customer products and promotions. Let me now touch on some areas where we are seeing some pressure. We continue to experience volume declines in the prepared food categories that we participate in, like frozen and Asian, and America's Consumer.

Brendan M. Foley: We continue to experience volume declines in the prepared food categories that we participate in, like frozen and Asian, and America's Consumer. Importantly, these items represent a small part of our portfolio, and the volume growth in our core categories is beginning to fully offset these declines.

Unknown Executive: In flavor solutions, we have pockets of strength this quarter. In our Americas-branded food service business, despite softness in the overall market, we grew volumes. In our Americas-flavours business, our performance with high growth innovator customers remains strong. We grew a non-alcoholic beverage, and sought continued strength and performance nutrition. In Asia Pacific, including China, we drove strong volume growth as we benefited from new customer products and promotions.

Brendan M. Foley: In hot sauce, we have underlying strength in our base business and strong consumer loyalty, and we continue to invest in our market-leading brands.

Brendan M. Foley: In the Americas, consumption and share trends improved in the second quarter, on top of our first quarter improvement.

Brendan M. Foley: A couple of short-term items continue to impact our share. First, it is a peer that is lapping their own supply chain disruptions, and second, new price pack architecture in the form of trial sizes, which have been incremental to the category.

Unknown Executive: Let me now touch in some areas where we are seeing some pressure. We continue to experience volume declines in the prepared food categories that we participate in, like frozen in Asia, in America's consumer. Importantly, these items represent a small part of our portfolio, and the volume growth in our core categories is beginning to fully offset these declines. In hot sauce, we have underlying strength in our base business and strong consumer loyalty. And we continue to invest in our market-leading brands. In the Americas, consumption and share trends improved in the second quarter, on top of our first quarter improvement.

Brendan M. Foley: As we realize the benefit of our increased innovation, including Frank's new Dippin' Sauces and Squeeze Bottles, as well as many trial sizes, A&P investments, and distribution expansion, we expect to drive improved hot sauce consumption trends in the second half of 2024.

Brendan M. Foley: Importantly, these items represent a small part of our portfolio, and the volume growth in our core categories is beginning to fully offset these declines. In hot sauce, we have underlying strength in our base business and strong consumer loyalty. And we continue to invest in our market-leading brands. In the Americas, consumption and share trends improved in the second quarter, on top of our first quarter improvement. A couple of short-term items continue to impact our share. First, it is a peer that is lapping its own supply chain disruptions.

Brendan M. Foley: In Flavor Solutions, our volumes were impacted by slower QSR traffic in both EMEA and the Americas. We expect to improve these volume trends as we continue to execute on our growth plans in the second half of the year.

Unknown Executive: A couple of short-term items continued to impact our share. First, it is a peer that is laughing at their own supply chain disruptions, and second, new price-back architecture in the form of trial sizes, which happened incremental to the category. As we realize the benefit of our increased innovation, including Frank's new different sources and squeeze bottles, as well as mini trial sizes, A&P investments and distribution expansion, we expect to drive improved hot sauce consumption trends in the second half of 2024. In flavor solutions, our volumes were impacted by slower USR traffic and both E&BAA and the Americas.

Brendan M. Foley: Finally, some of our consumer packaged food customers experience additional softness and volumes within their own business in both the Americas and EMEA. We are collaborating with our customers to support their innovation plans and we are continuing to diversify our customer base over time.

Brendan M. Foley: And second, new price pack architecture in the form of trial sizes, which have been incremental to the category. As we realize the benefit of our increased innovation, including Frank's new Dippin' Sauces and Squeeze Bottles, as well as many trial sizes, A&P Investments, and Distribution Expansion, we expect to drive improved hot sauce consumption trends in the second half of 2024. In Flavor Solutions, our volumes were impacted by slower QSR traffic in both EMEA and the Americas.

Brendan M. Foley: Before moving to our growth plans, I'd like to note that our total U.S. branded portfolio consumption

Brendan M. Foley: As indicated by Cercana data, and combined with unmeasured channels, outpaced our sales growth this quarter.

Brendan M. Foley: As our brand investments drove improved consumption, and we are lapping the increased shipments that came in ahead of the 2023 pricing actions of the prior year. This is a function of timing from quarter to quarter.

Unknown Executive: We expect to improve these volume trends as we continue to execute on our growth plans in the second half of the year. Finally, civil bar consumer practice food customers experience additional softness and volumes within their own business, and both the Americas and the E&BAA. We are collaborating with our customers to support their innovation plans, and we are continuing to diversify our customer base over time.

Brendan M. Foley: We expect to improve these volume trends as we continue to execute on our growth plans in the second half of the year. Finally, some of our consumer packaged food customers experience additional softness and volumes within their own business in both the Americas and EMEA. We are collaborating with our customers to support their innovation plans, and we are continuing to diversify our customer base over time. Before moving to our growth plans, I'd like to note that our total U.S. branded portfolio consumption, as indicated by Cercana data and combined with unmeasured channels, outpaced our sales growth this quarter, as our brand investments drove improved consumption, and we are lapping the increased shipments that came in ahead of the 2023 pricing This is a function of timing from quarter to quarter.

Brendan M. Foley: Let's now move to our growth plans on slide 6, which are supporting our second quarter performance and will continue to drive our success in 2024 and into 2025.

Brendan M. Foley: Our base business is strengthening across major markets and core categories and we have a number of initiatives in flight that will continue to drive this performance and differentiation. And I look forward to sharing more details on these plans at our upcoming Investor Day in October .

Unknown Executive: Before moving to our growth plans, I'd like to note that our total US branded portfolio consumption, as indicated by Sarkana Data, and combined with unmeasured channels, outpaced our sales growth disorder. As our brand investments drove improved consumption, and we are laughing in increased shipments that came in ahead of the 2023 pricing actions of the prior year.

Brendan M. Foley: Brand marketing, new products, and packaging innovation, category management, proprietary technologies, and customer engagement continue to be the levers that drive our growth.

Unknown Executive: This is a function of timing from quarter to quarter. have that flexibility, too, but I think we're really pleased going into the third quarter. We talked a bit about some of the consumer uncertainty, which impacts some of our flavor solutions business. We're always cautious there, too, but I think we've caught it pretty much down the middle, with hopefully a lean end up to the talk of it.

Brendan M. Foley: For today, I'd like to take the opportunity to highlight one of these levers, innovation, on slides 7 and 8.

Brendan M. Foley: Let's now move to our growth plans on slide six, which are supporting our second quarter performance and will continue to drive our success in 2024 and into 2025. Our base business is strengthening across major markets and core categories, and we have a number of initiatives in flight that will continue to drive this performance and differentiation, and I look forward to sharing more details on these plans at our upcoming Investor Day in October.

Brendan M. Foley: First, it's important to recognize that we are one of the few, if not the only, company that operates in end-to-end flavor, with both our consumer and flavor solution segments.

Brendan M. Foley: We are in a unique position with our portfolios breadth and reach.

Brendan M. Foley: Our shared insights give us a strong understanding of consumers' flavor needs, preferences, and trends.

Brendan M. Foley: Brand marketing, new products, and packaging innovation, category management, proprietary technologies, and customer engagement continue to be the levers that drive our growth. For today, I'd like to take the opportunity to highlight one of these levers, innovation, on slides 7 and 8.

Brendan M. Foley: And we have the ability to translate this into innovation, making McCormick a global leader in flavor trends and flavor innovation.

Brendan M. Foley: Innovation is a priority for us. It drives one-third of our long-term algorithm. It meaningfully contributed to our results for the first half of 2024, and we expect it to drive strong performance in the second half.

Brendan M. Foley: First, it's important to recognize that we are one of the few, if not the only, company that operates in end-to-end flavor, with both our consumer and flavor solution segments. We are in a unique position with our portfolio's breadth and reach. Our shared insights give us a strong understanding of consumers' flavor needs, preferences, and trends, and we have the ability to translate this into innovation, making McCormick a global leader in flavor trends and flavor innovation. Innovation is a priority for us. It drives one-third of our long-term strategy.

Brendan M. Foley: As a management team, we discuss the latest trends and insights and how those might translate into innovation in both segments. We are continuously leading the pursuit of what's next in flavor. In our company, everyone is engaged in innovation.

Brendan M. Foley: In our consumer segment, our renovated U.S. everyday herb and spice portfolio is fully shipped and roughly two-thirds of our new packaging is currently on shelf, driving double-digit velocity gains and contributing to our strong volume improvement in spices and seasonings.

Brendan M. Foley: It meaningfully contributed to our results for the first half of 2024, and we expect it to drive strong performance in the second half. As a management team, we discuss the latest trends and insights and how those might translate into innovation in both sectors. We are continuously leading the pursuit of what's next in flavor. At our company, everyone is engaged in innovation.

Brendan M. Foley: New products within our spices and seasonings portfolio, including Lowry's new seasoning blends.

Brendan M. Foley: Flavor Maker Blends.

Brendan M. Foley: and our exciting grilling portfolio of Stubbs Rubs.

Brendan M. Foley: and New Grill Mates Seasoning Blends in partnership with Max the Meat Guy.

Brendan M. Foley: In the first half of the year, our results benefited from new products and packaging, and the performance of these launches continues to improve. Importantly, our pipeline for the remainder of the year remains robust. In our consumer segment, our renovated U.S. everyday herb and spice portfolio is fully shipped, and roughly two-thirds of our new packaging is currently on shelf, driving double-digit velocity gains and contributing to our strong volume improvement in spices and seasonings.

Brendan M. Foley: Fueled first half results and are expected to accelerate our performance in the second half. In fact, in 2024, we are launching nearly four times more grilling roughs and seasonings compared to 2023.

Brendan M. Foley: Importantly, our grilling season, which kicked off at the end of the second quarter, is off to a great start.

Brendan M. Foley: In addition to our grilling blends and rubs, we are excited about early results from Frank's Red Hot dip and sauces and popular flavors in a squeezed bottle format that we launched this year.

Brendan M. Foley: New products within our spices and seasonings portfolio, including Lowry's new seasoning blends, Flavormaker blends, and our exciting grilling portfolio of Stubbs rubs and new grill-made seasoning blends, in partnership with Max the Meat Guy, fuel first-half results and are expected to accelerate our performance in the second half. In fact, in 2024, we are launching nearly four times more grilling rubs and seasonings Importantly, our grilling season, which kicked off at the end of the second quarter, is off to a great start. In addition to our grilling blends and rubs, we are excited about early results from Frank's Red Hot dips and sauces and popular flavors in a squeeze bottle format that we launched this year.

Brendan M. Foley: We are energized for the grilling season and expect our Flamin' Flavor marketing campaign that launched in the second quarter to drive incremental consumer demand.

Brendan M. Foley: Our Cholula Salsas and Recipe Mixes that launched in 2023 are driving new buyers to the category and continue to exceed our expectations since launch.

Brendan M. Foley: Cholula Salsas are driving strong incremental category growth with their high repeat buy rates and our Cholula Recipe Mixes are a top recipe mix brand after just one year in the market.

Brendan M. Foley: They are driving the second-highest unit growth within the category. We continue to build U.S. distribution, and we are launching both formats in Canada this year.

Brendan M. Foley: We are energized for the grilling season and expect our Flamin' Flavor marketing campaign that launched in the second quarter to drive incremental consumer demand. Our Cholula Salsas and Recipe Mixes that launched in 2023 are driving new buyers to the category and continue to exceed our expectations since launch. Cholula Salsas are driving strong incremental category growth with their high repeat buy rates, and our Cholula Recipe Mixes are a top recipe mix brand after just one year in the market. They are driving the second-highest unit growth within the category. We continue to build U.S. distribution, and we are launching both formats in Canada this year.

Brendan M. Foley: In EMEA, growth from new product sales is accelerating and we expect it to drive significant growth in the second half of the year.

Brendan M. Foley: In the UK, across recipe mixes and seasonings, our Schwartz range with Nadia Hussain.

Brendan M. Foley: restaurant-branded partnerships, and a range of classic American recipe mixes with Frank's, Old Bay, and French's are driving our innovation performance and expanding household penetration with younger consumers.

Brendan M. Foley: In France, we are collaborating with Juan Arbelaez, a celebrity Colombian-French chef, to drive engagement with younger households.

Brendan M. Foley: And recently, we partnered with him to launch a range of unique and delicious Ducros barbecue seasonings in time for the summer barbecue season.

Brendan M. Foley: In EMEA, growth from new product sales is accelerating, and we expect it to drive significant growth in the second half of the year. In the UK, across recipe mixes and seasonings, our Schwartz range with Nadia Hussain, restaurant-branded partnerships, and a range of classic American recipe mixes with Frank's, Old Bay, and French's are driving our innovation performance and expanding household penetration with younger consumers. In France, we are collaborating with Juan Arbelaiz, a celebrity Colombian-French chef, to drive engagement with younger households. And recently, we partnered with him to launch a range of unique and delicious Ducros barbecue seasonings in time for the summer barbecue season.

Brendan M. Foley: Moving now to our flavor solution segment. We continue to leverage our proprietary technologies to support our innovation in flavors, to win new customers, diversify our customer base, and drive share gains across our portfolio.

Brendan M. Foley: Our momentum, with our high-growth innovator and consumer products customers, continues to be strong and fuel our new product pipeline.

Brendan M. Foley: As we look to our innovation pipeline that we support for our customers, we expect a pickup in the back half of the year.

Brendan M. Foley: We are collaborating with many customers to heat up their products, from snacking to beverages to performance nutrition. Our win rate with heat briefs are strong across our regions, and we continue to dedicate resources to where we have the right to win.

Brendan M. Foley: Moving now to our flavor solution segment, we continue to leverage our proprietary technologies to support our innovation in flavors, to win new customers, diversify our customer base, and drive share gains across our portfolio. Our momentum, with our high-growth innovator and consumer products customers, continues to be strong and fuel our new product pipeline. As we look to our innovation pipeline that we support for our customers, we expect a pickup in the back half of the year. We are collaborating with many customers to heat up their products, from snacking to beverages to performance nutrition.

Brendan M. Foley: In branded food service, our 2023 launches, including Frank's Mild Wingsauce and Frank's Nashville Hot, are delivering strong results in the first half of the year.

Brendan M. Foley: Our early 2024 launches are also contributing to our growth and include a number of e-products like Grillmates Fiery Habanero and Cholula Chili Lime.

Brendan M. Foley: Looking ahead to the second half, we expect new products to meaningfully drive our top line, and importantly,

Brendan M. Foley: We have a strong innovation agenda.

Brendan M. Foley: including launching Frank's Garlic Buffalo and Mango Habanero in the Americas, as well as Frank's Red Hot Mayo in the UK and France, and we are further extending McCormick Mayonesa, which has had great performance in our consumer segment, into the food service channel.

Brendan M. Foley: Our win rate with heat briefs is strong across our regions, and we continue to dedicate resources to where we have the right to win. In branded food service, our 2023 launches, including Frank's Mild Wingsauce and Frank's Nashville Hot, are delivering strong results in the first half of the year. Our early 2024 launches are also contributing to our growth and include a number of e-products like Grillmates Fiery Habanero and Cholula Chili Lime.

Brendan M. Foley: Overall we are very excited about our innovation plans for 2024. We expect new product performance to be in line with our long-term objectives and to drive a meaningful portion of our volume growth.

Brendan M. Foley: In addition, in the second half of the year, sales from new products are expected to nearly double compared to the first half, and a meaningful portion of this innovation is in heat.

Brendan M. Foley: Looking ahead to the second half, we expect new products to meaningfully drive our top line, and importantly, we have a strong innovation agenda, including launching Frank's Garlic Buffalo and Mango Habanero in the Americas, as well as Frank's Red Hot Mayo in the UK and France. And we are further extending McCormick Mayonesa, which has had great performance in our consumer segment, into the food service channel.

Brendan M. Foley: Heat-infused products span our portfolio. Across both segments, we expect heat to continue to be a long-term growth accelerator globally for Total McCormick.

Brendan M. Foley: We are uniquely positioned to win in heat with our global iconic brands, deep consumer insights, and our meaningful scale, technology, and expertise that we have been building for decades.

Brendan M. Foley: Overall, we are very excited about our innovation plans for 2024. We expect new product performance to be in line with our long-term objectives and to drive a meaningful portion of our volume. In addition, in the second half of the year, sales from new products are expected to nearly double compared to the first half, and a meaningful portion of this innovation is in heat. Heat-infused products span our portfolio.

Speaker Change: As we look ahead, we are maintaining our outlook for 2024. Mike will share more of the details.

Michael R. Smith: At a high level, we continue to expect our top line to be at the mid to high end of our guidance range given the momentum we saw in the first half of the year, particularly in our consumer segment.

Michael R. Smith: We are confident in our initiatives, and we have provided proof points of where they are working. That said, we also remain prudent and continue to reflect the uncertainty in the consumer environment in our outlook for 2024.

Brendan M. Foley: Across both segments, we expect HEAT to continue to be a long-term growth accelerator globally for Total McCormick. We are uniquely positioned to win in heat with our global iconic brands, deep consumer insights, and our meaningful scale, technology, and expertise that we have been building for decades. As we look ahead, we are maintaining our outlook for 2024. Mike will share more of the details. At a high level, we continue to expect our top line to be at the mid to high end of our guidance range, given the momentum we saw in the first half of the year, particularly in our consumer sector. We are confident in our initiatives, and we have provided proof points of where they are working.

Michael R. Smith: To wrap up, let me reiterate three key points.

Michael R. Smith: The long-term trends that fuel our categories—consumer interest in healthy, flavorful cooking, flavor exploration, and trusted brands—continues to be very strong, and importantly, consumer interest in cooking remains strong.

Michael R. Smith: We remain dedicated to accelerating our volume trends, we refine and adapt our plans as needed, and are prioritizing investments to drive impactful results and return to sustainable volume-led growth.

Michael R. Smith: And you should continue to expect improvement over the coming year and into 2025 and beyond.

Brendan M. Foley: That said, we also remain prudent and continue to reflect the uncertainty in the consumer environment in our outlook for 2024. To wrap up, let me reiterate three key points. Long-term trends that fuel our categories, consumer interest in healthy, flavorful cooking, flavor exploration, and trusted brands continues to be very strong, and importantly, consumer interest in cooking remains strong. We remain dedicated to accelerating our volume trends. We refine and adapt our plans as needed, and we are prioritizing investment to drive impactful results and return to sustainable volume-led growth.

Michael R. Smith: We believe the execution of our growth plans will be a win for consumers, customers, our categories and McCormick, which will continue to differentiate and strengthen our leadership.

Speaker Change: Now, before Mike's remarks, I'd like to speak to the management transition. As you likely know, last night we announced Mike's decision to retire at the end of February .

Speaker Change: Mike has been an exceptional leader at McCormick for more than three decades.

Speaker Change: His strategic leadership and focus on value creation have been instrumental in driving top-tier organic growth as well as our successful acquisition agenda.

Brendan M. Foley: And you should continue to expect improvement over the coming year and into 2025 and beyond. We believe the execution of our growth plans will be a win for consumers, customers, our categories, and McCormick, which will continue to differentiate and strengthen our leadership. Now, before Mike's remarks, I'd like to speak to the management transition. As you likely know, last night we announced Mike's decision to retire at the end of February. Mike has been an exceptional leader at McCormick for more than three decades.

Speaker Change: His deep knowledge of McCormick and effective execution of RCCI initiatives helped fuel our growth investments to deliver profitable growth.

Speaker Change: Mike is the embodiment of McCormick values and teamwork. He helped build a world-class global finance team.

Speaker Change: He will be missed by me and employees throughout the organization. Mike, congratulations on your successful career and your upcoming retirement.

Brendan M. Foley: His strategic leadership and focus on value creation have been instrumental in driving top-tier organic growth as well as our successful acquisition agenda. His deep knowledge of McCormick and effective execution of RCCI initiatives helped fuel our growth investments to deliver profitable growth. Mike is the embodiment of McCormick values and teamwork. He helps build a world-class global finance organization. He will be missed by me and employees throughout the organization.

Speaker Change: In the same announcement, Marcus Gabriel was named Executive Vice President and CFO , effective December 1st. Marcus will serve on our Management Committee and lead the company's finance organization and global business services team.

Speaker Change: Marcos is a proven global leader with over 25 years of experience in the consumer products industry.

Speaker Change: His expertise across major multinational companies in several geographies will be instrumental as we continue to execute our growth plans.

Speaker Change: I have worked with Marcos over the last seven years. He has served in key senior leadership roles at McCormick, contributing meaningfully to our profitable growth and improved productivity. Marcos, congratulations on this promotion, and I look forward to working with you in this new role.

Brendan M. Foley: Congratulations on your successful career and your upcoming retirement. In the same announcement, Marcus Gabriel was named Executive Vice President and CFO, effective December 1st. Marcus will serve on our Management Committee and lead the company's finance organization and global business services. Marcos is a proven global leader with over 25 years of experience in the consumer products industry. His expertise across major multinational companies in several geographies will be instrumental as we continue to execute our growth plan. I have worked with Marcos for the last seven years.

Marcos: Thank you, Brendan. I'm honored to serve as the CEO of McCormick.

Marcos: and excited to continue to partner with the entire team to deliver long-term, profitable growth and drive shareholder value.

Speaker Change: It has been great to work closely with Mike and the management committee for the past year to transition into this new role. Mike, I want to thank you for your mentorship and offer my congratulations on your retirement.

Speaker Change: Thanks very much for those remarks, Marcus and Brendan.

Mike: Joining McCormick more than 30 years ago was one of the best decisions I've ever made.

Marcos Gabriel: He has served in key senior leadership roles at McCormick, contributing meaningfully to our profitable growth and improved productivity. Marcos, congratulations on this promotion, and I look forward to working with you in this new role. Thank you, Brendan.

Mike: This is a great company and it continues to get better.

Mike: I am proud of the progress we have made over the years. We significantly grew our top line, generated fuel for growth through improved productivity, and continued to deliver solid results despite the complexity and uncertainty we experienced the last few years.

Marcos Gabriel: I'm honored to serve as the CFO of McCormick and excited to continue to partner with the entire team to deliver long-term profitable growth and drive shareholder value. It has been great to work closely with Mike and the management committee for the past year to transition into this new role. Mike, I want to thank you for your mentorship and offer my congratulations on your retirement. Thanks very much for those remarks, Marcus. Joining McCormick more than 30 years ago was one of the best decisions I've ever made.

Mike: I am so proud of and grateful for our entire team here at McCormick and appreciate all of their contributions and efforts.

Mike: My decision to retire in February is based, in part, on Marcos' readiness to move into the role. I've had the privilege of working with him for several years and witnessed his strong financial leadership and ability to drive results. I'm confident that Marcos, in partnership with Brendan and the rest of our leadership team,

Michael R. Smith: This is a great company, and it continues to get better. I am proud of the progress we have made over the years. We significantly grew our top line, generated fuel for growth through improved productivity, and continue to deliver solid results despite the complexity and uncertainty we experienced the last few years. I am so proud of and grateful for our entire team here at McCormick and appreciate all of their contributions and efforts. My decision to retire in February is based, in part, on Marcos' readiness to move into the role.

Mike: have the capabilities and vision to continue to advance our leadership and differentiation and capture all the great opportunities that are ahead for McCormick. Lastly, I look forward to partnering with Brendan and Marcos to ensure a smooth transition over the next few months.

Mike: Now moving to our results for the second quarter.

Mike: Starting on slide 11, our top line constant currency sales declined 1% compared to the second quarter of last year, including the impact of the canning divestiture, and reflect flat pricing, all set by a 1% volume and product mix decline.

Michael R. Smith: I've had the privilege of working with him for several years and witnessing his strong financial leadership and ability to drive results. I'm confident that Marcos, in partnership with Brendan and the rest of our leadership, has the capabilities and vision to continue to advance our leadership and differentiation and capture all the great opportunities that are ahead for McCormick. Lastly, I look forward to partnering with Brendan and Marcus to ensure a smooth transition over the next. Now, moving to our results for the second quarter.

Mike: As expected, volume declines were primarily driven by lower customer demand and the timing of customer activities in the labor solutions segment.

Mike: In our consumer segment, constant currency sales declined 1%, driven by pricing investments. Volumes were slightly positive and reflect a substantial sequential improvement from the first quarter.

Mike: On slide 12, consumer sales in the Americas declined to 2% versus the second quarter of last year. This decline reflects pricing investments of 1% and flat volumes.

Michael R. Smith: Starting on slide 11, our top-line constant currency sales declined 1% compared to the second quarter of last year, including the impact of the canning divestiture, and reflect flat pricing, all set by a 1% volume and product mix decline. As expected, volume declines were primarily driven by lower customer demand and the time-in customer activities in the labor solution cycle. In our consumer segment, constant currency sales declined 1% due to bypricing investments.

Mike: Volume growth in spices and seasonings was offset by volume declines in prepared food categories, including frozen and Asian.

Mike: In terms of pricing, we continue to take a surgical and data-driven approach to managing price gaps, and our investments are still expected to impact about 15% of our America's consumer segment.

Mike: EDMEA, Cost of Currency Consumer Sales Increased 4% Driven Entirely by Volume

Michael R. Smith: Volumes were slightly positive and reflect a substantial sequential improvement from the first quarter. On slide 12, however, consumer sales in the Americas declined by 2% versus the second quarter of last year. This decline reflects pricing investments of 1% and flat volume. Volume growth in spices and seasonings was offset by volume declines in prepared food categories, including frozen and aged. In terms of pricing, we continue to take a surgical and data-driven approach to managing price gaps, and our investments are still expected to impact about 15% of our America's consumer sector.

Mike: Sales growth is broad-based across product categories in our major markets. We are pleased with the volume growth we delivered in the EMEA and expect the momentum to continue through 2024.

Mike: Constant currency consumer sales in the APAC region were down 1%, driven by a 2% volume decrease, primarily due to the macro environment in China. Outside of China, we delivered volume-led growth in the mid-teens that was broad-based across categories and markets.

Mike: Turning to our flavor solution segment and slide 15, second quarter constant currency sales declined 1%, reflecting a 1% contribution from price offset by a 2% decline in volume and the impact of the divestiture of the canning business.

Michael R. Smith: EDMEA, Cost of Currency Consumer Sales Increased 4% Driven Entirely by Volume, Sales growth is broad-based across product categories in our major markets. We are pleased with the volume growth we delivered in the EMEA and expect the momentum to continue through 2024. Constant currency consumer sales in the APAC region were down 1%, driven by a 2% volume decrease, primarily due to the macro environment in China.

Mike: In the Americas, Flavor Solutions' constant currency sales declined 1%, reflecting a 1% contribution from price, offset by a 2% decrease in volume, driven by the timing of customer activities, as well as the softness in quick-service restaurant and packaged food customer volumes.

Speaker Change: This is partially offset by volume growth in our branded food service business, as Brendan mentioned.

Michael R. Smith: Outside of China, we delivered volume-led growth in the mid-teens that was broad-based across categories and markets. Turning to our Flavor Solutions segment and slide 15, second quarter constant currency sales declined 1%, reflecting a 1% contribution from price offset by a 2% decline in volume and the impact of the divestiture of the canning business. In the Americas, flavor solutions constant currency sales declined 1%, reflecting a 1% contribution from price, offset by a 2% decrease in volume driven by the timing of customer activity, as well as the softness in quick service restaurant and packaged food customer values.

Speaker Change: In EMEA, constant currency sales decreased by 8%, including a 3% impact from the divestiture of the canning business, lower volume and product mix of 4%, reflecting the impact of QSR on packaged food customers' volumes and the timing of some customer activities.

Speaker Change: In the APAC region, labor solution sales grew 10% in constant currency. Volume grew 9%, driven by customers' promotions, limited time offers, and new products, while pricing contributed 1%.

Speaker Change: As seen on slide 19, gross profit margin expanded by 60 basis points in the second quarter versus the year-ago period, driven primarily by the benefit of our Comprehensive Continuous Improvement Program, or CCI.

Michael R. Smith: This is partially offset by volume growth in our branded food service business, as Brendan mentioned and Amy Yeh. Cost and currency sales decreased by..., including a 3% impact from the divestiture of the canning business. Lower Volume and Product Next of 4%, reflecting the impact of QSR on packaged food customers' volumes and the timing of some customer activities. In the APAC region, labor solution sales grew 10% at constant current.

Speaker Change: As we look ahead, we continue to expect higher margins in the second half compared to the first half of the year.

Speaker Change: Now moving to slide 20, Selling General and Administrative Expenses, or SG&A, increased versus the second quarter of last year, driven by brand marketing investments, which were proportionally offset by CCI cost savings.

Michael R. Smith: Volume grew 9%, driven by customers' promotions, limited-time offers, and new products, while pricing contributed 1%. As seen on slide 19, gross profit margin expanded by 60 basis points in the second quarter versus the year-ago period, driven primarily by the benefit of our Comprehensive Continuous Improvement Program, or CCI. As we look ahead, we continue to expect higher margins in the second half compared to the first half of the year. Now moving to slide 20, Selling General and Administrative Expenses, or SG&A, increased versus the second quarter of last year, driven by brand marketing investments, which were partially offset by CTI cost savings.

Speaker Change: As a percentage of net sales, SG&A increased 40 basis points.

Speaker Change: As expected, brand marketing increased significantly compared to the prior year. Our investments are yielding results, and we can anticipate continuing to invest behind these efforts.

Speaker Change: Adjusted operating income was flat compared to the second quarter of 2023, with minimal impact from currency as gross margin expansion was offset by higher SG&A expenses.

Speaker Change: Adjusted operating income in the consumer segment declined 3%, or 2% in constant currency. While in labor solutions, adjusted operating income increased 6%, with minimal impact from currency.

Michael R. Smith: As a percentage of net sales, SG&A increased 40 basis points. As expected, brand marketing increased significantly compared to the prior year. Our investments are yielding results, and we can anticipate continuing to invest behind these. Adjusted operating income was flat compared to the second quarter of 2023, with minimal impact from currency as gross margin expansion was offset by higher SG&A expenses. Adjusted operating income in the consumer segment declined 3%, or 2% in constant currency.

Speaker Change: We remain committed to restoring Flavor Solutions profitability, and in the second quarter, as expected, we drove margin expansion versus prior year in this segment.

Speaker Change: Our performance this quarter reflects our commitment to increase our profit realization and positions us well to make continued investments in 2024 to fuel top-line growth.

Speaker Change: Turning to interest expense and income taxes on slide 21, our interest expense was up slightly versus the prior year. The reduction in average debt was more than offset by higher short-term interest rates.

Speaker Change: And touching on tax, our second quarter adjusted effective tax rate was 13.6%, compared to 22.3% in the year ago period.

Michael R. Smith: While on Flavor Solutions, Adjusted Operating Income increased 6% with minimal impact from current. We remain committed to restoring Flavor Solutions' profitability, and in the second quarter, as expected, we drove margin expansion versus prior year in this sector. Our performance this quarter reflects our commitment to increasing our profit realization and positions us well to make continued investments in 2024 to fuel top-line growth. Turning to interest expense and income taxes on slide 21, our interest expense was up slightly versus the prior year. However, the reduction in average debt was more than offset by higher short-term interest rates.

Speaker Change: Those periods were favorably impacted by discrete tax items with a more significant benefit this year.

Speaker Change: Our second quarter adjusted rate benefited from a discrete tax item primarily due to the recognition of a deferred tax asset related to an international legal entity reorganization.

Speaker Change: We continue to expect our tax rate to be approximately 22% for the year.

Speaker Change: Our income from unconsolidated operations in the second quarter reflects strong performance in our largest joint venture, McCormick, New Mexico.

Speaker Change: We remain the market leader with our McCormick-related mayonnaise, marmalades, and mustard product lines in Mexico, and the business continues to contribute meaningfully to our net income and operating cash flow results.

Michael R. Smith: And touching on taxes, our second quarter adjusted effective tax rate was 13.6% compared to 22.3% in the year-ago period. Those periods were favorably impacted by discrete tax items with a more significant benefit this year. Our second-quarter adjusted rate benefited from a discrete tax item primarily due to the recognition of a deferred tax asset related to an international legal entity reorganization. We continue to expect our tax rate to be approximately 22%.

Speaker Change: At the bottom line, as shown on slide 23, second quarter 2024 adjusted earnings per share was $0.69, as compared to $0.60 for the year-ago period.

Speaker Change: The increase was primarily due to the discrete tax benefit and higher income from consolidated operations I just mentioned.

Speaker Change: On slide 24, we've summarized highlights for cash flow in the quarter-end balance sheet.

Michael R. Smith: Our income from unconsolidated operations in the second quarter reflects strong performance in our largest joint venture, McCormick New Mexico. We remain the market leader with our McCormick-related 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 23, our second quarter 2024 adjusted earnings per share was $0.69.

Speaker Change: Through the first half of 2024, our cash flow from operations was $302 million, compared to $394 million in 2023.

Speaker Change: This decline was primarily driven by increased incentive compensation payments and the timing of cash tax payments.

Speaker Change: We've returned $226 million of cash to our shareholders through dividends and used $130 million for capital expenditures.

Michael R. Smith: That's compared to $0.60 for the year-ago period. The increase was primarily due to the discrete tax benefit and higher income from consolidated operations, as I just mentioned. On slide 24, we've summarized highlights for cash flow and the quarter-end balance. Through the first half of 2024, our cash flow from operations was $302 million, compared to $394 million in 2020. This decline was primarily driven by increased incentive compensation payments and the timing of cash tax.

Speaker Change: As a reminder, capital expenditures include projects to increase capacity and capabilities to meet growing demand, advance our digital transformation, and optimize our cost structure.

Speaker Change: Our priority remains 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 Change: Importantly, we remain committed to a strong investment-grade rating and continue to expect 2024 to be another year of strong cash flow, driven by profit and working capital initiatives.

Speaker Change: Now turning to our 2024 financial outlook on slide 25.

Michael R. Smith: We've returned $226 million of cash to our shareholders for dividends and used $130 million for capital expenditures. As a reminder, capital expenditures include projects to increase capacity and capabilities to meet growing demand, advance our digital transformation, and optimize our cost structure. Our priority remains 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. Importantly, we remain committed to a strong investment-grade rating and continue to expect 2024 to be another year of strong cash flow, driven by profit and working capital investment.

Speaker Change: Our outlook continues to reflect our prioritized investments and key categories to strengthen volume trends and drive long-term sustainable growth, while appreciating the uncertainty of the consumer environment.

Speaker Change: Turning to the details. First, currency rates are expected to unfavorably impact sales, adjusted operating income, and adjusted earnings per share by approximately 1%.

Speaker Change: At the top line, we continue to expect constant currency net sales to range between a decline of 1% to growth of 1%.

Speaker Change: Given the momentum in our first half, we expect to be at the mid to high end of our guidance range.

Michael R. Smith: Now turning to our 2024 financial outlook on slide 25. Our outlook continues to reflect our prioritized investments in key categories to strengthen volume trends and drive long-term sustainable growth, while appreciating the uncertainty of the consumer environment. Turning to the details, first, currency rates are expected to unfavorably impact sales, adjusted operating income, and adjusted earnings per share by approximately 1%.

Speaker Change: In terms of pricing, we expect the favorable impact related to the wrap of last year's pricing actions, realized primarily in the first quarter, to be partially offset by our price cap management investments that will drive volume growth.

Speaker Change: As we look to the second half of the year, we expect total pricing to be flat relative to the prior year.

Speaker Change: And second trends are expected to be similar to the second quarter.

Speaker Change: We expect to drive improved volume trends as the year progresses through the strength of our brands and the intentional and targeted investments we are making. As we noted, our initiatives will take time to materialize, and we continue to expect to return to total volume growth during the second half of the year.

Michael R. Smith: At the top line, we continue to expect constant currency net sales to range between a decline of 1% and growth of 1%. Given the momentum in our first half, we expect to be at the mid to high end of our guidance range. In terms of pricing, we expect the favorable impact related to the wrap of last year's pricing actions, realized primarily in the first quarter, to be partially offset by our price cap management investments that will drive volume growth. As we look to the second half of the year, we expect total pricing to be flat relative to the priority.

Speaker Change: Ask them any new macroeconomic headlines.

Speaker Change: We expect to continue to prune lower margin business throughout the year as we optimize our portfolio, the impact of which will be reflected within the natural fluctuation of sales.

Speaker Change: In China, our food-away-from-home business, which is included in APAC Consumer, was impacted by slower demand in the first half of the year, and we continue to expect China consumer sales to be flat to 2023 for the full year.

Michael R. Smith: The second trend is expected to be similar to the second. We expect to drive improved volume trends as the year progresses through the strength of our brands and the intentional and targeted investments we are making. As we noted, our initiatives will take time to materialize, and we continue to expect to return to total volume growth during the second half of the year. At any new macroeconomic environment, we expect to continue to prune lower margin business throughout the year as we optimize our portfolio, the impact of which will be reflected within the natural fluctuation of sales.

Speaker Change: While we recognize there has been volatility and demand in China, we continue to believe in that long-term growth trajectory of the China business.

Speaker Change: Finally, the divestiture of the Giotti candy business will impact us through the third quarter.

Speaker Change: Our 2024 gross margin is projected to range between 50 to 100 basis points higher than 2023.

Speaker Change: This gross margin expansion reflects favorable impacts for pricing, product mix, and cost savings from our CCI and GOE programs, partially offset by the anticipated impact of low single digit increases in cost inflation and our increased investments.

Michael R. Smith: China Our food away from home business, which is included in APAC consumer, was impacted by slower demand in the first half of the year, and we continue to expect Chinese consumer sales to be flat to 2023 for the full year.

Speaker Change: Additionally, we expect to begin reducing our dual running costs related to our transition to the new flavor solutions facility in the UK in the back half of the year.

Michael R. Smith: While we recognize there has been volatility and demand in China, we continue to believe in the long-term growth trajectory of the China-US relationship. Finally, the divestiture of the Giotti canning business will impact us through the third quarter. Our 2024 gross margin is projected to range between 50 to 100 basis points higher than 2023. This gross margin expansion reflects favorable impacts from pricing, product mix, and cost savings from our CCI and GOE programs, partially offset by the anticipated impact of low single-digit increases in cost inflation and our increased investment.

Speaker Change: Moving to Adjusted Operating Income, we expect 4% to 6% constant currency growth. This growth is projected to be driven by our gross margin expansion, as well as SG&A cost savings from our CCI and GOE programs, partially offset by investments to drive volume growth, including brand marketing.

Speaker Change: We expect our brand marketing spend to increase high single digits in 2024, reflecting a double-digit increase in investments partially offset by QCI savings, and we continue to expect our increased investments in brand marketing to be concentrated in the first half of the year.

Michael R. Smith: Additionally, we expect to begin reducing our dual running costs related to our transition to the new flavor solutions facility in the UK in the back half of the year. Moving to Adjusted Operating Income, we expect 4% to 6% constant currency growth.

Speaker Change: Our 2024 Adjusted Effective Income Tax Rate projection of approximately 22% is based upon our estimated mix of earnings by geography as well as factoring in discrete items.

Michael R. Smith: This growth is projected to be driven by gross margin expansion, as well as SG&A cost savings from our CCI and GOE programs, although partially offset by investments to drive volume growth, including brand marketing. We expect our brand marketing spend to increase by high single digits in 2024, reflecting a double-digit increase in investments partially offset by QCI savings, and we continue to expect our increased investments in brand marketing to be concentrated in the first half. Our 2024 Adjusted Effective Income Tax Rate projection of approximately 22% is based upon our estimated mix of earnings by geography as well as factoring in discrete items.

Speaker Change: We expect a mid-teens increase in our income from unconsolidated operations reflecting the strong performance we anticipate in McCormick, New Mexico.

Speaker Change: To summarize, our 2024 adjusted earnings per share projection of $2.80 to $2.85 reflects a 4% to 6% increase compared to 2023.

Speaker Change: As Brendan noted, we continue to prioritize our investments to drive impactful results and return to differentiated and sustainable volume-led growth.

Speaker Change: We are moving in the right direction, and we remain confident in the underlying fundamentals of our business.

Speaker Change: and delivering on our 2024 financial outlook and long-term objectives over time.

Michael R. Smith: We expect a mid-teens increase in our income from unconsolidated operations, reflecting the strong performance we anticipate in McCormick, D.C. To summarize, our 2024 adjusted earnings per share projection of $2.80 to $2.85 reflects a 4% to 6% increase compared to 2020.

Speaker Change: Thank you, Mike. Before moving to Q&A, I would like to close with our key takeaway on slide 26.

Speaker Change: First half results and volume performance in the consumer segment demonstrate that we are making the right investments to drive long-term sustainable organic growth and reinforces our confidence.

Speaker Change: We are executing on proven strategies and investing behind our business with speed and agility and in alignment with consumer behavior and capitalizing on our advantage categories across segments.

Michael R. Smith: As Brendan noted, we continue to prioritize our investments to drive impactful results and return to differentiated and sustainable volume-led growth. We are moving in the right direction, and we remain confident in the underlying fundamentals of our business and delivering on our 2024 financial outlook and long-term objectives. Thank you, Mike.

Speaker Change: We're able to do this and continue to make great progress on managing costs, led by our cost-saving programs to support our increased investments in the business and drive margin expansion.

Brendan M. Foley: Before moving to Q&A, I would like to close with our key takeaway on slide 26. First half results and volume performance in the consumer segment demonstrate that we are making the right investments to drive long-term sustainable organic growth and reinforce our confidence. We are executing our proven strategies and investing in our business with speed and agility and in alignment with consumer behavior and capitalizing on our advantage categories across sectors. We are able to do this and continue to make great progress on managing costs, led by our cost-saving programs to support our increased investments in the business and drive margin expansion.

Speaker Change: Our performance for the first half, coupled with our growth plans, give us confidence in achieving the mid-to-high end of our projected constant currency sales growth for 2024.

Speaker Change: Finally, I want to recognize McCormick employees around the world for their dedication and their contributions, and reiterate my confidence that together we will continue to drive differentiated results and shareholder value. Now for your questions.

Speaker Change: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star 1 from your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Brendan M. Foley: Our performance for the first half, coupled with our growth plans, gives us confidence in achieving the mid-to-high end of our projected constant currency sales growth for 2024. Finally, I want to recognize McCormick employees around the world for their dedication and their contributions, and reiterate my confidence that together we will continue to drive differentiated results and shareholder value. Now for your questions. Thank you. We will now be conducting a question and answer session.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.

Speaker Change: Thank you and our first question comes from the line of Andrew Lazar with Barclays. Please receive your questions.

Andrew Lazar: Great, thanks so much. Mike, congratulations to you on your retirement announcement. Glad we have you around for another couple of quarters. And Marcos, congratulations to you on the new role.

Speaker Change: Thank you, Andrew. We'll see you at Investor Day. Thank you, Andrew. Sure thing. I guess first off, looking at the sequential improvement in volume in the consumer segment, particularly in the Americas, certainly seems like the investments are starting to yield results. I was hoping maybe you could unpack that for us a bit.

Brendan M. Foley: If you'd like to ask a question at this time, please press star 1 on your telephone keypad and the confirmation tone to indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you, and our first question comes from the line of Andrew Lazar with Barclays. Please receive your question. Great, thanks so much.

Speaker Change: Speak to the levers that are driving the performance and what gives you the confidence that that will continue through the back half

Speaker Change: Thanks, Andrew, and good morning. Just to maybe open up with a couple points to reinforce,

Andrew Lazar: Mike, congratulations on your retirement announcement. Glad we have you around for another couple of quarters. And Marcos, congratulations on your new role.

Speaker Change: We did have a good quarter, and sales do continue to strengthen, which gives us confidence in that mid-to-upper end of our range.

Speaker Change: But this also includes that short-term weakness that we felt with flavor solutions in the quarter. I think, you know, one of the important things I want to make sure we get across is that we did drive volume growth in our global consumer segment.

Unknown Executive: Thank you, Andrew. We'll see you at Investor Day. Thanks, Andrew. Sure, thanks. I guess, first off, looking at the sequential improvement in volume in the consumer segment, particularly in the Americas, it certainly seems like the investments are starting to yield results. Thanks, Andrew, and good morning.

Speaker Change: And it does reflect kind of, in many ways, I think that additional programming that we talked about. We're also driving strong sequential volume improvement in Americas, like you just called out, in the consumer business, and specifically in spices and seasonings.

Speaker Change: You know, we deliver volume growth across all major markets and it included driving unit share growth in the U.S. So...

Brendan M. Foley: You know, just to maybe open up with a couple points to reinforce. We did have a good quarter, and sales do continue to strengthen, which gives us confidence in that mid-to-upper end of our range. But this also includes that short-term weakness that we felt with flavor solutions in the quarter. I think, you know, one of the important things I want to make sure we get across is that we did drive volume growth in our global consumer segment.

Speaker Change: We said this was a year of investment, and we further executed those programs that we've been talking about. And at the same time, we still expanded margins, so we're pretty pleased with the results at this point. It is a halfway point in the year, and we do like the progress that we're making.

Speaker Change: If I were to add more context in unpacking those levers that we've been talking about on this call and previous calls.

Brendan M. Foley: And it does reflect kind of, in many ways, the additional program that we talked about. We're also driving strong sequential volume improvement in Americas, as you just called out in the consumer business and specifically in spices and seasonings. You know, we delivered volume growth across all major markets, and that included driving unit share growth in the U.S. So, we said this was a year of investment, and we further executed those programs that we've been talking about, and at the same time, we still expanded margins. So, we're pretty pleased with the results at this point.

Speaker Change: You know, a lot of it is, we did ramp up brand marketing in the first half, and it wasn't just in the first quarter. We also saw a significant ramp up in the second quarter, too.

Speaker Change: And, you know, a lot of that investment was going more against our core categories to drive demand and support our initiatives, and we continue to expect healthy levels as we go into the second half of the year on brand marketing.

Speaker Change: New Products was also a big part of that too in the first half and it contributed pretty meaningfully.

Brendan M. Foley: It is the halfway point of the year, and we do like the progress that we're making. If I were to add more context and unpack those levers that, you know, we've been talking about on this call and on previous calls, a lot of it is that we did ramp up brand marketing in the first half, and it wasn't just in the first quarter. We also saw a significant ramp-up in the second quarter, too, and, you know, a lot of that investment was going more against our core categories to drive demand and support our initiatives, and we continue to expect healthy levels as we go into the second half of the year on brand marketing. New products were also a big part of that, too, in the first half, and they contributed pretty meaningfully. Especially, a lot of that build happened in the second quarter.

Speaker Change: Especially, a lot of that build happened in the second quarter. I would say it was more pronounced in the second quarter than even in the first, just because of the build of getting items on shelf and beginning to ship them.

Speaker Change: And we expect to double that innovation when you compare the second half to the first half.

Speaker Change: That lines up nicely as we go into the balance of the year.

Speaker Change: And then we expanded distribution in certain categories, you know, new products are gaining, you know, strong retail acceptance. And so that's obviously, you know, one of those levers that helps. And in terms of pricing, in the second quarter, we activated many of our price gap management programs. And so we expect this to continue into the second half.

Speaker Change: because we know the up with the performance that we're seeing from that but it's still only a portion of our strategy you know as we said before it impacts about 15% of our America's consumer business

Brendan M. Foley: I would say it was more pronounced in the second quarter than in the first, just because of the build of getting items on the shelf and beginning to ship them. And we expect to double that innovation when you compare the second half to the first half. So that lines up nicely as we go into the balance of the year.

Speaker Change: But it is yielding the results that we were expecting to get. And so all of these growth levers are contributing and driving, I think, really healthy outcomes.

Speaker Change: as we think about the performance of our business. So, by the way, we operate in great categories too. So the categories are performing well also. And so that obviously is a nice tailwind as part of that.

Brendan M. Foley: And then we expanded the distribution in certain categories. New products are gaining strong retail acceptance, and so that's obviously one of those levers that helps. And in terms of pricing, in the second quarter, we activated many of our price gap management programs. And we expect this to continue into the second half.

Speaker Change: Great. Thanks for that. And a quick follow-up. Mike, you had called out some weakness in flavor solutions volume several weeks ago. The result today, I guess, was at the sort of more favorable end of that range you provided in terms of flavor solutions volume in the quarter.

Brendan M. Foley: Because we are very happy with the performance that we're seeing from that, but it's still only a portion of our strategy. You know, as we said before, it impacts about 15% of our America's consumer business, but it is yielding the results that we were expecting to get. And so all of these growth levers are contributing to and driving, I think, really healthy outcomes as we think about the performance of our business. And, by the way, we operate in great categories too. So the categories are performing well also, and so that obviously is, you know, a nice tailwind part of that. Thanks for that!

Speaker Change: And I guess I'm just trying to get a sense of sort of what the exit rate is.

Speaker Change: of sort of volume in flavor solutions in the Americas and Europe sort of look like kind of coming out of fiscal 2Q.

Speaker Change: Just to get a sense of, maybe it sort of weakened from what we saw in the 2Q result.

Speaker Change: or maybe if we can expect some sequential improvement.

Speaker Change: and the US and Europe as we move further into fiscal 3Q.

Speaker Change: Thanks so much.

Speaker Change: No, that's no problem. Yeah, I mean, we could say on the call, we are expecting some sequential improvement in the Q3 and Q4.

Andrew Lazar: And a quick follow-up. Mike, you had called out some weakness in flavor solutions volumes several weeks ago. The result today, I guess, was at the sort of more favorable end of that range you provided. Transcripts by Transcription Outsourcing, LLC. America's in Europe sort of look like kind of coming out of this, to get a sense of maybe it sort of weakened from what we saw. Transcription by Transcription Outsourcing, LLC. No, that's no problem.

Speaker Change: We had talked about, about a month ago, low single-digit to mid-single-digit, so we did come in at the low single-digit phase, which we were happy with, we're always happy with those results. As you get down into some of the customer activity timing, which we have more clarity to, some of the partnerships that we're working with.

Brendan M. Foley: and getting more information on activities of customers. Now, some of those are second-half related, some we'll carry into 2025, so we don't wanna get too far ahead of ourselves, but we feel good about that sequential improvement we're seeing in addition to the great consumer performance that Brendan just alluded to.

Michael R. Smith: Yeah, I mean, we could say on the call that we are expecting some sequential improvement in Q3 and Q4. It was, you know, we talked about about a month ago, low single digits and mid single digits. So we did come in at the low single-digit phase, which we're happy with; we're always happy with those results. You know, as you get down into some of the customer activity timing, which we have more clarity on some of the partnerships that we're working with. Get more information on the activities of customers. Now, some of those are second half related.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Peter Galbo with Bank of America. Please proceed with your questions.

Speaker Change: Hey guys, good morning, congratulations on your retirement and congrats to Marcos as well.

Michael R. Smith: Some will carry into 2025. So we don't want to get too far ahead of ourselves, but we feel good about, uh, you know, where that sequential improvement we're seeing in addition to the great consumer performance that Brendan just alluded to. Our next question is from the line of Peter Galbo with Bank of America. Please proceed with your question.

Speaker Change: And maybe that explains why you might be bucking the trend relative to some of your peers. But maybe you could just unpack that a bit more, what you're seeing from that consumer perspective, and again, what kind of drives the confidence that you get into the back house.

Speaker Change: Yeah, I think what drives our confidence is as we look at our business.

Peter Thomas Galbo: Maybe just to pick up on Andrew's question just around kind of consumer confidence in the back half of the year and that acceleration. Brendan, I think in your prepared remarks, you mentioned a bit more that you're seeing consumers shopping the perimeter of the store relative to the center store. And maybe that explains why you might be bucking the trend relative to some of your peers. But maybe you could just unpack that a bit more, what you're seeing from that consumer perspective. And again, what kind of drives the confidence that you get into the back half?

Speaker Change: You know, the brand and sort of the, you know, sort of the key category and unit level.

Speaker Change: We think the programs are having, you know, strong impact.

Speaker Change: Coupled with, you know, where we think consumers are moving within the store and what they're doing. As people tend to, you know, when they feel like, in

Speaker Change: If you think about the inflation through the way from home, we're definitely seeing people shift more too.

Speaker Change: You know, eating at home, and that certainly benefits our businesses to be always mentioned.

Speaker Change: But, you know, as people shop at Perimeter, I think they're looking for opportunities in terms of how they flavor their meals, and so that really does benefit our categories. But I think about, broadly though, Peter, just, you know, the overall consumer outlook.

Brendan M. Foley: Yeah, I think what drives our confidence is as we look at our business, at the brand and, you know, sort of the key category and unit level, we think the programs are having a strong impact, coupled with where we think consumers are moving within the store and what they're doing. As people tend to, you know, when they feel like it, when you think about the inflation through the way from home, we're definitely seeing people shift more to, you know, eating at home.

Speaker Change: It hasn't really changed a lot since our last guidance or even on our last call. I mean, we're pretty confident in our initiatives and we think they're working.

Speaker Change: But our outlook assumes the consumer is kind of where they are or they have been like in the fourth quarter of 23 and the first half of

Speaker Change: [inaudible]

Brendan M. Foley: And that certainly benefits our businesses, as we've always mentioned. But you know, as people shop the perimeter, I think they're looking for opportunities in terms of how they flavor their meals, and so that really does benefit our categories. When I think broadly, though, Peter, just, you know, the overall consumer outlook hasn't really changed a lot since our last guidance or even on our last call. I mean, we're pretty confident in our initiatives, and we think they're working.

Speaker Change: So, we see the consumer moving around and shifting channels, that's definitely happening and I think that pops up in the numbers.

Speaker Change: But it tends to benefit our business, whether it's in food service or whether it's at meals at home. We're flavoring all those occasions, so we really believe that when we're, as an end-to-end provider of flavor, we tend to benefit depending on whatever channel it shifts into.

Brendan M. Foley: But our outlook assumes the consumer is kind of where they are, or they have been, like, in the fourth quarter of 23, in the first half of 24, and so we continue to take a cautious view on our outlook. I think that just reflects what might be uncertainty or inconsistency that we tend to see in the environment, but we believe, you know, even in that environment, we plan for our plants to kind of deliver this type of performance. So we see the consumer moving around and shifting channels. That's definitely happening, and I think that will pop up in the numbers.

Speaker Change: Got it. And Mike, I think, you know, depending on whether you look at the IRI or, sorry, the Cercana or the Nielsen data, there was maybe a gap just in America's consumer relative to the, I think you gave some of the factors, but just anything you can dimension there on kind of, you know, the gap in terms of shift to consumption on that.

Mike: Yeah, absolutely.

Mike: There's a number of factors that kind of impact the difference between our shipments and consumption, and just to give you some context around that, maybe I'll just share with you three points.

Brendan M. Foley: But it tends to benefit our business, whether it's in food service or whether it's at meals at home. We're flavoring all those occasions. So we really believe that when we're an end-to-end provider of flavor, we tend to benefit depending on wherever the channel shifts.

Speaker Change: First of all, our consumption is strengthening, and if I were to think about how that progressed through the second quarter, I think more of it we saw in the back half of the second quarter than in the front half. So that would reflect as we started to really get execution of our programs.

Michael R. Smith: And Mike, I think, [inaudible] Yeah, absolutely. There's a number of factors that kind of impact the difference between our shipments and consumption. And just to give you some context around that, maybe I'll just share with you three points to kind of consider. First of all, our consumption is strengthening. And if I were to think about how that progressed through the second quarter, I think more of it we saw in the back half of the second quarter than in the front half.

Speaker Change: In retail, we were seeing stronger consumption, so it started to pull up. You know, in Q2, across the total portfolio,

Speaker Change: We drove almost the full point of unit growth.

Speaker Change: And so, you know, that gave us, you know, reason to feel confident. And that includes those declines in prepared foods that we talked about, like left-frozen.

Speaker Change: Frozen in Asian Category to Clients

Speaker Change: But it was a substantial improvement from Q1.

Speaker Change: and driven by that, you know, increased programming. I think that is, to some degree, a condition of sales catching up to our performance on shelf. So, as retailers start to see, I think our movement, you know, we obviously expect sales to keep up with that.

Michael R. Smith: So that would reflect as we started to really execute our programs in retail, we were seeing stronger consumption. So it started to pull up, you know, in Q2 across the total portfolio, we drove almost the full point of unit growth. And so, you know, that gave us reason to feel confident. And that included those declines in prepared foods that we talked about, like the frozen and Asian category declines. But It was a substantial improvement from Q1.

Speaker Change: I would expect more strengthening to continue in the second half.

Speaker Change: The other condition that in the second quarter, I think it's important to call out, is we were lapping increased shipments that came ahead of the 2023 pricing actions of the prior year.

Speaker Change: and we also had a similar condition in 22 compared to 23 so that did play a little bit of impact I think when we look at shipments versus consumption.

Michael R. Smith: And driven by that, you know, increased programming. I think that is, to some degree, a condition of sales catching up to our performance on the shelf. So as retailers start to see, I think our movement, you know, we obviously expect sales to keep up with that. I would expect more strengthening to continue in the second half.

Speaker Change: And then in terms of, you know, retailers, you know, they're always looking to be more efficient. That's not new. It's always, I think, a focus there. But overall, we are not seeing at this time any unusual activity.

Mccormick: So, I think just to give you a little bit of context on, you know, consumption has an impact, what was going on in the prior year, and then how are retailers behaving, I think that would be the perspective I would want you to, you know, think about with McCormick.

Michael R. Smith: The other condition that in the second quarter, I think it's important to call out, is that we were lapping increased shipments that came ahead of the 2023 pricing actions of the prior year, and we also had a similar condition in 22 compared to 23. So, that did have a little bit of an impact, I think, when we look at shipments versus consumption. And then, in terms of, you know, retailers, they're always looking to be more efficient. That's not new.

Speaker Change: Great, thanks very much guys.

Speaker Change: Our next questions are from the line of Ken Goldman with J.P. Morgan. Please receive your questions.

Kenneth B. Goldman: Hi, thank you, and Mike and Marcos, congratulations to both of you. And Mike, thank you for all of your help over the years. I know you're not done yet, but it's appreciated.

Michael R. Smith: It's always, I think, a focus there. But overall, we are not seeing, at this time, any unusual activity. So I think just to give you a little bit of context on, you know, consumption has an impact, what was going on in the prior year, and then how are retailers behaving? I think that would be the perspective I would want you to, you know, think about with McCormick. Great.

Kenneth B. Goldman: I wanted to ask

Kenneth B. Goldman: A little bit about, you know, you have a pretty confident tone. I think it's fair to say about, you know, the direction of trends into the second half.

Speaker Change: You beat this quarter on the bottom line by a decent amount. You beat the first quarter by a decent amount. It sounds like you're implicitly – well, you are implicitly guiding for the tax rate to be, you know, closer to 24% in the second half roughly.

Stephen Robert R. Powers: Thanks very much, guys. Our next questions are from the line of Ken Goldman with J.P. Morgan. Please take your questions. Hi, thank you. And Mike and Marcos, congratulations to both of you.

Speaker Change: I guess putting that all together, were there any thoughts?

Speaker Change: of Raising Guidance. I realize it's a pretty unpredictable environment right now, but I just want to get a little bit of sense for how you view the second half in terms of, we use the word prudence, in relation to just how well the first half performed, at least versus external expectations.

Kenneth B. Goldman: And Mike, thank you for all of your help over the years. I know you're not done yet, but it's appreciated. I wanted to ask a little bit about, you know, you have a pretty confident tone, I think it's fair to say, about, you know, the direction of trends into the second half. You beat this quarter on the bottom line by a decent amount. You beat the first quarter by a decent amount.

Speaker Change: Yeah.

Mike: I'll lead off with a couple of comments, Mike. I mean, I do think, kind of, we felt like we didn't have strong consumer performance and our investments are working.

Brendan M. Foley: It sounds like you're implicitly, well, you are implicitly guiding for the tax rate to be, you know, closer to 24% in the second half, roughly. I guess putting that all together, were there any thoughts of raising guidance? I realize, you know, it's a pretty unpredictable environment right now, but I just want to get a little bit of a sense for, you know, how you view the second half in terms of, you know, we use the word prudence, you know, in relation to just how well the first half performed, at least versus external expectations. Yeah. I'll leave it up to the comments, Mike.

Mike: You know, doing what we said we would do, and so that does give us confidence going into the second half, and perhaps that's why you're hearing a little bit of confidence in our tone.

Mike: But given how the first half performed...

Mike: We expect those growth levers in the consumer part of our business to continue to operate and work well.

Mike: As we said, on Flavor Solutions, we expect...

Faten Freiha: Unknown Executive, Faten Freiha

Brendan M. Foley: I mean, I kind of feel like we did have strong consumer performance and our investments are working. You know, doing what we said we would do, and so that does give us confidence going into the second half, and perhaps that's why you're hearing a little bit of confidence in our tone. But given how the first half performed... we expect those growth levers in the consumer part of our business to continue to operate and work well.

Speaker Change: How we might look at the flavor solutions business. But Mike, if you want to talk a little bit about...

Speaker Change: What drives our prudence probably has to do with the back half's a big part of our year.

Speaker Change: [inaudible]

Speaker Change: And particularly what makes us happy is that consumer volume going to, you know, positive, which is great. You know, there's some back-ass assumptions on volume growth in consumer, which are very, you know, we know the programs are working, but, you know, you still have to assume that the second half of the year is the biggest, the biggest half, the biggest quarter, the fourth quarter. So while we're, you know, we're really pleased with the results, we realize the second half is important to continue that momentum, and we believe we will.

Brendan M. Foley: As we said on Flavor Solutions, we expect sequential improvement versus what we saw in the second quarter, because there's many of the things that I think, as Mike said earlier in the questions here, it does give us confidence as we think about how we might look at the Flavor Solutions business. But, Mike, if you want to talk a little bit about what drives our prudence probably has to do with – Well, I think, as we think about where we are on the lifecycle of the year, and we talked about Q2 being an important quarter for us because it was the pivot quarter, where we lose some of the protection of pricing, which we saw in the first quarter and last year, the shift of volume, and particularly what makes us happy is that consumer volume going to positive, which is great.

Speaker Change: We're always looking at the guidance. I mean, you referenced tax, so I'm kind of chuckling because I think my first earnings call, we probably, I think we had a big tax adjustment and similar.

Speaker Change: And we talked about guidance for the year versus these things happen lumpily in the quarter or half, so I'll take that one right off. 24% in the second half is our underlying rates, 24% and 25%, so that's...

Brendan M. Foley: There's some back half assumptions on volume growth in consumers, which we know the programs are working, but you still have to assume that the second half of the year is the biggest half and the biggest quarter of the fourth quarter. So while we're really pleased with the results, we realize the second half is important to continue that momentum, and we believe we will. We're always looking at the guidance. I mean, you referenced tax, so I'm kind of chuckling because, in my first earnings call, I think we had a big tax adjustment, similar, and we talked about guidance for the year versus these things happening lumpily in the quarter or half. So I'll take that one right off the bat, 24% in the second half.

Speaker Change: You know, roughly where we'll probably land.

Speaker Change: I mean, we do have the second half if you think about built-in.

Speaker Change: Operating margin growth, you know, we have volume growth, things like that. So we feel like we've called it prudently Obviously if there's opportunities that things change We want to keep our financial flexibility to make investments in some of these these growth drivers that we're really seeing positive on so we want to be

Speaker Change: [inaudible]

Michael R. Smith: The underlying rate is 24% to 25%, so that's roughly where we'll probably land. I mean, we do have the second half, if you think about built-in operating margin growth. We have volume growth, things like that, so we feel like we've called it prudently. Obviously, if there are opportunities, if things change, we want to keep our financial flexibility to make investments in some of these growth drivers that we're really seeing positive results on. We have that flexibility, too.

Speaker Change: Our next questions are from the line of Alexia Howard with Bernstein. Let's just hear with your questions.

Alexia Jane Burland Howard: Good morning and congratulations Mike and welcome or congratulations Marcos. I guess we'll see you both at the investor day coming up in October .

Speaker Change: And thank you.

Speaker Change: Can I pick up on Andrew's question around flavor solutions and maybe think about the longer-term strategy for building resilience in that segment? You have a lot of exposure to QSRs.

Michael R. Smith: But I think we're really pleased going into the third quarter. We talked a bit about some of the consumer uncertainty which impacts some of our flavor solutions business. We're always cautious there, too, but I'd say we've caught it pretty much down the middle with, hopefully, a lean in to the top.

Speaker Change: quite focused on one particular customer in the salty snack segment. Are there plans to diversify and how quickly can you get off to those new opportunities and which kinds of categories that are faster growth can you go after?

Unknown Executive: So, it's good, thank you all pass it on.

Kenneth B. Goldman: Sounds good. Thank you. I'll pass it on. Our next questions are from the line of Alexia Howard with Bernstein. Good morning, and congratulations, Mike, and welcome, or congratulations, Marcos.

Alexia Howard: Our new questions are from the line of Alexia Howard with Bernstein. This is you with your questions. Good morning, and congratulations, Mike. And welcome, or congratulations, Marcos. I guess we'll see you both at the Investor Day coming up in October. And thank you.

Alexa: Alexia, thanks for the question and good morning. I think as you think about the core of your question is that long-term outlook as you think about our customer space and portfolio flavor solutions.

Alexia Jane Burland Howard: I guess we'll see you both at Investor Day coming up in October, and thank you. Can I pick up on Andrew's question around flavor solutions and maybe think about the longer-term strategies for building resilience in that segment? You have a lot of exposure to QSRs, and you are quite focused on one particular customer in the salty snack segment. Are there plans to diversify, and how quickly can you get on to those new opportunities, and which kinds of categories that are faster growing can you go after? Alexia, thanks for the question. Good morning.

Alexia Howard: Can I pick up on Andrew's question around flavor solutions and maybe think about the longer-term strategies for building resilience in that. You have a lot of exposure to QSRs, white focus on one particular customer and the Fulti's next segment.

Alexa: I would go back to things that we've said in prior discussions. If we think about the flavor solutions businesses...

Alexa: Constantly an activity of continue to shape that portfolio to higher value added.

Alexa: products and technologies and customer base. So, you know, as we continue to shape that portfolio, it continues to go in the direction of, you know, sort of our flavors business, which includes seasonings, as we think about our portfolio.

Unknown Executive: Are there plans to diversify, and how quickly can you get off to those new opportunities that which clean the categories that a faster growth can you go after? Alexia, thanks for the questions. Good morning. I think, as you think about the core of your question that says long-term outlook, as you think about our customer space and portfolio and flavor solutions. I would go back to the things that you said and try your discussions. If we think about the flavor solutions businesses, constantly an activity of continue to shape that portfolio to higher value added products and technologies and customers.

Brendan M. Foley: Um, I think as you think about the core of your question is that long-term outlook as you think about our customer space and portfolio flavor solutions. I would go back to things that we've said in prior discussions. If we think about the flavor solutions businesses, there is constantly an activity of continuing to shape that portfolio of higher value-added products and technologies and a customer base. So as we continue to shape that portfolio, it continues to go in the direction of sort of our flavors business, which includes seasonings, as we think about our portfolio.

Alexa: And in many ways, some of the fastest-growing areas of that portfolio happen to be those small, highly innovative, emerging customers.

Alexa: that are operating in categories like performance nutrition or non-alcoholic beverages where like this quarter we continue to see real strength.

Alexa: That is a form of looking at how we diversify our customer base. But we're also operating where we think there are strong areas of growth.

Alexa: And this really, I think, is kind of the central point that we've talked about, is we'll continue to shape that part of our segment, the Flavor Solutions segment, in that portfolio.

Unknown Executive: So, you know, as we continue to shape that portfolio, it continues to go in the direction of sort of our flavors business, which includes seasonings as we think about our portfolio. And in many ways, some of the fastest growing areas of that portfolio happen to be those small, has the innovative emerging customers. And that are operating in categories that like performance nutrition or non-alcoholic beverages were like this quarter because you need to see real strength. That is, you know, foremost, you know, looking at how we diversify our customer base, but we're also operating where we think there are strong areas of growth.

Alexa: to that higher value added, you know, sort of product and technology sale that we have. And this is, I think, what you see quarter to quarter is a reflection of that.

Brendan M. Foley: And in many ways, some of the fastest growing areas of that portfolio happen to be those small, highly innovative, emerging customers that are operating in categories like performance nutrition or non-alcoholic beverages, where, like this quarter, we continue to see real strength.

Alexa: I think, too, people sometimes forget the brand-and-true service business, which...

Alexa: [inaudible]

Brendan M. Foley: That is a form of looking at how we diversify our customer base, but we're also operating where we think there are strong areas of growth. And this really, I think, is kind of the central point that we've talked about, that we'll continue to shape that part of our flavor solution segment and that portfolio to that higher value-added sort of product and technology sale that we have. And this is, I think, what you see quarter to quarter is a reflection of that. I think, too, people sometimes forget the branded food service business, which has really good margins. We like that part of the portfolio, and we're continuing to gain share. We keep coming up with opportunities.

Unknown Executive: And these, it's really, I think, is kind of the central point that we talked about. We'll continue to shape that part of our site. The flavor solution segment and that portfolio to that higher value added, you know, sort of product and technology sale that we have. And this is, I think, what you see a quarter-to-quarter is a reflection of that.

Speaker Change: Thank you.

Speaker Change: It's a diversified group. That's I think the message and we continue to diversify and optimize and move toward more higher margin product lines.

Speaker Change: Great. Thank you very much. Could I just do a quick follow-up on the highlights of the remaining cost-saving opportunities?

Unknown Executive: I think two people sometimes forget the brand of research service business, which, you know, really good margins. We like that portfolio and we're continuing to gain shares, gain share. We keep coming up with opportunities. We talked about expanding, performing mayonnaise to that category, things like that. So there's really lots of opportunities on that side, which you like on the flavor solutions side. It's a diverse cycle. I think the message, and we continue to diversify and optimize and move towards more higher margin product lines.

Speaker Change: You talked a little bit about getting rid of costs that were incremental through COVID, what are the major buckets of cost savings remaining to you over the next couple of years?

Michael R. Smith: We talked about expanding McCormick Mayonnaise into that category, things like that. So there's really lots of opportunities on that side, which we like on the flavor side. It's a diversified group; I think the message is we continue to diversify and optimize. Great, thank you very much.

Speaker Change: Oh, gosh, we could talk a whole earnings call on that one. Our CCI program has a long history of generating...

Speaker Change: and Michael Kasey Jenkins, Michael Smith, Brendan Foley, Lawrence Kurzius, Unknown Executive,

Unknown Executive: Great. Thank you very much.

Alexia Jane Burland Howard: Can I just do a quick follow-up on the highlights of the remaining cost-saving opportunities? You talked a little bit about getting rid of costs that were incremental through COVID. What are the major buckets of cost savings remaining for you over the next couple of years? Oh, gosh.

Unknown Executive: Could I just do a quick follow-up on the highlights of the remaining cost-saving opportunities? In buying more of our gourmet line, as the cook more at home, they do want to, we know they want to explore and really, you know, kind of, you know, explore flavor overall, and that gourmet line I think really kind of suits what they're, what they're looking for. If you think about the load of mid income consumer, they're looking for brands with price points closer to private label.

Speaker Change: You know we target all levels of the P&L. I mean a lot of times programs will just look at cost of goods sold, raw materials, things like that, which is an important part of our portfolio. We're looking at optimizing SG&A.

Speaker Change: A&P, we talk about A&P a lot this year, we're actually spending A&P, our guidance is high single digits, but from an effectiveness perspective, we're actually spending low double digits and getting CCI savings as we optimize spend to touch more customers more effectively. So those are examples.

Michael R. Smith: We actually get to talk through a whole earnings call on that one. I mean, our CCI program, you know, has a long history of generating sustainable cost savings. We talked a little bit on this call about, you know, we're finalizing the transition to our new UK Flavor Solutions business in the second half, which will give us some tailwind into next year, which is great, but our, you know, CCI program, we target all levels of the P&L.

Speaker Change: Everywhere along the P&L. I'd say, you know...

Speaker Change: It's a program that's special because ideas come from the bottom up in our organization as part of our culture to drive that because we want to use it as fuel for growth so we can drive the growth leverage that we talked about this year at Cagney and help drive that volume. So I think there's a lot more opportunity and I look forward to Marcus helping drive that into the future too.

Michael R. Smith: I mean, a lot of times, programs will just look at the cost of goods sold, raw materials, things like that, which is an important part of our portfolio. We're looking at optimizing SG&A. A&P, when we talk about A&P a lot this year, we're actually spending A&P. Our guidance is high single digits, but from an effectiveness perspective, we're actually spending low double digits and getting CCI savings as we optimize spend to touch more customers more effectively.

Speaker Change: Thank you very much. I'll pass it on.

Speaker Change: The next question is from the line of Steve Powers with Deutsche Bank. Please proceed with your question.

Stephen Robert R. Powers: Hey guys, good morning, and Mike Marcos, congrats from me as well.

Speaker Change: You expect a whole lot more of incremental unit price investment over the course of the year.

Speaker Change: And I guess I just wanted to kind of test that.

Michael R. Smith: So those are examples everywhere along the P&L, and I'd say, you know, it's a program that's beneficial because ideas come from the bottom up in our organization as part of our culture to drive that, because we want to use it as fuel for growth, so we can drive the growth leverage that we talked about this year at Cagney and help drive that volume. So I think there's a lot more opportunity, and I look forward to Marcus helping drive that into the future, too. Thank you very much. I'll pass it on. The next question is from the line of Steve Powers with Deutsche Bank. Hey guys, good morning. And Mike Marcos, congrats from me as well.

Speaker Change: That assumption and then in the context of what you were saying around just the

Speaker Change: The Value Seeking Behavior and the Consumer Financial Pressures that you're observing.

Speaker Change: across the consumer landscape. Just what gives you the confidence that that kind of you've kind of done enough at this point and you've got in place what you need for the duration of the year? Thank you.

Stephen Robert R. Powers: Hey, so Brendan, I wanted to talk a little bit about the price gap management initiatives you've put in place in Consumer. With the commentary on year-over-year pricing in the back half expected to resemble what we've seen in the second quarter, it doesn't sound like you expect a whole lot more in incremental unit price investment over the course of the year. And I guess I just wanted to kind of test that assumption, and then, in the context of what you were saying around just the value-seeking behavior and the consumer financial pressures that you're observing across the consumer landscape, just what gives you the confidence that you've kind of done enough at this point, and you've got in place what you need for the duration of the year? Thank you, Steve.

Speaker Change: Thank you, Steve. I think, you know, in the two questions you asked there, let me address your first one first.

Speaker Change: Yeah, you can make the assumption that as we think about the rest of the year and that price gap management activity, you know, what we've implemented here today largely reflects how we're thinking about carrying through the rest of the year. Having said that...

Speaker Change: We're looking at performance all the time, and so we might make tweaks, we might, you know, look at

Speaker Change: The performance of programs and decide whether or not we want to make adjustments, but as we look at it today, we feel like we're positioned for

Speaker Change: Given the performance so far that these programs are operating the way we want them to, it should continue into the second half.

Brendan M. Foley: I think, you know, in the two questions you asked there, let me address your first one first. Yeah, you can make the assumption that as we think about the rest of the year and that price gap management activity, you know, what we've implemented here today largely reflects how we're thinking about carrying through the rest of the year. Having said that, We're looking at performance all the time. And so we might make tweaks; we might, you know, look at the performance of programs and decide whether or not we want to make adjustments.

Speaker Change: I think with a strong level of confidence. So I think

Speaker Change: Just to kind of hit that first area first on how you should think about that program activity.

Speaker Change: As it relates to...

Speaker Change: The Consumer and how they're operating and what might be the way to think about consumer behavior today in the store. I would just maybe add a couple of thoughts there. We have the broadest portfolio in the category, particularly like in spices and seasonings, and that really does differentiate us, but what that allows us to do is...

Brendan M. Foley: But as we look at it today, we feel like we're positioned for getting the performance so far that these programs are operating the way we want them to and should continue into the second half, I think with a strong level of confidence. So I think just to kind of hit that first area first on how you should think about that program activity as it relates to, you know, the consumer and how they're operating and, you know, what might be the way to think about consumer behavior today in the store. I would just maybe add a couple thoughts there.

Speaker Change: You know, we're operating across all channels. We have products at every price point, whether it be premium or lower price points, and we even explored, like we did with Dilawri's opening price point, you know, launching that item in there was to really take care of another price point area that we felt like we needed to operate in.

Speaker Change: But this broad, diversified portfolio allows us to meet consumer needs and then we become part of the solutions for what consumers are looking for.

Speaker Change: Cooking at home does remain elevated right now in our price points.

Speaker Change: You know, are really us.

Brendan M. Foley: You know, we have the broadest portfolio in the category, particularly in spices and seasonings, and that really does differentiate us. But what that allows us to do is, you know, we're operating across all channels. We have products at every price point, whether it be premium or lower price points. And we even explored, like we did with Dilawri's opening price point, you know, launching that item in there was to really take care of another price point here that we felt like we needed to operate in.

Speaker Change: Small percentage of the cost of a meal when you think about the most enjoyable part of the meal, which is waiver.

Speaker Change: And so, as we see consumers increasingly shop the perimeter, continue to cook at home, our categories really play an even more important role.

Speaker Change: It's including condiments and sauces, and we're seeing a benefit from that. I mean, one thought is just to show you how consumers are responding in this current environment in the second quarter.

Speaker Change: Spices and seasonings were the top category in the center of store growth across measured channels. So, you know, that tells you something that, you know, this is a tool for consumers to really deliver on what they're looking for.

Brendan M. Foley: But this broad and diversified portfolio allows us to meet consumer needs, and then we become part of the solutions for what consumers are looking for. Cooking at home does remain elevated right now, and our price points are really a small percentage of the cost of a meal when you think about the most enjoyable part of the meal, which is flavor.

Speaker Change: And, you know, of course, we're the leading branded player, but we're also driving category unit growth in that context, too.

Speaker Change: When consumers are pressured, I think, in this environment, regardless of maybe their level of income, you know, and they're cooking at home, they will lean in on flavor. They might even splurge on it. You know, one example that we would share, or at least a couple...

Brendan M. Foley: And so as we see consumers increasingly shop the perimeter and continue to cook at home, our categories really play an even more important role. They include condiments and sauces, and we're seeing a benefit from that. One thought is just to show you how consumers are responding in this current environment. In the second quarter, spices and seasonings were the top category in the center of store growth across measured channels.

Speaker Change: is when we look at what's driving younger consumers right now, interestingly, they're going to our gourmet line.

Speaker Change: and buying more of our Gourmet Line.

Speaker Change: As they cook more at home, we know they want to explore and really kind of

Brendan M. Foley: So, you know, that tells you something about this being a tool for consumers to really deliver on what they're looking for. And, you know, of course, we're the leading branded player, but we're also driving category unit growth in that context, too. When consumers are pressured, I think, in this environment, regardless of maybe their level of income, you know, in their cooking at home, they will lean in on flavor. They might even splurge on it.

Speaker Change: You know, explore flavor overall. And that gourmet line, I think, really kind of suits what they're looking for.

Speaker Change: If you think about the low to mid-income consumer, they're looking for brands with price points closer to private label.

Speaker Change: You know, that's why we're, you know, from an innovation standpoint, we're adding new seasoning blends to our Lowry's line. And that attracts these consumers and we're seeing the consumer trade up in that particular case because they're looking for brands that they trust.

Brendan M. Foley: You know, one example that we would share, or at least a couple, is when we look at what's driving younger consumers right now, interestingly, they're going to our gourmet line. In buying more of our gourmet line, as they cook more at home, we know they want to explore and really kind of explore flavor overall, and that gourmet line, I think, really kind of suits what they're looking for. If you think about the low to mid-income consumer, they're looking for brands with price points closer to the private label.

Speaker Change: We do see right now overall consumers shopping smaller sizes than maybe we did this time last year, where we saw a lot of large size purchasing going on.

Speaker Change: So that means we have to ensure that we have the right price pack architecture in place to meet that demand. Another example, just to give you even more color, if you will, is in recipe mixes.

Speaker Change: You know, with a lot of our programs, including, you know, sort of revenue management, price gap management, we're attracting a lot more consumers overall to that category. RecipeVix is a great value, especially when you just want to buy for a specific meal. It's a great convenience. There's no waste.

Unknown Executive: You know, that's why we're, you know, from an innovation standpoint, we're adding these seasoning blends to our liaries line. And in our tracks, these consumers, and we're seeing the consumer trade out. In that particular case, because they're looking for brands that they trust. We do see right now overall consumers dropping smaller sizes, then maybe we did this time last year. We saw a lot of large size first thing going on. So that means we get to sure that we have the right press, back our protection place to meet that demand.

Brendan M. Foley: That's why we, from an innovation standpoint, we're adding new seasoning blends to our Lowry's line, and that attracts these consumers, and we're seeing the consumer trade up in that particular case because they're looking for brands that they trust. We do see overall consumers shopping smaller sizes than maybe they did this time last year, where we saw a lot of large size purchasing going on. So that means we have to ensure that we have the right price pack architecture in place to meet that demand.

Speaker Change: It's a great way to explore new flavors at low risk so you don't have to invest in, you know, let's say a whole bottle. But what's happened is we've seen household penetration grow for our brands, you know, during the second quarter in a category like that.

Speaker Change: So I think that also gives some context, and I'll just wrap it up with one other idea. You know, we are seeing a lot of growth in this mini-trial size area, and we view that as a pretty interesting tool for, you know, lowering the cost for consumers to try new flavors.

Unknown Executive: Another example that just to give you even more color, if you will, is in recipe mixes. You know, with a lot of our programs, including, you know, sort of revenue management, price gap management, we're attracting a lot more consumers overall to that category. The rest of the mix is a great value, especially when you just want to buy a specific meal. It's a great convenience; there's no waste. It's a great way to explore new flavors at low risk, so you don't have to invest in, you know, let's say, a whole bottle. But what's happened is we've seen household penetration grow for our brands, you know, during the second quarter in a category like that.

Brendan M. Foley: Another example, just to give you even more color, if you will, is in recipe mixes. You know, with a lot of our programs, including, you know, sort of revenue management, price gap management, we're attracting a lot more consumers overall to that category. Recipe Bix is a great value, especially when you just want to buy for a specific meal.

Speaker Change: And so we're also launching those here in the second quarter and just shipping those now, but that's just another opportunity for consumers to explore.

Brendan M. Foley: It's a great convenience. There's no waste. A great way to explore new flavors at low risk, so you don't have to invest in, you know, let's say, a whole bottle. But what's happened is we've seen household penetration grow for our brands during the second quarter in a category like that, so I think that also gives some context. And then I'll just wrap it up with one other idea.

Speaker Change: Look at innovation, but you know, it's at a lower price point for them to kind of, you know, give it a try in these mini trial sizes. So, I kind of wanted to give you sort of a collection of context or points to consider when you think about meeting the consumer's needs today.

Unknown Executive: So I think I've also give some contact me. I'll just wrap it up with one of the idea. You know, we are seeing a lot of growth in this mini trial size area, and we view that as a pretty interesting tool for, you know, lowering the cost for consumers to try new flavors. And so we're also launching those here in the second quarter and just shipping those now, but that's just another opportunity for consumers to explore. Look at innovation, but you know, it's at a lower price point than then to kind of give it a try in these mini trial sizes.

Speaker Change: Yes, I appreciate that. Thank you very much.

Brendan M. Foley: You know, we are seeing a lot of growth in this mini trial size area, and we view that as a pretty interesting tool for, you know, lowering the cost for consumers to try new flavors. And so we're also launching those here in the second quarter and just shipping those now. But that's just another opportunity for consumers to explore. Look at innovation, but you know, it's at a lower price point for them to kind of give it a try in these mini trial sizes.

Speaker Change: And if I could maybe pivot, Mike, question on gross margin, I apologize if you if you already provided some commentary here, but indulge me anyway, you know, the first half of the year, you're trending towards the, you know, the upper end of that gross margin expansion range. And I guess just as I extrapolate to the back half, is it fair to assume that you're

Speaker Change: You're comfortable with the upper half of the range at least for the full year, or are we open to more volatility in the back half where the full range is kind of in play?

Stephen Robert R. Powers: So I kind of wanted to give you sort of a collection of context or points to consider when you think about meeting the consumer's needs today. Yes, I appreciate that. Thank you very much. And if I could maybe pivot, Mike, on gross margin. I apologize if you have already provided some commentary here, but indulge me anyway.

Unknown Executive: So I kind of wanted to give you sort of a collection of contacts or points to consider when you think about needing to consumers' needs today. Yes, I appreciate that. Thank you very much.

Mike: Well, I think, you know, in the back half, the guide implies almost, like, 5 basis points, 100 basis points, you know, and, you know, we say for the year 50 to 100, so we realize we had a, you know, really strong first half.

Michael R. Smith: You know, in the first half of the year, you're trending towards the, you know, the upper end of that gross margin expansion range. And I guess, just as I extrapolate to the back half, is it fair to assume that you're comfortable with the upper half of the range, at least for the full year? Or is it are we open to more volatility in the back half, where the full range is kind of in play?

Unknown Executive: And if I could maybe pivot my question on gross margin. I apologize if you already provided some commentary here, but indulge me anyway. You know, the first half of the year you're training towards the, you know, the upper end of that gross margin expansion range.

Speaker Change: Unknown Executive, Faten Freiha

Speaker Change: Volume is great for a lot of things, and it helps push margin and mix and all that sort of stuff, so I think we're comfortable with the guide we have. I wouldn't say right now I'd guide to the higher end at this point.

Unknown Executive: And I guess just as I extrapolate to the back half, there's a fair to assume that you're comfortable with the upper half of the range, at least for the full year or is are we open to more volatility in the back half where that the full range is kind of in play. Well, I think you have in the back half that the guy implies almost like five basis points to a hundred basis points. And you know, we say for the year 50 to a hundred. So we realize we had a really strong first half. You know, the price thing was large in the first word for us.

Speaker Change: Do you want to read what I said?

Speaker Change: Yep.

Speaker Change: Remember, some of the cost savings programs we have, like GLE was really first quarter into the second quarter. Some of those are going away also.

Michael R. Smith: Well, I think, you know, in the back half, the guide implies almost like five basis points. 100 basis points is, you know, and, you know, we say for the year 50 to 100. So we realized we had a really strong first half.

Speaker Change: It's still, you know, the trends we see in gross margin, you know, the first, the second half is higher than the first half traditionally, which is going to continue again, and, you know, we do see a nice trajectory there for gross margin over time as we continue our multi-year journey of getting back to, you know, kind of the pre-COVID gross margin levels.

Michael R. Smith: You know, pricing was large in the first quarter for us; that's going away in the second half. And, you know, the key is volume growth. I mean, volume growth is great for a lot of things, and it helps first margin and mix and all that sort of stuff. So I think we're comfortable with the guide we have; I wouldn't say right now that I'd guide to the higher end at this point. But, for reasons like that.

Unknown Executive: That's going away with the second half, and you see is the volume. The volume is great for a lot of things, and it helps those margin and mixing, all that sort of stuff. So I think we're comfortable with what the guys we have.

Speaker Change: Understood. Okay. I appreciate it. Thank you very much.

Speaker Change: Our next question is in the line of Adam Samuelson with Goldman Sachs. Please proceed with your questions.

Unknown Executive: I wouldn't say right now I got to the higher edge at this point. Do you all are reasons like that?

Adam L. Samuelson: Thank you. Good morning everyone. Let me add my congratulations to Mike and to Marcos.

Unknown Executive: Okay, never some of the set cost savings program we have like Julie was really first quarter into the second quarter. Some of those are going away also, but it's still, you know, that the trends we see grows margin. You know, the first, the second half is higher than the first half traditionally, which is going to continue again. And you know, we do see a nice trajectory there for first margin over time. As we continue our multi-year journey of getting back to kind of the pre-COVID first margin. I appreciate it. Thank you very much.

Stephen Robert R. Powers: Okay, fair enough. Thank you. Remember, some of the cost savings programs we have, like GLE, were really first quarter into the second quarter. Some of those are going away also, but it's still, you know, the trends we see in gross margin, you know, the second half is higher than the first half traditionally, which is going to continue again. And, you know, we do see a nice trajectory there for gross margin over time as we continue our multi-year journey of getting back to kind of the pre-COVID gross margin level. Okay. I appreciate it. Thank you very much. Our next question is in the line of Adam Samuelson with Goldman Sachs. Please proceed with your question. Yes, thank you, good morning everyone.

Adam L. Samuelson: Maybe if I could continue on some of the pricing discussion that we just had. I guess I'm just trying to segregate. If I look at the spices and seasonings category in the more recent months in the scanner data, it does seem like

Speaker Change: The whole your entire portfolio has unit pricing lower on a year-on-year basis, and I guess I'm

Adam Samuelson: A nice question. A lot of Adam Samuelson with Goldman Sachs. Let me just see you with your questions. Yes, thank you.

Speaker Change: [inaudible]

Adam L. Samuelson: Let me add my congratulations to Mike and to Marcos. I'm so looking forward to working with you. Um, maybe I could continue on some of the pricing discussions that we just had, and I guess I'm just trying to separate them. If I look at the spices and seasonings category in the more recent months in the scanner data, it does seem like your whole entire portfolio has unit pricing lower on a year-on-year basis, and I guess I'm, maybe, is there a size?

Unknown Executive: Good morning, everyone.

Unknown Executive: Let me add my congratulations to Mike and to Marcos, so I'm looking forward to working with you.

Speaker Change: More surgical pricing actions on a small part of the portfolio with the spices and seasonings category in total for you that is showing kind of negative pricing in the last few months of Nielsen data.

Unknown Executive: Maybe if I could continue on some of the pricing discussion that we just had. I guess we're just trying to figure out if I look at the spices and seasonings category in the more recent months in the scanner data. It does seem like the whole your entire portfolio has unit pricing lower on a year on your basis.

Mike: Yeah, well, go ahead, Mike. Yeah, I'll start. I mean, at the end of the day, you know, the nut sales guidance we get for pricing and the results of what we showed, you know, you have, you know, for the consumer business for the, you know, for the second quarter was down.

Unknown Executive: And I guess I'm maybe. Is there a size? It doesn't seem like there's an impact because of size and unit and priceback architecture necessarily. Promo percentage is also a little bit lower year or year, but I guess I'm trying to just square the notion of more surgical pricing actions on small part of the portfolio with the spices and seasonings category in total for you that is showing kind of negative pricing. In the last last few months of the health and data.

Adam L. Samuelson: It doesn't seem like there's an impact because of size and unit and price-back architecture necessarily. Promo percentage is also a little bit lower year-over-year, but I guess I'm trying to just square the notion of more surgical pricing actions on a small part of the portfolio with the spices and seasonings category in total for you that is showing a kind of negative pricing in the last few months of Nielsen data. Yeah, well, go ahead, Mike. Yeah, I'm sorry.

Mike: A little under one percent, which we...

Mike: Continue to see that in the second half, so that would suggest that...

Mike: The pricing actions we said we were going to do, the surgical pricing actions on a limited part of the portfolio.

Speaker Change: That's what's showing up through net sales. Now, what happens when that gets to the shelf? That's a whole another story. In addition to the things that we're doing on some of those items, there's other retail actions that are happening too. Because as Brendan said before, this is a category, our categories are growing. That's what people want.

Michael R. Smith: I mean, at the end of the day, you know, the net sales guidance we get for pricing and the results of what we showed, you know, for the consumer business, for the second quarter was down, a little under 1%, which we continue to see in the second half, so that would suggest that the pricing actions we said we were going to do, the surgical pricing actions on a limited part of the portfolio, that's what's showing up through net Now, what happens when that gets to the shelf? That's a whole other story, and in addition to the things that we're doing on some of those items, there's other retailer actions that are happening too, because, as Brendan said before, this is a category; our categories are growing.

Unknown Executive: Yeah, but because Mike.

Unknown Executive: Yeah, I'm out of start. I mean, at the end of the day, the net failed guidance we give for pricing and the results of what we showed you. You have, you know, for the consumer business, for the second quarter was down a little under one percent, which we continue to see that in the second half. So that would suggest that the pricing actions we said we were going to do the surgical pricing actions on it. On a limited part of the portfolio, that's where that's what showed up through net sales.

Speaker Change: [inaudible]

Speaker Change: It might not be our price adjustments on items, it may be other ones that they're seeing and operating in their stores, too. So I think there's a combination of factors that may be skewing a little bit of the data you're seeing versus our internal, kind of, what we're actually reporting on these calls.

Unknown Executive: Now, what that what happens when that gets to shelf. That's a whole other story, and in addition to the things that we're doing on some of those, there's items. There's other retailer actions that are happening too.

Speaker Change: Just to add to that, Adam, when you look just at like spices and seasonings and recipe mixes, depending on how you're you're looking at data, the percentage is just so small in terms of, you know, the percentage of that part of our portfolio that

Unknown Executive: Because I've read that before. This is a category. Our categories are growing. That's where people want to shop them more: the perimeter of the store. They're wanting to use products like ours to flavor these and manage and manage cost inflation across protein and things like that. So the retail is also contributing to some of these things. We not might not might not be our price. Adjustments on items that may be other ones that they're seeing and operating in their four suits. So I think there's a combination of factors that may be skewing a little bit of the data you're seeing versus our internal kind of what we're asking reporting on these calls.

Michael R. Smith: That's where people want to shop in more of the perimeter of the store; they want to use products like ours to flavor these and manage cost inflation across protein and things like that. So the retailers are also contributing to some of these things; it might not be our price adjustments on items; it may be other ones that they're seeing and operating in their stores too. So I think there's a combination of factors that may be skewing a little bit of the data that you're seeing versus our internal, what we're actually reporting on these costs.

Speaker Change: It's kind of receiving that sort of an effort, but let's also not forget, you know, we have a broad program in terms of increased brand investment, new items.

Speaker Change: increased distribution, et cetera. And so we're driving volume growth, particularly, even in that I would say, you know, certainly it's an accelerated area as a part of our portfolio that's driving unit volume growth. And so we're seeing really good performance, net performance from that.

Unknown Executive: Just to add to that. When you look at just the likes, biases, and citizens and residents depending on how you're looking at data. The percentages just don't fall in terms of the percentage of that part of our portfolio that is kind of receiving that sort of an effort. But it's also not forget, you know, we have a broad program in terms of increased brand investment, new items, increased distribution, etc. And so we're driving volume growth, particularly even in that I would say, you know, certainly it's an accelerated area as a part of our portfolio that's driving a unit volume growth.

Brendan M. Foley: Just to add to that, Adam, when you look just at Spices and Seasonings and Recipe Mixes, depending on how you're looking at data, the percentage is still small in terms of the percentage of that part of our portfolio that is kind of receiving that sort of an effort. But let's also not forget we have a broad program in terms of increased brand investment. Alright, now that's a helpful caller. I thought I'd ask a clarifying question about guidance.

Speaker Change: Alright, that's a helpful caller. I thought you were going to ask a clarifying question on guidance. On the JV, on Mexico, if I look at the guidance,

Speaker Change: It would seem like you've already achieved, for the full year, the equivalent of mid-teens.

Speaker Change: and Michael Kasey Jenkins, Michael Smith, Brendan Foley, Lawrence Kurzius, Unknown Executive, Faten Freiha, Unknown Executive, Faten Freiha, Unknown Executive, Faten Freiha, Unknown Executive, Faten Freiha, Unknown Executive, Faten Freiha,

Unknown Executive: So we're seeing a really good performance network performance from that.

Speaker Change: And Great Performance is really second-half focus last year, so we're lapping a tough comp, I'd say.

Brendan M. Foley: On the JV in Mexico, if I look at the guidance, it would seem like you've already achieved, for the full year, the equivalent of mid-teens profit growth on income from the Mexican JV, and I just want to make sure I'm understanding if there are expectations of profit declines in the back half, because otherwise, you're going to be well above mid-teens profit growth on that line. Remember, I think back to last year; we're lapping a really strong second half.

Unknown Executive: All right, and that's helpful. That's helpful.

Unknown Executive: If I say clarifying questions on guidance on the JV on Mexico, if I look at the guidance. you're right today. Thank you.

Speaker Change: Okay. All right. That's helpful. I'll pass it on. Thank you.

Speaker Change: The next questions are from the line of Tom Palmer with Citi. Please proceed with your questions.

Speaker Change: Good morning. Mike and Marcos, congratulations to you both.

Speaker Change: I wanted to clarify...

Thomas Hinsdale Palmer: just on the expected volume recovery in the back half of the year in labor solutions. Are you assuming that industry trends get better or this is really McCormick specific initiatives or maybe it's a combo, I just wanna clarify that.

Adam L. Samuelson: A lot of the acceleration they've seen in grade performance is really second-half focused last year, so we're lapping a tough one. Okay. All right. That's helpful. I'll pass it on.

Thomas Hinsdale Palmer: Yeah, I don't know that, you know, Thomas, as we look at it, we don't say, you know, making a call or projection on the industry as a total, we kind of look at our customer base, and we understand their plans and programs.

Thomas Hinsdale Palmer: Thank you. The next questions are from the line of Tom Palmer with Citi. Please proceed with your questions. Good morning, Mike and Marcos. Congratulations to you both.

Thomas Hinsdale Palmer: What might be innovation that's going to be launching soon? How they might be thinking about, you know, driving maybe an uptick in their own activity. And so that's really what drives, I think, our thinking is more specifically at a customer level as opposed to

Brendan M. Foley: I wanted to clarify, just on the expected volume recovery in the back half of the year in flavor solutions. Are you assuming that industry trends get better, or is this really McCormick specific initiatives, or maybe it's a combination? I just want to clarify that.

Thomas Hinsdale Palmer: hearing us make a call and a projection on an industry. I don't know if you want to go deeper on that, but I think just to quickly kind of let you know how we think about it, that's what drives our thinking.

Thomas Hinsdale Palmer: I don't know that, you know, Tom, as we look at it, we don't say, you know, making a call or projection on the industry as a whole; we kind of look at our customer base, and we understand their plans and programs, what might be innovation that's going to be launching soon, how they might be thinking about, you know, driving maybe an uptick in their own activity. And so that's really what drives our thinking more specifically at a customer level as opposed to hearing us make a call and a projection about an industry. I don't know if you want to go deeper on that, but I think just to quickly kind of let you know how we think about it. That's what drives our activity. Okay, thanks for that.

Speaker Change: Okay, thanks for that. No, I was just trying to reconcile some of the food service weakness with the positive tone and so that was helpful. Thank you. Well, I think, let me just add to that Tom. I mean, in branded food service though, I mean, just to give you some context around that, we are seeing nice performance there. I think that's a reflection of

Speaker Change: You know, we operate in every segment of food service, so it isn't just QSRs. It's fast casual, casual dining, independent restaurants, college and university, etc., etc. And so it's a very diverse...

Speaker Change: You know sort of marketplace

Speaker Change: As we look at that, we're doing really well in branded food service because we're driving some really, I think, interesting programming like with limited time offers with our brands like Frank's.

Brendan M. Foley: No, I was just trying to reconcile some of the food service weaknesses with the positive tone. And so that was helpful. Thank you. Well, I think, let me just add to that, Tom.

Brendan M. Foley: I mean, in branded food service, though, just to give you some context around that, we are seeing nice performance there. I think that's a reflection of, You know, we operate in every segment of food service, so it isn't just QSRs. It's fast casual, casual dining, independent restaurants, college and university, etc., etc.

Speaker Change: or we're going to share the number of categories or performing well in spices and seasonings. We're getting more hot sauce on tabletops.

Speaker Change: That's what kind of drives, I think, our performance right now in branded food service, which operates a little bit differently than maybe the QSR part of the food service marketplace. So maybe that additional color might provide some...

Brendan M. Foley: And so it's a very diverse, you know, sort of marketplace. And as we look at that, we're doing really well in branded food service because we're driving some really, I think, interesting programming, like with limited-time offers with our brands like Frank's, or we're growing share in a number of categories or performing well in spices and seasonings. We're getting more hot sauce on tabletops. That's what kind drives, I think, our performance right now in branded food service, which operates a little bit differently than maybe the QSR part of the food service marketplace. It may be that additional color might provide some additional things to think about. No, that was very helpful.

Speaker Change: Some additional things to think about.

Speaker Change: No, that was very helpful. Thank you. Just on the expected margin improvements in flavor solutions.

Speaker Change: Should we be thinking about continued sequential improvement in margin as the year plays out and some of these cost initiatives take hold?

Speaker Change: You know, what we said at the beginning of the year, and I'll go back to that, I mean, one, we're really happy with the margin improvement we've experienced last year, and we gave guidance for this fiscal year for the total company.

Speaker Change: [inaudible]

Thomas Hinsdale Palmer: Thank you. Just on the expected margin improvements in flavor solutions. Should we be thinking about continued sequential improvement in margin as the year plays out and some of these cost initiatives take hold? You know, what we said at the beginning of the year, and I'll go back to that, I mean, one, we were really happy with the margin improvement we experienced last year, and, you know, we gave guidance for this fiscal year for the total company of 80 basis points, about 80 basis points of OP margin improvement. And we said at the time, flavor solutions, you know, might be slightly ahead of that, but in the range, you know, that I'd say that for the whole company, we're really comfortable with 50 to 100 basis points.

Speaker Change: We're always looking for improvement.

Speaker Change: I'd say that for the whole company, we're really comfortable with 50 to 100 basis points.

Speaker Change: A lot is, and as I said about a month ago, you know, a lot depends on the volume numbers and, you know, the consumer business continues to, you know, volume grows, that drives the margin improvement. I mean, flavor solutions, a bit of dip in the second quarter could put a little bit of pressure on margins, as I said, but, you know, we're expecting sequential improvement in flavor solutions. That's not going to be materially different than what we said at the beginning of the year, I'd say.

Speaker Change: Thank you.

Speaker Change: Thank you. Bye-bye.

Speaker Change: Thank you. Our final question is from the line of Rob Dickerson with Jefferies. Please proceed with your questions.

Michael R. Smith: A lot of this, and as I said about a month ago, a lot depends on the volume numbers. And the consumer business continues to deal with volume growth, which drives good margin improvement. I mean, flavor solutions. A bit of a dip in the second quarter could put a little bit of pressure on margins, as I said. But we're expecting sequential improvement in flavor solutions, but it's not going to be materially different from what we said at the beginning of the year. Thank you. Thank you. Our final question is from the line of Rob Dickerson with Jeffries. Please proceed with your question. Great, thanks so much. I think I always get the final question with McCormick.

Robert Frederick Dickerson: Great, thanks so much. I think I always get the final question.

Robert Frederick Dickerson: I guess kind of a broader question, you know, around frozen Asians that you commented on.

Speaker Change: It seems like consumers are shopping the perimeter of the store a little bit.

Speaker Change: you know, understand kind of the desire to kind of cook at home still.

Speaker Change: Maybe there's some value seeking in there. But I'm just curious, like,

Speaker Change: You know, if you step back and you think about that consumer behavior, you know, on the perimeter and on the spice-eating side, relative.

Rob Dickerson: Our final question is from line of Rob Dickerson with Jeffries. This is here with your questions. Great, thanks so much. You can always get the final question with the clerk.

Speaker Change: They kind of what you've seen in Frozen Asian, maybe you can just provide a little bit more color as to how you're thinking about

Robert Frederick Dickerson: Just, I guess, kind of a broader question, you know, around frozen Asian, they comment on, you know, it seems like consumers are shopping at the store a little bit, you know, understand kind of the desire to kind of cook at home still. Maybe there's some value seeking in there. But I'm just curious, like, you know, if you step back and you think about that consumer behavior, you know, on the perimeter, and on the spicy side relative to kind of what you've seen in frozen Asian, maybe you can just provide a little bit more color as to how you're thinking about, you know, kind of that relative performance of those two areas, and maybe why, you know, parts of frozen and Asian specifically, you know, aren't performing as well as maybe they have in past economic cycles.

Rob Dickerson: Just I guess kind of a broader question, you know, around frozen nations. They come at on. You know, it seems like consumers are shopping a perimeter of the store a little bit. You know, understand kind of the desire to kind of cook at home still. Maybe there's some value seeking in there, but I'm just curious, like, you know, if you step back and you think about that consumer behavior, you know, to performance of those two areas, and maybe why, you know, part of frozen and Asian specifically, you know, aren't performing as well as maybe they have in past economic cycle.

Speaker Change: Unknown Executive, Faten Freiha

Robert Frederick Dickerson: Well, thanks for the question, Rob. You know, if I go back and I think about half a part of our portfolio, one of the important things maybe to reinforce is it's a smaller part of our business.

Robert Frederick Dickerson: But the declines, I think...

Robert Frederick Dickerson: As far back as like the fourth quarter of 23, you know, we're steeper. So they're pulling down. I think the overall view of the portfolio

Robert Frederick Dickerson: And that's why we decided to make sure it was kind of called out, because as we were putting more focus and investment...

Robert Frederick Dickerson: you know, around what we would call, you know, those core categories. Um, yeah, that was gonna, we thought that would offset that. As we move through, you know, the rest of the year, I think that, um, we start to see those core categories, start to overcome whatever declines might be experiencing there.

Unknown Executive: Thanks. Well, thanks to the question, Rob. You know, if I go back and I think about part of our course. One important thing is maybe to reinforce; it's a smaller part of our business. But to the clients, I think this far back is like the fourth quarter of '23, you know, we're safer. So they're pulling down, I think the overall view of the portfolio. And that's why we decided to make sure it was kind of called out because, as we were putting more focus and investment, you know, around what we would call, you know, those core categories.

Robert Frederick Dickerson: Thanks. Well, thanks for the question, Rob. You know, if I go back, and I think about half of our business, one of the important things maybe to reinforce is it's a smaller part of our business. But the declines, I think, as far back as, like, the fourth quarter of 23, were steeper.

Robert Frederick Dickerson: To the consumer behavior context that you're asking about.

Robert Frederick Dickerson: We think that has a lot to do with, it could be the impact of inflation in the marketplace.

Brendan M. Foley: So they're pulling down, I think, the overall view of the portfolio. And that's why we decided to make sure it was kind of called out, because as we were putting more focus and investment, you know, around what we would call, you know, those core categories, you know, that was going to, we felt that would offset that. As we moved through, you know, the rest of the year, I think that we'd start to see those core categories start to overcome whatever declines might be experienced. In the consumer behavior context that you're asking about, we think that has a lot to do with, it could be the impact of inflation in the marketplace.

Robert Frederick Dickerson: I think that certainly can have an impact on that overall, and we're a relatively small player in a number of these areas, so it's not as if we're operating with the type of scale and...

Unknown Executive: Yeah, that was going to, we felt that would offset that. As we moved through the rest of the year, I think that we started to see those core categories sort of overcome whatever the clients might be experiencing there. So the consumer behavior context that you're asking about. You know, we think that has a lot to do with; it could be impacting the inflation in the marketplace. I think that, you know, certainly can have an impact on that. You know, overall, and we're relatively small players in a number of these areas. So, you know, it's not as if we're operating with the type of scale.

Brendan M. Foley: I think that certainly can have an impact on that overall, and we're a relatively small player in a number of these areas, so it's not as if we're operating with the type of scale and competitive leverage that others might be. We certainly see inflation hurting that, but also, I think some consumer trends might have been shifting away a little bit from some parts of frozen food or some Asian categories that we compete in. And so, therefore, I don't know that they're necessarily suggesting a structural impact of change, but rather, this is just a trend that we're working through, and we felt like we were going to experience it most of this fiscal year. I would share that as our context. What we're seeing in the primitive store is that you simply need to add flavor in a lot of these situations, whether it be protein or produce or carbs.

Unknown Executive: And, and competitive leverage. The others might be. So, yeah, we certainly see inflation hurting that. But also I think some consumer trends, you know, might have been shifting away a little bit from some parts of, you know, whether it be frozen or some Asian categories that we compete in. And so, therefore, I don't know that they're necessarily suggesting a structural impact of change. But rather, you know, this is just a trend that we're working through. And it was, you know, we felt like we were going to experience it most of this school year. So, I would share that as our context.

Unknown Executive: What we're seeing in the primitive store is simply, you know, you need to add flavor in a lot of these situations, whether it be, you know, protein or produce or cars. Our categories are going to play an important role in flavoring both of our categories, rather. And so, we see consumers shifting their product because they're looking for healthy eating. That's not a new trend. And that's something we think continues with your business.

Brendan M. Foley: Our category is going to play an important role in flavoring, or both of our categories rather. And so, we see consumers shifting there probably because they're looking for healthy eating. That's not a new trend, and that's something that we think continues to fuel our business. So I think that's probably where I'll keep it for right now today, Rob, and if there's any other clarification you want, let me know. Yeah, no, that was very helpful. Thank you. And then, Mike, first, congratulations. I'm jealous; it will be nice.

Robert Frederick Dickerson: Our category is going to play an important role in flavoring.

Robert Frederick Dickerson: Both of our categories, rather and so.

Robert Frederick Dickerson: We see consumers shifting their project because we're looking for healthy eating that's not.

Rob Dickerson: So, I think it's probably where I keep it for right now today, Rob. And there's any other clarification we want, you know. Yeah, yeah, that was very helpful. Thank you.

Robert Frederick Dickerson: A new trend and that's something that we think continues to fuel our business. So I think that's probably where I keep.

Speaker Change: Right now today, Rob and Chris any other clarification.

Unknown Executive: And then Mike, first congratulations. You're jealous. Well, be nice.

Robert Frederick Dickerson: Yeah.

Speaker Change: Yes, no that was very helpful. Thank you.

Robert Frederick Dickerson: You know, I think there was a comment you made, Mike, in the prepared remarks where you said that, you know, there might be similar segment trends expected as you get to the back half relative to Q2. And I may have missed that. But I just wanted to clarify because, clearly, everything else we've been talking about in Q&A suggests that things should get better. So I just wanted to understand what Yeah, that was.

Speaker Change: And then Mike first congratulations.

Unknown Executive: You know, I think there was a comment you made, Mike, in the preparatory marks where you said that you, you know, there might be similar segment trends expected as you get to the back half relative to the Q2, and I may have missed that, but I just wanted to clarify because they're clearly everything else we've been talking about in Q&A, you know, suggest that things should get better. So just want to understand what that was. Yeah, that wasn't the preparatory marks. We thought that was really in the reference in that section we're talking about pricing for the remainder of the year, similar segment trends, similar company and segment trends for the remainder of the year.

Speaker Change: Jos will be nice.

Speaker Change: <unk>.

Speaker Change #100: I think there was a comment you made Mike.

Speaker Change #101: In the prepared remarks, where you said.

Speaker Change #100: <unk>.

Speaker Change #100: There might be similar segment trends expected.

Speaker Change #102: As you get to the back half relative to Q2, and I may have missed that but I just wanted to clarify because clearly everybody else. We've been talking about in Q&A suggests that things should get better. So just wanted to understand what that was.

Robert Frederick Dickerson: Yeah, that wasn't the prepared remarks we thought that was really in the reference in that section. We're talking about pricing for the remainder of the year and similar segment trends, similar company and segment trends for the remainder of the year. So if you look at the pricing trends in Q2 versus the prior year, approximately the same by segment.

Speaker Change #103: Yes that wasn't in the prepared remarks, we thought that was really in the reference in that section, we're talking about pricing for the remainder of the year and similar segment trends similar company and segment trends for the remainder of the year. So if you look at the pricing trends in Q2 versus prior year approximately the same by segment and for total company.

Michael R. Smith: Okay, got it. That's all. Thank you. Thank you. Thank you. At this time, we've reached the end of our question and answer session, and I'll hand the floor back to management for closing remarks. Thank you. And thanks, everybody, for joining today's call. If you have any further questions on the information we shared today, please feel free to contact me. And this concludes this morning's conference call. Thank you.

Unknown Executive: So if you look at the pricing trends in Q2 versus prior year, approximately the same by segment and for total company. Okay, got it. That's all. It really helps you model questions. Yeah, that's right. I get it. Thank you.

Speaker Change #104: Okay got it that's all really modeled model question.

Speaker Change #105: Right right I got it great. Thanks, David Thank you.

Unknown Executive: At the time we've reached into our question, answer session, and I'll hand the floor back to management for closing remarks. Thank you, and thanks everybody for joining today's call.

Speaker Change #106: Thank you at this time, we've reached the end of our question and answer session and I'll hand, the floor back to management for closing remarks.

Unknown Executive: If you have any further questions on the information we share today, please feel free to contact me, and this concludes this morning's conference call. Thank you.

Speaker Change #107: Thank you and thanks, everybody for joining today's call. If you have any further questions on the information we share today. Please feel free to contact me and this conclude this morning.

Speaker Change #106: <unk>.

Speaker Change #106: Yeah.

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