Q1 2025 McCormick & Company Inc Earnings Call

March 25, 2025

On our IR website, IR and dump Mccormack Dot Com with me. This morning are Brendan Foley, Chairman, President and CEO, and Michael Gabriel Executive Vice President and CFO.

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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 in our comments certain percentages are rounded. Please refer to our presentation for complete information today's presentation contains projections and other.

Speaker Change: Forward looking statements actual results could differ materially from those projected the company undertakes no obligation to update or revise publicly any forward looking statements, whether because of new information future events or other factors.

Speaker Change: Please refer to our forward looking statements on slide two for more information I will now turn the discussion over to Brendan.

Brendan: Good morning, everyone and thank you for joining us.

Brendan: Pleased to start the year with solid first quarter results that are in line with our expectations. Our performance continues to demonstrate the success of our prioritized investments in the area.

Brendan: Areas that we believe will continue to drive the most value and sustain our momentum for the remainder of 2025 and beyond.

Brendan: <unk> remains a growth oriented company with robust plans that leverages the demand for flavor and the strength of our brands.

Brendan: Our strategies have proven to be effective by driving growth and compounding that growth over the years with our strategies and best in class leadership, we are well positioned to continue on our trajectory and delivered on our near term and long term objectives with industry leading performance.

Brendan: This morning, I will begin my remarks, with an overview of our first quarter results focusing mostly on topline drivers next I will review, how Mccormick is positioned relative to an evolving consumer landscape.

Brendan: Then I will highlight some areas of success and the areas. We continue to work on as well as our growth plans.

Brendan: <unk> will then go into more depth on the first quarter results and review, our 2025 outlook and finally before your questions I will have some closing comments.

Michael Smith: Good morning, everyone and thank you for joining US we're pleased to start the year with solid first quarter results that are in line with our expectations. Our performance continues to demonstrate the success of our prioritized investments in the areas that we believe will continue to drive the most value and sustaining our momentum for the remainder of 2020.

Brendan: Turning now to our results on slide four.

Brendan: In the first quarter total organic sales increased by 2%, primarily driven by volume and product mix growth and partially offset by pricing in line with our expectations.

Michael Smith: Five and beyond.

Michael Smith: It remains a growth oriented company with robust plans that leverages the demand for flavor and the strength of our brands.

Brendan: Global consumer organic sales growth was volume led demonstrating continued momentum across key markets. We delivered robust volume growth in all three regions. This sustained growth is supported by investments across our core categories, including innovative brand marketing accelerated innovation aligned with consumer.

Michael Smith: Our strategies have proven to be effective by driving growth and compounding that growth over the years with our strategies and best in class leadership, we are well positioned to continue on our trajectory and deliberate on our near term and long term objectives with industry leading performance.

Brendan: <unk> expanded distribution and robust category management initiatives.

Michael Smith: This morning, I will begin my remarks, with an overview of our first quarter results focusing mostly on topline drivers next I will review, how Mccormick is positioned relative to an evolving consumer landscape.

Brendan: As expected volume growth was partially offset by price in the Americas price declined due to price gap management plans that were implemented in the second quarter of 2024, and a targeted incremental promotion related to seasonal recipe mixes.

Michael Smith: Then I will highlight some areas of success and the areas. We continue to work on as well as our growth plans.

Michael Smith: Marcos will then go into more detail on the first quarter results and review, our 2025 outlook and finally before your questions I will have some closing comments.

Brendan: In EMEA, we took selective pricing actions to cover rising commodity costs and still maintain volume momentum.

Brendan: For the year to go we expect price in our global consumer segment to be flat.

Marcos: Turning now to our results on slide four.

Brendan: Now to the global flavor solutions segment, where organic sales growth was also volume wise, we delivered sequential volume improvement relative to the fourth quarter and are pleased with our results volume growth was driven by continued execution of our strategic priorities and flavors amid a challenging customer environment.

Marcos: In the first quarter total organic sales increased by 2%, primarily driven by volume and product mix growth and partially offset by pricing in line with our expectations and global consumer organic sales growth was volume led demonstrating continued momentum across key markets, we delivered robot.

Brendan: We're growing customers, partially offset larger CPG customers softness in addition, <unk> customer performance improved in Asia Pacific and the Americas led by innovation.

Marcos: Volume growth in all three regions. This sustained growth is supported by investments across our core categories, including innovative brand marketing accelerated innovation aligned with consumer trends expanded distribution and robust category management initiatives.

Brendan: Furthermore, across Asia Pacific, including China, We delivered strong volume growth as we partnered with <unk> customers on new products and limited time offers.

Marcos: As expected volume growth was partially offset by price in the Americas price declined due to price gap management plans that were implemented in the second quarter of 2024, and a targeted incremental promotion related to seasonal recipe mixes.

Brendan: <unk> with prior years, we expect flavor solutions volume growth to fluctuate quarterly due to timing of customer activities.

Brendan: However, on a full year basis, we continue to expect to deliver positive volume growth.

Marcos: In EMEA, we took selective pricing actions to cover rising commodity costs and still maintain volume momentum.

Brendan: From a profitability perspective, we delivered results in line with our expectations as.

Brendan: As the first quarter was impacted by increased investments in marketing and technology as well as the timing of stock based compensation expense that shifted relative to the prior year.

Marcos: For the year to go we expect price in our global consumer segment to be flat.

Marcos: Now to the global flavor solutions segment, where organic sales growth was also volume wise.

Brendan: As we look to the year ago period, we remain confident in our operating income and earnings growth outlook on a constant currency basis.

Marcos: We delivered sequential volume improvement relative to the fourth quarter and are pleased with our results volume growth was driven by continued execution of our strategic priorities in flavors amid a challenging customer environment faster growing customers, partially offset larger CPG customers softness in addition, <unk>.

Brendan: Moving now to the macro environment, including the current state of the consumer.

Brendan: There is increasing consumer uncertainty and concern over returning to more inflation and this has impacted consumer sentiment, particularly in the last month.

Marcos: Customer performance improved in Asia Pacific and the Americas led by innovation.

Brendan: This prolongs the consumer context of 2024, where consumers, especially lower income consumers are more cautious exhibiting more value seeking behavior and tightening their budgets as many are worried about the future job security and rising costs. We are seeing this not just in the U S, but across our key markets.

Marcos: Furthermore, across Asia Pacific, including China, We delivered strong volume growth as we partnered with <unk> customers on new products and limited time offers consistent with prior years, we expect flavor solutions volume growth fluctuate quarterly due to timing of customer activities.

Brendan: At the same time, we are all witnessing shifts in consumer preferences. They are becoming more health conscious and this trend has continued to gain momentum. They are cooking at home more often increasingly shopping a perimeter for protein and produce as we look at growth in edible categories unit growth is primarily driven by these perimeter categories.

Marcos: However, on a full year basis, we continue to expect to deliver positive volume growth.

Marcos: From a profitability perspective, we delivered results in line with our expectations as.

Marcos: As the first quarter was impacted by increased investments in marketing and technology as well as the timing of stock based compensation expense that shifted relative to the prior year.

Brendan: Healthier and better for you trends as well as the desire to stretch budgets are fueling the continued interest in cooking from scratch reinforcing the demand for flavor and for mccormick's categories spices, and seasonings remained the top growing center store category.

Marcos: As we look to the year ago period, we remain confident in our operating income and earnings growth outlook on a constant currency basis.

Marcos: Moving now to the macro environment, including the current state of the consumer.

Brendan: As a result consumption trends in our business remains strong ultimately we expect the global consumer segment to continue to benefit from these secular trends and we have the plans in advantaged portfolio to capitalize on them.

Marcos: There is increasing consumer uncertainty and concern over returning to more inflation and this has impacted consumer sentiment, particularly in the last month.

Marcos: This prolongs the consumer context of 2024, where consumers, especially lower income consumers are more cautious exhibiting more value seeking behavior and tightening their budgets as many are worried about the future job security and rising costs. We are seeing this not just in the U S, but across our key markets.

Brendan: And in our flavor solutions segment, we continue to partner with customers to launch new products will reformulate existing ones to fit healthier lifestyles.

Brendan: The more our exposure to faster growing customers allows us to win in several high growth categories, many of which are benefiting from the trends towards healthier eating.

Brendan: In the context of this environment Mccormick's trends remained strong our volume driven first quarter results and continued strengthening consumption trends demonstrate our ability to continue to successfully meet our objectives for the year.

Marcos: At the same time, we are all witnessing shifts in consumer preferences. They are becoming more health conscious and this trend has continued to gain momentum. They are cooking at home more often increasingly shopping the perimeter for protein and produce as we look at growth in edible categories unit growth is primarily driven by these perimeter categories.

Brendan: We continue to monitor consumer trends, our focus remains on meeting consumers and customers, where they are delivering value expanding our presence in growing channels, including mass club and e-commerce, and aligning them with flavor as well as helping customers innovate to meet consumers' changing dietary needs we.

Marcos: Healthier and better for you trends as well as the desire to stretch budgets are fueling the continued interest in cooking from scratch reinforcing the demand for flavor and for mccormick's categories spices, and seasonings remained the top growing center store category.

Brendan: We believe we have the right plans in place and we remained well positioned to capitalize on secular trends and continue to drive differentiated long term growth across both of our segments.

Marcos: As a result consumption trends in our business remains strong ultimately we expect the global consumer segment to continue to benefit from these secular trends and we have the plans in advantaged portfolio to capitalize on them.

Brendan: Let's move to slide five and let me highlight for the quarter some of the key areas of success.

Brendan: Across our global consumer segment, we successfully executed on our plans with increased investment and competitive focus towards driving growth, we improved unit volume share gains across our core categories in key markets.

Marcos: And in our flavor solutions segment, we continue to partner with customers to launch new products will reformulate existing ones to fit healthier lifestyles.

Marcos: The more our exposure to faster growing customers allows us to win in several high growth categories, many of which are benefiting from the trends towards healthier eating.

Brendan: In the U S. The vast majority of our categories are growing unit share let me provide some color on the categories globally.

Marcos: In the context of this environment Mccormick's trends remained strong our volume driven first quarter results and continued strengthening consumption trends demonstrate our ability to continue to successfully meet our objectives for the year.

Brendan: Starting with spices, and seasonings in Americas, EMEA, and Asia Pacific, including China, We delivered strong volume growth.

Brendan: In the U S. We drove unit volume share growth outpacing private label for the third consecutive quarter.

Marcos: We continue to monitor consumer trends, our focus remains on meeting consumers and customers, where they are delivering value expanding our presence in growing channels, including mass club and e-commerce, and aligning them with flavor as well as helping customers innovate to meet consumers' changing dietary needs we.

Brendan: In addition, we drove market share gains in Canada and China.

Brendan: And recipe mixes we continued to strengthen consumption trends in the Americas and drove unit and volume share gains in the first quarter.

Brendan: In the U S Mccormick gravy and chili recipe mixes, where a significant growth driver as they deliver on the value and convenience consumers are seeking.

Marcos: We believe we have the right plans in place and we remained well positioned to capitalize on secular trends and continue to drive differentiated long term growth across both of our segments.

Brendan: In addition, we are outpacing the total category in total new buyers as well as dollars per buyer in Canada, We drove dollar unit and volume share gains.

Marcos: Let's move to slide five and let me highlight for the quarter some of the key areas of success.

Brendan: And mustard, we've made great progress globally over the last four quarters and are pleased to see that our plants are driving great results.

Marcos: Across our global consumer segment, we successfully executed on our plans with increased investment and competitive focus towards driving growth, we improved unit volume share gains across our core categories in key markets.

Brendan: In the first quarter, we drove dollar unit and volume share gains in the Americas in Poland. One of the top mustard consuming countries. Our muster consumption continues to grow and we are also realizing dollar share gains. In addition, we are gaining dollar share in the U K.

Marcos: In the U S. The vast majority of our categories are growing unit share let me provide some color on the categories globally.

Marcos: Starting with spices, and seasonings in Americas, EMEA, and Asia Pacific, including China, We delivered strong volume growth.

Brendan: In hot sauce, our plans continued to yield great results in the U S. We drove positive unit share gains, reflecting significant progress distribution gains as well as investments in differentiated brand marketing, including a strong Super Bowl activation and innovation continue to fuel our performance outside of that.

Marcos: In the U S. We drove unit volume share growth outpacing private label for the third consecutive quarter.

Marcos: In addition, we drove market share gains in Canada and China.

Marcos: And recipe mixes we continued to strengthen consumption trends in the Americas and drove unit and volume share gains in the first quarter.

Brendan: U S. We are gaining market share in France, the UK and Australia.

Marcos: In the U S Mccormick gravy, and chili recipe mixes where significant growth driver as they deliver on the value and convenience consumers are seeking.

Brendan: Additionally, we continue to make progress on total distribution points in the Americas, we significantly expanded tdp's across spices, and seasonings recipe mixes and hot sauce in the Americas and EMEA, we are seeing broad based distribution gains in spices, and seasonings and hot sauce.

Marcos: In addition, we are outpacing the total category in total knee buyers as well as dollars per buyer in Canada, We drove dollar unit and volume share gains.

Marcos: In mustard, we made great progress globally over the last four quarters and are pleased to see that our plans are driving great results.

We're also gaining distribution in high growth channels like discounters and E Commerce.

Brendan: In Asia Pacific our business in China is recovering gradually relative to the prior year as expected.

Marcos: In the first quarter, we drove dollar unit and volume share gains in the Americas in Poland. One of the top mustard consuming countries. Our muster consumption continues to grow and we are also realizing dollar share gains in.

Brendan: We delivered strong performance amid and continually challenged environment growth in our categories, including spices, and seasonings and condiments outpaced the market, which included the Chinese new year holiday.

Marcos: And we are gaining dollar share in the U K.

Brendan: Moving to flavor solutions, we saw strengthen our technically insulated high margin product category flavors.

Marcos: In hot sauce, our plans continued to yield great results in the U S. We drove positive unit share gains, reflecting significant progress distribution gains as well as investments in differentiated brand marketing, including a strong Super Bowl activation and innovation continues to fuel our performance outside of that.

Brendan: In flavors in the Americas, we remain focused on being the partner of choice across our four taste competencies savory key naturally suite and citrus improve.

Brendan: As a result of this continued focus we are winning new customers and gaining share.

Marcos: U S. We are gaining market share in France, the UK and Australia.

Brendan: We outperformed the industry across many end categories, including alcoholic and non alcoholic beverages as well as snacking bars.

Marcos: Additionally, we continue to make progress on total distribution points in the Americas, we significantly expanded tdp's across spices, and seasonings recipe mixes and hot sauce in the Americas and EMEA, we are seeing broad based distribution gains in spices, and seasonings and hot sauce.

Brendan: Offsetting this is the softness we continue to see in larger CPG customer volumes.

Brendan: He was our trends improved in the Americas and in Asia Pacific and the Americas, We are continuing to drive innovation with our customers driving volume growth amid soft foot traffic in China, and Australia, our customers new products and promotions are driving strong volume growth in southeast Asia volume growth benefited from our customers.

Marcos: We're also gaining distribution in high growth channels like discounters and E Commerce.

Marcos: In Asia Pacific our business in China is recovering gradually relative to the prior year as expected.

Marcos: We delivered strong performance amid and continually challenged environment growth in our categories, including spices, and seasonings and condiments outpaced the market, which included the Chinese new year holiday.

Brendan: Lapping the impact of geopolitical boycotts and the prior year.

Brendan: Let me now touch on some areas, where we're seeing some pressure.

Brendan: The areas of pressure are primarily in our flavor solutions business in the Americas and in EMEA. Some of our CPG customers continue to experience softness in volumes within their own businesses. We continue to work on offsetting these trends through innovation and collaboration with customers and by winning new customers.

Marcos: Moving to flavor solutions, we saw strengthen our technically insulated high margin product category flavors.

Marcos: In flavors in the Americas, we remain focused on being the partner of choice across our four taste competencies savory key naturally suite and citrus improve.

Brendan: The foodservice environment remains challenged.

Marcos: As a result of this continued focus we are winning new customers and gaining share.

Brendan: Our food away from home performance continues to outpace the industry. We are seeing flat performance in branded foodservice and the Americas as well as some of our customers are seeing softness in their volumes due to a slowdown in foot traffic.

Marcos: We outperformed the industry across many end categories, including alcoholic and non alcoholic beverages as well as snacking bars.

Marcos: Partially offsetting this is the softness we continue to see in larger CPG customer volumes.

Brendan: He was our traffic remains soft in EMEA, we have seen this pressure impact our results for several quarters, it's difficult to predict CSR traffic. However, we are collaborating with our customers as they focus on improving their volumes through innovation and value and align with consumer trends.

Marcos: He was our trends improved in the Americas and in Asia Pacific and the Americas, We are continuing to drive innovation with our customers driving volume growth amid soft foot traffic in.

Marcos: In China, and Australia, our customers new products and promotions are driving strong volume growth in southeast Asia volume growth benefited from our customers lapping the impact of geopolitical boycotts and the prior year.

Brendan: As outlined on slide six our growth plans remain consistent to drive growth through category management brand marketing new products, our proprietary technologies and our differentiated customer engagement.

Marcos: Let me now touch on some areas, where we are seeing some pressure.

Brendan: Our growth levers are supported and enhanced through data and analytics as we continue to accelerate our digital transformation our base business is strengthening across major markets and core categories.

Marcos: The areas of pressure are primarily in our flavor solutions business in the Americas and in EMEA. Some of our CPG customers continue to experience softness in volumes within their own businesses. We continue to work on offsetting these trends through innovation and collaboration with customers and by winning new customers.

Brendan: And we have a number of initiatives in flight that will continue to drive this performance and differentiation.

Brendan: Let me focus on brand marketing as our plans across all categories are supported by our global brand marketing initiatives, we are prioritizing investments to connect with consumers and fuel growth.

Marcos: The foodservice environment remains challenged.

Marcos: Our food away from home performance continues to outpace the industry, we are seeing flat performance in branded foodservice and the Americas.

Brendan: Our differentiated brand marketing is driven by a combination of factors. In addition to maintaining a high share of voice, we are committed to having the best content in our categories content that inspires and educates consumers and reaches them at the right points on their path to purchase and on their flavor or diet journey.

Marcos: As well as some of our customers are seeing softness in their volumes due to a slowdown in foot traffic.

Marcos: He was store traffic remained soft in EMEA, we have seen this pressure impact our results for several quarters, it's difficult to predict USR traffic. However, we are collaborating with our customers as they focus on improving their volumes through innovation and value in line with consumer trends.

Brendan: From flavor exploration.

Brendan: New planning to shopping and cooking and even to eating and sharing the experience online.

Marcos: As outlined on slide six our growth plans remain consistent to drive growth through category management brand marketing new products, our proprietary technologies and our differentiated customer engagement.

Brendan: In the first quarter brand marketing spend increased against the high spend in the prior year as expected. This increase was broad based and a key driver in supporting volume growth for this quarter as well as for maintaining our volume momentum for 2025.

Our growth levers are supported and enhanced through data and analytics as we continue to accelerate our digital transformation. 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.

Brendan: Through our efforts across multiple channels and by leveraging our digital capabilities. We are driving further household penetration and increasing by rates across our core categories. Our holiday campaigns across our region proved successful our marketing campaigns in the Americas highlight our everyday value innovation and point of difference to.

Marcos: Let me focus on brand marketing as our plans across all categories are supported by our global brand marketing initiatives. We are prioritizing investments to connect with consumers and fuel growth our differentiated brand marketing is driven by a combination of factors.

Brendan: Consumers and are supporting our volume growth and driving share gains.

Brendan: Our Frank Super Bowl activation campaign with Paris Hilton was very successful, we gained new buyers and media and consumer sentiment was incredibly positive.

Marcos: In addition to maintaining a high share of voice, we are committed to having the best content in our categories content that inspires and educates consumers and reaches them at the right points on their path to purchase and on their flavor or diet journey.

Brendan: To wrap up our growth plans, although we are navigating in a difficult environment. We remain confident in the long term health of our business and in our fundamentals and in delivering our 2025 financial outlook.

Marcos: Some flavor exploration to menu planning to shopping and cooking and even to eating and sharing the experience online.

Brendan: Both near term and long term objectives, we remain focused on investing behind our growth levers to continue to drive differentiated performance.

Marcos: In the first quarter brand marketing spend increased against the high spend in the prior year as expected. This increase was broad based and a key driver in supporting volume growth for this quarter as well as for maintaining our volume momentum for 2025 through.

Marcos: Now over to Marcos.

Marcos: Thank you Brendan and good morning, everyone.

Marcos: Starting on slide eight our total organic sales grew 2% for the quarter.

Marcos: This increase was volume led with more than 2% volume and product mix growth, partially offset by pricing.

Marcos: Through our efforts across multiple channels and by leveraging our digital capabilities we have.

Marcos: Moving to our consumer segment on slide nine organic sales increased 1% as volume growth of 3% was partially offset by a 2% impact of price investments.

Marcos: Driving further household penetration and increasing by rates across our core categories. Our holiday campaigns across our regions proved successful our marketing campaigns in the Americas highlight our everyday value innovation and point of difference to consumers and are supporting our volume growth and driving share gains are.

Marcos: <unk> organic sales in Americas was flat, 2% volume growth was offset by price investments volume.

Marcos: Volume growth was strong across our core categories and was driven by our investment in brand marketing innovation and category management in terms of pricing. The decline primarily reflects the price gap management investments that were mostly in place in the second quarter of 2024, as well as incremental and targeted promotional activity.

Marcos: Frank Superbowl activation campaign with Paris Hilton was very successful, we gained new buyers and media and consumer sentiment was incredibly positive.

Marcos: To wrap up our growth plans, although we are navigating in a difficult environment. We remain confident in the long term health of our business and in our fundamentals and in delivering our 2025 financial outlook, both near term and long term objectives. We remain focused on investing behind our growth levers to continue to drive differentiated performance.

Marcos: In EMEA, we grew consumer organic sales 4%.

Marcos: And by a 2% increase in volume and 2% increase in price.

Marcos: Volume growth was broad based across product categories in our major markets.

Marcos: Pleased with the strong sustained volume growth in EMEA as.

Marcos: Now over to Marcos.

Marcos: As Brendan mentioned, we took selective pricing actions in EMEA to offset commodity costs.

Marcos: Thank you Brendan and good morning, everyone starting on slide eight our total organic sales grew 2% for the quarter.

Marcos: Consumer organic sales in the Asia Pacific region increased 3% driven by a 2% increase in volume and a 1% contribution from price.

Marcos: This increase was volume led with more than 2% volume and product mix growth, partially offset by pricing.

Marcos: Moving to our consumer segment on slide nine organic sales increased 1% as volume growth of 3% was partially offset by a 2% impact of price investments.

Marcos: This growth reflects the gradual recovery, we expected in China.

Marcos: We're pleased with our performance and expect these trends to continue through 2025.

Marcos: Turning to our flavor solutions segment on slide 10, first quarter organic sales increased 3% driven by volume growth of 2% and a 1% contribution from price in.

Marcos: <unk> organic sales in Americas was flat, 2% volume growth was offset by price investment volume.

Marcos: Volume growth was strong across our core categories and was driven by our investment in brand marketing innovation and category management in terms of pricing. The decline primarily reflects the price gap management investments that were mostly in place in the second quarter of 2020 for as long as incremental and targeted promotional activity.

Marcos: In the Americas flavor solutions organic sales increased 4%, reflecting 3% price contribution and 1% volume growth.

Marcos: Our results reflect strong performance with faster growing flavor customers any forfeitures hartzell.

Marcos: So were partially offset by sub CPG customer volumes.

Marcos: In EMEA, we grew consumer organic sales 4%.

Marcos: The price contribution is primarily related to currency in Latin America.

Marcos: Given by a 2% increase in volume and 2% increase in price.

In EMEA organic sales decreased by 4%, including a 2% decline from price and a 2% impact of lower volume and product mix, reflecting the impact of soft CPG and kyocera customer's volume.

Marcos: Volume growth was broad based across product categories in our major markets.

Marcos: Pleased with the strong sustained volume growth in EMEA.

Marcos: As Brendan mentioned, we took selective pricing actions in EMEA to offset commodity costs.

Marcos: In the Asia Pacific region flavor solutions organic sales increased 15%.

Speaker Change: Consumer organic sales in the Asia Pacific region increased 3% driven by a 2% increase in volume and a 1% contribution from price.

Marcos: With volume growth of 16% driven by kyocera customer promotions.

Marcos: Limited time offers as well as new products.

Marcos: This growth reflects the gradual recovery, we expected in China.

Marcos: Actually offset by pricing.

Marcos: Moving to slide 11, as expected gross profit margin expanded by 20 basis points in the first quarter versus a year ago period, driven primarily by the benefit from our comprehensive continuous improvement program or CCI.

Marcos: We're pleased with our performance and expect these trends to continue through 2025.

Marcos: Turning to our flavor solutions segment on slide 10, first quarter organic sales increased 3% driven by volume growth of 2% and a 1% contribution from price in.

Marcos: Selling general and administrative expenses or SG&A.

Marcos: In the Americas flavor solutions organic sales increased 4%, reflecting 3% price contribution and 1% volume growth.

Chris: Chris relative to the first quarter of last year, driven primarily by a shift in timing of our stock based compensation expense from the second quarter into the first quarter as well as increased investments in technology and brand marketing as expected.

Marcos: Our results reflect a strong performance with faster growing flavor customers any book too it's hard though.

Marcos: There were partially offset by sub CPG customer volumes.

Marcos: For the quarter.

Marcos: The price contribution is primarily related to currency in Latin America.

Marcos: Adjusted operating income declined by 5% excluding.

Marcos: In EMEA organic sales decreased by 4%, including a 2% decline from price and a 2% impact of lower volume and product mix, reflecting the impact of soft CPG and kyocera customer's volume.

Marcos: Excluding impact of currency adjusted operating income decreased by 3%. This.

Marcos: This decline was driven by the increases in expenses I just mentioned.

Marcos: Our first quarter adjusted effective tax rate was 22%.

Marcos: In the Asia Pacific region flavor solutions organic sales increased 15% with volume growth of 16% driven by kyocera customer promotions.

Marcos: Compared to 26% in the year ago period.

Marcos: Our tax rate.

Marcos: Last quarter benefited from discrete tax items.

Marcos: Our income from unconsolidated operations in the first quarter declined 18%, primarily due to the strengthening of the US dollar against the Mexican peso.

Marcos: At the time offers as well as new product.

Marcos: Partially offset by pricing.

Marcos: Moving to slide 11, as expected gross profit margin expanded by 20 basis points in the first quarter versus the year ago period, driven primarily by the benefit from our comprehensive continuous improvement program or CCI.

Marcos: Turning to our segment operational results on slide 12.

Marcos: Adjusted operating income in the consumer segment decreased 17% or 16% in constant currency.

Marcos: Selling general and administrative expenses or <unk>.

Marcos: The decrease was primarily due to pricing and increased SG&A costs, including brand marketing and technology investments, partially offset by cost savings generated by our CCI program.

Marcos: G&A increase relative to the first quarter of last year, driven primarily by a shift in timing of our stock based compensation expense from the second quarter into the first quarter as well as increased investments in technology and brand marketing as expected.

Marcos: Looking ahead, we expect consumer adjusted operating income margin expansion to normalize in the year to go period.

Marcos: The flavor solutions, adjusted operating income increased 28% or 33% in constant currency driven by product mix pricing and CCI led cost savings, partially offset by increased SG&A costs. We.

Marcos: For the quarter.

Marcos: Adjusted operating income declined by 5% excluding.

Marcos: Excluding impact of currency adjusted operating income decreased by 3%. This.

Marcos: This decline was driven by the increased SG&A expenses I just mentioned.

Marcos: We continue to make progress in expanding operating margins in line with our objectives.

Marcos: Our fourth quarter adjusted effective tax rate was 22%.

Marcos: Compared to 26% in the year ago period.

Marcos: The bottom line as shown on slide 13 first quarter 2025 of adjusted earnings per share were <unk> 60.

Marcos: Our tax rate.

Marcos: Last quarter benefited from discrete tax items.

Marcos: As compared to 63 for the year ago period.

Marcos: Our income from unconsolidated operations in the first quarter declined 18%, primarily due to the strengthening of the US dollar against the Mexican peso.

Marcos: This decrease was primarily due to the SG&A increase I mentioned earlier as well as the increased impact of currency on our operating profit and consolidated results.

Marcos: Turning to our segment operational results on slide 12.

Marcos: Actually offset by a more favorable tax rate.

Marcos: Adjusted operating income in the consumer segment decreased 17% or 16% in constant currency.

Marcos: The impact of currency on adjusted earnings per share is about <unk> <unk> per share.

Marcos: On slide 14, we've summarized highlights for cash flow and balance sheet.

Marcos: The decrease was primarily due to pricing and increased SG&A costs, including brand marketing and technology investments, partially offset by cost savings generated by our CCI program.

Marcos: Our cash flow from operations for the first quarter of 2025 was $160 million.

Marcos: Compared to $138 million in 2024.

Marcos: Looking ahead, we expect consumer adjusted operating income margin expansion to normalized in the year to go period.

Marcos: Chris was driven primarily by higher cash used for working capital, partially offset by lower incentive compensation.

Marcos: The flavor solutions, adjusted operating income increased 28% or 33% in constant currency driven by product mix pricing and CCI led cost savings, partially offset by increased SG&A costs.

Marcos: We returned $121 million of cash to shareholders through dividends.

Marcos: $37 million for capital expenditures.

Speaker Change: Is that to the timing of capital expenditures would fluctuate on a quarterly basis, depending on the phasing of initiatives, including projects to increase capacity and capabilities to meet growing demand.

Marcos: We continue to make progress in expanding operating margins in line with our objectives.

Marcos: The bottom line as shown on slide 13 first quarter 2025 of adjusted earnings per share of <unk> 60.

Marcos: And our digital transformation and optimize our cost structure.

Marcos: As compared to 63% for the year ago period.

Marcos: Our priority remains to have a balanced use of cash.

Marcos: This means funding investments to drive growth.

Marcos: This decrease was primarily due to the SG&A increase I mentioned earlier as well as the increased impact of currency on our operating profit and consolidated results.

Marcos: Return, a significant portion of cash to shareholders through dividends and maintaining strong balance sheet.

Marcos: We remain committed to a strong investment grade rating and expect to continue to deliver strong cash flow in 2025, driven by profit and working capital initiatives.

Marcos: Partially offset by a more favorable tax rate.

Marcos: The impact of currency on adjusted earnings per share is about <unk> <unk> per share.

Marcos: On slide 14, we've summarized highlights for cash flow and balance sheet.

Marcos: Now turning to our 2025 financial outlook on slide 15.

Marcos: Our cash flow from operations for the first quarter of 2025 was $160 million compared to $138 million.

Marcos: We are maintaining our guidance for the year.

Marcos: Our outlook continues to reflect our prioritize investments in key categories to strengthen volume trends and drive long term profitable growth, while appreciating the current level of uncertainty in the consumer and macro environment.

Marcos: 24.

The decrease was driven primarily by higher cash used for working capital, partially offset by lower incentive compensation.

Marcos: First let me address status.

Marcos: We returned $121 million of cash to shareholders through dividends.

Marcos: As you know the situation remains fluid.

Marcos: At this time, we plan to offset costs related to U S import tariffs on China, with our CCI savings and some very targeted price adjustments.

Marcos: $37 million for capital expenditures.

Marcos: Note that the timing of capital expenditures would fluctuate on a quarterly basis, depending on the phasing of initiatives, including projects to increase capacity and capabilities to meet growing demand.

Marcos: Our focus remains on safeguarding the health and competitiveness of our brands.

Marcos: Sustaining the growth momentum of our business and maintain and transparent with our customers.

Marcos: For digital transformation and optimize our cost structure.

Marcos: I don't believe our current plant actions will be material to the total business.

Marcos: Our priority remains to have a balanced use of cash.

Marcos: We will have a significant impact on our volume mix outlook for the year.

Marcos: Funding investments to drive growth.

Marcos: That said due to continued uncertainty on this topic.

Marcos: Return, a significant portion of cash to shareholders through dividend and maintaining a strong balance sheet.

Marcos: <unk> does not include any additional impact from tariffs that could potentially be implemented this year.

Marcos: We remain committed to a strong investment grade rating and expect to continue to deliver strong cash flow in 2025, driven by profit and working capital initiatives.

Marcos: As things evolve, we will provide update on our outlook within our typical reporting cadence.

Marcos: Turning now to the details of our outlook.

Marcos: Now turning to our 2025 financial outlook on slide 15.

Marcos: Those rates are still expected to have a one point negative impact on both net sales and adjusted operating income and two points on adjusted earnings per share.

Marcos: We are maintaining our guidance for the year.

Marcos: At the topline we continue to expect organic net sales growth to range between one and 3%.

Marcos: And for those to be volume led.

Marcos: First let me address tariffs.

Marcos: In the years ago, we expect to deliver total volume growth across both segments and for total pricing to be flat to slightly positive primarily driven by flavor solutions.

Marcos: As you know the situation remains fluid.

Marcos: At this time, we plan to offset costs related to U S import tariffs on China, with our CCI savings and some very targeted price adjustments.

Marcos: For China, our outlook assumes a gradual recovery and we expect China consumer sales to improve slightly year over year.

Marcos: Our focus remains on safeguarding the health and competitiveness of our brands sustaining the growth momentum in our business and maintain a transparent with our customers.

Marcos: We saw this come through this past quarter and we expected it to continue for the rest of the year.

Marcos: We don't believe our current plant actions will be material to the total business.

Marcos: Our 2025 gross margin is still projected to range between 50 to 100 basis points higher than 2024.

Marcos: We will have a significant impact on our volume mix outlook for the year.

Marcos: That said due to continued uncertainty on this topic.

Marcos: This gross margin expansion reflects favorable impact from product mix and cost savings from our CCI program.

Marcos: Outlook does not include any additional impact from tariffs that could potentially be implemented this year.

Marcos: Partially offset by the anticipated impact of a low single digit increase in cost inflation.

Marcos: As things evolve, we will provide update on our outlook within our typical reporting cadence.

Marcos: Consistent with historical trends, we expect our gross margin expansion to build throughout the year.

Marcos: Turning now to the details of our outlook.

Marcos: Currency rates are still expected to have a one point negative impact on both net sales and adjusted operating income and two points on adjusted earnings per share.

Marcos: In addition, gross margin expansion, we expect SG&A benefits from cost savings to be partially offset by investments in technology as well as brand marketing to drive volume growth.

Marcos: At the topline we continue to expect organic net sales growth to range between one and 3%.

Marcos: For the year, we expect our brand marketing spend to increase in the high single digits, reflecting a double digit increase partially offset by anticipated CCI savings.

Marcos: For those to be volume led.

Marcos: In the years ago, we expect to deliver total volume growth across both segments and for total pricing to be flat to slightly positive primarily driven by flavor solutions.

Marcos: As a result, our adjusted operating income is expected to grow 4% to 6% in constant currency.

Marcos: For China, our outlook assumes a gradual recovery and we expect China consumer sales to improve slightly year over year.

Marcos: Similar to our gross margin trends, we expect growth in our operating income to build throughout the year.

Marcos: We saw this come through this past quarter and we expected it to continue for the rest of the year.

Marcos: This remains a balanced outlook that gives us the flexibility to continue to invest in the business.

Marcos: Our 2025 gross margin is still projected to range between 50 to 100 basis points higher than 2024.

Marcos: I'll expand margins in line with our 2028 objectives.

Marcos: In terms of tax we expect our tax rate to be approximately 22% for the year compared to 25% in 2024, where we benefited from a number of discrete tax items that are not expected to repeat in 2025.

Marcos: This gross margin expansion reflects a favorable impact from product mix and cost savings from our CCI program.

Marcos: Partially offset by the anticipated impact of a low single digit increase in cost inflation.

Marcos: We expect our income from unconsolidated operations to decline in the mid teens range in 2025, reflecting the strengthening of the US dollar against the Mexican peso, which is impacting the results of our largest joint venture Mccormick de Mexico.

Marcos: Consistent with historical trends, we expect our gross margin expansion to build throughout the year.

Marcos: In addition, gross margin expansion, we expect SG&A benefits from cost savings to be partially offset by investments in technology as well as brand marketing to drive volume growth.

Marcos: To summarize our 2025 of adjusted earnings per share projection of $3 <unk>.

Marcos: For the year, we expect our brand marketing spend to increase in the high single digits, reflecting double digit increase partially offset by anticipated CCI savings.

Marcos: The $3 <unk> on a reported dollar basis.

Marcos: Currency headwinds and the impact of increased tax rate relative to the prior year.

Marcos: On a constant currency basis, adjusted EPS is expected to grow between five and 7%.

Marcos: As a result, our adjusted operating income is expected to grow 4% to 6% in constant currency.

Marcos: To wrap up our continued volume growth underscores that our plants are yielding results and sustaining this differentiated performance looking.

Marcos: Similar to our gross margin trends, we expect growth in our operating income to build throughout the year.

Marcos: Looking ahead, our cost savings programs will continue to fuel our investments and drive margin expansion and we remain confident in the underlying fundamentals of our business and in delivering on our 2025 financial outlook near term and long term objectives.

Marcos: This remains a balanced outlook that gives us the flexibility to continue to invest in the business.

Marcos: I'll expand margins in line with our 2028 objectives.

Thank you Marcos.

Marcos: Before moving to Q&A I would like to close with our key takeaways on slide 16.

Marcos: While the environment has gotten more challenging consumer sentiment has been impacted we have managed through these environments in the past and we expect to navigate through this successfully as we continue to refine and align our plans.

Marcos: The long term trends that fuel our categories consumer interest in healthy flavorful cooking key flavor exploration and trusted brands continued to be strong and importantly, consumer interest in cooking is growing.

To summarize our.

Marcos: 2025 of adjusted earnings per share projection of $3 <unk> to $3 <unk> on a reported dollar basis.

Marcos: Currency headwinds and the impact of increased tax rate relative to the prior year.

Marcos: We continue to execute on our strategic roadmap with speed and agility and in alignment with consumer trends.

Marcos: On a constant currency basis, adjusted EPS is it fixed.

Marcos: Tac to grow between five and 7%.

Marcos: Further capitalizing on our attractive categories across segments and driving category leadership.

Marcos: To wrap up our continued volume growth underscores that our plants are yielding results.

Marcos: Our results demonstrate that we are investing in the areas that drive the most value and we expect to maintain this momentum.

Marcos: Sustaining this differentiated performance looking.

Marcos: We also expect to continue to expand margins and manage our cost as we are investing in the business. These improvements are led by a favorable product mix and cost savings programs.

Marcos: Performance historically and over the last few quarters, coupled with our growth plans give us confidence in achieving our near and long term objectives. Ultimately we believe the execution of our growth plans will be a win for consumers customers or categories, and Mccormick, which will continue to differentiate and strengthen our leadership.

Marcos: Thank you Marcos.

Marcos: Before moving to Q&A I would like to close with our key takeaways on slide 16.

Marcos: Finally, I want to recognize all Mccormick employees for their dedication and contributions and reiterate my confidence that together, we will continue to drive differentiated results and shareholder value.

Marcos: The long term trends that fuel our categories consumer interest in healthy flavorful cooking key flavor exploration and trusted brands continue to be strong and importantly, consumer interest in cooking is growing.

Marcos: Now for your questions.

Marcos: Thank you.

Marcos: I'll now be conducting a question and answer session.

Marcos: We continue to execute on our strategic roadmap with speed and agility and in alignment with consumer trends.

Speaker Change: And Jack asked a question you May press Star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Marcos: Further capitalizing on our attractive categories across segments and driving category leadership.

Marcos: You May press star two Shiite withdrawing our questions from the queue.

Speaker Change: From tradition participants using speaker equipment, it may be necessary to pick up your handset before pressing star keys.

Marcos: Our results demonstrate that we are investing in the areas that drive the most value and we expect to maintain this momentum.

Speaker Change: DSO for the first question.

Marcos: We also expect to continue to expand margins and manage our cost as we are investing in the business. These improvements are led by a favorable product mix and cost savings programs.

Speaker Change: Thank you our first question will be coming from the line of Andrew Lazar with Barclays. Please proceed with your question.

Andrew Lazar: Great. Thanks, so much good morning, everybody.

Speaker Change: Good morning, Good morning, Andrew.

Speaker Change: I think on last quarter's call you had guided to operating profit in fiscal <unk> should be sort of flat to slightly down.

Speaker Change: As you mentioned operating profit fell about 5% in the quarter decline was heavily weighted obviously to the consumer segment. I think you mentioned pricing stock based comp and Brandon mesh investments I think a lot of which were anticipated previously so I'm just trying to get a better sense for what drove maybe the stronger than forecast operating profit decline, particularly in consumer.

Speaker Change: Was there a timing shift relative to initial expectations or sort of what drove that and then more importantly, I guess what gives you the confidence in sort of reaffirming the full year. Thanks, so much okay.

Marcos: Now for your questions.

Marcos: Thank you.

I'll now be conducting a question and answer session.

Speaker Change: Thank you Eric asked the question you May press Star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: Andrew Let me kick it off and I'll have mark plus handle maybe more directly to the question on operating profit at a high level Q1 was roughly in line with what our expectations were and in fact, we had planned for Q1 to be sort of a different quarter than what the rest of the year will look like.

You May press Star two Shiite withdrawing a question from the queue.

Speaker Change: Of tradition participants using speaker equipment it may be.

Speaker Change: Necessary to pick up your handset before pressing psyches.

Speaker Change: For the first question.

Speaker Change: And I think you can kind of see that play out in a lot of our prepared comments, but there are timing elements that we've called out before like you mentioned that certainly impact that.

Speaker Change: Thank you. Your first question will be coming from the line of Andrew Lazar with Barclays. Please proceed with your question.

Andrew Lazar: Great. Thanks, so much good morning, everybody.

Speaker Change: Did you remain confident in the year to go period, and it's really supported by strong sales performance.

Speaker Change: Good morning, Andrew.

Andrew Lazar: I think on last quarter's call you had guided to operating profit in fiscal <unk> should be sort of flat to slightly down.

Speaker Change: Marcellus units, yes, sure so Andrew on the operating profit I mean, you mentioned minus minus 5% decline in July adjusted for currency was minus 3%.

Speaker Change: As you mentioned operating profit fell about 5% in the quarter decline was heavily weighted obviously that the consumer segment. I think you mentioned pricing stock based comp and in branded mesh investments I think a lot of which were anticipated previously so I'm just trying to get a better sense for what drove maybe the stronger than forecast operating profit decline, particularly in consumer.

Speaker Change: So on a constant currency basis III.

Speaker Change: A couple of timing related items as we mentioned on the call. One is the shift of the stock based compensation from Q2 into Q1 and ico normalize for that in <unk> would be essentially flat for Q1.

Speaker Change: Was it a timing shift relative to initial expectations or sort of what drove that and then more importantly, I guess what gives you the confidence in sort of reaffirming the full year. Thanks, so much okay.

Speaker Change: Also we had some timing in terms of brand marketing and technology investments hitting in Q1, we're going to continue to have some of those investments on the back.

Speaker Change: In future quarters of the year, but a little bit of timing between Q1 and Q2, there as well in the consumer space specifically.

Speaker Change: Andrew Let me kick it off and I'll have Mark for example, maybe more directly to your question on operating profit.

Speaker Change: Level Q1 was roughly in line with what our expectations were and in fact, we have planned for Q1 to be sort of a different quarter than what the rest of the year will look like.

Speaker Change: We had to lap the price gap management and investments that we put in place in 2024%. So that was a headwind that is going to go away. If you think about the consumer operating profit decline of 16% I mean, two thirds of it will go away in the next quarter, which is the price and the stock Matt stock comp shift.

Speaker Change: And I think you can kind of see that play out in a lot of our prepared comments, but there are timing elements that we've called out before like he mentioned that certainly impact that but did you remain confident in the year to go period, it's really supported by strong sales performance.

Speaker Change: And <unk>.

Speaker Change: FX was a bigger headwind I mean, it was trying to focus on the things that we can't control.

Speaker Change: <unk> units, yes, sure so Andrew on the operating profit I mean, you mentioned minus 5% decline in July adjusted for currency was minus 3%.

Speaker Change: It was a bigger headwind now we're seeing FX moderating a little bit going forward. So that's where we're keeping the guidance as it is.

Speaker Change: And then in terms of the guidance question, Yes, we do have a lot of confidence in the guidance that we've put out there I mean top line is coming as we expected we will continue to see.

Speaker Change: So on a constant currency basis III.

Growth in both segments consumer and flavor solutions for.

Speaker Change: For the full year and the consumer youre going to see growth all quarters and across all regions for the balance of the year.

Speaker Change: Also we had some timing in terms of brand marketing and technology investments hitting in Q1, we're going to continue to have some of those investments on the back.

Speaker Change: Pleased with the flavor solutions performance this quarter driving not only top line, but also our profitability as you saw profitability was up 240 basis points.

Speaker Change: In future quarters of the year, but a little bit of timing between Q1 and Q2, there as well in the consumer space specifically.

Speaker Change: On the back of CCI product mix and as well as.

Speaker Change: We had to lap the price gap management and investments that we put in place in 2024. So that was a headwind that's going to go away. If you think about the on the consumer operating profit decline of 16% two thirds of it will go away in <unk>.

Speaker Change: The top line that drives leverage through the P&L, So happy there as well.

Speaker Change: Margin will build throughout the year as I said on the call 50 to 100 basis points on a full year basis.

Speaker Change: On the back of the CCI program, we want to invest back into the business as we said before in terms of SG&A, particularly brand marketing and we feel confident about expanding margins for the full year.

Speaker Change: The next quarter, which is the price and the stock Matt stock comp shift.

Speaker Change: <unk>.

Speaker Change: FX was a bigger headwind I mean, we're trying to focus on the things that we can't control.

Speaker Change: Five.

Speaker Change: It was a bigger headwind now we're seeing FX moderating a little bit going forward. So that's where we're keeping the guidance as it is.

Speaker Change: Between 4% to 6% operating profit growth.

Speaker Change: The full year.

Speaker Change: Primarily driven by the flavor solutions segment.

Speaker Change: And then in terms of the guidance question, Yes, we do have a lot of confidence in the guidance that we put out there I mean top line is coming as we expected we will continue to see.

Speaker Change: Thanks, so much I appreciate the color.

Speaker Change: Sure.

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

Speaker Change: Growth in both segments consumer and flavor solutions for.

Peter Galbo: Hi, good morning, guys.

Speaker Change: For the full year and the consumer youre going to see growth all quarters and across all regions for the balance of the year.

Speaker Change: Okay.

Speaker Change: Two questions on the Americas consumer business and Brendan.

Speaker Change: Pleased with the flavor solutions performance this quarter driving not only top line, but also our profitability as you saw profitability was up 240 basis points.

Speaker Change: Toss the first one to you.

Speaker Change: I think you mentioned that.

Speaker Change: The price gap management be incremental price gap management in the first quarter was maybe seasonal or tied to a seasonal business.

Speaker Change: On the back of our CCI product mix and as well as.

Speaker Change: And the expectation is that the consumer price will be flat going forward.

Speaker Change: The top line that drives leverage through the P&L, So happy there as well.

Speaker Change: I'm just wondering if on an underlying basis.

Speaker Change: Margins will build throughout the year as I said on the call 50 to 100 basis points on a full year basis.

Speaker Change: Within Americas, if that pricing.

Speaker Change: You'll have an opportunity to be negative given some incremental investments and maybe that you saw good returns on the promo around the holidays until you'll look at that as we get into grilling season.

Speaker Change: On the back of the CCI program, we want to invest back into business as we said before in terms of SG&A, particularly brand marketing and we feel confident about expanding margins for the full year.

Speaker Change: And then you're offsetting that possibly with them, but I just wanted to understand kind of the.

Speaker Change: Five.

Speaker Change: Between 4% to 6% operating profit growth.

Speaker Change: Pieces underneath the flat price for consumer commented at a total company level relative maybe to the geography.

Speaker Change: The full year.

Speaker Change: Primarily driven by the flavor solutions segment.

Thanks, so much appreciate the color.

Peter Galbo: Okay. So thanks, Peter first of all let me just kick off with.

Speaker Change: Sure.

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

Peter Galbo: Overall, we had very strong sales performance throughout the company both in both segments, specifically, though thinking about consumer that's where most of your question focused on it.

Hi, good morning, guys.

Speaker Change: Alright.

Speaker Change: Okay.

Two questions on the Americas consumer business, and Brendan I'll I'll toss the first one to you.

Peter Galbo: We delivered really strong volume growth.

Peter Galbo: Across the business to me across all regions up two 6%. So we really think that that was.

Speaker Change: I think you mentioned that.

Peter Galbo: Indicative of the type of strength that we had been.

Speaker Change: The price gap management, the incremental price gap management in the first quarter was maybe seasonal or tied to a seasonal business.

Peter Galbo: <unk>.

Peter Galbo: Prior quarters.

Peter Galbo: There was a price element, obviously as you called out specifically in Americas.

Speaker Change: And the expectation is that the consumer price will be flat going forward.

Peter Galbo: In Q1, and a lot of that had to deal with we did target and incremental promotion on a recipe mix business I'm not sure.

Speaker Change: Just wondering if on an underlying basis.

Speaker Change: Within Americas, if that pricing.

Speaker Change: We'll have an opportunity to be negative given some incremental investment that maybe that you saw good returns on the promo around the holidays until you'll look at that as we get into grilling season.

Peter Galbo: If everyone felt the cold weather that most of the country felt but that's really good for Chile volume and gravy and so we saw an opportunity really a great opportunity to just continue to drive that business even harder during the first quarter because it is a great time of the year for those specific products and we really see it actually in a lot of our volume and share performance.

Speaker Change: And then you're offsetting that possibly with them, but I just wanted to understand kind of the.

Speaker Change: Pieces underneath the flat price for consumer comment at a total company level relative maybe to the geography.

Peter Galbo: That segment of our business.

Peter Galbo: That's what really drove a lot of it was.

Peter Galbo: Okay. So thanks, Peter first of all let me just kick off with.

Peter Galbo: Certainly one of those and reserve the flexibility to be able to spend across the business, where we feel like we need to and that might've been sort of the one element that was if you could say incremental to whats the price gap management.

Peter Galbo: Overall, we had very strong sales performance throughout the company both in both segments, specifically thinking about consumer that's where most of your question focused on it.

Peter Galbo: Plans and programs.

Peter Galbo: One would have expected as we look to the rest of the year, we don't really see price having much contribution.

Peter Galbo: We delivered really strong volume growth.

Peter Galbo: Across the business across all regions up two 6%. So we really think that that was.

Peter Galbo: And in terms of it being super positive for Super negative.

Peter Galbo: Indicative of the type of strength of visa, we have been communicating on.

Peter Galbo: Across the portfolio globally, but I would say.

Peter Galbo: Quarters.

Peter Galbo: That's definitely going to be the case in the Americas.

Peter Galbo: There was a price element, obviously as you called out specifically in Americas.

Peter Galbo: Will it be maintaining the price investments from the prior year.

Peter Galbo: In Q1, and a lot of that had to deal with we did target and incremental promotion on a recipe mix business.

Peter Galbo: There is a little bit of pricing, that's going to come through in EMEA to deal with some commodity pressures that they're feeling so you will see a little bit of that but they will be growing volume.

Peter Galbo: Sure.

Peter Galbo: And so that's kind of one perspective, I think on how to think about the first quarter and then what do you expect the rest of the year volume growth in the Americas is really the fundamental driver I think you saw that strengthen our consumption Youre also seeing it in the actual sales results, where my open a little bit of a gap from a standpoint of our consumption and our sales but.

Peter Galbo: See it actually in a lot of our volume and share performance in that segment of our business. So that's what really drove a lot of it was.

Peter Galbo: Thats really typical dynamics for us in the first quarter as we would typically see that after obviously, a very strong holiday period that we had so.

Peter Galbo: One of those and reserve the flexibility to be able to spend across the business, where we feel like we need to and that might have been sort of the one element that was if you could say incremental to whats the price gap management plans and programs.

Peter Galbo: I'll stop there to see if I've addressed your question, but happy to take on more.

Speaker Change: Thanks, Brennan I think thats very helpful.

Peter Galbo: As expected as we look to the rest of the year.

Peter Galbo: Context, and maybe just as a follow up.

Peter Galbo: Don't really see price having much contribution.

Speaker Change: We've gotten a few questions. This morning.

Peter Galbo: And in terms of it being super positive for Super negative.

Speaker Change: Just around again in Americas, consumer kind of shipment versus consumption and just whether there were any dynamics you saw from a carryover perspective on inventories out of Thanksgiving or any timing shifts related to Easter just that youre.

Peter Galbo: Across the portfolio globally, but I would say.

Peter Galbo: That's definitely going to be the case in the Americas.

Peter Galbo: Will it be maintaining the price investments from the prior year.

Speaker Change: That youre thinking about it again as we contemplate.

Speaker Change: Thanks.

Speaker Change: Yes, let me go we may add some more context on shipments to consumption. We have very few concerns about our shipment versus consumption profile just to give you some more context.

Speaker Change: First of all we had a really great holiday program resulted in a really strong consumption not only in Q4, but so in Q1. So we have a really strong consumption profile kind of underpinning really our sales growth over the past two quarters.

Speaker Change: Consumption.

Peter Galbo: Thats really typical dynamics for us in the first quarter as we would typically see that after obviously, a very strong holiday period that we had.

Speaker Change: And the outpacing in Q1 of sales as a typical dynamic that we see on inventory patterns across our business over the long.

Peter Galbo: No.

Speaker Change: Last decade, or so I mean, that's just something that we typically expect there's probably two other variables. There I think one could say, it's a little bit incremental or new in this quarter and the first one is we're not really seeing any early Easter shipments like we did last year because Easter is falling later in April and so its just there isn't really anything happening in Q1.

Peter Galbo: I'll stop there to see if I've addressed your question, but happy to take on more.

Brennan: Thanks, Brennan I think thats very helpful context, and maybe just as a follow up I think we've gotten a few questions. This morning.

Brennan: Just around again in Americas, consumer kind of shipment versus consumption.

Brennan: Whether there were any dynamics you saw from a carryover perspective on inventories out of Thanksgiving or any timing shifts related to Easter just that you are.

Speaker Change: One regard to Easter with regard to Easter like it might have the year before.

Speaker Change: And then we do have strong innovation plans for the year, we got an early kickoff on that this year, which means a little bit more slotting spend.

Brennan: Okay that youre thinking about it again as we contemplate your assumption yes.

Speaker Change: Whatever increases we hadn't slotting comes into the first quarter because it matches with the shipments of the item.

Brennan: Yes, let me go we may add some more context on shipments to consumption. We have very few concerns about a shipment versus consumption profile just to give you some more context.

Speaker Change: So.

Speaker Change: Yes, that's one indication that obviously, we're off to a good start on innovation, but some of that spend comes into the first quarter and that was a little bit heavier than it was the prior year, but I don't look at those two things as structural problems. Those are just cycles that we go through its really quite normal I think it looks the profile is what we'd expect.

Brennan: First of all we had a really great holiday program, resulting in really strong consumption not only in Q4, but so in Q1. So we have a really strong consumption profile kind of underpinning really our sales growth over the past two quarters.

Brennan: Consumption.

Speaker Change: Combined Q4, and Q1 together into one number.

Brennan: And the outpacing in Q1 of sales as a typical dynamic that we see on inventory patterns across our business over there.

Speaker Change: Exactly where we'd want to be.

Speaker Change: Great. Thanks, so much.

Speaker Change: Okay.

Brennan: The last decade, or so I mean, that's just something that we typically expect there's probably two other variables that I think one can say is a little bit incremental or new in this quarter and the first one is we're not really seeing any early Easter shipments like we did last year because Easter is falling later in April.

Speaker Change: Our next questions are from the line of Alexia Howard with Bernstein. Please proceed with your question.

Alexia Howard: Good morning, everyone.

Speaker Change: Good morning, Alex.

Alexia Howard: By that.

Alexia Howard: Can I focus on the growth.

Alexia Howard: Fills in flavor solutions.

Speaker Change: Im wondering if you can quantify or at least comment on how much new these new high growth customers, adding to your sales volumes in that segment.

Brennan: So its just there isn't really anything happening in Q1 regard to eastern with regard to Easter like it might have the year before.

Brennan: And then we do have strong innovation plans for the year, we got early kickoff on that this year, which means a little bit more slotting spend.

Alexia Howard: And then by contrast, how much.

Alexia Howard: <unk> benefited.

Alexia Howard: Also in Nash and then offsetting that you had the CPG customer weakness, how big was that compared to some of the other dynamics and then I have a follow up.

Brennan: Whatever increases we hadn't slotting comes into the first quarter because it matches with the shipments of the item. So.

Brennan: One indication that obviously, we're off to a good start on innovation, but some of that spend comes into the first quarter that was a little bit heavier than it was the prior year, but I don't look at those two things as structural problems. Those are just cycles that we go through its really quite normal I think it looks the profile of what we would expect if you combine Q.

Alexia Howard: Thanks for the question Alexia, we did have a good quarter on flavor solutions overall Tech I would say in two out of our three regions volume growth, mostly in the Americas and Asia Pacific just to give you a little bit more context in detail.

Alexia Howard: I'm not going to be able to sort of quantify each individual segment within <unk>.

Brennan: For Q1 together into one number it's exactly what we wanted to be.

Brennan: Great. Thanks, so much.

Alexia Howard: Kind of categorize each volume and give it a framing on numbers, but I'll give you some context in terms of what we saw.

Brennan: Yeah.

Speaker Change: Our next questions are from the line of Alexia Howard with Bernstein. Please proceed with your question.

Alexia Howard: In the quarter.

Alexia Howard: We did very well for us high growth sort of.

Alexia Howard: Good morning, everyone.

Brennan: Good morning, Alex.

Alexia Howard: Innovator customers that are a lot of emerging segments, many of them attached to health and wellness.

Alexia Howard: By that.

Alexia Howard: Can I focus on the growth.

Alexia Howard: In flavor solutions.

Alexia Howard: And so we continue to see strong growth from them.

Speaker Change: I'm wondering if you can quantify or at least comment on how much new these new high growth customers, adding to your sales volumes in that segment and then by contrast, how much.

Speaker Change: <unk> also continued to acquire new customers. There. So it's not only volume, but it's also gaining share.

Speaker Change: That's helping us there and it allows us to diversify our sales mix in our portfolio, but we also saw strengthening <unk> business. Even if there is weak traffic in the industry and what was driving that is we had some innovation wins.

Alexia Howard: <unk> benefited.

Alexia Howard: Also in Nash and then offsetting that you had the CPG customer weakness, how big was that compared to some of the other dynamics.

Speaker Change: Execute in the quarter. We also won some new customers there too so in the Americas region.

Alexia Howard: And then I have a follow up.

Alexia Howard: Okay.

Alexia Howard: Thanks for the question Alexia, we did have a good quarter on flavor solutions overall in fact, I would say in two out of our three regions.

Speaker Change: It was the <unk> customer base and that the small high innovator customers that we have in flavor that were really driving an offsetting any of the weakness that we saw with larger cpg's in Asia Pacific It was.

Alexia Howard: Volume growth, mostly in the Americas, and Asia Pacific just to give you a little bit more context in detail.

Speaker Change: A lot of <unk> performance that drove that business increased customer promotions and limited time offers.

Alexia Howard: I'm not going to be able to sort of quantify each individual segment within.

Alexia Howard: <unk>.

Alexia Howard: Kind of categorize each volume and give it a framing on numbers, but I'll give you some context in terms of what we saw.

Speaker Change: Certainly contributed to some strong numbers, but also we were lapping.

Speaker Change: <unk> political boy constantly year ago. So that also improved volume performance in Asia Pacific EMEA on the other hand definitely saw continued weakness, although we see sequential improvement quarter to quarter. It's still is soft in terms of traffic with <unk> and so that one that region was down but.

In the quarter.

Alexia Howard: We did very well at those high growth sort of.

Alexia Howard: Innovator customers that are a lot of emerging segments, many of them attached to health and wellness.

Alexia Howard: So we continue to see strong growth from them and we also continue to acquire new customers. There. So it's.

Alexia Howard: It's not only volume, but it's also gaining share.

Speaker Change: Underlying all of this there is a there is a softness with larger CPG companies I would say not just within the Americas, but also we're seeing that in Europe too.

Alexia Howard: That's helping us there and it allows us to diversify our sales mix in our portfolio.

Alexia Howard: But we also saw strengthening <unk> business, even if there is weak traffic in the industry and what was driving that is we had some innovation wins.

Speaker Change: <unk>.

Speaker Change: That's consistent with what you are hearing I think from other <unk>.

Speaker Change: Anthony Sports and so we're seeing a little bit of that.

Alexia Howard: Execute in the quarter.

Speaker Change: In our performance I would say that when we look at it category to category, we tend to still outperform what's going on in the broader market, but nonetheless, the volumes are weaker.

Alexia Howard: Also won some new customers there too so in the Americas region.

Alexia Howard: It was the <unk> customer base in that.

Alexia Howard: Small high innovator customers that we have in flavor that were really driving an offsetting.

Speaker Change: Great and a quick follow up.

Speaker Change: Probably too early to see anything, but RFK junior seems to be pursuing an agenda of driving an artificial additives across packaged paid in probably in the restaurant sector as well as I say, it's probably too early to tell because he's just catch up on the scene, but are you seeing any uptick in reformulation effort on the part of your CPG.

Alexia Howard: Any of the weakness that we saw with larger Cpg's in Asia Pacific. It was a lot of <unk> performance that drove that business increased customer promotions and limited time offers.

Alexia Howard: Certainly contributed to some strong numbers, but also we were lapping the geopolitical boycotts from a year ago. So that also improved volume performance in Asia Pacific EMEA on the other hand definitely saw continued weakness, although we see sequential improvement quarter to quarter. It still is soft in terms of traffic with.

Speaker Change: <unk>, our restaurant customers in the U S.

Speaker Change: Yes with regard to colors, just let me first provide some context on the Mccormick portfolio, our consumer portfolio, we don't really have a lot of.

Alexia Howard: <unk> and so that one that region was down but underlying all of this there is a there is a softness with larger CPG companies I would say not just within the Americas, but also we're seeing that in Europe too and that's.

Speaker Change: Usage of color in our products as you might expect.

Speaker Change: At least very very few.

Speaker Change: Overall now with respect to formulations, we are seeing more activity on that.

Speaker Change: Definitely know reformulation activity and has always been a part of the work that we do with our customer base.

Speaker Change: That's consistent with what you are hearing I think from other <unk>.

Alexia Howard: And sports and so we're seeing a little bit of that.

Speaker Change: And we've been doing that for quite some time, but we are seeing a tick up in re formulation activity.

Alexia Howard: In our performance I would say that when we look at it category to category, we tend to still outperform what's going on in the broader market, but nonetheless, the volumes are weaker.

Speaker Change: And that would that would align with what youre seeing in being written out and the news media regarding.

Speaker Change: And what we're hearing from the new administration, but it isn't just colors. It's also sodium <unk> always been working on sodium.

Speaker Change: Great and a quick follow up.

Speaker Change: Probably too early to see anything, but RFK junior seems to be pursuing an agenda of driving an artificial additives are cross package paid in probably in the restaurant sector as well as I say, it's probably too early to tell because he's just catch up on the screen, but are you seeing any uptick in reformulation effort on the part of your CPG.

Speaker Change: It's also about just working on trends that are served.

Speaker Change: Certainly positive like hydration functional foods high protein, we're seeing re formulation activity across our customer base, but also a lot of new product activity too.

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

Speaker Change: Okay.

Speaker Change: Our restaurant customers in the U S.

Speaker Change: Thank you. The next question is from the line of Ken Goldman with Jpmorgan. Please proceed with your questions.

Speaker Change: Yes with regard to colors, just let me first provide some context on the Mccormick portfolio, our consumer portfolio, we don't really have a lot of.

Ken Goldman: Hi, Thank you.

Speaker Change: Understanding the situation changes daily or sometimes hourly.

Speaker Change: Usage of color in our products as you might expect.

Speaker Change: What should investors be looking for in terms of key tariff risks ahead.

Speaker Change: At least very very few.

Speaker Change: Overall now with respect to formulations, we are seeing more activity on that.

Speaker Change: Well as I guess related headwinds.

Speaker Change: Actions that the company will take in response and I know these are myriad in nature, but anything youre really keeping an eye on that we should also be following I think would be helpful.

Speaker Change: Definitely know reformulation activity and has always been a part of the work that we do with our customer base.

Speaker Change: And we've been doing that for quite some time, but we are seeing a tick up in re formulation activity.

Speaker Change: Thank you.

Well.

Speaker Change: Just in case.

Speaker Change: And that would that would align with what youre seeing in being written out and the news media regarding.

Speaker Change: It might have been missed there are no tariffs already that we have accounted for in our in our forecast and our guidance for the year. Those are specifically the ones that were levied on China. So those are already factored into our thinking right now.

Speaker Change: And what we're hearing from the new administration, but it isn't just colors. It's also sodium <unk> always been working on sodium.

Speaker Change: It's also about just working on trends that are served.

Speaker Change: Certainly positive like hydration functional foods high protein, we're seeing re formulation activity across our customer base, but also a lot of new product activity too.

Speaker Change: Overall, Ken as it relates to anything moving forward. It is it is.

Speaker Change: Difficult to know.

Speaker Change: Sort of project what.

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

Speaker Change: What will be the areas that we have to focus on because we're not exactly sure how exactly these might come through so.

Speaker Change: Okay.

Speaker Change: Thank you. The next question is from the line of Ken Goldman with Jpmorgan. Please proceed with your question.

Speaker Change: Like you just said, we're staying very close to what the latest news and the latest potential plans might be.

Ken Goldman: Hi, Thank you.

Speaker Change: Understanding the situation changes daily or sometimes hourly.

Speaker Change: We're thinking through a number of scenarios there.

Speaker Change: In terms of how that might get applied there's obviously a lot of variability on how one might think through these tariffs just based on what might be reached.

Speaker Change: What should investors be looking for in terms of key tariff risks ahead.

Speaker Change: Well as I guess related headwinds.

Speaker Change: Reports, but we're staying close to.

Speaker Change: What everyone else's learning too I think from a from a broader standpoint, I would just say.

Speaker Change: These are situations that we dealt with in the past and we expect to be able to deal with them successfully moving forward too.

Speaker Change: Kidney.

Speaker Change: Well.

Speaker Change: Just in case.

Speaker Change: It might have been missed.

Speaker Change: Depending on where the tariff might be in terms of country or on type of sort of raw ingredient or finished goods. I mean, this is quite varied I would say and.

Speaker Change: There are no tariffs already that we have accounted for in our in our forecast and our guidance for the year. Those are specific to the ones that were levied on China. So those are already factored into our thinking right now.

Speaker Change: As you might expect complex.

Speaker Change: But we're prepared to work through it when we know exactly what will happen.

Speaker Change: Overall, Ken as it relates to anything moving forward. It is it is.

Speaker Change: Okay. Thank you and then a quick follow up I recognize that.

Speaker Change: Difficult to know.

Speaker Change: Sort of project, what what will be the areas that we have to focus on because we're not exactly sure how exactly these might come through so.

Speaker Change: Giving quarterly guidance isn't always your practice, but just in light of some of the moving pieces in the first half and some of the.

Speaker Change: The conversation about pricing and SBC SBC shifts excuse me how would you like us to sort of think about directionally EBIT and EPS in <unk>.

Speaker Change: We're still like you just said, we're staying very close to what the latest news and the latest potential plans might be.

Speaker Change: We're thinking through a number of scenarios there.

Speaker Change: In terms of how that might get applied there's obviously a lot of variability on how one might think through these tariffs just based on what might be.

Speaker Change: Either relative to <unk> or versus a year ago. I think any help you can get in or we can getting toward a sort of narrowing that would be would be useful. Thank you.

Speaker Change: <unk> reports, but we're staying close to.

Speaker Change: Yes.

Markus: Let me kick it off and then ask Markus to add more.

Speaker Change: What everyone else is learning too I think from a from a broader standpoint, I would just say.

Speaker Change: Context to this but kind of back to my opening remarks, we always saw Q1 as being a very different quarter than the rest of the year and so I think that would be the picture that we continue to paint we felt like we've made that.

Speaker Change: These are situations that we dealt with in the past and we expect to be able to deal with.

Speaker Change: With them successfully moving forward too.

Speaker Change: Depending on where the tariff might be in terms of country or bond type of sort of raw ingredient or finished goods. I mean, this is quite varied I would say and as you might expect complex.

Markus: You know.

Markus: Kind of clear it will be close to the fiscal year 'twenty four.

Mark: But mark do you want to.

Speaker Change: Yes, Ken so yes, Ken so it's difficult to give quarterly guidance as you can imagine, especially in this dynamic environment that we're in these days you should see a continued momentum in terms of our topline growth will continue as I mentioning between Q3 Q2 and Q4.

Speaker Change: But we're prepared to work through it when we know exactly what will happen.

Speaker Change: Okay. Thank you and then a quick follow up I recognize that.

Speaker Change: Giving quarterly guidance isn't always your practice, but just in light of some of the moving pieces in the first half and some of the.

Mark: The margin gross margin will build.

Mark: Aggressively.

Speaker Change: The conversation about pricing and SBC SBC shifts excuse me how would you like us to sort of think about directionally EBIT and EPS in <unk>.

You will see.

Mark: The bulk of our profitability comes in the second half of the year, which is the second half is bigger than our first half. So you should see more of the gross margin impacting.

Speaker Change: Either relative to <unk> or versus a year ago. Just I think any help you can get in or we can getting toward a sort of narrowing that would be would be useful. Thank you.

Mark: The second on a positive way impacting the second half versus the first half and that will flow through the P&L to operating profit as well continue to investing in SG&A.

Speaker Change: Yes.

Markus: Ill kick it off and then ask Markus to add more.

Speaker Change: Every quarter.

Mark: And that is proving to be.

Speaker Change: Context to this but kind of back to my opening remark, we always saw Q1 as being a very different quarter than the rest of the year and so I think that would be the picture that we continue to paint we felt like we've made that.

Positive in terms of the volume that we're getting out of those investments that we're making.

Mark: And profitability, we will continue to build as well in line with the gross margin build.

Mark: You should see some of the slipped and timing related items that impacted in Q1 as a tailwind into Q2.

Speaker Change: Kind of clear it will be close to the fiscal year 'twenty four.

Mark: But mark do you want to.

Mark: Yes, Ken so yes, Ken so it's difficult to give quarterly guidance as you can imagine, especially in this dynamic environment that we're in these days you should see a continued momentum in terms of.

Mark: But then continue to build gross margin and operating margin through the balance of the year.

Mark: Thank you.

Speaker Change: The next question is from the line of Robert Moskow with TV Cowen. Please proceed with your question.

Mark: Top line growth will continue as I mentioning between Q3 gets you in Q4.

Robert Moskow: Hi, there.

Speaker Change: Thanks for the question.

Robert Moskow: Brendan.

Speaker Change: I wanted to follow up to Andrew's question at the top of the call.

Mark: The margin gross margin will build.

Mark: Progressively you'll.

Mark: You'll see.

Craig: Craig the results is roughly in line with your expectations.

Mark: The bulk of our profitability comes in the second half of the year, which is the second half is bigger than the first half. So you should see more of the gross margin impacting.

Speaker Change: And I'm just trying to.

Craig: Drill down a little bit more into that.

Craig: Organic growth for consumer versus organic growth for flavor solutions.

Mark: The second in a positive way impacting the second half versus the first half and that will flow through the P&L to operating profit as well continue to investing in SG&A.

Craig: Based on hone heading into the results I would've thought that that flavor solutions would be a little weaker consumer would be stronger given everything you said about the shift to scratch cooking.

Mark: Every quarter.

Mark: And that is proving to be.

Mark: Positive in terms of the volume that we're getting out of those investments that we're making.

Craig: Higher for more.

Craig: Fresh foods and the flavors that are used to prepare them and so this is kind of the reverse in first quarter and I wanted to know if that was also in line with your expectations or not and then more specifically on the Chile promotion.

Mark: And then profitability, we will continue to build as well in line with the gross margin build.

Mark: So you should see some of that slipped and timing related items that impacted in Q1 as a tailwind into Q2.

Craig: Is that a profitable promotion.

Craig: Obviously drove a lot of volume you said it was incremental.

Mark: But then continue to build gross margin and operating margin through the balance of the year.

Craig: Yes.

Speaker Change: Did it grow profit.

Craig: Sure. Thank you.

Craig: Rob.

Mark: Thank you.

Speaker Change: Let me go to talk to your question in terms of expectations overall.

The next question is from the line of Robert Moskow with TV Cowen. Please proceed with your question.

Speaker Change: I do think that our fleet platelet solutions, a little bit stronger than what we would've expected I think it really came through more <unk> volume performance.

Robert Moskow: Hi, there.

Speaker Change: Thanks for the question.

Mark: Brendan.

Speaker Change: I wanted to follow up to Andrew's question at the top of the call.

Speaker Change: <unk>. So so I think that was one part of your question for Tim from a consumer standpoint.

Speaker Change: The results is roughly in line with your expectations.

Speaker Change: And I'm just trying to.

Speaker Change: Drill down a little bit more into that.

Speaker Change: Boy I am looking at volume and <unk>.

Speaker Change: Organic growth for consumer versus organic growth for flavor solutions.

Speaker Change: It was really really quite good.

Speaker Change: The Americas.

Speaker Change: Based on hone heading into the results I would've thought that flavor solutions would be a little weaker consumer would be stronger given everything you said about the shift to scratch cooking.

Speaker Change: Two 9%.

Speaker Change: We talked about ship to consumption, obviously as being a dynamic there that we typically expect.

Speaker Change: But overall, we felt like and as you see the consumption.

Speaker Change: We think it was quite strong overall so.

Speaker Change: Higher for more.

Speaker Change: Fresher foods and flavors that are used to prepare them.

Speaker Change: And in fact, a nice continuation from what we saw in Q4. Another holiday season, obviously has a lot more demand going on in it but we see a continuation of the strength that we have.

Speaker Change: This is kind of the reverse in the first quarter and I wanted to know if that was also in line with your expectations or not and then more specifically on the Chile promotion.

Speaker Change: China.

Speaker Change: I would say we were looking for gradual improvement and we were plus we're pleased with the performance of China in.

Speaker Change: Is that a profitable promotion it obviously drove a lot of volume you said it was incremental.

Speaker Change: In the first part.

Speaker Change: First quarter as we look at our performance versus the Chinese new year and the market. We believe that we slightly outperformed there so that was.

Speaker Change: Did it did it grow profit.

Speaker Change: Sure. Thank you.

Speaker Change: Rob.

Speaker Change: Let me go to talk to your question in terms of expectations overall.

Speaker Change: We plan on growth as we call it slight growth I would say.

Speaker Change: That 3% that you saw was pretty good in terms of.

Speaker Change: I do think that our fleet solutions, a little bit stronger than what we would've expected I think it will be came through more than a <unk> volume performance.

Speaker Change: The challenges in the marketplace that is where consumer sentiment is at that point in time. So just to give you context on the consumer side I was quite pleased with performance of volume in the Americas and.

Speaker Change: <unk>. So so I think that was one part of your <unk>.

Speaker Change: <unk> <unk> from a consumer standpoint.

Speaker Change: As well as in China, EMEA also performed well too now receivables more pricing coming through in EMEA as a result of some commodity pressure that they're feeling but we're still growing volume in the context of having a little bit more pricing.

Speaker Change: Boy I am looking at volume and <unk>.

Speaker Change: It was really really quite good.

Speaker Change: The Americas region.

Speaker Change: The two 9%.

Speaker Change: We talked about ship to consumption, obviously as being a dynamic there that we typically expect.

Speaker Change: And so that's the profile there now with respect to the <unk>.

Speaker Change: Incremental promotional and rescue mix.

Speaker Change: But overall, we felt like and as you see the consumption.

Speaker Change: When we look at price.

Speaker Change: We think it was quite strong overall so.

Speaker Change: Overall revenue management price gap management all of those things, we certainly take a very hard look at.

Speaker Change: Whether or not Theyre smart from a from a profit perspective. So I can tell you that our team when they execute these programs they're doing because they know that they are strategically good for the business.

Speaker Change: China.

Speaker Change: I would say we were looking for gradual improvement and we were plus we're pleased with the performance of China in.

Speaker Change: Build loyalty and Theyre also financially smart and so we're we're pretty pleased with the performance. So I think overall in the first quarter and.

Speaker Change: In the first.

Speaker Change: First quarter as we look at our performance versus the Chinese new year and the market. We believe that we slightly outperformed there so that was.

Speaker Change: Just to kind of help bridge if there was any slight disappointment the consumer number I would just say.

Speaker Change: We felt like that number was pretty strong.

Speaker Change: We plan on growth I would call it slight growth I would say.

Speaker Change: Great. That's helpful. Thank you.

Speaker Change: That 3% that we saw was pretty good in terms of.

Speaker Change: Yes.

Speaker Change: Want to make sure our costs caused the point of your question Okay great.

Speaker Change: Our next question is from the line of Max comfort with BNP Paribas. Please proceed with your question.

Speaker Change: Hey, Thanks for the question recently package food players, particularly those with exposure to stacking some of whom are your key customers in flavor solutions.

Speaker Change: As well as in China, EMEA also performed well too now receivable more pricing coming through in EMEA as a result of some commodity pressure that they're feeling but we're still growing volume in the context of having a little bit more pricing.

Speaker Change: And observing prolonged softness in attributing it to the consumer feeling financial pressure.

Speaker Change: And so that's the profile there now with respect to the <unk>.

Speaker Change: Rick you've acknowledged some of those pressures, but you also.

Speaker Change: Incremental promotional rescue mix.

Speaker Change: Seem to be attributing much more of this to changing consumer preferences as well, which is support of your some of your key categories in the consumer segment.

Speaker Change: When we look at price.

Speaker Change: Overall revenue management price gap management all of those things, we certainly take a very hard look at.

Speaker Change: If you could provide a bit more color.

Speaker Change: And these changing consumer preferences that youre seeing and also how you would think about parsing out the weakness that we're seeing in the snacking between the consumer feeling financial pressure versus the consumer changing their preferences for eating thanks very much.

Speaker Change: Build loyalty and Theyre also financially smart and so we're we're pretty pleased with the performance I think it will fall in the first quarter and.

Speaker Change: Well. Thank you for the question, Matt as it relates to sort of snacking trends and.

Speaker Change: Just to kind of help bridge if there was any slight disappointment in the consumer number I would just say.

Speaker Change: No.

Speaker Change: Other drivers related more towards affordability are the drivers related to health and wellness trends.

Speaker Change: We felt like that number was pretty strong.

Speaker Change: Great. That's helpful. Thank you.

Speaker Change: Like a lot of things in life, it's a lot of those things so I think probably.

Speaker Change: Yes.

Speaker Change: Let me make sure I call the point of your question Okay great.

Speaker Change: Hard to parse that out.

Speaker Change: Our next question is from the line of Max comfort with BNP Paribas. Please proceed with your question.

Speaker Change: Let me tell you what I think we are seeing is in terms of snacking trends.

Speaker Change: There is a little bit more softness but.

Speaker Change: Hey, Thanks for the question recently packaged food players, particularly those with exposure to stacking some of whom are your key customers in flavor solutions had been observing prolonged softness in attributing it to the consumer feeling financial pressure sounds like you've acknowledged some of those pressures, but you also.

Speaker Change: We're seeing pockets of growth also on snacking too so, especially within those value added segments. So protein based snacks and better for you options are in many ways part of the snacking category as well.

Speaker Change: We see growth in those areas. So I don't know that snacking by itself is the issue is just people are looking for other opportunities in other.

Speaker Change: Seem to be attributing much more of this to changing consumer preferences as well, which is supporting your some of your key categories. In the consumer segment I was hoping you could provide a bit more color.

Speaker Change: Other options.

Speaker Change: As they consider snacking as part of the repertoire throughout the day.

Speaker Change: But we also in terms of our own performance believes that we're gaining market share in a number of these areas for competitors. So its helped offset what we believe to be maybe a little bit of <unk>.

Speaker Change: These changing consumer preferences that youre seeing and also how you would think about parsing out.

Speaker Change: And if that were seeing in snacking between the consumer feeling financial pressure versus the consumer changing their preferences for eating thank you very much.

Speaker Change: Temporary weaknesses as we're looking at the snack category, but its more dynamic than maybe just one version of it and that would be.

Speaker Change: Well. Thank you for the question, Matt as it relates to sort of snacking trends and.

Speaker Change: One context, I would give from a from.

Speaker Change: From a consumer perspective, specifically on snacking now if you think about just broadly at the state of the consumer Max.

Speaker Change: Yes.

Speaker Change: Other drivers related more towards affordability are the drivers related to health and wellness trends.

Speaker Change: We think consumers continue to be resilient, but there is definitely still in a challenging environment.

Speaker Change: Like a lot of things in life. It has a lot of those things. So I think probably it's hard to parse that out let.

Speaker Change: As many of US are seeing consumer sentiment has been impacted especially over this past month, primarily related to concerns over rising inflation potentially.

Speaker Change: Let me tell you what I think we're seeing is in terms of snacking trends.

Speaker Change: There is a little bit more softness but.

I think my our view is that this prolongs what we saw as we thought about sort of the back half of 'twenty for that the mindset of the consumer may not be getting shifting.

We're seeing pockets of growth also in snacking too so, especially within those value added segments. So protein based snacks and better for you options are in many ways part of the snacking category as well.

Speaker Change: All that much towards a positive just still kind of remaining remaining resilient but challenged.

Speaker Change: We see growth in those areas. So I don't know that snacking by itself is the issue is just people are looking for other opportunities in other.

Speaker Change: They're still cautious about how they spend their money on food and beverage and we're continuing that value seeking behavior and.

Speaker Change: Other options.

Speaker Change: And our own categories, what were seeing is.

Speaker Change: As they consider snacking as part of the repertoire throughout the day.

Speaker Change: Some people are maybe trading down to smaller units are also seeing a lot of growth in our larger units actually so it tells me that people are looking for value. We're also putting a lot of focus on the value per ounce that their spend so I think consumers are quite savvy as we all know and they're trying to make their dollar stretch as much as they can.

Speaker Change: But we also in terms of our own performance believe that we're gaining market share in a number of these areas for competitors. So its helped offset what we believe to be maybe a little bit.

Speaker Change: Temporary weakness as we're looking at the snacking category, but its more dynamic than maybe just one version of it and that would be.

Speaker Change: <unk>, which is another reason why they go into the perimeter of store to make scratch meals et cetera, they see them as healthier, but they also to you and is cheaper and so I think both of these kind of you start with the snacking segment permanent and just more broadly what we're seeing in our own categories as consumers are sort of blending both and it's hard to parse them apart.

Speaker Change: One context, I would give from a from a consumer perspective, specifically on snacking now if you think about just broadly the state of the consumer Max.

Speaker Change: We think consumers continue to be resilient, but there is definitely still in a challenging environment.

Speaker Change: As many of us sustained consumer sentiment has been impacted especially over this past month, primarily related to concerns over rising inflation potentially.

Speaker Change: Great. Thanks, very much I'll leave it there.

Speaker Change: Okay.

Speaker Change: I think my our view is that this prolongs what we saw as we thought about sort of the back half of 'twenty for that the mindset of the consumer may not be getting shifting.

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

Steve Powers: Hey, everybody good morning, Thank you.

Speaker Change: Good morning, Todd.

Speaker Change: I was hoping you can talk a little bit more about what you're seeing in Europe and I.

Speaker Change: All that much towards a positive just still kind of remaining remaining resilient but challenged.

Speaker Change: I guess in the EMEA segment as it relates to consumer.

Speaker Change: They are still cautious about how they spend their money on food and beverage and we're continuing that value seeking behavior.

Speaker Change: Volume growth there as well this quarter.

Speaker Change: You've got some pricing coming through because of the commodity backdrop, but at the same time you cited.

Speaker Change: Our own categories, what were seeing is.

Speaker Change: Other CTG.

Speaker Change: Companies in Europe kind of facing.

Speaker Change: Parallel apparel dynamics as we're seeing here in the U S with consumer weakness so as you think about that.

Speaker Change: So I think consumers are quite savvy as we all know and they're trying to make their dollar stretch as much as they can which is another reason why they go into the perimeter of store to make scratch meals et cetera, they see them as healthier, but they also season is cheaper and so I think both of these kind of you started with the snacking segment them in and just more broadly.

Speaker Change: The progression of demand in Europe.

Speaker Change: The balance of the year I guess, how are you sort of take you through the scenarios there and is there is there incremental.

Speaker Change: Investments.

Speaker Change: They may have to be.

Speaker Change: You put into place in Europe, as well as the year goes on to offset some of that demand weakness.

Speaker Change: What we're seeing in our own categories as consumers are sort of blending both and it's hard to parse them apart.

Steve Powers: Thanks, Steve.

Speaker Change: In Europe specifically.

Speaker Change: Let me step back we do a lot of proprietary research throughout the year.

Speaker Change: Great. Thanks, very much I'll leave it there.

Speaker Change: Okay.

Speaker Change: Frequently throughout the year and were.

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

Speaker Change: Trying to understand consumer sentiment.

Speaker Change: Not only with cooking and shopping and value.

Steve Powers: Hey, everybody good morning, Thank you.

Speaker Change: Good morning, Todd.

Speaker Change: <unk> et cetera, many other top many topics, but we do this.

Speaker Change: I was hoping you can talk a little bit more about what you're seeing in Europe and I.

Speaker Change: Almost every quarter and that helps us understand what the sentiment of the consumer is especially let's say comparing Europe to the U S.

Speaker Change: I guess in the EMEA segment as it relates to consumer.

Speaker Change: Volume growth there as well this quarter.

Speaker Change: S or other big markets that we operate in.

Speaker Change: You've got some pricing coming through because of the commodity backdrop, but at the same time you cited.

Speaker Change: What's striking to US is the similarity that we're seeing.

Speaker Change: From a U S consumer sentiment broadly with Europeans and so very similar trends in terms of.

Speaker Change: Other CTG.

Speaker Change: Companies in Europe kind of facing.

Speaker Change: Parallel apparel dynamics as we're seeing here in the U S with consumer weakness so as you think about that.

Speaker Change: I'm cooking scratched from scratch more often a meeting at home more often.

Speaker Change: Then I did.

Speaker Change: The progression of demand in Europe.

Speaker Change: For value.

Speaker Change: Overall, we see growth of discounters.

Speaker Change: The balance of the year I guess, how are you sort of take you through the scenarios there and is there is there incremental.

Speaker Change: As an example of that.

Speaker Change: We're gaining distribution.

Speaker Change: We also see performance.

Speaker Change: Investments.

Speaker Change: Commerce really accelerating too so people are looking for sort of that convenience overall and thats accelerating quite nicely in that marketplace. So.

Speaker Change: They may have to be.

Speaker Change: Did you put into place in Europe, as well as the year goes on to offset some of that demand weakness.

Speaker Change: We're seeing somewhat of a similar.

Steve Powers: Thanks, Steve.

Speaker Change: In Europe specifically.

Speaker Change: Sort of parallel if you will.

Speaker Change: Let me step back we do a lot of proprietary research throughout the year.

Speaker Change: Behaviors and sentiment.

Speaker Change: Frequently throughout the year and were.

Speaker Change: From a consumer standpoint.

Speaker Change: But inflation is just as high there as it would be here in the U S and so that's coming through in the data that we're looking at so I don't know that I can pinpoint something uniquely different in Europe that that's happening in the U S right now.

Speaker Change: Trying to understand consumer sentiment.

Speaker Change: Not only with cooking and shopping and value.

Speaker Change: Relation et cetera, many other top many topics, but we do this.

Speaker Change: Almost every quarter and that helps us understand what the sentiment of the consumer is especially let's say comparing Europe too.

Speaker Change: Okay.

Speaker Change: Maybe if I could just follow up so the is there as we see net.

Speaker Change: S or other big markets that we operate in.

Positive pricing flowing through your business.

Speaker Change: What's striking to US is the similarity that we're seeing.

This quarter and over the course of the year as expected.

Speaker Change: From a U S consumer sentiment broadly with European and so very similar trends in terms of.

Speaker Change: Is that.

Speaker Change: What we're really seeing and there is sort of commodity based pricing offset by.

Speaker Change: I'm cooking it scratched from scratch more often on eating at home more often.

Speaker Change: Promotional investments and the like or.

Speaker Change: Yes, and value not quite is not quite as strong as the U S. Despite those dynamics.

Speaker Change: Then I did.

Speaker Change: For value overall, we see growth of discounters.

Speaker Change: Yes, the commodity inflation that we're experiencing is not broad based it's very targeted and specific items and so.

Speaker Change: As an example of that.

We're gaining distribution in.

Speaker Change: We also see performance of e-commerce really accelerating too so people are looking for sort of that convenience.

Speaker Change: As you know like we for example, we have a homemade dessert business in France. So.

Speaker Change: Overall, and thats accelerating quite nicely in that marketplace. So.

Speaker Change: The very specific items are receiving some inflation there and so think about this quite targeted but still having said that we're focused on making sure that we have the right price points on shelf.

Speaker Change: We're seeing somewhat of a similar.

Speaker Change: Sort of parallel if you will.

Speaker Change: Yes.

Speaker Change: Behaviors and sentiment from a consumer standpoint, the worry of inflation is just as high there as it would be here in the U S and so.

Speaker Change: It isn't necessarily true promotions only but it's also true to sort of that.

Speaker Change: Making sure like price gap management.

Speaker Change: So that's coming through in the data that we're looking at so I don't know that I can pinpoint something uniquely different in Europe that that's happening in the U S right now.

Speaker Change: But we're getting to the right price point on the shelf, but I do want to illustrate that more of a targeted issue from a commodity standpoint, not broad based.

Speaker Change: Understood. Thank you so much.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Maybe if I could just follow up so the is there as we see net.

Speaker Change: Our next question is from the line of Tom Palmer with Citi. Please proceed with your question.

Speaker Change: Positive pricing flowing through your business.

Tom Palmer: Good morning, and thanks for that.

Speaker Change: This quarter and over the course of the year as expected.

Speaker Change: <unk>, maybe just to start out I wanted to clarify an element of Ken's question from earlier.

Speaker Change: Is that.

Speaker Change: What we're really seeing and there is sort of commodity based pricing offset by.

Speaker Change: Appreciate the sales momentum and the expectation for gross margin to build as the year progresses.

Speaker Change: Promotional investments and the like or.

Speaker Change: But I wanted to just clarify on <unk>.

Speaker Change: The.

Speaker Change: Yes, and value not quite is not quite as strong as the U S. Despite those dynamics.

Speaker Change: SG&A given some of the timing items that were called out in <unk> I think traditionally.

Speaker Change: Yes, the commodity inflation that we're experiencing is not broad based it's very targeted and specific items and so.

Speaker Change: SG&A dollars in the second quarter are quite a bit higher than we see in the first quarter does this still hold next year or was there enough pull forward of some of these items into <unk> that will be a bit more balance.

Speaker Change: As you know likely for example, we have a homemade dessert business in France, so they're very specific items start receiving some inflation there and so think about this quite targeted but still having said that we're focused on making sure that we have the right price points on shelf.

Speaker Change: And it is going to be balanced between Q1, and Q2 should look at those two quarters together, Tom as you think about the SG&A line.

Speaker Change: There is a shifting to Q1 and negative shifting to pier one as I explained, but thats going to be a tailwind into Q2.

Speaker Change: It isn't necessarily true promotions only but it's also true in the just sort of that.

Speaker Change: Making sure like price gap management that we're getting to the right price point on the shelf, but I do want to illustrate that more of a targeted issue from a commodity standpoint, not broad based.

Speaker Change: Brand marketing technology, we will continue across both quarters. So Q1, you saw some of that although it would be more heavily than anticipated, but it is going to come back in Q2 as well we're going to continue to invest on the back of those two items. So.

Speaker Change: Understood. Thank you so much.

Speaker Change: Sure.

Speaker Change: I would look at it is the combination of Q1 and Q2 for a more of a normalized view on SG&A.

Speaker Change: Our next question is from the line of Tom Palmer with Citi. Please proceed with your question.

Speaker Change: Good morning, and thanks for the question, maybe just to start out I wanted to clarify an element of Ken's question from earlier.

Speaker Change: Okay. Thank you.

Speaker Change: And I wanted to ask on Canada, we've seen headlines about weaker sales for U S. Brands are you seeing any of that at this point and just any refresher on your exposure to Canada. Thank you.

Speaker Change: Appreciate the sales momentum and the expectation for gross margin to build as the year progresses, but I wanted to just clarify on SG&A given some of the timing items that were called out in <unk> I think traditionally.

Speaker Change: In Canada, we actually had a really just like in the U S are really robust quarter in terms of consumption that performance there.

Speaker Change: G&A dollars in the second quarter are quite a bit higher than we see in the first quarter.

Speaker Change: And I'm familiar with what.

Speaker Change: You're referring to in terms of what we've seen written in the press.

Speaker Change: This still hold next year or was there enough pull forward of some of these items into <unk> that will be a bit more balance.

Speaker Change: But currently we're not experiencing any sort of difficulties there.

Speaker Change: Honestly it just as we look at our performance from our consumption and sales standpoint.

Speaker Change: And it is going to be balanced between Q1, and Q2 should look at those two quarters together, Tom as you think about the SG&A line.

Speaker Change: We're pretty happy with it.

Speaker Change: Okay. Thank you.

Speaker Change: There is a shifting to Q1 and negative shifting to pier one as I explained, but that's going to get tailwind into Q2.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: Our final question is from the line of Matt Smith with Stifel. Please proceed with your question.

Speaker Change: Brand marketing technology will continue across both quarters. So Q1, you saw some of that a little bit more heavily than anticipated, but it is going to come back in Q2 as well we're going to continue to invest on the back of those two items. So.

Matt Smith: Hi, Good morning, I wanted to follow up on America's curious our trends are curious are trends more broadly you called out traffic weak or weaker traffic trends, but volumes were actually up can you talk about the drivers of growth that more than offset that traffic weakness in your expectation for the rest of the year in terms of industry traffic trends and your ability to out.

Speaker Change: I would look at it is the combination of Q1 and Q2 for a more of a normalized view on SG&A.

Speaker Change: Okay. Thank you.

Matt Smith: Pace the industry traffic.

Some of the limited time offers and menu benefits more short term or do those continue and allow you to outperform.

Matt Smith: Traffic trends, we're seeing for kyocera. Thank you.

Matt Smith: We've often described this business is lumpy.

Speaker Change: In Canada, we actually had a really just like in the U S are really robust quarter in terms of consumption and performance there.

Matt Smith: <unk> ability to quarter to quarter and.

Matt Smith: One of the variables that drives that is things like customer promotions and limited time offers because they may not they may or may not continue.

Speaker Change: And I'm familiar with what.

Speaker Change: You're referring to in terms of what we've seen written depressed.

Speaker Change: But currently we're not experiencing any sort of difficulties there.

Matt Smith: For either a short period of time for a long period of time difficult for us.

Speaker Change: Honestly it just as we look at our performance from our consumption and sales standpoint work.

Matt Smith: To fully predict but that is one element in terms of what we saw is just particularly when you think about in Asia Pacific just a lot more heightened activity in fact, I would say <unk> niche specific have been doing.

Speaker Change: We're pretty happy with it.

Speaker Change: Okay. Thank you.

Speaker Change: Yes.

Speaker Change: Thank you.

Speaker Change: A final question is from the line of Matt Smith with Stifel. Please proceed with your question.

Matt Smith: Pretty well for the last couple of quarters, and so they've been growing stores, but also.

Speaker Change: Hi, Good morning, I wanted to follow up on America's curious our trends are curious are trends more broadly you called out traffic weak or weaker traffic trends, but volumes were actually up can you talk about the drivers of growth that more than offset that traffic weakness in your expectation for the rest of the year in terms of industry traffic trends and your ability to out.

Matt Smith: Accelerating on traffic overall in fact, I think the store growth itself is one other contributor to overall performance there, which is not the same store sales type.

Matt Smith: Metric.

Matt Smith: Overall.

Matt Smith: The other items that if we win more business or we get innovation that becomes incremental to the prior year and so.

Speaker Change: Pace the industry traffic.

Speaker Change: Some of the limited time offers and menu benefits more short term or do those continue and allow you to outperform.

Matt Smith: That enables one to sort of overcome whatever might be the trends with traffic going on in the industry. So.

Speaker Change: The traffic trends, we're seeing for kyocera. Thank you.

Matt Smith: We saw more of that happen.

Speaker Change: We've often described this business is lumpy.

Matt Smith: The Americas region.

Matt Smith: And that is an example of something that isn't necessarily short term, but rather it is something that sort of.

Speaker Change: Variability quarter to quarter.

Speaker Change: And one of the variables that drives that is things like customer promotions and limited time offers because they may not they may or may not continue.

Matt Smith: Continuing to sort of improve our sales mix by either winning new customers or getting new products.

Matt Smith: Overall or selling them new products. If you will so thats the other context, there which is equivalent to gaining share if you will.

Speaker Change: For either a short period of time for a long period of time difficult for us.

Speaker Change: To fully predict but that is one element in terms of what we saw is just particularly when you think about in Asia Pacific.

Matt Smith: Okay.

Matt Smith: Thank you Brendan I'll pass it on.

Matt Smith: Sure.

Speaker Change: Thank you I'll now turn the call back to Brendan Foley for closing remarks.

Speaker Change: A lot more heightened activity in fact.

Speaker Change: I'd say <unk> niche specific have been doing.

Matt Smith: Okay.

Speaker Change: Pretty well for the last couple of quarters, and so they've been growing stores, but also.

Matt Smith: Thank you all for joining today's call. If you have any further questions regarding today's information. Please feel free to contact me. This concludes our conference call for this morning.

Speaker Change: Accelerating on traffic overall in fact, I think the store growth itself is one other contributor to overall performance there, which is not the same store sales type.

Speaker Change: Metric.

Speaker Change: Overall.

Speaker Change: The other items that if we win more business or we get innovation that becomes incremental to the prior year and so.

Speaker Change: That enables one to sort of overcome whatever might be the trends with traffic going on in the industry. So.

Speaker Change: We saw more of that happen.

Speaker Change: The Americas region.

Speaker Change: And that is an example of something that isn't necessarily short term, but rather.

Speaker Change: Net.

Speaker Change: Continue to sort of improve our sales mix by either winning new customers or getting new products.

Speaker Change: Overall or selling them new products. If you will so that's the other context, there which is equivalent to gaining share if you will.

Speaker Change: Okay.

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

Speaker Change: Sure.

Thank you I'll now turn the call back to Brendan Foley for closing remarks.

Speaker Change: Okay.

Speaker Change: Thank you all for joining today's call. If you have any further questions regarding today's information. Please feel free to contact me. This concludes our conference call for this morning.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Good morning. This is Boston Huh VP of Investor Relations. Thank you for joining today's first quarter earnings call to accompany this call. We've posted a set of slides on our IR website, IR and Don Mccormack Dot Com with me. This morning are Brendan Foley, Chairman, President and CEO, and Michael Gabriel Executive Vice President and CFO.

Speaker Change: Our comments certain percentages are rounded please refer to our presentation for complete information today's presentation contains projections and other forward looking statements actual results could differ materially from those projected the company undertakes no obligation to update or revise publicly any forward looking statements, whether because of new information.

Speaker Change: Future events or other factors. Please refer to our forward looking statements on slide two for more information I'll now turn the discussion over to Brendan.

Brendan Foley: Good morning, everyone and thank you for joining US we're pleased to start the year with solid first quarter results that are in line with our expectations. Our performance continues to demonstrate the success of our prioritized investments.

Brendan Foley: Areas that we believe will continue to drive the most value and sustaining our momentum for the remainder of 2025 and beyond Mccormick remains a growth oriented company with robust plans that leverages the demand for flavor and the strength of our brands.

Brendan Foley: Our strategies have proven to be effective by driving growth and compounding that growth over the years with our strategies and best in class leadership, we are well positioned to continue on our trajectory and deliberate on our near term and long term objectives with industry leading performance.

Brendan Foley: This morning, I will begin my remarks, with an overview of our first quarter results focusing mostly on topline drivers next I will review, how Mccormick is positioned relative to an evolving consumer landscape.

Brendan Foley: And then I will highlight some areas of success and the areas. We continue to work on as well as our growth plans Marcos.

Brendan Foley: Marcos will then go into more depth on the first quarter results and review, our 2025 outlook and finally before your questions I will have some closing comments.

Brendan Foley: Turning now to our results on slide four.

Marcos: In the first quarter total organic sales increased by 2%, primarily driven by volume and product mix growth and partially offset by pricing in line with our expectations.

Marcos: Global consumer organic sales growth was volume led demonstrating continued momentum across key markets. We delivered robust volume growth in all three regions. This sustained growth is supported by investments across our core categories, including innovative brand marketing accelerated innovation aligned with consumer.

Marcos: <unk> expanded distribution and robust category management initiatives.

Marcos: In EMEA, we took selective pricing actions to cover rising commodity costs and still maintain volume momentum.

Marcos: For the year to go we expect price in our global consumer segment to be flat.

Marcos: Now to the global flavor solutions segment, where organic sales growth was also volume wise, we delivered sequential volume improvement relative to the fourth quarter and are pleased with our results volume growth was driven by continued execution of our strategic priorities and flavors amid a challenging customer environment.

Marcos: We're growing customers, partially offset larger CPG customers softness in addition give us our customer performance improved in Asia Pacific and the Americas led by innovation.

Marcos: Furthermore, across Asia Pacific, including China, We delivered strong volume growth as we partnered with <unk> customers on new products and limited time offers.

Marcos: Assistant with prior years, we expect flavor solutions volume growth fluctuate quarterly due to timing of customer activities. However on a full year basis, we continue to expect to deliver positive volume growth.

Marcos: From a profitability perspective, we delivered results in line with our expectations as.

Marcos: As the first quarter was impacted by increased investments in marketing and technology as well as the timing of stock based compensation expense that shifted relative to the prior year.

Marcos: As we look to the year ago period, we remain confident in our operating income and earnings growth outlook on a constant currency basis.

Marcos: Moving now to the macro environment, including the current state of the consumer.

Marcos: There is increasing consumer uncertainty and concern over returning to more inflation and this has impacted consumer sentiment, particularly in the last month.

This prolongs the consumer context of 2024, where consumers, especially lower income consumers are more cautious exhibiting more value seeking behavior and tightening their budgets as many are worried about the future job security and rising costs. We are seeing this not just in the U S, but across our key markets.

Marcos: At the same time, we're all witnessing shifts in consumer preferences. They are becoming more health conscious and this trend has continued to gain momentum. They are cooking at home more often increasingly shopping a perimeter for protein and produce as we look at growth in edible categories unit growth is primarily driven by these perimeter categories.

Marcos: Healthier and better for you trends as well as the desire to stretch budgets are fueling our continued interest in cooking from scratch reinforcing the demand for flavor and for mccormick's categories spices, and seasonings remained the top growing center store category.

Marcos: As a result consumption trends in our business remained strong ultimately we expect the global consumer segment to continue to benefit from these secular trends and we have the plans in advantaged portfolio to capitalize on them.

Marcos: And in our flavor solutions segment, we continue to partner with customers to launch new products will reformulate existing ones to fit healthier lifestyles.

Marcos: The more our exposure to faster growing customers allows us to win in several high growth categories, many of which are benefiting from the trends towards healthier eating.

Marcos: We believe we have the right plans in place and we remain well positioned to capitalize on secular trends and continue to drive differentiated long term growth across both of our segments.

Marcos: Let's move to slide five and let me highlight for the quarter some of the key areas of success.

Marcos: In the U S. The vast majority of our categories are growing unit share let me provide some color on the categories globally.

Marcos: Starting with spices, and seasonings in Americas, EMEA, and Asia Pacific, including China, We delivered strong volume growth in the U S. We drove unit volume share growth outpacing private label for the third consecutive quarter.

Marcos: In addition, we drove market share gains in Canada and China.

Marcos: And recipe mixes we continued the strengthening consumption trends in the Americas and drove unit and volume share gains in the first quarter.

Marcos: In the U S Mccormick gravy and chili recipe mixes were a significant growth driver as they deliver on the value and convenience consumers who are seeking.

Marcos: In addition, we are outpacing the total category in total new buyers as well as dollars per buyer in Canada, We drove dollar unit and volume share gains.

Marcos: And mustard, we've made great progress globally over the last four quarters and are pleased to see that our plans are driving great results.

Marcos: U S. We are gaining market share in France, the UK and Australia.

Marcos: We're also gaining distribution in high growth channels like discounters and E Commerce.

Marcos: In Asia Pacific our business in China is recovering gradually relative to the prior year as expected.

Marcos: Moving to flavor solutions, we saw strengthen our technically insulated high margin product category flavors.

Marcos: In flavors in the Americas, we remain focused on being the partner of choice across our four taste competencies savory key naturally suite and citrus improve.

Marcos: As a result of this continued focus we are winning new customers and gaining share.

Marcos: We outperformed the industry across many end categories, including alcoholic and non alcoholic beverages as well as snacking bars.

Marcos: Offsetting this is the softness we continue to see in larger CPG customer volumes.

Marcos: He was our trends improved in the Americas and in Asia Pacific and the Americas, We are continuing to drive innovation with our customers driving volume growth amid soft foot traffic in.

In China, and Australia, our customers new products and promotions are driving strong volume growth in southeast Asia volume growth benefited from our customers lapping the impact of geopolitical boycotts and the prior year.

Marcos: Let me now touch on some areas, where we are seeing some pressure.

Marcos: The foodservice environment remains challenged.

Our food away from home performance continues to outpace the industry, we are seeing flat performance in branded foodservice and the Americas.

Marcos: As well as some of our customers are seeing softness in their volumes due to a slowdown in foot traffic.

Marcos: Our growth levers are supported and enhanced through data and analytics as we continue to accelerate our digital transformation. 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.

Marcos: From flavor exploration to menu planning to shopping and cooking and even to eating and sharing the experience online.

Marcos: Through our efforts across multiple channels and by leveraging our digital capabilities we have.

Marcos: Frank Superbowl activation campaign with Paris Hilton was very successful, we gained new buyers and media and consumer sentiment was incredibly positive.

Marcos: Now over to Marcos.

Marcos: Thank you Brendan and good morning, everyone starting on slide eight our total organic sales grew 2% for the quarter.

Marcos: This increase was volume led with more than 2% volume and product mix growth, partially offset by pricing.

Marcos: Moving to our consumer segment on slide nine organic sales increased 1% as volume growth of 3% was partially offset by a 2% impact of pricing investments.

Marcos: <unk> organic sales in Americas was flat, 2% volume growth was offset by price investments volume.

Marcos: Volume growth was strong across our core categories and was driven by our investments in brand marketing innovation and category management.

Marcos: In terms of pricing the decline primarily reflects the price gap management investments that were mostly in place in the second quarter of 2024, as well as incremental and targeted promotional activity.

Marcos: In EMEA, we grew consumer organic sales 4%.

And by a 2% increase in volume and 2% increase in price.

Marcos: Volume growth was broad based across product categories in our major markets.

Marcos: We're pleased with the strong sustained volume growth in EMEA.

Brendan Foley: Brendan mentioned, we took selective pricing actions in EMEA to offset commodity costs.

Brendan Foley: Consumer organic sales in the Asia Pacific region increased 3% driven by a 2% increase in volume and a 1% contribution from price. This.

Brendan Foley: This growth reflects the gradual recovery, we expected in China.

Brendan Foley: Pleased with our performance and expect these trends to continue through 2025.

Speaker Change: Turning to our flavor solutions segment on slide 10, first quarter organic sales increased 3% driven by volume growth of 2% and a 1% contribution from price.

Speaker Change: In the Americas flavor solutions organic sales increased 4%, reflecting 3% price contribution and 1% volume growth.

Speaker Change: Our results reflect a strong performance with faster growing flavor customers any book too, it's hard belt, which were partially offset by sub CPG customer volumes.

Speaker Change: <unk> contribution is primarily related to currency in Latin America.

Speaker Change: In EMEA organic sales decreased by 4%.

Speaker Change: A 2% decline from price and a 2% impact of lower volume and product mix, reflecting the impact of soft CPG and kyocera customer's volume.

Speaker Change: In the Asia Pacific region flavor solutions organic sales increased 15% with volume growth of 16% driven by Kyocera customer promotions limited time offers as well as new product.

Speaker Change: Partially offset by pricing.

Speaker Change: Moving to slide 11, as expected gross profit margin expanded by 20 basis points in the first quarter versus a year ago period, driven primarily by the benefit from our comprehensive continuous improvement program or CCI.

Speaker Change: Selling general and administrative expenses or SG&A increased relative to the first quarter of last year, driven primarily by a shift in timing of stock based compensation expense from the second quarter into the first quarter as well as increased investments in technology and brand marketing as expected.

Speaker Change: For the quarter.

Speaker Change: <unk> operating income declined by 5%.

Speaker Change: The impact of currency adjusted operating income decreased by 3%.

Speaker Change: This decline was driven by the increased SG&A expenses I just mentioned.

Speaker Change: Our first quarter adjusted effective tax rate was 22%.

Speaker Change: Compared to 26% in the year ago period.

Speaker Change: Our tax rate.

Speaker Change: Last quarter benefited from discrete tax items.

Speaker Change: Our income from unconsolidated operations in the first quarter declined 18%, primarily due to the strengthening of the US dollar against the Mexican peso.

Speaker Change: Turning to our segment operational results on slide 12.

Speaker Change: Adjusted operating income in the consumer segment decreased 17% or 16% in constant currency.

Speaker Change: The decrease was primarily due to pricing and increased SG&A costs, including brand marketing and technology investments, partially offset by cost savings generated by our CCI program.

Q1 2025 McCormick & Company Inc Earnings Call

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