Q3 2026 McCormick & Co Inc Earnings Call

October 1, 2026

Speaker #1: Good morning. This is Fatin Freja, VP of Investor Relations. Thank you for joining today's third-quarter earnings call. To accompany this call, we've posted a set of slides on our IR website, ir.mccormick.com.

Faten Freiha: Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's Q3 earnings call. To accompany this call, we posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, Chairman, President, and CEO, and Marcos Gabriel, Executive Vice President and CFO. 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 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 #1: With me this morning are Brendan Foley, Chairman, President, and CEO; and Marcos Gabriel, Executive Vice President and CFO. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slides.

Speaker #1: In our comments, certain percentages are rounded. Please refer to our presentation for complete information. Today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected.

Speaker #1: The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or other factors. Please refer to our forward-looking statement on slide 2 for more information.

Faten Freiha: Please refer to our forward-looking statement on slide 2 for more information. I will now turn the discussion over to Brendan.

Speaker #1: I will now turn the discussion over to Brendan.

Speaker #2: Good morning, everyone, and thank you for joining us. Our third quarter demonstrates the resilience and differentiated performance of our flavor-centered business model in a dynamic environment.

Brendan Foley: Good morning, everyone, and thank you for joining us. Our Q3 demonstrates the resilience and differentiated performance of our flavor-centric business model in a dynamic environment. We delivered strong sales growth, margin expansion, and increased earnings, supported by solid base business performance and accretion from the McCormick de Mexico acquisition. Organic growth reflected in consumer momentum in EMEA and Asia Pacific and improving trends in Consumer Americas. Global Flavor Solutions delivered strong organic growth, though volumes were slightly below our expectations, reflecting cyclical customer demand patterns and a muted food industry environment. Our productivity initiatives and operational discipline are helping us manage higher input, freight, and other ongoing inflationary costs while expanding margins. This strengthens our capacity to continue investing in our brands, innovation, and capabilities, reinforcing sustainable growth and long-term value creation. Our fundamentals remain strong, supported by year-to-date results, advantage categories, and disciplined execution.

Speaker #2: We delivered strong sales growth, margin expansion, and increased earnings, supported by solid base business performance and accretion from the McCormick de México acquisition. Organic growth was reflected in consumer momentum in EMEA and Asia Pacific, with improving trends in Consumer Americas.

Speaker #2: Global Flavor Solutions delivered strong organic growth, though volumes were slightly below our expectations, reflecting cyclical customer demand patterns and a muted food industry environment.

Speaker #2: Our productivity initiatives and operational discipline are helping us manage higher input, freight, and other ongoing inflationary costs while expanding margins. This strengthens our capacity to continue investing in our brands, innovation, and capabilities.

Speaker #2: We are reinforcing sustainable growth and long-term value creation. Our fundamentals remain strong, supported by year-to-date results, advantage categories, and disciplined execution. We are confident in our ability to deliver on our 2026 outlook.

Brendan Foley: We are confident in our ability to deliver on our 2026 outlook. We remain confident in the strategic benefits of the proposed combination with Unilever Foods. Integration planning remains on track, and we continue to advance the work required to support a successful close and a strong transition. Turning now to our results on slide 4, focusing on the top line. In the Q3, total sales grew by 17% in constant currency, reflecting acquisition contribution from McCormick de Mexico and organic sales growth of 2%, reflecting growth across consumer and flavor solutions. In global consumer, volume trends improved relative to the Q2, reflecting continued momentum in EMEA and Asia Pacific and early benefits in the Americas from our targeted actions. While US category consumption is soft in select areas, our actions, including revenue growth management, value marketing, and innovation, alongside expanded distribution, are driving improvement.

Speaker #2: We remain confident in the strategic benefits of the proposed combination with Unilever Foods. Integration planning remains on track, and we continue to advance the work required to support a successful close and a strong transition.

Speaker #2: Turning now to our results on slide 4, focusing on the top line: In the third quarter, total sales grew by 17% in constant currency, reflecting acquisition contribution from McCormick de México and organic sales growth of 2%.

Speaker #2: Reflecting growth across Consumer and Flavor Solutions. In Global Consumer, volume trends improved relative to the second quarter, reflecting continued momentum in EMEA and Asia Pacific, and early benefits in the Americas from our targeted actions.

Speaker #2: While US category consumption is soft in select areas, our actions, including revenue growth management, value marketing, and innovation, alongside expanded distribution, are driving improvement.

Speaker #2: Importantly, the underlying business remains strong. Our categories are well positioned for long-term growth, and we have the capacity to continue investing behind our brands and growth initiatives.

Brendan Foley: Importantly, the underlying business remains strong. Our categories are well positioned for long-term growth, and we have the capacity to continue investing behind our brands and growth initiatives. In Global Flavor Solutions, organic growth reflected pricing and volume growth. Softer demand from CPG and QSR customers weighed on volume performance, with the Cyclospora outbreak impacting QSRs in the US. In EMEA, lower QSR foot traffic also pressured volumes. These factors were offset by strong performance in Asia Pacific, driven by new product launches and limited time offers with our QSR customers. Importantly, we delivered strong profit growth this quarter, supported by margin expansion and productivity initiatives, enabling continued investment in our long-term growth priorities. Let's move to slide 5, and let me highlight for the quarter some of the key areas of success. Starting with Global Consumer, we saw good consumption trends in select categories.

Speaker #2: In Global Flavor Solutions, organic growth reflected pricing and volume growth. Softer demand from CPG and QSR customers weighed on volume performance, with the Cyclospora outbreak impacting QSRs in the U.S.

Speaker #2: In EMEA, lower QSR foot traffic also pressured volumes. These factors were offset by strong performance in Asia Pacific, driven by new product launches and limited-time offers with our QSR customers.

Speaker #2: Importantly, we delivered strong profit growth this quarter, supported by margin expansion and productivity initiatives, enabling continued investment in our long-term growth priorities. Let's move to slide 5, and let me highlight for the quarter some of the key areas of success.

Speaker #2: Starting with Global Consumer, we saw good consumption trends in select categories. In herbs, spices, and seasonings, unit or volume share gains in Canada, France, Poland, and China continue to support global performance.

Brendan Foley: In herbs, spices, and seasonings, unit or volume share gains in Canada, France, Poland, and China continue to support global performance. In the US, as expected, we are seeing improving dollar and unit consumption trends. In recipe mixes in the UK and Australia, we drove unit and dollar share gains for the last three quarters, supported by expanded distribution and new customer wins. In mustard, US unit share gains were driven by enhanced distribution and promotional execution during the grilling season. Outside of the US, we continue to drive unit and dollar share gains in Poland and in the UK. In hot sauce, we continue to strengthen our position across key markets. In the US, we delivered dollar and unit share gains for the fourth consecutive quarter, led by Cholula's expanded distribution, continued base business momentum, and increased household penetration.

Speaker #2: In the U.S., as expected, we are seeing improving dollar and unit consumption trends. In recipe mixes, in the U.K. and Australia, we drove unit and dollar share gains for the last three quarters, supported by expanded distribution and new customer wins.

Speaker #2: In mustard, U.S. unit share gains were driven by enhanced distribution and promotional execution during the grilling season. Outside of the U.S., we continue to drive unit and dollar share gains in Poland and in the U.K.

Speaker #2: In hot sauce, we continue to strengthen our position across key markets. In the U.S., we delivered dollar and unit share gains for the fourth consecutive quarter, led by Cholula's expanded distribution, continued base business momentum, and increased household penetration.

Speaker #2: In Australia, Frank's and Cholula are gaining share, and we now hold a leading market position. In the UK, we also delivered unit and dollar share gains.

Brendan Foley: In Australia, Frank's and Cholula are gaining share, and we now hold a leading market position. In the UK, we also delivered unit and dollar share gains. These results reflect strong execution and continued brand momentum across key international markets. In Asia Pacific, we delivered strong results in China, particularly through our retail business. DaQiao, our chicken bouillon brand, continued to perform well, supported by expanded distribution, innovation, and brand marketing investments. McCormick de Mexico delivered robust volume-led quarterly growth, fueled by broad-based strength in the core mayonnaise and herbs and spices categories. Moving to flavor solutions. In flavors, customer innovation activity continued to support sales growth across large CPGs, private label, and high-growth innovators. We are seeing opportunities in functional beverage innovation, supplements, hydration, better-for-you snacks, premiumization, and customer diversification. In branded food service, we continue to see momentum across non-commercial channels, retail food service, and independent operators.

Speaker #2: These results reflect strong execution and continued brand momentum across key international markets. In Asia Pacific, we delivered strong results in China, particularly through our retail business.

Speaker #2: Dai Chow, our chicken bouillon brand, continued to perform well, supported by expanded distribution, innovation, and brand marketing investments. McCormick de México delivered robust, volume-led quarterly growth.

Speaker #2: Fueled by broad-based strength in the core mayonnaise and herbs and spices categories. Moving to flavor solutions, in flavors, customer innovation activity continued to support sales growth across large CPGs, private label, and high-growth innovators.

Speaker #2: We are seeing opportunities in functional beverage innovation, supplements, hydration, better-for-you snacks, premiumization, and customer diversification. In branded food service, we continue to see momentum across non-commercial channels, retail food service, and independent operators.

Speaker #2: Importantly, we delivered front-of-house share gains across Frank's, Cholula, French's, and McCormick. In Asia Pacific, we delivered strong volume growth that exceeded expectations, supported by new product launches and limited-time offers with QSR customers.

Brendan Foley: Importantly, we delivered front of house share gains across Frank's, Cholula, French's, and McCormick. In Asia Pacific, we delivered strong volume growth that exceeded expectations, supported by new product launches and limited time offers with QSR customers. Continued customer diversification should support solid volume growth for the balance of the year, though at a more normalized rate than in the third quarter. Let me now touch on some areas where we are seeing pressure and speak to the actions we are taking to address them. Starting with Global Consumer, US herbs, spices, and seasonings remain a growth category. Despite improving dollar and unit trends, we still have room to improve performance, especially in areas like cooking blends and gourmet. Performance also reflects a value-conscious consumer environment. Within certain segments of the category, consumption was pressured by increased seafood and beef prices.

Speaker #2: Continued customer diversification should support solid volume growth for the balance of the year, though at a more normalized rate than in the third quarter.

Speaker #2: Let me now touch on some areas where we are seeing pressure and speak to the actions we are taking to address them. Starting with Global Consumer, U.S. herbs, spices, and seasonings remained a growth category.

Speaker #2: Despite improving dollar and unit trends, we still have room to improve performance, especially in areas like cooking blends and gourmet. Performance also reflects a value-conscious consumer environment.

Speaker #2: Within certain segments of the category, consumption was pressured by increased seafood and beef prices. We are acting decisively to improve consumption and strengthen our competitive position.

Brendan Foley: We are acting decisively to improve consumption and strengthen our competitive position. For example, portfolio and assortment optimization to better serve distinct consumer needs and improve shelf productivity. Targeted pricing, promotional, and revenue growth management actions to reinforce value across key segments. Increased investment, including retailer search, holiday activation, precision marketing, and in-store execution. Continued scaling of high-growth platforms, including finishing salts and sugars, to create new usage occasions and drive incremental category growth. We have navigated similar consumer and competitive dynamics successfully in the past, and we are already seeing the positive impact of our actions in herbs, spices, and seasonings consumption. With these actions underway, we expect consumption trends to continue improving and strengthen share performance. In terms of volume shipments, we expect continued improvement in the Q4.

Speaker #2: For example, portfolio and assortment optimization to better serve distinct consumer needs and improve shelf productivity. Targeted pricing, promotional, and revenue growth management actions to reinforce value across key segments.

Speaker #2: Increased investment, including retailer search, holiday activation, precision marketing, and in-store execution, and continued scaling of high-growth platforms, including finishing salts and sugars, to create new usage occasions and drive incremental category growth.

Speaker #2: We have navigated similar consumer and competitive dynamics successfully in the past, and we are already seeing the positive impact of our actions in herbs, spices, and seasonings consumption.

Speaker #2: With these actions underway, we expect consumption trends to continue improving and to strengthen share performance. In terms of volume shipments, we expect continued improvement in the fourth quarter.

Speaker #2: In addition, in Consumer Americas, we are managing a short-term industry supply constraint on a specific type of packaging material. This may have a negative impact of up to one point on total company volume growth for the fourth quarter.

Brendan Foley: In addition, in Consumer Americas, we are managing a short-term industry supply constraint on a specific type of packaging material. This may have a negative impact of up to 1 point on total company volume growth for the Q4, potentially impacting the expected improvement in volume shipments. Our teams are working hard at mitigating its potential impact. In recipe mixes, performance reflected pressure in select segments, partially offset by improving trends in Mexican flavor and targeted pricing and promotional actions. We are confident that we are making progress to strengthen velocity across the core portfolio, expand consumer conversion behind McCormick Taco, and accelerate Cholula recipe mixes. Together, these actions are designed to improve near-term performance and build a stronger foundation for sustainable, profitable growth. Moving to Flavor Solutions. In the Americas, as I mentioned earlier, we experienced softer demand as macroeconomic pressure affected select CPG and QSR customers.

Speaker #2: Potentially impacting the expected improvement in volume shipments, our teams are working hard at mitigating its potential impact. In recipe mixes, performance reflected pressure in select segments.

Speaker #2: Partially offset by improving trends in Mexican flavor and targeted pricing and promotional actions. We are confident that we are making progress. To strengthen velocity across the core portfolio, expand consumer conversion behind McCormick Taco, and accelerate Cholula recipe mixes.

Speaker #2: Together, these actions are designed to improve near-term performance and build a stronger foundation for sustainable, profitable growth. Moving to Flavor Solutions, in the Americas, as I mentioned earlier, we experienced softer demand as macroeconomic pressure affected select CPG and QSR customers.

Speaker #2: In EMEA, QSR customer volumes, particularly in the UK, were pressured by softer foot traffic. We expect some of these trends to be sustained in the fourth quarter.

Brendan Foley: In EMEA, QSR customer volumes, particularly in the UK, were pressured by softer foot traffic. We expect some of these trends to be sustained in the Q4, as foot traffic with QSRs remains soft and consumers remain pressured. To help offset these pressures, we are focused on diversifying our customer base and working with existing customers on new products that align with evolving consumer flavor preferences and focus on value. Let me provide some context on the state of the consumer. Geopolitical volatility, elevated fuel costs, and persistent inflation continue to influence consumer confidence and spending. In the US, higher gas prices and the Cyclospora outbreak have added pressure and contributed to softer traffic across food service and grocery channels.

Speaker #2: As foot traffic with QSRs remains soft and consumers remain pressured, we are focused on diversifying our customer base and working with existing customers on new products that align with evolving consumer flavor preferences and focus on value to help offset these pressures.

Speaker #2: Let me provide some context on the state of the consumer. Geopolitical volatility, elevated fuel costs, and persistent inflation continue to influence consumer confidence and spending.

Speaker #2: In the US, higher gas prices and the cyclospora outbreak have added pressure and contributed to softer traffic across food service and grocery channels. Consumers continue to look for practical ways to manage their budgets, including using what's already in their pantry, repurposing leftovers, and thinking of simple, affordable ways to add flavor at home.

Brendan Foley: Consumers continue to look for practical ways to manage their budgets, including using what's already in their pantry, repurposing leftovers, and seeking simple, affordable ways to add flavor at home. At the same time, flavor exploration, health and wellness, and affordable indulgence remain important priorities, supporting demand for flavorful, convenient meal solutions across retail and food service. Within this environment, flavor remains a powerful constant. Consumers continue to cook at home as they seek affordable, healthier meal solutions, and flavor is the primary driver of purchase across occasions. The continued convergence of value-seeking behavior and health trends reinforces the central role of flavor and underscores our advantaged position across our flavor-focused portfolio. Let's turn to slide 6 and our growth plans, which support our confidence in delivering our top-line outlook for the year and improving volume performance.

Speaker #2: At the same time, flavor exploration, health and wellness, and affordable indulgence remain important priorities—supporting demand for flavorful, convenient meal solutions across retail and foodservice.

Speaker #2: Within this environment, flavor remains a powerful constant. Consumers continue to cook at home as they seek affordable, healthier meal solutions, and flavor is the primary driver of purchase across occasions.

Speaker #2: The continued convergence of value-seeking behavior and health trends reinforces the central role of flavor and underscores our advantaged position across our flavor-focused portfolio. Let's turn to slide 6 and our growth plans, which support our confidence in delivering our top-line outlook for the year and improving volume performance.

Speaker #2: Starting with Consumer, we recognize that the improvement in Consumer Americas will be more gradual, as certain categories are experiencing a more challenging demand environment.

Brendan Foley: Starting with consumer, we recognize that the improvement in Consumer Americas will be more gradual as certain categories are experiencing a more challenging demand environment. However, we continue to view these pressures as cyclical. Our categories remain fundamentally healthy, and we are focused on actions that strengthen consumption and position the business for sustainable growth. Ultimately, our priorities are clear: expanding distribution, accelerating portfolio renovation, and refining revenue growth management to address increased price sensitivity in select segments, including through optimized price pack architecture. We are also increasing innovation and brand marketing investment, including precision marketing and in-store activation, to build purchase intent and drive velocity across our core categories. These actions are designed to support an improvement in consumption trends as well as our shipments.

Speaker #2: However, we continue to view these pressures as cyclical. Our categories remain fundamentally healthy, and we are focused on actions that strengthen consumption and position the business for sustainable growth.

Speaker #2: Ultimately, our priorities are clear: expanding distribution, accelerating portfolio renovation, and refining revenue growth management to address increased price sensitivity in select segments, including through optimized price pack architecture.

Speaker #2: We are also increasing innovation and brand marketing investment, including precision marketing and in-store activation, to build purchase intent and drive velocity across our core categories.

Speaker #2: These actions are designed to support an improvement in consumption trends as well as our shipments. In Flavor Solutions, we expect the current pressures, particularly among certain QSRs in the Americas and the EMEA, and large CPG customers in the Americas, to persist through the balance of the year.

Brendan Foley: In flavor solutions, we expect the current pressures, particularly among certain QSRs in the Americas and EMEA and large CPG customers in the Americas, to persist through the balance of the year. At the same time, our customer innovation pipeline remains healthy with opportunities across large CPG customers, private label, and high-growth innovators. We are leveraging our R&D and product development capabilities to help customers address evolving health and wellness preferences, premiumization, and demand for differentiated flavor experiences. Finally, in branded food service, we expect to sustain the sales momentum we have seen year to date. The environment remains competitive and value conscious. This is why our targeted investments in menu placements innovation and disciplined execution are expected to drive growth across customer channels. Together, these initiatives reinforce our confidence in the resilience of our flavor-focused portfolio and our ability to deliver sustainable, profitable growth over time.

Speaker #2: At the same time, our customer innovation pipeline remains healthy, with opportunities across large CPG customers, private label, and high-growth innovators. We are leveraging our R&D and product development capabilities to help customers address evolving health and wellness preferences, premiumization, and demand for differentiated flavor experiences.

Speaker #2: And finally, in branded food service, we expect to sustain the sales momentum we have seen year-to-date. The environment remains competitive and value-conscious.

Speaker #2: This is why our targeted investments in menu placements, innovation, and disciplined execution are expected to drive growth across customer channels. Together, these initiatives reinforce our confidence in the resilience of our flavor-focused portfolio and our ability to deliver sustainable, profitable growth over time.

Speaker #2: Before turning it over to Marcos, I'd like to provide a brief update on the planned Unilever Foods transaction on slide 7. Integration planning is advancing on schedule and is increasingly validating the strategic and financial rationale for the combination.

Brendan Foley: Before turning it over to Marcos, I would like to provide a brief update on the planned Unilever Foods transaction on slide 7. Integration planning is advancing on schedule and is increasingly validating the strategic and financial rationale for the combination. Since announcing the transaction, we have made significant progress in preparing for the integration of Unilever Foods. We have established the planned future leadership team and operating model, mobilized a dedicated integration management office and cross-functional teams, and put global transition service agreements in place to support business continuity from day one. Detailed bottom-up planning has also provided a clear view of the synergy opportunity and the actions, ownership, timing, and resources required to deliver it post-close. Lastly, we have made strong progress on regulatory approvals, with filings submitted on schedule and clear momentum across jurisdictions, reinforcing our confidence in a timely closing.

Speaker #2: Since announcing the transaction, we have made significant progress in preparing for the integration of Unilever Foods. We have established the planned future leadership team and operating model.

Speaker #2: We mobilized a dedicated integration management office and cross-functional teams, and put global transition service agreements in place to support business continuity from day one. Detailed bottom-up planning has also provided a clear view of the synergy opportunity.

Speaker #2: And the actions, ownership, timing, and resources required to deliver it post-close. Lastly, we have made strong progress on regulatory approvals, with filings submitted on schedule and clear momentum across jurisdictions, reinforcing our confidence in a timely closing.

Speaker #2: We are excited about the opportunity to bring these two flavor-focused companies together, and look forward to sharing more of our integration plans as we approach close.

Brendan Foley: We are excited about the opportunity to bring these two flavor-focused companies together and look forward to sharing more of our integration plans as we approach close. At the same time, we remain fully focused on delivering on our standalone fiscal 2026 commitments as we prepare to unlock the growth capability and cost synergy benefits of the combination. Now, over to Marcos.

Speaker #2: At the same time, we remain fully focused on delivering stand-alone fiscal 2026 commitments, as we prepare to unlock the growth, capability, and cost synergy benefits of the combination.

Speaker #2: Now, over to Marcos.

Speaker #1: Thank you, Brandon, and good morning, everyone. Let's start on slide 9 and review our top-line results for the third quarter. Total net sales grew 17% in constant currency, and included 2% in organic growth, with the balance driven by acquisition contribution from McCormick & Mexico.

Marcos Gabriel: Thank you, Brendan, and good morning, everyone. Let's start on slide 9 and review our top-line results for Q3. Total net sales grew 17% in constant currency and included 2% in organic growth, with the balance driven by acquisition contribution from McCormick de Mexico. As we previously noted, we have substantially completed the integration of this acquisition. Moving to consumer segment on slide 10, constant currency sales increased 24%, including a 1% increase in organic sales with the remaining growth driven by acquisition contribution. Consumer organic sales in the Americas were flat, with pricing contribution of 2% offset by volume decline. The volumes were pressured by the macro environment. We saw declines across certain categories, which were partially offset by growth in core herbs and spices for the quarter. In EMEA, consumer organic sales grew 5%.

Speaker #1: As we previously noted, we have substantially completed the integration of these acquisitions. Moving to the consumer segment on slide 10, constant currency sales increased 24%, including a 1% increase in organic sales, with the remaining growth driven by acquisition contribution.

Speaker #1: Consumer organic sales in the Americas were flat, with a pricing contribution of 2%, offset by a volume decline. Volumes were pressured by the macro environment. We saw declines across certain categories, which were partially offset by growth in core herbs and spices for the quarter.

Speaker #1: In EMEA, consumer organic sales grew 5%, driven by a 2% increase in volume and a 3% contribution from pricing related to targeted actions taken as a result of increased commodity and freight costs.

Marcos Gabriel: Driven by a 2% increase in volume and a 3% contribution from pricing related to targeted actions taken as a result of increased commodity and freight costs. We're pleased with the sustained volume growth for the 11th consecutive quarter in EMEA. Consumer organic sales in the Asia-Pacific region increased by 4%. The increase was driven primarily by volume and reflects the continued gradual recovery in China. The strength in our retail business is more than offsetting the softness we continue to see in food service. Outside of China, we delivered strong volume growth across Australia and Southeast Asia. Turning to our Flavor Solutions segment on slide 11. Q3 constant currency sales grew by 6%, including 3% organic growth driven by price and volume. The remaining growth was driven by acquisition contribution. In the Americas, Flavor Solutions organic sales increased 3%, reflecting a 3% price contribution and flat volumes.

Speaker #1: We're pleased with the sustained volume growth for the 11th consecutive quarter in EMEA. Consumer organic sales in the Asia-Pacific region increased by 4%. The increase was driven primarily by volume and reflects the continued, gradual recovery in China.

Speaker #1: The strength in our retail business is more than offsetting the softness we continue to see in food service. Outside of China, we deliver strong volume growth across Australia and Southeast Asia.

Speaker #1: Turning to our Flavor Solutions segment on slide 11, third quarter constant currency sales grew by 6%, including 3% organic growth, driven by price and volume.

Speaker #1: The remaining growth was driven by acquisition contribution. In the Americas, Flavor Solutions organic sales increased 3%, reflecting a 3% price contribution and flat volumes.

Speaker #1: Volumes for the quarter were impacted by softer trends with QSR and CPG customers. In EMEA, organic sales were up 1%, driven by price offset by lower volume reflecting soft QSR customer volumes due to declining foot traffic, particularly in the UK.

Marcos Gabriel: Volumes for the quarter were impacted by softer trends with QSR and CPG customers. In EMEA, organic sales were up 1%, driven by price offset by lower volume, reflecting soft QSR customers volumes due to declining food traffic, particularly in the UK. In the Asia-Pacific region, Flavor Solutions organic sales increased by 8%, driven by strong volume growth of 10%, partially offset by price. The strong volume growth was driven by timing of new product innovation and limited time offers with our QSR customers in China and Southeast Asia. Moving to slide 12. Adjusted gross profit margin expanded 180 basis points in Q3, driven by accretion from McCormick de Mexico, as well as improvements in our base business, including pricing, savings from our comprehensive continuous improvement program, or CCI, partially offset by increased freight costs.

Speaker #1: In the Asia-Pacific region, flavor solutions organic sales increased by 8%, driven by strong volume growth of 10%, partially offset by price. The strong volume growth was driven by the timing of new product innovation and limited-time offers with our QSR customers in China and Southeast Asia.

Speaker #1: Moving to slide 12, adjusted gross profit margin expanded 180 basis points in the third quarter, driven by accretion from McCormick & Mexico, as well as improvements in our base business, including pricing and savings from our comprehensive continuous improvement program, or CCI, partially offset by increased freight costs.

Speaker #1: Selling, general, and administrative expenses, or SG&A, increased relative to the third quarter of last year, driven by the impact of consolidating McCormick & Mexico, as well as increased investments in technology and brand marketing.

Marcos Gabriel: Selling, general, and administrative expenses, or SG&A, increased relative to Q3 of last year, driven by the impact of consolidating McCormick de Mexico and increased investments in technology and brand marketing. As a percentage of sales, SG&A was 110 basis points higher compared to the prior year. For the quarter, adjusted operating income increased by 22%, or 21% in constant currency. This increase was driven by strong top-line growth and gross margin expansion, partially offset by higher SG&A. Our Q3 adjusted effective tax rate was 22.6% compared to 16.1% in the prior year, driven by a greater level of favorable tax items in the prior year. Turning to segment operational results on slide 13. Consumer adjusted operating income increased 24% with minimal impact from currency, with flat adjusted operating margins.

Speaker #1: As a percentage of sales, SG&A was 110 basis points higher compared to the prior year. For the quarter, adjusted operating income increased by 22%, or 21% in constant currency.

Speaker #1: This increase was driven by strong top-line growth and gross margin expansion, partially offset by higher SG&A. Our third quarter adjusted effective tax rate was 22.6%, compared to 16.1% in the prior year.

Speaker #1: Driven by a greater level of favorable tax items in the prior year. Turning to segment operational results on slide 13, Consumer adjusted operating income increased 24%, with minimal impact from currency.

Speaker #1: With flat adjusted operating margins, benefits from acquisition, accretion, and productivity initiatives were offset by increased inflation, higher logistics costs driven by Middle East conflict, tighter freight capacity resulting from recent changes to U.S. federal regulations, and continued brand marketing investments.

Marcos Gabriel: Benefits from acquisition accretion and productivity initiatives were offset by increased inflation, higher logistics costs driven by Middle East conflict, tighter freight capacity resulting from recent changes to US federal regulations, and continued brand marketing investments. Flavor Solutions adjusted operating income increased by 18%, or 16% in constant currency, and adjusted operating margin expanded by 120 basis points, reflecting top-line growth and our continued focus on improving Flavor Solutions profitability in line with our 2024 Investor Day commitment. At the bottom line, as shown on slide 14, Q3 2026 adjusted earnings per share was $0.86, up 1% compared to the year ago period, reflecting increased adjusted operating income partially offset by a higher tax rate. On slide 15, we have summarized highlights for cash flow and balance sheet.

Speaker #1: Flavor Solutions adjusted operating income increased by 18%, or 16% in constant currency, and adjusted operating margin expanded by 120 basis points, reflecting top-line growth and our continued focus on improving Flavor Solutions profitability in line with our 2024 Investor Day commitment.

Speaker #1: At the bottom line, as shown on slide 14, third quarter 2026 adjusted earnings per share was $0.86, up 1% compared to the year-ago period, reflecting increased adjusted operating income, partially offset by a higher tax rate.

Speaker #1: On slide 15, we've summarized highlights for cash flow and balance sheet. Cash flow from operations year-to-date was approximately $600 million, compared to $420 million in the prior year—driven primarily by higher profitability and improved working capital.

Marcos Gabriel: Cash flow from operations year to date was approximately $600 million compared to $420 million in the prior year, driven primarily by higher profitability and improved working capital. This strong cash generation enabled us to return $387 million of cash to shareholders through dividends and used $131 million for capital expenditures to expand capacity, advance digital transformation, and optimize our cost structure. We continue to expect strong performance in our cash flow from operations for the fiscal year. Our capital allocation priorities remain balanced. This means funding investments to drive growth, supporting our dividends, and maintaining a strong balance sheet. We remain committed to a strong investment-grade rating. At the end of this quarter, our leverage ratio was approximately 2.9 times. We expect to continue to make progress in paying down debt, positioning as well ahead of the Unilever Foods close.

Speaker #1: The strong cash generation enabled us to return $387 million of cash to shareholders through dividends and use $131 million for capital expenditures, to expand capacity, advance digital transformation, and optimize our cost structure.

Speaker #1: We continue to expect strong performance in our cash flow from operations for the fiscal year. Our capital allocation priorities remain balanced. This means funding investments to drive growth, supporting our dividends, and maintaining a strong balance sheet.

Speaker #1: We remain committed to a strong investment-grade rating. At the end of this quarter, our leverage ratio was approximately 2.9 times. We expect to continue to make progress in paying down debt, positioning us well ahead of the Unilever Foods close.

Speaker #1: As previously noted, at the close of Unilever Foods, we expect to have industry-leading operating margins of 21% and working capital benefits that support 100% free cash flow conversion from net income, before any synergies.

Marcos Gabriel: As previously noted, at close of Unilever Foods, we expect to have industry-leading operating margins of 21% and working capital benefits that support 100% free cash flow conversion from net income before any synergies. Post-close, we expect to continue investing in the business while driving margin expansion, delivering and supporting our dividend consistent with our history. Based on current estimates, after brand investments, costs to achieve synergies and dividends, we anticipate having $1.5 to $2 billion available to pay down debt within the first two years and delever two, three times. Longer term, we would target a leverage ratio of two to three times. Turning to Slide 16 to review our 2026 financial outlook, which remains broadly consistent with what we shared on our last earnings call. A few call-outs.

Speaker #1: Close, close. We expect to continue investing in the business while driving margin expansion, delivering and supporting our dividend consistent with our history. Based on current estimates, after brand investments, costs to achieve synergies, and dividends, we anticipate having $1.5 to $2 billion available to pay down debt within the first two years, and deliver two to three times.

Speaker #1: Longer term, we would target a leverage ratio of 2 to 3 times. Turning to slide 16 to review our 2026 financial outlook, we expect to remain broadly consistent with what we shared on our last earnings call.

Speaker #1: A few callouts: On organic growth, we expect full-year organic growth to reflect stable volumes and positive pricing contributions, primarily driven by Flavor Solutions.

Marcos Gabriel: On organic growth, we expect full-year organic growth to reflect the stable volumes and positive pricing contributions, primarily driven by Flavor Solutions. Overall, we expect organic growth to be between the low end and midpoint of our guidance range, including approximately a 30 basis point impact from the supply constraint mentioned earlier. On tariffs, our cost assumptions, primarily related to the global 10% tariff, remain unchanged based on the latest development and information available today. At this time, we do not expect Canadian tariffs to have a meaningful impact on this year's results. Moving to gross margin, year-to-date performance has exceeded our implied guidance, benefiting from accretion from McCormick de Mexico, the strong sales growth, as well as our productivity initiatives, including some that were pulled forward into the Q3.

Speaker #1: Overall, we expect organic growth to be between the low end and midpoint of our guidance range, including approximately a 30 basis point impact from the supply constraint mentioned earlier.

Speaker #1: Regarding tariffs, our cost assumptions—primarily related to the global 10% tariff—remain unchanged based on the latest developments and information available today. At this time, we do not expect Canadian tariffs to have a meaningful impact on this year’s results.

Speaker #1: Moving to gross margin, year-to-date performance has exceeded our implied guidance, benefiting from accretion from McCormick & Mexico, strong sales growth, as well as our productivity initiatives.

Speaker #1: Including some that were pulled forward into the third quarter. Looking at the full year, we now expect cost inflation of 6% to 7%, compared to our prior expectation of a mid-single-digit year-over-year increase.

Marcos Gabriel: Looking at the full year, we now expect cost inflation of 6% to 7%, compared to our prior expectation of a mid-single digit year-over-year increase. Despite this increase, we are maintaining our full-year expectations of 100 to 120 basis points of gross margin expansion versus 2025 and now expect to be at the high end of the range. For the Q4, we are implying some year-over-year margin compression as we expect rising commodity and freight costs, as well as commercial investments in Consumer Americas to impact gross margin. Overall, our implied guide reflects a dynamic cost environment while maintaining our commitment to invest for growth. Lastly, on operating income growth and earnings per share, we expect to be at midpoint of the range for the year. In addition, our implied guide for the Q4 reflects continued investments in technology, including our ERP implementation costs and brand marketing support.

Speaker #1: Despite this increase, we're maintaining our full-year expectations of 100 to 120 basis points of gross margin expansion versus 2025, and now expect to be at the high end of the range.

Speaker #1: For the fourth quarter, we're implying some year-over-year margin compression, as we expect rising commodity and freight costs, as well as commercial investments in Consumer Americas, to impact gross margin.

Speaker #1: Overall, our implied guide reflects a dynamic cost environment while maintaining our commitment to invest for growth. Lastly, on operating income growth and earnings per share, we expect to be at the midpoint of the range for the year.

Speaker #1: In addition, our implied guide for the fourth quarter reflects continued investments in technology, including our ERP implementation costs, and brand marketing support. These costs remain consistent with assumptions we initially included in our full-year guidance back in January of this year.

Marcos Gabriel: These costs remain consistent with assumptions we initially included in our full-year guidance back in January of this year. Earnings per share in the Q4 will be impacted by lacking a favorable tax rate in the prior year of 23.9%. To close, we remain confident in the long-term resilience of our business and our ability to deliver on our 2026 outlook. Through disciplined execution, targeted investments in our growth priorities, and continued productivity progress, we are well positioned to drive net sales and operating income growth while generating strong cash flow to support balanced capital allocation.

Speaker #1: Earnings per share in the fourth quarter will be impacted by the absence of a favorable tax rate in the prior year of 23.9%. To close, we remain confident in the long-term resilience of our business and our ability to deliver on our 2026 outlook.

Speaker #1: Through disciplined execution, targeted investments in our growth priorities, and continued productivity progress, we're well positioned to drive net sales and operating income growth, while generating strong cash flow to support balanced capital allocation.

Speaker #2: Thank you, Marcos. I would like to close with three key takeaways on slide 17. First, our differentiated performance, flavor-focused portfolio, and geographic footprint continue to provide resilience in a dynamic environment.

Brendan Foley: Thank you, Marcos. I would like to close with three key takeaways on Slide 17. First, our differentiated performance, flavor-focused portfolio, and geographic footprint continue to provide resilience in the dynamic environment. Q3 results reflect the strength of our base business, the contribution from McCormick de Mexico, and the benefit of a disciplined productivity and cost management. Second, we are actively managing through uneven category performance while investing to strengthen our competitive position. Our gross margin performance enables us to continue to invest in the business to drive top line growth and improve performance in Consumer Americas. Third, we are executing against a clear value creation agenda, delivering our 2026 commitments, investing behind advantage growth platforms, and planning for the Unilever Foods combination. Strong cash generation, a balanced capital allocation framework, and continued deleveraging provide the financial flexibility support both near-term execution and long-term profitable growth.

Speaker #2: Third quarter results reflect the strength of our base business, the contribution from McCormick & Mexico, and the benefit of disciplined productivity and cost management.

Speaker #2: Second, we are actively managing through uneven category performance while investing to strengthen our competitive position. Our gross margin performance enables us to continue investing in the business to drive top-line growth and improve performance in Consumer Americas.

Speaker #2: Third, we are executing against a clear value creation agenda, delivering our 2026 commitments, investing behind advantaged growth platforms, and planning for the Unilever Foods combination.

Speaker #2: Strong cash generation, a balanced capital allocation framework, and continued deleveraging provide the financial flexibility to support both near-term execution and long-term profitable growth. Finally, I want to thank all McCormick employees for their continued dedication, agility, and focus on delivering for our consumers, customers, and shareholders.

Brendan Foley: Finally, I want to thank all McCormick employees for their continued dedication, agility, and focus on delivering for our consumers, customers, and shareholders.

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

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone to indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for our first question. The first question today is from the line of Andrew Lazar, Barclays. Please proceed with your questions.

Speaker #1: You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: One moment, please, for our first question. The first question today is from the line of Andrew Lazar with Barclays. Please proceed with your questions.

Speaker #3: Great, thanks very much. Good morning, everybody.

Andrew Lazar: Great. Thanks very much. Good morning, everybody.

Speaker #2: Good morning.

Brendan Foley: Good morning.

Speaker #3: Brendan, Brendan, in consumer, both AMEA and APAC are performing well, as you talked about. Though you now look for a more gradual improvement in Americas volumes versus, let's say, your previous guidance, you made some very specific interventions in Q3 to sort of improve volume trends.

Andrew Lazar: Brendan, in consumer, both EMEA and APAC are performing well, as you talked about, though you now look for a more gradual improvement in Americas volumes versus, let us say, your previous guidance. You made some very specific interventions in Q3 to improve volume trends, and we saw some sequential improvement, but I think a bit slower than probably most were expecting. I guess my question is: How would you assess the success of those initial actions and what, if anything, do you need to do either differently or additionally in Q4 to continue to see more of that sequential improvement?

Speaker #3: And we saw some sequential improvement, but I think a bit slower than probably most were expecting. So I guess my question is, how would you assess the success of those initial actions and, sort of, what, if anything, do you need to do either differently or additionally in Q4 to continue to see more of that sequential improvement?

Speaker #2: Well, Andrew, thank you for the question. Yeah, I think if I provide just some context on how we looked at the third quarter, and maybe how we're looking at the fourth quarter too.

Brendan Foley: Well, Andrew, thank you for the question. Yeah, I think if I provide just some context on how we looked at Q3 and maybe how we are looking at Q4 too. We definitely saw improvement in our business, especially in Americas consumer, not only on shipments, but also consumption for the quarter. But definitely there were a lot of transitory issues that impacted the quarter. I think when we were walking out of Q2, I was expecting the consumer to largely be in a similar environment at that point in time for the rest of the back half. That is definitely not what happened, or at least what we saw. We saw softer category unit consumption.

Speaker #2: We definitely saw improvement in our business, especially in Americas consumer, not only on shipments but also consumption. For the quarter, there were definitely a lot of transitory issues that impacted the quarter.

Speaker #2: I mean, I think when we were walking out of the second quarter, I was expecting the consumer to largely be in a similar environment at that point in time for the rest of the back half.

Speaker #2: That's definitely not what happened, or at least what we saw. We saw softer category unit consumption. A good example might be in condiments and sauces, and some select other categories.

Brendan Foley: A good example might be in condiments and sauces and some select other categories. Higher beef and seafood prices, we think has definitely impacted probably parts of our recipe mix business and maybe some other items that we have that are connected with those proteins. Rising gas prices has definitely, we believe, drove increased price sensitivity for the consumer and therefore an increased focus on value. But our herb, spices, and seasonings business and recipe mix really sort of remain in a very competitive environment. We are going to continue to drive improvement as we look at Q4, especially in areas like cooking blends and our gourmet line as well as recipe mix.

Speaker #2: Higher beef and seafood prices—we think it definitely has impacted probably parts of our recipe mix business, and maybe some other items that we have that are connected with those proteins.

Speaker #2: Rising gas prices definitely, we believe, drove increased price sensitivity for the consumer and therefore an increased focus on value. But our herbs, spices, and seasonings business—and recipe mix—really sort of remained in a very competitive environment.

Speaker #2: And we're going to continue to drive improvement as we look at the fourth quarter, especially in areas like cooking blends and our gourmet line, as well as recipe mix.

Speaker #2: I would also say, in the third quarter, perhaps the implementation speed of everything that we're trying to do just wasn't as fast as we wanted it to be, as we're trying to coordinate plans with retailers, etc.

Brendan Foley: I would also say in Q3, perhaps the implementation speed of everything that we are trying to do, just was not as fast as we wanted it to, as we are trying to coordinate plans with retailers, et cetera. We had a lot of bright spots in Q3. As you said, great momentum in EMEA and Asia Pacific. But I would also say in the US, our US Red Cap business, which is also expressed as our core herb and spice portfolio, performed very well. It was performing well year to date. It performed even better in Q3, and we continue to see share gains within herb, spices, and seasonings, and strong unit volume coming from that. Then overall, we are performing well in areas like convenient fresh and seasoned salt and other innovation platforms that we have been launching.

Speaker #2: We had a lot of bright spots in the third quarter. As you said, there was great momentum in EMEA and Asia Pacific, but I would also say that in the US, our US red cap business—which is also expressed as our core herb and spice portfolio—performed very well.

Speaker #2: It was performing well year-to-date. It performed even better in the third quarter. And we continue to see share gains within herbs, spices, and seasonings, and strong unit volume coming from that.

Speaker #2: And then, overall, we're performing well in areas like Convenient Fresh and Seasoned Salt, and other innovation platforms that we've been launching. In addition, we're seeing share gains in hot sauce and mustard.

Brendan Foley: In addition, share gains in hot sauce and mustard. So there was a lot to be pleased with in terms of performance across the portfolio, but the areas that we really wanted to attack, we felt like we made the improvement, but the implementation speed, maybe not as great as we thought, and certainly a more pressured consumer. As I look to Q4, there are some things that are working well right now, and I would just give you some examples of just some of the levers that we are pulling that we talked about in Q2. They are certainly going to have more impact, I believe, in Q4. Price pack architecture has been a plus. We launched it on our Grill Mates line, also on our cooking blends line. So we are seeing, we believe, early improvement coming from that.

Speaker #2: So there was a lot to be pleased with in terms of performance across the portfolio. But the areas that we really wanted to attack—we felt like we made the improvement, but the implementation speed was maybe not as great as we thought.

Speaker #2: And certainly, a more pressured consumer. As I look to the fourth quarter, there are some things that are working well right now, and I would just give you some examples.

Speaker #2: Just some of the levers that we're pulling, that we talked about in the second quarter, are certainly going to have more impact, I believe, in the fourth quarter.

Speaker #2: Price pack architecture has been a plus. We launched it on our Growmates line, also on our Cooking Brands line, and so we're seeing, we believe, early improvement coming from that.

Speaker #2: And what it did was, it filled a price pocket that we felt like we weren't competing in. So, that was always in our innovation plan.

Brendan Foley: What it did was it filled a price pocket that we felt like we weren't competing in. That was always in our innovation plan. We're increasing our competitive spend on search. We're seeing just a lot more productivity coming from that, so that's having a really strong impact. I expect that to be even more powerful as we go into Q4, because the overall efficacy of the spend just continues to strengthen in that area. Then we're sharpening promotions and assortment across our categories. I would say more work remains on areas like cooking blends. We're seeing early improvement to our renovation that we launched in the H2. So I expect to see maybe more continued improvement there. The same is true on recipe mixes.

Speaker #2: We're increasing our competitive spend on search. We're seeing a lot more productivity coming from that, and so that's having a really strong impact.

Speaker #2: And I expect that to be even more powerful as we go into the fourth quarter, because the overall efficacy of the spend just continues to strengthen in that area.

Speaker #2: And then we're sharpening promotions and assortment across our categories. But I would say more work remains on areas like cooking blends. We're seeing early improvement to our renovation that we launched in the second half.

Speaker #2: So, I expect to see maybe more continued improvement there. And the same is true on recipe mixes. We're seeing good improvement in Mexican flavors, which is a specific, targeted area that we had in the third quarter.

Brendan Foley: We're seeing good improvement in Mexican flavors, which is a specific targeted area that we had in Q3. We now need to make sure that we sort of shore up the core strength behind the rest of the recipe mix line, and we have a number of initiatives to kind of help that. So I'll stop right there unless you want to dig further, but I wanted to give you some context of both the Q3 and the Q4.

Speaker #2: We now need to make sure that we sort of shore up the core strength behind the rest of the recipe mix line. And we have a number of initiatives to kind of help with that.

Speaker #2: So I'll stop right there, unless you want to dig further. But I wanted to give you some context for both the third and the fourth quarter.

Speaker #3: Yeah, that's helpful. I appreciate that context very much. Maybe just a very quick follow-up from Marcos. McCormick, obviously, is set to issue debt with the completion of the transaction.

Andrew Lazar: Yeah, that's helpful, and I appreciate that context very much. Maybe just a very quick follow-up for Marcos. McCormick obviously set to issue debt with the completion of the transaction, and rates have risen since the deal was first announced. How should investors think about exposure to higher rates, and does this impact expected accretion math at all? Thanks so much.

Speaker #3: And rates have risen since the deal was first announced. How should investors think about exposure to higher rates, and does this impact expected accretion math at all?

Speaker #3: Thanks so much.

Speaker #4: Yeah, no, thanks for the question, Andrew. I know this is on the minds of investors these days, so we are staying very close to market dynamics.

Marcos Gabriel: Yeah, no. Thanks for the question, Andrew. I know this is on the mind of investors these days, so we are staying very close to market dynamics as we continue to reevaluate our debt financial strategy. Based on the assumptions today, we're well positioned to deliver on the commitments that we made, both in terms of EPS accretion as well as delevering from 4x when we closed to down to 3x in two years, even with interest rate volatility. So we feel pretty confident about that. As we continue to evaluate the go-forward approach, we have a range of alternatives at our disposal. So I'm going to comment on three elements that are very important. Number one is currency mix. As we think about debt financing in the future, as a larger company, we now have the capacity to add other currencies to the mix.

Speaker #4: As we continue to evaluate our debt financing strategy, based on the assumptions today, we're well positioned to deliver on the commitments that we made, both in terms of EPS accretion, as well as delivering from four times when we closed down to three times in two years, even with interest rate volatility.

Speaker #4: So we feel pretty confident about that. As we continue to evaluate the go-forward approach, we have a range of alternatives at our disposal.

Speaker #4: So I'm going to comment on three elements that are very important. Number one is currency mix. As we think about that financing in the future, as a larger company, we now have the capacity to add other currencies to the mix.

Speaker #4: So, think about a mix of US dollar as well as euro-denominated debt, and that will help reduce the overall weighted average cost of funding.

Marcos Gabriel: So think about a mix of USD as well as euro-denominated debt, and that will help reduce overall weighted average cost of funding. The idea of adding currencies, we are looking into other markets as well, markets in which we have good presence and we expect it to generate substantial cash flows that we can add to that mix of basket of currencies. Currency is one. The second element is the fixed versus floating ratio that we are going to be using. We are right now evaluating the right mix between fixed and floating rates that will also help balance the cost and provide flexibility to manage interest rates. As we introduce floating rates, that helps lower near-term expenses. That is a place that we want to be, but we want to find the right balance between fixed and floating.

Speaker #4: The idea of adding currencies we'll look at into other markets as well—markets in which we'll have good presence. And we expect it to generate substantial cash flows that we can add to that mix or basket of currencies.

Speaker #4: So, currencies are one. The second element is the fixed versus floating ratio that we're going to be using. We are right now evaluating the right mix between fixed and floating rates.

Speaker #4: That will also help balance the cost and provide flexibility to manage interest rates. As we introduce floating rates, that helps lower near-term expenses, so that's a place that we want to be.

Speaker #4: But we want to find the right balance between fixed and floating. And then finally, I would say the maturity profile and the tenor of the debt.

Marcos Gabriel: Finally, I would say the maturity profile and the tenor of the debt. We are going to look at the very diversified maturities, likely staggered over the long term, and that approach will also help manage overall funding costs. So those are the three elements that we are looking into right now. Obviously, we are also looking into pre-issuance of hedging alternatives subject to market conditions, but it will depend on how the finance structure come along. But right now, we believe we have a very prudent plan in place and the right strategies to really preserve the earnings that we have outlined to you in terms of earnings per share, but also as well as the cash generation to pay down debt.

Speaker #4: We're going to look at the very diversified maturities, likely staggered over the long term. That approach will also help manage overall funding costs.

Speaker #4: So those are the three elements that we're looking into right now. Obviously, we're also looking into pre-issuance of hedging alternatives, subject to market conditions.

Speaker #4: But it will depend on how the finance structure comes along. But right now, we believe we have a very prudent plan in place and the right strategies to really preserve the earnings that we have outlined to you.

Speaker #4: And in terms of earnings per share, but also as well as the cash generation to pay down debt.

Speaker #3: Thanks so much.

Andrew Lazar: Thanks so much.

Speaker #1: The next question is from the line of Peter Galbo with Bank of America. Peter, please go ahead with your questions.

Operator: The next question is in the line of Peter Galbo with Bank of America. Please proceed with your questions.

Speaker #5: Hey, good morning. Thanks for taking the questions. Brendan, I'd like to go back to your commentary just around recipe mixes. You've made the interventions.

Peter Galbo: Hey, good morning. Thanks for taking the questions.

Brendan Foley: Sure.

Peter Galbo: Brendan, I would like to go back to your commentary just around recipe mixes. You have made the interventions, you have introduced the Cholula offering, I think, in Mexican, and it seems like it is starting to move in the right direction, but it still seems to be, I think, kind of the biggest thing holding you back from a volume perspective in the Americas consumer business. So, understanding there is more interventions to come, but just maybe you can give us a little bit more of a timeline in terms of how you are going to get that business back to bright. Again, as the rest of the portfolio in Americas continues to kind of hum along, that would seem to be holding you back a bit from something that could be a more volume-led story, which I think is what obviously you would like to try and get back to.

Speaker #5: You've introduced the Cholula offering, I think, in Mexican. And it seems like it's starting to move in the right direction, but it still seems to be, I think, kind of the biggest thing holding you back from a volume perspective in the Americas consumer business.

Speaker #5: And so, understanding there's more interventions to come, maybe you can give us a little bit more of a timeline in terms of how you're going to get that business back to bright.

Speaker #5: Again, as the rest of the portfolio in Americas continues to kind of hum along, that would seem to be holding you back a bit from something that could be a more volume-led story, which I think is what obviously you'd like to try and get back to.

Speaker #2: Well, yeah, thank you, Peter. In the context of recipe mix, here's where I would say that I definitely would say our recovery is probably going a little bit longer than what we would have expected.

Brendan Foley: Well, yeah. Thank you, Peter. The context for recipe mix, here is what I would say. I definitely would say our recovery is probably going a little bit longer than what we would have expected, but I think that the environment just reflects continued competitive activity, some retailer distribution changes, and just some value trade down that we have seen in select segments. Broadly, what we have seen within this last year is there is a demand shift in store shelf location, which impacted the category and our own performance. So we are seeing a lot of strong growth in the Mexican aisle. So that is where you will find a lot of products sort of dedicated to the sort of Mexican cuisine. But the great majority of our presence happens to be in another aisle.

Speaker #2: But I think that the environment just reflects continued competitive activity from retail and distribution changes, and some value trade-down that we've seen in select segments.

Speaker #2: Broadly, what we've seen within this last year is there is a demand shift in store shelf location, which impacted the category and our own performance.

Speaker #2: And so we're seeing a lot of strong growth in the Mexican aisle. So that's where you find a lot of products sort of dedicated to the sort of Mexican cuisine.

Speaker #2: But the great majority of our presence happens to be in another aisle. So we're seeing a ton of growth right now, certainly in that Mexican aisle.

Brendan Foley: So, where we are seeing a ton of growth right now, certainly in that Mexican aisle, certainly still some growth in the core aisle, but it is more demonstrable, I think, in the Mexican aisle. And we need to address that by being stronger in the Mexican aisle. And that is why, as you just noted, we are going to see even more increased focus behind Cholula as a brand, competing in that offering for consumers, but also restoring the strength of the core recipe mix aisle. So it is a two-pronged game for us. And our priority is to rebuild the velocity in the core portfolio and improve our customer conversion behind McCormick Taco and also accelerate Cholula recipe mixes. And that will be supported by increased retail media, improved shelf execution, and addressing just pricing and promotion gaps in key accounts.

Speaker #2: Certainly, there is still some growth in the core aisle, but it's more demonstrable, I think, in the Mexican aisle. And we need to address that by being stronger in the Mexican aisle.

Speaker #2: And that's why, as you just noted, we're going to see even more increased focus behind Cholula as a brand competing in that offering for consumers, but also restoring the strength of the core recipe mix aisle.

Speaker #2: So, it's a two-pronged game for us. Our priority, too, is to rebuild the velocity in the core portfolio and improve our customer conversion behind McCormick Taco. We also want to accelerate Cholula recipe mixes, and that will be supported by increased retail media, improved shelf execution, and addressing pricing and promotion gaps in key accounts.

Speaker #2: As I just mentioned, we're already seeing really good improvement in Mexican-flavored recipe mixes and positive unit volume, more recently. And it's supported by some of those tactics that I just mentioned.

Brendan Foley: As I just mentioned, we are already seeing really good improvement in Mexican-flavored recipe mixes and just positive unit volume more recently, and it is supported by some of those tactics that I just mentioned. We expect to start lapping what was just certainly prior year pricing and distribution headwinds as we get into early 2027. Having said that, I am not relying just on a comparison on consumption and share. We are really focused on just making sure that we fundamentally improve underlying consumption. That has been our plan. We feel like we are making the right progress on it right now, and I do expect continued, more gradual progress moving forward as we go into the first quarter of 2027.

Speaker #2: And we expect to start lapping what were just certain prior-year pricing and distribution headlines as we get into early 2027. But having said that, I'm not relying just on a comparison of consumption and share.

Speaker #2: We're really focused on making sure that we fundamentally improve underlying consumption, and that's been our plan. We feel like we're making the right progress on it right now.

Speaker #2: And I do expect continued, more gradual progress moving forward as we go into the first quarter of '27.

Speaker #5: Great. Okay, that's helpful, thanks. And maybe if we could touch a bit more on the packaging issue—I know you don't want to get into brand specifics around that—but again, as we all are tracking some of the Nielsen data and Sircana data, it's just clearly going to become apparent where it is.

Peter Galbo: Great. Okay. That is helpful. Thanks. Maybe if we could touch a bit more on the packaging issue. I know you do not want to get into brand specifics around that, but again, as we all are tracking some of the Nielsen data and Circana data, it is clearly going to become apparent where it is. So maybe you can just help us understand exactly what happened with the packaging supplier, what you are doing to rectify it, and maybe just what exactly happened, because it is a little bit unclear to me as we are trying to track recovery, what that might look like. Thanks very much.

Speaker #5: So maybe you can just help us understand exactly what happened with the packaging supplier, what you're doing to rectify it, and maybe just what exactly happened?

Speaker #5: Because it's a little bit unclear to me, as we're trying to track recovery, what that might look like. Thanks very much.

Speaker #2: Sure. Well, the issue affects a specific packaging component. It really mostly just affects us in Consumer Americas. There's no Flavor Solutions exposure to this.

Brendan Foley: Well, the issue affects a specific packaging component. It really mostly just affects us in Consumer Americas. There is no Global Flavor Solutions exposure to this, and it is not a commodity availability or a raw material issue. So our broader spice and seasoning sourcing is unaffected by this. Importantly, I would not call this a demand issue either. Overall, but it is really a packaging component and more of a conversion issue rather than the availability of material. As we work through that, and it tends to be, it is more of an industry issue, it is not just impacting us, but we plan to mitigate it with other packaging formats. So that is why we felt like it was prudent just to call it out as a potential short-term supply issue.

Speaker #2: And it's not a commodity availability or a raw material issue, so our broader spice and seasoning sourcing is unaffected by this. And, importantly, I would not call this a demand issue either.

Speaker #2: So overall. But it's really a packaging component. And more of a conversion issue rather than the availability of material. And so as we work through that, and it tends to be it's more of an industry issue.

Speaker #2: It's not just impacting us, but we plan to mitigate it with other packaging formats. That's why we felt it was prudent to call it out as a potential short-term supply issue.

Speaker #2: Just given the timing of this call and everything else, it just sort of—well, let's just make sure that we at least illustrate that it could happen.

Brendan Foley: Just given the timing of this call and everything else, it is just sort of, well, let us just make sure that we at least illustrate that it could happen. But we are really actively trying to mitigate it right now with different packaging formats and just rectifying what was more of a material conversion problem. So, that is about as far as we are going to go at this point, I think, in making sure that we illustrate it to everyone, but we will report more on it as we get into the Q4 call, in January.

Speaker #2: But we're really actively trying to mitigate it right now with different packaging formats and just rectifying what was more of a material conversion problem.

Speaker #2: So that's about as far as we're going to go at this point, I think, in making sure that we illustrate it to everyone. But we'll report more on it as we get into the Q4 call in January.

Speaker #5: Okay. Thank you.

Peter Galbo: Okay, thank you.

Speaker #1: The next question is from Tom Palmer with JP Morgan. Please just ask your questions.

Operator: The next question is in the line of Thomas Palmer with JP Morgan. Please proceed with your questions.

Speaker #3: Good morning. Thanks for the questions. The guidance and prepared remarks indicate input cost inflation has stepped up, but I don't think that's surprising for people on this call.

Thomas Palmer: Good morning. Thanks for the questions. The guidance and prepared remarks indicate input cost inflation has stepped up. I do not think that is surprising for people on this call. It is going to be more apparent here in Q4, and I think the implication is that it does have some earnings impact. Should we think about the cost pressures as kind of an enduring headwind as we move into 2027 that will continue to constrain earnings growth? Or is maybe when we look at Q4, there is a bit of timing where some of the mitigating actions do not take hold as fast as cost inflation steps up?

Tom Palmer: Good morning. Thanks for the questions. The guidance and prepared remarks indicate input cost inflation has stepped up. I do not think that is surprising for people on this call. It is going to be more apparent here in Q4, and I think the implication is that it does have some earnings impact. Should we think about the cost pressures as kind of an enduring headwind as we move into 2027 that will continue to constrain earnings growth? Or is maybe when we look at Q4, there is a bit of timing where some of the mitigating actions do not take hold as fast as cost inflation steps up?

Speaker #3: And it's going to be more apparent here in the fourth quarter, and I think the implication is that it does have some earnings impact.

Speaker #3: Should we think about the cost pressures as kind of an enduring headwind as we move into 2027, that will continue to constrain earnings growth?

Speaker #3: Or is it maybe when we look at Q4, there's a bit of timing where some of the mitigating actions don't take hold as fast as cost inflation steps up?

Speaker #4: Yeah, I can answer that, Tom. So yes, there are timing of expenses that shifted from Q3 into Q4. If I take a step back and comment on the gross margin for the year, I'll then get to your 2027 question as well.

Marcos Gabriel: Yeah, I can answer that, Tom. Yes, there are timing of expenses that shifted from Q3 to Q4. If I take a step back and comment on the gross margin for the year, then I will get to your 2027 question as well. If you take a step back, we came into the year with an expectation of 60 basis points gross margin expansion versus 2025. We are now expecting to deliver about 120 basis points. Even if you take tariff refunds out, which is about 35 basis points, it is still a significant gross margin expansion year over year, despite the very challenging cost environment that we are facing.

Speaker #4: I mean, if you take a step back, we came into the year with an expectation of 60 basis points gross margin expansion versus 2025.

Speaker #4: We're now expecting to deliver about 120 basis points. And even if you take tariff refunds out, which are about 35 basis points, it's still a significant gross margin expansion year over year, despite the very challenging cost environment that we are facing.

Speaker #4: So, I would say it is a testament to the resilience and strength of McCormick in terms of finding CCI and driving CCI to execution.

Marcos Gabriel: I would say it is the testament of the resilience, the strength of McCormick in terms of finding CCI and driving CCI to execution quickly over the last three quarters and be able to offset all this inflation that we are seeing come through. Year to date, we are about 180 basis points for the year, so that gives me confidence in the call of 120 basis points for the full year. It is reasonable, it is achievable. If you think about Q4, you got to look about Q4 and Q3 to get in tandem, because there was shift of expenses between Q3 and Q4. The best way of looking into Q3 and Q4 is really not in isolation one quarter, but putting them together and looking from a H2 perspective.

Speaker #4: Quickly, over the last three quarters, we've been able to offset all the inflation that we're seeing come through. Year to date, we are about 180 basis points for the year.

Speaker #4: So that gives me confidence in the call of 120 basis points for the full year. It is reasonable. It is achievable. Now, if you think about Q4, you've got to look at Q4 and Q3.

Speaker #4: To get intended, because there was a shift of expenses between Q3 and Q4. So the best way of looking into Q3 and Q4 is really not in isolation, one quarter, but putting them together and looking from a half two perspective.

Speaker #4: In Q3, we had a very positive performance from McCormick and Mexico, which drove accretion across the P&L. There was also a good contribution in terms of gross margin.

Marcos Gabriel: In Q3, we had a very positive performance from McCormick de Mexico, which drove accretion across the P&L, and that was a good contributor in terms of gross margin. Pricing and CCI were able to offset cost inflation. As I said, quite a bit of expenses got shipped into Q4. When you look at it is going to be a tailwind into Q4. A headwind, was a tailwind in Q3, it is going to be a headwind into Q4. If you think about Q4 specifically, in addition to that shift in cost from Q3 to Q4, we are facing more costs. We raised our guide to about 7% inflation, and we are facing more costs both in terms of raw packaging, but also freight. Primarily freight costs due to fuel as well as capacity constraints in the US. We are seeing more impacts on freight, specifically.

Speaker #4: But also, pricing and CCI were able to offset cost inflation. But as I said, quite a bit of expenses got shifted into Q4. And then, when you look at it, it's going to be a tailwind into Q4—a headwind that was a tailwind in Q3.

Speaker #4: It's going to be a headwind into Q4. If you think about Q4 specifically, in addition to that shifting cost from Q3 to Q4, we are facing more costs, and we raised our guide to about 7% inflation.

Speaker #4: And we're facing increased costs, both in terms of raw packaging materials and freight—primarily freight costs due to fuel prices as well as capacity constraints in the U.S.

Speaker #4: We're seeing more impacts on freight, specifically. So, in Q4 we'll see that. Also, we'll be investing some of the gross margin gains from the earlier part of the year— we're going to invest some in trade investments to drive volume improvements in the quarter.

Marcos Gabriel: Q4 will see that. Also we will be investing some of the gross margin gains in the earlier part of the year. We are going to invest some in trade investments to drive volume improvements in the quarter. But looking at it together, Q3 and Q4, margin expansion is about 60 basis points. That is how I would frame it for 2026. Going into 2027, obviously it is a little bit too early to talk about formal outlook for 2027. However, the environment has evolved meaningfully since we talked about it back in February. We will be able to provide an initial perspective when we report the Q4 results in January. As I look back into 2026, quite a few factors have been less favorable than we expected. Inflation, the freight aspect that I talked to about it, consumer pressure, and even more uneven demand environment.

Speaker #4: But looking at Q3 and Q4 together, margin expansion is about 60 basis points. So that's how I would frame it for 2026. Going into 2027, obviously, it's a little too early to talk about a formal outlook for 2027.

Speaker #4: However, the environment has evolved meaningfully since we talked about it back in February, and we'll be able to provide an initial perspective when we report the fourth quarter results in January.

Speaker #4: But as I look back into 2026, quite a few factors have been less favorable than we expected: inflation, the freight aspect that I talked about, consumer pressure, and an even more uneven demand environment.

Speaker #4: But as we look into 2027, our priority will be to drive sales growth and volume across the company while managing inflation. We do have a good CCI program in place.

Marcos Gabriel: As we look into 2027, our priority will be to drive sales growth and volume across the company, while managing the inflation. We do have a good CCI program in place. We expect inflation to actually to continue into next year, but we do have a very good CCI program in place that you saw hitting us, impacting us in Q3, over the last three quarters actually, very positively. That will continue into 2027. But we are seeing more headwinds for margins and earnings per share as we go into 2026. All to say that more to come. We are right into this discussion right now as we close the year looking into the outlook for 2027. But this is the first qualitative, I would say, comments that I can make about that.

Speaker #4: We expect inflation to actually continue into next year, but we do have a very good CCI program in place that you saw hitting us, impacting us in Q3.

Speaker #4: Over the last three quarters, actually, very positively. That will continue into 2027, but we'll see more headwinds for margins and earnings per share as we go into 2026.

Speaker #4: So, all to say that there is more to come. We're heading into this discussion right now as we close the year, looking into the outlook for 2027.

Speaker #4: But this is the first qualitative, I would say, comment that I can make about that.

Speaker #3: Thanks for all that detail. That was very helpful. Maybe just a follow-up on that topic. I think one of the areas of focus this year has been—and I think it's worked, right—is addressing some price gaps as a way to help stimulate volume.

Thomas Palmer: Thanks for all that detail. That was very helpful. Maybe just a follow-up on that topic. I think one of the areas of focus this year has been, and I think it's worked, is addressing some price gaps as a way to help stimulate volume. As you move into this more inflationary environment, how do you think about balancing the need to protect the P&L maybe with pricing actions versus maintaining that value-centric angle?

Tom Palmer: Thanks for all that detail. That was very helpful. Maybe just a follow-up on that topic. I think one of the areas of focus this year has been, and I think it's worked, is addressing some price gaps as a way to help stimulate volume. As you move into this more inflationary environment, how do you think about balancing the need to protect the P&L maybe with pricing actions versus maintaining that value-centric angle?

Speaker #3: As you move into this more inflationary environment, how do you kind of think about balancing the need to kind of protect the P&L, maybe with pricing actions versus maintaining that value-centric angle?

Speaker #2: I appreciate the question, Tom. Yeah, I would say what was true a few years ago—let's say pre-pandemic—really isn't true today. There hasn't been any reprieve on inflation.

Brendan Foley: I appreciate the question, Tom. I would say what was true a few years ago, let's say pre-pandemic, really isn't true today. There hasn't been any reprieve on inflation as we think about this over the last several years. The consumer has been more pressured and also hasn't seen relief. It does make for a challenging environment to recover on price. The way we're looking at it is it's important to maintain a durable business model and we're focused on this, but at the same time win with consumer value and maintain a very strong competitive posture on shelf. Building on what Marcos just said, we're looking to CCI, our productivity program, which frankly exceeded our plan this year. It's gotten a lot of focus from us. Revenue growth management would be another lever.

Speaker #2: As we think about this over the last several years, the consumer has been more pressured and also hasn't seen relief. And so, it does make for a challenging environment to recover on price.

Speaker #2: And so the way we're looking at it is, it's important to maintain a durable business model, and we're focused on this. But at the same time, we win with consumer value and maintain a very strong competitive posture on shelf.

Speaker #2: So, kind of building on what Marcus just said, we're looking to CCI our productivity program, which, frankly, exceeded our plan this year. It's gotten a lot of focus from us.

Speaker #2: Revenue growth management would be another lever. We're building this out with stronger technology and greater predictability, which allows us to be more precise. The third area I would say broadly is just to support brand superiority in our products.

Brendan Foley: We're building out this with stronger technology and greater predictability, which allows us to be more precise. The third area I would say broadly is just support brand superiority in our products. That's important to have at shelf, especially if you're going to have a premium versus private label and other brands. It's been challenging, I think over this period. We're proud of how we navigated it thus far, and we think what's enabled us to do this is just our scaled presence, having a portfolio focus on flavor operating in great categories. Also having strong capabilities like global sourcing and brand marketing. All of those sort of create this broad competitive advantage to be able to sort of deal with this.

Speaker #2: And that's important to have at shelf, especially if you're going to have a premium versus private label and other brands. So it's been challenging, I think, over this period.

Speaker #2: And we're proud of how we navigated it, I think, thus far. And we think what's enabled us to do this is just our scaled presence, having a portfolio focused on flavor, operating in great categories.

Speaker #2: And also, having strong capabilities like global sourcing and brand marketing. So, all of those sort of create this broad competitive advantage to be able to deal with this.

Speaker #2: But as Marcus just said, as we look ahead to 2027, and we have a continued inflationary environment—at least that's our current thinking.

Brendan Foley: As Marcos just said, as we look ahead to 2027 and we have a continued inflationary environment, at least that's kind of our current thinking, we're working through now how to plan for that. We're going to still try to balance that need to meet the consumer with where they are, but also maintain a durable business.

Speaker #2: We're working through now how to plan for that, and we're still going to try to balance the need to meet the consumer where they are, but also maintain a durable business.

Speaker #3: Great. Thank you.

Stephen Powers: Great. Thank you.

Tom Palmer: Great. Thank you.

Speaker #1: Our next questions are from Steve Powers with Deutsche Bank. Please proceed with your questions.

Operator: Our next question is in the line of Stephen Powers with Deutsche Bank. Please proceed with your questions.

Speaker #5: Okay, great. Good morning, guys.

Stephen Powers: Hey, great. Good morning, guys.

Steve Powers: Hey, great. Good morning, guys.

Speaker #2: Good morning.

Brendan Foley: Good morning.

Speaker #5: Different tactic. As I think about it, I think investors are very focused on the Unilever Foods business and where growth has been trending softer than envisioned at the time of deal announcement.

Stephen Powers: Different tactic. As I think about, I think investors are very focused on the Unilever food business, where growth has been trending softer than envisioned at the time of deal announcement. I guess, as you are planning for integration, obviously you are not in control of that business, but how confident are you that momentum can improve and be restored in that business before deal close? And how important is that recovery to realizing some of the growth synergies that were embedded in the transaction rationale?

Steve Powers: Different tactic. As I think about, I think investors are very focused on the Unilever food business, where growth has been trending softer than envisioned at the time of deal announcement. I guess, as you are planning for integration, obviously you are not in control of that business, but how confident are you that momentum can improve and be restored in that business before deal close? And how important is that recovery to realizing some of the growth synergies that were embedded in the transaction rationale?

Speaker #5: I guess as you're planning for integration, obviously you're not in control of that business, but how confident are you that momentum can improve and be restored in that business before deal close?

Speaker #5: And how important is that recovery to realizing some of the growth synergies that were embedded in the transaction rationale?

Speaker #2: Well, like you said, at this time it's difficult for us to comment on their business, since we're not really running it and don't have that sort of internal-level insight about how they're looking at it.

Brendan Foley: Well, like you said, this time it is difficult for us to comment on their business since we are not really running it and do not have that sort of internal level insight about how they are looking at it. But that part of the business, particularly in the United States, is feeling more than likely the very same pressures that we are seeing consumer face itself. I imagine that those are very similar to what we are calling out on our own business. And I expect they are probably going to be looking at very much the same sort of tactics and approach towards making sure they are getting back to volume growth as they historically have driven. That is pretty confident that the company has a view on remaining very competitive as it relates to volumes, but also trying to balance out what is going on in terms of input costs.

Speaker #2: But that part of the business, particularly in the United States, is feeling, more than likely, the same very same pressures that we're seeing consumers face at shelf.

Speaker #2: So I imagine that those are very similar to what we're calling out in our own business. And I expect they're probably going to be looking at very much the same sort of tactics and approach towards making sure they're getting back to volume growth, as they historically have driven.

Brendan Foley: And I expect they are probably going to be looking at very much the same sort of tactics and approach towards making sure they are getting back to volume growth as they historically have driven. That is pretty confident that the company has a view on remaining very competitive as it relates to volumes, but also trying to balance out what is going on in terms of input costs.

Speaker #2: So that's pretty confident that the company has a view on remaining very competitive as it relates to volumes, but also trying to balance out what's going on in terms of input costs.

Speaker #2: As we look ahead—and if the core or spirit of your question is: does it make me think differently about how we think about what underpins and what underwrites the strength of this combination?

Brendan Foley: As we look ahead and if the core or spirit of your question is, does it make me think differently about how we think about what underpins and what underwrites sort of the strength of this combination? It does not create, I think, an incremental level of concern. It is really all about continuing to sort of strengthen the business before we close, and then we get an opportunity to really dig into it. And I think work collaboratively with the leaders that will be combined with McCormick leaders, to really put forward just obviously a very strong and effective growth program. But as we go into 2027, we still have a lot that we have to sort out right now in terms of inflation and costs and where the consumer is going to be.

Speaker #2: It doesn't create, I think, an incremental level of concern. It's really all about continuing to sort of strengthen the business before we close, and then we get an opportunity to really dig into it.

Speaker #2: And I think we're collaborating with the leaders who will be combined with McCormick leaders to really put forward, obviously, a very strong and effective growth program.

Speaker #2: But as we go into 2027, we still have a lot that we have to sort out right now in terms of inflation and costs, and where the consumer is going to be.

Speaker #2: So, I think those are very similar questions that they're going to be trying to address as we do it at the same time. But I still have confidence, Steve, in our ability to drive growth behind this portfolio.

Brendan Foley: I think those are very similar questions that they are going to be trying to address as we do it at the same time. But I still have confidence, Steve, in our ability to drive growth behind this portfolio. Again, I would point to, we operate in really good categories. There is growth in these categories. We are fundamentally focused on flavor, and that is a key consumer need. But it is about short-term, there is going to be ups and downs, but over the long term, we really do believe in the growth of both of these businesses.

Speaker #2: Again, I would point out that we operate in really good categories. There's growth in these categories. They're fundamentally focused on flavor, and that is a key consumer need.

Speaker #2: But it is about the short term; there are going to be ups and downs. But over the long term, we really do believe in the growth of both of these businesses.

Speaker #5: Appreciate that. Thank you very much. And then, maybe a question for Marcus. It sounds like TSA planning and separation carve-out workstreams are progressing well.

Stephen Powers: Appreciate that. Thank you very much. Maybe a question for Marcos. It sounds like TSA planning and separation carve-out work streams are progressing well. I guess, is there any further you can go in terms of, I guess, more discretely defining TSA scope, duration of those agreements, cost of those agreements? Any more details that are available today, and if not today, I guess when do you think you might be able to add some of that specificity? Thank you.

Steve Powers: Appreciate that. Thank you very much. Maybe a question for Marcos. It sounds like TSA planning and separation carve-out work streams are progressing well. I guess, is there any further you can go in terms of, I guess, more discretely defining TSA scope, duration of those agreements, cost of those agreements? Any more details that are available today, and if not today, I guess when do you think you might be able to add some of that specificity? Thank you.

Speaker #5: I guess, is there any further you can go in terms of, I guess, more discreetly defining TSA scope, duration of those agreements, and cost of those agreements?

Speaker #5: Are there any more details that are available today? And if not, I guess, when do you think you might be able to add some of that specificity?

Speaker #5: Thank you.

Speaker #4: Yeah, sure. I mean, TSAs are in process, as we spoke before, and continue to evolve. The detail of the scope of each one—broadly, we talked about TSAs.

Marcos Gabriel: Yeah, sure. TSAs are in process as we spoke before, continuing to evolve the detail of the scope of each one. Broadly, we talked about TSAs primarily supporting the back office of operations. Think of our global business solutions, think of our IT, think of our support into HR areas, finance areas. So that is primarily the support that we're going to get from TSA for about two years. We talked about two years. We're going to have a phased exit to TSAs. We don't want to exit all TSAs at the same time. That wouldn't be practical. So we're going to be having a more detailed plan. We're not able to share yet that plan, but we're going to be able to share a plan on more of a gradual exit of TSAs over the first couple of years.

Speaker #4: Primarily, we're supporting the back office of our operations. Think of our global business solutions. Think about IT, and think about supporting HR areas and finance areas.

Speaker #4: So, that is primarily the support that we're going to get from TSA. For about two years—we talked about two years—we're going to have a phased exit to TSAs.

Speaker #4: We're going to want to exit all TSAs at the same time. That wouldn't be practical, so we're going to be having a more detailed plan.

Speaker #4: We're not able to share that plan yet, but we're going to be able to share a plan for more of a gradual exit of TSAs over the first couple of years.

Speaker #4: And then, from the cost perspective, we do have those costs as assumed in our deal model, so that should not be something incremental. We should think about it that way.

Marcos Gabriel: From the cost perspective, we do have those costs as assumed in our deal model. So that should not be something incremental that we should think about that way. So overall, progressing as planned. More details to come the next, I would say, few months. Hopefully we'll be able to share more in the next earnings call.

Speaker #4: So overall, we're progressing as planned. More details will be shared in the next few months, and hopefully, we'll be able to share more during the next earnings call.

Speaker #5: Okay, very good. Thank you. I appreciate it.

Stephen Powers: Okay. Very good. Thank you. Appreciate it.

Steve Powers: Okay. Very good. Thank you. Appreciate it.

Speaker #4: Sure.

Marcos Gabriel: Sure.

Speaker #1: The next question. They're from the line of Robert Mosco with TD Cowen. Please proceed with your questions.

Operator: The next question is from the line of Robert Moskow with TD Cowen. Please proceed with your questions.

Speaker #6: Hey, thank you. I was hoping you could give a little more detail on what caused momentum with your CPG customers in the U.S. to slow down in the third quarter.

Robert Moskow: Hey, thank you. I was hoping if you can give a little more detail on what caused momentum with your CPG customers in the US to slow down in Q3. On the last earnings call, you sounded very confident about a lot of reformulation projects. It just sounded like their sales performance was just okay. Is it really just like the volume declines, the regular everyday volume declines just got worse, or did anything in the pipeline kind of get delayed in terms of reformulations and new products? Rob, I think if I were to go quickly, you gave me two choices there. I would go with the first one. I think it was more based on the overall acceleration of volume declines that we saw in the industry over the course of Q3.

Speaker #6: On the last earnings call, you sounded very confident about a lot of reformulation projects. Also, it just sounded like their sales performance was just okay.

Speaker #6: I mean, is it really just that the volume declines, the regular everyday volume declines, just got worse? Or did anything in the pipeline kind of get delayed in terms of reformulations and new products?

Speaker #2: Rob, I think regarding the part about going quickly, you gave me two choices there. I'll go with the first one. I think it was more based on the overall acceleration of volume declines that we saw in the industry over the course of the third quarter.

Brendan Foley: Rob, I think if I were to go quickly, you gave me two choices there. I would go with the first one. I think it was more based on the overall acceleration of volume declines that we saw in the industry over the course of Q3.

Speaker #2: Now, to provide just additional context on top of that, we saw softer QSR traffic, particularly in the US and the UK, plus softer demand from CPG customers, driven by softer-than-expected consumption.

Brendan Foley: To provide just additional context, though, on top of that, we saw softer QSR traffic, particularly in the US and the UK, plus softer demand from CPG customers driven by softer than expected consumption. Back to my quick answer, given those two choices that you gave, that's the way we would express what we saw in terms of a slowdown that wasn't expected in Q3. I will say on the QSR side, the Cyclospora outbreak in the US, it's clear it did have pressure on QSR traffic. I think we started to really see that express itself in terms of store traffic in July. Maybe it started to come back in August, but by that point, I think suppliers already had enough inventory. Or sorry, the customers already had enough inventory. So we think that had an impact in Q3.

Speaker #2: Back to my quick answer—given those two choices you gave, that's the way we would express what we saw in terms of a slowdown that wasn't expected.

Speaker #2: In the third quarter, I will say on the QSR side, the cycle score outbreak in the U.S. is clear. It did have pressure on QSR traffic.

Speaker #2: I think we started to really see that express itself in terms of store traffic in July. Maybe it started to come back in August, but by that point, I think suppliers already had enough inventory.

Speaker #2: So I'm sorry, customers already had enough inventory. So we think that had an impact in the third quarter. I would characterize that as very short-term.

Brendan Foley: I would characterize that as very short term, based on everything that I'm hearing. But these pressures were really what impacted we believe is Q3. But we think we'll offset that, and we believe the fact that we were flat in the Americas effectively on volume is a function of just having a healthy innovation pipeline. Still have a lot of focus around customer diversification and gaining share in terms of customers, good private label growth, and just continue to strengthen the areas that we keep talking about, which is health and wellness, functional beverages, better-for-you snacking. And those continue to perform well. So, hopefully that addresses sort of the insight you were looking for, Rob.

Speaker #2: Based on everything that I'm hearing, these pressures were really what impacted it. We believe that for the third quarter, but we think we'll offset that. We believe the fact that we were flat in the Americas, effectively on volume, is a function of just having a healthy innovation pipeline. We still have a lot of focus around customer diversification and gaining share in terms of customers.

Speaker #2: Good private label growth. And we continue to strengthen the areas we keep talking about, which are health and wellness, functional beverages, and better-for-you snacking.

Speaker #2: And those continue to perform well. So, hopefully, that addresses the insight you were looking for, Rob.

Speaker #6: Yeah, it does. Thanks. And maybe a follow-up—I appreciate you acknowledging that the implementation of your interventions in U.S. retail was a little slower than expected.

Robert Moskow: Yeah, it does. Thanks. Maybe a follow-up. I appreciate you acknowledging that the implementation of your interventions in US retail were a little slower than expected. I am going to give you two choices again. Do you think it was related to retailers being a little reluctant to make changes at this time of the year? Or your organization is going through a lot right now. There is a lot of focus on the Unilever acquisition. Has that affected execution in any form or function? I will think of a third choice, but maybe just these two.

Speaker #6: So, I'm going to give you two choices again. Do you think it was related to retailers being a little reluctant to make changes at this time of the year?

Speaker #6: Or your organization is going through a lot right now. There's a lot of focus on the Unilever acquisition. Has that impacted execution in any form or function?

Speaker #6: And I'll think of a third choice, but maybe just these two.

Speaker #2: Again, I'm going with your first. So it really has a lot to do with just coordination of timing with customers. I'm going to come back to more context on the second point—I think you were mentioning that there.

Brendan Foley: Again, I am going with your first.

Robert Moskow: Yeah.

Brendan Foley: It really has a lot to do with just coordination of timing with customers. I am going to come back to more context on the second point I think that you were mentioning there. These teams are operating separately. Whoever is doing integration is working on integration exclusively, and those who are working on the base business, which is the majority of the company, is exclusively focusing on our current business. I am quite confident that is not the case. It really has a lot to do with implementation timing and coordination with customers.

Speaker #2: These teams are operating separately. So, whoever is doing integration is working on integration exclusively, and those who are working on the base business—which is the majority of the company—are exclusively focusing on our current business.

Speaker #2: So I'm quite confident that's not the case. It really has a lot to do with implementation timing and coordination with customers.

Speaker #6: Understood. Thank you.

Robert Moskow: Understood. Thank you.

Speaker #1: The next question is from the line of Alexia Howard with Bernstein. Please proceed with your question.

Operator: The next question is from the line of Alexia Howard with AllianceBernstein. Please proceed with your questions.

Speaker #7: Good morning, everyone. Can I focus in on the US consumer business once again? You mentioned a couple of actions that you're taking, and maybe you could just provide a little more elaboration there.

Alexia Howard: Good morning, everyone. Can I focus in on the US consumer business once again? You mentioned a couple of actions that you are taking, and maybe you could just provide a little more elaboration there. You talked about the need to maybe invest in price and promotion to shore up the affordability side of things. I think Americas consumer, we saw pricing up, I think it was a little over 2% this quarter. As we roll into fiscal 2027, should we expect that price growth to turn negative once again, as it did a couple of years ago the last time you were trying to fix this? You also mentioned portfolio assortment optimization to better serve some distinct consumer needs. Could you give us a couple of examples of that just so that we can understand what that means? Thank you, and I will pass it on.

Speaker #7: So, you talked about the need to maybe invest in price and promotion to shore up the affordability side of things. I think America's consumer—we saw pricing up.

Speaker #7: I think it was a little over 2% this quarter. As we roll into fiscal 2027, should we expect that price growth to turn negative once again, as it did a couple of years ago the last time you were trying to fix this?

Speaker #7: And then you also mentioned portfolio as assortment optimization, to better serve some distinct consumer needs. Could you give us a couple of examples of that, just so that we can understand what that means?

Speaker #7: Thank you, and I'll pass it on.

Speaker #2: Yep. Alexia, your audio cut out in part of your first question. Could you just maybe hit that one more time? Sorry.

Brendan Foley: Yeah, Alexia, your audio cut out in part of your first question. Could you maybe hit that one more time? Sorry.

Speaker #7: Sure. It was just, should we expect pricing to turn negative in U.S. Consumer, as it did a couple of years ago when you were shoring up the business before?

Alexia Howard: Sure. It was just, should we expect pricing to turn negative in US consumer as it did a couple of years ago when you were shoring up the business before?

Speaker #2: No, we don't expect the pricing to go negative. It certainly will be, perhaps, less pricing contribution than what we've seen year-to-date, but we don't anticipate it to go negative.

Brendan Foley: No, we don't expect pricing to go negative. It certainly will be perhaps less pricing contribution than what we've seen year to date, but we don't anticipate it to go negative. There was a second question. Sorry, I got distracted there by the audio cut-out.

Speaker #2: Now, there was a second question. Sorry, I got distracted there because the audio cut out.

Speaker #7: That's fine. You talked about portfolio assortment optimization to better serve distinct consumer needs. Could you give some examples of that so we can better understand it?

Alexia Howard: That's fine. You talked about portfolio assortment optimization to better serve

Brendan Foley: Oh

Alexia Howard: distinct consumer needs. Could you give some examples of that so we can better understand it? Thank you, and I'll pass it on.

Speaker #7: Thank you, and I'll pass it on.

Speaker #2: Yeah, I think really on portfolio assortment, it really is about probably going back to areas like thinking about some of the top-selling flavors, making sure that those are on shelf, and thinking about where we're getting strong velocity.

Brendan Foley: Yeah, I think really on portfolio assortment, it really is about probably going back to areas like thinking about some of the top-selling flavors, making sure that those are on shelf. Thinking about where we're getting strong velocity, as well as price pack architecture, continuing to implement that on shelf. That's part of the assortment optimization that we're seeing in parts of our portfolio. Innovation either it's incremental to shelf or it replaces items that we think are not turning as well as they should. We see assortment optimization happen there on the shelf. Broadly, we are still gaining distribution as we look at our total portfolio.

Speaker #2: As well as price pack architecture, we continue to implement that on shelf. That's part of the assortment optimization that we're seeing in parts of our portfolio.

Speaker #2: Innovation, sort of replaces either its incremental to shelf or replaces items that we think are not turning as well as they should. And so we see assortment optimization happen there on the shelf.

Speaker #2: But broadly, we are still gaining distribution as we look at our total portfolio.

Speaker #7: Thank you very much. I'll pass it on.

Alexia Howard: Thank you very much. I will pass it on.

Speaker #1: Our next questions are from the line of Rob Dickerson with US Bancorp. Please proceed with your questions.

Operator: Our next question is from the line of Rob Dickerson with U.S. Bancorp. Please proceed with your question.

Speaker #2: Great. Thanks so much. Maybe just to kind of in a broader question around kind of where the consumer is and then some of your comments around the cyclicality, right, of the business and just kind of how well the portfolio is positioned.

Rob Dickerson: Great. Thanks so much. Maybe just a broader question around where the consumer is, then just some of your comments around the cyclicality of the business and just how well the portfolio is positioned. Because what I am hearing is renovate the portfolio a little bit, optimize some of the assortment, I guess lean in a little bit to brand spend, but at the same time, we do not really see prices coming down necessarily, which I get, especially given the cost inflation. But if the consumer is still stretched and demand is still a little weak, everyone is value conscious, and they have been that way for multiple years, but it is all cyclical. Is the overall answer is the consumer just needs to get healthier, just has to have more money, and then everything is fixed?

Speaker #2: It's kind of what I'm hearing is kind of renovate the portfolio a little bit, right, optimize, some of the assortment, kind of I guess lean in a little bit to brand spend, but at the same time, we don't really see prices coming down necessarily, which I get, especially given the cost flation.

Speaker #2: But just if the consumer is still stretched and demand is still a little weak, right? Everyone's value conscious, and they've been that way for multiple years, but it's all cyclical.

Speaker #2: It's kind of like the overall answer is, well, the consumer just needs to get healthier, just has to have more money, and then everything's fixed.

Speaker #2: And I know that's a lame question, but just try to cut through a lot of the noise and figure out what fixes it.

Rob Dickerson: I know that is a lame question, but just trying to cut through a lot of the noise and just figure out what fixes it. That is it. Thanks.

Speaker #2: That's it. Thanks.

Speaker #5: Well, I think all of us would like healthier consumers, but we're not relying on that as we think about our plans moving ahead. We think about this environment as pretty much remaining status quo, if you will.

Brendan Foley: Well, I think all of us would like healthier consumers, but we are not relying on that as we think about our plans moving ahead. We think about this environment as pretty much remaining status quo, if you will, especially as we look at it as perhaps 2027. It did turn a little bit more incrementally, more pressured, I think, in so far in the back half of the year, at least that is what we are seeing. I think the attitude that we are taking, Rob, is we keep using this expression, but it really does guide our thinking, meet the consumer with where they are. I think the consumer is really looking for even better value right now. It is not necessarily lower price. Consumers are still willing to pay for convenience, delivery. We see e-commerce growth growing for a reason, because consumers find value in that overall.

Speaker #5: Especially as we look at perhaps 2027, but it did turn a little bit more incrementally, more pressured, I think. And so far in the back half of the year, at least, is what we're seeing.

Speaker #5: I think the attitude that we're taking, Rob, is—you know, we keep using this expression, but it really does kind of guide our thinking.

Speaker #5: Meet the consumer where they are. And I think the consumer is really looking for even better value. Right now, it isn't necessarily a lower price.

Speaker #5: Consumers are still willing to pay for convenience—delivery. We see e-commerce growth, growing for a reason, because consumers find value in that overall. Or, there are items where they'll spend more per item because they're getting just better value in our large sizes.

Brendan Foley: Or there are items where they will spend more per item because they are getting just better value, like in our large sizes. So, it is a dynamic sort of environment, I would say. We expect to continue to operate in this environment and continue to do well. We are going to have periods where we have to find a way to recover from inflation, but also find even more creative ways in making sure that the consumer sees value at shelf. I think if it is an outlook of what has to be true for things to get better, I think it is really, for our business, it is we are operating in great categories. That fundamentally really drives and underwrites our view of our business looking ahead. That is why we remain flavor-focused.

Speaker #5: So it's a dynamic sort of environment, I would say. We expect to continue to operate in this environment and continue to do well. And we're going to have periods where we have to find a way to recover from inflation, but also find even more creative ways to make sure that the consumer sees value at shelf.

Speaker #5: But I think if it's an outlook of what has to be true for things to get better, really for our business, it's that we're operating in great categories.

Speaker #5: And that fundamentally really drives and underwrites sort of our view of our business looking ahead. And that's why we remain flavor focused. And then on top of that, we have to continue to make sure that we have a competitive edge on shelf.

Brendan Foley: Then on top of that, we have to continue to make sure that we have a competitive edge on shelf in terms of making sure we drive consumer value in whatever conditions we are operating in.

Speaker #5: In terms of making sure we drive consumer value, in whatever conditions we're operating in.

Speaker #2: All right, super. That's fair. And then, just maybe a quick question. There have been some comments just kind of around improved or increased distribution.

Rob Dickerson: All right. Super. That is fair. Then maybe just a quick question. There have been some comments just around improved or increased distribution. Maybe I missed it, but is that the way you are thinking about this is just, is that TDPs essentially, or there could be potential to make more inroads into certain channels maybe where you have less exposure now? That is all. Thanks a lot.

Speaker #2: And maybe I missed it, but is that the way you're thinking about this is just is that TDPs essentially or is this there could be potential to kind of make more inroads into certain channels?

Speaker #2: Maybe where you have less exposure now. That's all. Thanks a lot.

Speaker #5: Yeah, we're measuring it both ways. Rob, so we are looking at TDPs. It's a pretty clear metric, especially if you look at sort of retail ACV distribution.

Brendan Foley: Yeah. We are measuring it both ways, Rob. We are looking at TDPs. It is a pretty clear metric, especially if you look at retail ACV distribution. It is also about having more items in other channels. We are seeing a lot of channel growth in club stores or e-commerce or discount channels, so we see the need to continue driving distribution growth in those areas too.

Speaker #5: But it's also about having more items in other channels, so that's going to be important. We're seeing a lot of channel growth in club stores, e-commerce, and discount channels.

Speaker #5: And so, we see the need to continue driving distribution growth in those areas, too.

Speaker #2: All right, great. Thanks so much. I appreciate it.

Rob Dickerson: All right. Great. Thanks so much. Appreciate it.

Speaker #1: Our next question is from the line of Max Comfort with BNP Paribas. Please proceed with your questions.

Operator: Our next question is from the line of Max Gumport with BofAML. Please proceed with your questions.

Speaker #6: Hey, thanks for the question. Between rising freight, which includes ocean freight, are there inflationary pressures and supply chain constraints? Some of these dynamics feel reminiscent of what we heard and saw during the COVID and supply chain bottleneck years, which really hampered your margin and profit delivery during that period.

Max Gumport: Hi. Thanks for the question. Between rising freight, which includes ocean freight, other inflationary pressures, and supply chain constraints, some of these dynamics feel reminiscent of what we heard and saw during the COVID and supply chain bottleneck years, which really hampered your margin and profit delivery during that period. As you start to face these accelerating pressures again, I am curious if you have more confidence in your ability to withstand them, particularly given learnings from that period and maybe even some supply chain improvements you have made over the last several years. I am really asking because as the market starts to consider what your gross margin delivery can look like next year, particularly given the implied x-rate for Q4, I think this will become more topical. Thanks very much.

Speaker #6: So, as you start to face these accelerating pressures again, I'm curious if you have more confidence in your ability to withstand them, particularly given the learning from that period, and maybe even some supply chain improvements you've made over the last several years.

Speaker #6: I'm really asking because, as the market starts to consider what your gross margin delivery can look like next year—particularly given the implied exit rate for Q4—I think this will become more topical.

Speaker #6: Thanks very much.

Speaker #2: You know, Max, I think you bring up a relevant observation, which is that these are similar variables that we were dealing with back during that time period.

Brendan Foley: Max, I think you bring up a relevant observation, which is that these are similar variables that we were dealing with back during that time period. I think one of the things that I would start off with, and then I am going to hand it over to Marcos for additional context, is one of the key priorities I have asked the organization to work on over the past three years is just really this idea of focusing on resiliency in all forms. Because the external marketplace is not necessarily friendly all the time with making things easy. We think about resiliency as an important quality about our company that we want to keep improving. We are always looking for opportunity areas where we can do that.

Speaker #2: I think one of the things that I would start off with—and I'm going to hand it over to Marcos for additional context—is that one of the key priorities I've asked the organization to work on over the past three years is really this idea of focusing on resiliency in all forms.

Speaker #2: Because the external marketplace isn't necessarily friendly all the time with making things easy. And so, we think about resiliency as an important quality of our company that we want to keep improving.

Speaker #2: And we're always looking for opportunity areas where we can do that. And I think that gives us, I wouldn't say I wouldn't call it overconfidence, just an ability to sort of deal with them maybe a little bit quicker and faster as we learn from each event that occurs.

Brendan Foley: I think that gives us, I would not call it overconfidence, just an ability to sort of deal with them maybe a little bit quicker and faster as we learn from each event that occurs. That would be my kickoff. Marcos, any other thoughts?

Speaker #2: So that would be my kickoff. And Marcos, any other thoughts?

Marcos Gabriel: Yeah, no, I would add to the resilience. I would add that our CCI program has really stepped up over the last couple of years, Max. Think about looking at all lines of the P&L in terms of where we find savings and productivity and optimization initiatives, standardizing process across the globe. That standardization and automation of processes have been a key enabler for us to continue to be more efficient overall. A CCI program that is in place for 16 years now has been elevated over the last five, I would say, taking into account our global footprint, taking into account our Global Flavor Solutions organization in many places across the globe, but also taking into account the use of technology.

Speaker #3: Yeah, no, I would add to the resilience. I would add that our CCI program has really stepped up over the last couple of years, Max.

Speaker #3: Think about looking at all lines of the P&L in terms of where we find savings, productivity, and optimization initiatives—standardizing processes across the globe.

Speaker #3: I mean, standardization and automation of processes have been a key enabler for us.

Speaker #8: to continue to be more efficient overall. So a CCI program that is in place for 16 years now has been elevated over the last 5, I would say, taking into account our global footprint, taking into account the global business solutions organization in many places across the globe.

Speaker #8: But also taking into account the use of technology. So all in all to say that we do have a more resilient business as Brenda just mentioned, but also the underlying CCI program continues to evolve, continues to be widespread in the organization, and continues to give confidence.

Marcos Gabriel: All in all, to say that we do have a more resilient business, as Brendan just mentioned, but also the underlying CCI program continues to evolve, continues to be widespread in the organization, and continues to give confidence. Look at 2026 as an example, 120 basis points of gross margin expansion. A good portion of it was because of the CCI program that was put in place. I do feel more confident, although headwinds are there for us to manage, but I do feel more confident today going into 2027 than back in 2019.

Speaker #8: I mean, look at 2020 Q1, as an example, you know, 120 basis points of gross margin expansion, you know, a good portion of it was because of the CCI program that was put in place.

Speaker #8: So I do feel more confident, although headwinds are there for us to manage, but I do feel more confident today going into 2027 than back in 2020.

Speaker #9: 2019. Great, thanks very much. Very helpful. I'll leave it there. Thank you.

Max Gumport: Great. Thanks very much. Very helpful. I will leave it there.

Operator: Thank you. Our final question is from the line of Scott Marks with Jefferies. Please proceed with your questions.

Speaker #10: And our final question is from the line of Scott Marks with Jefferies. Please proceed with your questions. Hey, good morning, all. Thanks very much for squeezing us in here.

Scott Marks: Hey, good morning, all. Thanks very much for squeezing us in here. Wanted to just ask one about McCormick de Mexico. Looks like performance was a bit stronger than folks were looking for. Wondering if you could just help us understand some of the key drivers within that business, and as we look ahead, how you are thinking about trajectory as we look into Q4 and into next year. Thanks very much.

Speaker #10: Wanted to just ask one about McCormick de Mexico. Looks like performance was a bit stronger than folks were looking for. Wondering if you could just help us understand some of the key drivers within that business and as we look ahead, how you're thinking about trajectory as, you know, as we look into Q4 and into next year.

Speaker #10: Thanks very much. Well, um, I think in our prepared remarks, I would go back to that and the performance of the mayonnaise category was really pretty strong overall.

Brendan Foley: Well, I think in our prepared remarks, I would go back to that, and the performance of the mayonnaise category was really pretty strong overall, and that is consistent with what our expectations are for the mayonnaise category in that market and that part of our organization, that level of execution, I think, has been really quite effective and quite strong. We also saw performance in categories like herbs and spices, which is just growing very nicely right now. We are able to grow share in that part of the portfolio there, and so we are seeing a nice lift in that category. As you might recall, we are present in a number of categories other than in that part of our business in Mexico. So we really were pleased with, I think, the performance of that category, too, overall.

Speaker #10: And that is consistent with what our expectations are for the mayonnaise category in that market and their level of—you know—that part of our business organization. That level of execution, I think, has been really quite effective and quite strong.

Speaker #10: But we also saw performance in categories like herbs and spices, which is growing very nicely right now. We're able to grow share in that part of the portfolio.

Speaker #10: And so we're seeing a nice lift in that category. As you might recall, we're present in a number of categories other than in that part of our business in Mexico.

Speaker #10: So we really were pleased with, I think, the performance of that category too, overall. Ahead, I think our outlook on this and the rationale and the thesis behind making sure that we sort of brought more of it back into McCormick's ownership still holds true.

Brendan Foley: As we look ahead, I think our outlook on this and the rationale and the thesis behind making sure that we brought more of it back into McCormick's ownership still holds true. We see it as a growing market long term. We see good performance in the categories that we are operating in with a number of them, like herbs and spices, with even more upside. So I think we have a very strong outlook for that part of our portfolio, as we called out when we did the original transaction, it was in January of this year.

Speaker #10: We see it as a growing market long-term. We see good performance in the categories that we're operating in. With a number of them like herbs and spices with even more upside.

Speaker #10: So I think we have a very sort of strong outlook for that part of the business. Part of our portfolio, as we called out when we did the original transaction.

Speaker #10: It was in January of this year. Yeah, we committed to accretion across all lines of P&L, and that's coming through.

Marcos Gabriel: Yeah. We committed to accretion across all lines of P&L, and that is coming through in 2026 very much.

Speaker #8: You know, in 2026. Very much. Thank you.

Operator: Thank you. I will now turn the floor back to Faten Freiha for closing remarks.

Speaker #10: I'll now turn the floor back to Faten Freyha for closing remarks.

Speaker #8: Thank you all for joining our call today. If you have any further questions, please reach out to me. And this concludes our conference call for this morning.

Faten Freiha: Thank you all for joining our call today. If you have any further questions, please reach out to me. This concludes our conference call for this morning.

Operator: You may now disconnect your lines at this time. Thank you for your participation.