KEY TAKEAWAYS
- McCormick shares surged premarket Tuesday on a first-quarter earnings report that beat expectations.
- The spice maker also improved on the sales, income, and earnings-per-share (EPS) figures it posted in the year-ago quarter.
- McCormick affirmed its full-year 2024 guidance, with a flat to 2% decrease in sales, but increased income and EPS due to previously announced cost-cutting initiatives.
McCormick & Co. (MKC) stock jumped premarket Tuesday following the release of a first-quarter earnings report that beat expectations, with the spice maker affirming its full-year projections for 2024.
In the first quarter of fiscal 2024, McCormick posted sales of $1.6 billion, adjusted net income of $169 million, and adjusted earnings per share (EPS) of 63 cents. All of those figures are higher than what McCormick posted in the first quarter of 2023, and also above analyst estimates compiled by Visible Alpha, which predicted that McCormick would post a slight decrease in all those categories.
“As we look ahead, we are pleased with the momentum we are seeing in the business and continue to expect improved volume performance, which will build throughout the year,” McCormick Chief Executive Officer (CEO) Brendan Foley said. “Our results for the quarter coupled with our growth plans, give us confidence in achieving the mid to high-end of our projected constant currency sales growth for 2024. Our business fundamentals are strong, and we are confident we will continue to deliver long-term profitable growth and drive value for shareholders.”
McCormick credited higher prices for its 3% sales growth and higher gross profit margin compared with the year-ago quarter, offsetting flat demand. The company also attributed its 140-basis-point profit margin expansion to cost-cutting initiatives and a favorable product mix.
The company behind Frank’s RedHot and Cholula hot sauces, along with dozens of spices and other condiments and sauces, also said it plans to continue returning a “significant portion” of cash flow to shareholders through dividends after approving an 8% increase in the quarterly dividend in November.
The spice maker affirmed its full-year 2024 guidance, projecting sales to be in a range between a 2% decline and flat, compared to a 5% increase in 2023, with adjusted EPS projected between $2.80 to $2.85, compared to the $2.70 mark posted for 2023 and analyst estimates of $2.82 compiled by Visible Alpha.
McCormick shares were up about 6.7% in premarket trading after closing Monday at $69.94. Entering Tuesday, they were down about 5.6% in the last 12 months.