McCormick & Company, Incorporated (NYSE:MKC.V) Q2 2018 Earnings Conference Call - Final Transcript

Jun 28, 2018 • 08:00 am ET


McCormick & Company, Incorporated (NYSE:MKC.V) Q2 2018 Earnings Conference Call - Final Transcript


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Kasey Jenkins

Good morning. This is Kasey Jenkins, Vice President of McCormick Investor Relations. Thank you for joining today's second quarter earnings call. To accompany this call, we posted set of slides at Now, all participants are in a listen-only mode. Following our remarks, we will begin a question-and-answer session. [Operator Instructions] We will begin with remarks from Lawrence Kurzius, Chairman, President and CEO and Mike Smith, Executive Vice President and CFO.

During our remarks, we will refer to certain non-GAAP financial measures. These include adjusted operating income, adjusted income tax rate and adjusted earnings per share that exclude the impact of transaction and integration expenses related to the Reckitt Benckiser Foods or RB Foods acquisition, special charges and income taxes excluding certain non-recurring impacts associated with the recently enacted U.S. tax reform which we refer to as the U.S. Tax Act as well as information in constant currency.

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 which includes the complete information. As a reminder, 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. As seen on slide two, our forward-looking statements also provide information on Risk Factors that could affect our financial results. It is now my pleasure to turn the discussion over to Lawrence.

Lawrence Kurzius

Thank you, Kasey. Good morning everyone. Thanks for joining us. With our strong second quarter and first-half results, we are confident we are well-positioned to deliver strong results in 2018. Our successful execution of our strategies and engagement of employees around the world have driven strong double-digit sales, operating profit and EPS growth as well as significant operating margin expansion across both segments in both the second quarter and year-to-date.

Starting on page four. We have a broad and advantaged global flavor portfolio which is continuing to drive growth, among the second quarter highlights across our portfolio, we grew our underlying business in our consumer segment, particularly in the Americas and China. In our flavor solutions segment, we continued to make progress on expanding our portfolio with additional growth in flavors, particularly in savory this quarter, while pruning some low margin business, and we are driving strong broad-based growth in our branded foodservice business. The reshaping of our flavor solutions portfolio is a significant driver of operating margin expansion.

In addition to the solid growth on our core business, we are pleased with the Frank's and French's performance and their positive impact on our portfolio of condiments and sauces and branded foodservice. Overall, we are confident that the breadth and reach of our portfolio continues to position us to fully meet the demand for flavor around the world and grow our business. Now let me go into more detail on our second quarter performance on slide five as