McCormick & Co Inc (NYSE:MKC) Q3 2020 Earnings Conference Call - Final Transcript

Good morning. This is Kasey Jenkins, Vice President of McCormick Investor Relations. Thank you for joining today's Third Quarter Earnings Call.

To accompany this call, we've posted a set of slides at ir.mccormick.com. [Operator Instructions] We'll 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 information in constant currency as well as adjusted operating income, adjusted income tax rate and adjusted earnings per share that exclude the impact of special charges and, for 2019, the net non-recurring benefit associated with the US Tax Act. 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.

In addition, 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. It is important to note these statements include expectations and assumptions which will be shared related to the impact of the COVID-19 pandemic. As seen on slide 2, our forward-looking statement also provides information on risk factors, including the impact of the COVID-19, that could affect our financial results.

It is now my pleasure to turn the discussion over to Lawrence.

Thank you, Kasey. Good morning, everyone. Thanks for joining us.

The last few months have been an extraordinary period, and the COVID-19 situation continues to evolve daily. I'm incredibly proud of the way McCormick has performed in this unprecedented operating environment.

Starting on slide 4, let me highlight a few points on the current conditions we're seeing and their potential impact. First, in our Consumer segment around the world, we are experiencing strong, sustained consumer demand, which is real incremental consumption and reflects the trend of consumers cooking more at home. In China, which is viewed as a leading indicator since their COVID-19 recovery is ahead of the rest of the world, the demand for food at home continues to be very strong. We see the same in Europe and of course in the Americas.

The significant shift to consumers eating more at home is persisting long enough that it has become a habit. Our proprietary consumer survey data supported by other research indicates the majority of consumers are cooking more from scratch, enjoying the cooking experience and adding flavor to their meal occasions. These new behavior, coupled with some consumer discomfort at dining out, are driving an increased and sustained preference for cooking at home. We believe this will continue globally and thus further benefit our Consumer segment.

Turning to our Flavor Solutions segment, where we have a very diverse customer portfolio, we are seeing varying stages of recovery. Starting with the away from home portion of the segment. With our quick service restaurant customers or QSRs, we are seeing