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

Sep 29, 2020 • 08:00 am ET

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

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Q & A
Executive
Lawrence E. Kurzius

so, we'd take a -- a really extraordinary performance to repeat that. So, probably it's going to be a tailwind as well, but in any case, the underlying business results that we delivered this year don't get paid for twice, and our plans pay for growth.

Analyst
Andrew Lazar

Yeah, makes sense. And you mentioned capacity, and I want to dig into that a little bit. I'm curious if there's a way to sort of spread out a little bit how much of the upcoming capacity that's coming online is sort of internal versus stepped up use of third parties. And really the reason I ask you it is that, I would assume that McCormick would not be adding its own sort of internal capacity in any significant way unless it thought that some of these recently elevated trends were likely to persist somewhat longer-term, not at current levels, necessarily, but longer-term, in a way that you kind of felt like you needed internal capacity as opposed to just the more -- as opposed to just accessing -- accessing the flexibility of third-party manufacturers.

Executive
Lawrence E. Kurzius

Yeah, and so -- Andrew, it's a -- it's a mix. So, some of the capacity, we've gained has been by adding people and changing our shift pattern so that we have more of our facilities operating on a 24/7 or a 25/7 schedule, not just on some lines, but in some case on all lines. So that's one way we've added our capacity. We have made some short -- we've made some -- we've been able to make some investments in blending capacity that -- that are internal. And then we have brought on quite a lot of third-party co-packing capacity that is an incremental cost that we would hope to absorb into our own facilities over the course of next year.

Executive
Mike Smith

And that's primarily with strategic partners that we already do co-packing with also. So we're not creating a quality risk out there also.

Analyst
Andrew Lazar

Yeah. Got it. Great. Thank you very much.

Analyst
Operator

Your next question is from the line of Ken Goldman with JPMorgan. Please proceed with your question.

Analyst
Kenneth B. Goldman

Hi, thank you. One clarification and then I have a broader question. I'm just building on Andrew's question. You talked about no major go-live for ERP in 2021. Is it fair for us to assume that obviously the costs will be delayed maybe until 2022 as well from that or are there some costs that you'll incur in advance? Just curious on that first [Speech Overlap].

Executive
Mike Smith

Yeah, I mean, we're continuing, even though we talked earlier about delaying the ERP, we're still incurring cost this year, and we're going to spend to 2020 around the same level as we did in 2019. So you can expect that we replan this will have cost in next year. We're not prepared at this point to talk about the level of costs, but we just wanted to highlight the fact that go-lives, which are -- bring with them major costs, aren't