Maryland | 001-14920 | 52-0408290 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation) | File Number) | Identification No.) |
18 Loveton Circle | ||
Sparks, Maryland | 21152 | |
(Address of principal executive offices) | (Zip Code) |
By: | /s/ W. Geoffrey Carpenter |
W. Geoffrey Carpenter | |
Vice President, General Counsel & Secretary |
Exhibit Number | Exhibit Description | |
99.1 | Copy of the press release labeled “McCormick Reports Financial Results for Second Quarter and Reaffirms 2014 Financial Outlook.” |
• | McCormick grew second quarter sales 3%, with increases in both its consumer and industrial businesses. |
• | Earnings per share rose 8% to $0.64 from $0.59 in the year-ago period. |
• | For fiscal year 2014, the company reaffirmed its plans to grow sales 3% to 5% and report earnings per share of $3.22 to $3.29. |
(in millions) | Three months ended | Six months ended | ||||||||||||||
5/31/2014 | 5/31/2013 | 5/31/2014 | 5/31/2013 | |||||||||||||
Net sales | $ | 615.0 | $ | 591.0 | $ | 1,230.3 | $ | 1,160.7 | ||||||||
Operating income | 85.8 | 87.6 | 180.2 | 175.3 |
• | Consumer sales in the Americas declined 5%, and in local currency decreased 4% from the second quarter of 2013. In comparison, consumer sales in this region rose 5% in the second quarter of 2013 from the second quarter of 2012. During the second quarter of 2014, higher pricing added 2% of sales growth, reflecting a U.S. price increase effective in late 2013 taken as an offset to higher material costs. Volume and product mix declined in the second quarter of 2014 and actions are underway to address the competitive environment in this region, including accelerated innovation, |
• | Consumer sales in Europe, Middle East and Africa (EMEA) grew 7%. In local currency the increase was 2% and was attributable to pricing actions taken in response to higher material costs. Volume and product mix in this region declined 2%, due in part to a difficult retail environment in certain markets, including the U.K. |
• | Second quarter consumer sales in the Asia/Pacific region rose 70%. In local currency, sales grew 76% with WAPC contributing 70 percentage points of the increase. Sales of the company's base business in China grew at a double-digit rate with new products and expanded distribution. |
(in millions) | Three months ended | Six months ended | ||||||||||||||
5/31/2014 | 5/31/2013 | 5/31/2014 | 5/31/2013 | |||||||||||||
Net sales | $ | 418.4 | $ | 411.6 | $ | 796.5 | $ | 776.2 | ||||||||
Operating income | 35.9 | 28.4 | 66.1 | 52.7 |
• | Industrial sales in the Americas decreased 2%, and in local currency the decrease was 1%. In this region, a 2% decline in volume and product mix resulted from on-going weakness in demand from quick service restaurants. This decline was offset in part by pricing actions taken to offset the impact of higher material costs. |
• | In EMEA, the company grew industrial sales 14% and in local currency the increase was 12%. Sales growth in this region remained robust, with higher sales to quick service restaurant customers driven by new products and distribution gains. In addition, the company passed-through to its customers 6% in higher pricing in response to increased material costs. |
• | Industrial sales in the Asia/Pacific region rose 6% this quarter and in local currency the increase was 10%. Higher volume and product mix was mainly the result of improved sales to quick service restaurants in China. This compared to a year-on-year sales decline in China in the second quarter of 2013 that related to consumer concerns with poultry consumption. |
Second Quarter Report | McCormick & Company, Incorporated | |||||||||||||||
Consolidated Income Statement (Unaudited) | ||||||||||||||||
(In millions except per-share data) | ||||||||||||||||
Three months ended | Six months ended | |||||||||||||||
May 31, 2014 | May 31, 2013 | May 31, 2014 | May 31, 2013 | |||||||||||||
Net sales | $ | 1,033.4 | $ | 1,002.6 | $ | 2,026.8 | $ | 1,936.9 | ||||||||
Cost of goods sold | 620.9 | 608.2 | 1,222.8 | 1,180.8 | ||||||||||||
Gross profit | 412.5 | 394.4 | 804.0 | 756.1 | ||||||||||||
Gross profit margin | 39.9 | % | 39.3 | % | 39.7 | % | 39.0 | % | ||||||||
Selling, general and administrative expense | 290.8 | 278.4 | 557.7 | 528.1 | ||||||||||||
Operating income | 121.7 | 116.0 | 246.3 | 228.0 | ||||||||||||
Interest expense | 12.5 | 13.5 | 24.9 | 27.4 | ||||||||||||
Other income, net | 0.3 | 0.8 | 0.5 | 1.4 | ||||||||||||
Income from consolidated operations before income taxes | 109.5 | 103.3 | 221.9 | 202.0 | ||||||||||||
Income taxes | 31.2 | 30.6 | 66.2 | 58.8 | ||||||||||||
Net income from consolidated operations | 78.3 | 72.7 | 155.7 | 143.2 | ||||||||||||
Income from unconsolidated operations | 6.2 | 5.9 | 11.3 | 11.4 | ||||||||||||
Net income | $ | 84.5 | $ | 78.6 | $ | 167.0 | $ | 154.6 | ||||||||
Earnings per share - basic | $ | 0.65 | $ | 0.60 | $ | 1.28 | $ | 1.17 | ||||||||
Earnings per share - diluted | $ | 0.64 | $ | 0.59 | $ | 1.27 | $ | 1.16 | ||||||||
Average shares outstanding - basic | 130.2 | 132.1 | 130.6 | 132.3 | ||||||||||||
Average shares outstanding - diluted | 131.2 | 133.6 | 131.7 | 133.8 |
Second Quarter Report | McCormick & Company, Incorporated | |||||||
Consolidated Balance Sheet (Unaudited) | ||||||||
(In millions) | ||||||||
May 31, 2014 | May 31, 2013 | |||||||
Assets | ||||||||
Cash and cash equivalents | $ | 81.4 | $ | 72.1 | ||||
Trade accounts receivable, net | 417.1 | 399.9 | ||||||
Inventories | 687.3 | 611.4 | ||||||
Prepaid expenses and other current assets | 138.9 | 134.1 | ||||||
Total current assets | 1,324.7 | 1,217.5 | ||||||
Property, plant and equipment, net | 575.0 | 554.3 | ||||||
Goodwill | 1,798.6 | 1,754.2 | ||||||
Intangible assets, net | 340.4 | 353.3 | ||||||
Investments and other assets | 370.6 | 329.5 | ||||||
Total assets | $ | 4,409.3 | $ | 4,208.8 | ||||
Liabilities | ||||||||
Short-term borrowings and current portion of long-term debt | $ | 308.4 | $ | 551.9 | ||||
Trade accounts payable | 335.8 | 322.1 | ||||||
Other accrued liabilities | 358.6 | 352.2 | ||||||
Total current liabilities | 1,002.8 | 1,226.2 | ||||||
Long-term debt | 1,016.8 | 774.4 | ||||||
Other long-term liabilities | 409.8 | 474.5 | ||||||
Total liabilities | 2,429.4 | 2,475.1 | ||||||
Shareholders’ equity | ||||||||
Common stock | 984.1 | 947.7 | ||||||
Retained earnings | 969.3 | 953.2 | ||||||
Accumulated other comprehensive income (loss) | 8.8 | (184.2 | ) | |||||
Non-controlling interests | 17.7 | 17.0 | ||||||
Total shareholders’ equity | 1,979.9 | 1,733.7 | ||||||
Total liabilities and shareholders’ equity | $ | 4,409.3 | $ | 4,208.8 |
Second Quarter Report | McCormick & Company, Incorporated | |||||||
Consolidated Cash Flow Statement (Unaudited) | ||||||||
(In millions) | ||||||||
Six Months Ended | ||||||||
May 31, 2014 | May 31, 2013 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 167.0 | $ | 154.6 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 53.5 | 51.7 | ||||||
Stock based compensation | 12.1 | 12.5 | ||||||
Income from unconsolidated operations | (11.3 | ) | (11.4 | ) | ||||
Changes in operating assets and liabilities | (51.6 | ) | (77.3 | ) | ||||
Dividends from unconsolidated affiliates | 12.4 | 2.6 | ||||||
Net cash flow provided by operating activities | 182.1 | 132.7 | ||||||
Cash flows from investing activities | ||||||||
Acquisition of business | — | (116.7 | ) | |||||
Capital expenditures | (47.4 | ) | (34.6 | ) | ||||
Proceeds from sale of property, plant and equipment | 0.7 | 1.9 | ||||||
Net cash flow used in investing activities | (46.7 | ) | (149.4 | ) | ||||
Cash flows from financing activities | ||||||||
Short-term borrowings, net | 94.3 | 158.9 | ||||||
Long-term debt repayments | (1.2 | ) | (0.9 | ) | ||||
Proceeds from exercised stock options | 16.1 | 29.8 | ||||||
Common stock acquired by purchase | (126.3 | ) | (92.1 | ) | ||||
Dividends paid | (96.7 | ) | (90.1 | ) | ||||
Net cash flow (used in) provided by financing activities | (113.8 | ) | 5.6 | |||||
Effect of exchange rate changes on cash and cash equivalents | (3.2 | ) | 4.2 | |||||
Increase (decrease) in cash and cash equivalents | 18.4 | (6.9 | ) | |||||
Cash and cash equivalents at beginning of period | 63.0 | 79.0 | ||||||
Cash and cash equivalents at end of period | $ | 81.4 | $ | 72.1 |
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