Business Segments

9 Months Ended

Aug. 31, 2020

Segment Reporting [Abstract]

BUSINESS SEGMENTS

BUSINESS SEGMENTS

We operate in two business segments: consumer and flavor solutions. The consumer and flavor solutions segments manufacture, market and distribute spices, herbs, seasoning mixes, condiments and other flavorful products throughout the world. Our consumer segment sells to retail channels, including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce under the “McCormick” brand and a variety of brands around the world, including “French’s”, “Frank’s RedHot”, “OLD BAY”, “Lawry’s”, “Zatarain’s”, “Simply Asia”, “Thai Kitchen”, “Ducros”, “Vahine”, “Schwartz”, “Club House”, “Kamis”, “Kohinoor”, “DaQiao”, “La Drogheria”, “Stubb's”, and “Gourmet Garden”. Our flavor solutions segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors, with the exception of our businesses in China and India, where foodservice sales are managed by and reported in our consumer segment.

In each of our segments, we produce and sell many individual products which are similar in composition and nature. With their primary attribute being flavor, we regard the products within each of our segments to be fairly homogenous. It is impracticable to segregate and identify sales and profits for each of these individual product lines.

We measure segment performance based on operating income excluding special charges, as this activity is managed separately from the business segments.

Although the segments are managed separately due to their distinct distribution channels and marketing strategies, manufacturing and warehousing are often integrated to maximize cost efficiencies. We do not segregate jointly utilized assets by individual segment for internal reporting, evaluating performance or allocating capital. Because of manufacturing integration for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost. Intersegment sales are not material.

	Consumer		Flavor Solutions		Total
			(in millions)
Three months ended August 31, 2020
Net sales	$	910.9	$	519.4	$	1,430.3
Operating income excluding special charges	209.0		64.1		273.1
Income from unconsolidated operations	8.5		1.1		9.6
Three months ended August 31, 2019
Net sales	$	794.2	$	535.0	$	1,329.2
Operating income excluding special charges	176.5		84.7		261.2
Income from unconsolidated operations	7.3		2.3		9.6
Nine months ended August 31, 2020
Net sales	$	2,573.0	$	1,470.4	$	4,043.4
Operating income excluding special charges	560.2		168.4		728.6
Income from unconsolidated operations	24.7		5.5		30.2
Nine months ended August 31, 2019
Net sales	$	2,303.2	$	1,559.4	$	3,862.6
Operating income excluding special charges	449.6		225.8		675.4
Income from unconsolidated operations	22.7		6.5		29.2

A reconciliation of operating income excluding special charges to operating income is as follows (in millions):

	Consumer		Flavor Solutions		Total
Three months ended August 31, 2020
Operating income excluding special charges	$	209.0	$	64.1	$	273.1
Less: Special charges	—		0.1		0.1
Operating income	$	209.0	$	64.0	$	273.0
Three months ended August 31, 2019
Operating income excluding special charges	$	176.5	$	84.7	$	261.2
Less: Special charges	4.6		3.1		7.7
Operating income	$	171.9	$	81.6	$	253.5
Nine months ended August 31, 2020
Operating income excluding special charges	$	560.2	$	168.4	$	728.6
Less: Special charges	3.1		0.9		4.0
Operating income	$	557.1	$	167.5	$	724.6
Nine months ended August 31, 2019
Operating income excluding special charges	$	449.6	$	225.8	$	675.4
Less: Special charges	11.0		5.9		16.9
Operating income	$	438.6	$	219.9	$	658.5

The following table sets forth our net sales, by geographic area, for the three and nine months ended August 31, 2020 and 2019 (in millions):

	Americas		EMEA		Asia/Pacific		Total
Three months ended August 31, 2020	$	1,010.5	$	262.7	$	157.1	$	1,430.3
Three months ended August 31, 2019	931.3		234.5		163.4		1,329.2
Nine months ended August 31, 2020	2,855.5		756.7		431.2		4,043.4
Nine months ended August 31, 2019	2,634.4		726.7		501.5		3,862.6