MKC:CC - McCormick & Company Incorporated (MKC) Q4 2023 Earnings Call Transcript
2024-01-25 13:59:09 ET
McCormick & Company, Incorporated (MKC)
Q4 2023 Earnings Conference Call
January 25, 2024, 08:00 AM ET
Company Participants
Faten Freiha - VP of IR
Brendan Foley - President and CEO
Mike Smith - EVP and CFO
Conference Call Participants
Andrew Lazar - Barclays
Ken Goldman - JPMorgan
Alexia Howard - Bernstein
Max Gumport - BNP Paribas
Steve Powers - Deutsche Bank
Adam Samuelson - Goldman Sachs
Matt Smith - Stifel
Robert Moskow - TD Cowen
Rob Dickerson - Jefferies
Presentation
Faten Freiha
Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's Fourth Quarter Earnings Call. To accompany this call, we posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO; Mike Smith, Executive Vice President and CFO; and Kasey Jenkins, Chief Growth Officer.
During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related 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.
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. Please refer to our forward-looking statements on Slide 2 for more information.
I will now turn the discussion over to Brendan.
Brendan Foley
Good morning, everyone, and thank you for joining us.
Let me start by sharing what we will cover in the morning's call. I will begin with an overview of our fourth quarter year-over-year results, focusing on top-line drivers. Next, I will briefly reflect on our full year 2023 performance and share our plans and building blocks to improve volume in 2024. Mike will then go into more depth on the fourth quarter financial results and the details of our 2024 financial outlook. And finally, before your questions, I will share some closing comments, including our key priorities as I begin my first full year as CEO.
Turning now to our results on Slide 4. I want to start by acknowledging that our top-line results for the fourth quarter did not meet our expectations, as volume trends decelerated relative to the third quarter. There was greater-than-expected pressure on the consumer that drove changes in their behavior, which impacted our growth. We did, however, see sequential improvement in several key areas within our portfolio, underscoring that our strategies and initiatives are working, as I will highlight in a moment.
That said, we do recognize that consumers are exhibiting even more value-seeking behavior, they are increasing shopping trips, reducing basket size and making just-in-time purchases, creating further uncertainty in the consumer environment.
I want to be clear that we are dedicated to improving volumes. We have refined our plans and are prioritizing our investments to drive impactful results, and return to differentiated and sustainable volume-led growth, and you should expect improvement over the coming year and into 2025 and beyond.
Now let's go to our fourth quarter performance in more detail. Turning to Slide 5. In our fourth quarter, sales increased 3%, including a 1% favorable impact from currency. In constant currency, sales grew 2%, reflecting a 5% contribution from pricing, which was partially offset by a 3% decline in volume and product mix.
As expected, the benefit from the China recovery was fully offset by the impact of our strategic decisions to exit DSD -- Direct Store Delivery, of our bagged Hispanic spices in the Americas, and the exit of a private label product line and the divestiture of a small canning business, which was part of our Giotti Flavor Solutions operations in EMEA.
Starting with where results differed from expectations. In Americas Consumer, we expected volume declines in the prepared food categories that we participate in, like frozen and Asian. But the decline was greater than we anticipated due to the more challenging macro trends and was broadly consistent with the performance of these categories....
McCormick & Company, Incorporated (MKC) Q4 2023 Earnings Call Transcript