2023-10-03 10:44:30 ET
Summary
- McCormick's Q3 results show a significant increase in cash flow from operations and improvements in inventory management.
- The company's governance programs are starting to show positive effects on inventory reduction and cost savings.
- McCormick reaffirmed its revenue and profit outlook for FY 2023, but controllable expenses and volume declines are concerning.
McCormick & Company ( MKC ), the company associated with food flavor globally, just reported its Q3 results this morning (October 3rd, 2023) as Seeking Alpha has covered here . The stock is down close to 3% pre-market as of this writing, which suggests that the market did not like something about the report or the guidance. Let's take a closer look at McCormick's spicy version of The Good, The Bad, and The Ugly.
The Good
- Inventory Looking Better: Cash flow from operations went up a mind-boggling 164% to reach $660 million in Q3. This was primarily driven by the fact that inventories and other assets/liabilities went from -$447 million in Q3 2022 to $97.8 million in Q3 2023. In its Q3 2022 report , the company had highlighted that managing inventory and eliminating inefficiencies was a primary goal, and it appears like they've more than followed through on that in Q3 2023.
MKC Cash Flow (ir.mccormick.com)
For further details see:
McCormick Earnings: Volume Decline Is Concerning Despite Pricing Power