MCCORMICK & CO INC

Previous wording

In the second quarter of 2024, our sales declined by 1.0% from the second quarter 2023 level, including impact from the following factors:

Current wording

In the third quarter of 2024, our sales declined by 0.3% from the third quarter 2023 level, including impact from the following factors:

Previous wording

•Volume and product mix unfavorably impacted our net sales growth by 0.7%, exclusive of divestitures. The flavor solutions segment experienced unfavorable volume and product mix of 1.8% and the consumer segment experienced favorable volume and product mix of 0.3%.

Current wording

•Volume and product mix favorably impacted our net sales by 0.6%, exclusive of divestitures. The consumer segment experienced favorable volume and product mix of 1.0% and the flavor solutions segment experienced flat volume and product mix.

Previous wording

•Net sales in our flavor solutions segment were positively impacted by fluctuations in currency rates which were offset by the negative impact of fluctuations in currency rates for our consumer segment.

Current wording

•Net sales were negatively impacted by fluctuations in currency rates by 0.4%, decreasing sales growth by 0.2% in our consumers segment and 0.5% in our flavor solutions segment.

Previous wording

Operating income was $234.1 million in the second quarter of 2024 and $221.8 million in the comparable 2023 period, an increase of 5.5%. We recorded $1.8 million and $13.2 million of special charges in the second quarter of 2024 and 2023, respectively, related to organization and streamlining actions. In the second quarter of 2024, the effects of a 60 basis points improvement in our gross profit margin, primarily associated with the effects of cost savings from our GOE and CCI programs, were partially offset by increased conversion costs. Also, in the second quarter of 2024, selling, general and administrative expenses as a percentage of sales increased 40 basis points, which was driven by the higher level of advertising and promotion expenses. Excluding special charges, adjusted operating income was $235.9 million in the second quarter of 2024, an increase of 0.3%, compared to $235.0 million in the year-ago period. In constant currency, adjusted operating income increased 0.4%.

Current wording

Operating income was $286.5 million in the third quarter of 2024 and $245.0 million in the comparable 2023 period, an increase of 16.9%. We recorded $1.9 million and $6.1 million of special charges in the third quarter of 2024 and 2023, respectively, related to organization and streamlining actions. In the third quarter of 2024, our gross profit margin improved by 170 basis points, primarily driven by favorable product and customer mix and cost savings led by our comprehensive continuous improvement (CCI) program. Also, in the third quarter of 2024, selling, general and administrative expenses as a percentage of sales decreased 60 basis points, which was driven by lower incentive and stock-based compensation expenses as well as CCI-led cost savings. Excluding special charges, adjusted operating income was $288.4 million in the third quarter of 2024, an increase of 14.9%, compared to $251.1 million in the year-ago period. In constant currency, adjusted operating income increased 15.6%.

Previous wording

Diluted earnings per share was $0.68 and $0.56 in the second quarter of 2024 and 2023, respectively. The increase in diluted earnings per share for the second quarter of 2024 was driven primarily by the impact of higher operating income, including the effects of lower special charges, the favorable effects of a decrease in the effective tax rate, including the effects of a favorable discrete income tax benefit, and the favorable effects of an increase in income from unconsolidated operations. Special charges lowered earnings per share by $0.01 and $0.04 in the second quarter of 2024 and 2023, respectively. Excluding the effects of special charges, adjusted diluted earnings per share was $0.69 in the second quarter of 2024 and $0.60 in the second quarter of 2023, or an increase of 15.0%.

Current wording

Diluted earnings per share was $0.83 and $0.63 in the third quarter of 2024 and 2023, respectively. The increase in diluted earnings per share for the third quarter of 2024 was driven primarily by the impact of higher operating income, including the effects of lower special charges, the favorable effects of a decrease in the effective tax rate, including the effects of favorable discrete income tax benefits, and the favorable effects of an increase in income from unconsolidated operations. Special charges lowered earnings per share by $0.02 in the third quarter of 2023. Excluding the effects of special charges, adjusted diluted earnings per share was $0.83 in the third quarter of 2024 and $0.65 in the third quarter of 2023, or an increase of 27.7%.

Previous wording

A detailed review of our second quarter 2024 performance compared to the second quarter of fiscal 2023 and our performance for the six months ended May 31, 2024 compared to the prior year period appears in the section titled “Results of Operations – Company” and “Results of Operations – Segments”. For a reconciliation of non-GAAP to reported amounts, see the subsequent discussion under the heading "Non-GAAP Financial Measures".

Current wording

A detailed review of our third quarter 2024 performance compared to the third quarter of fiscal 2023 and our performance for the nine months ended August 31, 2024 compared to the prior year period appears in the section titled “Results of Operations – Company” and “Results of Operations – Segments”. For a reconciliation of non-GAAP to reported amounts, see the subsequent discussion under the heading "Non-GAAP Financial Measures".

Previous wording

In 2024, we expect net sales to range from a decline of 2% to 0% from our net sales in 2023 including a 1% unfavorable impact of foreign currency rates, or to range from a decline of 1% to an increase of 1% on a constant currency basis. We anticipate that the 2024 sales change will include a favorable impact from prior year pricing actions, which will be partially reduced by current year pricing actions taken in response to price gap management as well as promotional activities. We anticipate that our volume and product mix will be impacted by the divestiture of our Giotti canning business in the third quarter of last year, and the pruning of low margin businesses.

Current wording

In 2024, we expect net sales to range from a decline of 1% to an increase of 1% on both a reported and a constant currency basis, with a minimal impact from currency. We anticipate that the 2024 sales change will include a favorable impact from prior year pricing actions, which will be partially reduced by current year pricing actions taken in response to price gap management as well as promotional activities. We anticipate that our volume and product mix will be impacted by the divestiture of our Giotti canning business in the third quarter of last year, and the pruning of low margin businesses.

Previous wording

In 2024, we expect an increase in operating income of 8% to 10%, which includes a 1% unfavorable impact from foreign currency rates, over the 2023 level. The projected 2024 change in operating income includes the effects of the anticipated increase in our gross profit margin as well as SG&A cost savings from our CCI and GOE programs, which will be partially offset by our investments to drive volume growth, including brand marketing. We expect our brand marketing investments in 2024 to increase in the high-single digits over the 2023 level. We also expect approximately $15 million of special charges in 2024 that relate to previously announced organization and streamlining actions; in 2023, special charges were $61.2 million. Excluding special charges, we expect 2024’s adjusted operating income to increase by 3% to 5%, which includes a 1% unfavorable impact from foreign currency rates, or to increase by 4% to 6% on a constant currency basis.

Current wording

In 2024, we expect an increase in operating income of 9% to 11%, which includes a minimal impact from foreign currency rates, over the 2023 level. The projected 2024 change in operating income includes the effects of the anticipated increase in our gross profit margin as well as SG&A cost savings from our CCI and GOE programs, which will be partially offset by our investments to drive volume growth, including brand marketing. We expect our brand marketing investments in 2024 to increase in the high-single digits over the 2023 level. We also expect approximately $15 million of special charges in 2024 that relate to previously announced organization and streamlining actions; in 2023, special charges were $61.2 million. Excluding special charges, we expect 2024’s adjusted operating income to increase by 4% to 6% on a reported and a constant currency basis, with a minimal impact from currency.

Previous wording

We estimate that our 2024 effective tax rate, including the net favorable impact of anticipated discrete tax items, will be 22% as compared to 21.8% in 2023. Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 22% in 2024, or comparable to an adjusted effective tax rate of 22.0% in 2023.

Current wording

We estimate that our 2024 effective tax rate, including the net favorable impact of anticipated discrete tax items, will be 21% as compared to 21.8% in 2023. Excluding projected taxes associated with special charges, we estimate that our adjusted effective tax rate will be approximately 21% in 2024, as compared to an adjusted effective tax rate of 22.0% in 2023.

Previous wording

Diluted earnings per share was $2.52 in 2023. Diluted earnings per share for 2024 is projected to range from $2.76 to $2.81. Excluding the per share impact of special charges of $61.2 million adjusted diluted earnings per share was $2.70 in 2023. Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.04, is projected to range from $2.80 to $2.85 in 2024, or an increase of 4% to 6% over adjusted diluted earnings per share of $2.70 in 2023.

Current wording

Diluted earnings per share was $2.52 in 2023. Diluted earnings per share for 2024 is projected to range from $2.81 to $2.86. Excluding the per share impact of special charges of $61.2 million, adjusted diluted earnings per share was $2.70 in 2023. Adjusted diluted earnings per share, excluding an estimated per share impact from special charges of $0.04, is projected to range from $2.85 to $2.90 in 2024, or an increase of 5% to 7% over adjusted diluted earnings per share of $2.70 in 2023.

Previous wording

Sales for the second quarter of 2024 decreased by 1.0% from the prior year level and decreased by 1.0% on a constant currency basis (that is, excluding the impact of foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures). Unfavorable volume and product mix decreased sales by 0.7%. Unfavorable volume and product mix in our flavor solutions segment, including the effects of the lower quick service restaurant and packaged food customer demand, exceeded the favorable volume and product mix in our consumer segment. Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period. Foreign currency rates had a neutral impact on sales for the quarter.

Current wording

Sales for the third quarter of 2024 decreased by 0.3% from the prior year level and increased by 0.1% on a constant currency basis (that is, excluding the impact of foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures). Pricing actions decreased sales by 0.2% as compared to the prior period. Pricing actions taken in response to price gap management as well as promotional activities in our consumer segment were mitigated by the favorable impact of pricing actions taken in the prior year. Favorable volume and product mix increased sales by 0.6% for the quarter. Favorable volume and product mix in our consumer segment was mitigated by flat volume and product mix in our flavor solutions segment. Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period. Foreign currency rates decreased sales by 0.4% for the quarter and is excluded from our measure of sales growth of 0.1% on a constant currency basis.

Previous wording

Sales for the six months ended May 31, 2024 increased by 0.7% from the prior year level and increased by 0.3% on a constant currency basis. Pricing actions increased sales by 1.3% as compared to the prior year period principally due to pricing actions implemented in the prior year. Unfavorable volume and product mix from both our consumer and flavor solutions segments collectively decreased sales by 0.7%. Our decisions to discontinue certain low margin businesses contributed approximately 0.3% to the unfavorable impact of volume and product mix. Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period. Sales were also impacted by favorable foreign currency rates that increased net sales by 0.4% in the six months ended May 31, 2024 compared to the year-ago period and is excluded from our measure of sales growth of 0.3% on a constant currency basis.

Current wording

Sales for the nine months ended August 31, 2024 increased by 0.3% from the prior year level and increased by 0.1% on a constant currency basis. Pricing actions increased sales by 0.8% as compared to the prior year period principally due to pricing actions implemented in the prior year. Unfavorable volume and product mix from both our consumer and flavor solutions segments collectively decreased sales by 0.4%. Our decisions to discontinue certain low margin businesses contributed approximately 0.3% to the unfavorable impact of volume and product mix. Also, the divestiture of our Giotti canning business unfavorably impacted sales by 0.3% as compared to the prior year period. Sales were also impacted by favorable foreign currency rates that increased net sales by 0.2% in the nine months ended August 31, 2024 compared to the prior period and is excluded from our measure of sales growth of 0.1% on a constant currency basis.

Previous wording

Gross profit for the second quarter of 2024 increased by $4.1 million, or 0.7%, from the comparable period in 2023. Our gross profit margin for the three months ended May 31, 2024 was 37.7%, an increase of 60 basis points from the comparable period in 2023. The increase in gross profit margin in the quarter ended May 31, 2024 was driven by our cost savings led by our CCI and GOE programs, which were partially offset by increased conversion costs as compared to the 2023 period.

Current wording

Gross profit for the third quarter of 2024 increased by $27.1 million, or 4.4%, from the comparable period in 2023. Our gross profit margin for the three months ended August 31, 2024 was 38.7%, an increase of 170 basis points from the comparable period in 2023. The increase in gross profit margin in the quarter ended August 31, 2024 was driven by favorable product and customer mix and cost savings led by our CCI program as compared to the 2023 period.

Previous wording

Gross profit for the six months ended May 31, 2024 increased by $40.5 million, or 3.4%, from the comparable period in 2023. Our gross profit margin for the six months ended May 31, 2024 was 37.6%, an increase of 110 basis points from the comparable period in 2023. The increase in gross profit margin in the six months ended May 31, 2024 was driven by the favorable impact of our pricing actions, favorable product and customer mix, and cost savings led by our CCI and GOE programs. These favorable impacts were partially offset by increased commodity and conversion costs as compared to the 2023 period.

Current wording

Gross profit for the nine months ended August 31, 2024 increased by $67.6 million, or 3.8%, from the comparable period in 2023. Our gross profit margin for the nine months ended August 31, 2024 was 37.9%, an increase of 120 basis points from the comparable period in 2023. The increase in gross profit margin in the nine months ended August 31, 2024 was driven by the favorable impact of our pricing actions, favorable product and customer mix, less scrapped inventory, and cost savings led by our CCI and GOE programs. These favorable impacts were partially offset by increased commodity and conversion costs as compared to the 2023 period.

Previous wording

SG&A increased by $3.2 million in the second quarter of 2024 as compared to the 2023 level, driven primarily by advertising and promotional spend and increased selling and marketing costs. These costs were partially offset by CCI-led cost savings as well as a lower stock-based compensation expense, all as compared to the 2023 period. SG&A as a percentage of net sales increased by 40 basis points from the prior year levels due to the factors described above.

Current wording

SG&A decreased by $10.2 million in the third quarter of 2024 as compared to the 2023 level, driven primarily bylower performance-based employee and stock-based compensation expense as well as CCI-led cost savings. SG&A as a percentage of net sales decreased by 60 basis points from the prior year levels due to the factors described above.

Previous wording

SG&A increased by $28.7 million in the six months ended May 31, 2024 as compared to the 2023 period, driven primarily by advertising and promotional spend, increased selling and marketing costs and a higher investment in research and development. These costs were partially offset by CCI-led and GOE cost savings as well as lower stock-based compensation expense, all as compared to the 2023 period. SG&A as a percentage of net sales increased by 80 basis points from the prior year levels due primarily to a 60 basis point increase in advertising and promotional expenses as compared to the prior year period.

Current wording

SG&A increased by $18.5 million in the nine months ended August 31, 2024 as compared to the 2023 period, driven primarily by advertising and promotional spend, increased selling and marketing costs and a higher investment in research and development. These costs were partially offset bylower performance-based employee and stock-based compensation expense as well as CCI-led and GOE cost savings, all as compared to the 2023 period. SG&A as a percentage of net sales increased by 30 basis points from the prior year levels due primarily to a 40 basis point increase in advertising and promotional expenses as compared to the prior year period.

Previous wording

During the three months ended May 31, 2023, we recorded $13.2 million of special charges. Those special charges principally consisted of $8.6 million associated with our GOE program, $1.3 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $3.2 million in the Americas region.

Current wording

During the three months ended August 31, 2023, we recorded $6.1 million of special charges. Those special charges principally consisted of $3.6 million associated with the GOE program, $1.7 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $0.8 million in the Americas region.

Previous wording

During the six months ended May 31, 2023, we recorded $41.0 million of special charges. Those special charges principally consisted of $33.4 million associated with our GOE program, $2.2 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $4.5 million in the Americas region, and $0.9 million in the EMEA region.

Current wording

During the nine months ended August 31, 2023, we recorded $47.1 million of special charges. Those special charges principally consisted of $37.0 million associated with the GOE program, $3.9 million associated with the transition of a manufacturing facility in EMEA, and streamlining actions of $5.3 million in the Americas region, and $0.9 million in the EMEA region.

Previous wording

Interest expense increased slightly in the three and six months ended May 31, 2024, as compared to the prior year periods, driven by the effects of a reduction in average borrowing levels which were more than offset by higher short-term interest rates. Other income, net for the three and six months ended May 31, 2024 remained consistent, as compared to the prior year periods.

Current wording

Interest expense increased $0.8 million and $1.2 million in the three and nine months ended August 31, 2024, respectively, as compared to the prior year periods, driven by the effects of a reduction in average borrowing levels which were more than offset by higher average interest rates on borrowings. Other income, net for the three months ended August 31, 2024 increased as compared to the prior year period primarily due to an increase in interest income and a lower level of foreign currency exchanges losses. Other income, net for the nine months ended August 31, 2024 increased as compared to the prior period primarily due to an increase in interest income.

Previous wording

Income tax expense for the six months ended May 31, 2024 included $18.6 million of net discrete tax benefits consisting principally of the following: (i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $1.3 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S. jurisdiction, (iii) $1.9 million of tax expense resulting from state tax matters, and (iv) $0.2 million of tax expense associated with stock-based compensation.

Current wording

Income tax expense for the three months ended August 31, 2024 included $16.3 million of net discrete tax benefits consisting principally of the following: (i) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (ii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iii) $8.3 million of tax benefits resulting from state tax matters, and related deferred taxes, (iv) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (v) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.

Previous wording

Income tax expense for the three months ended May 31, 2024 included $20.2 million of net discrete tax benefits consisting principally of the following: (i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $1.3 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S. jurisdiction, (iii) $0.3 million of excess tax benefits associated with stock-based compensation, and (iv) $0.8 million of tax expense resulting from a state tax matter.

Current wording

Income tax expense for the nine months ended August 31, 2024 included $34.9 million of net discrete tax benefits consisting principally of the following: (i) $19.4 million of tax benefits associated with the recognition of a deferred tax asset related to an international legal entity reorganization, (ii) $6.8 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations, (iii) $5.5 million of tax benefit from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the effective settlement from conclusion of a tax examination, (iv) $6.4 million of tax benefits resulting from state tax matters, and related deferred taxes, (v) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (vi) $4.6 million of tax expense associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset.

Previous wording

Income tax expense for the three months ended May 31, 2023 included $3.0 million of net discrete tax benefits consisting principally of the following: (i) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S. jurisdiction, (ii) $1.2 million of tax benefit related to a tax settlement, and (iii) $0.6 million of excess tax benefits associated with stock-based compensation.

Current wording

Income tax expense for the three months ended August 31, 2023 included $3.3 million of net discrete tax benefits consisting principally of the following: (i) $2.2 million of tax benefits from the net reversal of certain prior year reserves for unrecognized tax benefits and related interest in non-U.S. jurisdictions, (ii) $0.8 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in non-U.S. jurisdictions, (iii) $0.6 million of excess tax benefits associated with stock-based compensation, (iv) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (v) $1.9 million of tax expense related to certain unremitted prior year earnings.

Previous wording

Income tax expense for the six months ended May 31, 2023 included $6.8 million of net discrete tax benefits consisting principally of the following: (i) $3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, (ii) $1.2 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in a non-U.S. jurisdiction, (iii) $1.2 million of tax benefit related to a tax settlement (iv) $0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, and (v) $0.4 million of excess tax benefits associated with stock-based compensation.

Current wording

Income tax expense for the nine months ended August 31, 2023 included $10.1 million of net discrete tax benefits consisting principally of the following: (i) $3.2 million of tax benefits associated with the adjustment of a valuation allowance due to changes in judgment about the realizability of the deferred tax asset, (ii) $2.2 million of tax benefits from the net reversal of certain prior reserves for unrecognized tax benefits and related interest in non-U.S. jurisdictions, (iii) $2.0 million of tax benefits from the reversal of certain reserves for unrecognized tax benefits and related interest associated with the expiration of statutes of limitations in non-U.S. jurisdictions, (iv) $1.2 million of tax benefit related to a tax settlement, (v) $0.8 million of tax benefits related to the revaluation of deferred taxes resulting from changes in tax rates, (vi) $1.0 million of excess tax benefits associated with stock-based compensation, (vii) $1.5 million of tax benefits resulting from an adjustment to a prior year tax accrual, and related deferred taxes, based on the final returns filed, and (viii) $1.9 million of tax expense related to certain unremitted prior year earnings.

Previous wording

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $6.5 million and $13.8 million for the three and six months ended May 31, 2024, respectively, each as compared to the year ago period. The increase was driven by higher earnings of our largest joint venture, McCormick de Mexico.

Current wording

Income from unconsolidated operations, which is presented net of the elimination of earnings attributable to non-controlling interests, increased by $4.5 million and $18.3 million for the three and nine months ended August 31, 2024, respectively, each as compared to the year ago period. The increase was driven by higher earnings of our largest joint venture, McCormick de Mexico.

Previous wording

In the second quarter of 2024, sales of our consumer segment decreased by 0.8% as compared to the second quarter of 2023 and decreased by 0.5% on a constant currency basis. The 0.8% decrease was driven by the Americas and APAC regions, partially offset by higher sales in the EMEA region, all as compared to the prior year quarter. Pricing, including actions taken in response to price gap management as well as promotional activities, unfavorably impacted sales by 0.8% as compared to the prior year period. Favorable volume and product mix increased consumer segment sales by 0.3% in the second quarter of 2024 as compared to the same period last year. Sales in the second quarter of 2024 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 0.3% compared to the year-ago quarter and is excluded from our measure of sales decline of 0.5% on a constant currency basis.

Current wording

In the third quarter of 2024, sales of our consumer segment were flat as compared to the third quarter of 2023 and increased by 0.2% on a constant currency basis. Higher sales in the EMEA region were offset by decreases in the Americas and APAC regions, all as compared to the prior year quarter. Pricing, including actions taken in response to price gap management as well as promotional activities, unfavorably impacted sales by 0.8% as compared to the prior year period. Favorable volume and product mix increased consumer segment sales by 1.0% in the third quarter of 2024 as compared to the same period last year. Sales in the third quarter of 2024 reflected an unfavorable impact from foreign currency rates that decreased consumer segment sales by 0.2% compared to the year-ago quarter and is excluded from our measure of sales growth of 0.2% on a constant currency basis.

Previous wording

In the Americas region, consumer sales decreased 1.6% in the second quarter of 2024 as compared to the same quarter of 2023 and decreased by 1.6% on a constant currency basis. Pricing, including actions taken in response to price gap management as well as promotional activities decreased sales by 1.3% as compared to the prior year period. For the second quarter of 2024, unfavorable volume and product mix decreased sales by 0.3% as compared to the corresponding period in 2023. Foreign currency rates did not have a significant impact on sales in the quarter. Our sales decline on a constant currency basis was 1.6% for the quarter.

Current wording

In the Americas region, consumer sales decreased 0.4% in the third quarter of 2024 as compared to the same quarter of 2023 and decreased by 0.2% on a constant currency basis. Pricing, including actions taken in response to price gap management as well as promotional activities, decreased sales by 0.9% as compared to the prior year period. For the third quarter of 2024, favorable volume and product mix driven by growth across core product categories increased sales by 0.7% as compared to the corresponding period in 2023. During the third quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 0.2% compared to the year-ago period and is excluded from our measure of sales decline of 0.2% on a constant currency basis.

Previous wording

In the EMEA region, consumer sales increased 5.0% in the second quarter of 2024 as compared to the same quarter of 2023 and increased by 3.9% on a constant currency basis. Favorable volume and product mix during the second quarter of 2024 increased sales by 3.7% from the prior year level, which was driven by growth in our major markets across their product categories. Pricing actions, principally implemented in the prior year, increased sales by 0.2% as compared to the 2023 period. During the second quarter of 2024, a favorable impact from foreign currency rates increased sales by 1.1% compared to the year-ago period and is excluded from our measure of sales growth of 3.9% on a constant currency basis.

Current wording

In the EMEA region, consumer sales increased 2.9% in the third quarter of 2024 as compared to the same quarter of 2023 and increased by 2.6% on a constant currency basis. Favorable volume and product mix during the third quarter of 2024 increased sales by 3.5% from the prior year level, which was driven by growth in our major markets across their product categories. Pricing actions taken in response to price gap management as well as promotional activities decreased sales by 0.9% as compared to the 2023 period. During the third quarter of 2024, a favorable impact from foreign currency rates increased sales by 0.3% compared to the year-ago period and is excluded from our measure of sales growth of 2.6% on a constant currency basis.

Previous wording

In the APAC region, consumer sales decreased 4.8% in the second quarter of 2024 as compared to the second quarter of 2023 and decreased by 0.9% on a constant currency basis. For the quarter ended May 31, 2024, unfavorable volume and product mix decreased sales by 1.5%, which was primarily driven by slower demand in China. Pricing actions, principally implemented in the prior year, increased sales by 0.6% as compared to the prior year period. During the second quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 3.9% compared to the year-ago period and is excluded from our measure of sales decline of 0.9% on a constant currency basis.

Current wording

In the APAC region, consumer sales decreased 0.9% in the third quarter of 2024 as compared to the third quarter of 2023 and were flat on a constant currency basis. Pricing actions, principally implemented in the prior year, favorably impacted sales by 0.6% as compared to the prior year period. For the quarter ended August 31, 2024, unfavorable volume and product mix decreased sales by 0.6%, which was primarily driven by slower demand in China mitigated by growth in other parts of the region. During the third quarter of 2024, an unfavorable impact from foreign currency rates decreased sales by 0.9% compared to the year-ago period and is excluded from our measure of sales on a constant currency basis.

Previous wording

For the six months ended May 31, 2024, sales of our consumer segment increased 0.2% as compared to the six months ended May 31, 2023 and were flat on a constant currency basis. The favorable impacts of pricing in all regions, including both actions implemented in the prior year as well as those taken in the current year in response to price gap management and promotional activities, increased sales by 1.0% during the six months ended May 31, 2024 as compared to the prior year period. Lower volume and unfavorable product mix decreased sales by 1.0% as compared to the prior year period. Volume and product mix includes a 0.4% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. A favorable impact from foreign currency rates increased sales by 0.2% compared to the prior year and is excluded from our measure of sales growth of 0.0% on a constant currency basis.

Current wording

For the nine months ended August 31, 2024, sales of our consumer segment increased 0.2% as compared to the nine months ended August 31, 2023 and increased 0.2% on a constant currency basis. The favorable impacts of pricing in all regions, including both actions implemented in the prior year as well as those taken in the current year in response to price gap management and promotional activities, increased sales by 0.4% during the nine months ended August 31, 2024 as compared to the prior year period . Lower volume and unfavorable product mix decreased sales by 0.2% as compared to the prior year period. Volume and product mix includes a 0.3% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. Foreign currency rates did not have a significant impact on sales for the nine months ended August 31, 2024.

Previous wording

Segment operating income for our consumer segment decreased by $4.3 million, or 2.8%, in the second quarter of 2024 from the second quarter of 2023. The decrease in segment operating income was driven by the effects of a decrease in gross profit primarily due to unfavorable pricing actions and higher conversion costs, which more than offset the favorable impacts of product mix and CCI-led and GOE cost savings, all as compared to the prior year period. Segment operating margin for our consumer segment decreased in the second quarter of 2024 by 30 basis points from 2023 to 16.5% and was driven primarily by the decrease in gross margin as compared to the prior year period. On a constant currency basis, segment operating income for our consumer segment decreased by 2.4% in the second quarter of 2024 in comparison to the same period in 2023.

Current wording

Segment operating income for our consumer segment increased by $13.5 million, or 7.8%, in the third quarter of 2024 from the third quarter of 2023. The increase in segment operating income was driven by the effects of a decrease in SG&A expenses, primarily driven by lower distribution, incentive, and stock compensation expense as well as CCI-led cost savings, which more than offset a decrease in gross profit. The decrease in gross profit is primarily due to unfavorable pricing, which more than offset the favorable impacts of product mix, and CCI-led cost savings, all as compared to the prior year period. Segment operating margin for our consumer segment increased in the third quarter of 2024 by 140 basis points from 2023 to 19.9% and was driven primarily by a decrease in SG&A as a percentage of sales, as compared to the prior year period. On a constant currency basis, segment operating income for our consumer segment increased by 8.1% in the third quarter of 2024 in comparison to the same period in 2023.

Previous wording

Segment operating income for our consumer segment decreased by $1.4 million, or 0.4%, for the six months ended May 31, 2024 as compared to the same period in 2023. The decrease in segment operating income was driven by the effects of an increase in gross profit that was more than offset by an increase in SG&A expenses, primarily driven by higher advertising and promotion expenses, all as compared to the prior year period. The increase in gross profit was primarily due to favorable pricing actions and CCI-led and GOE costs savings, which were partially offset by increased commodity costs, all as compared to the prior year. Segment operating margin for our consumer segment for the six months ended May 31, 2024 was 17.8%, a reduction of 20 basis points from the 2023 level as an increase in gross margin was offset by an increase in SG&A as a percentage of sales, driven by an increase in advertising and promotion spend, all as compared to the prior year period. On a constant currency basis, segment operating income for our consumer segment decreased by 0.4% in the six months ended May 31, 2024 in comparison to the same period in 2023.

Current wording

Segment operating income for our consumer segment increased by $12.1 million, or 2.4%, for the nine months ended August 31, 2024 as compared to the same period in 2023. The increase in segment operating income was driven by the effects of a decrease in SG&A expenses, primarily driven by lower distribution, incentive, and stock compensation expense, as well as CCI-led savings, offset by an increase in advertising and promotional expense. Gross profit was relatively flat for our consumer segment as compared to the prior year. Favorable impacts of pricing actions and product mix combined with the lower level of scraped inventory and CCI-led and GOE savings were offset by increases in commodity prices and conversion costs as compared to the prior year period. Segment operating margin for our consumer segment for the nine months ended August 31, 2024 was 18.5%, an increase of 40 basis points from the 2023 level due to a decrease in SG&A as a percentage of sales as compared to the prior year period. On a constant currency basis, segment operating income for our consumer segment increased by 2.5% in the nine months ended August 31, 2024 in comparison to the same period in 2023.

Previous wording

In the second quarter of 2024, sales of our flavor solutions segment decreased by 1.1% as compared to the second quarter of 2023 and decreased by 1.4% on a constant currency basis. Favorable pricing in the Americas and APAC regions more than offset unfavorable pricing in the EMEA region and increased sales by 1.0% in the second quarter of 2024 as compared to the prior year period principally due to pricing actions implemented in the prior year. Unfavorable volume and product mix decreased segment sales by 1.8% as compared to the prior period as growth in the APAC region was more than offset by lower volume and product mix in the Americas and EMEA regions. Volume and product mix includes a 0.2% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. The divestiture of our Giotti canning business unfavorably impacted sales by 0.6% as compared to the prior year period. The favorable impact of foreign currency rates increased flavor solutions segment sales by 0.3% compared to the year-ago quarter and is excluded from our measure of sales decline of 1.4% on a constant currency basis.

Current wording

In the third quarter of 2024, sales of our flavor solutions segment decreased by 0.7% as compared to the third quarter of 2023 and decreased by 0.2% on a constant currency basis. Favorable pricing in the Americas and APAC regions more than offset unfavorable pricing in the EMEA region and increased sales by 0.4% in the third quarter of 2024 as compared to the prior year period principally due to pricing actions implemented in the prior year. Favorable volume and product mix in the Americas region offset unfavorable volume and product mix in the EMEA and APAC regions, resulting in a neutral impact to sales for the quarter. Volume and product mix includes a 0.2% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. The divestiture of our Giotti canning business unfavorably impacted sales by 0.6% as compared to the prior year period. The unfavorable impact of foreign currency rates decreased flavor solutions segment sales by 0.5% compared to the year-ago quarter and is excluded from our measure of sales decline of 0.2% on a constant currency basis.

Previous wording

In the EMEA region, flavor solutions sales decreased by 7.3% in the second quarter of 2024 as compared to the second quarter of 2023 and declined by 8.2% on a constant currency basis. Pricing actions unfavorably impacted sales by 1.0% in the second quarter of 2024 as compared to the prior period level. Unfavorable volume and product mix decreased segment sales in the EMEA region by 4.1% as compared to the corresponding period in 2023 including the effects of lower consumer spending at quick service restaurants and packaged food and beverage companies, including the timing of promotional activities, and a 0.9% impact of our decision to discontinue a low margin business. The divestiture of our Giotti canning business unfavorably impacted sales by 3.1% as compared to the prior year period. A favorable impact from foreign currency rates increased sales by 0.9% compared to the second quarter of 2023 and is excluded from our measure of sales decline of 8.2% on a constant currency basis.

Current wording

In the EMEA region, flavor solutions sales decreased by 8.4% in the third quarter of 2024 as compared to the third quarter of 2023 and declined by 9.0% on a constant currency basis. Pricing actions, principally due to those implemented in the prior year, unfavorably impacted sales by 1.4% in the third quarter of 2024 as compared to the prior period level. Unfavorable volume and product mix decreased segment sales in the EMEA region by 4.5% as compared to the corresponding period in 2023 including the effects of lower sales at quick service restaurants, and a 1.1% impact of our decision to discontinue a low margin business. The divestiture of our Giotti canning business unfavorably impacted sales by 3.1% as compared to the prior year period. A favorable impact from foreign currency rates increased sales by 0.6% compared to the third quarter of 2023 and is excluded from our measure of sales decline of 9.0% on a constant currency basis.

Previous wording

In the Americas region, flavor solutions sales decreased by 0.2% in the second quarter of 2024 as compared to the second quarter of 2023 and decreased by 0.9% on a constant currency basis. Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 1.5% during the quarter ended May 31, 2024, as compared to the prior year period. Unfavorable volume and product mix decreased flavor solutions sales in the Americas by 2.4% during the second quarter of 2024, as compared to the prior year period primarily as a result of softness in quick service restaurants and packaged food companies, including the timing of customer promotional and other activities. A favorable impact from foreign currency rates increased sales by 0.7% compared to the second quarter of 2023 and is excluded from our measure of sales decline of 0.9% on a constant currency basis.

Current wording

In the APAC region, flavor solutions sales decreased 1.3% in the third quarter of 2024 as compared to the third quarter of 2023 and decreased by 0.1% on a constant currency basis. Pricing actions, principally due to those implemented in the prior year, favorably impacted sales by 0.3% as compared to the prior year period. Unfavorable volume and product mix decreased segment sales by 0.4% in the third quarter of 2024. Growth in quick service restaurant sales in China were more than offset by softness in quick service restaurant sales in other parts of the region. An unfavorable impact from foreign currency rates decreased sales by 1.2% compared to the third quarter of 2023 and is excluded from our measure of sales decline of 0.1% on a constant currency basis.

Previous wording

For the six months ended May 31, 2024, our flavor solutions sales increased 1.2% as compared to the six months ended May 31, 2023 and increased by 0.5% on a constant currency basis. Pricing actions, principally due to those implemented in the prior year, across all regions increased sales by 1.7% during the six months ended May 31, 2024 and were partially offset by 0.6% of unfavorable volume and product mix, both as compared to the prior year period. Volume and product mix includes a 0.3% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. The divestiture of our Giotti canning business unfavorably impacted sales by 0.6% as compared to the prior year period. The favorable impact of foreign currency rates increased flavor solutions segment sales by 0.7% compared to the year-ago period and is excluded from our measure of sales growth of 0.5% on a constant currency basis.

Current wording

For the nine months ended August 31, 2024, our flavor solutions sales increased 0.5% as compared to the nine months ended August 31, 2023 and increased by 0.2% on a constant currency basis. Pricing actions, principally due to those implemented in the prior year, across all regions increased sales by 1.2% during the nine months ended August 31, 2024 and were partially offset by 0.4% of unfavorable volume and product mix, both as compared to the prior year period. Volume and product mix includes a 0.3% unfavorable impact from the prior year associated with our decision to discontinue certain low margin businesses. The divestiture of our Giotti canning business unfavorably impacted sales by 0.6% as compared to the prior year period. The favorable impact of foreign currency rates increased flavor solutions segment sales by 0.3% compared to the year-ago period and is excluded from our measure of sales growth of 0.2% on a constant currency basis.

Previous wording

Segment operating income for our flavor solutions segment increased by $5.2 million, or 6.3%, in the second quarter of 2024 as compared to the second quarter of 2023. The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the favorable impact of pricing as well as CCI-led and GOE cost savings which more than offset the lower level of sales and the higher level of SG&A expenses. Segment operating margin for our flavor solutions segment increased by 80 basis points from the prior year level to 11.7% in the second quarter of 2024. That increase was the result of an increase in gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2023. On a constant currency basis, segment operating income for our flavor solutions segment increased by 5.9% in the second quarter of 2024 as compared to the same period in 2023.

Current wording

Segment operating income for our flavor solutions segment increased by $23.8 million, or 30.6%, in the third quarter of 2024 as compared to the third quarter of 2023. The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to product mix and pricing actions, and CCI-led cost savings. Segment operating margin for our flavor solutions segment increased by 330 basis points from the prior year level to 13.7% in the third quarter of 2024. That increase was the result of an increase in gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2023. On a constant currency basis, segment operating income for our flavor solutions segment increased by 32.0% in the third quarter of 2024 as compared to the same period in 2023.

Previous wording

Segment operating income for our flavor solutions segment increased by $13.2 million, or 9.8%, in the six months ended May 31, 2024 as compared to the same period in 2023. The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to the higher level of sales, the favorable impacts of pricing actions, product mix, and CCI-led and GOE cost savings which more than offset increased commodity and conversion costs and the higher level of SG&A expenses. Segment operating margin for our flavor solutions segment increased by 80 basis points from the prior year level to 10.4% in the six months ended May 31, 2024. That increase was the result of an increase in gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2023. On a constant currency basis, segment operating income for our flavor solutions segment increased by 9.0% in the six months ended May 31, 2024 as compared to the same period in 2023.

Current wording

Segment operating income for our flavor solutions segment increased by $37.0 million, or 17.4%, in the nine months ended August 31, 2024 as compared to the same period in 2023. The increase in segment operating income was driven by the effects of an increase in gross profit primarily due to favorable impacts of pricing actions, product mix, and CCI-led and GOE cost savings which more than offset the higher level of SG&A expenses. Segment operating margin for our flavor solutions segment increased by 160 basis points from the prior year level to 11.5% in the nine months ended August 31, 2024. That increase was the result of an increase in gross margin, as previously described, which was partially offset by a higher level of SG&A as a percentage of sales, all as compared to 2023. On a constant currency basis, segment operating income for our flavor solutions segment increased by 17.4% in the nine months ended August 31, 2024 as compared to the same period in 2023.

Previous wording

The primary objective of our financing strategy is to maintain a prudent capital structure that provides us flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. We use short-term debt, comprised primarily of commercial paper, principally to finance ongoing operations, including our requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities). We are committed to maintaining investment grade credit ratings.

Current wording

The primary objective of our financing strategy is to maintain a prudent capital structure that provides us with flexibility to pursue our growth objectives. We use a combination of equity and short- and long-term debt. We use short-term debt, comprised primarily of commercial paper, principally to finance ongoing operations, including our requirements for working capital (accounts receivable, prepaid expenses and other current assets, and inventories, less accounts payable, accrued payroll, and other accrued liabilities). We are committed to maintaining investment grade credit ratings.

Previous wording

Our cash flows from operations enable us to fund operating projects and investments that are designed to meet our growth objectives, service our debt, fund or increase our quarterly dividends, fund capital projects and other investments, and make share repurchases when appropriate. Due to the cyclical nature of a portion of our business, our cash flow from operations has historically been the strongest during the fourth quarter of our fiscal year. Due to the timing of the interest payments on our long-term debt, interest payments are higher in the first and third quarter of our fiscal year.

Current wording

Our cash flows from operations enable us to fund operating projects and investments that are designed to meet our growth objectives, service our debt, fund or increase our quarterly dividends, fund capital projects and other investments, and make share repurchases when appropriate. Due to the cyclical nature of a portion of our business, our cash flow from operations has historically been the strongest during the fourth quarter of our fiscal year. Due to the timing of the interest payments on our long-term debt, interest payments are higher in the first and third quarters of our fiscal year.

Previous wording

Operating Cash Flow—Net cash provided by operating activities of $301.5 million for the six months ended May 31, 2024, decreased $92.7 million from the same period of 2023. The effects of the increase in earnings was more than offset by the higher cash used for certain employee incentive compensation arrangements accrued as of the prior year-end and paid in the subsequent fiscal year as well as the timing of income tax payments.

Current wording

Operating Cash Flow—Net cash provided by operating activities of $463.2 million for the nine months ended August 31, 2024, decreased $196.9 million from the same period of 2023. The effects of the increase in earnings were more than offset by higher cash used for working capital, certain employee incentive compensation arrangements accrued as of the prior year-end and paid in the subsequent fiscal year as well as the timing of income tax payments.