MCCORMICK & CO INC
For the period ended May 31, 2026. Filed Jun 25, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 31, 2026 · Filed Jun 25, 2026
MKC-V$48.77-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-02-28; filed 2026-03-31.
0000063754-26-000192
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2026-05-31; filed 2026-06-25.
0000063754-26-000274
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSResults of Operations – CompanyResults of Operations – SegmentsNon-GAAP Financial MeasuresThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 121 previous paragraphs and 131 current paragraphs.
63 unchanged; 51 reworded; 14 added; 6 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 21 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs imposed under IEEPA by the executive branch are not lawful. On March 4, 2026, the CIT ordered CBP to begin the refund process for all importers who were subject to IEEPA tariffs. On April 20, 2026, CBP established an online portal through which companies can submit IEEPA tariff refund requests. We submitted our refund request on April 28, 2026, which is described in Note 1 of the notes to our accompanying condensed consolidated financial statements. The CIT order has been appealed and we will continue to monitor U.S. tariff-related developments for further updates and any associated impacts on our consolidated financial statements.
Current report
Gross profit for the second quarter of 2026 increased by $155.4 million, or 25.0%, from the same period of 2025. Our gross profit margin was 40.2%, an increase of 270 basis points, driven by the impacts of the McCormick de Mexico acquisition, favorable pricing, the IEEPA tariff refund, and cost savings from the Company's CCI program, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East.
Current report
During the six months ended May 31, 2026, we recorded$85.1 million of special charges, including transaction and integration expenses. Those expenses consisted of$65.5 million of transaction and integration costs,$18.0 million associated with employee severance and related benefits associated with our SG&A streamlining actions and$1.6 million associated with other actions.
Current report
During the three and six months ended May 31, 2025, we recorded$12.8 million of special charges, including transaction and integration expenses. Those expenses principally consisted of$11.4 million associated with employee severance and related benefits associated with our SG&A streamlining actions,$0.8 million of transaction and integration costs, and$0.6 million associated with other actions.
Current report
Interest expense increased by $11.7 million and $10.5 million for the three and six months ended May 31, 2026, respectively, compared to the same period in 2025, driven by $6.8 million of amortization of debt financing fees related to our pending merger with Unilever Foods, the effects of higher interest rates and the impact of higher average borrowing levels.
Current report
The effective tax rate for the three months ended May 31, 2026 increased by 4.7% compared to the same periods in 2025 primarily driven by the unfavorable impact of acquisition related costs partially offset by the impact of discrete tax items which are described in more detail in Note 8 of the notes to our accompanying condensed consolidated financial statements.
Current report
The effective tax rate for the six months ended May 31, 2026 increased by 4.5% compared to the same periods in 2025 primarily driven by the unfavorable impact of acquisition related costs.
Current report
Income from unconsolidated operations decreased $17.2 million for the three months ended May 31, 2026 compared to the same period of 2025. This decrease was primarily driven by the acquisition of an additional 25% ownership interest in McCormick de Mexico which resulted in the consolidation of McCormick de Mexico's financial results, which is described in more detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.
Current report
In the EMEA region, Consumer segment sales increased by 10.7% in the second quarter of 2026 compared to the same quarter of 2025 and increased by 3.3% on an organic basis. Favorable volume and product mix increased sales by 1.9%, driven by higher sales in France and the UK. Favorable pricing impacted sales by 1.4%. The favorable impact from foreign currency rates increased sales by 7.4%.
Current report
Segment operating income for our Consumer segment for the six months ended May 31, 2026 increased by $86.2 million, or 27.8%, as compared to the same period in 2025, driven by the effects of an increase in gross profit partially offset by an increase in SG&A expense. The increase in gross profit was driven by the impacts of our acquisition of McCormick de Mexico, the IEEPA tariff refund, favorable pricing, and CCI-led cost savings, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East. Segment operating margin increased by 50 basis points to 17.3%. On a constant currency basis, segment operating income increased by 25.9%.
Current report
For the six months ended May 31, 2026, sales of our Flavor Solutions segment increased 7.6% as compared to the same period in 2025 and increased by 1.7% on an organic basis. The acquisition of McCormick de Mexico increased sales by 2.7%. Favorable volume and product mix increased sales by 0.2% driven primarily by growth in the APAC region partially offset by lower sales in the EMEA region. Favorable pricing increased sales by 1.5%, driven by the Americas and EMEA regions partially offset by unfavorable pricing in the APAC region. The favorable impact of foreign currency rates increased segment sales by 3.2%.
Current report
Segment operating income for our Flavor Solutions segment for the six months ended May 31, 2026 increased by $34.0 million, or 19.6%, compared to the same period in 2025, driven by the effects of an increase in gross profit partially offset by an increase in SG&A expense. The increase in gross profit was driven by favorable pricing, the impact of our acquisition of McCormick de Mexico, and CCI-led cost savings. The increase in SG&A expense was driven by the impact of the McCormick de Mexico acquisition and increased investments in technology. Segment operating margin increased by 130 basis points to 13.6%. On a constant currency basis, segment operating income increased by 15.1%.
Current report
In March 2026, we entered into the Bridge Commitment Letter in connection with the financing of the pending transaction with Unilever, pursuant to which the Commitment Parties committed to provide, subject to the terms and conditions set forth therein, the Bridge Facility an aggregate principal amount of up to $15.7 billion to fund the cash consideration and related fees and expenses at closing of the pending transaction. Effective April 28, 2026, we terminated $2.0 billion of the commitments under the Bridge Facility and entered into a term loan agreement as described below, subject to customary closing conditions for similar facilities.
Current report
In April 2026, we entered into the Term Loan Agreement by and among us, the lenders party thereto and Citibank, N.A., as the Administrative Agent. The Term Loan Agreement provides us with the Term Loan Facility at the the Closing Date, subject to satisfaction of customary closing conditions for similar facilities, for the purpose of financing a portion of the cash consideration to be paid in the pending transaction and paying related fees and expenses in connection therewith. The Term Loan Facility may be funded on the Closing Date or, subject to compliance with certain conditions, on the preceding business day, and matures three years after the Closing Date. Under the Term Loan Agreement, borrowings will bear interest on the principal amount outstanding at a floating rate based on, at our election, (i) Term SOFR (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of our senior unsecured long term debt ranging from 0.75% to 1.50% or (ii) Base Rate (as defined in the Term Loan Agreement) plus an applicable margin based on the credit ratings of our senior unsecured long term debt ranging from 0.00% to 0.50%. The Term Loan Agreement contains a financial covenant requiring us to maintain a minimum interest coverage ratio as well as other non-financial covenants and certain customary events of default.
Removed paragraphs (6)
Previous report
On February 20, 2026 the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA) by the executive branch are not lawful, but did not provide guidance on how importers may claim refunds of IEEPA tariffs previously paid. On March 4, 2026, the Court of International Trade (CIT) ordered U.S. Customs and Border Protection (CBP) to begin the refund process for all importers who were subject to IEEPA duties. The situation continues to evolve, and further legislative, regulatory, or judicial developments may affect the ultimate outcome and the availability or timing of any refunds. We are currently evaluating the impact that the ruling may have on our consolidated financial statements.
Previous report
Interest expense decreased by $1.2 million in the first quarter of 2026 as compared to the same period in 2025 driven by the effects of lower interest rates, partially offset by the impact of higher average borrowing levels.
Previous report
The provision for income taxes is based on the estimate of the annual effective tax rate adjusted to reflect the tax impact of items discrete to the fiscal period. We record tax expense or tax benefits that do not relate to ordinary income in the current fiscal year discretely in the period in which such items occur pursuant to the requirements of U.S. GAAP. Examples of such types of discrete items not related to ordinary income include, but are not limited to, excess tax benefits or expense associated with stock-based compensation, changes in estimates of the outcome of tax matters related to prior years, including reversals of reserves upon the lapsing of statutes of limitations, provision-to-return adjustments, the settlement of tax audits, changes in enacted tax rates or other legislation, changes in the assessment of deferred tax valuation allowances, and the tax effects of intra-entity asset transfers (other than inventory).
Previous report
Income tax expense for the three months ended February 28, 2026 was not impacted by discrete tax items. In addition to the effect of lower discrete tax items compared to the prior year period, the increase in effective tax rate was impacted by a change in the geographic mix of pre-tax earnings following the acquisition of McCormick de Mexico, resulting in a greater proportion of income generated in jurisdictions with higher income tax rates.
Previous report
Income tax expense for the three months ended February 28, 2025, included $5.2 million of net discrete tax benefits consisting principally of a $5.0 million net tax benefit resulting from the revaluation of deferred taxes associated with enacted legislation.
Previous report
In the EMEA region, Consumer segment sales increased by 15.5% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 3.7% on an organic basis. Favorable volume and product mix increased sales by 2.4%, driven by higher sales of our core products in France. Favorable pricing impacted sales by 1.3%. The favorable impact from foreign currency rates increased sales by 11.8%.
Reworded paragraphs (51)
Previous wording
On January 2, 2026 we acquired an additional 25% ownership interest in McCormick de Mexico for a purchase price of $750 million, which increased our ownership to a 75% controlling interest. We believe the acquisition creates opportunities for further growth in the Mexican market and provides a strategic platform for further expansion in Latin America. McCormick de Mexico is a prominent food company in Mexico, with a broad portfolio, including mayonnaise, spices, marmalades, mustard, hot sauce, and tea, sold under McCormick brands. The acquisition is described in detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.
Current wording
On January 2, 2026, we acquired an additional 25% ownership interest in McCormick de Mexico for a purchase price of $750.0 million, which increased our ownership to a 75% controlling interest. We believe the acquisition creates opportunities for further growth in the Mexican market and provides a strategic platform for further expansion in Latin America. McCormick de Mexico is a prominent food company in Mexico, with a broad portfolio, including mayonnaise, spices, marmalades, mustard, hot sauce, and tea, sold under McCormick brands. The acquisition is described in detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.
Previous wording
On March 31, 2026, we entered into an Agreement and Plan of Merger with Unilever PLC (the “Merger Agreement”), pursuant to which Unilever will separate its Unilever Foods business, excluding its food businesses in India, Nepal and Portugal, and Unilever Foods will merge with a wholly owned subsidiary of McCormick in a transaction intended to qualify as a Reverse Morris Trust transaction. The transaction is generally expected to be tax-free to Unilever’s shareholders for U.S. federal income tax purposes, except to the extent that cash is paid to Unilever’s shareholders in lieu of fractional shares and provided that Unilever does not make the U.S. Asset Sale Election.
Current wording
On March 31, 2026, we entered into the Merger Agreement with Unilever, pursuant to which Unilever will separate its Unilever Foods business, excluding its foods businesses in India, Nepal and Portugal, as well as its Lifestyle & Nutrition business, Buavita business and Lipton Ready-to-Drink business, and Unilever Foods will merge with a wholly owned subsidiary of McCormick in a transaction intended to qualify as a Reverse Morris Trust transaction. The transaction is generally expected to be tax-free to Unilever’s shareholders for U.S. federal income tax purposes, except to the extent that cash is paid to Unilever’s shareholders in lieu of fractional shares and provided that Unilever does not make the U.S. Asset Sale Election.
Previous wording
Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever shareholders and Unilever in the same proportion as is currently held by our shareholders. The transactions contemplated by the Merger Agreement are expected to result in current Unilever shareholders owning approximately 55.1% of the combined company, our current shareholders owning approximately 35.0% of the combined company, and Unilever retaining approximately 9.9% of the total outstanding equity of the combined company, assuming Unilever does not elect under the Merger Agreement to dispose of such interest. The proposed transaction is subject to the satisfaction or waiver of certain customary closing conditions, including shareholder and regulatory approvals. For additional information regarding the proposed transaction, see Note 12 of the notes to our accompanying condensed consolidated financial statements.
Current wording
Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever shareholders and Unilever in the same proportion as is currently held by our shareholders. The transactions contemplated by the Merger Agreement are expected to result in current Unilever shareholders owning approximately 55.1% of the combined company, our current shareholders owning approximately 35.0% of the combined company, and Unilever retaining up to approximately 9.9% of the total outstanding equity of the combined company, assuming Unilever does not elect under the Merger Agreement to dispose of such interest. Unilever will also receive a one-time $15.7 billion cash payment, subject to certain adjustments. The pending transaction is subject to the satisfaction or waiver of certain customary closing conditions, including shareholder and regulatory approvals. For additional information regarding the pending transaction, see Note 2 of the notes to our accompanying condensed consolidated financial statements.
Previous wording
In the first quarter of 2026, we achieved net sales growth of 16.7% as compared to the same quarter of 2025, due to the following factors:
Current wording
In the second quarter of 2026, we achieved net sales growth of 16.7% as compared to the same quarter of 2025, due to the following factors:
Previous wording
•Volume and product mix unfavorably impacted net sales by 0.7%. The Consumer segment experienced unfavorable volume and product mix of 0.4% and the Flavor Solutions segment experienced unfavorable volume and product mix of 1.0%.
Current wording
•Volume and product mix unfavorably impacted net sales by 0.5%. The Consumer segment experienced unfavorable volume and product mix of 1.9% and the Flavor Solutions segment experienced favorable volume and product mix of 1.4%.
Previous wording
•Pricing favorably impacted net sales by 1.9%. The Consumer segment experienced favorable pricing of 2.2% and the the Flavor Solutions segment experienced favorable pricing of 1.5%.
Current wording
•Pricing favorably impacted net sales by 2.2%. The Consumer segment experienced favorable pricing of 2.7% and the Flavor Solutions segment experienced favorable pricing of 1.5%.
Previous wording
•The impact of our acquisition of McCormick de Mexico contributed 12.4% of our net sales growth.
Current wording
•The impact of our acquisition of McCormick de Mexico contributed 12.3% of our net sales growth.
Previous wording
•Fluctuations in currency rates positively impacted net sales by 3.1%. Fluctuations in currency rates positively impacted our Consumer segment sales growth by 2.9% and our Flavor Solutions segment sales growth by 3.3%.
Current wording
•Fluctuations in currency rates positively impacted net sales by 2.7%. Fluctuations in curr ency rates positively impacted our Consumer segment sales growth by 2.4% and our Flavor Solutions segment sales growth by 3.0%.
Previous wording
Operating income was $227.5 million in the first quarter of 2026, compared to $225.2 million in the same period of 2025, reflecting an increase of 1.0%. Our gross profit margin increased by 20 basis points driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in cost of goods sold as the related inventory was sold, favorable pricing, and cost savings from the Company's Comprehensive Continuous Improvement (CCI) program, partially offset by increased commodity costs driven primarily by the impact of tariffs. Excluding the effects of special charges included in cost of goods sold, our adjusted gross profit margin increased by 100 basis points. Selling, general, and administrative (SG&A) expense as a percentage of sales increased by 70 basis points, primarily driven by increased investments in technology and increased brand marketing expense. Excluding special charges, adjusted operating income was $267.6 million in the first quarter of 2026, reflecting an increase of 18.8% compared to $225.2 million in the 2025 period, primarily driven by the impact of the acquisition of McCormick de Mexico. In constant currency, adjusted operating income increased by 16.0%.
Current wording
Operating income was $276.4 million in the second quarter of 2026, compared to $245.8 million in the same period of 2025, reflecting an increase of 12.4%. Our gross profit margin increased by 270 basis points driven by the impacts of the McCormick de Mexico acquisition, favorable pricing, the IEEPA tariff refund, and cost savings from the Company's Comprehensive Continuous Improvement (CCI) program, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East. Selling, general, and administrative (SG&A) expense as a percentage of sales increased by 90 basis points, primarily driven by the impact of the McCormick de Mexico acquisition and increased investments in technology. Excluding special charges, adjusted operating income was $336.4 million in the second quarter of 2026, reflecting an increase of 30.1% compared to $258.6 million in the 2025 period, primarily driven by the impact of the McCormick de Mexico acquisition and the IEEPA tariff refund. In constant currency, adjusted operating income increased by 27.3%.
Previous wording
Diluted earnings per share was $3.77 and $0.60 in the first quarters of 2026 and 2025, respectively. The gain on remeasurement of our previously held equity interest in McCormick de Mexico increased diluted earnings per share by $3.22 and special charges, including transaction and integration costs, lowered diluted earnings per share by $0.11. Excluding the effects of the remeasurement gain and special charges, adjusted diluted earnings per share was $0.66 and $0.60 in the first quarters of 2026 and 2025, respectively. The increase in adjusted diluted earnings per share was driven by favorable operating income, partially offset by an increase in the effective tax rate, higher income attributable to noncontrolling interests and a decrease in other income.
Current wording
Diluted earnings per share was $0.56 and $0.65 in the second quarters of 2026 and 2025, respectively. Special charges, including transaction and integration costs, lowered diluted earnings per share by $0.24 and $0.04 in the second quarters of 2026 and 2025, respectively. Excluding the effects of special charges, adjusted diluted earnings per share was $0.80 and $0.69 in the second quarters of 2026 and 2025, respectively. The increase in adjusted diluted earnings per share was driven by favorable operating income and a decrease in the effective tax rate, partially offset by lower income from unconsolidated operations, higher income attributable to noncontrolling interests, an increase in interest expense, and a decrease in other income.
Previous wording
A detailed review of our first quarter 2026 performance compared to the first quarter of fiscal 2025 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 second quarter 2026 performance compared to the second quarter of fiscal 2025 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
Our fiscal 2026 outlook continues to reflect prioritized investments in key categories to sustain our volume trends and drive long-term profitable growth while appreciating the uncertainty of the consumer and macro environment, including global trade policies. Our CCI program is continuing to fuel growth investments while also driving operating margin expansion. Our fiscal 2026 outlook also reflects meaningful contributions from the acquisition of a controlling interest in McCormick de Mexico, which closed on January 2, 2026. Amounts are rounded with percentages calculated from the underlying amounts.
Current wording
Our fiscal 2026 outlook continues to reflect prioritized investments in key categories to sustain our volume trends and drive long-term profitable growth while appreciating the uncertainty of the consumer and macro environment, including global trade policies and the conflict in the Middle East. Our CCI program is continuing to fuel growth investments while also driving operating margin expansion. Our fiscal 2026 outlook also reflects meaningful contributions from the acquisition of a controlling interest in McCormick de Mexico, which closed on January 2, 2026.
Previous wording
Our outlook for 2026 adjusted operating income and adjusted earnings per share are non-GAAP financial measures that exclude or otherwise adjust for items impacting comparability of financial results. We are unable to reconcile projected adjusted operating income to projected reported operating income because we cannot reasonably predict the amount of special charges, including transaction and integration expenses, during this time period. We are unable to reconcile projected adjusted earnings per share to projected reported earnings per share due to the same factors affecting reported operating income.
Current wording
Our outlook for 2026 adjusted operating income and adjusted earnings per share are non-GAAP financial measures that exclude or otherwise adjust for items impacting comparability of financial results. We do not provide guidance on a GAAP basis as we cannot predict certain items included in GAAP results such as special charges, including transaction and integration expenses.
Previous wording
In 2026, we expect an increase in adjusted operating income of 16% to 20% compared to 2025, including a 1% favorable impact from foreign currency rates, or to increase by 15% to 19% on a constant currency basis. This anticipated increase in adjusted operating income reflects recovery of adjusted gross margin, accretion from the acquisition of the controlling interest in McCormick de Mexico and cost savings from our CCI program, partially offset by increased commodity costs and an increase in SG&A expense, including increased investments in technology, performance-based employee compensation expenses and investments aimed at driving volume growth, particularly in brand marketing. We project our brand marketing investments in 2026 to rise by low to mid-teens digits, including the impact from the acquisition of the controlling interest in McCormick de Mexico, compared to 2025.
Current wording
In 2026, we expect an increase in adjusted operating income of 16% to 20% compared to 2025, including a 1% favorable impact from foreign currency rates, or to increase by 15% to 19% on a constant currency basis. This anticipated increase in adjusted operating income reflects adjusted gross margin expansion, accretion from the acquisition of the controlling interest in McCormick de Mexico and cost savings from our CCI program, partially offset by an increase in SG&A expense, including increased investments in technology, performance-based employee compensation expenses and investments aimed at driving volume growth, particularly in brand marketing. We project our brand marketing investments in 2026 to rise by low to mid-teens digits, including the impact from the acquisition of the controlling interest in McCormick de Mexico, compared to 2025. The benefit of the IEEPA tariff refund is expected to be offset by increased inflation, including costs related to the Middle East conflict, and continued investments in business growth.
Previous wording
Excluding the per share impact of special charges, adjusted diluted earnings per share was $3.00 in 2025. Adjusted diluted earnings per share is projected to range from $3.05 to $3.13 in 2026. We expect adjusted diluted earnings per share to increase by 2% to 5%, which includes a 1% favorable impact from currency rates, or to increase by 1% to 4% on a constant currency basis.
Current wording
Adjusted diluted earnings per share was $3.00 in 2025. Adjusted diluted earnings per share is projected to range from $3.05 to $3.13 in 2026. We expect adjusted diluted earnings per share to increase by 2% to 5%, which includes a 1% favorable impact from currency rates, or to increase by 1% to 4% on a constant currency basis.
Previous wording
Sales for the first quarter of 2026 increased by 16.7% from the same period in 2025 and increased by 1.2% on an organic basis (that is, excluding the impact of acquisitions and foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures). The acquisition of McCormick de Mexico added 12.4% to net sales. Pricing favorably impacted sales by 1.9% with favorable pricing from our Consumer and Flavor Solutions segments of 2.2% and 1.5%, respectively. Unfavorable volume and product mix decreased sales by 0.7% with unfavorable volume and product mix from our Flavor Solutions and Consumer segments of 1.0% and 0.4%, respectively. Foreign currency rates increased sales by 3.1%.
Current wording
Sales for the second quarter of 2026 increased by 16.7% from the same period in 2025 and increased by 1.7% on an organic basis (that is, excluding the impact of acquisitions and foreign currency exchange as more fully described under the caption, Non-GAAP Financial Measures). The acquisition of McCormick de Mexico added 12.3% to net sales. Pricing favorably impacted sales by 2.2% with favorable pricing from our Consumer and Flavor Solutions segments of 2.7% and 1.5%, respectively. Unfavorable volume and product mix decreased sales by 0.5% with unfavorable volume and product mix from our Consumer segment of 1.9% partially offset by favorable volume and product mix from our Flavor Solutions segment of 1.4%. Foreign currency rates increased sales by 2.7%.
Previous wording
Gross profit for the first quarter of 2026 increased by $104.9 million, or 17.4%, from the same period of 2025. Our gross profit margin was 37.8%, an increase of 20 basis points, driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in cost of goods sold as the related inventory was sold, favorable pricing, and CCI-led cost savings, partially offset by increased commodity costs driven primarily by the impact of tariffs. Excluding the impact of special charges included in cost of goods sold, adjusted gross margin was 38.6% for the first quarter of 2026, or an increase of 100 basis points.
Current wording
Gross profit for the six months ended May 31, 2026 increased by $260.3 million, or 21.2%, from the same period in 2025. Our gross profit margin was 39.0%, an increase of 140 basis points, driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in Cost of goods sold as the related inventory was sold, favorable pricing, the impact of the IEEPA tariff refund, and cost savings from the Company's CCI program, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East. Excluding the impact of special charges included in Cost of goods sold, adjusted gross margin was 39.4%, or an increase of 180 basis points.
Previous wording
SG&A expense increased by $77.5 million in the first quarter of 2026 as compared to the same period in 2025, driven primarily by the impact of the McCormick de Mexico acquisition, increased investments in technology, and increased brand marketing expense. SG&A as a percentage of net sales increased by 70 basis points.
Current wording
SG&A expense increased by $77.6 million in the second quarter of 2026 as compared to the same period in 2025, driven primarily by the impact of the McCormick de Mexico acquisition, increased brand marketing expense, and increased investments in technology. SG&A as a percentage of net sales increased by 90 basis points.
Previous wording
During the three months ended February 28, 2026, we recorded $25.1 million of special charges, including transaction and integration expenses. Those expenses consisted of $16.2 million associated with employee severance and related benefits associated with our SG&A streamlining actions, $7.9 million of transaction and integration costs, and $1.0 million associated with other actions.
Current wording
During the three months ended May 31, 2026, we recorded $60.0 million of special charges, including transaction and integration expenses. Those expenses consisted of $57.6 million of transaction and integration costs, $1.8 million associated with employee severance and related benefits associated with our SG&A streamlining actions and$0.6 million associated with other actions.
Previous wording
Other income, net, decreased by $5.0 million in the first quarter of 2026 as compared to the same period in 2025 due to a lower level of interest income driven primarily by the impact of the acquisition of McCormick de Mexico on our average cash balance during the period.
Current wording
Other income, net, decreased by $3.3 million and $8.3 million for the three and six months ended May 31, 2026, respectively, compared to the same period in 2025 due to a lower level of interest income driven primarily by the impact of the acquisition of McCormick de Mexico on our average cash balance during the period.
Previous wording
Income from unconsolidated operations increased by $867.5 million in the first quarter of 2026 compared to the same period of 2025. This increase was primarily driven by a gain of $866.8 million on the remeasurement of our previously held equity interest in McCormick de Mexico, which is described in more detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.
Current wording
Income from unconsolidated operations increased by $850.3 million for the six months ended May 31, 2026 compared to the same period of 2025. This increase was primarily driven by a gain of $866.8 million on the remeasurement of our previously held equity interest in McCormick de Mexico, which is described in more detail in Note 2 of the notes to our accompanying condensed consolidated financial statements.
Previous wording
Net income attributable to noncontrolling interests increased by $5.0 million in the first quarter of 2026 compared to the same period in 2025. This increase was driven by the net income attributable to our noncontrolling interest in McCormick de Mexico.
Current wording
Net income attributable to noncontrolling interests increased by$9.1 million for thethree months ended May 31, 2026 and$14.1 million for thesix months ended May 31, 2026 compared to the same periods in 2025. This increase was driven by the net income attributable to our noncontrolling interest in McCormick de Mexico upon its consolidation in 2026.
Previous wording
In the first quarter of 2026, sales of our Consumer segment increased by 24.5% compared to the first quarter of 2025 and increased by 1.8% on an organic basis. The acquisition of McCormick de Mexico increased sales by 19.8%. Unfavorable volume and product mix decreased sales by 0.4%, driven by declines in the Americas region which were partially offset by growth in the EMEA and APAC regions. Favorable pricing impacted sales by 2.2% primarily driven by pricing actions in the Americas region. The favorable impact of foreign currency rates increased sales by 2.9%.
Current wording
In the second quarter of 2026, sales of our Consumer segment increased by 22.8% compared to the second quarter of 2025 and increased by 0.8% on an organic basis. The acquisition of McCormick de Mexico increased sales by 19.6%. Unfavorable volume and product mix decreased sales by 1.9%, driven by declines in the Americas region which were partially offset by growth in the EMEA and APAC regions. Favorable pricing impacted sales by 2.7% primarily driven by the Americas region. The favorable impact of foreign currency rates increased sales by 2.4%.
Previous wording
In the Americas region, Consumer segment sales increased by 30.4% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 1.2% on an organic basis. The acquisition of McCormick de Mexico increased sales by 28.9%. Unfavorable volume and product mix decreased sales by 1.6%, which included the unfavorable impact of price elasticity. Favorable pricing impacted sales by 2.8%. The favorable impact of foreign currency rates increased sales by 0.3%.
Current wording
In the Americas region, Consumer segment sales increased by 28.0% in the second quarter of 2026 compared to the same quarter of 2025 and decreased by 0.2% on an organic basis. The acquisition of McCormick de Mexico increased sales by 27.9%. Unfavorable volume and product mix decreased sales by 3.6%, which included the unfavorable impact of price elasticity. Favorable pricing impacted sales by 3.4%. The favorable impact of foreign currency rates increased sales by 0.3%.
Previous wording
In the APAC region, Consumer segment sales increased by 6.2% in the first quarter of 2026 compared to the same quarter of 2025 and increased by 2.2% on an organic basis. Favorable volume and product mix increased sales by 2.1%, driven by higher sales in China. Favorable pricing impacted sales by 0.1%. The favorable impact from foreign currency rates increased sales by 4.0%.
Current wording
In the APAC region, Consumer segment sales increased by 10.0% in the second quarter of 2026 compared to the same quarter of 2025 and increased by 2.9% on an organic basis. Favorable volume and product mix increased sales by 2.4%, driven by higher sales in China. Favorable pricing impacted sales by 0.5%. The favorable impact from foreign currency rates increased sales by 7.1%.
Previous wording
Segment operating income for our Consumer segment for the first quarter of 2026 increased by $32.9 million, or 22.4%, compared to the same period of 2025 driven by an increase in gross profit partially offset by an increase in SG&A expense. The increase in gross profit was driven by the impact of our acquisition of McCormick de Mexico, favorable pricing and CCI-led cost savings partially offset by increased commodity costs primarily driven by tariffs. The increase in SG&A expense was driven by the items described in the consolidated discussion. Segment operating margin decreased by 30 basis points to 15.7%. On a constant currency basis, segment operating income increased by 20.5%.
Current wording
Segment operating income for our Consumer segment for the second quarter of 2026 increased by $53.3 million, or 32.6%, as compared to the same period of 2025 driven by an increase in gross profit, partially offset by an increase in SG&A expense. The increase in gross profit was driven by the impacts of our acquisition of McCormick de Mexico, favorable pricing, the IEEPA tariff refund, and CCI-led cost savings, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East. The increase in SG&A expense was driven by the items described in the consolidated discussion. Segment operating margin increased by 140 basis points to 19.0%. On a constant currency basis, segment operating income increased by 30.7%.
Previous wording
In the first quarter of 2026, sales of our Flavor Solutions segment increased by 6.2% as compared to the first quarter of 2025 and increased by 0.5% on an organic basis. The acquisition of McCormick de Mexico increased sales by 2.4%. Unfavorable volume and product mix unfavorably impacted sales by 1.0% driven by the Americas and EMEA regions partially offset by growth in the APAC region. Favorable pricing increased sales by 1.5%. The favorable impact of foreign currency rates increased sales by 3.3%.
Current wording
In the second quarter of 2026, sales of our Flavor Solutions segment increased by 8.9% as compared to the second quarter of 2025 and increased by 2.9% on an organic basis. The acquisition of McCormick de Mexico increased sales by 3.0%. Favorable volume and product mixincreased sales by 1.4% driven by the Americas and APAC regions, partially offset by lower sales in the EMEA region. Favorable pricing increased sales by 1.5% driven by the Americas and EMEA regions. The favorable impact of foreign currency rates increased sales by 3.0%.
Previous wording
In the Americas region, Flavor Solutions sales increased by 6.1% in the first quarter of 2026 compared to the first quarter of 2025 and increased by 0.8% on an organic basis. The acquisition of McCormick de Mexico increased sales by 3.4%. Unfavorable volume and product mix decreased sales by 1.7% driven by the effect of lower sales to packaged food customers. Favorable pricing impacted sales by 2.5%. The favorable impact from foreign currency rates increased sales by 1.9%.
Current wording
In the Americas region, Flavor Solutions sales increased by 10.0% in the second quarter of 2026 compared to the second quarter of 2025 and increased by 3.9% on an organic basis. The acquisition of McCormick de Mexico increased sales by 4.2%. Favorable volume and product mix increased sales by 2.1% driven by the effect of higher sales to packaged food customers. Favorable pricing impacted sales by 1.8%. The favorable impact from foreign currency rates increased sales by 1.9%.
Previous wording
In the EMEA region, Flavor Solutions sales increased by 7.3% in the first quarter of 2026 compared to the first quarter of 2025 and decreased by 0.5% on an organic basis. Unfavorable volume and product mix decreased sales by 0.5%. The favorable impact from foreign currency rates increased sales by 7.8%.
Current wording
In the EMEA region, Flavor Solutions sales increased by 5.4% in the second quarter of 2026 compared to the second quarter of 2025 and increased by 0.4% on an organic basis. Unfavorable volume and product mixdecreased sales by 1.2% driven by the effect of lower sales to quick-service restaurant customers. Favorable pricing impacted sales by 1.6%. The favorable impact from foreign currency rates increased sales by 5.0%.
Previous wording
In the APAC region, Flavor Solutions sales increased by 5.1% in the first quarter of 2026 compared to the first quarter of 2025, and increased by 0.5% on an organic basis. Favorable volume and product mix increased sales by 2.6%, primarily driven by growth in China. Pricing unfavorably impacted sales by 2.1%. The favorable impact from foreign currency rates increased sales by 4.6%.
Current wording
In the APAC region, Flavor Solutions sales increased by 7.5% in the second quarter of 2026 compared to the second quarter of 2025, and increased by 0.2% on an organic basis. Favorable volume and product mix increased sales by 0.8%, primarily driven by growth in China. Pricing unfavorably impacted sales by 0.6%. The favorable impact from foreign currency rates increased sales by 7.3%.
Previous wording
Segment operating income for our Flavor Solutions segment for the first quarter of 2026 increased by $9.5 million, or 12.1%, compared to the same period of 2025 driven by an increase in gross profit partially offset by an increase in SG&A expense. The increase in gross profit was driven by the impact of our acquisition of McCormick de Mexico, favorable pricing and CCI-led cost savings, partially offset by increased commodity costs primarily driven by tariffs. The increase in SG&A expense was driven by the impact of the McCormick de Mexico acquisition and increased investments in technology. Segment operating margin increased by 70 basis points to 12.1%. On a constant currency basis, segment operating income increased by 7.5%.
Current wording
Segment operating income for our Flavor Solutions segment for the second quarter of 2026 increased by $24.5 million, or 25.8%, compared to the same period of 2025 driven by an increase in gross profit partially offset by an increase in SG&A expense. The increase in gross profit was driven by favorable pricing, the impact of our acquisition of McCormick de Mexico, and CCI-led cost savings. The increase in SG&A expense was driven by the impact of the McCormick de Mexico acquisition and increased investments in technology. Segment operating margin increased by 210 basis points to 15.1%. On a constant currency basis, segment operating income increased by 21.4%.
Previous wording
We are exposed to foreign currency risk affecting net investments in subsidiaries, transactions (both third-party and intercompany) and earnings denominated in foreign currencies. Management assesses foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contract and currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions. We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instruments. All derivatives are designated as hedges.
Current wording
We are exposed to foreign currency risk affecting net investments in subsidiaries, transactions (both third-party and intercompany) and earnings denominated in foreign currencies. Management assesses foreign currency risk based on transactional cash flows and translational volatility and may enter into forward contract and currency swaps with highly-rated financial institutions to reduce fluctuations in the long or short currency positions. All derivatives are designated as hedges.
Previous wording
The following table sets forth the notional values and unrealized net gain (loss) of the portfolio of our forward foreign currency and cross currency swap contracts:
Current wording
The following table sets forth the notional values and unrealized net gains (losses) of the portfolio of our forward foreign currency and cross currency swap contracts:
Previous wording
The following table sets forth the notional values and unrealized net gain (loss) of our interest rate swap contracts:
Current wording
The following table sets forth the notional values and unrealized net gains (losses) of our interest rate swap contracts:
Previous wording
The following table sets forth the notional values and unrealized net gain (loss) of our commodity contracts:
Current wording
The following table sets forth the notional values and unrealized net gains (losses) of our commodity contracts:
Previous wording
The customers of our Consumer segment are predominantly food retailers and food wholesalers. Consolidations in these industries have created larger customers. In addition, competition has increased with the growth in alternative channels including mass merchandisers, dollar stores, warehouse clubs, discount chains, and e-commerce. This has caused some customers to be less profitable and increased our exposure to credit risk. Some of our customers and counterparties are highly leveraged. We continue to closely monitor the credit worthiness of our customers and counterparties. We believe that our allowance for doubtful accounts properly recognizes trade receivables at realizable value. We consider nonperformance credit risk for other financial instruments to be insignificant.
Current wording
The customers of our Consumer segment are predominantly food retailers and food wholesalers. Consolidations in these industries have created larger customers. In addition, competition has increased with the growth in alternative channels including mass merchandisers, dollar stores, warehouse clubs, discount chains, and e-commerce. This has caused some customers to be less profitable and increased our exposure to credit risk. Some of our customers and counterparties are highly leveraged. We continue to closely monitor the credit worthiness of our customers and counterparties. We believe that our allowance for credit losses properly recognizes trade receivables at realizable value. We consider nonperformance credit risk for other financial instruments to be insignificant.
Previous wording
We expect that the proposed combination with Unilever Foods is likely to result in a material increase in our debt and liquidity needs that will impact our capital needs prior to and after the closing of such transaction. Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever and its shareholders and make a one-time cash payment of $15.7 billion to Unilever, subject to certain adjustments, which we intend to fund through the Bridge Facility and, to the extent available, the Permanent Financing. See "Bridge Commitment Letter and Financing Arrangements" in the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion. We believe that our sources of liquidity, which include existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, access to capital markets and the committed debt financing related to the proposed transaction with Unilever Foods, will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, the one-time cash payment to Unilever in connection with the proposed transaction, the payment associated with an acquisition and payment of anticipated quarterly dividends for at least the next twelve months.
Current wording
We expect that the pending combination with Unilever Foods is likely to result in a material increase in our debt and liquidity needs that will impact our capital needs prior to and after the closing of such transaction. Under the terms of the Merger Agreement, we will issue voting and non-voting securities to Unilever and its shareholders and make a one-time cash payment of $15.7 billion to Unilever, subject to certain adjustments, which we intend to fund through the Bridge Facility, the Term Loan Facility, and, to the extent available, the Permanent Financing. See Note 4 of the notes to the condensed consolidated financial statements for further discussion. We believe that our sources of liquidity, which include existing cash balances, cash flows from operations, existing credit facilities, our commercial paper program, access to capital markets and the committed debt financing related to the pending transaction with Unilever Foods, will provide sufficient liquidity to meet our debt obligations, including any repayment of debt or refinancing of debt, working capital needs, planned capital expenditures, the one-time cash payment to Unilever in connection with the pending transaction, the payment associated with an acquisition and payment of anticipated quarterly dividends for at least the next twelve months.
Previous wording
Operating Cash Flow—Net cash provided by operating activities of $50.9 million for the three months ended February 28, 2026, decreased $64.6 million as compared to $115.5 million for the corresponding 2025 period. The decrease in operating cash flow was primarily driven by higher income tax payments and cash used for working capital partially offset by lower incentive payments. The higher use of cash associated with working capital, net of effect of business acquired, was driven by an increased use of cash associated with accounts payable, partially offset by a source of cash associated with inventory in 2026 compared to a use of cash in the 2025 period.
Current wording
Operating Cash Flow—Net cash provided by operating activities of $430.7 million for the six months ended May 31, 2026 increased $269.3 million as compared to $161.4 million for the corresponding 2025 period. The increase in operating cash flow was primarily driven by lower cash used for working capital. The lower use of cash associated with working capital, net of effect of businesses acquired, was driven by a decreased use of cash associated with accounts payable and increased source of cash from accounts receivables in 2026 compared to the 2025 period.
Previous wording
Investing Cash Flow—Cash used in investing activities of $762.4 million for the three months ended February 28, 2026 increased by $725.3 million as compared to $37.1 million for the corresponding period in 2025. Our primary investing cash flows included cash used in the acquisition of a business and cash used for capital expenditures. Capital expenditures, including expenditures for capitalized software decreased from the 2025 level of $37.1 million to $32.5 million. Cash used for the acquisition of a business, net of cash acquired was $729.9 million. We expect 2026 capital expenditures to approximate $275 million.
Current wording
Investing Cash Flow—Cash used in investing activities of $805.1 million for the six months ended May 31, 2026 increased by $699.9 million as compared to $105.2 million for the corresponding period in 2025. Our primary investing cash flows included cash used in the acquisition of a business and cash used for capital expenditures. Capital expenditures, including expenditures for capitalized software decreased from the 2025 level of $85.4 million to $75.2 million. Cash used for the acquisition of a business, net of cash acquired for the six months ended May 31, 2026 was $729.9 million as compared to $19.8 million for the six months ended May 31, 2025. We expect 2026 capital expenditures to approximate $250 million.
Previous wording
Financing Cash Flow—Financing activities provided cash of $781.7 million for the three months ended February 28, 2026 as compared to a use of cash of $155.2 million for the corresponding period in 2025. The year-over-year change was primarily driven by fluctuations in net borrowings, share repurchase activity, and dividend payments, as further described below.
Current wording
Financing Cash Flow—Financing activities provided cash of $602.7 million for the six months ended May 31, 2026 as compared to a use of cash of $142.9 million for the corresponding period in 2025. The year-over-year change was primarily driven by fluctuations in net borrowings, share repurchase activity, and dividend payments, as further described below.
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Current report — wording carried from elsewhere
Sales for the six months ended May 31, 2026 increased by 16.7% from the same period in 2025 and increased by 1.4% on an organic basis. The acquisition of McCormick de Mexico added 12.4% to net sales. Pricing favorably impacted sales by 2.1% with favorable pricing from our Consumer and Flavor Solutions segments of 2.5% and 1.5%, respectively. Unfavorable volume and product mix decreased sales by 0.7% with unfavorable volume and product mix from our Consumer segment of 1.2% partially offset by favorable volume and product mix from our Flavor Solutions segment of 0.2%. Foreign currency rates increased sales by 2.9%.
Current report — wording carried from elsewhere
SG&A expense increased by $155.1 million in the six months ended May 31, 2026 as compared to the same period in 2025, driven primarily by the impact of the McCormick de Mexico acquisition, increased brand marketing expense, and increased investments in technology. SG&A as a percentage of net sales increased by 70 basis points.
Current report — wording carried from elsewhere
For the six months ended May 31, 2026, sales of our Consumer segment increased 23.7% as compared to the same period in 2025 and increased by 1.3% on an organic basis. The acquisition of McCormick de Mexico increased sales by 19.7%. Unfavorable volume and product mix decreased sales by 1.2% driven by declines in the Americas region which were partially offset by growth in the EMEA and APAC regions. Favorable pricing impacted sales by 2.5% driven by the Americas region. The favorable impact from foreign currency rates increased sales by 2.7% .
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Foods or McCormick related to the transaction; and other risks as described herein under Part II, Item 1A “Risk Factors—Risks Relating to the Proposed Transaction”; and other risks described in the Company's filings with the Securities and Exchange Commission.