MCCORMICK & CO INC

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%.

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%.

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.

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.

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.

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.

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.

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.

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.

Details with respect to the composition of special charges, including transaction and integration expenses, are included in Note 3 of the notes to the accompanying condensed consolidated financial statements.

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.

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.

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.

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.

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.

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.

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.

The following table outlines the major components of the change in diluted earnings per share from 2025 to 2026: