McCormick reported Q3 net sales of $2.02 billion and adjusted EPS of $0.86, topping Fiscal AI estimates of $1.98 billion in revenue and $0.76 adjusted EPS.
- McCormick reaffirmed 2026 guidance, including 13% to 17% sales growth and $3.05 to $3.13 adjusted EPS.
- Organic sales increased 1.9% during the quarter, driven by a 2.2% increase from pricing, partially offset by a 0.3% decline in volume and product mix.
- Unilever Foods integration remains on track, with $600M in expected annual run-rate cost synergies.
McCormick & Company Inc. (MKC) shares dropped on Thursday morning as the flavor and seasoning company reported fiscal third-quarter results that topped estimates and reaffirmed its fiscal 2026 outlook.
The stock surged as much as 6% in premarket trading before paring most of its gains, as of this writing.
McCormick reported third-quarter net sales of $2.02 billion, up 17.4% year-over-year, while adjusted earnings came in at $0.86 per share. According to estimates from Fiscal AI, analysts were expecting revenue of about $1.98 billion and adjusted earnings per share (EPS) of $0.76.
Organic sales increased 1.9% during the quarter, driven by a 2.2% increase from pricing, partially offset by a 0.3% decline in volume and product mix. Sales also benefited from the McCormick de Mexico acquisition, which accounted for 14% of the overall sales increase.
McCormick Highlights Margin Expansion, Productivity Gains
Gross profit increased by $150 million from the year-ago period, while gross profit margin expanded by 190 basis points to 39.3%. Adjusted operating income increased 22.1% to $358.5 million, with adjusted operating margin expanding 70 basis points to 17.7%.
McCormick said the improvement in gross profit margin was driven by the McCormick de Mexico acquisition, higher sales and cost savings from its Comprehensive Continuous Improvement (CCI) program, partially offset by higher commodity and freight costs.
“Disciplined productivity initiatives helped offset rising input and freight costs, supporting margin expansion and enabling continued investment in our brands to drive long-term profitable growth,” said Brendan M. Foley, Chairman, President and Chief Executive Officer of McCormick & Company.
Foley said the quarter reflected a solid base-business contribution and accretion from McCormick de México, where the company has substantially completed its integration. He added that McCormick’s enhanced margin profile and operational discipline position the company to continue investing in its brands, capabilities and innovation.
MKC Reaffirms Fiscal 2026 Outlook
McCormick reaffirmed its fiscal 2026 outlook, including net sales growth of 13% to 17%, adjusted operating income growth of 16% to 20% and adjusted EPS of $3.05 to $3.13.
The company continues to expect organic sales growth of 1% to 3% for the year. McCormick said its outlook reflects continued investments in key categories, productivity initiatives through its CCI program and the contribution from McCormick de Mexico.
“Overall, performance reflected solid base business contribution and accretion from the McCormick de Mexico acquisition,” Foley said, adding that strong year-to-date performance, including organic growth, margin expansion and robust cash flow, gives the company confidence in delivering its 2026 outlook.
Unilever Foods Deal Integration Remains On Track
McCormick said integration planning for its proposed combination with Unilever’s Foods business remains on track. The company has established the future operating model and leadership team, set up a dedicated Integration Management Office and mobilized 20 cross-functional teams comprising more than 200 employees from McCormick and Unilever Foods.
The company said its Day 1 planning has identified specific integration initiatives, while transition service agreements are in place to support business continuity after the deal closes.
McCormick expects the combined company to realize approximately $600 million in annual run-rate cost synergies, net of growth reinvestments and potential dis-synergies, with approximately two-thirds expected to be achieved by Year 2 following the close.
The company also expects to identify approximately $100 million in additional cost and revenue synergies that would be reinvested to support growth. McCormick expects the transaction to deliver mid- to high-single-digit adjusted EPS accretion within the first 12 months after closing and mid- to high-teens accretion in Year 3.
The transaction is expected to close by mid-2027, subject to customary closing conditions and regulatory approvals.
Retail View On MKC
On Stocktwits, retail sentiment surrounding the stock has improved to ‘extremely bullish’ amid ‘high’ message volumes in the past 24 hours.
MKC stock has declined by more than 35% so far this year.
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