MKC Financial Analysis

Analysis Date: 1/24/2025

Business Model

McCormick generates revenue through two segments: Consumer and Flavor Solutions, selling spices, seasonings, condiments and other flavoring products

Revenue Sources

• Consumer Segment (57% of revenue) - Sales to retail customers and grocery stores
• Flavor Solutions Segment (43% of revenue) - Sales to food manufacturers and foodservice customers

Revenue Distribution by Channel

• Consumer Segment: $3,849 million in FY2024
• Flavor Solutions: $2,875 million in FY2024

Income Statement Analysis

• Net sales increased 2.6% driven by 2.2% volume growth
• Gross profit margin expanded 20 basis points to 40.2%
• Operating income increased 3% while net income declined 1.9%

Balance Sheet Analysis

• Total assets increased 1.6% to $13.1 billion
• Total liabilities decreased slightly while shareholders' equity grew 4.6%

Cash Flow Analysis

• Operating cash flow decreased to $922 million from $1.2 billion in prior year
• Capital expenditures increased to $275 million

Capital Allocation

Management returned $451 million to shareholders through dividends in 2024. The company increased dividend by 7% in November 2024, marking 39th consecutive year of dividend increases. Capital expenditures were $275 million, focused on growth investments.

Management Commentary

Strong performance in Q4 and full year 2024 with volume-led growth

Successfully delivered on objectives with margin expansion and earnings growth

Macro environment in China remains challenged

Overall Sentiment: Positive and confident about momentum continuing into 2025

Recommendation

Rating: Buy

Reason for Rating: Strong execution, margin expansion and consistent dividend growth support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/24/2025, 9:27:16 AM