McCormick & Company, Incorporated

Good morning. This is Casey Jenkins, Vice President of McCormick Investor Relations. Thank you for joining today's first quarter earnings call. To accompany this call, we've posted a set of slides at ir.mccormick.com. Currently, all participants are in a listen-only mode. Following our remarks, we will begin a question and answer session. If you need to reach the operator at any time during the call, please press star zero. We'll begin with remarks from Lawrence Kurzias, Chairman, President, and CEO, and Mike Smith, Executive Vice President and CFO. During our remarks, we will refer to certain non-GAAP financial measures. These include information in constant currency, as well as adjusted growth margins, adjusted operating income, adjusted income tax rate, and adjusted earnings per share that exclude the impact of special charges, transactions, and integration expenses related to the acquisition of Cholula and Phona. Reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are grounded. Please refer to our presentation for complete information. In addition, as a reminder, today's presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or other factors. It is important to note these statements include expectations and assumptions, which will be shared related to the impact of COVID-19 pandemic. As seen on slide two, our forward-looking statement also provides information on risk factors, including the impacts of COVID-19 that could affect our financial results. It is now my pleasure to turn the discussion over to Lawrence.

Thank you, Casey. Good morning, everyone. Thanks for joining us. Starting on slide four, our first quarter results were outstanding. As we said in our year-end earnings call in January, we have confidence in our strategies and are well-positioned to deliver another year of differentiated growth in 2021. Following an extraordinary year in 2020, in 2021, we expect strong underlying base business performance and recent acquisitions to drive significant sales growth, as well as strong operating income growth, even considering extraordinary COVID-19 costs and business transformation investments, highlighting our focus on profit realization. During the first quarter, we delivered double-digit sales, adjusted operating income, and earnings growth. We expect growth to vary by quarter in 2021, given 2020's level of demand volatility and the pace of COVID-19 recovery. But importantly, we have started the year with outstanding first quarter performance, giving us confidence in an even stronger outlook for 2021. As seen on slide five, we have a broad and advantaged global flavor portfolio with compelling offerings for every retail and customer strategy across all channels. The breadth and reach of our portfolio across segments, geographies, channels, customers, and product offerings creates a balanced and diversified portfolio to drive consistency in our performance, as evidenced again by our first quarter results. The sustained shift in consumer behavior to cooking and eating more at home continued to drive substantial increases in our consumer segment demand in all regions, as well as increases in our packaged food company customers in our flavor solutions segments. On the other hand, in our Americas and EMEA regions, we continue to experience reduced demand from our restaurant and other food service customers given the pressure on away-from-home consumption driven by continued COVID-19 government-imposed restrictions, which in several areas increased during the first quarter. Notably, our APZ region had substantial growth in both segments driven not only by lapping the significant disruption last year caused by the COVID-19-related lockdown in China, but also by the sustained increase in at-home consumption and an increase in away-from-home consumption as restrictions have eased and the recovery momentum is building. Finally, with the addition of our Cholula and Fona acquisitions, we have further extended the reach and breadth of our portfolio with new product offerings, channels, and customers, and are excited about their contributions to our first quarter and beyond. These impacts continue to demonstrate the strength and diversity of our offerings and we are confident our balanced portfolio will continue to differentiate McCormick and sustainably position us for growth. This morning, I'll begin with our first quarter results, share some comments on business performance, and then discuss our 2021 momentum and growth plan. After that, Mike will go more in-depth on our first quarter results and provide an update on our 2021 guidance. Starting with our outstanding first quarter results as seen on slide six, Total sales grew 22%, including a 2% favorable impact from currency. In constant currency, we grew total sales 20% with increases in both segments. Based business growth, new products, and acquisitions, our three long-term growth drivers all contributed to the increase. In addition to our top-line growth, adjusted operating income increased 35%, including a 3% favorable impact from currency. An adjusted operating margin expanded by 160 basis points. Growth from higher sales, favorable mix, and CCI-led cost savings more than offset COVID-19-related costs and higher planned brand marketing investments. Our first quarter adjusted earnings per share was 72 cents compared to 54 cents in the prior year, driven by our strong operating performance partially offset by a higher adjusted tax rate. Turning to our first quarter segment business performance, starting on slide seven in our consumer segment, we grew sales by 35%, on constant currency, 32%, with double-digit increases across each of our three regions. Our America's constant currency sales growth was 30% in the first quarter, with incremental sales from our Tallulah acquisition contributing 5%. Momentum Tallulah carried in from last year continues to be strong. with consumption growing at twice the category rate. Excluding Cholula, our total McCormick U.S.-branded portfolio, as indicated in our IRI consumption data, and combined with unmeasured channels, grew 15%, which reflects the strength of our categories as consumers continue to cook more at home. For the first time in several quarters, our sales increase was higher than our U.S. IRI consumption growth. We are realizing the benefit of our capacity expansion at the end of last year. The difference between shipments and consumption is attributable to beginning to catch up on the undershipment of consumption across all quarters of last year that resulted in depleted retailer and consumer pantry inventory. Demand has remained high, and the steps we've taken to increase supply are beginning to show. As we mentioned in our January earnings call, after experiencing real pressure on our U.S. manufacturing operations throughout 2020 due to elevated demand levels, we ended the calendar year with considerable incremental capacity and restoration plans for products which had been suspended. Throughout our first quarter, we removed products from suspension and continued to see service levels improve, which combined with our overshipping consumption indicates we're beginning to refill the inventory pipeline. As we've said previously, inventory replenishment will progress throughout the year. We continue to work with all our customers on improving shelf conditions An estimate more than half the suspended products are now back on shelf. The level of restoration is very customer specific. Focusing further on our U.S. branded portfolio, in spice and seasonings and all other categories, excluding dry recipe mixes, we grew first quarter consumption at double digit rates and again increased our household penetration and repeat buy rates. In the first quarter, we continued to gain share in categories less impacted by supply constraints, including stocks and broths, barbecue sauce, wet marinades, and Asian products. The categories most impacted by supply constraints, spice and seasonings, and dry recipe mix, we know there is a high correlation between our share performance and the shelf conditions, resulting from product suspension or allocation. Products that have had strong supply and remained on shelf have performed well, And as suspended products are restocked on shelf, we're seeing similar performance. We anticipate regaining share as conditions continue to improve. All of our key categories continue to outpace the center of store growth rates, favorably impacting not only the McCormick brand, but smaller brands as well, such as Stubbs, Lowry's, Simply Asia, Thai Kitchen, Zatarain's, and Kitchen Basics. And in e-commerce, we have strong double-digit pure play growth. with McCormick-granted consumption outpacing all major categories. We continue to use our strong category management capabilities in working with our customers as inventory is replenished throughout the supply chain. Optimized category shelf sets drives both growth for our customers and for McCormick. I'd like to thank our customers for their partnerships and working together with us on long-term solutions. We are well-positioned for success in 2021, and has implemented efficient long-term solutions and strengthened our supply chain resiliency to support continued growth. Now, turning to EMEA, which continued its momentum with outstanding performance in the first quarter, our constant currency sales rose 26% with broad-based growth across the region. Each of our markets drove double-digit total branded consumption growth with market share gains across the region. Spices and seasonings consumption was strong in all markets, driving a market share gain across total EMEA regions. And our Vosne brand in France, again, had strong consumption growth and outpaced the homemade desserts category. In the UK, both Frank's Red Hot and French's Mustard also had strong consumption and gained share. Since the beginning of the pandemic, our EMEA supply chain has been very well positioned to meet the elevated demand, and this has contributed to our ability to grow share across the regions. In EMEA, our household penetration and rate of repeat buyers increased again in the first quarter for the fourth consecutive quarter across our major brands and markets compared to last year. And we continue to work closely with our customers to ensure that elevated consumer demand will be met, even obtaining incremental placement for our branded portfolio as other manufacturers and private labels face supply challenges. We're excited with our growth trajectory in EMEA following the challenging market conditions in the past. In the Asia-Pacific region, our constant currency sales grew 55%. During the first quarter of last year, China's consumption was disrupted by the COVID-19-related lockdown. Recovering from that disruption increased sales in the first quarter of 2021 versus last year. Notwithstanding that recovery, the region still had double-digit growth driven by strong China consumer and branded food service demand, partially fueled by the Chinese New Year holiday, as well as strong consumer consumption in the rest of the region. For instance, in Australia, we continue to see elevated consumption in the brands where we gained household penetration last year, such as Frank's Red Hot, Gourmet Garden, and Grillmates. Across all regions, we know second quarter consumption will start to be compared to the highly elevated levels from last year. And while we do not expect consumption at those same levels, we do expect continued and long-lasting growth from the increase in consumers cooking more at home. Constant currency sales in our flavor solution segment grew 3%, driven by our Americas and APZ regions. In the Americas, we drove constant currency sales growth of 2%, driven by our Fona and Cholula acquisitions, as well as growth with our consumer packaged food customers, or our at-home base, which strengthened base business as well as new product momentum. We continue to shift our portfolio to more value-added and technically insulated products, not only with the combination of Fona's flavor portfolio, but also with considerable growth from snack seasonings in the U.S. and Mexico, as well as flavors from both savory and beverage applications. Demand from our away-from-home customer base for branded food service and restaurant customers declined and continued to be impacted by the COVID-19 environment. Sales in our EMEA region were comparable to the first quarter of last year for flavor solutions, with demand declines in our away-from-home customer base offset by strong sales for consumer packaged food customers. This growth was driven by a significant increase in new product growth versus last year, as well as continued strength in the base business, partially from our customers' promotional activities. Our sales growth in the Asia-Pacific region was outstanding, up 18% in constant currency. Both China, excluding the recovery impact from last year's lockdown, and Australia delivered double-digit growth from quick-service restaurants or QSR customers. This growth was driven by significant momentum in limited time offers as well as strength in the core business. I mentioned our results related to Cholula and Thona, and now I'd like to provide a brief update on their integration status. For both acquisitions, our integration activities are progressing according to our plan. We continue to deliver on opportunities quickly and aggressively to drive growth and are pleased with our momentum on capturing our synergy opportunities. We remain on track to achieve synergies according to plan. Starting with Cholula, as expected, our integration of the business has been straightforward. As of March 1st, all functions have been integrated into our McCormick processes, and importantly, we are now servicing customers from our McCormick U.S. Distribution Center. From a consumer commercial perspective, we are expanding distribution and are fueling growth with robust brand marketing investments. we'll be activating both digital, where Tallulah was under-penetrated, and in-store merchandising in the next few weeks for our exciting Cinco de Mayo campaign. In flavor solutions, we're also expanding distribution with new and existing branded food service customers and are leveraging Tallulah's authentic Mexican flavor for increased menu participation, particularly in Cinco de Mayo menu offerings. Moving to Tona, The employees at FONA have been part of building a great business, and we are excited to be working with them to collectively integrate the business and drive plans to capitalize on growth opportunities. Our functional integration is very much on track and is using a best-of-both approach to ensure we optimize our operating model similar to the approach we had with our RB Foods integration. The alignment of our organization is well underway, and we have had significant commercial collaboration yielding quick wins and identifying long-term strategic opportunities. Customer reaction has been extremely positive. They were impressed with our early collaboration and excited about the increased customer value proposition created by the combination of McCormick and Phona, a more comprehensive product offering, broader technical platform, deep technical and flavor talent, and best-in-class customer collaboration. And we're excited with Phona's performance starting the year. great results, and a robust momentum across the business. For both Cholula and Sona, we're pleased with our progress so far and their contribution to our results. Our enthusiasm for these acquisitions and our confidence that we will deliver on our acquisition plan, accelerate growth of these portfolios, and drive shareholder value has only increased over the last few months. I would like to briefly comment on the conditions we're seeing in our markets. their potential impact, and our 2021 organic growth plan, starting on slide 10. Global demand for flavor remains the foundation for our sales growth. We are capitalizing on the growing consumer interest in healthy, flavorful cooking, trusted brands, as well as digital engagement and purpose-minded practices. These long-term trends have only accelerated during the pandemic. and our alignment with them, combined with the breadth and reach of our portfolio, sustainably positions us for continued growth. These underlying trends, current market conditions, and our robust 2021 plans position us well to successfully execute our growth strategies in both segments. Turning to slide 11, starting with our consumer segment, around the world we continue to experience sustained elevated consumer demand. which is real incremental consumption and reflects the trend of consumers cooking more at home. Across our APZ region, consumer demand continues to be strong. In China, consumer consumption remains strong and we continue to see recovery in food service, which in China is in our consumer segment, with approximately 90% of restaurants open during the Chinese New Year period. In Australia, even with restaurant restrictions eased and away-from-home demand increasing, at-home consumption has remained elevated. And as I mentioned earlier, we are retaining households that came into our brands last year, and we're also realizing growth with our away-from-home customers. In many of our largest markets in EMEA, restrictive COVID-19 measures are still in place, further fueling at-home consumption, and we are seeing sustained levels of demand. In the Americas, As restrictions are easing and vaccinations are continuing, consumption remains elevated. Consumers are continuing to come to our brand, having a good experience, and buying our products again. Consumers are cooking more from scratch and adding flavor to their meal occasions. There's a key long-term trend which has accelerated during the pandemic. As we've shared previously, our proprietary consumer survey data, supported by external research, indicates consumers are enjoying the cooking experience as it provides a creative outlook, reduces stress, and connects the family. And consumers feel meals prepared at home are safer, healthier, better tasting, and cost less. In our recent consumer survey from February, these positive sentiments are not only still true but have strengthened. Consumers' interest in cooking has increased in recent months versus the end of last year because they want to cook versus have to cook. For example, approximately 50% of the consumers surveyed indicated they are cooking more now because they want to try a new recipe, ingredient, cooking method, or tool, or simply just cook from scratch. And approximately 40% also indicated they're trying to recreate restaurant meals at home. Importantly, over two-thirds of consumers surveyed claimed they would maintain or increase their current level of cooking at home. even if life were to return to normal next week, whatever normal may be. We continue to believe that consumer behavior and sentiment driving an increased and sustained preference for cooking at home will continue globally and persist beyond the pandemic, further driving consumer demand for our products in 2021 and beyond, fueled by robust brand marketing, differentiated new products, and our strong category management initiatives. Our category management initiatives are designed to continue to strengthen our category leadership by driving growth for both us and our customers. In the U.S. in 2020, we began our initiative to reinvent the in-store experience for spices and seasonings consumers by introducing new merchandising elements to improve navigation and drive inspiration, transforming an at-times confusing shelf to three shoppable sections. Our rollout has continued in 2021 with plans to implement in thousands of stores and the early indication is positive with the category and McCormick branded growth outpacing the rest of the market in transformed stores. We are also investing in e-commerce to drive McCormick and category growth. In the first quarter, we delivered over 90% global e-commerce growth with particular strength in Omnichannel. We are investing in content, retailer search, and innovation specifically for e-commerce, trialing new items and packaging in the direct-to-consumer channel first. For example, in the Americas, we've launched unique flavor inspiration products, such as Frank's Red Hot Everything Bagel Seasoning, and in China, we're launching a Ready-to-Eat Chili Paste on our direct-to-consumer platform. In EMEA, following the successful launch of the innovative Street Food Seasonings last year, we are now accelerating online growth with variety, bundle packs, and multi-buy offers on our main e-commerce channels. Turning to global brand marketing, we continue to increase our investments across our entire portfolio as evident in our 17% increase in the first quarter and plan for another significant increase in the second quarter. Our investments have proven to be effective and we will continue to connect with consumers online, turning real-time insights into action By targeting messaging focused on providing information and inspiration, we expect our brand marketing investments, combined with our valuable brand equities and strong digital consumer engagement, will continue to drive growth with existing consumers and the millions of consumers gained in 2020. Highlighting some of our first quarter investments in the Americas and EMEA regions on slide 12, starting with the Americas, we continued our advertising campaign, It's Gonna Be Great, with a focus on consumers' continuing traditions and preparing their family's signature holiday dishes, even if their celebrations looked different. Our Frank's Super Bowl campaign, integrated across digital, social, online video, and TV, featured fan favorite Eli Manning promoting Frank's Red Hot as approachably hot and was our best Super Bowl campaign yet, garnering record high impressions. As part of our Zatarain's Bold Like That campaign, we partnered with New Orleanian author and poet Cleo Wade to promote virtual Mardi Gras celebrations with authentic New Orleans flavors. Hashtag Zatarain's Porch Party. And recognizing virtual celebrations replaced live Mardi Gras events, we supported Culture Aid NOLA, an organization which distributes food to hospitality workers impacted by pandemic restrictions. Turning to EMEA, where we have invested a substantial portion of our brand marketing, our digital marketing and promotional activities included our holiday campaign featuring our festive gold-capped limited-edition packaging, which drove strong holiday results in our major markets. In the U.K., with our New Year Flavor Resolutions campaign, we inspired consumers with recipes and products to flavor their healthy cake, whether it be through the heat of Frank's or spicing it up with Schwartz. And in France, we're giving families another reason to celebrate in 2021. In 2020, birthday celebrations were not just a piece of cake. So with the inspiration of our Happy Birthday marketing campaign, consumers can celebrate their half birthdays, complete with Bahane's launch of a decimal comma shaped candle, top their cakes made with our Bahane baking product. Looking at just a few of our second quarter plans, In the Americas, we'll inspire restaurant-quality cooking with our It's Going to Be Great campaign. Our Vahane brand in the NBA is sponsoring a primetime French baking program, which will showcase our homemade dessert line. In both regions, we launched Easter campaigns to bring the family together with baking and crafting ideas. And moving to grilling season, we will acknowledge the importance of connecting through outdoor grilling occasions with campaigns targeting products such as French's and Grillmates in the U.S. and Frank's in the U.K. Finally, our plans include support of our robust new product launches. New products are integral to our growth, and our consumer segment new product innovation differentiates our brands and strengthens our relevance with our consumers. Our 2020 launches have been an exceptional trial and are providing significant momentum into this year. And in 2021, we have a robust global pipeline of new product launches, and I'm happy to share some of our first half launches as seen on slide 13. We're meeting consumers at the intersection of flavor and health. We're launching just five dry recipe mixes in the U.S., dips and dressing mixes in flavors like French onion and home-style ranch with clean and short ingredient statements, five simple ingredients delivering a classic flavor experience. And in France, we're expanding our range of organic products in our Vahonay homemade dessert line. When it comes to heat, we're continuing to broaden our Franks portfolio globally in the U.S., for expanding Frank's wing sauces with a milder tangy buffalo flavor and a garlic buffalo flavor for combining savory garlic with spicy heat. Also in the U.S., we have just launched Cholula wing sauces in two flavors, Mexicali Cilantro Lime and Caliente Spicy Arbol Peppers in a unique bottle with the iconic wooden cap. And in the U.K., we're launching Frank's Craft Edition, capitalizing on interest in Frank's heat with differentiated flavors such as roasted jalapeno and grilled habanero. We are responding to consumers' demand for convenience and flavor. In the U.S., our launch of frozen appetizers, providing hot chicken bites and buffalo chicken dip with Frank's flavor that are ready in minutes, is gaining momentum as one of our best new product starts. We're excited to launch our new Grillmates all-purpose grilling seasoning for consumers who want to respect the meat simple coarse ground seasonings for the open flame that cling to the meat and lock in juiciness. Finally, our innovation is not only all about flavor, but also staying relevant for their consumers through our packaging innovation. We're continuing the rollout of our first choice bottle with its consumer preferred transparent and functional design, modern look, and reinforcement of fresh flavor into our Eastern European markets. These markets have predominantly been sachet markets for spices and seasonings and perceived the bottle packaging as a premium offering. And in Canada, we're beginning the relaunch of our gourmet line in the first choice bottle, as well as adding new flavor varieties. In the UK, not only are we building on our Schwartz Recipe Mix Momentum with the introduction of flavorful line extensions, we're also advancing on our sustainable packaging commitment with sachet packaging that is 100% recyclable. Schwartz will be the first brand in the UK dry recipe mix category with recyclable packaging. And in France, with the redesign of our Ducro grinder, its appearance not only has greater consumer appeal, but it also reduces our carbon footprint. Turning to flavor solutions, in this segment, we have a diverse customer base, and I've seen various stages of recovery. From a food-at-home perspective, our flavor solutions growth varies by packaged food customer. Overall, we are carrying our growth momentum with these customers into 2021, driven by strength in their iconic core product, as well as new products, and bigger vet innovation in 2021. Overall, the selling of our new product launches and big vet innovation from these customers slowed in 2020 due to the focus on keeping core items on the shelf. There are still new product launches, and in many cases, there are smaller expansions of the core and more channel-oriented. Moving into 2021, we're excited about the momentum of the 2020 launches, but even more excited about the robust 2021 pipeline. Our customers have bigger bet innovations in their plans, and we look forward to collaborating with them and driving growth from those launches. A key enabler driving our success and developing winning flavors for our customers is our insight on consumer and culinary trends. We've been at the forefront of forecasting emerging flavors for 21 years. Through the McCormick Flavor Forecast, we have a history of identifying the top trends and ingredients shaping the future of flavor, many of which have stood the test of time, whether it was with turmeric or pumpkin pie spices, the flavor of chipotle, or dishes with quinoa. In April, we'll be launching our newest addition, that will shake up the way we cook, flavor, and eat. We'll feature new trends, flavors, and recipes that will not only flavor our consumer segment innovation, but also drive wins with our flavor solutions customers. In our away-from-home portion of this segment, as I mentioned earlier, we're seeing growth from our restaurant and other food service customers in our APC region as restrictions have eased. The QSR demand momentum continues to strengthen, particularly as they continue to expand their menu options with limited time offers, and are increasing promotional activities. Branded food service demand, as it relates to entertainment, stadium, or hospitality venues, for instance, is recovering at a slower pace. In the EMEA and the Americas, during the first quarter, our restaurant and other food service customers were still impacted by government-imposed COVID-19 restrictions in many markets. There is now optimism with many of these customers related to restrictions easing and reopening plans. Focus has shifted from adapting operating models to supply chain preparedness for the second half of the year. We're collaborating with our customers to ensure a strong recovery with pent-up demand being met. We expect the recovery of some of our branded food customers will start to begin similar to what we've seen in APZ. As QSR customers are oriented less to dine-in, their recovery will be at a faster pace than the rest of the restaurant and food service industry. We have positive fundamentals in place to navigate through this period and are excited about the recovery momentum. Across our entire flavor solutions portfolio, we're advantaged by our differentiated customer engagement and plan on driving further wins for both us and our customers in fiscal 2021. With our customer intimacy approach, we'll continue to drive new product wins, collaborate on opportunities and solutions, manage the recovery plan, and importantly, further strengthen our customer partnerships. When we collaborate with our customers in our technical innovation center, we have a high win rate. Since we could not connect in person during 2020, we adapted to new ways of collaborating through creative digital and virtual solutions. The interactive experience for our customers builds their excitement, awareness, and confidence in our unique capabilities in an engaging and inspiring way. We continued to not only strengthen our engagement in 2020, but we also proved we could maintain our high win rate, whether physically in our innovation centers or not, and have carried that momentum into 2021. In our flavor solution segment, the execution of our strategy to migrate our portfolio to more technically insulated and value-added categories will continue in 2021. With top-line opportunities gained from our investments to expand flavor scale, our momentum in flavor categories, as well as opportunities from our phone acquisition, we expect to realize further results from this strategy. Lastly, we continue to be recognized for our efforts for doing what's right for people, communities, and the planet, our purpose-led performance. Following being named by Corporate Knights in their 2021 Global 100 Most Sustainable Corporations Index as number one, In the packaged food and processed foods and ingredients sector, McCormick was also recently named to Barron's 2021 100 Most Sustainable Companies list for the fourth consecutive year. As we continue our sustainability journey, I'm excited to announce that later this week, we will begin using 100% renewable electricity in all our Maryland and New Jersey-based facilities. This includes our manufacturing operations, distribution centers, offices, and technical innovation centers. and will result in an 11% reduction in our global greenhouse gas emissions. Moving to slide 16, in summary, we continue to capture the momentum we have gained in our consumer segment and with our flavor solutions at-home customers, have positive fundamentals in place to navigate through the flavor solutions away from home recovery, and are excited about our Cholula and Fona acquisitions, all of which bolster our confidence for continued growth in 2021. Our fundamentals, momentum, and growth outlook are stronger than ever. Our achievements in 2020, our effective strategies, our robust operating momentum, and the breadth and reach of our portfolio reinforce our confidence in delivering another strong year of growth and performance in 2021. Following an extraordinary year in 2020, our 2021 outlook reflects both our strong underlying base business performance and acquisitions driving significant sales growth. as well as strong operating income growth, even considering extraordinary COVID-19 costs and our business transformation investments, which highlights our focus on profit realization. Our top-tier, long-term growth objectives remain unchanged, and we're positioned for continued success. Importantly, McCormick employees around the world drive our momentum and success, and I would like to thank them for their dedicated efforts and engagement. Now, I'll turn it over to Mike. Thanks, Lawrence, and good morning, everyone. I'll now provide some additional comments on our first quarter performance and an update on our 2021 outlook. As Lawrence mentioned, our first quarter results were outstanding. Starting with our top-line growth, as seen on slide 18, we grew sales 20% in constant currency during the first quarter. Our volume and product mix, acquisitions and pricing, each contributed to the increase. Our organic sales growth was 16%, driven by our consumer segments. and incremental sales from our Cholula and Fona acquisitions contributed 4% across both segments. The consumer segment sales grew 32% in constant currency, with double-digit growth in all three regions. The sustained shift in consumer consumption continues to drive increased demand for our consumer products, fueled by our brand marketing, new products, and category management initiatives, and resulted in higher volume mix in each region. On slide 19, consumer sales in the Americas increased 30% in constant currency versus the first quarter of 2020, with 5% of the increase from the acquisition of Cholula. The remaining increase from higher volume and product mix was broad-based across the majority of categories and brands, as well as private label products, with particular strength in the McCormick, Frank's Red Hot, French's, Zatarain's, Lowry, Civil Asia, and Gourmet Gordon brands. In EMEA, Constant currency consumer sales growth grew 26% from a year ago, with double-digit growth in all countries and categories across the region. The most significant volume and mixed growth drivers were Schwartz and Ducro branded spices and seasonings, Vahine homemade dessert products, Thai kitchen products, and Arkemis branded products in Poland. Consumer sales in the Asia-Pacific region increased 55% in constant currency. driven primarily by the recovery from the disruption in China consumption last year, as Lawrence mentioned. Excluding that recovery impact, the region had double-digit growth due to strong China consumer and branded food service demand, partially driven by the timing of Chinese New Year and related holiday promotions, as well as continued strength in Australia. Turning to our flavor solution segment in slide 22, we grew first quarter constant currency sales 3%, In the Americas, flavor solutions constant currency sales grew 2% driven by the Fona and Cholula acquisitions, a 7% increase, as well as pricing to offset cost increases. Volume and product mix declined due to a reduction in demand from branded food service and other restaurant customers, partially offset by higher demand from packaged food companies, with particular strength in snack seasonings and savory flavors. In the EMEA, Constant currency sales were comparable to last year, as pricing actions offset cost increases. Volume and product mix declined due to lower sales to branded food service and other restaurant customers, partially offset by sales growth with packaged food companies, with strength in snack seasonings. In the Asia-Pacific region, flavor solution sales rose 18% in constant currency, driven by higher sales to QSRs in China and Australia, partially due to our customers' limited time offers and promotional activities, as well as the China recovery impact from last year's COVID-19-related lockdown. As seen on slide 26, adjusted operating income, which excludes transaction and integration costs related to the Cholula and FONA acquisitions, as well as special charges, increased 35%, or in constant currency, 32% in the first quarter versus the year-ago period. The consumer segment adjusted operating income grew 59% to $190 million. The 54% constant currency growth from higher sales, favorable mics, and CCI-led cost savings more than offset COVID-19-related costs and a 17% increase in brand marketing. In the flavor solution segment, adjusted operating income declined 4% to $73 million with minimal impact from currency. Higher sales and CCI-led cost savings were more than offset by unfavorable manufacturing costs. As seen on slide 27, adjusted gross profit margin expanded 60 basis points in the first quarter versus the year-ago period due to favorable mix, both within the consumer segment and due to the sales shift between segments. In addition, CCI-led cost savings were partially offset by COVID-19-related costs. Our selling general and administrative expense as a percentage of net sales was down year-on-year by 100 basis points from the first quarter of last year. Leverage from sales growth drove the decline, partially offset by the increase in brand marketing I mentioned a moment ago. With the gross margin expansion and as a leverage, adjusted operating margin expanded 160 basis points from the first quarter of 2020. Turning to income taxes on slide 28, Our first quarter adjusted effective tax rate was 22.7% compared to 18.4% in the year-ago period. The first quarter adjusted tax rate in 2020 was significantly impacted by a favorable discrete item related to a refinement of our entity structure. Income from unconsolidated operations increased 28% in the first quarter of 2021 due to strong underlying performance of our joint venture in Mexico. At the bottom line, as shown on slide 30, first quarter 2021 adjusted earnings per share was 72 cents, as compared to 54 cents for the year-ago period. The increase was due to our higher adjusted operating income performance, partially offset by a higher adjusted income tax rate. On slide 31, we summarize highlights for cash flow and the balance sheet. Our cash flow from operations was an outflow of $32 million, for the first quarter of 2021, compared to an inflow of $45 million in the first quarter of 2020. This change was primarily due to a lower level of cash generated from working capital associated with increased sales, higher incentive compensation payments, and the payment of transaction and integration costs related to our recent acquisitions. In February, we raised $1 billion through the issuance of five-year 0.9% notes and 10-year 1.85% notes. We took the opportunity in a low interest rate environment to optimize our long-term financing following our Cholula and GONA acquisitions. We also returned $91 million of cash to our shareholders through dividends and used $49 million for capital expenditures this quarter. We expect 2021 to be another year of strong cash flow driven by profit and working capital initiatives and our priority is to continue to have a balanced use of cash, funding investments to fuel growth, returning a significant portion to our shareholders through dividends, and paying down debt. Now I would like to discuss our 2021 financial outlook on slides 32 and 33. With our broad and advantaged labor portfolio, our robust operating momentum, and effective growth strategies, we are well positioned for another year of differentiated growth and performance. In our 2021 outlook, we are projecting top line and earnings growth from our strong base business and acquisition contribution. With earnings growth partially offset by incremental COVID-19 costs and ERP investment, as well as a higher projected adjusted effective tax rate. We also expect there will be an estimated two percentage point favorable impact of currency rates on sales, adjusted operating income, and adjusted earnings per share. At the top line, Due to our first quarter results and robust operating momentum, we are increasing our expected constant currency sales growth to 6% to 8%, compared to 5% to 7% previously, which continues to include the incremental impact of the Cholula and Fono acquisitions at the projected range of 3.5% to 4%. We anticipate our organic growth will be primarily led by higher volume of product mix, driven by our category management, brand marketing, new products, and customer engagement growth plan. As Lawrence mentioned earlier, we expect sales growth to vary by region and quarter in 2021, given 2020's level of demand volatility and the pace of the COVID-19 recovery. But importantly, we continue to expect we will drive overall organic sales growth for the full year in both of our segments. We are now projecting our 2021 adjusted gross profit margin to be comparable to 2020 due to increasing inflationary pressure, mainly due to transportation costs. But our inflation expectation for the full year remains a low single-digit increase. Our adjusted gross margin projection reflects margin accretion from the Cholula and Fono acquisitions, as well as unfavorable sales segments and COVID-19 costs. Our estimate for COVID-19 costs remains unchanged at $60 million in 2021 as compared to $50 million in 2020. and weighted to the first half of the year. As a reminder, fiscal 2021's COVID-19 costs are largely from third-party manufacturing costs. Reflecting the increase in our sales outlook, we are also increasing our expected constant currency adjusted operating income growth. Our adjusted operating income growth rate reflects expected strong underlying performance from our base business and acquisitions. projected to be 11% to 13% constant currency growth compared to 10% to 12% previously. This is partially offset by a 1% impact from increased COVID-19 costs compared to 2020 and a 3% impact of the estimated incremental ERP investment. This results in total projected adjusted operating income growth rate of 7% to 9% in constant currency, increased from 6% to 8% previously. This projection reflects the inflationary pressure I just mentioned, as well as our CCI-led cost savings target of approximately $110 million. We also continue to expect a low single-digit increase in brand marketing investments, which will be heavier in the first half of the year. We also reaffirm our 2021 adjusted effective income tax rate, projected to be approximately 23%. This outlook versus our 2020 adjusted effective tax rate is expected to be a headwind, to our 2021 adjusted earnings per share growth of approximately 4%. We are increasing our 2021 adjusted earnings per share expectations to growth of 5% to 7%, which includes a favorable impact from currency. This increase reflects our higher adjusted operating profit outlook and the impact from optimizing our long-term financing, which I mentioned earlier. Our guidance range for the adjusted earnings per share in 2021 is now $2.97 to $3.02, compared to $2.91 to $2.96 previously. This compares to $2.83 of adjusted earnings per share in 2020. This growth reflects strong base business and acquisition performance growth of 11% to 13% in constant currency, partially offset by the impacts I just mentioned related to COVID-19 costs our incremental ERP investment, and the tax headwinds. Based on the expected timing of some expense items, such as COVID-19 costs and brand marketing investments, as well as a low tax rate in the first half of last year, we expect our earnings growth to be weighted to the second half of the year. Our first quarter's performance was a strong start to the year, and we are optimistic for the balance of the year. But we recognize we are lapping a very strong earnings performance in the second quarter of 2020, while also making investments to drive growth in 2021. In summary, we are projecting strong underlying base business performance and growth from acquisitions in our 2021 outlook, with earnings growth partially offset by incremental COVID-19 costs and ERP investment, as well as a higher projected effective tax rate. I'd like to now turn it back to Lawrence for some additional remarks before we move to your questions. Thank you, Mike. Now that Mike has shared our financial results and outlook in more detail, I'd like to recap the key takeaways as seen on slide 34. Our first quarter results with double-digit sales, adjusted operating income, and earnings growth were an outstanding start to the year and bolster our confidence in a stronger 2021 outlook. We have a strong foundation and a balanced portfolio, which drives consistency in our performance. We are confident this The sustainability of higher at-home consumption will persist beyond a pandemic, and we are well-positioned to capitalize on accelerating consumer trends, as well as prepared for away-from-home consumption recovery. Tallulah and Fona have both started the year with strong momentum and results. Our enthusiasm for these acquisitions and our confidence that we will deliver on our plans has only strengthened over the last few months. Our fundamentals, momentum, and growth outlook are stronger than ever. Our 2021 outlook reflects another year of differentiated growth and performance while also making investments for the future. We are confident we will continue on our growth trajectory in 2021 and beyond. Now, let's turn to your questions.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you, and our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your questions.

Hi, good morning, everybody.

Morning, Andrew.

Hi there. I guess first off, it sounds like you are making, as expected, good progress on getting many of those suspended items and SKUs back on the shelf as your capacity comes on stream. It sounds like there's still some more to go as you move through the year, I guess particularly in 2Q. Is there any way you can maybe dimensionalize that a bit on how significant that refill might be in 2Q, even if it's like versus the magnitude of what you saw in 1Q, just to try and put some context around it? And have you had any challenges in getting some of those suspended items back on the shelf at all? Because I know that in Europe, you mentioned you had actually benefited from incremental shelf placement at the expense of some competitors that had some capacity issues. I didn't know if the reverse had been an issue for you here. And then I'm just going to follow up.

Sure, Andrew. Well, you know, as we've gone through the crisis in 2020, We undershipped consumption every quarter because we were not able to keep up with the extended, elevated levels of demand overall. And in order to keep our best-selling items, our core items, and in particular, as we got to the fall, protect the holiday items, we did suspend a substantial number of items. And as we've added capacity, we've been steadily restoring them as we've gone through this first quarter of this year. And I'd say that right now we probably are around the halfway point in terms of getting items back on the shelf. But you or anyone on this call, and certainly my friends and family who hector me about this endlessly, can walk into any store and find that there are a lot of holes on the shelf and a lot of our products that are not yet in full distribution and even within a given account the store-by-store situation it might be different there's a there's a supply chain aspect to it there's a retail work aspect to getting on the shelf and I think that this is going to be a steady rebuild as we go through the rest of the year and we've made a good start on it in in q1 but but we have you know quite a long way to go and it's hard I would hesitate to get overly precise about it. I would expect to see the shelf getting restored as we go through the year. I think one of the big variables for us, Andrew, is just the strength of the consumer demand. Consumer demand has been higher than we originally planned, and so we're actually not as far along in our restoration plans as we would have hoped, just because as fast as we've supply the market. Consumers are pulling the product through. I do think that it's hard for us to dimensionalize. I will emphasize it's an America's problem. Most of the world, we are shipping to consumption. Our supply chain is well caught up. Our service levels are solid. It's in the Americas where we've got We've got some catching up to do. In most categories here in the Americas, we're also shipping to consumption as well. It's primarily herbs and spices and recipe mixes. I think you're going to see a big change in the TDPs as we go through the coming weeks. I'm sure we've hit bottom on that and have already turned the corner just because of the restoration efforts that we've I think just to add to that, too, we're optimistic but prudent. I mean, the second quarter of last year, as you remember, we grew total consumer sales 28%, 36% in the Americas. So it's a tough comp as we look forward, but we're optimistic.

Understood. And thank you for the TDP comment. That leads into just a quick follow-up, which is, What's your best guess at where TDPs might end up, like, once we get to a steady state, let's say, versus, you know, 2019? I'm assuming they'll be down a bit just as you have come through this and maybe in a more efficient shelf going forward, even though I know they probably reached, you know, obviously more depths during the actual pandemic and then as you recover. But would you expect TDPs to be down maybe a couple of percent going forward in sort of a steady state?

Very astute observation. As we've gone through this, we've not only suspended skis, but we've also rationalized skis. We've eliminated a couple hundred skis that were slower moving. The items that we have now are much higher velocity on average. We're also continuing the aisle reinvention program and setting store shelves. In spite of the COVID pandemic, situation last year and all of the restrictions around working the shelf, we were able to reset over 5,000 stores. We expect at least that many this year, and we're definitely getting a lift from that, and at the same time, it does reduce the skew count. So it's a more efficient set.

Great. Thank you very much, everybody.

Our next question is in the line of Ken Goldman with J.P. Morgan. Please proceed with your question.

Hi, thank you. You know, you have a unique perspective because you see broadly across so many retail and food service categories. I'm curious, you know, in the U.S., restaurant sales, they're doing better, right? Americans are traveling much more. But at the same time, we're seeing overall food at home takeaway really remain strong, and I think probably better than what some may have expected. Obviously down on a weekly basis, but still better on a two-year. So I'm just curious, You know, are you surprised and how do you reconcile the improved food service sales that we're seeing across the entire industry with what I would consider still impressive at home trends? I never want to bet against the simplest explanation, which is that, you know, Americans are just eating more. But I think the total implied increase in food numbers, you know, is notable. I'm just curious for your thoughts there.

Great. Hey, Ken, thanks. And, by the way, you won the award for the best headline on your screen. That was awesome.

All the shorts are mad at me for overstating it, so it works both ways.

Right. You know, well, I would say, first of all, the food at home consumption really is strong. I mean, we're seeing that ourselves and in our business, of course, and also in our flavor solutions business where, again, The other CPG companies are our customers, and we're seeing a lot of strength there. I think on the restaurant, it's actually a mixed bag. The quick service restaurants are doing well. I think during the first quarter, there were a lot of, because everyone thinks about the state we're in today, but think about December and January. There were a lot of new lockdowns that were put in place, restrictions that had been lifted were reinstated. So I'd say that the branded food service side, the restaurant customers might be off to a little bit slower start to the year than everyone may be thinking. I do think there's a lot of optimism among restaurant operators as we go into the second quarter and as the vaccination rates go up. And many of these restrictions are lifted. And I think that that group will come back strong. But certainly for the beginning of the year, they're off to a little bit of a slower start.

Okay, thank you. And I know we're running a little long, but I wanted to sneak one more in, which is, you know, it's always dangerous to ask about math on earnings calls. But back of the envelope, it seems you're implying now that for the last nine months of the year, right, 2Q through 4Q, organic sales growth is actually going to be a little bit less than what you anticipated a few months ago. And I'm just basing this on some of your guidance items. So is it fair to say that the first quarter over-shipment was so strong that it maybe pulled forward some of your expected shipments ahead? Or am I really parsing that info too finely and you're not really making any implied changes?

Our intent was to reflect the sales growth over-delivery that we got in the first quarter which was high, but we really did not change our outlook for the rest of the year. A year to go for the total organic, as we call it, is basically the same. It's plus or minus 1% for the year. We've called our base up. The range is 2.5% to 4% up 1%, but you're right. A year to go is basically what we said before. We haven't called it down. But I know, as you and others, the two-year CAGRs are what's really an impressive part as we start measuring this and looking at the lapping thing. So those are actually above our organic growth guidance long-term that we're seeing now. And it is just the first quarter, so we're trying to express our optimism because, I mean, the business is very strong, but also be a bit prudent. I mean, we're lapping a big second quarter. Understood. Thank you.

Our next question is from the line of Robert Moscow with Credit Suisse. Please proceed with your question.

Hi, thank you. Hi, good morning. I don't think you're in the practice of giving us your COVID costs, but I was wondering if they now need to be higher this year than expected because you need to rely on third parties more than you thought, and if you can maybe compare that to 2020. I'm also wondering if I could look at second quarter in a different way. I know the year-over-year is difficult to look at, but sequentially, you typically have higher sales in 2Q than you have in 1Q and higher profit, but I think consensus is assuming that that won't happen. I know you've given us first half, second half guidance, but wondering for a little more clarity on how 2Q compares to 1Q maybe sequentially. Thanks.

Yeah, this is Mike. On the COVID cost, we said previously, and we haven't changed from that, we spent about $50 million last year, and we're going to spend about $60 million this year. So up about 10. Now, the timing of that's a little different.

It's going to be first half heavily weighted in 2021.

A lot of that's the command cost we talked about. before. Kind of leading into your second question, you know, that command was coming in, you know, the first quarter wasn't a full impact of the command cost as we ramped things up. So really the second quarter is where, you know, that would be every month we'll have the full command cost. So that's a little bit of a headwind in the second quarter. You know, we talked about the first quarter, our consumer AMP was up around 17%. We're going to have another investment of AMP in the second quarter to drive sales, as we said. So again, that's part of the first half, second half story. So I think Q2 has a bit of a headwind from an expense perspective and a COVID and an AMP cost perspective. And also the tax rate. They're going down to the EPS line.

Okay. Okay. I'll leave it there. Thank you very much.

I'd say maybe to summarize this, we talked about the year being a first half, second half story. Within the first half, there's a first quarter and a second quarter story.

Think of it that way. Again, first half EPS still up versus a year ago. Yes. Great. Thanks a lot.

Next question is from the line of Alexia Howard with Bernstein. Please proceed with your question.

Good morning, everyone.

Hi, Alicia.

Hi there. So you mentioned e-commerce briefly in the prepared remarks. Could you give us a little bit more color region by region? You talked about strong double-digit growth, and I'm just wondering how that varied in the various parts of the world. And are you seeing a slowdown in some of those areas at this point as reopening happens? And then I have a follow-up.

Sure. Well, first of all, e-commerce is strong everywhere. You know, we talked last year about triple digits, and at the end of the year we said e-commerce total was around, I think it was 136% increase year on year. It's not quite triple digits, but it's a very strong double-digit increase in the first quarter again on top of the strong performance last year. I'd say that that's still pretty explosive growth and we have no disappointment about that. I'd say the omni-channel particularly is very strong and I think that while the numbers may be slightly different region to region, the trend is the same direction globally.

Great, thank you very much.

I think consumers have had a good experience shopping online. I think it's a habit that they're going to continue using, too, is what we're seeing from some of our consumer research.

Okay, that's very helpful. And then in terms of new product launches, it sounds as though you've obviously got an impressive lineup for 2021. Is your percentage of sales from new products trending upwards? I imagine it was slower last year because of the pandemic. I don't know whether you can quantify exactly what percentage of sales from new products you're anticipating this year and how that compares to maybe where you were a year ago.

I'll let Mike speak to the numbers. I think it's a more normal year. You know, we're talking about 7% or 8% of our products introduced in the last three years make up our sales base. It would have been less last year because of the pandemic, but with kind of a strong wrap of new products in the 2021, as you see, and then we get back to more of that normal longer-term numbers. A number of the items that we launched last year, we got less placement on it because of the focus on core items, not just by us, but by the retailers. On the other hand, where they did get into distribution, they got an extraordinary amount of trial. So some of the items that we did launch last year are one of our best performing new items in a while. And we're really treating 2021 as a continuation of the launch year for the NPD we introduced last year. So it appears there's quite a pipeline for this year.

Great. Thank you very much. I'll pass it on.

Our next question is from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.

Yes, thanks. Good morning, everyone. Hi, Adam. Hi, Adam. Hi. So I just want two clarification questions. First, relative to the earnings call in January, the expectations on raw materials and cost inflation were unchanged, and just Be clear just in terms of what you're seeing in terms of freight, packaging, variety of raw material, ingredients. Is that something where you've had enough contracted and not exposed to the spot market to insulate you for fiscal 21? Or is it just your aggregate commodity basket really hasn't moved that much because more broadly it seems –

Yeah, this is Mike. We haven't changed our guidance for the year. So low single digits, obviously, a lot of commodities and packaging, to your point, is already contracted. Freight's a variable that we've talked about, and one of the reasons we've said, while we've had really great growth and mix and things like that, and the long-term debt optimization, we didn't drop it all through to the bottom line because of some pressure from increased inflation from transportation, just like every other company has been seeing recently. And we've recognized that in our forecast and our guidance. But we're still low single digits generally.

All right. That's really helpful. And then the second clarification, you talked about overshipping America's consumption growth of 15%. And I'm just trying to make sure in the slides, the America's volume price mix, our product mix is up 24.5%. Is that apples to apples versus the 15, or what's the, just trying to understand the magnitude of how much you were actually overshipping in the period?

You know, in the year ago, this is Lawrence, in the year ago, in the first quarter of last year, it seems like a lifetime ago, in the Americas, we actually undershipped consumption in the first quarter a year ago, and so at the time we said there's about a 4% impact on the Americas, and so I think you should factor that out. And so the over-shipment versus consumption might be a little bit less than it seems. Again, we hope actually to rebuild stocks in the trade more than we did, and the consumption is very strong. All right, that's all really helpful. I'll pass it on.

Thank you.

Thank you. We're nearing the end of our question and answer session for today and have time for one additional question, which is coming from the line of Chris Grohe with Stifel. Please proceed with your questions.

Hi, good morning.

Hi.

I'll make it quick here. I know we're at the end of this, but real quickly, just understand, as we think about those third-party co-manufacturing costs and a bit of a weight on the gross margin, do those continue all through the year? Just understand, are you using third parties just to rebuild inventory and then you kind of shut that down, or is this something that will be ongoing in terms of your supply of product in the future? Sure.

Hey, Chris. It's Mike. One, we're always using co-manufacturers. You know, that's a part of our supply chain. As we talked about, though, for the year, we've really stretched some of those strategic co-packers to help us out, shorter term, really focused on the first six months of the year, very volume dependent. So the way we're thinking now is, you know, again, the second quarter will be the heaviest spend. There will be some some probably rolls in the third quarter or so. And we'll see what volume is, too, what consumption continues. That's something we would assess, as we always do. And as our supply chain continues to recover, that's another variable that could speed it up or slow it down. So those are all considered in our guidance, though.

Okay. Thank you. And just a quick one on, as I think about what's happening in China, you saw double-digit consumption in China consumer sales, and I think that even excludes the branded food service you sell, products you sell, as well as a really strong recovery in food service. I guess I just want to understand, make sure those numbers are accurate, and then to the degree to which that is somewhat of a predictor of what could happen in the U.S. as we sort of lap the tougher comps on the consumer side with the easy comps on the food service side. Are you learning anything from what's happening in China as an indicator for the U.S.? ?

Well, I think that the interesting thing in China is that even though they're well past the COVID impact and are very far along in recovery, consumption of food at home remains strong, even as food service has recovered. I think it's interesting to look around their region also, because what we're talking about is the Asia-Pacific region. It's not just China. That's the biggest market there. But markets like Australia, which is also pretty far low in recovery, even though food service has rebounded, it's not back to the same level that it once was, and consumption of food at home has continued to be very strong. Okay.

Thank you.

I think it goes to the point that we have been making, which is that this has been a long-term trend anyway for consumers to cook more at home and more from scratch at home when they do. and the COVID situation reinforced that behavior. It helped a whole new generation of cooks learn how to cook their family recipes that maybe they relied on mom or grandma or a new eating occasion, a whole new eating occasion like lunch as people work remotely. I think there are a lot of reasons to believe that consumption at home is going to continue to be elevated.

Okay, thank you.

Thank you. I'll now turn the floor back to Lawrence Kersey for closing remarks.

I'd like to thank everyone for your questions and for participating in today's call. I apologize to those that we didn't get to in the queue. We did have a very long script today. We had a lot of information to get out. McCormick is differentiated by the breadth and reach of our balanced portfolio, which has sustainably positioned us for growth. We're very pleased with our outstanding first quarter operating performance, which proves the strength of our business model, the value of our product, and our capabilities as a company. We expect to drive even further growth as we continue to execute on our long-term growth performance and people strategies, actively respond to changing consumer behavior, and capitalize on new opportunities. Our investments provide a new foundation for growth while enhancing our agility and our relevance with consumers and customers, which positions us well for continued success and long-term shareholder value creation.

Thank you, Lawrence, and thanks to everybody for joining today's call. And again, we apologize to those we did not get, and I would be happy to follow up with you after the call. If there are any further questions from anybody regarding today's information, please feel free to contact me. This concludes this morning's conference call. Thank you very much.