McCormick & Company, Incorporated

Good morning. This is Casey Jenkins, Chief Growth Officer. Thank you for joining today's second quarter earnings call. To accompany this call, we have posted a set of slides at ir.mccormick.com. With me this morning are Lawrence Kurzias, Chairman and CEO, Brendan Foley, President and COO, and Mike Smith, Executive Vice President and CFO. I would also like to welcome Spad and Freya joining us on this call this morning. Fatin joined McCormick earlier this month as Vice President, Investor Relations. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning's press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. 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. Please refer to our forward-looking statement on slide 2 for more information. I will now turn the discussion over to Lawrence.

Good morning, everyone. Thanks for joining us. To start, last night we announced that Brendan Foley will become McCormick's next Chief Executive Officer on September 1st. He is joining the board of directors immediately. I could not be more pleased with Brendan as my successor. I will continue to serve McCormick and all of its stakeholders as executive chairman of the board once Brendan becomes CEO. This is a transition that we have been planning internally as part of an orderly, multi-year succession plan, and it's exciting to finally share the news with all of you. As many of you know, Brendan is exceptionally well-qualified and prepared to lead McCormick. He deeply understands the importance of delivering continued strong growth while doing the right things for people, communities, and the planet. With our advantaged competitive positioning, supported by the growing demand for flavor, and with our tremendous depth of talent, I have utmost confidence that McCormick, under Brendan's leadership, will continue to drive differentiated growth and long-term shareholder value. Congratulations, Brendan. Now, on to our earnings update. First, I'll provide an overview of our second quarter results. Brendan will provide the business segment updates. Mike will provide details on our financial results and 2023 outlook. And after your questions, I will have some final comments. Starting with our second quarter results, we're pleased with our strong second quarter performance, which reflects sustained demand across our business and the effective execution of our strategies. We deliver double-digit constant currency sales growth. Our pricing actions are in place, and importantly, our volume performance improved. we continue to see top-line momentum in our business, positioning McCormick for sustained growth. Additionally, we drove meaningful year-over-year margin expansion in both segments, underscoring our focus on profit realization. Our global operating effectiveness, or GOE program, which includes the optimization of our supply chain cost structure, is yielding results. We grew adjusted earnings per share 25%, driven by significant adjusted operating income growth, and despite interest rate and tax headwinds. Year to date, cash flow from operations more than doubled driven by higher earnings I just mentioned and working capital improvements, notably we're reducing inventory levels as planned. Both segments in all regions contributed with strong growth. Our results benefited from our recovery in China, and while the timing and pace of recovery in our China business was less robust than anticipated, It was still strong, and we are confident in the contribution China will provide to our results as the year progresses. Overall, we are pleased with our execution and results during the first half of 2023. Our year-to-date results, combined with the strong demand we continue to expect across our portfolio and our diligent approach to optimizing our cost structure, bolster our confidence in our growth trajectory as we enter the second half of the year. As such, we're raising our adjusted operating income and earnings per share outlook for the full year. Turning to slide five, in the second quarter, we drove 8% sales growth or 10% in constant currency. Our constant currency sales growth reflected strong business performance with an 11% contribution from pricing and a 1% decline in volume and product mix. Netting in this volume decline, our net 1% volume increase from China recovery partially offset by our kitchen basics, divestiture, and the exit of our consumer business in Russia, and 1% decline attributable to pruning low-margin business. As examples, we exited direct store delivery, DSD, of our bagged Hispanic products in our America's consumer segment and a private label food service line in the EMBA. From a segment lens, both the consumer and flavor solution segments delivered strong sales growth in each region, In the consumer segment, we continued to have strong price realization and we drove a sequential improvement in volume performance. In flavor solutions, our exceptional performance continued with our ninth consecutive quarter of constant currency double-digit sales growth. Our sales performance demonstrates the strength of our broad global portfolio and positions us well for continued top-line growth for the balance of the year. I'd like to share a few highlights about our gross margin performance, which Mike will cover in more detail in a few moments. We drove significant gross margin improvement, reflecting the continued recovery of the cost inflation our pricing lagged last year, cost savings for our CCI and GOE programs, and the impact of strategic decisions we've made to optimize our portfolio with a focus on driving margin improvement as we continue to prune low margin businesses. Our gross margin expansion in the quarter was partially offset by higher SG&As as we build back incentive compensation as planned. Our adjusted operating income increased by 35% versus the second quarter of last year, or in constant currency, 36%. This growth drove an adjusted earnings per share increase of 25%, which also reflected higher interest and effective tax rates. We remain confident that we have the right plans in place and are taking the right actions. We are halfway through the year. Our year-to-date results speak for themselves. We expect to continue driving profitable growth for the balance of the year. Demand is strong. We're driving improvements in our margin profile and optimizing our cost structure effectively. I want to thank McCormick employees worldwide for their collective powers driving our success. I'm proud of the tremendous job the McCormick team has done navigating the dynamic environment over the last few years. I'd like to recognize their energy and excitement for the business, which is coming through in our results. Now, I'd like to ask Brendan to share the second quarter business updates for our segment. Thank you, Lawrence. Starting with our consumer segment, on slide 8, our underlying performance was strong, reflecting our price realization and continuing positive momentum in our consumption trends. we continue to see sequential improvement. Now, for some highlights by region, starting with the Americas. Our total U.S.-branded portfolio consumption, as indicated by our IRI consumption data and combined with unmeasured channels, grew 7%. The difference between our sales and consumption was attributable to the retail sell-through of discontinued items and listing fees for an increase in the new distribution of products. For example, our new Cholula and Stubbs items, and Tabitha Brown line extensions. As anticipated, our alignment between consumption and shipments is normalizing. As usual, we expect some business fluctuations from period to period. In spices and seasonings, both consumption dollars and units accelerated sequentially from the last several quarters, with unit strength in core products such as straight-fill spices and vanilla, as well as our seasoning blends which provide consumers both convenience and flavor exploration. Watch-to-date results of our Lorry's Everyday Spice range continue to be positive. We are seeing incremental sales and profit to the category, and like the first quarter, over half of the purchases are from new buyers to McCormick and overall incremental to the category. We also continue to see consumers trade off from private label. As our proprietary research indicates, consumers still prefer brands. even when under economic pressure. Our excitement and distribution for this product line continues to build. The renovation of our U.S. core Everyday Spice and Nerd portfolio is rolling out according to plan and is a seamless transition for our retail partners as it fits into existing shelf spots. At the end of the second quarter, we had about 30% of our SKUs on shelf. We will continue to roll out the product over the course of the year and our significant brand marketing campaign will be ramping up at the end of the third quarter. Our larger size Super Deal herbs and spices continue to benefit the category and McCormick with 11% consumption growth in the second quarter as consumers continue to cook more at home. Super Deal's purchase cycle is similar to that of smaller sizes, even though they are three times the volume. and household penetration remains greater, think pre-COVID. We kicked off the grilling season at the end of the second quarter, and early results are good. Frank's Red Hot and Cholula Hot Sauces, French's Mustard, Lowry's Marinades, and McCormick Minonesa all delivered double-digit growth in the second quarter, with Stubb's Barbecue Sauce, as well as Grillmate's Seasoning Blends and Recipe Mixes following close with high single-digit growth. We are expecting our new grilling products and strong promotions to heat up share performance. We've launched three new Grillmates on-trend flavors, including Smashburger and Garlic Butter, as well as Griller's Choice Marinades, which you can use as three different flavors. All have had strong retailer acceptance. We are really excited about our Stubb's Real Smoke Rubs, which capture real, authentic, hardwood smoke flavor and Stubbs jalapeno and honey barbecue sauce, which combines two trending flavor profiles, and the nuance of heat and flavor that our Frank's smoke and sweet barbecue wing sauce offers. We are fired up for the grilling season and expect the launch of our Fire Up brand marketing campaign in the third quarter to fire up consumer demand as well. Our expansion into the fast-growing Mexican aisle with Cholula taco recipe mixes and salsas based on authentic Mexican formulas is off to a great start following our Cinco de Mayo execution. During the third quarter, we are increasing our Cholula brand marketing investments to support our expanded portfolio. Our third quarter brand marketing will also include increasing our investments for our McCormick Gourmet product line with our Further for Flavor campaign, highlighting our commitment to sustainability from farm to table. With our supply issues of this product line resolved, we are excited to be able to support this premium product offering for the first time in two years. And importantly, as we enter the second half of the year, it is historically our most significant period. Finally, in the Americas, we continue to drive double-digit consumption growth in e-commerce led by spices and seasonings. We are realizing high returns on our investments, gaining new customers, and growing with new products, such as our new Franksville Pickle Hot Sauce on our direct-to-consumer platform, which sold out in less than a week. We will start to expand distribution in stores late this year. In EMEA, our second quarter was our strongest quarterly sales performance in two years. Our effective pricing accelerated to contribute double-digit growth, and our volume performance improved sequentially. And in fact, we grew volume in the UK and Eastern Europe. Consumption data continues to indicate the consumer is holding up well in our categories, and our share performance is solid. We are growing herbs, spices, and seasonings share in Eastern Europe and in Italy, and our growth plans in France are also yielding results with improved share performance. We are excited about celebrating the 60th anniversary of our Ducro brand this year. We are scaling up our grilling activation in France, and partnering with key retailers to celebrate the brand's anniversary and to spark another reason to celebrate around the grill. In the UK, we have also kicked off the grilling season and are building out our support in a discount channel featuring our Schwartz Grillmates products. In both France and the UK, we will be increasing our third quarter brand marketing investments to support grilling, as well as new products and to continue to emphasize our value messaging. Across the region, we are making meaningful progress in the fast-growing discount channel, expanding distribution and gaining share. Finally, we are gaining share of the UK hot sauce category. We continue to drive strong Frank's Red Hot performance and are accelerating our Cholula growth, with new distribution and e-commerce multi-packs contributing significantly to our hot sauce growth. Overall, our investments in brand marketing, merchandising, and new products are proving to be effective and are driving growth in EMEA. In the Asia-Pacific region, growth of the quarter reflected lapping the COVID-related disruptions in China. While our business is recovering and our second quarter growth was robust, it was lower than our expectations as the pace of reopening is proving to be more gradual, and consumer spending was pressured by broad-based economic pressures in the region. we remain optimistic for a more normal operating environment emerging as the year progresses and we enter into 2024, driving sustainable growth as we execute on our strategies. Outside of China, new products and brand marketing initiatives drove double-digit growth in other markets, with strength in branded spices and seasonings and Frank's Red Hot. Wrapping up the consumer update, We are fueling our growth with the power of our brands and increased innovation and brand marketing. The supply issues we experienced last year are resolved, and we are using our strength in category management to increase distribution and drive McCormick and category growth. Our year-to-date results bolster our confidence that we will continue to drive sales growth as we have in the past, before, during, and after the pandemic. We believe the execution of our growth plans will be a win for consumers, customers, our categories, and McCormick, differentiating us even more and strengthening our leadership in core categories. Now turning to flavor solutions on slide 10, we are continuing our outstanding sales growth momentum in this segment. As Lawrence already mentioned, the second quarter was our ninth consecutive quarter with double-digit constant currency sales growth. We have previously shared our commitment to restoring profitability in this segment, And the second quarter is marking an inflection point toward our objective to continuing to build our margin. Our growth was led by pricing actions in all three regions. We are priced to cover current year inflation and are continuing to recover the cost inflation our pricing lagged the last two years. Recovery in the second quarter was even greater than the first. Now for regional highlights. Our America's second quarter strong sales growth was led by our flavors product categories. Within flavors, seasonings growth was strong, including volume growth related to new products, which is outpacing last year's new product contribution, as well as our strength in our customers' iconic products. We are winning in seasonings with our heat platform. Flavors for performance nutrition beverages and health and market applications also contributed to our strong performance as we continue driving double-digit sales growth. We are winning with new products for existing and new customers. In branded food service, we continue to gain share in hot sauce, mustard, spices, and seasonings, with strength this quarter in grillmates and lauries. Our grilling portfolio is firing up in branded food service, just like in our consumer segment. Moving to EMEA, we continue to drive broad-based growth across the portfolio, led by higher sales to our quick-service restaurant customers in the second quarter. Overall, our price realization accelerated again from last quarter Notably, we grew sales constant currency 15% in the quarter despite an impact from pruning low margin business, as Lawrence mentioned earlier, and softness in some of our QSR and packaged food and beverage customers' volume within their own business. And in APZ, we also experienced recovery in China and are encouraged about the return to normal as growth was also driven by strong performance of our quick service restaurant customers' promotions. Outside of China, we deliver double-digit growth with effective price realization as well as solid volume growth driven by demand from QSRs. The strength of our flavor solutions portfolio and capabilities, including our differentiated customer engagement and culinary-inspired innovation, are driving our outstanding flavor solutions momentum. The power of McCormick and Fona together continues to create exciting growth opportunities and a technically insulated and value-added part of our portfolio, especially with our recent wins in health and nutrition. And in branded food service, we expect new products, increased menu penetration, and culinary partnerships to drive continued growth. Our robust plans and flavor solutions bolster our confidence in continuing our growth trajectory and driving our flavor solutions leadership. Now, I'd like to turn it over to Mike to provide details on our financial performance. Thanks, Brendan, and good morning, everyone. Starting on slide 12, our top-line constant currency sales grew 10% compared to the second quarter of last year, reflecting 11% from pricing, partially offset with a 1% volume and mix decline. As Lawrence already mentioned, there were impacts to volume related to the China recovery, the kitchen basics to vestiture, the exit of our consumer business in Russia, and and strategic decisions we made related to optimizing the profitability of our portfolio. At the total company level, all these impacts netted out. In our consumer segment, constant currency sales increased 7%, reflecting a 9% increase from pricing actions, partially offset by a 2% volume decline. Including in this volume decline are a net 1% increase from the recovery in China, partially offset by the kitchen basics divestiture and our business exit in Russia, a 1% decline from exiting DSD, or direct store delivery, business for Hispanic bag products in the Americas. On slide 13, consumer sales in the Americas increased 4% in constant currency, with an 8% increase from pricing actions, partially offset by a 1% volume decline from the kitchen basics to vestiture, a 2% volume decline from the Hispanic product DSD exit, and 1% underlying volume and mix decline. Our strong underlying sales growth was driven by the products in our grilling portfolio Brendan mentioned earlier. In EMEA, constant currency consumer sales increased 9%, with a 12% increase from pricing actions partially offset by a 2% volume decline from exiting Russia and a 1% underlying volume and mix decline. Excluding Russia, sales growth was broad-based across all categories and markets. Constant currency consumer sales in the Asia-Pacific region increased 28%, driven by a 20% volume increase from China recovery and a 6% increase from pricing actions across the entire region, as well as 2% increase in all other volume and product mix. Turning to our flavor solutions segment and slide 16, we grew second quarter constant currency sales 13%, reflecting a 14% increase from pricing actions, partially offset by a 1% volume decline. Included in this volume decline are a net 1% increase from the recovery in China, offset by a 1% decline from discontinuing a private label food service product line in EMEA. In the Americas, flavor solutions' constant currency sales rose 11%. Pricing actions contributed to higher sales across the customer base. Volume and product mix declined in the quarter as strong volume growth in seasonings was more than fully offset by the impact of pruning of low-margin business. In EMEA, constant currency sales increased 15%, with pricing actions partially offset by lower volume and product mix, including a 2% impact from discontinuing the private label product line I mentioned earlier. EMEA's labor solutions' outstanding growth was driven by pricing and was broad-based across its portfolio, led by higher sales to QSR customers. Volume and mix, outside of the product discontinuation, declined due to softness in some of our customers' volume within their own businesses, mainly packaged food and beverage customers as well as QSRs. In the Asia-Pacific region, flavor solution sales grew 22% in constant currency, with a 13% volume benefit in China due to lapping the prior year COVID-related disruption, an 8% increase from pricing actions, and a 1% increase in all other volume of mix driven by Australia. As seen on slide 20, gross profit margin expanded 310 basis points in the second quarter versus the year-ago period, reflecting our unwavering focus on increasing profit realizations. Favorable drivers in the quarter were our CCI and GOE programs, the continued recovery of the cost inflation our pricing lagged over the last two years as we planned, and favorable product mix in both segments. We offset current year inflation in the second quarter with our pricing. Notably, in labor solutions, while we continue to incur some level of higher cost to meet high demand in certain parts of our business, we continue to make progress on reducing the level of these costs, and as we expected, the second quarter's dual running costs we experienced in the UK were comparable to last year. We are very pleased with our gross margin expansion for the quarter and expect to continue to drive margin improvement in the balance of the year. Now moving to slide 21, selling general and administrative expenses, or SG&A, increased relative to the second quarter of last year, as higher employee incentive compensation expenses and distribution costs were partially offset by CCI-led and GOE savings. Brand marketing increased compared to the second quarter of last year, and we are expecting an even more significant year-over-year increase in the third quarter. As a percentage of net sales, SG&A increased 20 basis points. Strong sales growth and gross margin expansion, partially offset by higher SG&A costs, resulted in a constant currency increase in adjusted operating income of 36% compared to the second quarter of 2022. In constant currency, the consumer segments adjusted operating income increased 24%, and the flavor solutions segment grew 66%. Turning to interest expense and income taxes on slide 22, our interest expense increased significantly over the second quarter of 2022, driven by the higher interest rate environment. Our second quarter adjusted effective tax rate was 22.3%, compared to 18.6% in the year-ago period. Both periods were favorably impacted by discrete tax items, with a more significant impact last year. At the bottom line, as shown on slide 23, second quarter 2023 adjusted earnings per share was $0.60, as compared to $0.48 for the year-ago period. The increase was driven by higher adjusted operating income, partially offset by higher interest expense and a higher effective tax rate. On slide 24, we've summarized highlights for cash flow in the quarter-end balance sheet. Our cash flow from operations due to date was strong. $394 million in 2023 compared to $154 million for the first half of 2022. The increase was primarily driven by higher net income and working capital improvements, including lower inventory as well as lower incentive compensation payments. We returned $209 million of cash to our shareholders through dividends and used $119 million for capital expenditures through the second quarter. We expect 2023 to be a year of strong cash flow driven by our profit and working capital initiatives. Our priority is to continue to have a balanced use of cash, funding investments to drive growth, returning a significant portion to our shareholders through dividends, and paying down debt. We remain committed to a strong investment grade rating, and we have a history of strong cash generation and profit realization. Now turning to our updated 2023 financial outlook on slide 25. Our 2023 outlook reflects our continued positive top-line growth momentum and, with the optimization of our cost structure, increased profit realization. We expect to drive margin expansion with strong sales and adjusted operating income growth that reflects the health of our underlying business performance, as well as the net favorable impact from several discrete drivers. We expect our adjusted operating profit growth will be partially offset below operating profit by higher interest expense and a higher projected effective tax rate. We also expect there will be a minimal impact from currency rates, although there will be a timing aspect as we realize an unfavorable impact in the first half of the year and project a favorable impact in the second half. For fiscal 2023, we are reaffirming our sales outlook, and as Lawrence mentioned, we are raising adjusted operating income and adjusted earnings per share, driven by our strong year-to-date performance, combined with the robust demand we continue to expect and our diligent approach to optimizing our cost structure. At the top line, we continue to expect 5% to 7% growth, driven primarily by the wrap of last year's pricing actions, combined with new pricing actions we have taken in 2023. We expect several factors to impact our volume and product mix over the course of the year, including price elasticity, consistent with 2022 at lower levels than we have historically experienced, but in line with the current environment. A 1% estimated benefit from last year's impact of COVID-related disruptions in China, although we expect the impact will vary from quarter to quarter given 2022's level of demand volatility. The divestiture of our kitchen basics business in August of last year and the exit of our consumer business in Russia during last year's second quarter. And finally, the continual pruning of lower margin business from our portfolio. We estimate the America's consumer segment DSD exit and the EMEA's labor solutions private label discontinuation to be approximately a 1% impact on the year, which began to impact us in the second quarter. As always, we plan to drive growth through the strength of our brands, as well as our category management, brand marketing, new products, and customer engagement plans. Our 2023 gross margin is projected to range between 50 to 100 basis points higher than 2022 compared to our prior guidance of 25 to 75 basis points. This gross margin expansion reflects a favorable impact from pricing, cost savings from our CCI-led and GOE programs, and portfolio optimization, partially offset by the anticipated impact of a low to mid-teens increase in cost inflation. We expect cost pressures to be more than offset by pricing during the year as we recover the cost inflation our pricing lagged the last two years. Moving to adjusted operating income, first let me walk through some discrete items items and their expected impact to our 2023 adjusted operating profit growth. First, the cost savings from our GOE program are expected to have an 800 basis point impact. The savings from this program are expected to scale up as the year progresses. Next, the benefit of lapping the impact of COVID-related disruptions in China is expected to have a 300 basis point favorable impact. The kitchen basics divestiture is expected to have an unfavorable 100 basis point impact. And finally, an 800 basis point unfavorable impact is expected as we build back incentive compensation. The net impact of these discrete items is a favorable 200 basis points. This favorable impact, combined with expected 8% to 10% underlying business growth, which is driven by our improved operating momentum, results in our adjusted operating income projection of 10% to 12% compared to our previous guidance of 9% to 11%. In addition to the adjusted gross margin impacts I just mentioned, this projection also includes a low single-digit increase in brand marketing investments and our CCI-led cost savings target of approximately $85 million. We continue to anticipate a meaningful step up in interest expense driven by the higher interest rate environment, which will impact our floating debt. We estimate that our interest expense will range from $200 to $210 million in 2023, spread evenly throughout the year. As a reminder, in 2022, we realized an $18 million favorable impact from optimizing our debt portfolio, which we will lap in the third quarter of 2023. The net impact of these interest-related items is expected to be an approximately 800 basis point headwind to our 2023 adjusted earnings per share growth. Our 2023 adjusted effective income tax rate is projected to be approximately 22% based upon our estimated mix of earnings by geography, as well as factoring in a level of discrete impacts. Versus our 2022 adjusted effective tax rate, we expect this outlook to be a 100 basis point headwind to our 2023 earnings growth. To summarize, our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 10% to 12% and a 2% net favorable impact from the discrete items I just mentioned impacting profits. the GOE program, the China recovery, the kitchen basics to vestiture, and the employee benefit cost rebuild, partially offset by the combined interest and tax headwind of 9%. This resulted in an expected increase of 3% to 5% for a projected guidance range for adjusted earnings per share in 2023 of $2.60 to $2.65. Before turning it back to Brendan, I would like to recap the key takeaways as seen on slide 27. Our second quarter sales growth reflects sustained demand across our business and the effective execution of our strategies. Our pricing actions are in place and our volume of performance improved. We drove meaningful year-over-year margin expansion in both segments, underscoring our focus on profit realization. Our cost savings programs are yielding results in line with our expectations. Our year-to-date results combined with continued robust demand expectations and our actions to optimize our cost structure bolster our confidence in delivering the strong operating performance projected in our enhanced 2023 outlook. Thank you, Mike. Before we turn it over to Q&A, I would like to provide some additional comments. First, I would like to say I am truly honored and excited about the opportunity to lead this great company with its rich and very promising future. Global demand for flavor remains the foundation of our sales growth, and we have intentionally focused on great, fast-growing categories. Our alignment with long-term consumer trends, healthy and flavorful cooking, increased digital engagement, trusted brands, and purpose-minded practices continues to create a tailwind for growth. McCormick is uniquely positioned to capitalize on this demand for great flavor. With the breadth and reach of our strong global flavor portfolio, we are delivering flavor experiences for every meal occasion. We are the global leader in flavor from end to end for our consumers and our customers. As we look ahead to the back half of the year, we will continue to focus on capitalizing on strong demand, optimizing our cost structure, and positioning McCormick to deliver sustainable growth and long-term shareholder value. We have compelling growth plans in place, including building momentum with our new products and heat platform, and are delivering on our commitment to increasing our profit realization. we are confident with successful execution of our plans and concrete actions, we will realize the profitable growth reflected in our updated 2023 financial outlook. The strength of our business model, the value of our products and capabilities, and execution of our proven strategies further bolsters our confidence in our growth trajectory in both segments, particularly as the environment begins to normalize. Remaining relentless with our focus on growth, performance, and people combined with the compounding impact of our continued growth investments and alignment with consumer trends, underscores McCormick's position to deliver long-term differentiated growth. Our fundamentals remain strong, and we expect to continue to not only deliver strong sales growth, but also drive total shareholder return at an industry-leading pace. Importantly, I'd like to personally thank Lawrence for his mentorship and continued service to McCormick. On behalf of shareholders and employees, I want to recognize his outstanding leadership as CEO of this great company. Lawrence has been a transformational leader for McCormick, bringing our global flavor platform to life through his entrepreneurial spirit, innovative thinking, and growth-oriented vision for the company. During his time as CEO, we have grown sales over 50% and market capitalization more than doubled, creating significant shareholder value. We have prioritized investing to drive future growth, increased our profit realization, improved cash flow from operations, and have returned more than $2.5 billion to shareholders. Lawrence is widely credited with embedding purpose-led performance into McCormick's culture by championing the company's industry-leading sustainability efforts, driving a period of tremendous growth, performance, and expansion, including acquisitions of iconic brands like Frank's Red Hot, French's, Cholula, as well as Thona, and successfully leading McCormick through the unprecedented global pandemic. This is an enviable track record. Congratulations, and we look forward to your continued support as Executive Chairman. Now for your questions.

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