McCormick & Company, Incorporated

Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's second quarter earnings call. To accompany this call, we've posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, Chairman, President, and CEO, and Marcos Gabriel, Executive Vice President and CFO. 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 two for more information. I will now turn the discussion over to Brendan.

Good morning, everyone, and thank you for joining us. Our strong second quarter performance demonstrates the underlying strength and resilience of our business. We delivered robust sales growth, expanded underlying margins, and increased earnings. Our total results were supported by the McCormick de Mexico transaction. Organic growth was driven by the accelerated momentum in flavor solutions with growth across flavors and branded food service customers, highlighting the benefits of our diversified flavor-focused portfolio. Looking ahead, we expect to sustain the momentum in flavor solutions and increase reinvestment to improve consumer volume trends in organic sales. Our enhanced margin profile and operational rigor position us well to deliver a virtuous cycle of growth through continued investment in our brands, capabilities, and innovation that drive long-term value creation. Our fundamentals remain strong, supported by our advantage categories and disciplined execution, giving us confidence in our ability to deliver on our 2026 outlook. Turning now to our results in slide four. In the second quarter, total sales grew by 14% in constant currency, reflecting acquisition contribution from McCormick & Mexico of 12%, and organic sales growth of 2%. As expected, organic growth was driven by pricing. In global consumer, volumes were impacted by shifting demand patterns and increased price gaps in the Americas. Looking to the second half, we are implementing targeted actions to strengthen performance. We expect sequential volume improvement in the third quarter and volume growth in the fourth quarter, supported by refined revenue growth management initiatives, expanded distribution, targeted value-focused marketing and innovation. In EMEA and Asia Pacific, we delivered sustained volume growth during the quarter, and we expect that momentum to continue for the remainder of the year. In global flavor solutions, volume growth exceeded expectations, driven primarily by the Americas. We benefited from growth across the flavors customer base, including large CPG, private label, and high-growth innovators. In branded food service, Growth was balanced across channels, supported by distributor volume recovery, sustained demand in non-commercial channels, and strong e-commerce performance. Overall, the quarter reflects solid execution and strengthening fundamentals. Let's move to slide five and let me highlight for the quarter some of the key areas of success. Starting with global consumer, across key markets, food categories continued to soften. Against this backdrop, we saw good consumption trends. In spices and seasonings, share gains in Canada, France, Poland, and China continue to support global performance. In recipe mixes, in the UK, we drove unit and dollar share gains for the last three quarters, supported by expanded distribution and customer wins. In Poland, new recipe mix launches under our Canvas brand are performing well. And most recently, we expanded our recipe mix portfolio in France with the Ducro brand, further strengthening our presence in the categories. In mustard, US unit share gains were driven by enhanced distribution, and we delivered the sixth consecutive quarter of dollar share gains in Poland. In hot sauce, in the US, we delivered dollar and unit share gains for the third consecutive quarter, supported by expanded distribution and innovation, including new Cholula sauces. We also drove share gains in the UK and Australia, reflecting strong execution and continued brand momentum across key international markets. We expanded total distribution points across the Americas, led by spices and seasonings, with incremental gains in condiments and sauces.

Moving to flavor solutions.