McCormick & Company (MKC) Q2 2026 earnings summary

Executive summary

• Net sales grew 16.7% year-over-year in Q2 2026, driven by the McCormick de Mexico acquisition (12% contribution), favorable pricing, and positive currency impacts; organic sales up 1.7%.

• Adjusted operating income increased 30% to $336.4M, with margin up 180 bps to 17.4%; adjusted EPS rose 16% to $0.80, including a $0.07 benefit from a $28M tariff refund.

• Flavor Solutions segment outperformed expectations, with broad-based growth across large CPG, private label, and branded food service customers.

• Integration planning for the Unilever Foods acquisition is progressing well, with synergy targets and milestones on track; the pending merger is expected to create a global flavor leader and significantly alter the capital structure.

• The company reaffirmed its fiscal 2026 outlook, expecting continued growth and margin expansion, supported by the integration of McCormick de Mexico and the proposed Unilever Foods combination.

Financial highlights

• Q2 2026 net sales: $1,936.6M (+16.7% YoY); Consumer segment sales up 23% (20% from McCormick de Mexico, 1% organic), Flavor Solutions up 9% (3% organic).

• Gross profit margin expanded 270 bps to 40.2%, including a 140 bps benefit from a $28M tariff refund.

• Adjusted operating income grew 30% to $336.4M, with Consumer adjusted operating income up 33% to $217M and Flavor Solutions up 26% to $120M.

• Adjusted EPS for Q2 was $0.80, up from $0.69; reported EPS was $0.56, impacted by special charges.

• Cash flow from operations for H1 was $431M, up from $161M last year, supporting dividends and capital expenditures.

Outlook and guidance

• Fiscal 2026 net sales growth projected at 13–17%, with 12–16% from McCormick de Mexico and 1–3% organic growth; foreign currency expected to add 1%.

• Adjusted operating income expected to grow 16–20%; adjusted EPS guidance is $3.05–$3.13, up 2–5% year-over-year.

• Gross margin expansion of 100–120 bps anticipated, offset by inflation and increased SG&A from growth investments.

• Anticipate $1.5B–$2B available to pay down debt within two years post-Unilever Foods close; targeting long-term leverage ratio of 2–3x.

• Mid to high single-digit adjusted EPS accretion expected within 12 months post-Unilever Foods close, mid to high teens by year three.