Acquisitions are expected to contribute approximately one-third of sales growth over time. Recent acquisitions like FONA and Cholula are driving sales in both consumer and flavor solutions segments, with a focus on flavor and health.

McCormick is implementing a multi-year business transformation initiative to improve global processes, capabilities, and operating model, including a global business services (GBS) operating model initiative, to provide a scalable platform for future growth, while reducing costs. This includes replacing the ERP system.

The company divested its Giotti canning business and is pruning low margin businesses, which is expected to impact volume and product mix in 2024.

Cost savings from the Global Operating Effectiveness (GOE) and Comprehensive Continuous Improvement (CCI) programs are contributing to margin recovery and are expected to continue in 2024. These programs fund brand marketing support and product innovation.

McCormick has identified digital marketing as one of its highest return investments in brand marketing support. Through digital marketing, the company is connecting with consumers in a personalized way to deliver recipes, provide cooking advice and help them discover new products.

For the consumer segment, McCormick believes that scalable and differentiated innovation continues to be one of the best ways to distinguish its brands from the competition, including private label. For flavor solutions customers, McCormick is developing seasonings for snacks and other food products, as well as flavors for new menu items.

Deterioration of global economic conditions, an economic recession or slow growth, periods of inflation, or economic uncertainty in key markets may adversely affect customer and consumer spending as well as demand for products.

Our purchases of raw materials are subject to fluctuations in market price and availability caused by inflationary pressures, weather, growing and harvesting conditions, climate change, market conditions, governmental actions and other factors beyond our control.

The ongoing conflicts between Russia and Ukraine and Israel and Hamas, and the related sanctions, potential governmental actions and economic impact, such potential impacts remain uncertain.

The food industry is intensely competitive. Competition in our product categories is based on price, product innovation, product quality, brand recognition and loyalty, effectiveness of marketing and promotional activity, and the ability to identify and satisfy consumer preferences.

Damage to our reputation or brand name, loss of brand relevance, increase in use of private label or other competitive brands by customers or consumers, or product quality or safety concerns could negatively impact our business, financial condition or results of operations.

Customer consolidation, consumer behaviors, and competitive, economic and other pressures facing our customers, may impact our financial condition or results of operations.

Our results of operations can be adversely affected by labor shortages, turnover and labor cost increases or any failure to effectively manage changes in our workforce.

Disruption of our supply chain could adversely affect our business. Our ability to make, move, and sell products is critical to our success. Damage or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, terrorism, cyber-attack, health epidemics, pandemics or other contagious outbreaks, governmental restrictions or mandates, strikes, import/export restrictions, or other factors could impair our ability to manufacture or sell our products.

Streamlining actions to reduce fixed costs, simplify or improve processes, and improve our competitiveness may have a negative effect on employee relations.

As technology provides the backbone for greater process alignment, information sharing and scalability, we are also making investments in our information systems, including the multi-year program to replace our enterprise resource planning (ERP) system currently underway, which includes the transformation of our financial processing systems to enterprise-wide systems solutions.

Our information technology systems, and the systems of our customers, vendors, suppliers, and other third-party service providers, are subject to cyber-attacks or other security incidents including computer viruses or other malicious codes, phishing attacks, unauthorized access attempts, cyber extortion, business email compromise, deepfake or social engineering schemes, denial of service attacks, hacking, ransomware, or other cyberattacks attempting to exploit vulnerabilities.

We utilize cloud-based services and systems and networks managed by third-party vendors to process, transmit and store information and to conduct certain of our business activities and transactions with employees, customers, vendors and other third parties.

In 2023, McCormick continued to have a balanced use of cash for debt repayment, capital expenditures and the return of cash to shareholders through dividends and share repurchases.

We are using our cash to fund shareholder dividends, with annual increases in each of the past 38 years, and to fund capital expenditures and acquisitions.

As of November 30, 2023, approximately $501 million remained of a $600 million share repurchase authorization approved by the Board of Directors in November 2019.

Climate change, or legal, regulatory or market measures to address climate change, may negatively affect our business, financial condition and results of operations. Unseasonable or unusual weather or long-term climate changes may negatively impact the price or availability of spices, herbs and other raw materials.

Moreover, from time to time we establish and publicly announce goals and commitments, including to reduce our impact on the environment. For example, we established science-based target 2025 – 2030 goals for Scope 1, 2 and 3 greenhouse gas emissions.

ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

Fluctuations in foreign currency markets may negatively impact us. We are exposed to fluctuations in foreign currency in the following main areas: cash flows related to raw material purchases; the translation of foreign currency earnings to U.S. dollars; the effects of foreign currency on loans between subsidiaries and unconsolidated affiliates and on cash flows related to repatriation of earnings of unconsolidated affiliates.

Uncertain global economic conditions expose us to credit risks from customers and counterparties. Consolidations in some of the industries in which our customers operate have created larger customers, some of which are highly leveraged.

Our international and cross-border operations are subject to additional risks. We operate our business and market our products internationally. In fiscal year 2023, approximately 39% of our sales were generated in countries other than the U.S.