AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Broad distribution, material brands and recurring category leadership disclosures are corroborated by realized pricing and demand. This supports strong brand differentiation, with issuer-source limitations; relative cost leadership is unproven.
durability · 2/4 · Leadership is disclosed across fiscal 2023–2025, but this limited observation window and continuing marketing requirements do not establish exceptional persistence. Recent Consumer volume/product mix weakness tempers the evidence.
customer dependency · 1/4 · Frequently negotiated pricing and quantities, powerful retailers and disclosed alternative supply for particular customer products indicate weak dependency. Brand preference does not establish customer lock-in.
erosion resilience · 2/4 · Favorable fiscal 2025 pricing and volume/product mix demonstrate resilience, but subsequent Consumer volume/product mix declines and acquisition-assisted margin gains leave mixed evidence. Retailer risks are weighed as potential pressure rather than realized losses.
Pricing power56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Pricing contributed positively by 0.7% to fiscal 2025 consolidated sales and 2.5% to first-half 2026 Consumer sales. These are demonstrated outcomes across successive periods, although they do not establish an unlimited premium or isolate elasticity.
retention · 2/4 · Indirect operating evidence is mixed: fiscal 2025 volume/product mix improved, while first-half 2026 Consumer organic sales increased 1.3% through pricing despite a 1.2% volume/product mix decline. No customer retention rate is disclosed.
margin resilience · 2/4 · Pricing and cost savings partly absorbed fiscal 2025 inflation, but gross margin declined 60 basis points. First-half 2026 recovery also reflects acquisition consolidation and a recognized tariff refund, limiting attribution to pricing power.
contractual freedom · 2/4 · Frequent establishment of pricing and quantities provides repricing opportunities, with most arrangements and incentives lasting one year or less. Terms remain negotiated with powerful buyers; unilateral pricing freedom is not established.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.72
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.78
Financial strength26
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 37.18
- netDebtEbitGrade
- 27.15
- interestCoverageGrade
- 40.52
- currentRatioGrade
- 0.00
- Debt / FCF (x)
- 5.40
- Net debt / operating income (x)
- 3.64
- Interest coverage (x)
- 5.46
- Current ratio (x)
- 0.70
Capital allocation86
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 10.90
- 3-year average dilution (%)
- 0.04
- 3-year average SBC / revenue (%)
- 0.78
- cashConversionGrade
- 100.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual cash generation and debt repayments support discipline, but the Mexico acquisition required substantial cash and increased borrowing. Pending merger financing and ownership commitments materially expand capital exposure without demonstrated merger returns. The bridge commitment is not treated as drawn debt.
incentive alignment · 2/4 · Actual annual and multi-year incentives incorporate operating performance, acquisition-adjusted sales and equity payouts; failed price-vested options were forfeited. Alignment is mixed because half of fiscal 2025 equity awards were RSUs with retirement-related accelerated vesting, and executed merger retention agreements reward continued employment rather than investment returns. Conditional cash awards are not treated as vested.
execution · 2/4 · Indirect operating evidence shows consolidated sales and operating income growth across 2023–2025, with particularly improved Flavor Solutions operating income. Consumer operating income softened in 2025, subsequent organic demand was mixed, and transaction costs increased. Acquisition consolidation and refunds prevent treating recent headline gains as exceptional execution.
governance · 2/4 · Independent audit and compensation committees, a Lead Director and hedging restrictions provide substantive safeguards. Non-voting MKC shares and a non-independent Chairman limit shareholder influence and independent leadership. These disclosures support a mixed assessment without implying misconduct.
Evidence
Consumer Segment. From locations around the world, our brands reach consumers in approximately 150 countries and territories.
Business—Consumer segment geographic reach · Filed 22/01/2026
Within the spices and seasoning category, we are the brand leader globally and a category leader in our key markets.
Business—spices and seasoning category position · Filed 22/01/2026
In the condiments and sauces category, we are one of the brand leaders globally and in the U.S.
Business—condiments and sauces category position · Filed 22/01/2026
There are numerous competitive brands of spices and seasonings and condiments and sauces in the U.S., as well as additional brands in international markets.
Business—competitive brands · Filed 22/01/2026
Such consolidation could present a challenge to margin growth and profitability in that it has produced large, sophisticated customers with increased buying power who are more capable of operating with reduced inventories; resisting price increases; demanding lower pricing, increased promotional programs and specifically tailored products; and shifting shelf space currently used for our products to private label and other competitive products.
Risk factors—retailer bargaining power · Filed 22/01/2026
We have a number of major customers, including two large customers that, in the aggregate, constituted approximately 24% of consolidated sales in 2025.
Risk factors—major customer concentration · Filed 22/01/2026
The following table outlines our net borrowing activities: 2025 2024 2023 Net (decrease) increase in short-term borrowings $ (101.4) $ 211.1 (964.6) Proceeds from issuance of long-term debt, net of debt issuance costs 2.7 494.5 495.3 Repayments of long-term debt (267.9) (801.1) (268.1) Net cash (used in) net borrowing activities $ (366.6) $ (95.5) $ (737.4) In 2025, we repaid $267.9 million of long-term debt, including the $250.0 million, 3.25% notes that matured in November 2025.
MD&A—net borrowing activities and debt repayments · Filed 22/01/2026
The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets periodically with members of management, the internal auditors and the independent registered public accounting firm to review and discuss internal control over financial reporting and accounting and financial reporting matters.
Internal control—independent Audit Committee · Filed 22/01/2026
The market conditions were not met in the five-year period from the date of grant and all price-vested options were forfeited in November 2025.
Stock compensation—actual forfeiture of price-vested options · Filed 22/01/2026
78 Business Segment Results (millions) Consumer Flavor Solutions Total segments Corporate & other Total 2025 Net sales $ 3,950.3 $ 2,890.0 $ 6,840.3 $ — $ 6,840.3 Cost of goods sold excluding special charges 2,187.4 2,058.6 4,246.0 — 4,246.0 SG&A expense 1,028.0 472.3 1,500.3 — 1,500.3 Operating income excluding special charges 734.9 359.1 1,094.0 — 1,094.0 Income from unconsolidated operations 68.7 3.5 72.2 — 72.2 Assets — — 12,511.6 688.8 13,200.4 Capital expenditures — — 176.4 45.4 221.8 Depreciation and amortization — — 227.2 4.1 231.3 2024 Net sales $ 3,848.5 $ 2,875.2 $ 6,723.7 $ — $ 6,723.7 Cost of goods sold 2,074.2 2,058.5 4,132.7 — 4,132.7 SG&A expense 1,034.0 487.2 1,521.2 — 1,521.2 Operating income excluding special charges 740.3 329.5 1,069.8 — 1,069.8 Income from unconsolidated operations 71.2 3.0 74.2 — 74.2 Assets — — 12,359.4 710.9 13,070.3 Capital expenditures — — 234.1 40.8 274.9 Depreciation and amortization — — 204.7 4.1 208.8 2023 Net sales $ 3,807.3 $ 2,854.9 $ 6,662.2 $ — $ 6,662.2 Cost of goods sold 2,044.4 2,115.3 4,159.7 — 4,159.7 SG&A expense 1,027.4 450.9 1,478.3 — 1,478.3 Operating income excluding special charges 735.5 288.7 1,024.2 — 1,024.2 Income from unconsolidated operations 54.7 1.7 56.4 — 56.4 Assets — — 12,233.1 629.2 12,862.3 Capital expenditures — — 234.9 29.0 263.9 Depreciation and amortization — — 194.8 4.5 199.3 A reconciliation of cost of goods sold excluding special charges and operating income excluding special charges to cost of goods sold and operating income for 2025, 2024, and 2023 is as follows: (millions) Consumer Flavor Solutions Total 2025 Cost of goods sold excluding special charges $ 2,187.4 $ 2,058.6 $ 4,246.0 Special charges 1.3 0.8 2.1 Cost of goods sold $ 2,188.7 $ 2,059.4 $ 4,248.1 Operating income excluding special charges $ 734.9 $ 359.1 $ 1,094.0 Less: Special charges 13.6 9.6 23.2 Operating income $ 721.3 $ 349.5 $ 1,070.8 2024 Operating income excluding special charges $ 740.3 $ 329.5 $ 1,069.8 Less: Special charges 3.4 6.1 9.5 Operating income $ 736.9 $ 323.4 $ 1,060.3 2023 Operating income excluding special charges expenses $ 735.5 $ 288.7 $ 1,024.2 Less: Special charges 35.8 25.4 61.2 Operating income $ 699.7 $ 263.3 $ 963.0 79 Total segment operating income as disclosed in the preceding table represents our consolidated operating income.
Business segment results—2023–2025 sales and operating income · Filed 22/01/2026
Although in the aggregate these trademarks are material to our business, the loss of any one of those trademarks, with the exception of our “McCormick,” “French’s,” “Frank’s RedHot,” “Lawry’s,” “Zatarain’s,” “Cholula,” “Stubb's,” “Club House,” “Ducros,” “Schwartz,” “Vahiné,” "OLD BAY," "Simply Asia," "Thai Kitchen," “Kamis,” “La Drogheria,” "DaQiao," and "Gourmet Garden" trademarks, would not have a material adverse effect on our business.
Business—material trademarks · Filed 22/01/2026
Pricing actions favorably impacted sales by 0.7%.
MD&A—2025 realized pricing contribution · Filed 22/01/2026
Favorable volume and product mix increased sales by 1.2% driven by favorable volume and product mix from our Consumer segment of 2.1% offset by unfavorable volume and product mix from our Flavor Solutions segment of 0.2%.
MD&A—2025 volume and product mix · Filed 22/01/2026
Our gross profit margin was 37.9%, a decrease of 60 basis points, driven by increased commodity costs including the impact of tariffs, unfavorable product mix, and increased conversion cost including costs to support capacity for future growth, partially offset by pricing actions and CCI program-led cost savings.
MD&A—2025 gross margin drivers · Filed 22/01/2026
Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one-year or shorter duration.
Revenue recognition—frequency of setting sales terms · Filed 22/01/2026
Total brand marketing support costs, which are included in our consolidated income statement in the line entitled "Selling, general and administrative expense," were $276.7 million, $265.0 million, and $247.1 million for 2025, 2024, and 2023, respectively.
Accounting policies—actual brand marketing expenditures · Filed 22/01/2026
6 Table of Contents McCORMICK & COMPANY, INCORPORATED CONDENSED CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) (in millions) Six months ended May 31, 2026 2025 Operating activities Net income $ 1,182.5 $ 339.4 Adjustments to reconcile net income to net cash flow provided by operating activities: Depreciation and amortization 136.5 110.9 Stock-based compensation 29.3 29.6 Amortization of inventory fair value adjustments associated with acquisition 15.0 — Deferred income tax benefit (11.3) (12.1) Income from unconsolidated operations (22.7) (39.2) Gain on remeasurement of previously held equity interest (866.8) — Changes in operating assets and liabilities (net of effect of businesses acquired) Trade accounts receivable 129.4 23.2 Inventories (6.3) (19.1) Trade accounts payable 30.2 (74.5) Other assets and liabilities (199.6) (219.4) Dividends from unconsolidated affiliates 14.5 22.6 Net cash flow provided by operating activities 430.7 161.4 Investing activities Acquisition of business, net of cash acquired (729.9) (19.8) Capital expenditures (including software) (75.2) (85.4) Net cash flow used in investing activities (805.1) (105.2) Financing activities Short-term borrowings, net 945.2 116.0 Long-term debt borrowings (net of debt issuance costs of $1.1) 497.7 0.9 Debt financing fees paid (51.0) — Long-term debt repayments (504.4) (13.6) Proceeds from exercised stock options 13.6 13.3 Taxes withheld and paid on employee stock awards (11.9) (12.6) Common stock acquired by purchase (10.9) (26.5) Dividends paid (257.9) (241.5) Dividends paid to joint venture partner (8.4) — Other financing activities (9.3) 21.1 Net cash flow provided by (used in) financing activities 602.7 (142.9) Effect of exchange rate changes on cash and cash equivalents 7.0 24.7 Increase (decrease) in cash and cash equivalents 235.3 (62.0) Cash and cash equivalents at beginning of period 95.9 186.1 Cash and cash equivalents at end of period $ 331.2 $ 124.1 See notes to condensed consolidated financial statements (unaudited).
Unaudited cash flow statement—six months ended May 31, 2026 · Filed 25/06/2026
The pending transaction is subject to the satisfaction or waiver of customary closing conditions, including the receipt of our shareholders' approval, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, obtaining certain other consents, authorizations, orders or approvals from governmental authorities, including certain other antitrust and any foreign investment approvals, and the effectiveness of a registration statement on Form S-4 to be filed by us.
Pending transaction—closing conditions · Filed 25/06/2026
In connection with the execution of the Merger Agreement, we entered into a commitment letter on March 31, 2026 (the "Bridge Commitment Letter") with Citigroup Global Markets Inc., Goldman Sachs Bank USA and Morgan Stanley Senior Funding, Inc., (the "Commitment Parties") pursuant to which the Commitment Parties committed to provide, subject to the terms and conditions set forth therein, a 364-day senior unsecured bridge term loan credit facility (the "Bridge Facility") in an aggregate principal amount of up to $15.7 billion.
Pending transaction—conditional bridge financing commitment · Filed 25/06/2026
Our gross profit margin was 39.0%, an increase of 140 basis points, driven by the impact of the McCormick de Mexico acquisition, which included a step-up of acquired inventory recognized as special charges in Cost of goods sold as the related inventory was sold, favorable pricing, the impact of the IEEPA tariff refund, and cost savings from the Company's CCI program, partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East.
MD&A—first-half 2026 gross margin drivers · Filed 25/06/2026
For the six months ended May 31, 2026, sales of our Consumer segment increased 23.7% as compared to the same period in 2025 and increased by 1.3% on an organic basis.
MD&A—first-half 2026 Consumer organic sales · Filed 25/06/2026
Unfavorable volume and product mix decreased sales by 1.2% driven by declines in the Americas region which were partially offset by growth in the EMEA and APAC regions.
MD&A—first-half 2026 Consumer volume/product mix · Filed 25/06/2026
Favorable pricing impacted sales by 2.5% driven by the Americas region.
MD&A—first-half 2026 Consumer realized pricing · Filed 25/06/2026
The increase in operating cash flow was primarily driven by lower cash used for working capital.
MD&A—working capital contribution to operating cash flow · Filed 25/06/2026
Following the proposed transaction, the substantial indebtedness incurred in connection with the proposed transaction could have adverse effects on our business, operating results and financial condition, including, among other things: •increasing our vulnerability to changing economic, regulatory and industry conditions; •limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry; •placing us at a competitive disadvantage compared to our competitors with less indebtedness; 49 Table of Contents •increasing our interest expense and potentially requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of cash to fund our business needs; •limiting our ability to borrow additional funds in the future to fund growth, acquisitions, working capital, capital expenditures or other purposes; and •limiting our ability to pursue other strategic opportunities or acquisitions that might otherwise be beneficial to us and our shareholders.
Risk factors—potential effects of post-transaction indebtedness · Filed 25/06/2026
During the three months ended May 31, 2026, we reduced cost of goods sold by $27.6 million, effectively reversing the IEEPA tariff expense previously recognized in connection with inventory sold to customers since the tariffs were enacted in the first quarter of 2025, and reduced the carrying value of inventory by $3.2 million.
Tariff refunds—recognized cost-of-goods-sold reduction · Filed 25/06/2026
The transactions contemplated by the Merger Agreement are expected to result in current Unilever shareholders owning approximately 55.1% of the combined company, our current shareholders owning approximately 35.0% of the combined company, and Unilever retaining up to approximately 9.9% of the total outstanding equity of the combined company, assuming Unilever does not elect to dispose of such interest to its shareholders in accordance with the Merger Agreement.
Pending merger—expected ownership allocation · Filed 25/06/2026
Those expenses consisted of $65.5 million of transaction and integration costs, $18.0 million associated with employee severance and related benefits associated with our SG&A streamlining actions and $1.6 million associated with other actions.
Special charges—first-half 2026 transaction and restructuring costs · Filed 25/06/2026
Foley) entered into a retention award agreement providing for a special one-time cash retention award of $1,000,000, 50% of which will vest on the Closing Date and 50% of which will vest on the six-month anniversary of the Closing Date, subject to the named executive officer’s continued employment through each such vesting date.
Compensatory arrangements—executed conditional retention award agreements · Filed 25/06/2026
Holders of Common Stock Non-Voting (NYSE: MKC) may not vote but are welcome to virtually attend the Annual Meeting at www.virtualshareholdermeeting.com/MKC2026.
Annual meeting—non-voting common stock rights · Filed 18/02/2026
We generated strong cash flow from operations of $962 million.(1) Increased stockholder return We returned approximately $483.0 million of cash to our stockholders through dividends in 2025 and, through the execution of our proven strategies, we have driven a total annual stockholder return of 7% over the past 10-year period.
Proxy business highlights—2025 operating cash flow and dividends · Filed 18/02/2026
Our annual incentive is based on a formula that includes adjusted earnings per share ("EPS") growth, net sales growth, volume sales growth, and adjusted operating income growth, adjusted for working capital charges and currency impact.
Executive compensation—annual incentive formula · Filed 18/02/2026
Cumulative net sales represents the cumulative growth rate for continuing operations over a three-year period, adjusted for items including foreign currency and the sales impact associated with acquisitions and divestitures.
Executive compensation—acquisition-adjusted three-year sales metric · Filed 18/02/2026
The PSUs that concluded their performance period at the end of fiscal 2025 were earned at 142.5% of target (or 47.5% of the maximum opportunity), reflecting strong three-year cumulative net sales and no TSR modifier.
Executive compensation—actual completed PSU cycle outcome · Filed 18/02/2026
Among other things, the Corporate Governance Guidelines make clear that directors and officers of the Company appointed by the Board (including all executive officers) may not pledge Company stock as collateral for a loan or otherwise use Company stock to secure a debt, and may not engage in any hedging transactions with respect to Company stock.
Corporate governance—officer and director hedging and pledging restrictions · Filed 18/02/2026
The Board also has the position of Lead Director who provides additional independent oversight of board matters in our current structure where the Chairman is not an independent director.
Board leadership—Lead Director and non-independent Chairman · Filed 18/02/2026
Secondly, executive officers' fiscal 2025 target awards were made in an equal mix of PSUs and restricted stock units (RSUs), rather than PSUs and stock options.
Executive compensation—actual fiscal 2025 equity award mix · Filed 18/02/2026
McCormick’s CHCC is comprised solely of independent directors.
Executive compensation—independent compensation committee · Filed 18/02/2026
•Awards generally vest at a rate of one-third per year or, if earlier, upon the retirement eligibility date of the holder.
Executive compensation—RSU retirement eligibility vesting · Filed 18/02/2026
and has not been involved in the execution of any commercial transactions between McCormick and Flowers Foods, Inc.; and (3) the products supplied by McCormick to Flowers Foods, Inc.
Director independence—commercial supply relationship context · Filed 18/02/2026
are readily available from other sources of supply.
Director independence—alternative sources for supplied products · Filed 18/02/2026
Within the spices and seasoning category, we are the brand leader globally and a category leader in our key markets.
Business—fiscal 2023 spices and seasoning category position · Filed 25/01/2024
