$MKC · MCCORMICK & CO INC
McCormick filed its Q3 FY2026 10-Q, reporting net sales of $2.025B (+17.4% YoY) driven almost entirely by the McCormick de Mexico acquisition, which added 14.6 percentage points. Organic sales grew just 1.9%. GAAP diluted EPS collapsed to $0.36 from $0.84 a year ago, crushed by $141.5M in special charges (vs. $3.9M in Q3 2025). Gross margin improved to 39.3% from 37.4%, but operating income fell 25% to $217.0M. The company reaffirmed FY2026 adjusted EPS guidance of $3.05–$3.13.
- Q3 GAAP EPS fell to $0.36 from $0.84 a year ago, a 57% decline.
- Special charges ballooned to $141.5M in Q3 vs. $3.9M last year, driven by acquisition-related costs and asset impairments.
- Organic sales growth was just 1.9% in Q3; the McCormick de Mexico acquisition contributed 14.6 percentage points of the 17.4% reported sales
- Consumer segment organic sales declined 0.3% in the Americas region, with volume/mix down 2.5%.
- FY2026 adjusted EPS guidance of $3.05–$3.13 implies only 2–5% growth over FY2025's $3.00.
Stock fell 4.87% in the regular session to $44.14. The market is punishing the sharp EPS miss driven by surging special charges and weak organic volume trends, despite the headline revenue jump from the Mexico consolidation.
The 57% EPS collapse exposes how acquisition accounting and integration costs are masking genuine demand weakness, with organic Americas consumer sales actually shrinking.
McCormick's weak organic volume contrasts with broader packaged-food peers who have been rebuilding volume through price moderation. The Mexico acquisition masks underlying softness — organic growth of 1.9% trails the sector's post-inflation recovery narrative.
Special charges of $226.6M year-to-date (vs. $16.7M last year) include $43.1M in asset impairments tied to the McCormick de Mexico integration. Consumer segment volume/mix declined 1.1% in Q3, signaling demand erosion in core Americas categories. Short-term borrowings surged to $1.34B from $381.4M,
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