McCormick & Co., Inc. Tuesday reported steady sales growth in its first quarter as it grew sales and earnings per share while hinting that more acquisitions may be in its future.
The Hunt Valley-based spice maker grew its sales 1 percent, 4 percent in constant currency, which adjusts for monetary fluctuations across its global markets. Earnings per share increased 12 percent to $1.12, up from $1 last year.
“This was a solid, no-drama quarter for us,” Lawrence E. Kurzius, the company’s chairman, president and CEO said during an earnings call. “I am pleased with the strong results to start the year.”
Kurzius told analysts the first-quarter results were within the firm’s expectations and that McCormick was reaffirming its outlook for the year. That includes 1-3 percent sales growth and 3-5 percent sales growth in constant currency and 4-6 percent adjusted earnings per share growth, with 6-8 percent in constant currency.
“We delivered against our plans for both sales growth and profit realization and are excited about our momentum,” Kurzius said. “Our fundamentals are very strong and we are confident the initiatives we have underway in 2019 position us to continue on our growth trajectory.”
Kurzius also emphasized that the sales growth this quarter came without the benefit of the firm’s most recent spate of acquisitions, including the Frank’s Red Hot and French’s condiment brands. Those acquisitions were fully integrated into McCormick’s numbers last summer.
McCormick continues to pay down the debt incurred as part of those acquisitions and is beginning to approach a point where it may begin to look for new acquisition opportunities, Kurzius said.
“It is time for us to start looking at opportunities again,” he said. “While I will continue to say that our priority is paying down debt, we are starting to look at some acquisition opportunities.”
McCormick has two primary sales markets: its consumer segment that include sales of spices and other products, and its flavor solutions segment that includes sales to restaurants and food makers. Both segments saw 4 percent sales growth last quarter.
The firm hopes to grow its sales among younger consumers this year, particularly millennials and Generation Z consumers, through a partnership with Tasty, Buzzfeed’s food brand that produces popular cooking videos on social media. McCormick plans to release spice blends co-branded with Tasty during the year’s second quarter.
The firm will hold its annual shareholders meeting Wednesday. The meeting is expected to include votes on the company’s board of directors, ratification of Ernst and Young LLP as its independent accounting firm for the year and a non-binding approval of executive compensation.