MKCMcCormick & Company

Operating income was $1,070.8 million in 2025, compared to $1,060.3 million in 2024 and $963.0 million in 2023. We recognized $9.5 million and $61.2 million 2024, reflecting an increase of special charges in 2024 and 2023, respectively, related to organization and streamlining actions. In 2024, operating income was positively impacted by the higher level of sales and an improvement in our 1.0%. Our gross profit margin decreased by 60 basis points primarily driven by increased commodity costs including the impact of tariffs, unfavorable product mix, and increased conversion costs including costs to support capacity for future growth, partially offset by pricing actions and CCI-led cost savings. Selling, general, and administrative (SG&A) expense as a percentage of sales of 90 decreased by 70 basis points as compared to the prior year. The gross profit margin improvement was points, primarily driven by the effects of favorable pricing actions, favorable product lower performance-based employee compensation expense, lower distribution expense, and customer mix, less scrapped inventory, and CCI-led cost savings led by our CCI and Global Operating Effectiveness (GOE) programs which were including SG&A streamlining initiatives, partially offset by higher conversion costs, all as compared to the prior year. A higher level of SG&A expenses resulted in a 40 basis point increase in SG&A as a percentage of sales with approximately half of that basis point increase attributable to an increase in advertising and promotion spend. In addition, the higher level of SG&A expenses was driven by increased selling and brand marketing costs and a higher level of research and development expenses that were partially offset by, lower performance-based employee and stock based compensation expense and cost savings led by our CCI and GOE programs, all as compared to the prior year. expense. Excluding special charges, adjusted operating income was $1,094.0 million in 2025, reflecting an increase of 2.3% compared to $1,069.8 million in 2024, representing a 4.5% increase compared to $1,024.2 million in 2023. 2024. In constant currency, adjusted operating income increased 4.6%. 2.8%. For further details and a reconciliation of non-GAAP to reported amounts, see the subsequent discussion under the heading "Non-GAAP Financial Measures".

In the U.S., for example, the CCPA imposes requirements on companies that do business in California and collect personal information from certain individuals, including notice, consent and service provider requirements. The CCPA also provides for civil penalties for companies that fail to comply with these requirements, as well as a private right of action for data breaches. Further, the California Privacy Rights Act (CPRA) went into full effect on January 1, 2023 (with a ‘look-back’ to January 1, 2022). The CPRA builds on the CCPA and among other things, requires the establishment of a dedicated agency to regulate privacy issues. In 2021, Virginia, Colorado, Connecticut and Utah adopted laws which have now taken effect introducing new privacy obligations, which have required us to develop additional compliance mechanisms and processes. Many other states are considering similar legislation. A broad range of legislative measures also have been introduced at the federal level. There also is a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws. The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers. Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws. There also is the threat of consumer class actions related to these laws and the overall protection of personal data. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.

In September 2022, the FASB issued ASU No. 2022-04: Liabilities - Supplier Finance Programs (Topic 450-50): Disclosure of Supplier Finance Program Obligations that requires entities that use supplier finance programs in connection with the purchase of goods and services to disclose the key terms of the programs and information about obligations outstanding at the end of the reporting period, including a roll forward roll-forward of those obligations. The guidance does not affect the recognition, measurement measurement, or financial statement presentation of supplier finance program obligations. The new standard's We met the requirements to disclose the key terms of the programs and information about obligations outstanding are effective November 30, 2023. The requirement to include a roll-forward of the obligations is effective for all interim and our annual periods of our fiscal year period ending November 30, 2024. 2025. We include disclosure regarding the key terms of the our program and information about obligations outstanding at the end a roll forward of the reporting period obligation outstanding in Note 1. The standard’s requirement to disclose a roll forward of obligations outstanding will be effective for our fiscal year ending November 30, 2025. We have not adopted the disclosure requirements regarding the roll forward adoption of the obligation. The partial adoption of this new standard did not have a material impact on our consolidated financial statements. We do not expect the adoption of the future disclosure requirements will have a material impact on our consolidated financial statements.