While our original plan was to review McCormick's first quarter fiscal 2026 earnings results, today's discussion will focus on our announced combination with Unilever Foods and the strategic rationale for the transaction. We are bringing together two leading organizations, McCormick and Unilever Foods, to create a strong, scaled, and growth-oriented company that will be flavor-focused and exceptionally well-positioned to succeed in today's dynamic environment. For the quarter, we delivered strong growth in sales, adjusted operating income, and adjusted earnings per share, supported by a McCormick de México acquisition and organic growth across both Consumer and Flavor Solutions. In a dynamic environment, we drove margin expansion through strong top-line, acquisition accretion, and disciplined cost management.
Bringing these portfolios together creates an opportunity to execute multiple growth levers, such as expanded distribution, accelerated innovation, brand premiumization, and a scaled dual-engine foodservice platform. At the same time, we see significant, clearly actionable cost synergies layered onto an already strong structural margin profile, creating capacity for continued reinvestment and attractive shareholder returns. The breadth of the combined company diversifies our growth across emerging and developed markets and retail and commercial channels. We will continue to flavor calories while others compete for them, giving us a strong tailwind and aligning us to favorable consumption growth trends.
We see a clear path to unlock incremental growth grounded in the complementary strengths of our geographic footprints and go-to-market capabilities. At the same time, McCormick is positioned to expand more meaningfully in high-growth emerging markets by leveraging Unilever's established scale, deep local infrastructure, and proven route to market. Before I expand on these growth opportunities, I will turn it over to Fernando for his perspective. At Unilever, over the past several years, we sharpened our strategic focus, we have reshaped our portfolio toward high-growth categories, and strengthened our operational foundation.
| Metric | Period | Current guidance |
|---|---|---|
| Pro forma net sales | FY2025 basis | $20 billion (New (combined company)) |
| Operating margin | combined / year three | approximately 23%-25% (Expansion target) |
| Organic sales growth | by year three (combined) | 3%-5% (Acceleration target) |
| Cost synergies | by year three | $600 million annual run rate (~2/3 by end of year two) (New) |
| Net leverage | at close / within two years | at or below 4x at close, reduced to ~3x within two years (New) |
| Brand reinvestment | combined | approximately $100 million incremental into brand marketing and innovation (New) |
| Metric | YoY | Note |
|---|---|---|
| Q1 FY2026 sales, adjusted operating income, adjusted EPS | growth (not quantified) | McCormick de Mexico acquisition and organic growth across Consumer and Flavor Solutions |
| Q1 FY2026 margin | expansion (not quantified) | Strong top-line, acquisition accretion, and disciplined cost management |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Unilever Foods combination | — | Reverse Morris Trust structure; Unilever shareholders own 65%, McCormick 35%, plus $15.7 billion cash to Unilever; ~$44.8 billion EV for Unilever Foods and ~$21 billion for McCormick at ~13.8x 2025 EBITDA for both | New |
| Flavor as a structurally advantaged category | — | Positioned as the number one purchase driver, aligned with health and wellness trends and Gen Z preferences; 'flavor calories while others compete for them' | Reinforced |
| Foodservice dual-engine platform | — | Combines McCormick front-of-house brand equity with Unilever back-of-house capabilities for ~$6 billion pro forma sales among largest global players | Expanding |
| Integration execution | Prior deals (French's, Frank's, FONA) | Detailed integration plan well ahead of close, best-in-class external partners, two years of Unilever board representation and TSA support; Unilever Foods is over 80% standalone | In progress |
| Capital allocation / shareholder returns | ~60% dividend payout history for both | Combined company to maintain dividend consistent with history; strong investment grade profile preserved while delevering | Maintained |