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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning. This is Kasey Jenkins, Vice President of McCormick Investor Relations. Thank you for joining today’s First Quarter Earnings Call. To accompany this call, we posted set of slides at ir.mccormick.com. Currently, all participants are in a listen-only mode. Following our remarks, we will begin a question-and-answer session. [Operator Instructions]
We will begin with remarks from Lawrence Kurzius, Chairman, President and CEO; and Mike Smith, Executive Vice President and CFO.
During our remarks, we will refer to certain non-GAAP financial measures. These include information and constant currency, as well as adjusted gross margin, adjusted operating income, adjusted income tax rate and adjusted earnings per share that exclude the impact of special charges, transaction and innovation expenses related to the acquisition of Cholula and FONA.
Reconciliations to the GAAP results are included in this morning’s press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information.
In addition, as a reminder, today’s presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events or other factors.
It is important to note these statements include expectations and assumptions, which will be shared related to the impact of COVID-19 pandemic. As seen on slide two, our forward-looking statement also provides information on risk factors including the impacts of COVID-19 that could affect our financial results.
It is now my pleasure to turn the discussion over to Lawrence.
Thank you, Kasey. Good morning, everyone. Thanks for joining us. Starting on slide four, our first quarter results were outstanding. As we said in our year-end earnings call in January, we have confidence in our strategies and are well-positioned to deliver another year of differentiated growth in 2021.
Following an extraordinary in 2020, in 2021 we expect strong underlying base business performance and recent acquisitions to drive significant sales growth, as well as strong operating income growth, even considering extraordinary COVID-19 costs and business transformation investments highlighting our focus on profit realization.
During the first quarter, we delivered double-digit sales, adjusted operating income and earnings growth. We expect growth to vary by quarter in 2021, given 2020 level of demand volatility and the pace of COVID-19 recovery. But importantly, we have started the year with outstanding first quarter performance giving us confidence in an even stronger outlook for 2021.
As seen on slide five, we have a broad and advantaged global flavor portfolio with compelling offerings for every retail and customer strategy across all channels. The breadth and reach of our portfolio across segments, geographies, channels, customers and product offerings creates a balanced and diversified portfolio to drive consistency in our performance as evidenced again by our first quarter results.
The sustained shift in consumer behavior to cooking and eating more at-home continued to drive substantial increases in our Consumer segment demand in all regions, as well as increases in our packaged food company customer in our Flavor Solutions segment.
On the other hand, in our Americas and EMEA regions we continue to experience reduced demand from our restaurant and other foodservice customers, given the pressure on away-from-home consumption driven by continued COVID-19 government imposed restrictions, which in several areas increased during the first quarter.
Notably, our APZ region had substantial growth in both segments driven not only by lapping the significant disruption last year caused by the COVID-19 related lockdown in China, but also by the sustained increase in at-home consumption and an increase in away-from-home consumption as restrictions have eased and the recovery momentum is building.
Finally, with the addition of our Cholula and FONA acquisitions, we have further extended the reach and breadth of our portfolio with new product offering, channel and customers, and are excited about their contributions to our first quarter and beyond.
These impacts continue to demonstrate the strength and diversity of our offering and we are confident our balanced portfolio will continue to differentiate McCormick and sustainably position us for growth.
This morning I will begin with our first quarter results, share some comments on business performance and then discuss our 2021 momentum and growth plans. After that Mike will go more in-depth on our first quarter results and provide an update on our 2021 guidance.
Starting with our outstanding first quarter results as seen on slide six. Total sales grew 22%, including a 2% favorable impact from currency. In constant currency we grew total sales 20% with increases in both segments. Base business growth, new products and acquisitions are three long-term growth drivers all contributed to the increase.
In addition to our topline growth, adjusted operating income increased 35%, including a 3% favorable impact from currency and adjusted operating margin expanded by 160 basis points. Growth from higher sales, favorable mix and CCI led cost savings more than offset COVID-19 related costs and higher planned brand marketing investments.
Our first quarter adjusted earnings per share was $0.72, compared to $0.54 in the prior year, driven by our strong operating performance, partially offset by a higher adjusted tax rate.
Turning to our first quarter segment business performance, starting on slide seven. In our Consumer segment we grew sales by 35%, on constant currency 32%, with double-digit increases across each of our three regions. Our Americas constant currency sales growth was 30% in the first quarter with incremental sales from our Cholula acquisition contributing 5%.
Momentum Cholula carried it from last year continues to be strong with consumption growing at twice the category rate. Excluding Cholula our total McCormick U.S. branded portfolio as indicated in our IRI consumption data and combined with unmeasured channels through 15%, which reflects the strength of our category as consumers continue to cook more at-home. For the first time in several quarters our sales increase was higher than our U.S. IRI consumption growth.
We are realizing the benefit of our capacity expansion at the end of last year. The difference between shipments and consumption is attributable to beginning to catch up on the under shipment of consumption across all quarters of last year that resulted in depleted retail or in consumer pantry inventory. Demand has remained high at the steps we have taken to increase supply are beginning to show.
As we mentioned at our January earnings call, after experiencing real pressure on our U.S. manufacturing operations throughout 2020 due to elevated demand levels, we ended the calendar year with considerable incremental capacity and restoration plans for products, which had been suspended.
Throughout our first quarter we removed products from suspension and continued to see service levels improve, which combined with our over shipping consumption indicates we are beginning to refill the inventory pipeline.
As we said previously, inventory replenishment will progressed throughout the year. We continue to work with all our customers on improving shelf conditions and estimate more than half the suspended products are now back on shelf. The level of restoration is very customer specific.
Focusing further on our U.S. branded portfolio, in spice and seasonings and all other categories excluding dry recipe mixes, we grew first quarter consumption at double-digit rates and again increased our household penetration and repeat buy rates. In the first, we continue to gain share in categories less impacted by supply constraint, including stocks and broths, barbecue sauce, wet marinades and Asian products.
The categories most affected by supply constraints spice and seasonings and dry recipe mix. We know there is a high correlation between our share performance and the shelf conditions resulting from product suspension or allocation.
Products that have had strong supply and remained on shelves have performed well and have suspended products or restocked on shelf we are seeing similar performance. We anticipate regaining share as conditions continue to improve.
All of our key categories continue to outpace the center of store growth rates favorably impacting not only the McCormick brand, but smaller brands as well, such as Stubb’s, Lawry’s, Simply Asia and Thai Kitchen, Zatarain’s and Kitchen Basics. In the e-commerce we had strong double-digit supply growth with McCormick branded consumption outpacing all major categories.
We continue to use our strong category management capability and working with our customers as inventory is replenished throughout the supply chain, optimized category shelf et drives both growth for our customers and for McCormick.
I’d like to thank our customers for their partnerships and working together with us on long-term solution. We are well-positioned for success in 2021 and have implemented sufficient long-term solutions and strengthened our supply chain resiliency to support continued growth.
Now turning to EMEA, which continued its momentum with our sales performance in the first quarter, our constant currency sales were of 26% with broad-based growth across the region. Each of our markets drove double-digit total branded consumption growth, with market share gains across the region. Spices and seasonings consumption was strong in all markets, driving a market share gain across total EMEA region.
In our Vahiné brand in France again had strong consumption growth and outpaced the homemade desserts category. In the U.K., both Frank’s RedHot and French’s mustard also had strong consumption and gained share. Since the beginning of the pandemic, our EMEA supply chain has been very well-positioned to meet the elevated demand and this has contributed to our ability to grow share across the region.
In EMEA, our household penetration and rate of repeat buyers increased again in the first quarter. For the fourth consecutive quarter, across our major brands and markets compared to last year and we continue to work closely with our customers to ensure that elevated consumer demand will be met even obtaining incremental placement for our branded portfolio as other manufacturers and private label face supply challenges. We are excited with our growth trajectory in EMEA following a challenging market conditions in the past.
In the Asia-Pacific region, our constant currency sales grew 55%. During the first quarter of last year, China’s consumption was disrupted by the COVID-19 related lockdown, recovering from that destruction increase sales in the first quarter of 2021 versus last year.
Notwithstanding that recovery, the region still had double-digit growth driven by strong China consumer and branded foodservice demand partially fueled by the Chinese New Year holiday, as well as strong consumer consumption in the rest of the region. For instance, in Australia, we continue to see elevated consumption in the brands where we gain household penetration last year such as Frank’s RedHot, Gourmet Garden and bromates.
Across all regions we know second quarter consumption will start to be compared to the highly elevated levels from last year and while we do not expect consumption at those same levels, we do expect continued and long lasting growth from the increase in consumers cooking more at-home.
Constant currency sales in our Flavor Solutions segment grew 3%, driven by our Americans and APZ regions. In the Americas, we drove constant currency sales growth of 2%, driven by our FONA and Cholula acquisitions, as well as growth with our consumer packaged food customer or at-home base, with strength in base business, as well as new product momentum.
We continue to shift our portfolio to more value-added and technically insulated products not only with the combination of FONA’s flavor portfolio, but also with considerable growth from snack seasonings in the U.S. and Mexico, as well as flavors from both savory and beverage applications. Demand for from our away-from-home customer base, the branded foodservice and restaurant customers declined and continued to be impacted by the COVID-19 environment.
Sales in our EMEA region were comparable for the first quarter of last year for Flavor Solutions, with demand declined in our away-from-home to customer base, offset by strong sales in our consumer packaged food customers. This growth was driven by a significant increase in new product growth versus last year, as well as continued strength in the base business partially from our customers’ promotional activities.
Our sales growth in the Asia-Pacific region was outstanding up 18% in constant currency. Both China excluding the recovery impact from last year’s lockdown and Australia delivered double-digit growth, while quick service restaurant or QSR customers. This growth was driven by significant momentum and limited time offers, as well as strength in the core business.
I mentioned our results related to Cholula and FONA and now I’d like to provide a brief update on their integration status. For both acquisitions, our integration activities are progressing according to our plans.
We continue to deliver on opportunities quickly and aggressively to drive growth and are pleased with our momentum on capturing our synergy opportunity. We remain on track to achieve synergies according to plan.
Starting with Cholula, as expected our integration of the business has been straightforward. As of March 1st, all functions have been integrated into McCormick processes, and importantly we are now servicing customers from our McCormick U.S. distribution centre.
From a consumer commercial perspective, we are expanding distribution and are fuelling growth with robust brand marketing investments, we will be activated both digital where Cholula was underpenetrated and in-store merchandising in the next few weeks for our exciting Cinco de Mayo campaign.
In Flavor Solutions, we are also expanding distribution with new and existing branded foodservice customers, and are leveraging Cholula’s authentic Mexican Flavor for increased menu participation particularly in Cinco de Mayo menu offerings.
Moving to FONA, the employees of FONA have been part of building a great business and we are excited to be working with them to collectively integrate the business and drive the plans to capitalize on growth opportunities.
Our functional integration is very much on track and is using a best of both approach to ensure we optimize our operating model, similar to the approach we have with RB Foods integration. The alignment of our organization is well underway and we have had significant commercial collaboration and quick wins and identifying long-term strategic opportunities.
Customer reaction has been extremely positive. We are impressed with our early collaboration and excited about the increased customer value proposition created by the combination of McCormick and FONA, a more comprehensive product offering, broader technical platform, deep technical and flavor talents and best-in-class customer collaboration. We were excited with FONA’s performance starting the year with great results and a robust momentum across the business.
For both Cholula and FONA we are pleased with our progress so far and our contribution to our results. Our enthusiasm for these acquisitions and our confident that we will deliver on our acquisition plans accelerate growth of these portfolios and drive shareholder value is only increased over the last six months.
Now I would like to briefly comment on the conditions we are seeing in our markets, their potential impact and our 2021 organic growth plans starting on slide 10. Global demand for Flavor remains the foundation for sales growth. We are capitalizing on a growing consumer interest in healthy flavorful cooking, trusted brands, as well as digital engagement and purpose minded practices.
These long-term trends have only accelerated during the pandemic and our alignment with them combined with the breadth and reach of our portfolio sustainably positions us for continued growth. These underlying trends, current market conditions and our robust 2021 plans positioned us well successfully execute our growth strategies in both segments.
Turning side to 11, starting with our Consumer segment, around the world we continue to experience sustained elevated Consumer demand, which is real incremental consumption and reflects the trend of Consumers cooking more at-home.
Across our APZ region, Consumer demand continues to be strong. In China consumer consumption remains strong, we continue to see recovery in foodservice, which in China, is in our Consumer segment. But approximately 90% of restaurants open during the Chinese New Year period.
In Australia, even restaurants seeing with restaurant restrictions eased and away-from-home demand increasing, at-home consumption has remained elevated. And as I mentioned earlier, we are retaining households that came into our brands last year and we are also realizing growth with our away-from-home customers.
In many of our largest markets at the EMEA, restrictive COVID-19 measures are still in place, further fueling at-home consumption and we are seeing sustained levels of demand.
In the Americas, as restrictions are easing and vaccinations are continuing, consumption remains elevated. Consumers are continuing to come to our brands, having a good experience and buying our products again.
Consumers are cooking more from scratch and adding flavor to their meal occasions, the long -- as a key long-term trend, which has accelerated during the pandemic. As we have shared previously, our proprietary consumer survey data supported by external research indicates the consumers are enjoying the cooking experience as it provides a creative outlook, reduces stress and connects the family and consumers feel meals prepared at-home are safer, healthier, better tasting and cost less.
In our recent consumer survey for February, these positive sentiments are not only still true but have strengthened consumers’ interest in cooking has increased in recent months versus the end of last year because they want to cook versus have to cook.
For example, approximately 50% of the consumers surveyed indicated they are cooking more now because they want to try a new recipe, ingredient, cooking method or tool or simply just cook from scratch, and approximately, 40% also have indicated they are trying to recreate restaurant meals at-home.
Importantly, over two-thirds of consumers survey, claims they would maintained or increased their current level of cooking at-home even if life were to return to normal next week, whatever normal maybe.
We continue to believe the consumer behavior and sentiment driving has increased and sustained preference for cooking at-home will continue globally and persist beyond the pandemic, further driving consumer demand for our products in 2021 and beyond, fueled by robust brand marketing, differentiated new products and our strong category management initiatives.
Our category management initiatives are designed to continue to strengthen our category leadership by driving growth for both us and our customers. In the U.S. in 2020, we began our initiative to reinvent the in-store experience for spices and seasonings to consumers by introducing new merchandising elements to improve navigation and drive inspiration, transforming and at times confusing shelf to three stoppable sections.
Our rollout has continued in 2021, with plans to implement in thousands of stores and the early indication is positive, but the category at McCormick branded growth outpacing the rest of the market in transport stores.
We are also investing in e-commerce to drive McCormick and category growth. In the first quarter, we delivered over 90% global e-commerce growth with particular strength in omnichannel. We are investing in content, retail research and innovation specifically for e-commerce, trialing new items of packaging and the direct-to-consumer channel first.
For example in the Americas, we have launched unique flavor inspiration products such as Frank’s RedHot, Everything Bagel Seasoning and in China we are launching a ready to eat chili paste on our direct-to-consumer platform.
In EMEA following the successful launch of the innovative Street Food Seasonings last year, we are now accelerating online growth with variety bundle packs and multi-buy offers on our main e-commerce channels.
Turning to global brand marketing, we continue to increase our investments across our entire portfolio as evident in our 17% increase in the first quarter and plan on for another significant increase in the second quarter.
Our investments have proven to be effective and we will continue to connect with consumers online for real-time insights into action by targeting, messaging focused on providing information and inspiration.
We expect our brand marketing investments combined with our valuable brand equity, strong digital consumer engagement will continue to drive growth with existing consumers and the millions of consumers gained in 2020.
Highlighting some of our first quarter investments in the Americas and EMEA regions on slide 12. Starting with the Americas, we continued our advertising campaign, it’s going to be great with a focus on consumers continuing traditions and preparing the family’s signature holiday dishes even if their celebrations look different.
Our Frank’s Super Bowl campaign integrated across digital, social, online video and TV featured fan favorite Eli Manning promoting Frank’s RedHot as approachable RedHot and was our best Super Bowl campaign yet garnering record high incentives.
As part of our Zatarain’s Bold Like That campaign we partnered with New Orleanian author and poet Cleo to promote virtual Mardi Gras celebrations with authentic New Orleans flavor. Hashtag Zatarain’s Sports Party and recognizing virtual celebrations replaced live Mardi Gras we supported culture a NOLA, an organization which distributes food hospitality workers impacted by pandemic restrictions.
Turning to EMEA, where we have invested a substantial portion of our brand marketing, our digital marketing and promotional activities included our holiday campaign featuring a festive gold cap limited edition packaging, which drove strong holiday results in our major markets.
In the U.K., with our New Year Flavor Resolutions campaign we inspired consumers with recipes and products to flavor their healthy cakes whether it be through the heat of Frank’s or spicing it up with Schwartz.
And in France we are giving families another reason to celebrate in 2021. In 2020 birthday celebrations were not just a piece of cake, so what’s the inspiration of our Half-py Birthday Marketing campaign consumers can celebrate their half birthdays complete with Barneys launch of a decimal comment fake candle, cups or cakes made for their environment baking product.
Looking at just a few of our second quarter plan, in the Americas, we will inspire restaurant quality cooking whether it’s going to be great campaign. Our Vahiné brand in the EMEA is sponsoring a prime time French baking program, which will showcase a homemade dessert line. In both regions we launched Easter campaigns to bring the family together with baking and crafting ideas.
And moving to grilling season we will acknowledge the importance of connecting to outdoor grilling vacations with campaigns targeting products such as French’s and Grill Meats in the U.S. and Frank’s in the U.K.
Finally, our plans include support of a robust new product launches. New products are integral to our growth and our Consumer segment new product innovation differentiates our brands and strengthens our relevance with our consumers.
Our 2020 launches have been exceptional trial and are providing significant momentum into this year. And in 2021 we have a robust global pipeline of new product launches and I am happy to share some of our first half launches as seen on slide 13.
We are meeting consumers at the intersection of flavor and health. We are launching just five drive recipe mixes in the U.S. Tips and dressing mixes and flavors like French onion and home style red, the cool and short ingredient statement. Five simple ingredients delivering a classic flavor experience.
And in France we are expanding our range of organic products and our Vahiné homemade dessert line. When it comes to heat, we are continuing to broaden our French portfolio globally. In the U.S. we are expanding Frank’s sauces with a milder tangy buffalo flavor and a garlic buffalo flavor for combining savory garlic with spicy heat.
Also in the U.S. we have just launched Taludo [ph] wing sauces in two flavors Mexicali Cilantro Lime and Kelly and Taste Spicy Air Bowl Peppers [ph] and a unique bottle with the iconic wooden tap.
And in the U.K., we are launching Frank’s Craft Edition, capitalizing on interest in Frank’s Heat with differentiated flavors such as roasted hall opinions [ph] and grilled Habanero. We are responding to consumers demand for convenience and flavor.
In the U.S., our launch of frozen appetizers providing hot chicken bites and buffalo chicken dipped with Frank’s flavor that are ready in minutes is gaining momentum at one of our best food products starts.
We are excited to launch our new grill based all-purpose grilling season for consumers who want to respect the meat. Simple coarse ground seasoning for the open plains that clings to the meat and lock-in juiciness.
Finally, our innovation is not only all about flavor, but also staying relevant for their consumers for packaging innovation. We are continuing the roll up of our first choice bottle with its consumer preferred transparent and functional design, modern looks and reinforcement of fresh flavor into our Eastern European markets.
These markets have predominantly been sachet markets for spices and seasonings and proceed to bottle packaging as a premium offering. And in Canada for beginning the re-launch of our gourmet line in the first choice bottle, as well as adding new flavor varieties.
In the U.K. not only are we building on our Schwartz recipe mix momentum with the introduction of flavorful line extensions, we are also advancing on our sustainable packaging commitments with sachet packaging that is 100% recyclable.
Schwartz will be the first brand in the U.K. dry recipe mixed category with recyclable packaging. And in France with the redesign of our Ducros grinder, it appears not only has the greater consumer appeal but it also reduces our carbon footprint.
Turning to Flavor Solutions, in this segment we have a diverse customer base and I have seen a variety -- various stages of recovery. From the food at-home perspective, our Flavor Solutions growth varies by packaged food customer.
Overall, we are carrying our growth momentum with these customers into 2021, driven by strength in their iconic core products, as well as new products and bigger bet innovations in 2021.
Overall, the selling of our new product launches and big-bet innovation from these customers slowed in 2020 due to the focus on keeping core items on shelf. There are still new product launches and in many cases there are smaller expansions of the core and more channel oriented.
Moving into 2021, we are excited about the momentum of the 2020 launches but even more excited about the robust 2021 pipeline. Our customers have bigger bet innovations in their plants and we look forward to collaborating with them and driving growth from those launches.
The key enablers driving our success and developing winning flavors for our customers is our insight on consumer and culinary trends. We have been at the forefront of forecasting emerging flavors for 21 years. Through the McCormick flavor forecasts, we have a history of identifying the top trends and ingredients, tapering the future of flavor, many of which have stood the test of time, whether it was with turmeric or pumpkin pie spices, the flavor of tapolake for dishes with clean look [ph].
In April, we will be launching our newest addition of shake up the way we cook, flavor and eat. We will feature a new trend flavors and recipes that will not only flavor our Consumer segment innovations, but also drive wins with our Flavor Solutions customer.
Now away-from-home portion of this segment, as I mentioned earlier, we are seeing growth from our restaurant and other foodservice customers in our APZ regions as restrictions have eased. The QSR demand momentum continues to strengthen, particularly as they continue to expand their menu options with limited time offers and are increasing promotional activities. Branded foodservice demand, as it relates to entertainment, stadium or hospitality venues for instance, is recovering at a slower pace.
In EMEA and the Americas, during the first quarter, our restaurant and other foodservice customers were still impacted by government imposed COVID-19 restrictions in many markets. There is no optimism with many of these customers related to restrictions easing and reopening plans.
Focus has shifted from adapting operating models to supply chain preparedness for the second half of the year. We are collaborating with our customers to ensure a strong recovery with pent-up demand being met. We expect the recovery of some of our branded food customers will start to begin similar to what we have seen in APZ.
As QSR customers already have less to dine in, their recovery will be at a faster pace than the rest of the restaurant and foodservice industry, we have positive fundamentals in place to navigate through this period and are excited about the recovery momentum.
Across our entire Flavor Solutions portfolio, we are advantaged by the differentiated customer engagement and plan on driving further wins for both us and our customers in fiscal 2021. With our customer intimacy approach we will continue to drive new product wins, collaborate on opportunities and solutions, manage the recovery plan and importantly further strengthen our customer partnerships.
When we collaborate with our customers and our technical innovation center we have a high win rate since we could not connect in person during 2020 we adapted to new ways of collaborating with creative digital and virtual solutions.
The interactive experience for our customers built their excitement, awareness and confidence in our unique capabilities in an engaging and inspiring way. We continue to not only strengthen our engagement in 2020, but we also proved we could maintain our high win rate whether physically in our innovation centers or not and have carried that momentum into 2021.
In our Flavor Solutions segment the execution of our strategy to migrate our portfolio more technically insulated and value-added categories will continue in 2021. The topline opportunities gained from our investments to expand flavor scale and momentum in flavor categories, as well as opportunities from our FONA acquisition we expect to realize further results from this strategy.
Lastly, we continue to be recognized for our efforts. We are doing what’s right for people, communities and the planet our purpose led performance, following being named by Corporate Knights in their 2021 Global 100 Most Sustainable Corporations Index as number one the packaged food and processed foods and ingredients sector McCormick was also recently named the Barron’s 2021 100 Most Sustainable Companies List for the fourth consecutive year.
As we continue our sustainability journey, I am excited to announce that later this week we will begin using 100% renewable electricity in all our Maryland and New Jersey based facilities. This includes our manufacturing operations, distribution centers, offices and technical innovation centers, and will result in an 11% reduction in our global greenhouse gas emission.
Moving to slide 16. In summary, we continue to capture the momentum we have gained in our Consumer segment and with our Flavor Solutions at-home customers. Our positive fundamentals in place to navigate to the Flavor Solutions away-from-home recovery, we are excited about Cholula and FONA acquisitions all of which bolster our confidence for continued growth in 2021.
Our fundamental, momentum and growth outlook are stronger than ever. Our achievements in 2020, our effective strategies, our robust operating momentum, and the breadth and reach of our portfolio reinforce our confidence in delivering another strong year of growth and performance in 2021.
Following an extraordinary year in 2020, our 2021 outlook reflects both our strong underlying base business performance and acquisitions driving significant sales growth, as well as strong operating income growth, even considering extraordinary COVID-19 costs and our business transformation investments, which highlights our focus on profit realization.
Our top tier long-term growth objectives remain unchanged and better positioned for continued success. Importantly, McCormick employees around the world drive our momentum and success and I would like to thank them for their dedicated efforts and engagement.
Now, I will turn it over to Mike.
Thanks, Lawrence, and good morning, everyone. I will now provide some additional comments on our first quarter performance and an update on our 2021 outlook. As Lawrence mentioned, our first quarter results were outstanding.
Starting with our topline growth, as seen on slide 18, we grew sales 20% in constant currency during the first quarter, our volume and product mix, acquisitions and pricing each contributed to the increase. Our organic sales growth was 16%, driven by our Consumer segment and incremental sales from our Cholula and FONA acquisitions contributed 4% across both segments.
The Consumer segment sales grew 32% in constant currency with double-digit growth in all three regions. The sustained shift in consumer consumption continues to drive increased demand for our Consumer products, fueled by our brand marketing, new products and category management initiatives, and resulted in higher volume and mix in each region.
On slide 19, Consumer segment sales in the Americas increased to 30% in constant currency versus the first quarter of 2020, with 5% of the increase from the acquisition of Cholula. The remaining increase from higher volume and product mix was broad-based across the majority of categories and brands, as well as private label products, with particular strength in the McCormick, Frank’s RedHot, French’s, Zatarain’s, Lawry’s, Simply Asia and Gourmet Garden brands.
In EMEA, constant currency consumer sales growth -- grew 26% from a year ago, with double-digit growth in all countries and categories across the region. The most significant volume and mixed growth drivers were Schwartz and Ducros branded spices and seasonings, Vahiné homemade dessert products, packaging products and our Kamis branded products in Poland.
Consumer sales in the Asia-Pacific region increased 55% in constant currency, driven primarily by the recovery from the disruption in China consumption last year, as Lawrence mentioned. Excluding that recovery impact, the region had double-digit growth due to strong China consumer and branded foodservice demand, partially driven by the timing of Chinese New Year and related holiday promotions, as well as continued strength in Australia.
Turning to our Flavor Solutions segment in slide 22, we grew first quarter constant currency sales 3%. In the Americas, Flavor Solutions constant currency sales grew 2%, driven by the FONA and Cholula acquisitions, a 7% increase, as well as pricing to offset of increase.
Volume and product mix declined due to a reduction in demand from branded foodservice and other restaurant customers, partially offset by higher demand from packaged food company, with particular strength in snacks seasonings and savory flavors.
In EMEA, constant currency sales were comparable to last year, as pricing actions offset cost increases. Volume and product mix declined due to lower sales to branded foodservice and other restaurant customers, partially offset by sales growth with packaged food companies with strengthened snacks seasonings.
In the Asia-Pacific region, Flavor Solutions sales rose 18% at constant currency, driven by higher sales to QSRs in China and Australia, partially due to our customers limited time offers and promotional activities, as well as the China recovery impact from last year’s COVID-19 related lockdown.
As seen on slide 26, adjusted operating income, which excludes transaction and integration costs related to the Cholula and FONA acquisitions, as well as special charges increased 35% or international currency 32% in the first quarter versus the year ago period.
The Consumer segment adjusted operating income grew 59% to $190 million, a 54% constant currency growth from higher sales, favorable mix and CCI-led cost savings more than offset COVID-19 related costs and a 17% increase in brand marketing.
In the Flavor Solutions segment, adjusted operating income declined 4% to $73 million with minimal impact from currency. Higher sales and CCI-led cost savings were more than offset by unfavorable manufacturing costs.
As seen on slide 27, adjusted gross profit margin expanded 60 basis points in the first quarter versus the year ago period due to favorable mix, both within the Consumer segment and due to the sales shift between segments. In addition, CCI-led cost savings were partially offset by COVID-19 related costs.
Our selling, general and administrative expense, as a percentage of net sales, was down year-on-year by 100 basis points from the first quarter of last year. Leverage from sales growth drove the declined, partially offset by the increase in brand marketing, I mentioned a moment ago. With the growth -- gross margin expansion and SG&A leverage, adjusted operating margin expanded 160 basis points for the first quarter of 2020.
Turning to income taxes on slide 28, our first quarter adjusted effective tax rate was 22.7%, compared to 18.4% in the year ago period. The first quarter adjusted tax rate in 2020 was significantly impacted by a favorable discrete item related to a refinement of our entity structure. Income from unconsolidated operations increased 28% in the first quarter of 2021, due to strong underlying performance of our joint venture in Mexico.
At the bottomline, as shown on slide 30, first quarter 2021 adjusted earnings per share was $0.72, as compared to $0.54 for the year ago period. The increase was due to our higher adjusted operating income performance, partially offset by a higher adjusted income tax rate.
On slide 31, we summarize highlights for cash flow and the balance sheet. Our cash flow from operations was an outflow of $32 million for the first quarter of 2021, compared to an inflow of $45 million in the first quarter of 2020. This change was primarily due to a lower level of cash generated from working capital associated with increased sales, higher incentive compensation payments and the payment of transaction and integration costs related to our recent trans -- acquisitions.
In February, we raised $1 billion through the issuance of five-year 0.9% notes and 10-year 1.85% notes. We took the opportunity in a low interest rate environment to optimize our long-term financing following our Cholula and FONA acquisitions.
We also return to $91 million of cash to our shareholders through dividends and use $49 million for capital expenditures this quarter. We expect 2021 to be another year of strong cash flow, driven by profit and working capital initiatives and our priority is to continue to have a balanced use of the cash, funding investments to fuel growth, returning a significant portion to our shareholders through dividends and paying down debt.
Now, I would like to discuss our 2021 financial outlook on slide 32 and 33. With our broad and advantage flavor portfolio, a robust operating momentum and effective growth strategies, we are well-positioned for another year of differentiated growth and performance.
In our 2021 outlook, we are projecting topline and earnings growth from our strong base business and acquisition contribution, with earnings growth partially offset by incremental COVID-19 costs and ERP investment, as well as our higher projected adjusted effective tax rate. We also expect there will be an estimated 2-percentage-point favorable impact of currency rates on sales, adjusted operating income and adjusted earnings per share.
At the topline, due to our first quarter results and robust operating momentum, we are increasing our expected constant currency sales growth to 6% to 8%, compared to 5% to 7% previously, which continues to include the incremental impact of the Cholula and FONA acquisitions at the projected range of 3.5% to 4%.
We anticipate our organic growth will be primarily led by higher volume and product mix driven by our category management, brand marketing, new products and customer engagement growth lines.
As Lawrence mentioned earlier, we expect sales growth vary by region and quarter in 2021, given 2020’s level of demand volatility and the pace of the COVID-19 recovery. But importantly, we continue to expect we will drive overall organic sales growth for the full year in both of our segments.
We are now projecting our 2021 adjusted gross profit margin to be comparable to 2020 due to increasing inflationary pressure, mainly due to transportation costs, but our inflation expectation for the full year remains a low single-digit increase.
Our adjusted gross margin projections reflect margin accretion from the Cholula and FONA acquisitions, as well as unfavorable sales mix from segments and COVID-19 costs. Our estimate for COVID-19 costs remains unchanged at $60 million in 2021, as compared to $50 million in 2020 and weighted to the first half of the year. As a reminder, fiscal 2021 COVID-19 costs are largely from the third-party manufacturing costs.
Reflecting the increase in our sales outlook, we are also increasing our expected constant currency adjusted operating income growth. Our adjusted operating income growth rate reflects expected strong underlying performance from our base business and acquisitions projected to be 11% to 13% constant currency growth, compared to 10% to 12% previously. This is partially offset by a 1% impact from increased COVID-19 costs compared to 2020 and a 3% impact of the estimated incremental ERP investment.
This results in total projected adjusted operating income growth rate of 7% to 9% in constant currency, increased from 6% to 8% previously. This projection reflects the inflationary pressure I just mentioned, as well as our CCI-led cost savings target of approximately $110 million. We also continue to expect a low single-digit increase in brand marketing investments, which will be heavier in the first half of the year.
We also reaffirm our 2021 adjusted effective income tax rate projected to be approximately 23%. This outlook versus our 2020 adjusted effective tax rate is expected to be a headwind to our 2021 adjusted earnings per share growth of approximately 4%.
We are increasing our 2021 adjusted earnings per share expectations to growth of 5% to 7%, which includes a favorable impact from currency. This increase reflects our higher adjusted operating profit outlook and the impact from optimizing our long-term financing, which I mentioned earlier.
Our guidance range for the adjusted earnings per share in 2021 is now $2.97 to $3.02, compared to $2.91 to $2.96 previously. This compares to $2.83 of adjusted earnings per share in 2020. This growth reflects strong base business and acquisition performance growth of 11% to 13% in constant currency, partially offset by the impacts I just mentioned related to COVID-19, our incremental ERP investment and the tax headwinds.
Based on the expected timing of some expense items such as COVID-19 cost and brand marketing investments, as well as a low tax rate in the first half of last year, we expect our earnings growth to be weighted to the second half of the year.
Our first quarter performance was a strong start to the year and we are optimistic for the balance of the year. But we recognize we are lapping a very strong earnings performance in the second quarter of 2020, we are also making investments to drive growth in 2021.
In summary, we are projecting strong underlying base business performance and growth from acquisitions in our 2021 outlook. With earnings growth partially offset by incremental COVID-19 costs and ERP investment, as well as a higher projected effective tax rate.
I’d like to now turn it back to Lawrence for some additional remarks before we move to your questions.
Thank you, Mike. Now that Mike has shared our financial results and outlook in more details, I’d like to recap the key takeaways as seen on slide 34. Our first quarter results with double-digit sales, adjusted operating income and earnings growth were an outstanding start to the year and bolstered our confidence in a stronger 2021 outlook.
We have a strong foundation and a balanced portfolio, which drives consistency in our performance. We are confident the sustainability of higher at-home consumption will persist beyond the pandemic and we are well-positioned to capitalize on accelerating consumer trends, as well as prepared for away-from-home consumption recovery.
Cholula and FONA have both started the year with strong momentum and results, our enthusiasm for these acquisitions and our confidence that we will deliver on our plans has only strengthened over the last few months.
Our fundamentals, momentum and growth outlook are stronger than ever. Our 2021 outlook reflects another year of differentiated growth and performance, while also making investments for the future. We are confident we will continue on our growth trajectory in 2021 and beyond.
Now, let’s turn to your questions.
Thank you. [Operator Instructions] Thank you. And our first question comes from the line of Andrew Lazar with Barclays. Please proceed with your question.
Hi. Good morning, everybody.
Good morning, Andrew.
Good morning.
Hi. I guess, first off, sounds like you are making as expected good progress on getting many of those suspended items in SKUs back on the shelf as your capacity comes on stream. It sounds like there’s still some more to go as you move through the year, I guess, particularly in 2Q. Is there any way you can maybe dimensionalize that a bit and how significant that refill might be in 2Q, even if it’s like versus the magnitude of what you saw in 1Q, just to try and put some context around it? And have you had any challenges in getting some of those suspended items back on the shelf at all, because I know that in Europe you mentioned you would actually benefited from incremental shelf placement at the expense of some competitors that had some capacity issues. I didn’t know if the reverse had been an issue for you here? And then I am just going to follow-up.
Sure, Andrew, Well, as we have gone through the COVID crisis in 2020 and we want to ship consumption every quarter because we were not able to keep up with the extended elevated levels of demand overall. And in order to keep our best selling items, our core items and in particular as we got to the fall protect the holiday items, we did suspend a substantial number of items and as that capacity we have been steadily restoring them as we have gone through this first quarter of this year.
And I’d say that right now we probably are around the halfway point in terms of getting items back on the shelf. But any -- you or anyone on this call and certainly my friends and family who hector me about this endlessly, can walk into any store and find that there are a lot of holes on the shelf and a lot of our products that are not yet in full distribution and even within a given account, the store-by-store situation it might be different.
There’s a supply chain aspect to it. There’s a retail work aspect to getting on the shelf. And I think that this is going to be a steady rebuild as we go through the rest of the year. We have made a good start on it in Q1, but we have quite a long way to go. And it’s hard -- I would hesitate to get overly precise about it. I would expect to see the shelf getting restored as we go through the year. I think one of the big variables for us, Andrew, is just the strength of the consumer demand.
Yeah.
Consumer demand has been higher than we originally planned and so we are actually not as far along in our restoration plans as we would have hoped. That’s because as fast as we supply the market, consumers are pulling the product through. But as you think that, it’s hard -- I’d say it’s hard for us to dimensionalize. I will emphasize…
Yeah.
… it’s an America’s problem. Most of the world, we are shipping to consumption, our supply chain is well caught up or our service levels are solid. It’s in the Americas where we have got some catching up to do. And in most categories here in the Americas we are also shipping consumption as well. It’s primarily herbs and spices, and our recipe mixes particularly.
Yeah.
I think you are going to see a big change in the TDPs as we go through the coming weeks and I think I am sure we hit bottom on that and already turn the quarter just because of the restoration efforts daily.
Yeah.
I think just to add to that too, we are going to be a little bit more optimistic but prudent. I mean the second quarter of last year as you remember we grew total consumer sales 28%, 36% in the Americans. So it’s a tough comp as we look forward but we are optimistic.
Yeah. Understood. And thank you for the TDP comment that leads into just a quick follow-up, which is, where do you -- what’s your best guess at where TDPs might end up like once we get to a steady state, let’s say, versus 2019. I am assuming they will be down a bit just as you have come through this and maybe in a more efficient shelf going forward even though I know they probably reached obviously more depth during the actual pandemic and manage to recover. But we do expect TDPs to be down maybe a couple of percent going forward…
Yeah. That is…
… that sort of a steady state?
…very good observation. As we have gone through this we have not only suspended SKUs but we have also rationalized SKUs. We have eliminated a couple of hundred SKUs that were slow moving or what the items that we have now are much higher velocity on an average.
We are also continuing the aisle reinvention program and setting store shelves. We -- in spite of that I think the COVID situation last year and all of the restrictions around working the shelf we were able to reset over 5,000 stores. We expect at least that many this year and a reduction we are getting a lift from that and at the same time it does reduce the SKU count. So it’s a…
Thanks.
[Inaudible]
Right. Thank you very much everybody.
Our next question is from the line of Ken Goldman with JPMorgan. Please proceed with your question.
Hi. Thank you. You have a unique perspective because you see broadly across so many retail and foodservice categories. I am curious in the U.S. restaurant sales, we are doing better right? Americans are traveling much more? But at the same time, we are seeing overall food at-home take away really remaining strong and I think probably better than what some may have expected? Obviously down on a weekly basis, but still better on a two year? So I am just curious, are you surprised and how do you reconcile the improved foodservice sales that we are seeing across the entire industry, with what I would consider still impressive at-home trends? I never want to bet against the simplest explanation, which is that Americans are just eating more, but I think the total implied increase in food numbers. It’s still -- it is notable. I am just curious for your thoughts there?
Right. Hey, Ken. Thanks. And by the way you won the award for the best headline on your screen that was awesome.
All the short-term are mad at me for overstating it. So it works both ways.
Okay. Well, I would say, first of all, the food at-home consumption really is strong. I mean we are seeing that ourselves and in our business of course and also in our Flavor Solutions business where the other CPG companies are our customers. And so we see growth -- we are seeing a lot of strength there.
I think on restaurant it’s actually a mixed bag. The QSR, the quick service restaurants are doing well. I think during the first quarter, there were a lot of -- because everyone thinks about the state we are in today, but think about December and January, there were a lot of new lockdowns that were put in place, the restrictions that were -- have been lifted or reinstated.
I would say that the branded foodservice side, the restaurant customers might be off to a little bit slower start to the year and everyone maybe thinking. I do think there’s a lot of optimism among restaurant operators as we go into the second quarter and as the vaccination rates go up and many of these restrictions are lift and I think that that group will come back stronger. But certainly for the beginning of the year they are off to a little bit slower start.
Okay. Thank you. I know we are running a little long but I wanted to sneak one more in which is it’s always dangerous to ask about math on earnings calls, but back of the envelope it seems you are implying now that for the last nine months of the year, right, 2Q to 4Q organic sales growth is actually going to be a little bit less than what you have anticipated a few months ago and I am just basing this on some of your guidance items? So is it fair to say that the first quarter over shipment was so strong that it may be pulled forward some of your expected shipments ahead or am I really parsing that info too finally and you are not really making any implied changes to guidance?
Yeah. So our intent was to reflect the sales growth over delivery that we got in the first quarter, but -- which was high. But we really did not change our outlook for the rest of the year…
Yeah. Year ago for the total constant organic as we call it is basically the same. It’s plus or minus 1% for the year. So we call our base of the range is 2.5% to 4%, up 1%. But you are right, year ago it basically what we said before, we haven’t called it down.
Okay.
But I know and as you and others the two year CAGRs or what’s really an impressive part as we start measuring this and looking at lapping things. Those are actually above our organic growth guidance long-term that we are seeing now.
And it is just the…
Got it.
… first quarter, so we are trying to be both optimism -- express our optimism, because I mean the business is very strong, but also a bit prudent. I mean we are lapping a big second...
We are lapping…
We are lapping to second quarter there.
Understood. Thank you.
Our next question is from the line of Robert Moskow with Credit Suisse. Please proceed with your question.
All right. Thank you.
Hi, Rob.
Hi. Good morning. I don’t think you are in the practice of giving us your COVID costs, but I was wondering if they now did need to be higher this year than expected, because you need to rely on third parties more than you thought and if you can maybe compare that to 2020? I am also wondering if I look at second quarter a different way. I know the year-over-year is difficult to look at. But sequentially, you typically have higher sales in 2Q than you have in 1Q and higher first -- and higher profit. But I think consensus is assuming that that won’t happen. So I know you have given us first half, second half guidance, but wondering for a little more clarity on how 2Q compares to 1Q maybe sequentially? Thanks.
Yeah. This is Mike. On the COVID cost, we said previously and we haven’t changed from that, we spent about $50 million last year and we are going to ever spend about $60 million this year. So that’s about spend.
Okay.
Now the timing of that is a little different. It’s going to be first half heavily weighted in 2021, a lot of that’s cumin cost we talked about before. Kind of leading in your second question, like, Colmin [ph] was coming in the first quarter wasn’t a full impact of the Colmin cost as we ramp things up, so really the second quarter is where kind of these every month will have the full Colmin cost, so that’s a little bit of the headwind in the second quarter.
We talked about the first quarter our consumer A&P was up around 17%, we are going to have another investment of A&P in the second quarter to drive sales as we said again as towards the first half, second half story. So I think Q2 has a bit of a headwind from an expense perspective and then COVID and A&P cost perspective. And also the tax rates, they are going down to the EPS line.
Okay. I will leave it there. Thank you.
I say maybe we summarize this, we talked about the year being a first half, second half story, within the first half, there’s a first quarter and the second story -- the second quarter story, think of it that way.
Yeah. And again first half EPS still up versus year ago.
Yeah.
Okay. Great. Thanks a lot.
Next question is from the line of Alexia Howard with Bernstein. Please share your question.
Good morning, everyone.
Good morning, Alexia.
Hi, there. So you mentioned e-commerce briefly in the prepared remarks. Could you give us a little bit more color region-by-region? You talked about strong double-digit growth and I am just wondering how that varied in the various parts of the world? And are you seeing a slowdown in some of those areas at this point as reopening happened? And then I have a follow up.
Sure. Well, first of all, e-commerce is strong everywhere. We talked last year about triple-digit and at the end of the year, we said, e-commerce total was around, I think, it was 136% increase year-on-year. It’s not quite triple-digit, but it’s a very strong double-digit increase in the first quarter again on top of the strong performance last year.
So, I mean, I’d say, that that’s still pretty explosive growth and we have no disappointment about that. I’d say, the omnichannel, particularly is very strong and I don’t -- I think that the -- while the numbers may be slightly different region-to-region, but they trend in the same direction globally.
Great. Thank you very much.
I think consumers have had a good experience shopping online.
Well, I think that the habits that they are going to continue using to what we are seeing.
Right.
Some of our consumer research.
Okay. That’s very helpful. And then, in terms of new product, it sounds as though you have obviously got an impressive lineup to 2021. Is your percentage of sales from new products trending upwards, I imagine it was slower last year because of the pandemic. I don’t know what you can quantify exactly what percentage of sales from new products you are anticipating this year and how that compares to maybe where you were a year ago?
I will let Mike speak to the numbers of...
I think it is more -- I think that as a more normal year. In a normal year, we are talking about 7% or 8% of our products introduced in the last three years make up our sales pace. It would have been less last year because of the pandemic, but it was kind of a strong ramp of new products in the 2021, as you have seen that we get back to more normal longer term numbers.
Great.
Yeah. A number of the items that we launched last year, we got less placement on it because of the focus on core items, not just by us but by the retailers. On the other hand, where we -- they did get into distribution. They have got an extraordinary amount of trial. So some of the items that we did launch last year are no longer best performing at new items and new aisles and we are really treating 2021 as a continuation of the launch here for NPD we introduced last year. So it gives us quite a pipeline for this year.
Great. Thank you very much. I will pass it on.
Our next question is from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.
Yes. Thanks. Good morning, everyone.
Hi, Adam.
Good morning, Adam.
Hi. So I just want to clarify -- two clarification questions. First, the relative to the earnings call in January the expectations on raw materials and cost inflation were unchanged? And just to be clear just in terms of what you are seeing in terms of freight, packaging, varieties of raw material, ingredients, is that something where you have had enough contracted and not exposed to the spot market to insulate you for fiscal 2021 or is it just your aggregate commodity basket really hasn’t moved that much because…
I mean it…
…more broadly seems...
Yeah. This is Mike. I mean we haven’t changed our guidance for the year still low-single digits, obviously, a lot of commodities and packaging to your point is already contracted. In freight variable that we have talked about and one of the reasons we said while we have had growing great growth in mix and things like that in the long-term debt optimization.
We didn’t drop it off through to the bottomline because some pressure from increased inflation from transportation just like every other company has been seeing recently and those we have recognized that in our forecasts and our guidance but we are still low single digits generally.
Okay. That’s really helpful. And then the second clarification just you talked about over shipping Americas consumption growth of 15%. I am just trying to make sure in the slides the Americas volume price mix, our product mix is up 25%, 24.5%. Is that apples to apples versus the 15% or what the -- just trying to understand the magnitude of how much you were actually over shipping in the period?
In a year ago -- this is Lawrence. In a year ago in the first quarter of last year it seems like a long -- life time ago in the Americas are actually under shift consumption in the first quarter a year ago and so at the time we said was about a 4% impact on the Americas. So I think you should factor that out and so the over shipment versus consumption might be a little bit less than it seems. Again, we…
Okay.
… are hopeful actually to build to rebuild stocks in the trade more than we did and the consumption is very strong.
All right. That’s all really helpful. I will pass it on. Thank you.
Great. Thanks, Adam.
Thank you. We are nearing the end of our question-and-answer session for today and have time for one additional question which is coming from line of Chris Growe with Stifel. Please proceed with your questions.
Hi. Good morning.
Good morning Chris.
Hi. I just I will make a quick here. I know we are at the end of this, just real quickly. Just to understand as we think about those third-party co-manufacturing costs and a bit of weight on the gross margin, do those continue all through the year? Just understand like are you using third parties just to rebuild inventory and then you can shut that down or is this something that will be ongoing in terms of your supply of product in the future?
Hey, Chris. It’s Mike. One, we are always using food manufacturers. That’s a part of our supply chain. As we talked about though here we really stretch some of those strategic co-factors to help us out shorter term really focused on the first six months of the year, very volume dependent.
So, the way we are thinking now is again the second quarter will be the heaviest spend there will be some probably roles into third quarter or so but. And we will see what volume is too, what consumption continues as something we would assess as we always do. And as our supply chain continues to recover that’s another variable that could speed it up or slow it down. So those are all considered in our guidance stuff.
Okay. Thank you. And just a quick one on as I think about what’s happening in China, you saw double-digit consumption in consumer sales and I think that even excludes the branded foodservice you sell -- the products you sell, as well as a really strong recovery in foodservice. I guess I just want to understand, make sure that those numbers are accurate and then to the degree to which that is somewhat of a predictor of what can happen in the U.S. as we saw the lap the tougher comps on the consumer side with the easy comps on the foodservice side, are you learning anything from what’s happened in China as an indicator for the U.S.?
Well, I think, the interesting thing in China is that, even though they are well past the COVID impact and are very far along in recovery, consumption of food at-home remains strong even as foodservice has recovered. The -- I think it’s interesting to look around that region also because what we are talking about the Asia-Pacific region, it is not just China that’s the biggest market there. But markets like Australia which is also pretty far along in recovery, even though foodservices has rebounded, it’s not back to the same level that it once was and consumption of food at-home has continued to be very strong.
Okay. Thank you.
I think it goes to the point that we have -- the making which is that, this has been a long-term trend anyway for consumers where they cook more at-home and more from scratch at home when they do and the COVID situation reinforced that behavior that helped whole new generation of cooks learn how to cook their family recipes that maybe they relied on mom or grandma, all new eating occasions as well as new…
Lunch…
All new eating occasions like lunch as people work remotely. I think there are lot of reasons to believe that consumption at-home is going to continue to be elevated.
Okay. Thank you.
Thank you. I will now turn the floor back to Lawrence Kurzius for closing remarks.
I’d like to thank everyone for your questions and for participating in today’s call. I apologize to those that we didn’t get to in the queue. We did have a very long script today. We had a lot of information to get out.
McCormick is differentiated by the breadth and reach of our balanced portfolio which is sustainably positioned us for growth. We are very pleased with our outstanding first quarter operating performance, which proves the strength of our business model, the value of our products and our capabilities as a company.
We expect to drive even further growth as we continue to execute on a long-term growth performance and people strategies actively respond to changing consumer behavior and capitalize on new opportunities.
Our investments provide a new foundation for growth, while enhancing our agility and our relevance with consumers and customers, which positions us well for continued success and long-term shareholder value creation.
Thank you, Lawrence, and thanks everybody for joining today’s call. And again, we apologize to those that did not get. And I would be happy to follow up with you after the call. If there are any further questions from anybody regarding today’s information, please feel free to contact me. This concludes this morning’s conference call. Thank you very much.