Delight flavors McCormick meeting

Shareholders celebrate record earnings and gains in stock price

March 25, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

In a year when some annual meetings have turned into angry showdowns between shareholders and corporate leaders, yesterday's gathering of McCormick & Co. Inc. stockholders was a remarkable love feast.

A day after the Sparks-based spice and flavorings manufacturer announced record first-quarter earnings, executives were savoring the sweet taste of success.

"Our financial performance has been one of the best in the food industry," said Robert J. Lawless, McCormick's chairman, president and chief executive, noting that McCormick topped all Standard & Poor's 500 food companies with a 14.5 percent average five-year return.

Last year, the company posted four quarters of record sales and earnings growth and laid the foundation to grow beyond a traditional spice company into a business that supplies flavors for Doritos and Hershey's chocolate bars.

For many of the 1,000 shareholders who jammed a Hunt Valley hotel ballroom, the session was more like a friendly party than a business gathering.

Some came to hobnob with old friends over coffee. Others came to compliment company executives or to pitch ideas. Others were out to grab one of the fabled goody bags the spice maker hands out each year, chock full of McCormick vanilla, peppercorns and grilling sauce.

McCormick may have built its name on traditional spices, but it intends to lead the way in a brave new world of flavors, Lawless told the shareholders.

For consumers who go low-carb, or favor grilled food, for those who want to add zing to a salad or toss together a meal in a hurry, McCormick plans to have a growing array of products at the ready, from traditional spices to the newer grilling sauces, salad seasonings and New Orleans-style flavored rice, company executives said.

"Flavor drives nearly every eating occasion," said Lawless. McCormick sees eating trends such as the "low-carb revolution" as an opportunity, not an obstacle, he said. "Most eating trends that restrict some part of a diet plan often remove the flavorful taste. That's a great opportunity for us to create a consumer-preferred flavor."

In 2003, McCormick acquired Zatarain's, a line of New Orleans-style packaged foods and spices, and Uniqsauces, a British condiment maker, cut costs by making its supply chain more efficient and sold a noncore packaging business. It also expanded its distribution to sell products in Dollar General and Food Lion stores.

Annual sales and earnings reached record levels. For the fiscal year, which ended Nov. 30, earnings rose 15 percent to $1.48 a share on sales of $2.3 billion, an 11 percent gain.

On Tuesday, the company said its earnings growth in the first quarter was driven by strong sales of spices and higher-profit flavorings. Net income rose 8.5 percent to $38.1 million, or 27 cents per diluted share, in the quarter that ended Feb. 29, from $35.1 million, or 25 cents per diluted share, in the first quarter of last year. The results met analysts' expectations.

Sales in the quarter shot up 18 percent, to $572 million, thanks, in part, to favorable currency rates and the acquisition of Zatarain's. Higher prices on some products also added to the sales increase.

Lawless opened the meeting at Marriott's Hunt Valley Inn by highlighting the gain in McCormick's stock price since the last annual meeting. Shares have risen from $24.34 per share on March 26, 2003, to $31.57 per share as of Tuesday's close.

"I think the meeting's over," he joked.

Shareholders peppered Lawless with mostly praise on his management of the company, and a few suggestions, such as increasing the company's dividend. (After the meeting yesterday, the board declared a quarterly dividend of 14 cents per share on the common stock, unchanged from the previous quarter and payable April 16.)

McCormick has paid dividends for 80 consecutive years, and during the 12 months ending last November the dividend had increased 27 percent.

Shareholders said they came to hear a progress report on a company that has brought them a 22 percent return in the past year. But the event that typically draws many former McCormick workers and longtime shareholders has become, for many, more than a business meeting.

"It's a social gathering. Many of the people, you see every year. People who hold stock in McCormick hold on to it, and you see them every year," said Steve Maltese, a Catonsville retired school teacher who attended with his wife, Anna Maria.

Yesterday's goody bag, distributed by McCormick employees as attendees filed out of the ballroom, included chicken chili seasoning, Tex-Mex chili seasoning, Old Bay blackened seasoning, vanilla blend, a peppercorn grinder, Grill Mates Hickory BBQ grilling sauce, Hershey's S'Mores candy bar, Doritos Nacho snacks and New Orleans-style Jambalaya rice mix from Zatarain's.

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