McCormick Beats Q3 Estimates as Mexico Deal Lifts Sales 17.4%, Reaffirms 2026 Outlook

MKC reported fiscal third-quarter 2026 net sales of $2.02 billion, up 17.4%, and adjusted earnings of $0.86 per share versus $0.85 a year earlier, ten cents above the $0.76 consensus. Most of the top-line jump was acquired: consolidating McCormick de Mexico added 14.6 points and currency 0.9 points, while organic growth was 1.9%. Pricing rose 2.2% and volume and mix slipped 0.3%, the trade-off Reuters summed up as price hikes lifting results despite sluggish demand. GAAP EPS fell to $0.36 from $0.84 on $141.5 million of special charges, including a $43.1 million impairment tied to a discontinued pepper project in Malaysia.

Margins were the cleaner positive. Adjusted gross margin expanded 180 basis points to 39.3% and adjusted operating income rose 22.1% to $358.5 million. By segment, Consumer sales rose 24.9% to $1,215 million on 1.1% organic growth, and Flavor Solutions rose 7.7% to $809 million with organic growth of 3.0%.

McCormick reaffirmed its 2026 outlook for net sales growth of 13% to 17%, organic growth of 1% to 3% and adjusted EPS of $3.05 to $3.13. On the call, management said it now expects cost inflation of 6% to 7%, up from a mid-single-digit assumption, with tariff assumptions unchanged, and flagged margin pressure in the fourth quarter.

The stock rose about 5% in premarket trading but did not hold it: a 15-minute delayed quote showed it down 2.3% at $45.34 in the afternoon. Some coverage tied the sales surge to Unilever, but McCormick's planned combination with Unilever's Foods business, announced in March, is not expected to close until mid-2027 and contributed nothing to the quarter. The questions for the fourth quarter are whether pricing can keep absorbing higher cost inflation without further volume losses, and how much of the margin expansion survives once the Mexico consolidation laps.