McCormick & Co. Inc., on the eve of its annual stockholders meeting, reported record sales and earnings per share yesterday for its 1999 fiscal first quarter.
Today, the Sparks-based spice-and-seasonings company will hold its annual stockholders meeting at the Hunt Valley Inn-Marriott.
The meeting, which the company expects will be attended by 800 to 1,000 shareholders, will be the last chaired by veteran executive Charles P. "Buzz" McCormick Jr.
The company said yesterday that it earned $18.17 million in the three months that ended Feb. 28, a 12 percent jump from the $16.21 million it earned in the corresponding period a year earlier. Earnings per share were 25 cents, a 14 percent rise from the 22 cents recorded in first-quarter 1998 and a penny better than Wall Street expected.
McCormick shares rose 43.75 cents, to $28.375, yesterday.
"It's a very high-quality name if you're looking for a stock in the defensive side of the economy," said Legg Mason Wood Walker analyst Judith DeHoff, who rates the shares an "outperform."
McCormick & Co. said net sales for the quarter were $441.54 million, an increase of 6 percent over the $415.2 million notched in first-quarter 1998. Increased cash flow from operations -- essentially cash profit with "paper" charges such as the depreciation of property and equipment added back in -- allowed the firm to finish a planned buyback of 10 million shares three months ahead of schedule. A company official said the subject of another buyback would be taken up at the next board meeting, though declining to say if another stock repurchase program was likely.
Sales rose 10 percent in McCormick & Co.'s worldwide consumer-food-products business and what analysts felt was a disappointing 4 percent in the company's industrial-foods business, which top executives have been working to improve.
If the firm can get all its businesses running at full speed, powerful sales and earnings growth will result, Legg Mason's DeHoff said.
According to the earnings report, there are reasons to be optimistic. Gross profit margins -- one measure of how well a manufacturing company is faring -- increased and the company was able to cut inventories by 8 percent.
The latter is important because it costs a company money to carry a big inventory. Keeping inventories down is challenging, since customers such as supermarkets are increasingly carrying smaller inventories, and are relying on suppliers such as McCormick to restock their store shelves in a timely fashion. To a company not deft at timing its manufacturing, that could lead to undesired higher inventories.
McCormick three months ago disappointed Wall Street with fourth-quarter results that fell short of analysts' expectations. Studies show that firms that miss earnings once are likely to do so again. Instead, McCormick beat "the Street" with yesterday's results.
"I think they did pretty well," DeHoff said.
Pub Date: 3/17/99