McCormick's fiscal Q2 sales rose 16.7% to $1.94B, mostly from consolidating McCormick de Mexico (organic growth just 1.7%, all price). Adjusted EPS rose to $0.80, but GAAP EPS fell to $0.56 on Unilever deal costs.
Revenue
$1.9B
+16.7% YoY
Net income
$150M
-14.2% YoY
Diluted EPS
$0.56
-13.8% YoY
Operating margin
14.3%
McCormick Q2 FY2026: sales up 17% on the Mexico deal, but only 1.7% from the existing business, and GAAP EPS fell on Unilever deal costs
McCormick's fiscal second quarter ended May 31, 2026 (its fiscal year ends November 30). Reported net sales rose 16.7% to $1,936.6 million. Most of that growth came from buying things, not from selling more. 12.3 points came from consolidating McCormick de Mexico: in January 2026 McCormick raised its stake from 50% to 75%, so it now books 100% of that business's sales. Another 2.7 points came from a weaker dollar. Organic sales growth (sales from the businesses it already owned, excluding acquisitions and currency) was only 1.7%, and all of it came from higher prices: price added 2.2 points and volume/mix took away 0.5.
Profit went in two directions. Adjusted operating income (operating profit excluding special charges; McCormick's own non-GAAP measure) jumped 30.1% to $336.4 million. GAAP net income attributable to McCormick fell 14.2% to $150.1 million, and diluted EPS fell from $0.65 to $0.56. The difference is mostly $57.6 million of transaction and integration costs in the quarter, "primarily comprised of banking, legal, and consulting fees" for the pending combination with Unilever's Foods business. Those costs cut EPS by $0.24. Adjusted EPS was $0.80, up from $0.69.
Key figures
Metric
Q2 FY2026
Q2 FY2025
YoY Change
Net sales
$1,936.6M
$1,659.5M
+16.7%
Organic sales growth
+1.7%
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Source: Form 10-Q for the quarter ended May 31, 2026 and the June 25, 2026 earnings release. Adjusted figures are McCormick's non-GAAP measures, which exclude special charges.
Takeaway: The 30% jump in adjusted operating income is flattering. Three things that aren't about selling more spices drove most of it: consolidating McCormick de Mexico, a one-time $27.6 million refund of tariffs McCormick paid in 2025, and currency. Take out the tariff refund alone and adjusted operating income grew about 19% (our arithmetic: $308.8M vs. $258.6M). Mexico and currency are still inside that 19%. The core business grew organic sales 1.7%, all from price, and Consumer volumes in the Americas fell 3.6%. Management's own full-year guidance implies adjusted EPS in the second half will be lower than a year ago.
What drove the quarter
Two segments moving in different directions
McCormick has two segments. Consumer sells branded spices, seasonings and condiments (McCormick, French's, Frank's RedHot, Cholula and others) to retailers. Flavor Solutions sells flavorings and seasonings to food manufacturers and restaurant chains.
Segment
Reported growth
Acquisition
Currency
Price
Volume/mix
Organic
Consumer
+22.8%
+19.6%
+2.4%
+2.7%
−1.9%
+0.8%
— Americas
+28.0%
+27.9%
+0.3%
+3.4%
−3.6%
−0.2%
— EMEA
+10.7%
—
+7.4%
+1.4%
+1.9%
+3.3%
— APAC
+10.0%
—
+7.1%
+0.5%
+2.4%
+2.9%
Flavor Solutions
+8.9%
+3.0%
+3.0%
+1.5%
+1.4%
+2.9%
— Americas
+10.0%
+4.2%
+1.9%
+1.8%
+2.1%
+3.9%
— EMEA
+5.4%
—
+5.0%
+1.6%
−1.2%
+0.4%
— APAC
+7.5%
—
+7.3%
−0.6%
+0.8%
+0.2%
Consumer Americas, the largest single business, was the weak spot. Excluding Mexico, sales there fell 0.2%. Prices rose 3.4%, but volume and mix fell 3.6%. The 10-Q says that decline "included the unfavorable impact of price elasticity", meaning shoppers bought less after prices went up. That is the risk with price-led growth: the Americas consumer business raised prices and lost roughly as much in volume. EMEA (volume up, "driven by higher sales in France and the UK") and APAC ("driven by higher sales in China") grew volumes, but both are far smaller. Their reported growth of about 10% was mostly currency: 7.4 and 7.1 points.
Flavor Solutions was the better story. Organic growth of 2.9% came "nearly equally" from price and volume/mix. In the Americas, volume rose 2.1% "driven by the effect of higher sales to packaged food customers." EMEA volume fell 1.2% "driven by the effect of lower sales to quick-service restaurant customers." That is consistent with fast-food traffic being soft outside the US.
Margins: real improvement, plus a one-time boost
Gross margin (the share of sales left after the direct cost of making the products) rose 270 basis points (2.7 percentage points) to 40.2%. McCormick itself splits this in two. The tariff refund "contributed approximately 140 basis points" and the "underlying gross profit margin expansion was 130 basis points." Here is how the refund worked. The US Supreme Court ruled on February 20, 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful. McCormick then filed for a $30.8 million refund and cut this quarter's cost of goods sold by $27.6 million, reversing tariff costs it had already expensed. The 10-Q notes that the trade court's refund order "has been appealed."
The underlying 130 bps came from the higher-margin Mexico business, pricing, and savings from the Comprehensive Continuous Improvement (CCI) cost program. The filing says these were "partially offset by increased commodity costs and higher freight costs due to the conflict in the Middle East."
Segment margins (operating income before special charges, divided by segment sales) rose in both segments:
SG&A (selling, general and administrative costs) rose 90 bps as a share of sales, "primarily driven by the impact of the McCormick de Mexico acquisition and increased investments in technology."
Why adjusted EPS grew only half as fast as adjusted operating income
Adjusted operating income rose 30%, but adjusted EPS rose only 16%. Part of the gap is an accounting shift, not new profit. When McCormick owned 50% of McCormick de Mexico, its share of that business's profit sat below operating income in "income from unconsolidated operations." Now the whole business is consolidated, so its full profit shows up in operating income. The minority partner's 25% share then comes back out further down the income statement:
Income from unconsolidated operations fell from $20.7M to $3.5M (−$17.2M), which the 10-Q attributes to the Mexico consolidation.
Net income attributable to noncontrolling interests (the profit that belongs to the minority partner) rose from $1.0M to $10.1M.
Interest expense rose from $51.0M to $62.7M. It includes $6.8M of amortized financing fees for the Unilever deal and debt taken on for the Mexico purchase.
The adjusted tax rate fell to 22.5% from 24.1%, which helped EPS.
Year to date: GAAP numbers distorted by a one-time gain
First-half GAAP diluted EPS was $4.33 (vs. $1.25). That includes an $866.8 million non-cash gain. When McCormick took control of McCormick de Mexico, accounting rules required it to revalue its existing 50% stake at fair value, and the increase was booked as income. Excluding that gain and special charges, first-half adjusted EPS was $1.46 vs. $1.29 (+13%). First-half sales were $3,810.5M (+16.7%) with organic growth of 1.4%.
The Unilever Foods combination
On March 31, 2026 McCormick agreed to combine with Unilever's Foods business (excluding India, Nepal, Portugal and some other units). Per the 10-Q, current Unilever shareholders would own about 55.1% of the combined company and McCormick's current shareholders about 35.0%. Unilever would keep up to about 9.9% and receive a one-time $15.7 billion cash payment. McCormick describes the combined business as having about $20 billion of fiscal-2025 revenue and a 21% operating margin. It expects about $600 million of annual run-rate cost savings ("synergies") net of reinvestment, and "mid- to high-single-digit" adjusted EPS accretion in the first 12 months after closing. To help fund the cash payment, McCormick signed a $2.0 billion three-year term loan on April 28, 2026, alongside a bridge facility.
For current McCormick shareholders this changes the investment. They will become a minority of a much larger company, with far more debt. Debt was already rising before the deal closes: short-term borrowings plus long-term debt were $4.93 billion at May 31, 2026, up from $4.00 billion at November 30, 2025, mostly because of the $729.9M cash paid for McCormick de Mexico. The deal still needs shareholder and regulatory approval.
Outlook
Management reaffirmed its fiscal 2026 guidance:
Net sales growth of 13% to 17%, including 11–13 points from McCormick de Mexico and about 1 point of currency; organic growth of 1% to 3%
Adjusted operating income growth of 16% to 20%
Adjusted EPS of $3.05 to $3.13, up 2% to 5%
Adjusted gross margin up 100 to 120 bps; brand marketing spending up by a "low to mid-teens" percentage
Tax rate of about 24.0% vs. 21.5% in 2025
Our read: the guidance points to a weaker second half. Adjusted EPS is already up $0.17 (13%) in the first half. The full-year range of +2% to +5% on a base of about $3 means only about $0.06–$0.15 of growth for the whole year. That implies second-half adjusted EPS roughly $0.02 to $0.11 below last year's second half. The second half also matters more: the 10-Q notes that sales and profit are historically weighted to it because of US holiday cooking. Management names the headwinds. The tariff refund "is expected to be offset by increased inflation, including costs related to the Middle East conflict". The tax rate rises, interest costs rise, and Mexico profit no longer arrives as equity income. McCormick is also spending more on marketing to "improve Consumer volume trends."
That marketing spend is the thing to watch. In Q2, Consumer Americas volume was −3.6% against +3.4% price. If extra advertising doesn't turn that volume trend positive, organic growth will stay near the low end of the 1–3% range. Meanwhile the Unilever integration will take management attention and add special charges each quarter. The fiscal Q3 report (quarter ending August 31) is the first test of whether the reinvestment is working.