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Sunday July 21, 2024



McCormick Announces Earnings

McCormick & Co. Inc. (MKC) announced its third quarter results on Tuesday, October 3. While the company reported increased revenue, shares dropped 8.5% following the earnings report's release.

The company reported net sales of $1.68 billion for the third quarter, up 6% from $1.60 billion during the same quarter last year. This was slightly below analysts' estimates of $1.70 billion.

"We drove another quarter of strong performance, reflecting sustained demand and effective execution of our growth strategies across our Consumer and Flavor Solutions segments, reinforcing the confidence that we have in our competitive advantages and differentiation," said McCormick & Co. Inc. CEO, Brendan M. Foley. "Our business fundamentals remain strong, and we are confident we will continue to not only deliver strong sales growth, but also drive total shareholder return at an industry-leading pace."

For the quarter, the company reported net income of $170.10 million or $0.63 per diluted share. This is down from net income of $222.90 million or $0.82 per diluted share last year at this time.

The Hunt Valley, Maryland-based spice company reported a 1% increase in sales in its Consumer segment. Consumer segment sales in its Americas region grew 1% in the quarter and sales in its Europe, Middle East and Africa region increased by 15%. Consumer segment sales in the Asia and Pacific region decreased by 16% which reflected a slower-than-anticipated economic recovery in China. The company's Flavor Solutions segment saw year-over-year growth with a 12% increase in sales which McCormick attributed to a 10% increase in pricing. For fiscal 2023, the company expects sales growth to be in the range of 5% to 7% and earnings per diluted share to be between $2.46 to $2.51.

McCormick & Co. Inc. (MKC) shares ended the week at $64.55, down 14% for the week.

Helen of Troy Posts Earnings

Helen of Troy Limited (HELE) reported its second quarter earnings on Wednesday, October 4. Despite reporting better-than-expected earnings and revenue, the company's shares fell 9% following the release of the report.

Helen of Troy reported sales of $491.56 million in the second quarter. This was a decline of 5.7% from $521.40 million reported at this time last year, but above analysts' expectations of $485.40 million.

"During the quarter we delivered net sales and adjusted EPS at the high end of our expectations. I am pleased with the consistency of our results as we work toward returning to growth," said Helen of Troy's CEO, Julien R. Mininberg. "Looking ahead, I am pleased to be in a position to reiterate our full year outlook for this fiscal year. Our year-to-date results not only demonstrate strong execution across our entire organization, they also demonstrate resiliency as we navigate the continued challenging macro consumer environment."

Helen of Troy posted net income of $27.38 million or $1.14 per adjusted share. This was down 10.9% from net income of $30.67 million or $1.28 per adjusted share at this time last year.

The parent company of brands such as Hydro Flask, OXO, Braun and Honeywell reported a 0.2% decrease in their Home & Outdoor revenue to $240.0 million. This decline was primarily driven by a decrease in sales in the insulated beverage category, lower houseware sales due to a reduction in club channel programs and the impact of the Bed, Bath & Beyond bankruptcy. The company also saw a 10.4% decrease in revenue for their Beauty & Wellness segment to $251.6 million. The company attributed the decrease in revenues to reduced consumer demand for heaters, fans and humidifiers as well as reduced orders from inventory rebalancing and lingering COVID effects. The company maintained its fiscal 2024 outlook following the results and is expecting net sales to be in the range of $1.97 billion to $2.02 billion.

Helen of Troy Limited (HELE) shares ended the week at $108.48, down 6% for the week.

Conagra Foods Reports Quarterly Results

Conagra Foods, Inc. (CAG) announced its first quarter earnings on Thursday, October 5. The Chicago-based company reported mixed earnings, causing its shares to decline 1% following the release.

The company reported revenue of $2.90 billion during the first quarter. This was unchanged from revenue of $2.90 billion in the same quarter last year and slightly below analysts' estimates of $2.95 billion.

"I am proud of our team for delivering another quarter of strong margin recovery and EPS growth despite facing industry-wide macro dynamics that have affected consumer purchasing behavior and elongated the volume recovery period," said Conagra CEO, Sean Connolly. "We will continue to focus on executing our Conagra Way playbook as we make targeted and disciplined investments throughout the remainder of the year to drive the top-line. We are reaffirming our guidance for fiscal 2024, reflecting confidence in our plans, people and agility as we continue to navigate a shifting consumer environment."

For the quarter, Conagra reported adjusted net income of $319.70 million or $0.67 per diluted per share. This is an improvement from a net loss of $77.50 million at the same time last year.

The packaged foods company, which holds popular brands such as Duncan Hines, Healthy Choice and Slim Jim, reported organic net sales decreased 0.3% due to a decrease in volume attributed to a slowdown in consumption and changes in consumer behavior. The company's Grocery and Snacks segment accounted for $1.2 billion, a 1.2% increase in net sales during the quarter. Conagra's Refrigerated and Frozen segment decreased 4.6% to $1.2 billion in the quarter, while Foodservice increased 5.2% to $289 million. The company expects adjusted earnings per share between $2.70 to $2.75 for fiscal 2024.

Conagra Foods, Inc. (CAG) shares ended the week at $26.41, down 3% for the week.

The Dow started the week of 10/2 at 33,456 and closed at 33,408 on 10/6. The S&P 500 started the week at 4,285 and closed at 4,309 The NASDAQ started the week at 13,218 and closed at 13,431.

Treasury Yields Surge Higher

U.S. Treasury Yields increased early in the week after economic data for the service industry expanded in September for the ninth consecutive month. Yields surged to record highs on Friday as investors reacted to a better-than-expected employment report.

On Wednesday, the Institute for Supply Management (ISM) released its purchasing managers' index (PMI) for September indicating growth in the service industry. The PMI measures the change in economic activity in the services sector and is used as an indicator of U.S. economic activity. The PMI for September was 53.6, down from a PMI of 54.5 in August but in line with economists' estimates.

"The Services PMI, by being above 50% for the ninth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector," said Chair of the ISM Services Business Survey Committee, Anthony Nieves. "There has been a slight pullback in the rate of growth for the services sector, which is attributed to slower rates of growth in the New Orders and Employment indexes. The majority of respondents remain positive about business conditions; moreover, some respondents indicated concern about potential headwinds."

The benchmark 10-year Treasury note yield opened the week of October 2 at 4.58% and traded as high as 4.89% on Wednesday. The 30-year Treasury bond opened the week at 4.70% and traded as high as 5.01% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased by 2,000 to 207,000 for the week ending September 30. Continuing unemployment claims decreased by 1,000 to 1.66 million. On Friday, the Bureau of Labor Statistics released its monthly jobs report for September which showed an increase of 336,000 jobs, significantly higher than economists' estimates of 170,000.

"Friday's jobs report suggests that the labor market remains very strong and cements the case for an additional Fed rate hike this year, and it also likely delays the pace of eventual rate cuts," said Chief Investment Officer at Blanke Schein Wealth Management, Robert Schein. "Investors will need to get used to the higher for longer narrative on interest rates given the strength of the economy."

The 10-year Treasury note yield finished the week of 10/2 at 4.80%, while the 30-year Treasury note yield finished the week at 4.97%.

Mortgage Rates Remain High

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, October 5. The survey showed 30-year mortgage rates continue to climb well above 7% causing purchasing demand to fall.

This week, the 30-year fixed rate mortgage averaged 7.49%, up from last week's average of 7.31%. Last year at this time, the 30-year fixed rate mortgage averaged 6.66%.

The 15-year fixed rate mortgage averaged 6.78% this week, up from 6.72% last week. During the same week last year, the 15-year fixed rate mortgage averaged 5.90%.

"Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed," said Freddie Mac's Chief Economist, Sam Khater. "Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve's next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand."

Based on published national averages, the savings rate was 0.45% as of 9/18. The one-year CD averaged 1.76%.

Editor's Note: The publicly available financial information is offered as a helpful and informative service to our friends. This article is not an endorsement of any company, product or service.

Published October 6, 2023

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