Good morning. This is Kasey Jenkins, Chief Strategy Officer and Senior Vice President, Investor Relations. Thank you for joining today’s fourth quarter earnings call. To accompany this call, we have posted a set of slides at ir.mccormick.com. With me this morning are Lawrence Kurzius, Chairman and CEO; Brendan Foley, President and COO; and Mike Smith, Executive Vice President and CFO. During this call, we will refer to certain non-GAAP financial measures. The nature of those non-GAAP financial measures and the related reconciliations to the GAAP results are included in this morning’s press release and slides. In our comments, certain percentages are rounded. Please refer to our presentation for complete information. Today’s presentation contains projections and other forward-looking statements. Actual results could differ materially from those projected. The company undertakes no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events or other factors. Please refer to our forward-looking statements on Slide 2 for more information. I will now turn the discussion over to Lawrence.

Good morning, everyone. Thanks for joining us. Our fourth quarter concluded a challenging and volatile year that impacted our ability to deliver on our expectations and our financial performance. At the same time, we ended the year with positive momentum with consumer consumption trends and Flavor Solutions demand, stabilized service levels and supply, and meaningful progress in starting to reshape our cost structure. While more work remains to be done, our confidence in our outlook for 2023 and beyond is strong. Our organization is focused squarely on executing on the priorities I just mentioned, all of which are important drivers in the successful execution of our strategies and the delivery of stronger results. Turning to Slide 5, in our fourth quarter results, our sales declined 2% from the year-ago period, including a 4% unfavorable impact from currency. In constant currency, sales grew 2% within our implied fourth quarter guidance range, but below our expectations. Greater-than-expected COVID-related disruptions in China unfavorably impacted our expected sales growth for both total McCormick and the Consumer segment by approximately 2%. Fourth quarter sales would have grown in the range of 4% in constant currency, excluding the impact of China on our results. We had anticipated even higher growth, with fourth quarter restocking comparisons in the Americas Consumer segment further tempering our growth. As compared to last year, our fourth quarter constant currency sales growth of 2% reflected a 9% contribution from pricing actions, partially offset by a 4% decline in underlying volume and product mix, an expected 2% volume decline from the Kitchen Basics divestiture and the exit of low-margin business in India and the consumer business in Russia, and a 1% year-over-year volume decline from the China COVID-related disruption. Despite tempered fourth quarter sales performance, our underlying sales strength positions us well to accelerate sales growth in 2023. In our Consumer segment, excluding China, consumption trends strengthened, particularly in the U.S., where our fourth quarter total branded consumption grew 6%. In our Flavor Solutions segment, our sales growth was outstanding, continuing momentum across all regions. Consumers' increasing demand for flavor, whether through our products or our customers' products, is reflected in this performance and in our most recent proprietary consumer insights research. Our alignment with the long-term consumer trends of cooking at home, clean and flavorful eating and valuing trusted brands continues to deliver results. This alignment, combined with our broad and advantaged portfolio, plus the fundamental strength of our category, continues to underscore McCormick’s positioning for long-term differentiated growth in flavor. Moving to profit, our adjusted operating income decline of 10%, or 9% in constant currency, and adjusted earnings per share decline of 13% fell short of our expectations. Let me spend a moment on the differences to our expectation. Unfavorable product mix was a driving factor, particularly in our Consumer segment. This was primarily due to lower U.S. bites and seasoning sales stemming from fourth quarter inventory restocking comparisons in both 2021 and 2022, which I will discuss in a moment. Our results also reflected lower-than-anticipated sales in China and an unfavorable product mix related to the sales mix between segments. In addition, with two COVID-related plant shutdowns in China, we realized lower operating leverage. During the quarter, we made meaningful progress to lower our run-rate cost in Flavor Solutions with the reduction of elevated costs that we have been incurring to meet high demand in parts of our business. The impact of that progress was offset in the fourth quarter by unexpected discrete one-time issues. However, we expect to see positive benefits in our results going forward. Turning to Slide 7, we are committed to increasing our profit realization in 2023. In our last earnings call, we discussed normalizing our supply chain costs and increasing efficiencies while also strengthening our ability to service customers. To that end, we have targeted the elimination of $100 million of supply chain costs over the next two years. We are also now taking streamlining actions across our entire organization targeting an incremental $25 million of cost savings. The combination of these actions, which is our global operating effectiveness program, is incremental to our comprehensive continuous improvement, or CCI, savings. Our CCI program has a well-established track record of success and we are leveraging its proven program discipline to drive results. We expect our global operating effectiveness program to drive annual cost savings of approximately $125 million, of which we expect to realize $75 million through the P&L in 2023, enabling increased profit realization. We can see the results coming through and we expect the impact to scale up as the year progresses. Now, let me share more details on our actions. During last year, we transitioned to our global operating model allowing us to more effectively leverage our scale and drive cost reductions. As we further advance that model and streamline our processes, strengthen our collaboration and align our structure to work more efficiently, we are taking corresponding actions to streamline our workforce across the entire organization. We are making considerable progress on the streamlining actions we have underway. A large component of our streamlining actions is a U.S. voluntary retirement program, which is very far along with a targeted separation date of February 1. This will be followed by other actions, some of which will be involuntary. As always, we will care for employees in keeping with our shared values. Moving to the supply chain. Our top supply chain priority remains keeping our customers in supply and supporting their growth. And while we expect continued volatility in global supply chain, we have strengthened our resiliency over the past few years to achieve this priority. As we responded to demand volatility over the past several years, we incurred additional costs above inflation to service our customers and have seen inefficiencies develop in our supply chain. Some of these costs were for investments and decisions made to support continued growth for both our customers and McCormick, and some are the result of a buildup that can occur in periods of disruption. In 2022, with the service levels focus, the normalization of our supply chain costs and inventory levels has taken longer than expected. As we stated on our third quarter call, during the fourth quarter, we began to implement initiatives to optimize our cost structure, increase our capacity and reduce inventory levels while strengthening our supply chain resiliency and ability to service our customers. Now for some details on these initiatives. First and foremost, while we continue to resolve some outliers, we have rebuilt and stabilized our service back to strong levels and at a high level of finished goods inventory on hand. Operating from this position enables us to maximize our performance, reduce our labor costs and pare back excessive use of co-packers within our operations. Starting with labor as we expect it to be the most significant driver of our cost reductions, during the fourth quarter, we reinstated more normal shift schedules with most locations now operating on a 24/5 pattern. This allows us to eliminate inefficient and unpopular difficult-to-staff shifts. Additionally, as we move away from the industry-wide labor issues seen during the pandemic, we have stabilized absenteeism and turnover rates in our workforce and returned to more standard staffing by line. During the quarter, we optimized our leadership structure throughout our facilities and upgraded key roles. Simultaneously, we are increasing the capability levels of our team. We are also accelerating automation, bringing individual pieces of equipment together to a completely automated line for a high-volume packaging format. We expect through these initiatives to reduce 10% of our Americas supply chain workforce, and over the past three months we have already achieved half of the planned reduction. Next, turning to our capacity. We are supporting future growth and enabling better customer service by investing to increase both manufacturing capacity and reliability in constrained areas. These investments also enable the repatriation of the production we scaled up at co-packers while continuing to meet the elevated demand. In our Flavor Solutions segment, our flavors volume, including seasonings and flavor encapsulation, has been growing at a mid-single-digit rate for each of the past three years and demand remains strong. Our investments in additional seasoning capacity as well as spray dry capacity with the expansion of our footprint are on track to be online during the second quarter. Meanwhile, in our Consumer segment, we have been using co-packers for targeted high-demand packaging formats such as some of our large value-sized items. Given the efficiencies gained and the investments already in flight, we have started to repatriate some of these formats. Overall, we are on track for co-pack spending in 2023 to be the lowest in the past five years. From an inventory perspective, we are executing on initiatives to return to historical safety stock levels which have been disrupted and raised by the supply chain issues of the last few years. We reduced both raw material and finished goods inventory during the fourth quarter. While we are aware we have further progress to make, we are confident and encouraged by the results our initiatives are delivering so far. As we progress to a more normalized environment, we will realize additional benefits from these changes. For example, we expect to see reductions in expedited freight and less-than-truckload shipping costs and will streamline other transportation inefficiencies. With the recent opening of our new Maryland logistics center, we are able to eliminate expensive external warehouse costs before even fully realizing the inventory reduction, accelerating the expense savings. With more efficient manufacturing and lower inventory levels, we expect lower material losses. We have managed through various supply chain challenges over the last several years. I am confident in our disciplined approach to resolving the increased cost within our supply chain while prioritizing meeting our customers’ needs. The impact of our actions is expected to normalize our supply chain cost, enhance our efficiency and ability to meet demand, reduce inventory levels and ultimately increase our profit realization as reflected in our 2023 outlook. Our global operating effectiveness program has considerable momentum and we look forward to sharing more on our progress with you after our first quarter of 2023. Now moving to fourth quarter business updates for each of our segments. Turning to our Consumer segment on Slide 8, sales performance in the quarter was impacted by factors mentioned previously: the Kitchen Basics divestiture, exits of businesses and COVID-related disruptions in China as well as trade inventory dynamics between years. These factors, as well as lapping high COVID-related demand early in the year, also impacted the full year performance. Importantly, on a three-year basis, we have grown annual sales at a 5% CAGR, driven by the Americas region, and we are ending the year with positive momentum in our consumption trend. Now for some regional highlights on sales and consumption. Starting with the Americas, during the fourth quarter of 2021 because we were restocking, shipments were higher than consumption and we are lapping that this quarter, which impacts our sales growth. As we entered the holiday season this year and having shifted fairly in line with consumption for the first three quarters of the year, customers did not need to replenish their inventory as much despite strong consumer consumption during the holiday season. We estimate our fourth quarter sales growth rate was unfavorably impacted 6% related to these restocking comparisons. We did not fully appreciate the level of fourth quarter restocking in 2021, especially of high-margin holiday herbs and spices, and the resulting impact on our year-over-year growth and as such, had expected stronger sales growth this year. That said, excluding this impact, our underlying volume performance in the fourth quarter was better than in the second and third quarters. We have confidence that as we move out of the first quarter, the holiday season fluctuations this year between consumption and inventory levels as well as retailer restocking resulting from pandemic-driven dynamics will have normalized and we have an increased level of confidence in our visibility. Our total U.S. branded portfolio consumption growth was 6% this quarter, as indicated by our IRI consumption data combined with unmeasured channels, and was the strongest of the year. Our investments in brand marketing and stronger holiday merchandising proved to be effective. And with the stabilization of supply disruptions, restoration of our service levels continued and our fourth quarter service level was the best of the year, just shy of our pre-pandemic standards. Our consumption dollar sales, unit and volume all accelerated sequentially and our total distribution points, or TDPs, have stabilized. In spices and seasoning, our fourth quarter performance was the strongest of the year. Consumers are responding to our value messaging, trading up to larger sizes and according to our consumer insights are learning to navigate the current environment. We are continuing to build distribution on the Lawry’s Everyday spice range we launched last quarter and early results are positive. We are seeing incremental sales and profit to the category as consumers are trading up from private label. In recipe mixes, we gained share for the fifth consecutive quarter and with improved packaging supply, we also gained share in hot sauce and mustard during the quarter. Across the portfolio, our trends are continuing to strengthen in the first quarter of 2023. In EMEA, we ended the year with our strongest sales growth in the fourth quarter. Our effective pricing and new product growth accelerated versus the first three quarters with our fourth quarter price realization the highest of the year and our volume decline the lowest. Our strong consumption momentum continued and accelerated sequentially. In the fourth quarter and for the full year, we gained share versus last year and 2019 in the UK and Eastern Europe in herbs, spices and seasoning. Those gains were somewhat offset by softer performance in France. In the UK, we are driving the hot sauce category with Frank’s RedHot continuing to gain share again in the quarter and for the full year versus last year as well as compared to 2019. Additionally, in the UK, we advanced our recipe mix leadership during 2022 to the number one share position. As we entered 2023, we are confident in our continued momentum in the EMEA region. In the Asia-Pacific region, growth for the quarter and the year was impacted by the exit of low-margin business in India, which we will lap after the first quarter of 2023, as well as the COVID-related disruption in China. Reflected in our outlook, we are expecting continued disruption into the first quarter of 2023 with an expected recovery after the Chinese New Year. While we are currently experiencing the short-term pressure, we continue to believe in the long-term growth trajectory of our business in China. Our brand marketing, new products and category management initiatives are driving positive momentum with more to come from 2023 and we look forward to sharing this and our growth plans at CAGNY in a few weeks. Turning to Flavor Solutions on Slide 9, sales growth reflected pricing actions as well as higher base volume growth in new products. Our sales performance has been outstanding all year, led by double-digit growth every quarter in the Americas and EMEA regions, resulting in 12% growth for the full year. On a three-year basis, we have grown annual sales at an 8% CAGR with strong growth in all three regions. Now for some regional highlights. Our Americas fourth quarter sales growth was the strongest of the year. Growth in flavors, including snack seasonings and flavors for performance nutrition and health end market applications, as well as branded foodservice products drove our fourth quarter performance as well as our strong broad-based growth for the year. We continue to realize the benefits from the combined capabilities of FONA and McCormick with new products contributing approximately 30% more growth in Flavors in 2022 than last year. Demand continues to strengthen with branded foodservice, restaurant and institutional foodservice customers and we are also expanding distribution and gaining share in both spices and seasonings and hot sauce. In EMEA, our strong fourth quarter performance in all product categories capped an outstanding year of 17% growth, including significant volume growth of 9% as well as pricing. We are winning in all markets and channels. Growth remains strong across our customer base led by the momentum with our quick-service restaurant, or QSR, customers, partially driven by expanded distribution and their promotional activities. In APAC, we are driving further menu penetration with our QSR customers, realizing growth from strong performance of core menu item sweet flavor. We delivered solid growth in the Asia-Pacific region for the year despite the COVID-related disruptions in China. Across markets outside of China, we drove double-digit growth with contributions from both volume and pricing. Overall, Flavor Solutions demand has remained strong, and for certain parts of our business in the Americas and EMEA regions, our supply chain continues to be pressured to meet this high demand, driving extraordinary costs to service our customers. We appreciate our customers working with us and are encouraged by the results our collaboration is already beginning to yield. While our Flavor Solutions sales growth has been outstanding, we are not delivering profit growth in this segment. We are committed to restoring Flavor Solutions profitability, recovering margin while ensuring we keep our customers in supply and driving growth for both McCormick and our customers. We are confident we will achieve margin recovery through three actions: effective price realization—our price increases are only now catching up to the pace of inflation and we are beginning to recover the cost inflation we experienced last year; the successful execution of the global operating effectiveness program I just mentioned, in particular we expect the elimination of supply chain inefficiencies and the investments in capacity to have a significant impact in the Flavor Solutions segment; and finally, continued focus on driving growth in high-margin parts of our portfolio. The strength of our Flavor Solutions portfolio and capabilities, including our customer engagement approach and culinary-inspired innovation, are driving our outstanding Flavor Solutions momentum. We look forward to sharing more about our growth plan and margin recovery at CAGNY in a few weeks. Now some summary comments before turning it over to Mike. Turning to Slide 10, global demand for flavor remains the foundation of our sales growth and we have intentionally focused on great fast-growing categories that will continue to differentiate our performance. We continue to capitalize on the long-term consumer trends that accelerated during the pandemic: healthy and flavorful cooking, increased digital engagement, trusted brands and purpose-minded practices. These long-term trends and the rise in global demand for great taste are more relevant today than ever, and the younger generation is embracing them at a greater rate. McCormick is uniquely positioned to capitalize on this demand for great taste with the breadth and reach of our strong global flavor portfolio. We are delivering flavor experiences for every meal occasion through our products and our customers' products and are driving growth. We are end-to-end flavor. We remain focused on the long-term goals, strategies and values that have made us so successful. We have grown and compounded that growth over the years, including through the pandemic and other periods of volatility. The strength of our business model, the value of our products and capabilities and the execution of our proven strategies by our experienced leaders while adapting to changes accordingly give us confidence in our growth momentum and in our ability to navigate the dynamic global environment. As we look ahead to 2023, we will focus on capitalizing on strong demand, optimizing our cost structure and positioning McCormick to deliver sustainable growth and long-term shareholder value. The fundamentals that drove our industry-leading historical financial performance remain strong and we are confident we are well positioned to drive profitable growth in 2023. I want to recognize McCormick employees around the world for their contributions in 2022 and the momentum they are driving in 2023. Now, I will turn it over to Mike.

Thanks, Lawrence, and good morning everyone. Starting on Slide 13, our top line constant currency sales grew 2% compared to the fourth quarter of last year. This growth was tempered by a 1% unfavorable impact from the Kitchen Basics divestiture, a 1% impact from the exits of low-margin business in India and the consumer business in Russia, and a 1% impact from China consumption disruption related to COVID restrictions. In our Consumer segment, constant currency sales declined 4% with the divestiture of Kitchen Basics contributing 1% to the decline and the combined impact of exiting the businesses in India and Russia as well as the China consumption disruption contributing 3% to the decline. On Slide 14, consumer sales in the Americas declined 4% in constant currency. Pricing actions in the region were more than offset by a volume decline, including a 2% impact from the Kitchen Basics divestiture as well as a 6% impact from lapping the restocking and retail inventory in the fourth quarter of last year and a higher level of retail inventories entering this year’s holiday season. Additionally, returning to pre-pandemic promotional levels also tempered our sales comparison to the fourth quarter of last year. In EMEA, constant currency consumer sales grew 2%. Pricing actions across all markets were partially offset by lower volume and product mix, including a 4% unfavorable impact from lower sales in Russia. Constant currency consumer sales in the Asia-Pacific region declined 22%, including a 23% unfavorable impact from the consumption disruption in China as well as the exit of low-margin business in India. Pricing actions in all markets across the region partially offset this unfavorable impact. Turning to our Flavor Solutions segment on Slide 17, we grew fourth quarter constant currency sales 14% primarily due to pricing actions with higher volume and product mix also contributing to growth in all regions. In the Americas, Flavor Solutions constant currency sales grew 13%, with pricing actions and higher volume contributing to the increase. Higher sales to packaged food and beverage companies with strength in snack seasonings led the growth. Higher demand for branded foodservice customers also contributed to growth. In EMEA, we drove 16% constant currency sales growth, with 10% related to pricing actions and 6% behind the mix. EMEA’s Flavor Solutions growth was broad-based across the portfolio, led by strong growth with QSR and packaged food and beverage customers. In the Asia-Pacific region, Flavor Solutions sales grew 11% in constant currency with pricing actions and higher volume contributing to the increase. Growth was driven by higher sales to QSR customers, driven by strength in their core menu items. As seen on Slide 21, adjusted gross margin declined 410 basis points in the fourth quarter versus the year-ago period. I will spend a moment on the significant drivers, highlighting the ones that drove more compression than we had expected. First, approximately 60% of this decline, or 250 basis points, is due to the dilutive impact of pricing to offset our dollar cost increases. Next, product mix was unfavorable as compared to the fourth quarter of last year and compared to our expectations for the quarter. First, in our Consumer segment, as mentioned earlier, lower U.S. spices and seasoning sales stemming from fourth quarter inventory restocking comparisons in both 2021 and 2022, as well as lower sales of higher-margin products in China due to the COVID restrictions negatively impacted mix. Sales shift between our Consumer and Flavor Solutions segments also contributed to the unfavorable product mix as compared to the fourth quarter of last year. The impact of the unfavorable product mix was higher than we expected due to the shortfall in consumer sales from what we had anticipated, driven by both lower U.S. and China sales. Now for the impact of supply chain challenges on gross margins. In our Consumer segment, we experienced lower operating leverage because of the sales comparisons already discussed. The impact, though, was greater than expected due to the China COVID-related plant shutdowns. In our Flavor Solutions segment, as we transition production to our new UK Peterborough manufacturing facility, we continue to incur dual running costs. We expect the unfavorable year-over-year impact of these costs to continue in the first quarter of 2023, and then for the balance of the year expect them to be comparable to 2022. Additionally, we are still incurring elevated costs to meet high demand in certain parts of our business. While painful short-term, we know these investments to support our customers during periods of disruption are the right approach to drive long-term growth. That said, we did make progress on reducing the level of these costs in the fourth quarter. However, the impact of that progress was offset by the unfavorable transactional impact of foreign currency exchange rates and some discrete issues we experienced in our Flavor Solutions operations during the quarter. While we recovered quickly from these issues, they still contributed significant unexpected costs to the quarter. Finally, partially offsetting the unfavorable drivers I just mentioned were our CCI cost savings. And of note, our price increases continue to catch up with cost inflation during the quarter for both segments. This was in line with our expectations and consistent with our performance. In 2023, we plan to fully recover the inflation that pricing has lagged over the last two years. Now moving to Slide 22. Selling, general and administrative expenses, or SG&A, declined from the fourth quarter of last year with lower incentive compensation expenses, partially offset by higher distribution costs and brand marketing investments. As a percentage of net sales, SG&A declined 270 basis points. The net impact of the factors I just mentioned resulted in a constant currency decline in adjusted operating income, which excludes special charges and transaction and integration costs, of 9% as compared to the fourth quarter of 2021. In constant currency, the Consumer segment’s adjusted operating income declined 5% and the Flavor Solutions segment declined 26%. Turning to interest expense and income taxes on Slide 23, our interest expense increased significantly over the fourth quarter of 2021 as well as over our third quarter of this year, both driven by the higher rate environment. Our fourth quarter adjusted effective tax rate was 23.1% compared to 21.3% in the year-ago period. Both periods were favorably impacted by discrete tax items with a more significant impact last year. At the bottom line, as shown on Slide 24, fourth quarter 2022 adjusted earnings per share was $0.73 as compared to $0.84 for the year-ago period. The decrease was driven primarily by lower adjusted operating income with higher interest expense and a higher fourth quarter adjusted effective tax rate also contributing to the decrease. On Slide 25, we’ve summarized highlights for cash flow and the year-end balance sheet. Our cash flow from operations for the year was $652 million, which is lower than the same period last year. This decrease was primarily driven by lower net income and higher inventory levels. We returned $397 million of cash to our shareholders through dividends and used $262 million for capital expenditures in 2022. Our capital expenditures included growth investments and optimization projects across the globe. In 2023, we expect our capital expenditures to be comparable to 2022 as we continue to spend on the initiatives we have in progress as well as to support our investments to fuel future growth. We expect 2023 to be a year of strong cash flow driven by our profit and working capital initiatives. Our priority is to continue to have a balanced use of cash, funding investments to drive growth, returning a significant portion to our shareholders through dividends and paying down debt. We remain committed to a strong investment grade rating and we have a history of strong cash generation and profit realization. With improving our gross margin through our plan to normalize our supply chain costs and inventory levels, we will be better positioned to continue paying down debt and expect to de-lever to approximately 3x by the end of fiscal 2024. Now turning to our 2023 financial outlook on Slide 26, our 2023 outlook reflects our positive top-line growth momentum and with the optimization of our cost structure, increased profit realization. We expect to drive margin expansion with strong sales and adjusted operating income growth that reflects the health of our underlying business performance as well as the net favorable impact from several discrete drivers. We expect our adjusted operating profit growth will be partially offset by significantly higher interest expense and a higher projected effective tax rate. We also expect there will be minimal impact from currency rates. At the top line, we expect to grow sales 5% to 7%, driven primarily by the roll-up of last year’s pricing actions combined with new pricing actions we are taking in 2023. We expect several factors to impact our volume and product mix over the course of the year, including price elasticities, which we expect to be consistent with 2022 at the low levels that we have historically experienced, but in line with the current environment. A 1% estimated benefit from lapping last year’s impact of COVID-related disruptions in China is included, although we expect the impact will vary from quarter-to-quarter given 2022’s level of demand volatility. The divestiture of our Kitchen Basics business in August of last year and the exit of our consumer business in Russia during last year’s second quarter are also factors. And finally, the continued pruning of lower-margin business from our portfolio. As always, we plan to drive growth through the strength of our brands as well as our category management, brand marketing, new products and customer engagement plans. Our 2023 adjusted gross margin is projected to range between 25 to 75 basis points higher than 2022. This adjusted gross margin expansion reflects a favorable impact from pricing, cost savings from our CCI-led and global operating effectiveness programs, partially offset by the anticipated impact of a low- to mid-teens increase in cost inflation. We expect cost pressures to be more than offset by pricing during the year as we recover the cost inflation that pricing lagged last year. Moving to adjusted operating income. First, let me walk through some discrete items and their expected impact to our 2023 adjusted operating profit growth. First, the cost savings from our global operating effectiveness program are expected to have an 800 basis point impact. The savings from this program are expected to scale up as the year progresses. Next, the benefit of lapping the impact of COVID-related disruptions in China is expected to have a 300 basis point favorable impact. The Kitchen Basics divestiture is expected to have an unfavorable 100 basis point impact. And finally, an 800 basis point unfavorable impact is expected as we build back incentive compensation. The net impact of these discrete items is a favorable 200 basis points. This favorable impact, combined with expected 7% to 9% underlying business growth, which is driven by our improved operating momentum, results in our adjusted operating income projection of 9% to 11%. In addition to the adjusted gross margin impacts I just mentioned, this projection also includes a low single-digit increase in brand marketing investments and our CCI-led cost savings target of approximately $85 million. Based on the anticipated timing of certain items, we expect our adjusted operating profit growth to be pressured in the first quarter, accelerate in the second quarter and return to a normalized cadence of delivery for the remainder of the year. The impact of cost inflation will be weighted toward the first half of 2023, with peak inflation in the first quarter. Also, in the first quarter, we expect continued pressure to sales and profit from COVID-related disruptions in China and then the benefit beginning in the second quarter from lapping last year’s impact. Additionally, the exit of our consumer business in Russia will impact the first quarter. As a reminder, we began exiting it during the second quarter of last year. Finally, related to profit timing, while we expect a minimal impact from currency rates, we project an unfavorable impact in the first half of the year and expect 3% unfavorable in the first quarter and a favorable impact in the second half of the year. We are anticipating a meaningful step-up in interest expense driven by the higher interest rate environment, which will impact our floating debt. We estimate that our interest expense will range from $200 million to $210 million in 2023 and spread evenly throughout the year. As a reminder, in 2022, we realized an $18 million favorable impact from optimizing our debt portfolio, which we will lap in 2023. The net impact of these interest-related items is expected to be an 800 basis point headwind to our 2023 adjusted earnings per share growth. Our 2023 adjusted effective income tax rate is projected to be approximately 22% and is based on our estimated mix of earnings by geography as well as factoring in a level of discrete impacts. Versus our 2022 adjusted effective tax rate, we expect this outlook to be a 100 basis point headwind to our 2023 earnings growth. We expect our rate to be higher in the first half of the year compared to the second half. To summarize, our 2023 adjusted earnings per share expectations reflect strong underlying business growth of 8% to 10%, a 2% net favorable impact from the discrete items I just mentioned impacting profit—the global operating effectiveness program, the China recovery, the Kitchen Basics divestiture and the incentive compensation rebuild—partially offset by the combined interest and tax headwind of 9%. This results in an expected increase of 1% to 3% or a projected guidance range for adjusted earnings per share in 2023 of $2.56 to $2.61. We are projecting strong operating performance in 2023 with continued top-line momentum, significant optimization of our cost structure and strong adjusted operating profit growth as well as margin expansion. While this performance is expected to be tempered by interest and tax headwinds, we remain confident in the underlying strength of our business and that with the execution of our proven strategies, we will drive profitable growth in 2023.

Thank you, Mike. Now that Mike has shared our financial results and outlook in more detail, I would like to recap the key takeaways as seen on Slide 28. Our fourth quarter sales performance, despite challenges from the COVID-related disruptions in China, reflects the underlying strength of our global portfolio and the continued execution of our long-term strategies. With the stabilization of service and our supply chain in addition to positive momentum and consumption trends, we expect an acceleration in Consumer segment sales dollars and volume in 2023 and continued strong Flavor Solutions performance as the strength of our portfolio is met with outstanding demand across our customer base. We have strong growth programs, and we look forward to sharing them at CAGNY. We are committed to increasing our profit realization. The actions we have underway to normalize our supply chain costs and increase our organizational effectiveness and efficiency are already yielding results. Our global operating effectiveness program is expected to deliver $125 million of cost savings. We expect the benefits of the program to scale up through each quarter of 2023 and continue to be accretive into 2024. While actively responding to the macroeconomic challenges we are facing, we continue to operate with the same discipline and commitment to execution as we have in any other operating environment. The fundamentals that have driven our historical performance remain in place, and we are as diligent as ever in driving value for our employees, consumers, customers and shareholders in both 2023 and beyond. The compelling benefits of our relentless focus on growth, performance and people continues to position McCormick to drive sales growth. This, coupled with our focus on recovering cost inflation and lowering costs to expand margins, will allow us to realize long-term sustainable earnings growth. Before turning to your questions, I want to reiterate my confidence in driving the profitable growth reflected in our 2023 outlook. And now for your questions.

Thank you. The operator has provided instructions to participants. Our first question is from the line of Andrew Lazar with Barclays. Please proceed with your question.

Great, thanks. Good morning, everybody.

Hi, Andrew.

Hello. I guess the question I’m getting most from investors this morning really has to do with the fiscal 2023 operating profit guidance of 9% to 11%. I understand you’ve got incremental cost savings that are set to offset the incentive compensation rebuild and you have some of the China recovery built in as well. But in what’s still clearly a dynamic operating environment, it still seems aggressive to a bunch of folks we’ve spoken to this morning, especially given it’s expected to be a somewhat back-end loaded year from a profitability standpoint. So I was hoping, Lawrence, maybe you could comment a bit on that and add some more color on the level of confidence around this. And then I’ve just got a follow-up. Thank you.

Sure. This almost comes off my final comments in the prepared remarks. We really believe that this is balanced guidance. It is certainly not aggressive. We have a due degree of humility after last year and have a balanced outlook considering risk. And we have a high degree of confidence in this guidance, including the operating profit guidance. It’s underscored by our strong consumer demand and the underlying demand from the consumer is quite strong coming out of the fourth quarter; it is actually the strongest consumer demand that we’ve seen. And we continue to have tremendous demand from our Flavor Solutions customers. We have very strong programs that we did not talk about on this call, particularly on herbs and spices, and we will be sharing those growth programs at CAGNY. That is a foundation underlying the performance on operating profit. We have very strong confidence in our ability to realize the cost savings that we described. These programs are being managed programmatically through the same team that manages our CCI program. I believe that they are very much in our control and we’re quite confident about them. I think that they more than offset the build of incentive compensation. And maybe what some of the people you’re talking about haven’t fully considered is that we expect to cover not only this year’s cost inflation, but also recover all of the costs that we have lagged over the last two years with pricing actions earlier in the year. And as you know, pricing actions take time to sell in. So you would be correct in assuming that many of these conversations are either completed or well underway at this time.

Great. That’s helpful. And that’s a good segue into my follow-up, which is with low-to-mid-teens inflation still to come and as you’ve talked about likely further pricing actions still ahead, I’m just trying to get a sense how that jibes with the price gap issue that you’ve talked about previously in your core spice and seasonings category and the fact that pricing decelerated sequentially in fiscal 4Q in Consumer versus 3Q? I thought it was supposed to build and maybe that was mix versus actual price? Thanks.

I am going to say a couple of words about that and I’m going to let Brendan follow me. First of all, on that pricing, I would not forget that a significant portion of it is going to be on the Flavor Solutions side of the business. It’s confident when those have come up and allowed us to make some moves there. And so that is certainly a big part of the pricing equation. Our inflation outlook is actually higher on the Flavor Solutions inputs than on consumer inputs for the year. And so the pricing is similarly skewed more towards the Flavor Solutions side. I’m going to let Brendan talk about the price gaps and take it from here, please.

Yes, Andrew. Just to build on what Lawrence replied to, I’ll jump in. One of the points you brought up regarding private label: we are seeing price gaps narrow right now, and we certainly saw that in the fourth quarter, even leading into the first quarter. We started to see that trade down moderate honestly through the quarter. That’s an insight and maybe a reaction to macro inflationary factors moderating in the economy overall. Consumers are looking for brands, but they are also looking for value, and so it’s not necessarily the lowest price. Parts of our portfolio are starting to drive a lot of growth just on large sizes as we see consumers look for value. We also launched the Lawry’s Everyday line of spices and are continuing to build distribution; the early results are really good and better than we expected. We’re seeing a lot of incremental category sales and profit coming from this line as consumers trade up from private label. That’s the source of volume we’re seeing and it’s bringing in new consumers into the McCormick portfolio. Regarding pricing quarter-to-quarter, that is probably more a function of reinstating promotional activity that’s been called out previously, lapping last year’s increases which were higher on a relative basis, and our volume in the fourth quarter had an impact on that overall level of pricing, too. We’ve covered that with regard to the restocking comparison, and that’s factored into that quarter-to-quarter view.

Okay, thanks so much and see you guys in Florida.

Our next question comes from the line of Ken Goldman with JPMorgan. Please proceed with your question.

Hi, good morning.

Hey, Ken. Good morning.

I wasn’t sure if I heard you correctly, and maybe you said this, maybe you didn’t. But you said that sales growth will be driven primarily by pricing. Does this mean you expect volumes for the year in 2023 to be positive? And along those lines, I think you mentioned that you expect elasticity to not necessarily worsen in 2023 versus 2022? I think if I heard you right, you said it will remain kind of at today’s level, just curious why that is given that the consumer environment does seem to be eroding a small amount?

Start with the last part. We’ve seen some moderation of elasticity as we’ve gone through the year. It looks like peak elasticity was around the time when gas prices were about $5 a gallon and above for most of the country and was really not so much a reaction to our price increase, but to the general level of inflation that consumers were experiencing and the high pressure on their wallets. Our outlook for 2023 assumes a similar environment carries forward and that we’re seeing elasticity in that range. We’ve also adjusted—we’ve seen where we’ve had greater elasticity and where we’ve had less elasticity, and we’ve reflected that in our future pricing actions. We expect the consumer to be under pressure in 2023. I don’t care whether you call it a recession or a soft landing; consumers on the lower half of the income spectrum are going to have less money and be careful with their budgets. We are reflecting that in our marketing programs already and with some of the innovation that we’ve launched. It’s not all about buying the cheapest product; consumers are looking for value, and that’s come through clearly in our proprietary research. It is true that our sales growth is driven primarily by pricing in 2023, and at the total company level we expect volumes to be pretty much flat. That would be an improvement in the trend line, but it will vary tremendously by region, and a good bit of the overall volume growth is going to come from recovery in China following the quarter where we have that COVID impact during Chinese New Year.

Just a quick follow-up: on the restocking, you mentioned that perhaps you hadn’t quite recognized at the time how large the impact was the last couple of years. I’m curious if the company is doing anything to improve its ability to quantify those dynamics in a more real-time way so that going forward there are fewer surprises from year-end.

Thanks, Ken. This environment has been volatile and made it tougher to read, but this period has allowed us to refine how we look at restocking and the fluctuations coming out of the season between consumption and shipments. We’ve refined our view, tools and analytics. We had a disciplined approach prior to the pandemic, but this has helped us improve the analytics we apply. We have a lot of confidence going into this next year, particularly as we exit the first quarter, that the fluctuations we typically see during the holiday season between consumption and shipments and the restocking comparison will normalize and provide more stability in that read.

Some of that is internal. Our supply chain is operating at a much higher level now because of investments in service and stability. That gives us better insight into our sales.

Thank you.

Our next question comes from the line of Robert Moskow with Credit Suisse. Please proceed with your question.

Hi, thanks. I was hoping you could break down your volume forecast by Consumer versus Flavor Solutions. Because one of the strange dynamics of 2022 is that at a time when consumers are trying to save money, volumes were weak in Consumer, but your Flavors were pretty strong in Flavor Solutions. So I am wondering how you think of 2023 and is there a risk that because the consumer environment is so volatile that it might be very tough to determine what the trade down between foodservice and retail might be?

We are not providing a split between growth rates for Consumer and Flavor Solutions on this call. We would expect higher growth in Flavor Solutions in 2023, driven in part by a higher level of pricing expected in that segment, which alone will drive a higher year-on-year increase. Flavor Solutions itself includes branded foodservice where we have gained significant share in North America with a number of wins. We have had tremendous growth in flavors and snack seasonings and performance nutrition, with strong unit growth through the pandemic and continuing in 2022. We have been slightly capacity-constrained in that area and have significant new capacity coming online in the second quarter, which opens up additional capacity for flavor and spray-dry capability, and conversions to run snack seasonings that should be online in the second quarter. I know that’s a long answer but I hope it covered it.

Okay. Can I ask a follow-up? You talked about the new plant that’s opening in the UK and the double costs involved. Why is it taking so long to get past these dual running costs?

Rob, we are taking a deliberate approach. We have a very large footprint in the UK and the Peterborough plant is a massive facility. We are closing a plant and moving production to a brand-new facility in a difficult environment to close plants for many reasons, so it takes more time. The good news is we are almost out of that after the first quarter. The incremental costs we have talked about are concentrated in the first quarter; after production transfers over the rest of this year, 2024 will be a much cleaner year.

Okay, thank you.

Our next question is from the line of Alexia Howard with Bernstein. Please proceed with your question.

Good morning everyone.

Hi Alexia.

Can we focus in on the Flavor Solutions business? You gave us the three reasons why margins should improve this year. I’m curious about timing on that. How quickly will the pricing kick in and the elimination of the dual running costs happen? A bit on timing, please. Thank you. I have a follow-up.

I wasn’t being overly specific on the dual running costs when I described the expected improvement in Flavor Solutions. On pricing, I don’t want to get overly specific because we’re in active customer conversations and there is commercial tension in those. But we fully expect that we will recover the cumulative inflation we have experienced over the last two years. Our lag on getting caught up is greater in Flavor Solutions than on the consumer side, so it is a meaningful element and we expect that work to be complete early in the year.

A couple of points: inflation is weighted to the front of the year with the first quarter being the highest, impacting both Flavor Solutions and Consumer. Our global operating effectiveness program has had positive activity but the first quarter will have the least impact and it will ramp up rapidly in Q2, Q3 and Q4. The second quarter will be a big inflection point. Flavor Solutions will benefit significantly because many of the inefficiencies we’ve discussed have been in that segment's supply chain.

Great. As a follow-up, the share dynamics in the U.S. herbs and spices that we see in the scanner data look as though you are still losing market share. It doesn’t look like private label anymore; I presume it’s smaller brands. When do you expect that to turn the corner and can you give more color on the dynamics there? Thanks.

Alexia, as we look at our business, the fourth quarter had sequential improvement across the McCormick portfolio and in U.S. herbs and spices. The fourth quarter was probably our best quarter of the year: we saw sequential improvement in sales, units and volume across Q2 to Q4. So we have good momentum going into 2023. We’ve seen a stabilization of our share and expect to improve that over 2023. We won’t project exact share, but we’ll talk more about plans at CAGNY where we’ll go deeper into the opportunities and tactics.

To add context, in Q4 we gained share in hot sauce and mustard and had our fifth consecutive quarter of share growth in recipe mixes. In many international markets we gained share in herbs and spices. When you look at the full picture, where we have had good supply, we have grown market share. A lot of the share loss you see was due to TDP losses earlier in the year; we’ve won some back and expect to continue to do so in 2023.

Very helpful. Thank you very much. I’ll pass it on.

Our next question is from the line of Adam Samuelson with Goldman Sachs. Please proceed with your question.

Good morning everyone.

Good morning Adam.

I wanted to hone in on the operating income guidance and reconcile where you shake out for 2023 versus 2021. You’re at the high end of the guidance range, and it’s $80 million to $90 million lower than last year. Given incentive comp comparisons and pricing recovery, how should we think about absolute dollars for 2023 inclusive of incremental restructuring and the cumulative effect of pricing relative to where profit dollars were two or three years ago? Is this a rebase through COVID or do you expect acceleration beyond 2023 to get the long-term EBIT CAGR back into mid- to high-single digits?

Adam, good question. We put together slides to walk from current guidance to underlying base growth. If you remove discrete items and focus on the underlying base, we see a path back to our long-term profit algorithm by taking out pandemic-era costs. There is a case for acceleration in the future but we need to nail 2023. Our underlying base growth assumptions support strong performance and recovery of pricing allowing us to drive the 7% to 9% operating profit growth we’ve outlined. We feel good about the guidance; it's prudent and we’re confident that the planned programs and cost recoveries support this trajectory.

I’ll add that the guidance is balanced and prudent. Our teams are used to winning and have aggressive business plans. We will do everything we can to not just recover but exceed expectations. We were not able to deliver record results this year and we aim to get back on track.

Thanks. One follow-up: with Flavor Solutions selling into other food companies, do you see any risk of destocking among those customers who may be reducing working capital or facing sluggish consumption?

At this point, no. Our supply chain recovery and the feedback from customers is generally ahead of peers. Many of them remain relatively hand-to-mouth and are still rebuilding inventory at the shelf. In snacking, especially, demand remains very strong.

To add, a lot of our Flavor Solutions sales growth comes from new product and innovation activity for customers as well as winning new customers and share, which factors into how we think about growth.

Okay. That’s helpful. I’ll pass it on.

Our next question is from the line of Chris Growe with Stifel. Please proceed with your question.

Hi, good morning.

Good morning.

I had a question on the U.S. business. Brendan talked about moderating trade down. I wanted to understand whether you attribute that to promotional spending—was that a factor that helped drive that? And would you expect promotional spending to be up in fiscal 2023? I’m trying to square that with the need for more pricing. Can you achieve your price points and also meet the value consumers are seeking?

Promotional activity isn’t all about discounting. Much of our promotional activity is around merchandising—displays, digital partnerships—that have very good ROI and we are positive about them. Brendan will add more.

Chris, as we go into 2023, reinstated promotional spending is focused on driving categories with our customers. The feedback from customers has been welcome because we want to drive better overall growth. You asked if the reinstatement of promotions drove moderation of trade down: it’s a confluence of factors—macro factors like lower gas prices, reinstatement of promotions during the holiday season, and our increased A&P around value messaging, which has driven positive response. We got more aggressive in Q4 for a reason, including focus on value messaging, and we are seeing good results and momentum into 2023.

Thanks. One quick follow-up: inventory moved during the year and you had a big increase last year. Did you build less inventory overall and did inventory move lower in the fourth quarter than expected? Is that the unique factor around the inventory move in the quarter?

We did start making progress on inventory in the fourth quarter, both raw materials and finished goods, which was a focus of our global operating effectiveness program. One output of that program is reduced inventory as you stabilize the supply chain. We have aggressive targets for this year to reduce inventory and improve cash generation to drive debt down.

How about at retail—did retail inventories move lower in the fourth quarter?

No, Chris. Retail inventories were higher entering the holiday season than last year because retailers did a lot of restocking in the fourth quarter of last year. That said, our fiscal year end occurs in the middle of the holiday season and retailer inventories are always high coming into the first quarter; we typically ship below consumption in Q1. We expect normalization after Q1.

Our next question is from the line of Max Gumport with BNP Paribas. Please proceed with your question.

Hi. Thanks for the question. It sounds like Q1 will be pressured due to peak inflation, cost savings ramping, continued COVID-related disruptions in China and a higher tax rate. Can you help give a sense for how dramatically these factors could hold back your first quarter EPS?

Yes. The first quarter will be the most challenging for the reasons you named. First quarter tends to be our smallest quarter and China’s first quarter is typically their biggest because of Chinese New Year, so the COVID impact there will add pressure in Q1. FX is also about a 3% negative year-on-year in Q1. The global operating effectiveness savings ramp in later quarters, so Q1 is the most difficult quarter, but we expect a strong ramp in Q2 and beyond.

Great. Thanks very much. I’ll leave it there.

Our final question today is from the line of Peter Galbo with Bank of America. Please proceed with your question.

Good morning. Thanks for taking the question. Regarding the operating income bridge, the incentive compensation piece is about an 800 basis point headwind as you rebuild that function. How flexible or discretionary is that? If something in the plan goes wrong—China takes longer to reopen or destocking takes longer—can you pull that piece back more to still hit the operating income target, or are you committed to spending that?

Our incentive compensation pays for growth. We fell short of growth in 2022 and therefore incentives were lower in 2022. As we start 2023, we start with the expectation that we will hit our goals. Of course, as we over- or under-achieve, we will adjust incentive compensation as we go through the year.

It’s quite formulaic. The majority of our incentive compensation is based on McCormick profit, which is basically operating profit less a capital charge—our light EVA model—to make sure we are accountable for capital. It focuses a lot on operating profit and a bit on EPS. We pay for growth.

Great. Thanks very much.

I will turn the floor back to Lawrence Kurzius for closing remarks.

Thank you. McCormick is aligned with consumer trends and the rising demand for flavor. In combination with the breadth and reach of our global portfolio and our strategic investments, we have a strong foundation for sustainable growth. We are disciplined in our focus on the right opportunities and investing in our business. We are continuing to drive further growth as we successfully execute on our long-term strategy, actively respond to changing consumer behavior and capitalize on opportunities from our relative strength. We continue to be well positioned for continued success and remain committed to driving long-term value for our shareholders.

Thank you, Lawrence, and thank you to everybody for joining today’s call. If you have any questions regarding the information, please feel free to contact me. This concludes the call for today.