Good morning. This is Faten Freiha, VP of Investor Relations. Thank you for joining today's Third Quarter Earnings Call. To accompany this call, we posted a set of slides on our IR website, ir.mccormick.com. With me this morning are Brendan Foley, President and CEO; Mike Smith, Executive Vice President and CFO; and Marcos Gabriel, Senior Vice President, Global Finance and Capital Markets and Incoming 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 statement on Slide 2 for more information. I will now turn the discussion over to Brendan.

Good morning, everyone, and thank you for joining us. Before we begin reviewing our financial results, I would like to address Hurricane Helene. Our thoughts go out to all those impacted by this devastating storm. We continue to monitor the situation closely. Now moving to our results. Our third-quarter performance is aligned with our expectations, especially as we continue to navigate an evolving and complex consumer landscape. Our results demonstrate the success of our prioritized investments in the areas that we believe will drive the most value and improved unit share trends, drive volume growth and capitalize on our advantaged categories. As we have said, McCormick remains a growth company and our investments in 2024 are yielding results that support our confidence in delivering on our top-tier long-term objectives. We're excited to share our strategic roadmap and building blocks that support these long-term objectives at our upcoming Investor Day. This morning, I will begin my remarks with an overview of our third-quarter results, focusing on the top line drivers. Next, I will provide perspective on consumer trends, highlight some areas of success and the areas that we continue to work on. Mick will then go into more depth on the third-quarter financial results and Marcos will review our 2024 outlook. And finally, before your questions, I will have some closing comments. Turning now to our results on Slide 4. In the third quarter, sales were flat in constant currency, reflecting flat pricing, 1% volume and product mix as well as the impact of our canning divestiture. This quarter, we reached a meaningful milestone by delivering total positive volume growth despite the challenging environment. Our volume trends improved sequentially across both consumer and flavor solutions. Our results to date, coupled with our proven growth plans, fuel our continued confidence in our ability to deliver on the mid to high end of our constant currency sales growth guidance. In our Consumer segment in the Americas, we delivered solid sequential volume improvement for the third consecutive quarter, leading to 1% volume growth. Volume growth reflects our continued focus on accelerating innovation and alignment with consumer trends and expanding distribution. Our pricing reflects the continuation of our price gap management plans to support improved volumes as planned. In EMEA, we continue to drive positive volume growth across our major markets and core categories for the third consecutive quarter. We realized benefits from new product innovation and expanded distribution. In Asia Pacific, outside of China, we delivered strong volume-led sales growth as we continue to benefit from the rollout of our new consumer-preferred packaging for our core spices and seasonings portfolio as well as distribution gains. This performance was tempered by China, slightly more than we had originally expected. As we look ahead to the fourth quarter, we expect the environment in China to remain challenged and this is reflected within our guidance. Marcos will provide more color on this when he covers our outlook for the remainder of the year. Moving to Flavor Solutions. We delivered strong sequential volume improvement, primarily driven by growth in the Americas. In the EMEA, our volume trends were impacted by softness in our QSR customers' volumes. And in Asia Pacific, our results were impacted by the timing of customer promotions. From a profitability perspective, we delivered strong results relative to the prior year, as the third quarter benefited primarily from the timing of investments, which are shifting to the fourth quarter. As we look at the second half of the year, operating income results remained largely in line with our expectations and earnings per share results are slightly ahead due to a discrete tax item benefit. Let me now share our view on the state of the consumer, which has remained similar since we reported our second-quarter results. Overall, consumers are resilient, but remain challenged. They are exhibiting value-seeking behavior making more frequent trips to the grocery store with smaller baskets and shopping just for what they need. They are also focused on reducing waste and stretching their budgets. Foodservice traffic remains soft across most restaurant types, particularly in QSRs. These trends are starting to benefit growth in food at home and this shift is driven by older generations as well as lower income households. Consumers overall continue to cook at home and they are increasingly shopping the perimeter for protein and produce. This further reinforces their demand for flavor and McCormick's categories, included spices and seasonings as well as condiments and sauces. Flavor is not something consumers are willing to sacrifice. Spices and extracts remain the number one center store growth category. From a value perspective, we are seeing several trends. Demand for larger sizes remains elevated. At the same time, there is increased demand for small or trial sizes as well as one-time-use recipe mixes, highlighting that flavor exploration remains important to consumers and our plans need to match that demand with the right product offering. Gen Z, our new and future customers, are also cooking at home. They're interested in seasoning blends that make cooking easier and convenient. Interestingly, they are leaning into higher quality and premium flavor items. We're seeing velocity pick up on our gourmet line, and it's coming from Gen Z as they seek to recreate restaurant-quality meals. As we step back and reflect on all these trends, it reinforces the importance of our consumer-centric mindset, which is present across our entire business. It's at the heart of everything that we do at McCormick. We are strengthening our broad portfolio to meet evolving consumer demands and delighting them with innovation. And we believe we have the right plans in place that are continually informed by what matters most to our consumers and customers. Moving to Slide 5. Let me highlight for the quarter some of the key areas of our success. In our Global Consumer segment, we drove solid unit consumption growth in spices and seasoning across our key markets in the Americas, EMEA and Asia Pacific. In the US, we continue to improve on our competitiveness relative to private label as our volume consumption outpaced private label for spices and seasonings this quarter. This quarter, our grilling portfolio outpaced category growth on unit sales, displays, velocity and distribution. And in the fourth quarter, we are excited to begin the rollout of our new consumer-preferred packaging for Grill Mates, ahead of next year's grilling season. In recipe mixes, we continue to strengthen consumption trends in the Americas, driving both unit and volume share and outpacing private label in the US. Our Cholula line continues to be a significant driver of growth. We are innovating with Cholula recipe mixes, bringing new consumers to the category, particularly with millennials and younger families. In EMEA, recipe mixes were a significant driver of UK volume growth and realized dollar market share gains for two consecutive quarters. In Mustard, we had a strong quarter as we drove both unit and volume share in the Americas. In addition, our unit and volume growth outpaced private label in the US. In Poland, mustard consumption continues to grow and we are realizing unit and dollar market share gains. We made great progress over the last two quarters and are pleased to see that our plans are driving the expected improvement. In Americas Consumer, the declines we previously experienced in the prepared food categories that we participate in like Frozen and Asian, which represent a small part of our portfolio, have now stabilized, and we are seeing improved growth. We continue to make progress on total distribution points. We expanded TDPs and gained TDP share in spices and seasonings, recipe mixes and mustard in the Americas. Finally, in the Americas and EMEA, we drove double-digit consumption growth in e-commerce, outpacing the market. E-commerce was a significant driver of our unit consumption growth for the quarter as consumers continue to seek convenience. In Flavor Solutions, we saw strength in both of our technically insulated high-margin product categories, branded foodservice and flavors. In Americas branded foodservice business, despite softness in the overall foodservice market, we grew volumes and expanded points of distribution across spices and seasonings and condiments. In addition, we are winning hot sauce tabletop share behind new distribution, packaging and promotion. In Flavors, our consumer packaged food customers are seeing some improvement in volumes within their own business in both the Americas and EMEA. In the Americas, our performance with high-growth innovator customers remained strong. We delivered solid growth in Performance Nutrition beverages as well as alcoholic and non-alcoholic beverages, outpacing category growth. Let me now touch on some areas where we're seeing some pressure. In Hot Sauce, we continue to have underlying strength in our base business and strong consumer loyalty. Our share trends remain impacted by a peer that is lapping their own supply chain disruptions. In the Americas, our unit share trends improved sequentially. However, volumes are impacted by mini trial sizes. We are pleased so far with the performance of Frank's minis. Minis are incremental to the category and are driving trial of our new flavors. We expect our innovation, expanded distribution and brand marketing to help improve our trends as we exit 2024. In Flavor Solutions, our volumes were impacted by slower QSR traffic, particularly in EMEA. We have seen this pressure impact our results for several quarters. It's difficult to predict QSR traffic. However, we are collaborating with our customers as they focus on improving their volumes through innovation and value aligned with consumer trends. In Asia Pacific, volume was soft as was impacted by slower QSR traffic outside of China, most notably in Australia and Southeast Asia, where some of our customers remain impacted by geopolitical boycotts. Looking ahead to the fourth quarter, we are excited about the holiday season. With our promotion and innovation plans, we are well-positioned entering this season. We are increasing our merchandising levels, supporting our portfolio with holiday brand marketing campaigns and are expecting a strong holiday season. Before I wrap up, let me reiterate our growth plans on Slide 6, which support our performance year-to-date and will continue to drive our success in 2024 and into 2025. Our base business is strengthening across major markets and core categories. We have several initiatives in flight that will continue to drive this performance and differentiation. And I look forward to sharing more details on these plans at our upcoming Investor Day. To wrap up, let me share three key points. The long-term trends that fuel our categories, consumer interest in healthy, flavorful cooking, flavor exploration and trusted brands continue to be strong. And importantly, consumer interest in cooking remains strong. We are dedicated to accelerating our volume trends. We refine and adapt our plans as needed and are prioritizing our investments to drive impactful results and return to sustainable volume-led growth. You should continue to expect improvement as we close the year and into 2025 and beyond. We believe the execution of our growth plans will be a win for consumers, customers, our categories and McCormick, which will continue to differentiate and strengthen our leadership. Now over to Mike.

Thank you, Brendan, and good morning, everyone. Today's earnings call is bittersweet for me as it marks my last one as CFO of this incredible company before I retire. Reflecting on my tenure of more than three decades, I am filled with immense pride and gratitude for our entire team and appreciate all of their contributions and efforts over the years. Lastly, I would like to thank all of you, our sell-side analysts and investors, for your time and engagement over the years. Your thoughtful questions and insights have been invaluable to me, and they reflect your commitment to understanding our business and long-term strategy. Now let's move to our results for the third quarter. Starting on Slide 8, our top line sales were comparable to the third quarter of last year, including the impact of the canning divestiture and reflect 1% volume growth, partially offset by pricing. In our Consumer segment, sales were comparable with the prior year as the 1% impact of pricing investments was offset by 1% volume growth, reflecting solid sequential improvement from the second quarter. On Slide 9, consumer sales in the Americas were comparable with the prior year. This reflects 1% volume growth offset by pricing investments and this volume growth was driven by our core categories. We continue to take a surgical and data-driven approach to managing price gaps and our investments are still expected to impact about 15% of our Americas consumer segment. In the EMEA, constant currency consumer sales increased 3%, driven by volumes of 4%, partially offset by pricing of 1%. Sales growth was broad-based across product categories in our major markets. We are pleased with the volume growth we delivered in EMEA and expect the momentum to continue through 2024. Constant currency consumer sales in the APAC region were flat, primarily due to the macro environment in China. Outside of China, we delivered volume-led growth that was broad-based across categories and markets. Turning to our Flavor Solutions segment on Slide 12. Third quarter constant currency sales were comparable to the prior year, reflecting a contribution from price, which was fully offset by a 1% impact of the divestiture of the canning business. In the Americas, Flavor Solutions constant currency sales increased 3%, reflecting a 1% contribution from price and a 2% increase in volume, driven by the timing of customer activities as well as strength in branded foodservice. In the EMEA, constant currency sales decreased by 9%, including a 3% impact from the divestiture of the canning business, lower volume and product mix of 5%, reflecting the impact of QSR customers volumes and lower price of 1%. In the APAC region, Flavor Solutions sales were comparable in constant currency with minimal contributions from both price and volume. As Brendan mentioned, our volumes in APAC were impacted by slower QSR traffic outside of China, most notably in Australia and Southeast Asia, where some of our customers remain impacted by geopolitical boycotts. This was offset by growth in China due to QSR customer promotions. As seen on Slide 16, gross profit margin expanded by 170 basis points in the third quarter versus the year-ago period, driven primarily by favorable mix within our Flavor Solutions segment and the impact of our comprehensive continuous improvement program or CCI. Now moving to Slide 17. Selling, general and administrative expenses or SG&A decreased relative to the third quarter of last year, driven by lower distribution costs generated by our CCI program and lower employee-related benefit expenses. As a percentage of net sales, SG&A decreased 60 basis points. Adjusted operating income increased 15% as compared to the third quarter of 2023 or 16% in constant currency, with gross margin expansion and lower SG&A expenses both contributing. Operating profit benefited from a shift in the timing of our investments, which now will be reflected in our fourth quarter results. Marcos will address this shortly when he reviews our outlook for the remainder of the year. Adjusted operating income in the Consumer segment increased 8% with minimal impact from currency. In Flavor Solutions, adjusted operating income increased 31% or 32% in constant currency, reflecting our continued focus on restoring Flavor Solutions profitability. Our performance this quarter reflects our commitment to increase our profit realization and positions us well to make continued investments to fuel top line growth. And touching on tax. Our third-quarter adjusted effective tax rate was 16.8% compared to 21.4% in the year-ago period. The tax rate benefited from the resolution of an outstanding tax matter dating back several years as well as our state sales mix. As a result, we now expect our tax rate to be approximately 21% for the year, which is slightly better than the 22% rate we had previously provided and reflects the discrete items I just discussed. Our income from unconsolidated operations in the third quarter reflects strong performance in our largest joint venture, McCormick de Mexico. We are the market leader with our McCormick branded mayonnaise, marmalades and mustard product lines in Mexico and the business continues to contribute meaningfully to our net income and operating cash flow results. It is important to note that in the fourth quarter, we will be lapping strong results in the prior year period for McCormick de Mexico. At the bottom line, as shown on Slide 20, third-quarter 2024 adjusted earnings per share was $0.83 as compared to $0.65 for the year-ago period. This increase was primarily due to our increased operating profit as well as the discrete tax benefits that I mentioned earlier. With that, let me turn the call over to Marcos, who will cover our balance sheet and outlook for 2024.

Thanks, Mike. On Slide 22, we'll summarize highlights for our cash flow and the quarter-end balance sheet. Through the first nine months of 2024, our cash flow from operations was $463 million compared to $660 million in 2023. The benefit from the increasing earnings year-over-year was more than offset by the impact of cash used for working capital, increased incentive compensation payments and timing of cash tax payments. We returned $338 million of cash to shareholders through dividends and used $189 million for capital expenditures. As a reminder, capital expenditures include projects to increase capacity and capabilities to meet growing demand, advance our digital transformation and optimize our cost structure. Our priority remains to have a balanced use of cash, funding investments to drive growth, return a significant portion to our shareholders through dividends and paying down debt. Importantly, we remain committed to a strong investment-grade rating and expect our leverage ratio to be below three times for 2024 with another year of strong cash flow driven by profit and working capital initiatives. Now turning to our 2024 financial outlook on Slide 23. Our outlook continues to reflect our prioritized investments in key categories to strengthen volume trends and drive long-term sustainable growth, while appreciating the uncertainty of the consumer environment. Turning to the details. First, currency rates are now expected to have a minimal impact on sales, adjusted operating income and adjusted earnings per share, a change from the previously anticipated unfavorable impact of approximately 1%. At the top line, we continue to expect constant currency net sales to range between a decline of 1% to growth of 1% and anticipate our results will be at the mid to high end of our guidance range. In terms of pricing, we anticipate about a 1% increase for the year, similar to what we said last quarter. In China, our food away from home business, which is included in APAC consumer, continues to be impacted by lower demand. And we now expect China consumer sales to be down slightly compared to 2023 for the full year, while we presently expect it to be flat, and this is reflected within our guidance. While we recognize there has been continued weak demand in China, we continue to believe in the long-term trajectory of the China business. Moving to adjusted operating income. We continue to expect 4% to 6% constant currency growth. Our 2024 gross margin is projected to range between 50 basis points to 100 basis points higher than 2023. This gross margin expansion reflects favorable impacts from pricing, product mix and cost savings from the CCI and GOE programs, partially offset by the anticipated impact of a low single-digit increase in cost inflation and our increased investments. In addition to our gross margin expansion, SG&A benefits from cost savings will be partially offset by investments to drive volume growth, including brand marketing. For the year, we continue to expect our brand marketing spend to increase high single digits, reflecting a double-digit increase in investment partially offset by CCI savings. In terms of tax, we now expect our tax rate to be approximately 21% for the year, which is slightly better than the 22% rate we had previously provided and reflects the benefit of discrete items Mike mentioned earlier. We continue to expect mid-teens increase in our income from unconsolidated operations, reflecting the strong performance we anticipate in McCormick de Mexico for the year. To summarize, our 2024 adjusted earnings per share projection of $2.85 to $2.90 reflects a 5% to 7% increase compared to 2023 and we anticipate our results will be close to the high end of the range as we benefit from the improved tax rate. As we head into the fourth quarter, let me summarize some of the puts and takes to consider. We expect to drive volume growth in both Consumer and Flavor Solutions and sequential improvement from the third quarter. Pricing is expected to have a slight negative impact with the price investments in our Consumer segment, only partially offset by Flavor Solutions. We expect gross margins to sequentially improve from the third quarter and to be flat relative to the prior year, driven by price a comparable year-over-year Flavor Solutions product mix and planned supply chain investments to support growth. We expect our investments in brand marketing to ramp sequentially from the third quarter and anticipate an increase in SG&A year-over-year related to IT and digital transformation investments shifting into the fourth quarter and I will talk more about these investments at our upcoming Investor Day. As a result, our operating profit will likely be comparable with the prior year due mostly to the time of our investment. However, this remained largely in line with how we had expected our operating profit to perform for the second half of the year. As Brendan noted, we continue to prioritize our investments to drive impactful results. Our return to volume light growth underscores that we are moving in the right direction and we remain confident in the underlying fundamentals of our business and delivering on our 2024 financial outlook and long-term objectives over time.

Thank you, Marcos. Before moving to Q&A, I would like to close with our key takeaways on Slide 24. We are pleased with our results for the quarter, especially as it marks an inflection point for total company volumes turning positive. This demonstrates that we are investing in the areas that drive the most value and reinforces our confidence in our plans and long-term objectives. We continue to execute on our strategic roadmap with speed and agility and in alignment with consumer trends, further capitalizing on our attractive categories across segments. In addition, our plans are yielding the expected results. We also continued to expand margins and manage our costs as we are investing in the business. These improvements are led by our favorable product mix and cost savings programs. Our results in the third quarter benefited from the timing of these investments and we continue to expect our second half operating profit results to be in line with our expectations. Our year-to-date performance coupled with our growth plans give us confidence in achieving the mid to high end of our projected constant currency sales growth for 2024. Finally, I want to recognize all McCormick employees for their dedication and contributions, particularly as we navigate this complex environment and reiterate my confidence that together we will continue to drive differentiated results and shareholder value. Now for your questions.

Thank you. We'll now be conducting a question-and-answer session. Our first question today comes from Andrew Lazar with Barclays. Please proceed with your questions.

Great. Good morning, everybody.

Good morning, Andrew.

Good morning.

Brendan, it's certainly nice to see the continued sequential volume improvement in consumer, especially in the Americas. I think pricing in consumer was a little less than a point and that was pretty close to where expectations were. But I'm curious if you're seeing the expected magnitude of volume lift right from some of these pricing actions and investments that you've made? And I guess, if you are, would there be a reason maybe to lean in even a little bit further right to keep the momentum going, given you've got some flexibility this year from things like tax rate and some below the line items?

Yes. Thanks, Andrew. Let me just maybe lead in with a couple of opening thoughts here. I mean, we do continue to make the right progress, and we're on track with where we expected to be. We turned the corner in our growing volume, which was obviously as we started the year, our goal in the second half of the year. I think importantly, we're outperforming private label and volume across all of our core categories and I do like the progress that we're making in Flavor Solutions especially in this last quarter in the Americas region. Having said that, we're never going to be satisfied. So I think that we still see an opportunity to continue strengthening our plans and execution in the back, the rest of '24 going into '25. But our programs are working and we believe they're delivering the growth that we thought that they would. Just to add context on all those levers that on top of that price gap management that you referred to that we think are really driving our business. It is increased investment in brand marketing and A&P just across all of our core categories. We've launched innovation that's really contributed meaningfully to our performance. And that's been an exciting part because that's a lot more innovation that we launched in 2022 and 2023 which was an important goal that we had here in '24. We're expanding distribution in our core categories. I think we had a really good quarter there in terms of performance as we expected it would start to build. And in terms of pricing, we maintain that price gap management program that we've talked about in the third quarter. It will continue to play out as expected in the fourth quarter too, but it's only a portion of our strategy, but it is yielding I think the results that we expected from that. And I just would add, we're also operating in great categories. So let's not forget that that's also part of the, I think, the strength behind our businesses that we do operate in really strong categories. I do want to say broadly at a global level, we also saw really good performance across the consumer segment at a global level, definitely in EMEA, Australia, Southeast Asia, we just saw broadly good performance, including our spices and seasonings category growing volume across the entire consumer segment for McCormick. Having said all of that, I think our guidance is appropriate, given the dynamic consumer environment. So we're confident in our plans and we will be at that mid to high end of our top line range. But we also have to really, I think, make sure that we reflect what's going on in the environment right now. Hey, China is slightly worse than we expected and it does remain challenging. So we're factoring that into our thinking. QSR trends continue to be a bit uncertain. And so that's kind of factored into our thinking too. And as we go into the fourth quarter, as all of you know, this is the biggest part of the year for us. So we want to make sure that we're balanced and we deliver on our expectations, but it is a big quarter for us.

And that's helpful. Thank you. And then quick one is, I think you mentioned that your sort of prepared foods business in the Americas, which had been weaker was stabilizing and that trends in the sales that you make to other sort of packaged food manufacturers were starting to look a bit better, I think you mentioned. So I guess as it relates to the sort of the industry as a whole right where the big debate is when do we start to see some sort of better volume trends recover and whatnot across the space. Your view into that based on some of the businesses that you've got seemed to suggest maybe that's sort of starting to happen, albeit gradually. I'm curious to get your sense on your view into that aspect. Thank you.

Yes. I think and that certainly bridges off of our second quarter call. More or less, our customer plans were performing as expected, which was, we were expecting some improvement compared to the second quarter. And so we believe that largely did start to play out. Our Flavors business in the Americas region, we saw good results across those areas that we consider like high innovator growth customers. So that plays out in categories like Performance Nutrition or alcoholic beverages or nonalcoholic beverages, but we believe we outperformed the category broadly there. And then we did see strength in our branded foodservice business. And that also played into, I think, some of the improvement that we're seeing broadly across Flavor Solutions, the segment. Having said that, QSR traffic was weak and slower than probably we would have expected, but that's speaking back again to that level of uncertainty. However, having said that, we do see our customers being responsive to what's going on in the market and trying to drive volume growth etc. So we do think as we go into Q4, that trend should continue broadly that we see sequential improvement from the third quarter.

Thanks so much and see you in a couple of weeks.

Great.

Our next question is from the line of Ken Goldman with JPMorgan.

Hi and Mike thanks again for everything and we appreciate all your help over the years. Two questions, if I can. Number one, I don't think you quantified, forgive me if you did, the timing of the activities of your customers, how much that benefited 3Q. I think it was largely in Americas Flavor Solutions, but just wanted to clarify that. And you did say that shift will be reflected in 4Q results. Just making sure we should kind of model all of that reversing in 4Q and then I have a follow-up.

Yes, this is Mike. Yes, as we said in the last call, there's a bit of a positive that was going to come into the third quarter from Q2 and that happened. It wasn't the biggest you know Brendan talked about the really good Flavor Solutions underlying performance and Branded Foodservice and other areas. But that did have a positive impact in Q3, which will kind of normalize in Q4 as we think about year-on-year comparisons.

Okay. For my follow-up, I realize it's early to discuss 2025, but I'd like to ask anyway. The main question is whether there's any indication at this point that you won't meet your algorithm expectations. I'm asking this because you've mentioned volume growth for the next year and reiterated that recently. You've also stated that your investments are at the right level, so I don't anticipate those increasing. You consistently have strong CCI. I'm trying to gauge if there are any concerns at this time. Of course, there are factors like hot sauce, QSRs, and the situation in China that could pose challenges, but there are also positive developments. I just want to get your perspective on that. Additionally, while you're answering, could you clarify what the underlying EPS algorithm is, excluding M&A? Some years ago, you mentioned that M&A and share repurchases typically contribute around 2% to EPS in an average year, but I'm uncertain how that’s currently broken down. Thank you.

Well, that last follow-up question, I like to have maybe a few buried in there. So I'm going to do my best to remember everything, but I'm going to ask Mike and Marcos to help me out with this. Yes, we're not prepared to talk about '25 guidance at this point. So although in Investor Day, we feel like we'll share more context about how we're looking at the future and how we think about overall performance and what will drive our long-term volume growth, which is something that we've historically done. And so we'll spend some time talking about our view into what will be those drivers as we look from a long-term perspective. And when I think about what's going well in '24 and why should it continue in '25, it's just we believe that these are the right programs and the right things to do in our business. And these are things that we believe is part of just doing a good job and delivering growth within our categories. Mike, do you want to add anything else on the EPS question?

Yes, I would just add too, as we, if you go back to guidance early or late in January in CAGNY, the things we talked about making investments this year to really drive the second half volume growth, which we're attaining. We're happy with the performance, not totally satisfied, as Brendan said. We'd love to do more, but build that momentum into 2025. There's uncertainty in the economic market, as there always is, but we feel like we're well positioned. And I think you'll hear more from Investor Day, which would be in three weeks.

Yes, that's right.

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

Hey, guys. Good morning.

Good morning, Peter.

Good morning.

Thanks for taking the questions. And Mike thanks again. Maybe to follow-up on Ken's question just around this year. The gross margin guidance, I think, we're getting questions this morning. Just you're up 125 basis points year-to-date. Obviously, you didn't move the gross margin guidance higher. And maybe there's some timing factors there. But just trying to understand if there's maybe a bit of conservatism in there as well and why that rate of change just wouldn't kind of continue through the fourth quarter.

Yes, if you think about it and some perspective here, we talked about this year in half a lot, first half, second half. And because, as you know, a quarter can such a small unit of measure, sometimes you get some moves. But so we try to keep it pretty high level in half this year. And we've seen really good sequential improvement first half into second half. And actually, by quarter, it's gone that way too. We see the fourth quarter actually higher gross margin than the third quarter, which is our normal trend. So we're really happy with that. Year-on-year, you always get a little mix sometimes that happens. We talk about normalizing mix versus last year in the Flavor Solutions side, not necessarily from third to fourth quarter, but from fourth quarter of this year to last year. Marcos highlighted some of the supply chain investments and I'll let him talk about that in a second. And there's a slight pricing quarter year-on-year comparison there that puts a little bit of pressure, not a whole lot. But why don't you talk a little bit about that?

Yes. So you think about the gross margin and the puts and takes between Q3 and Q4. We're thinking about Q4 as more of a normalized Flavor Solutions product mix than Q3. So we think about it that way. We're also thinking about some of the supply chain investments that we had planned for the year around building capacity, particularly around the heat platform that we have continued to invest in the platform will be impacting Q4 more so than the rest of the year. So that is an impact there. And also, I would say that in a little of pricing, we're going to have a slightly negative pricing in consumer going into Q4 offset by partially offset by Flavor Solutions, but there's going to be a little bit of that negative impact through pricing as we continue to invest back in the business to drive top line growth. So there are some elements between Q3 and Q4. As Mike said, some puts and takes between the two quarters. I think if you look at the second half profitability it's very much in line with what we expected before.

And you'll hear us today talk about Investor Day about 10 times, but this heat investments that we're making in supply chain, I think you'll be excited to see the potential, as we've talked about in the past on heat, but it's really driving a lot of our growth, which is great.

Okay. Great. Thanks for that. And then maybe just pivoting. Brendan, I wanted to ask you on China specifically. I think maybe you spent some time there earlier this year and the market at least seems to be rewarding China exposed stocks in the past week or so on the back of some of the macro there. Just curious kind of get your perspectives on if there is some kind of stimulus policy in China, how you're thinking about improved consumer demand or improved consumer psyche there. Any perspectives would be helpful. Thanks very much.

Sure, Peter. On China, we do expect the environment there. It's going to remain broadly challenged. And we do expect our business probably to be down slightly in '24. So just for the sake of clarity, I mean, that's the outlook that we're looking at for the balance of our year. But when you reference, I think, this latest news on stimulus, I'm just not in a position to sort of predict the impact of that. I will say though in previous actions that have been taken in terms of in the country regarding stimulus, I don't know that they've necessarily had a material impact on our sort of the consumption in our business. And so at this moment, right now, we believe that they'll just continue to make sequentially good progress. It's just not the speed we thought it might happen. And by the way, we didn't plan on a lot, I think, this year in China to begin with. So it's just a little bit, it's more muted than we expected. And I think given the latest economic news out of the country, we're still waiting to see what kind of impact that might have.

Great. Thank you.

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

Good morning, everyone.

Good morning.

Good morning.

Hi. So can I ask about the margin recovery in Flavor Solutions. I think you mentioned that it may have been driven partially by product mix. I'm just wondering how much more runway there is for continued improvement on that side and specifically what the mix driver was?

Yes, Alexia. You think about our long-term journey on Flavor Solutions and we've talked about portfolio migration in the past and more recently. And as you think about the things that are higher margin within that portfolio, Branded Foodservice, as Brendan mentioned, had a really good quarter gaining share, driving growth some of the categories within flavors, which we're gaining share in Performance Nutrition and things like that again lean to the higher margin side of things. So it's a little indication of a proof point of our vision to move these margins higher as we migrate the portfolio. Considering with the CCI, as someone mentioned CCI before again another bedrock. We've taken you know we approved Flavor Solutions margins in the last two years through our CCI and our global operating effectiveness program, continue that CCI journey there. We'll talk about that more at Investor Day too. So, yes, I think we're very positive on Flavor Solutions longer term. Quarter-to-quarter, it's going to, we've talked about this business sometimes being lumpy. I think we've got to come up with another word since I'll be leaving, but volatile. But again, there is a room for margin improvement here.

And also just add to that, Mike, for me as we continue to grow the business, we'll see leverage coming through the P&L and that is also going to impact our margins going forward.

Great. Thank you. And then just a follow-up. You mentioned Branded Foodservice being a big driver of the margin improvement on the Flavor Solutions side. Is that because traffic is improving in the quick service restaurants as their value menus are picking up? Or is it something different that's happening? I think you mentioned share gains? Just trying to get a flavor for what's happening on the Branded Foodservice side and what's driving that? Thank you.

Alexia, to give you a flavor of that, just to repeat the pun a little bit. The drivers on Branded Foodservice have less to do with traffic trends. In fact, we see them quite subdued still at this point in time, and they have been for the last even in the second quarter when we reported, we saw just depressed trends from a traffic perspective in most sort of segments within foodservice. The driver of our growth seems to be or it is gaining share, gaining more tabletop placements on things like Frank's RedHot. And just broadly, I think winning in the marketplace with our full platform of both spices and seasonings and also condiments and sauces. And so we like the programs that we drive and that we run. And often what you'll see, I think, in that business is we're doing a lot of limited time offers with our brands. So brands like Cholula or Frank's RedHot tend to be brands that we've seen operators like to use as leverage as ways of driving interest and excitement on their menu because those are obviously flavors that are quite appealing to consumers. And so we're seeing that part of our Branded Foodservice business pick up even a little bit more because we've been running a lot more of those types of programs and promotions with our customer base. So it's really doing well in a tough marketplace, I think, is broadly the answer I would give.

Hey, thanks for the question. Just to follow-up on Flavor Solutions margin. So you had a very strong quarter, up 300 basis points year-over-year. I think it's the highest margin we've seen for that segment since the pandemic started. And by our math and the few assumptions we're making, it would seem like the guidance for the full year implies you have a pretty big step back in 4Q in Flavor Solutions margins. It sounds like product mix is one headwind you're seeing on the horizon, although it wasn't clear to me if you're saying product mix was abnormal in 4Q '23 and it's a tough compare or abnormal in 3Q '24. I mean you take a step back towards a more normal mix in 4Q '24. But I'm curious if there's any other factors you're seeing on the horizon? Or this is really just some conservatism for the volatility and lumpiness of the segment? Thanks.

Thanks. Yes, I'd say it's more balanced, honestly. I mean again quarter-to-quarter, you're going to get some variability here. If you look back at the fourth quarter last year, as I mentioned before, the kind of compare and mix, it's normalizing. Supply chain investments, I think, honestly, if you think about it, supply chain investments, the things we're doing on heat, Marcos talked about, impact Flavor Solutions. It's a smaller sales base too, so you probably get more of a gross margin impact. But for the year, going back to your comment, we're on plan. We're happy with the margin improvement there.

Overall, our operating profit margin is expected to improve for the full year compared to last year. We will continue to see sequential improvements in our operating margin. We have increased margins by 200 basis points in 2023 compared to 2022, and we anticipate this trend will drive our operating margin up for the full year as we had previously planned.

Great. Thanks. And then turning to hot sauce in the US. So it sounds like it remains a challenge. You're still seeing pressure from peers' trial size package offerings. It sounds like also that you're pleased with the initial reaction to your own trial size packages. But can you just give us an update on what you're seeing there? What you expect from your action plans over the coming quarters? Thanks very much. I'll leave it there.

Yes. Max, yes, thank you for the question on hot sauce. Hot sauce is an attractive category. There's new competition always entering the category. So that's something that we sort of deal with all the time. And but we as I said in the prepared remarks, we really do like the underlying health of our base business and just continued strong consumer loyalty. And this is also part of our portfolio that's also receiving a fair amount of increased investment. But there is one thing that's really, I think, impacting from a share perspective, just two particular things going on in the marketplace. A peer of ours is lapping a big supply chain constraint from the prior year, which hasn't affected our business as much, but definitely affect theirs. And so we're seeing that volume return back under their label. But also, we're seeing a lot of surge in unit volume from these mini trial sizes, which we were able to participate in or begin to participate in the third quarter. Our units are holding up well in this category too. So there is a fair amount of noise going on in the hot sauce category. And so when we look at those minis, just to give you some more perspective around that, we're seeing a lot of pickup in velocity. What it's doing is it's helping us drive trial on new flavors. I think we have sriracha in there, and we also have a creamy buffalo sauce. Both were super good. But at a dollar, these are really low price points for consumers to just really, it lowers the barrier to trial. And so we've seen a nice pickup in velocity on those mini trial sizes and expect that obviously to be a positive part of our portfolio or that brand assortment that we'll have moving forward. I also do want to draw attention to. We have strong acceptance on our overall innovation like our Frank's RedHot Squeeze products that are coming out, Frank's Dill Pickle Hot Sauce. These are items from an innovation perspective and then kind of rolling out in the market in the back half of this year and we like the performance that we've seen there. So we'll continue to work through that. We believe we'll have better performance as we move towards the end of 2024 sequentially improved versus the third quarter. But this is an area that we get a lot of attention to and it's an exciting area in the store.

Thanks very much. Very helpful.

The next question is from the line of Steve Powers with Deutsche Bank. Please proceed with your question.

Yes, hi, good morning.

Good morning, Steve.

Just the first question on the planned ramp in marketing and advertising support that you called out and that's implied in the fourth quarter guidance. I'm curious as to sort of how much of that is just more intense programming around holidays and sort of specific to stimulating 4Q demand versus maybe more everyday programming that has maybe a more durable ROI in '25?

Well, when you think about the fourth quarter and our posture walking into the fourth quarter, I think maybe a good way to think about it is, we still have the same level of programs and activity that's been driving our business results. And we expect that will continue in its strength going into the fourth quarter. So we're not pulling back or anything like that. But we like the progress and the results that we're getting across the portfolio with those investments and those plans and programs. It's also our big holiday season quarter. And we really do believe we have very strong holiday plan setup with our customers. And so this is an area that we expect to have really good performance in the holiday. And so that obviously is a tick up when you think about it sequentially from the third quarter and that's something to be expected.

But some of this, as you mentioned, every day we talked about Frank's RedHot Sauce early in the year turning that on every day, so that's a change we made earlier this year.

Yes, that's right.

Thank you. This is the end of the question-and-answer session. I will now turn the floor back to management for closing remarks.

Thank you, everyone, for your questions and for your participation today. We appreciate your continued support and look forward to speaking with you during our next earnings call.

Thank you and thanks to all for joining today's call. If you have any further questions regarding today's information, please feel free to contact me. That concludes our conference call for this morning.