Good morning. This is Joyce Brooks, Vice President of Investor Relations. Thank you for joining today's call for a discussion of McCormick's Fourth Quarter and Fiscal Year 2015 Financial Results and our Outlook for 2016. To accompany our call, we've posted a set of slides at ir.mccormick.com. At this time, all participants are in a listen-only mode. Following our remarks, we will begin a question-and-answer session. [Operator Instructions] With me this morning are Alan Wilson, Chairman and CEO; Lawrence Kurzius, President and Chief Operating Officer; Gordon Stetz, Executive Vice President and CFO; and Mike Smith, Senior Vice President, Corporate Finance. During our remarks, we will refer to non-GAAP financial measures. These include adjusted operating income and adjusted earnings per share that exclude the impact of special charges as well as information in constant currency. Reconciliations to the GAAP results are included in this morning's press release and slides. As a reminder, 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 as a result of new information, future events, or other factors. As seen on slide two, our forward-looking statement also provides information on risk factors that could affect our financial results. It's now my pleasure to turn the discussions over to Alan.

Thank you, Joyce. Good morning, everyone, and thanks for joining us. As many of you know, we announced back in early December that effective February 1, I'll be transitioning to the role of Executive Chairman and Lawrence will be promoted to President and CEO. This is the next step in a well-planned succession that we, together with our board, take a lot of pride in at McCormick. I am pleased to be transitioning from my role as CEO at this time. One of my conditions in stepping down was to have the company in great shape with strong financial performance and forward momentum. With our 2015 results and accomplishments and a bullish outlook for 2016, I am very excited about our prospects. Our success is being driven by a clear strategy for growth, a great board and leadership team, and more than 10,000 highly engaged McCormick employees. I want to recognize and thank our employees around the world for their dedication, efforts and achievements. On a personal note, I've enjoyed my many interactions with investors and analysts during my time as CEO at conferences and one-on-one meetings and other events. While the main focus of these discussions was your questions about McCormick, I've gotten just as much out of our time together receiving feedback and gaining industry insights that helped to shape our strategy and message. I want to let you know how much I've appreciated your support and perspective. As I turn it over to Lawrence, I want to assure you that I'm confident in his knowledge, experience and ability to lead McCormick into the next period of growth as we continue to build shareholder value. Lawrence?

Thank you, Alan, for those remarks and for your confidence. On behalf of McCormick shareholders and employees, I want to recognize Alan for his outstanding leadership as CEO of this great company. During your time as CEO, we've grown sales by $1 billion to $4.3 billion, completed 11 acquisitions, and expanded our geographic presence taking our percentage of sales in emerging markets to 17% from 7%. Since 2007, we have doubled our brand marketing expense, invested in R&D and consumer analytics, and created fuel for growth with nearly $450 million in cost savings led by your Comprehensive Continuous Improvement program that you and Gordon established. Cash flow from operations is now nearly $600 million, up from $225 million in 2007. The stock price has more than doubled. And our quarterly dividend is now $0.43 per share, up from $0.20 per share. This is an enviable track record. Congratulations, and we look forward to your continued participation as Executive Chairman. In other leadership news, effective January 1, Malcolm Swift was named President, Global Industrial Segment and McCormick International, adding responsibility for China to his role. Brendan Foley assumed responsibility for the strategic leadership of our Consumer business from me and is named President, Global Consumer Segment and North America. In these roles reporting to me, Brendan and Malcolm will set the strategic and operational goals for our Consumer and Industrial businesses, respectively, as well as assess performance of the segment leaders in each geographic region against these goals. In addition, Brendan will have geographic responsibility for our North American markets and Malcolm for our international markets. Let's move next to fourth quarter performance. Financial results for this quarter demonstrated that consumer demand for flavor is strong and on the rise and that McCormick has the strategies and the team to drive…

Thanks, Lawrence, and good morning, everyone. I want to take a moment with McCormick's analysts and investors on the call to also recognize Alan for his strong leadership, his friendship and his accomplishments as CEO. It's been an honor and a privilege to be CFO during his tenure and to partner with Alan and the entire executive team, steering our strategy and organization and delivering high performance. And Lawrence, I'm looking forward to working with you when you step into this role on February 1, and that's this Monday in case you needed a reminder. Lawrence shared some initial remarks on our fourth quarter results, and we provided some financial details in this morning's press release and our accompanying slides. Given this background, I'll move through my remarks on the quarter quickly, make a few additional points and then finish with the details of our 2016 outlook. On a constant currency basis, the underlying growth in sales was a step-up from what we have seen year-to-date with an 8% increase that included 3% added by acquisitions. We had a full impact this quarter from Brand Aromatics and Drogheria & Alimentari and from Stubb's which was completed towards the end of the quarter. Slide 16 shows that the base business growth for both the consumer and industrial segments was driven mainly by volume, the result of our product innovation, increased brand marketing, expanded distribution, and regional presence and other business-building work with our customers. In the consumer segment, we had 3% constant currency sales growth in the Americas with about a one-third of the increase from Stubb's. Base business sales growth in this region was led by higher U.S. sales of spices and seasonings including Grill Mates and our Lawry's brand, as well as gourmet items and Hispanic products. We had…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from the line of Alexia Howard with Bernstein. Please proceed with your question.

Hi, everyone.

Good morning.

Good morning.

Good morning, Alexia.

Hello there. So can I ask on the U.S. Consumer business? It sounds as though it's on a better trajectory in terms of market share. Does that mean that those smaller brands that have been plaguing you for the last 18 months or so are kind of now, I guess, stabilizing or actually going back? I just want to hear about how things are going on a category management front. Thank you.

All right. Thank you, Alexia. We think we're making great progress with the improvement actions that we started in the early part of 2014 to build brand equity, accelerate innovation, and to win at retail. We really think that we've gotten a good handle on this. We have worked with our leading customers with our new tools on both category management, assortment management, and pricing management. And we think that we've made a great deal of progress and really have some positive momentum building in this part of our business. In many of the subcomponents of the category, we're clearly gaining share and with many of the individual customers, we're gaining share as well. So we think we turned the corner on the problem and are in a position to build from a base of strength that's been established by some of the heavy lifting done over the last two years.

Great. And then as a quick follow-up, it looked as though you had very good net price realization on your U.S. Consumer business this time. I'm assuming that was a positive mix shift with less pressure from the world markets season brand this time around. And yet the profits were only up modestly and gross margin didn't move too much. Were there other offsets in there that put pressure on the performance this time around? Thank you. And I'll pass it on.

Yes. I mean, there was no pricing again in the U.S. business that we took this year. So part of it was mix, part of it was some of the noise in the data associated with some of the actions we took with the weighting of some of our products. But, generally, we're in a position, as Lawrence said, to be able to execute pricing in that business as we've mentioned in our conference call. We had some acquisition-related cost in the U.S. Consumer side of things related to Stubb's. So some of the profit realization was impacted by that. And in total, the gross margin improved. We are continuing to spend up against our brand. You saw the increase in brand marketing of $9 million in the quarter. That's pretty substantial. So we think that's important as well to build the business for the future. So that also was impactful on the quarter in terms of profit realization.

Great. Thank you very much and congratulations on the CEO transition. Looking forward to working with you, and great working with you in the past, Alan.

Thank you.

Thank you.

Our next question is from the line Robert Moskow of Credit Suisse. Please go ahead with your question.

Hi. Thank you.

Good morning, Rob.

It's really good to see the progress in North America, but you did say that you're going to initiate some pricing for 2016. I think you said very low single-digit across. Can you give us a little more color on what parts of the business you're going to implement that pricing on? And also talk about – a lot of grocers, I think, are worried more about deflation and investors are worried about it, too. You seem to still have inflation in your system. How will your base pricing actions be in relation to competition? And then also private label, do you expect your competition in private label to also increase by the same amount? Are they experiencing the same kind of inflation on packaging and materials that you're experiencing? Thanks.

Sure, Rob. First of all, we have not taken any pricing action in the U.S. for the last two years while we address some of the fundamental challenges in that part of our business. But as we have worked with the price elasticity tools and have been able to model the category more robustly, we've identified many areas where there are opportunities for us to adjust our pricing. The price increase that we've planned in our U.S. business has really been worked through at quite a granular level on an item-by-item basis. Some items are moving down as well as some items moving up, but the net increase will be in the 1% to 2% range. This has already been taken to our customers, so this is out in the field right now. And we've gotten really no meaningful pushback on it at all. Our basket of commodities is different than the basket of commodities than most of our peer companies. And there's good cost justification for the increase that we're taking. It's really not around packaging. Packaging is actually kind of in a bit of a deflationary mode. It's more around some of our more iconic raw material. And we believe that the cost pressures around those iconic raw materials, if anything, we're better positioned than our direct competitors on those items due to our global sourcing capability. So our competitors would be feeling that same pressure as well.

That's helpful. And...

Rob, this is Mike Smith. We have seen our competitors take pricing already in some cases, and we do think private label will move also.

Very helpful. Thank you, guys.

Thank you. Our next question is from the line of Akshay Jagdale with Jefferies. Please go ahead with your question.

Good morning, and congratulations again, Alan, on the career. And Lawrence, congrats on your appointment. Looking forward to it. So first question is just a follow-up on commodities. Can you specifically talk a little bit about pepper and what your expectation is that's embedded in your overall commodity outlook as far as pepper goes?

Hi, Akshay. It's Mike Smith again. As you know, the price of pepper has risen over the past five years from about $1 a pound to $5 a pound spot, but we've seen a lot more planning over the last couple years and we see a stabilization in the price of pepper as we continue to work with farmers globally to increase acreage and increase yield. So those assumptions are built into our low-single-digit commodity price increase this year. So we think we've seen the peak. Hopefully, longer term it's a downward trend.

Perfect. And then just on North America, you mentioned share gains in the customer accounts where they've implemented most of the changes you've suggested. What percentage of your sales did those customers account for roughly? And can you just help us understand sort of the dialog that the pushback perhaps that you're getting there and maybe what your argument is when you do get that pushback? I mean, one of the arguments that we've heard is just generally there's more fragmentation of share across many categories and that's perhaps driven by consumers wanting more choice than more sort of smaller authentic brands, but we'd love to know sort of what your category management analysis is telling you. And then if you could give us some sense of the customers that you are seeing success, how much of your portfolio they represent? That'll be great. Thank you.

Sure Akshay. I don't want to speak too specifically about any one customer. I will say that the basket of customers that we have approached now is roughly 50% of our volume and the set of recommendations that we make for those customers are quite extensive. As a group, there's quite a span of adoptions. So, some of those customers have literally taken on our full recommendation or as others have cherry-picked it a bit depending on their strategy. This is going to be an ongoing process. We're working with these customers to get the recommendations that we think are best for the category, which, generally, are also the best recommendation for us and as well accepted. And we continue to work with additional customers. This started as an extraordinary effort. It's really become our main way of working in sales. It's just a more fact-based, analytic-based approach to the customer that the more sophisticated customers, in particular, appreciate. And they tend to be the larger and faster-growing customers as well. You guys want to add anything to that?

No. Well done.

I'll pass it on. Thank you.

Our next question comes from the line of Chris Growe with Stifel. Please go ahead with your questions.

Hi. Good morning.

Good morning, Chris.

I'd like to add my well wishes to you, Alan, and I look forward, as well, Lawrence, talking with you. So, I just had two quick questions. If you look at the quarter – I'm sorry, for the year, what sort of emerging market growth did you have? If you can give that maybe on an underlying basis, and I was just curious how India and China and maybe perhaps this is more of a fourth quarter question, really influence that growth rate?

Well, on a go-forward basis, we're still robust on China. We know there's a lot of discussion around China. We're obviously very aware of the economic discussion going on there but our own business we're anticipating that continues to do well. India, as you know, we've taken actions to focus more on the branded component of that business. So, as we look forward into 2016, we expect India actually to be a drag as we lap the anniversary of our exit of the broken and bulk rice. So, you'll see noise in the Asia Pacific numbers as we progress through the year where we'll try and help you understand what's going on in the mix of that business. But again, we anticipate China being a good performer and India as we have rebased that business, that will be a negative on the sales line.

Chris, I want to just expand on China just a bit because it has grown to be such a large contributor to our total business. We're aware of the macroeconomic pressure around the China market, which does make us cautious, but we're also quite optimistic about our business in China. A great deal of the carnage that's happened around us has been more in the modern trade portion of the business. That part of our business is slow as well but it only accounts for about 20% of our consumer business in China. Much more of our business in particular, thanks to the acquisition that we did a couple of years ago is more directed to the interior, to the smaller cities and through a more traditional trade outlet. So, we have continued to experience quite robust growth of our consumer business in China. For the year, we were up I think 11% in China in 2015. It was a little bit slower in the fourth quarter, but some of that was some anticipation of the Chinese New Year promotions that were coming beginning in December, which for us is fiscal 2016. I don't want to comment too much on 2016 but the opening of our year in China on the consumer side of our business has been really quite strong. And I focus my remarks on the consumer side because for us China has really become predominantly a consumer business. Years ago, China was more of an industrial business for us, and that's how we got our foothold there. But with the continued growth of our consumer business and with the addition of the acquisition we did a couple of years ago, that business is now more [indiscernible] about two-thirds consumer.

Okay. That's very helpful. Maybe along the same lines, I just was curious about...

I was just there with the China team last week and met with the management over there. Actually, Alan and I went over as part of our internal transition communication. And so, it gave us an opportunity to meet firsthand with the China team and they continue to be quite optimistic.

That's great. Thank you for the color. Just a quick follow-up on the acquisition outlook and just get a sense of like the pipeline and really where you are focused today. Are you seeing any opportunities given some of the macroeconomic uncertainties in emerging markets? Just curious how the pipeline looks here today.

I'll say that we always have an active pipeline of acquisition project, and we're always in dialogue with some potential targets. And that is the case today, but I really can't say too much more than that.

Okay. Thank you.

Our next question is from the line of Brett Hundley with BB&T. Please go ahead with your questions.

Hey. Good morning, gentlemen, and Alan and Lawrence, congratulations to you both. I don't know what they're doing with all that mayonnaise in Mexico, but it's good to see. Gordon, I have a few questions for you around your cost savings program for 2016, your outlook there. So, I'm curious on how the achievement of your cost savings in 2016 fits into your guidance range. Should we just think about that as kind of in the middle of the guidance range? And then, as far as, thinking about the net benefit to earnings, should I be thinking about something like a net $75 million benefit to earnings just from taking the $20 million add-in spend that you might have on the marketing side and then you're going to have pricing mostly covering input cost inflation, is that the right way to think about it?

Well, in terms of the program itself and the realization, I would say, I'd put it this way, in 2016, our anticipation of the use of those benefit is more in line with how we had hoped the program would run, which means we'd have a portion of it read through into reinvestment in the brands, which we indicated we're doing through the up spend of $20 million plus. It will also blend partially some of the pricing, and obviously we have other costs in our system as well as it relates to salary increases, et cetera, that are built into our forecast. So, I'd just say the combination of all those things end up feeding into the total outlook that we have. I prefer not to parse about how much of it's going to go to the bottom line, how much of its used. But the net-net is obviously an improvement in margin structure that we had hoped that this program would generate both on the gross and operating income line.

And should we still think about a bigger piece of that pie coming from the gross margin line, or would you see more cost benefits in the future coming from the SG&A line?

We're still more heavily weighted towards the cost of goods sold as a generator of these savings. But, obviously, we continue to look at SG&A and we took actions last year, and we're looking to leverage our SG&A structure as we grow.

Okay. And then just a final question for me on the industrial business, really solid growth during the quarter, a really solid margin. And I wanted to ask a question surrounding either driving margins higher or sustaining some of the margin that you saw in Q4 just given the growth profile and potential of the top-line there. If you can somewhat close the gap on your margins relative to your consumer business, I think it can really be a positive for you guys going forward. And I'm curious on how that margin sustainability or even growth from here works, whether it's something that's solely related to mix or if there's some production optimization in there as well. And I think what I'm really trying to get at here is, when you think about the ingredients industry and the move by a lot of food and beverage companies towards natural, I think it can really help you guys from a volume standpoint as more and more people use spices and herbs, whether it's for coloring, flavoring, et cetera. But if you can move up the value chain, say for maybe a bulk spice and herb towards an extract or something like that, maybe you can benefit on the price side and the margin side as well. And so, I wanted to ask a question about how the growth or sustainability in margin improvement within industrial goes going forward? Thank you.

Hey, Brett, this is Lawrence. I'll start and then I'm going to pass this over to Gordon. Some parts of your question, it sounded like you are reading out of some of our internal strategy document. Certainly, improving the product mix and moving towards flavors and more value-added technically differentiated product is part of the margin equation, and the overall trend in our industry towards more natural, less artificial is an important driver of volume for us because this is an area where we think that we got particular expertise. I think in our remarks, we indicated that about 40% of the briefs that we get from our customers include some wellness aspect and this is an area that is an opportunity for us to get leverage and is part of driving our margins higher. And there are parts of our business that are higher margin than others, and the flavor end and the more technically differentiated end is separately where the best opportunities are. Gordon, you want to elaborate on that?

I would just add that, obviously, the CCI program for the industrial business is designed both to improve margin and to help us reinvest in R&D to help us drive the mix shift towards a higher margin. So, that's part of the equation as well.

And I'm sorry, but I mean just – Lawrence, is 11% a high watermark in your opinion?

Well, this is Gordon jumping in. We haven't put a boundary on it candidly. For those of you who followed us for quite some time, 8% to 10% has been the goal. And as we went through periods of high inflation that gets interrupted because we have pass-through mechanisms that interrupt that margin improvement or at least mask the optics of it. But we're obviously close to that 10% where we landed years here, so it's not as if we put a ceiling on this. It's something that we continue to evaluate. And we'll look forward to improving that even still. But there hasn't been a specific target or ceiling that we put out on that business.

Okay. I'll yield the floor.

Yeah. I think with another call coming up at 8:30, we probably have to end our Q&A there. And, Lawrence, I know you had some remarks to share. I'll turn it over to you.

Great. First, I'd like to thank you all for your questions and to everyone who is on the call today, both the questioners and the listeners. Yeah, thank you for participating in today's call. Consumer demand for flavor is on the rise. It's driving growth for McCormick. Our geographic presence and product portfolio are expanding and aligned with the move towards healthier eating, fresh ingredients, ethnic cuisine, and bold taste. This is evident in our 2015 results and along with our strategies, gives us confidence in our 2016 outlook as we grow our business and build value for our shareholders. I hope all of you who are in the snow-impacted areas this weekend cooked a lot of McCormick Chili and a lot of Zatarain's Gumbo. Thank you all for your participation on the call.